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Waste-to-energy company interviewing advisors for strategic capital raise

Vancouver-based Klean Industries plans to run a process to raise between $250m - $500m of capital to deploy into projects, some of which would use green hydrogen to upgrade recovered fuel and pyrolysis oils.

Waste-to-energy specialist Klean Industries is interviewing financial advisors and planning to run a process to find investors for a strategic capital raise.

The Vancouver-based company is seeking to raise between $250m – $500m in a minority stake sale that would value the company around $1bn, Klean CEO Jesse Klinkhamer said in an interview.

Klean had previously intended to list on the NASDAQ exchange but those plans were nixed due to the COVID-19 pandemic, he said. The company still plans to list publicly in 2024 or 2025.

Proceeds from a capital raise now would be used to “rapidly deploy” into the projects that Klean is advancing around the globe, Klinkhamer said.

For one of those projects – a flagship tire pyrolysis plant in Boardman, Oregon – Klean is raising non-recourse debt to finance construction, the executive said. Klinkhammer declined to name the advisor for the project financing but said news would be out soon and added that the company has aligned itself with infrastructure funds willing to provide non-recourse debt for the facility.

The Boardman project, which is expected to cost roughly $135m, is an expansion of an existing site where Klean will use its advanced thermal conversion technology to recover fuel oil, steel, and refined carbon black from recycled tires. The end products are comparable to virgin commodities with the exception of being more cost-effective with a lower carbon footprint.

“A lot of what we do is of paramount interest to a lot of the ESG-focused infrastructure investors that are focused on assets that tick all the boxes,” Klinkhamer said, noting the consistent output of the waste-to-energy plants that Klean is building along with predictable prices for energy sourced from renewable power.

Klean has also partnered with H2Core Systems, a maker of containerized green hydrogen production plants, and Enapter, an electrolyzer manufacturer. The company will install a 1 MW electrolyzer unit at the Boardman facility, with the green hydrogen used to upgrade recovered fuel oil and pyrolysis oil into e-fuels that meet California’s Low Carbon Fuels Standards.

“We were exploring how we could improve the quality of the tire pyrolysis oil so that it could enter the LCFS market in California,” he said, “because there are significant carbon credits and tax incentives associated with the improved product.”

The company received proposals from industrial gas companies to bring hydrogen to the Boardman facility that were not feasible, and Klean opted for producing electrolytic hydrogen on site in part due to the abundance of low-cost hydroelectric power and water from the nearby Columbia River.

Addressable market

Discussing Klean’s addressable market for waste-to-energy projects, Klinkhamer points to Japan as an example of a comparable “mature” market.

Japan, an island nation of 126 million people, has built roughly 5,000 resource recovery, waste-to-energy plants of various scopes and designations, he notes. For comparison, the United Kingdom – another island nation of 67 million people – has just 20 waste-to-energy plants.

“The opportunity for waste-to-energy in the UK alone is mind boggling,” he said. “There are a thousand opportunities of scope and scale. Nevermind you’ve got an aging, outdated electrical infrastructure, limited landfills, landfill taxes rising – a tsunami of issues, plus the ESG advent.”

A similar opportunity exists in North America, he noted, where there are around 100 waste-to-energy plants for 580 million people. The company is working on additional tire, plastic, and waste-to-energy projects in North America, and also has projects in Australia and Europe.

Hydrogen could be the key to advancing more projects: waste-to-energy plants have typically been hamstrung by a reliance on large utilities to convert energy generated from waste into electricity, which is in turn dependent on transmission. But the plants could instead produce hydrogen, which can be more easily and cost effectively distributed, Klinkhamer said.

“There is now an opportunity to build these same plants, but rather than rely on the electrical side of things where you’re dealing with a utility, to convert that energy into hydrogen and distribute it to the marketplace,” he added.

Hydrogen infrastructure

Klinkhamer says the company is also examining options for participating in a network of companies that could transform the logistics for bringing feedstock to the Boardman facility and taking away the resulting products.

The company has engaged in talks with long-haul truckers as well as refining companies and industrial gas providers about creating a network of hydrogen hubs – akin to a “Tesla network” – that would support transportation logistics.

“It made sense for us to look at opportunities for moving our feedstock via hydrogen-powered vehicles, and also have refueling stations and hydrogen production plants that we build in North America,” he said.

Klean would need seven to 12 different hubs to supply its transportation network, Klinkhamer estimates, while the $350m price tag for the infrastructure stems from the geographic reach of the hubs as well as the sheer volume of hydrogen required for fueling needs.

“With the Inflation Reduction Act, the U.S. has set itself up to be the lowest-cost producer of hydrogen in the world, which will really spur the development of hydrogen logistics for getting hydrogen out,” he said. “And to get to scale, it’s going to require some big investments.”

