Resource logo with tagline

Technology in focus: What is direct ocean capture and can it sail?

Bianca Giacobone explores the not-yet-seagoing technologies behind direct ocean capture, and the emerging players seeking to make it a reality.

The largest carbon capture system in the world is the ocean, sucking in about 31% of CO2 emissions from the atmosphere, which makes it “the world’s greatest ally against climate change.” As a matter of fact, it sucks in so much CO2 that it’s becoming too acidic, endangering its ecosystems along the way. 

In the ongoing frenzy to find as many pathways to reverse climate change as possible, scientists and developers are looking to take full advantage of the ocean’s natural carbon sink qualities, while hopefully restoring it to its original, less-acidic state. Direct ocean capture (DOC) removes CO2 from seawater directly, through electrochemical-based methods or calcium looping.

It still hasn’t been deployed on a large scale, but it’s catching the eye of investors, despite not having been blessed by federal subsidies like its sister technology, direct air capture (DAC).

Los Angeles-based Captura, for example, recently announced it has raised over $30m in a Series A funding round from backers like Maersk Growth and Eni Next, while Deep Sky, a Canadian carbon removal developer with partnerships with both Captura and its competitor Equatic, raised CAD 75m ($55.6m) late last year. 

Much like direct air capture, DOC holds a big advantage in that there’s plenty of CO2 and seawater to go around, making it, theoretically, endlessly scalable. 

But “in many ways, from an engineering standpoint, direct ocean capture seems a better approach to carbon removal, because the medium seawater contains more carbon molecules per unit than air,” David Babson, executive director of the MIT Climate Grand Challenge Initiative, said in an interview. Plus, it can be 100% powered by renewable electricity, whereas direct air capture still requires some heat. 

Not that pursuing one denies the other. 

“We got into this mess of climate change by taking carbon out from underground and putting it into the air and therefore into the ocean,” Phil De Luna, chief carbon scientist and head of engineering at Deep Sky, said in an interview. “In order to reverse that, we have to take CO2 out of both the air and the ocean and put it back underground.”

Deep Sky, according to De Luna, is “an oil and gas company in reverse,” and much like an oil company, it doesn’t develop its technologies, but rather invests in what’s already been brewing, offering partners money, solutions, and potentially a place to store the CO2 once they have it. 

Courtesy of Deep Sky.

Deep Sky looks for four things when selecting a technology to invest in: it has to be fully electrified and easily scalable, and it has to have low energy intensity and a robust and uncomplicated supply chain. DOC is on its way to tick all those boxes and it should be ready for commercial deployment within a decade, according to Babson and De Luna. 

Equatic, one of the companies Deep Sky has partnered with, has two pilot facilities active in Los Angeles and Singapore and is going to announce a larger plant, estimated to remove around 4,000 tons of CO2 per year, in the near future, according to Edward Sanders, Equatic’s chief operating officer. 

Its technology is based on modules the size of 20ft shipping containers, which, placed on the coast and powered by renewable energy, pump in large amounts of seawater, pass an electrical current through it, and then trap the extracted CO2 in solid minerals. 

The modules are replicable, “like solar cell modules,” according to Sanders, an attractive feature for investors, and the CO2 removal happens within their boundaries, which means you can measure and report how much of it you’ve captured. That’s important for figuring out how many carbon credits to sell – since, as it stands, selling carbon credits is the basis of most of these companies’ revenue models.

As a new technology, DOC is expensive and needs to become cheaper to be deployed at a relevant scale. But unlike direct air capture, it cannot, currently, claim tax credits for carbon sequestration both in the United States and Canada. 

The lack of DOC-related subsidies is not an issue for Equatic, which, in addition to removing CO2 from the ocean, also produces around 30 kilograms of green hydrogen per module per day, and is therefore eligible for hydrogen tax credits. Captura, on the other hand, is investing in modules to prove that DOC is, essentially, direct air capture, since “you’re using the surface of the water to capture CO2 from the air, and you’re using this process to remove the CO2 from the water,” according to Babson at MIT. 

Captura declined an interview and did not respond to a request for comment.  

“It’s certainly one of the flaws in the Inflation Reduction Act that it has constraining language around direct air capture specifically, saying that direct air capture gets the credit and nothing else,” Babson said. “That runs afoul of policy 101. It limits the possibilities.” 

The next step is convincing the authorities in charge to include DOC in the technologies eligible for subsidies, which is bound to take some time. 

“Unfortunately,” Babson said, “when it comes to climate change and carbon removal and scaling an enormous negative emissions industry, we just don’t have time.”

Unlock this article

The content you are trying to view is exclusive to our subscribers.
To unlock this article:

You might also like...

Subsurface storage firm makes first acquisitions

Caliche Development Partners has acquired two natural gas storage assets from Southern Company, which could serve as a bridge to storing helium, hydrogen, and CO2 in similar formations.