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Plug, Airbus, Delta exploring hydrogen hub at Atlanta airport

The study will help define the infrastructure, operational viability, and safety and security requirements needed to implement hydrogen as a fuel source for future aircraft operations at ATL.

Plug Power Inc. along with Airbus, Hartsfield-Jackson Atlanta International Airport (ATL), and Delta Air Lines have joined forces to study the feasibility of a hydrogen-based hub at the world’s busiest airport in support of advancing a more sustainable future of travel.

The study, which was preliminarily launched earlier this year, will help define the infrastructure, operational viability, and safety and security requirements needed to implement hydrogen as a fuel source for future aircraft operations at ATL. It will also contribute to the understanding of hydrogen supply and infrastructure requirements at airports around the world.

The study in Atlanta is scheduled for completion at the end of 2026.

The use of hydrogen to power future aircraft could ultimately eliminate aircraft CO2 emissions in the air, while also decarbonizing air transport activities on the ground. This study reflects the partners’ ambition to use their respective expertise to support the decarbonization of the aviation industry.

Plug is a leading provider of equipment and end-to-end, turnkey solutions for the global green hydrogen economy. The company is building an end-to-end green hydrogen ecosystem including the manufacture of electrolyzers, fuel cells and hydrogen facilities across the United States to decarbonize a variety of industrial, transportation and energy needs and applications worldwide.

“The potential to decarbonize aviation with green hydrogen is substantial,” noted Plug CEO Andy Marsh in a news release. “We are pleased to contribute our expertise in hydrogen infrastructure and applications development to this pioneering effort at Hartsfield-Jackson Atlanta International Airport. We have a ready-made supply of green hydrogen to support the airport from our new Woodbine, Georgia, production plant, the largest green hydrogen plant in the U.S.”

Airbus is currently developing the first hydrogen-powered commercial aircraft with the ambition to enter into service in 2035 and promoting the Hydrogen Hubs at Airports concept.

“The U.S. has easy and massive access to additional renewable energies to produce green hydrogen, and airports are looking for a diverse and balanced energy mix to help reduce the impact of aviation on the environment. Hydrogen is a key enabler for this,” said Karine Guénan, Airbus’ Vice President ZEROe Hydrogen Ecosystem. “The journey to prepare airport infrastructure to support hydrogen and low carbon aviation begins on the ground with studies like this one, working with pioneer players like Delta, Plug and the world’s busiest airport.”

“Hartsfield-Jackson has long been a leader in the commercial aviation industry and it only makes sense that we help lead this effort,” said ATL Senior Deputy General Manager Michael Smith. “If hydrogen proves to be a viable alternative, ATL will investigate options to update infrastructure needs in order to implement the new technology. We are thrilled to participate in this study and look forward to the results.”

As part of the study, ATL is providing the current airport layout plan and organization and will share updates on future developments and findings.

Delta is the largest airline operating at the world’s busiest airport and offers one of the largest commercial airline schedules globally. Delta has been a long-standing core partner in the Airbus ZEROe program since 2022 when it signed on to provide expertise to identify fleet and network expectations, and the operational and infrastructure requirements needed to develop commercial aircraft powered by hydrogen fuel. Delta’s Chief Sustainability Officer Amelia Deluca said this study is part of Delta’s ongoing commitment and that no one company can solve the industry’s sustainability challenges alone.

“All aviation stakeholders need to explore new paths in every direction today if the industry is going to reach a more sustainable future of travel by 2050,” she said. “While we work to scale sustainable aviation fuel to power today’s aircraft, hydrogen is the key to unlocking the decarbonized future of flight and the next generation of aviation. That’s why we are excited to be part of this journey to help map the industry’s hydrogen blueprints with partners who share our passion for connecting the world.”

Airbus launched the “Hydrogen Hub at Airports” program to jumpstart research into infrastructure requirements and low-carbon airport operations across the entire value chain. To date, agreements have been signed with partners and airports in ten countries including France, Germany, Italy, Japan, New Zealand, Norway, Singapore, South Korea, Sweden and the United Kingdom.

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The clean energy project of the future looks something like … a refinery?

An optimized clean energy plant of the future might hinge on biofuels upgrading with green hydrogen, in a scenario that provides optionality to the facility operator, similar to a downstream oil refinery that manages its output based on market signals.

A new research note from Longspur Research examines the potential for hydrogen in a decarbonized economy, noting biofuels upgrading with green hydrogen as a promising path forward for clean fuels developers.

The note calls for realism with respect to where hydrogen does and does not make sense, but  acknowledges that long-term demand for justifiable use cases for hydrogen could amount to 447 million tons annually, with the main opportunities related to projects in ammonia, methanol, biomethane, grid balancing and refueling. 

One of the standout use cases? Upgrading biofuels using green hydrogen to enhance output or make derivatives like methanol.

“The clean energy project of the future may be an integrated project with a grid connected solar farm powering an electrolyzer with battery storage and with hydrogen produced sold to the market or upgrading the output from a biomethane or biomethanol plant,” reads the note, which was published yesterday. “This brings the operator lots of optionality with real time optimization into multiple energy markets including baseload power, peak load power, peak power, hydrogen and biofuel, with carbon credits on the side and perhaps pure oxygen as a by-product.”

The note continues, “It will be more like a downstream oil refinery managing its output mix in real time to meet the needs of varying markets.”

At the Varenne Carbon Recycling facility in Quebec, Canada, for instance, the county’s largest electrolyzer deployment so far is co-located with a biomass gasification plant to make green methanol. The project is backed by Proman, Enerkem, Shell, and Suncor.

In the case of methanol, the gasification of carbohydrate typically results in a syngas with equal parts hydrogen and carbon monoxide. Methanol, however, requires twice as much hydrogen as carbon monoxide, so adding hydrogen from an electrolyzer can increase methanol output from the same amount of feedstock.

Similarly, anaerobic digestion production can be combined with green hydrogen to double the amount of biomethane produced from the same amount of feedstock “and we see this growing as a source of demand for hydrogen production,” the note reads.

Anaerobic digestion produces biomethane and CO2, thus putting the excess CO2 through a methanation process with hydrogen produces more methane. 

“Note that in both cases” – methanol and anaerobic digestion – “the amount of resulting fuel is maximized for the biomass input and, unlike pure e-fuels, no carbon capture is required other than the initial biomass photosynthesis.”

In addition to the Varennes project, Norwegian Hydrogen AS is developing biogas projects co-located with wind and electrolysis, with a first project in Denmark. KBR has launched PureM, an advanced green methanol technology that combines green hydrogen with CO2 from biogenic sources or carbon capture.

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Gevo: Net Zero 1 facility to reach late stages this year

Executives for the Colorado-based company said its first alcohol-to-jet fuel facility in South Dakota will be financed late this year or early next.

Gevo’s Lake Preston alcohol-to-jet fuel facility in Lake Preston, South Dakota will be financeable this year and reach financial close late this year or early next, executives for the Colorado-based company said on an earnings call Thursday.

The company is working on a DOE loan guarantee for the project, dubbed Net Zero 1.

“Our work on the Department of Energy loan guarantee is going well, but as anyone who has worked on one of these knows, there’s a lot of engineering and upfront risk mitigation required much more than a typical balance sheet finance project,” President and COO Chris Ryan said on the call. “Our EPC partners are busy working with us to mitigate execution risk and ensure our contracts fit the DOE’s loan guarantee requirements.”

Finalizing the DOE loan done, raising the equity, and reaching financial close is expected to be achieved by late 4Q24 or early 1Q25, CEO Patrick Gruber said on the call.

“We want to see the CO2 pipeline in South Dakota move forward to keep Lake Preston as our most attractive site for producing sustainable aviation fuel,” Ryan said. “But we’ve developed a slate of potential sites that we’ve prequalified for future Net-Zero projects.”

Offtake partners are working to ensure that the contracted demand fits with the requirements of a DOE loan guarantee to finance the construction phase, Ryan said. Lake Preston is more than twice the size of the plant’s footprint, leaving room for future bolt-on projects.

“It’s in a location where many of the surrounding farms in the region already use climate smart agricultural practices, which reduces carbon footprint of the corn feedstock we plan to use there,” Ryan said.

The location is also near the wholly-owned RNG business in Northwest Iowa.

The company has targeted several sites for Net-Zero 2, Gruber said.

“They could be brought on pretty quickly, and all of it is done with partners,” he said. “All of this financing would be done at a project finance level, not at a Gevo level.”

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Brookfield-owned renewables developer planning hydrogen co-location

An IPP and developer of wind, solar and storage projects is in early discussions with potential partners to co-locate electrolysis with its operating assets and projects in development.

Scout Clean Energy, the Boulder, Colorado-based IPP and renewables developer, is laying the groundwork to co-locate electrolysis for green hydrogen with its wind and solar assets, CEO Michael Rucker said in an interview.

The company’s Power2X team is charged with looking for alternative strategies, Rucker said.

“We are actively trying to match project opportunities with the future hydrogen economy,” he said, noting that the company’s operating wind portfolio provides a crucial piece of that. “Wind is an especially good fit for hydrogen production just in terms of pricing.”

Scout, which is owned by Brookfield Renewable, sees itself as producing green electrons and doesn’t want to get into marketing and distribution of hydrogen, Rucker said.

Brookfield acquired Scout in 2022 for $1bn, with the potential to invest an additional $350m to support development activities.