Caliche Development Partners II, Orion Infrastructure Capital (OIC), and GCM Grosvenor have reached a partnership targeting underground storage and sequestration assets in North America, according to a press release.

The capital commitments represent OIC’s second investment with the Caliche management team, and Caliche’s first with OIC’s frequent investment partner GCM Grosvenor, which invested client capital.  Both firms bring extensive experience in infrastructure investing to Caliche’s next iteration, which will target underground assets supporting North America’s transition to lower-carbon forms of energy.

The partnership’s initial acquisition of Golden Triangle Storage, Inc. (GTS), together with the anticipated acquisition of Central Valley Gas Storage (CVGS), from Southern Company affiliates, targets two regions with increasing demand for storage to support variable power loads, natural gas liquefaction, and high penetrations of renewable resources.

Acquisition amounts funded and/or anticipated to be funded by OIC, GCM Grosvenor, and Caliche management collectively total $186m, which represents the aggregate purchase price of both GTS and CVGS, plus working capital and other adjustments. Caliche expects, with support from OIC and GCM Grosvenor, to explore and assess additional growth related to these assets and in these regions.  The GTS transaction closed on November 18, 2022, and the CVGS purchase, which requires state regulatory approvals, is expected to close in 2023.

“Natural gas storage will continue to play an important role in our energy mix while providing the assets and knowledge to storing helium, hydrogen and CO2 in similar formations,” said Dave Marchese, CEO of Caliche II. “The support of our repeat and new capital partners combined with the location of these two acquisitions, and their exceptional operational teams, provide Caliche a platform to significantly impact the energy transition on the U.S. Gulf and West Coasts.”

“We are thrilled to partner with the Caliche team again and with GCM Grosvenor to build off the success of Caliche I,” said Ethan Shoemaker, investment partner and head of infra credit at OIC. “GTS and CVGS are both premier storage assets and provide critical infrastructure for reliability in their respective markets.  We look forward to supporting Caliche II’s continued growth as we expand the platform for other customers and into new products.”

“We believe the investment opportunity for underground storage is robust in light of market dynamics and ongoing energy transition initiatives across the globe,” said Matthew Rinklin, managing director at GCM Grosvenor. “The Caliche team has a proven track record of developing critical storage infrastructure for a range of customers across fuel types, and we look forward to growing their platform alongside our partners at OIC.”

Caliche welcomes GTS and CVGS employees to its culture of providing safe and environmentally conscious underground storage services. The Caliche team has a proven history of operating on the Spindletop salt dome, where GTS is located, and will leverage its expertise from its prior storage business—Coastal Caverns—for the success of both facilities.

Under the Caliche team’s stewardship, Coastal Caverns operated with a TIRR of zero (0), an industry leading environmental record. The team’s decision-making hierarchy of “Safety, Asset Integrity, Stakeholder Stewardship and On-Demand Deliverability” comes from a combined 65 years of collective underground storage experience, with products including NGLs, oil, helium and natural gas. Underground natural gas storage provides unparalleled flexibility for the entry of renewable generation resources into power grids, support for LNG exports to Europe and Asia, and ultimately provides the asset base and knowledge to move to carbon-neutral forms of generation.

The Caliche team previously developed North America’s first helium storage salt cavern and is committed to now applying the team’s decades of experience working together to the upcoming challenges of storing helium, hydrogen and sequestered CO2.

Read More »

Monarch Energy considering Illinois SAF plant

The plant would supply SAF to the Rockford International Airport, according to a column by Illinois Senator Tammy Duckworth.

Monarch Energy is considering a sustainable aviation fuel facility in Rockford, Illinois.

The plant would supply SAF to the Rockford airport, according to a column by Illinois Senator Tammy Duckworth.

“Monarch is considering building a facility that would use the emissions from nearby landfills that are already overburdened with waste from metro areas, converting them into American-made Sustainable Aviation Fuel (SAF) that could then be used at Rockford International Airport,” the senator wrote.

In an interview last year, Monarch CEO Ben Alingh said the company was focused on several green hydrogen projects in the Gulf Coast region, most notably a 500 MW project near Beaumont, Texas and a 300 MW project near Geismar, Louisiana.

Monarch has a $25m preferred equity investment and $400m project equity commitment from LS Power.

The proceeds of the preferred equity raise will fund pre-FID aspects of Monarch’s 4.5 GW green hydrogen development platform: overhead, project development, interconnection, land, permitting, and engineering.

The $400m commitment, meanwhile, is earmarked for project equity investments in Monarch’s pipeline of projects. Under the arrangement, the projects will be dropped into a new entity, Clean Hydrogen Fuels, LLC, where LS Power provides the capital and Monarch provides the project, Alingh said in the interview.

Read More »

HY24 hires new managing director

The former head of EDF Pulse Ventures will head up Hy24’s latest investment initiative dedicated to scaling-up clean hydrogen technologies and equipment manufacturers.