Scout has its first solar project in development in ERCOT, a market where shipping of hydrogen would make for a promising project, Rucker said. The company has also looked at the Midwest, where a robust SAF production ecosystem is forming, as well as the Pacific Northwest.

The company is already working with one hydrogen developer to match production to one of its wind farms, Rucker said. An exact location has not been selected.

Pricing diligence has been promising, Rucker said. But the offtake market in the US remains slow to develop despite regulatory encouragement.

“The IRA has given us maybe the most subsidized hydrogen production market in the world but it’s really being production-driven not demand-driven, so we really need to see more of the economy using hydrogen,” Rucker said. “I trust that will come, it’s just going to take longer than we think.”

Scout is not ready to take anything to market related to hydrogen, but ultimately there will be a need for financial advisory, Rucker said.
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Exclusive: Pattern Energy developing $9bn Texas green ammonia project

One of the largest operators of renewable energy in the Americas, San Francisco-based Pattern is advancing a 1-million-ton-per-year green ammonia project in Texas.

Pattern Energy knows a thing or two about large renewable energy projects.

It built Western Spirit Wind, a 1,050 MW project in New Mexico representing the largest wind power resource ever constructed in a single phase in the Americas. And it has broken ground on SunZia, a 3.5 GW wind project in the same state – the largest of its kind in the Western Hemisphere.

Now it is pursuing a 1-million-ton-per-year green ammonia project in Corpus Christi, Texas, at an expected cost of $9bn, according to Erika Taugher, a director at Pattern.

The facility is projected to come online in 2028, and is just one of four green hydrogen projects the company is developing. The Argentia Renewables project in Newfoundland and Labrador, Canada is marching toward the start of construction next year, and Pattern is also pursuing two earlier-stage projects in Texas, Taugher said in an interview.

The Corpus Christi project consists of a new renewables project, electrolyzers, storage, and a pipeline, because the electrolyzer site is away from the seaport. It also includes a marine fuels terminal and an ammonia synthesis plant.

Pattern has renewable assets in West and South Texas and is acquiring additional land to build new renewables that would allow for tax incentives that require additionality, Taugher said.

Financing for the project is still coming together, with JV partners and prospective offtakers likely to take project equity stakes along with potential outside equity investors. No bank has been mandated yet for the financing.

Argentia

At the Argentia project, Pattern is building 300 MW of wind power to produce 90 tons per day of green hydrogen, which will be used to make approximately 400 tons per day of green ammonia. The ammonia will be shipped to counterparties in Europe, offtake contracts for which are still under negotiation.

“The Canadian project is particularly exciting because we’re not waiting on policy to determine how it’s being built,” Taugher said. “The wind is directly powering our electrolyzers there, and any additional grid power that we need from the utility is coming from a clean grid, comprised of hydropower.“

“We don’t need to wait for rules on time-matching and additionality,” she added, but noted the renewables will likely benefit from Canada’s investment tax credits, which would mean the resulting ammonia may not qualify under Europe’s rules for renewable fuels of non-biological origin (RFNBO) as recently enacted.

Many of the potential offtakers are similarly considering taking equity stakes in the Argentia project, Taugher added.

Domestic offtake

Pattern is also pursuing two early-stage projects in Texas that would seek to provide green hydrogen to the domestic offtake market.

In the Texas Panhandle, Pattern is looking to repower existing wind assets and add more wind and solar capacity that would power green hydrogen production.

In the Permian Basin, the company has optioned land and is conducting environmental and water feasibility studies to prove out the case for green hydrogen. Pattern is considering local offtake and is also in discussions to tie into a pipeline that would transport the hydrogen to the Gulf Coast.

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exclusive

Hydrogen liquefaction provider looking for growth equity

An emerging liquid hydrogen and liquefaction management company is seeking equity to support manufacturing expansion in Europe and the US.

Absolut Hydrogen, a French liquid hydrogen and liquefaction company based in Grenoble, is looking for equity to scale up production following operations of their demonstration project in France, CEO Jerome Lacapere said in an interview.

Absolut has a partnership with SAF firm ZeroAvia to develop refueling infrastructure for aircraft, and is primarily focused on serving the mobility sector.

A subsidiary of Groupe Absolut, the company offers a full LH2 product range with an entry small-scale hydrogen liquefaction system (< 50 kg/day), a 100 kg/day Turbo-Brayton based H2 liquefier and a 1T/day liquefier based on the same technology. The company's liquefaction demonstration plant in France should produce 100 kg per day, Lacapere said. After that Absolut will need new investment to scale production. Longer term the company has its sites on the US transport market, Lacapere said. “We need to grow in the United States,” Lacapere said. The company will need US-based advisory services and offices in the country to do that, he said.

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