Hy24, the hydrogen-focused French and American private equity JV, has hired Guillaume Lesueur as Managing Director, according to a news release.

Guillaume, former head of EDF Pulse Ventures, will head upHy24’s latest investment initiative dedicated to scaling-up clean hydrogen technologies and equipment manufacturers.  

Hy24 is a joint venture established in 2021 by FiveTHydrogen and Ardian. Its first fund – Clean Hydrogen Infrastructure, or “InfraFund” – is targeted at building out the hydrogen infrastructure market. The fund has raised EUR 2bn and has made four investments. More than 50 LPs are involved.

The new investment initiative led by Guillaume will focus on supporting the technology and equipment manufacturing capacities needed to meet the demand for hydrogen across the global supply chain, the release states.

“With over one thousand large-scale hydrogen projects announced worldwide as of the end of January 2023, demand for equipment far exceeds available supply capacity,” the release states. “From upstream to downstream, the manufacturing of hydrogen production, conversion, distribution, retail, storage, and end-use equipment therefore needs rapid acceleration.”

The equipment market is estimated to reach $190bn by 2030.

Read More »
exclusive

Low-carbon crude refinery developer lining up project cap stack

The developer of a low-carbon crude refinery is in talks with banks and strategics to line up project financing for a $5.5bn project in Oklahoma.

Texas-based Southern Rock Energy Partners is holding discussions with banks and potential strategic investors with the aim of shaping a $5.5bn capital stack to build a low-carbon crude refinery in Cushing, Oklahoma.

The project, a first-of-its-kind 250,000 barrel-per-day crude refinery, would make it the first crude facility of that size built in the United States in several decades.

The company is evaluating a project finance route with a debt and equity structure for the project, and has held talks with several major investment banks as well as “industry-leading” strategics in midstream, industrial gas, and electricity generation, Southern Rock Managing Partner Steven Ward said in an interview.

In support of the refinery, the city of Cushing and the Cushing Economic Development Foundation approved $75m in tax-exempt private activity bonds, Ward noted. He added that the company could also tap industrial revenue bonds as well as PACE equity financing.

Seed capital for project development has so far come from strategic partners, some of which are operational partners, Ward said. He declined to comment further on the capital raise, noting that engagement letters have yet to be signed.

Engineering firm KBR is conducting a feasibility study for the Cushing project, and the company is moving through land acquisition, air permit preparation, and EPC selection, Ward said.

While most crude refineries consume natural gas, off-gasses, and ambient air, Southern Rock’s proposed refinery would use oxygen along with blue hydrogen produced from the refining off-gasses and green hydrogen from electrolysis. The process would eliminate 95% of greenhouse gas emissions at the proposed refinery.

“Our furnaces and our process heating units are fed 100% hydrogen and oxygen,” Ward said, noting that this type of system does not currently exist in the market. The company is expanding on technology it licenses from Great Southern Flameless, he said.

The size of the refinery would make it the largest to be built in the US since Marathon Petroleum built a 200,000 barrels-per-day facility in 1976.

Certain other low-carbon crude projects have been in the market for several years. Meridian Energy has been seeking to build cleaner crude refineries in North Dakota. Raven Petroleum ran up against environmental concerns while seeking to build a clean refinery in Texas. And MMEX is aiming to build an “ultra clean” crude refinery in West Texas.

Read More »
exclusive

Gas-fired peaker sale touts hydrogen blend potential

An equity process for 25% ownership of a California peaker plant includes plans to blend up to 30% hydrogen as part of the sales pitch, according to a teaser.

An opportunity to acquire 25% of the Sentinel Energy Center in California includes decarbonization initiatives like blending 30% hydrogen and installation of on-site battery storage, according to two sources familiar with the matter.

Project Oasis is being run by CIBC, the sources said. Voltage Finance, an entity managed by Guggenheim Partners Investment Management, is exploring the sale of its 25% indirect equity interest in the 850 MW generating facility in Riverside County.

The facility has more than 75% of its capacity contracted through 2027, according to a teaser seen by ReSource. The potential to execute a long-term green hydrogen offtake contract on several of Sentinel’s turbines is being evaluated.

“Sentinel is pursuing the implementation of hydrogen blending capabilities and has advanced the engineering and design through an agreement with a global OEM with beta testing expected in Q1 2025,” the document states.

Sentinel is also co-located with 15 MW of battery storage.

Guggenheim and CIBC did not respond to requests for comment.

Diamond Generating holds a 50% stake in Sentinel. The remaining 25% interest is owned by California-based fund manager Climate Adaptive Infrastructure (CAI), which bought its stake from Partners Group last year.

Read More »
exclusive

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.”

Read More »

Welcome Back

Get Started

Sign up for a free 15-day trial and get the latest clean fuels news in your inbox.