October 04, 2021 • Paul Rodden • Season: 2021 • Episode: 52
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In episode 052, A new US startup is eyeing the cheapest hydrogen to date, a new infrastructure fund from some of the biggest companies in France. And Enbridge signs a huge deal to produce RNG, and hydrogen. All of this on today's hydrogen podcast.
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A new US startup is eyeing the cheapest hydrogen to date, a new infrastructure fund from some of the biggest companies in France. And Enbridge signs a huge deal to produce RNG, and hydrogen. All of this on today's hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
In an article from rechargenews.com, Lee Collins writes that a US startup H Quest says its emissions free microwave plasma pyrolysis technology will turn methane into hydrogen and high volume solid carbon or petrochemicals. With these so called byproducts alone making projects profitable. The US startups as it's developed an emissions free process will make hydrogen from natural gas. at such a low price, it could give away the hydrogen for free. This is because the technology will also produce high value carbon based products and chemicals at the same time as the hydrogen and the income from selling those would be enough to render any project profitable. The microwave plasma pyrolysis technology developed by Pittsburgh based H Quest uses electricity to generate microwaves that move methane which is CH4 into a plasma state, stripping off hydrogen atoms and initiating a chain reaction that creates solid carbon or petrochemical compounds such as acetylene, or ethylene. According to the CEO George Skoptsov, thanks to the high value of the carbon co product under the currently prevailing natural gas and electricity prices.
H Quest could essentially give the hydrogen away for free and still make a profit. Natural gas is used to produce most of the hydrogen currently used around the world today in the fertilizer, oil refining and chemical sectors. But the steam methane reforming process used produces nine to 12 tonnes of co2 per tonne of hydrogen. This is because the carbon molecules combined with oxygen in the air, but take the air out of the equation and methane will split into hydrogen and solid carbon. Heating natural gas in the absence of air mainly inside so called pyrolysis ovens has long been discussed with any hydrogen produced in this way being labeled as turquoise. But pyrolysis ovens are still in their infancy and currently very expensive. With the high temperatures needed which require burning a fraction of the hydrogen produced, not exactly keeping costs low. Consequently, no commercial turquoise hydrogen plants are yet an operation.
By contrast, H Quests microwaves require four times less electricity than required for the green hydrogen electrolysis process that splits water molecules into hydrogen and oxygen. But the startups technology has further advances over pyrolysis ovens is able to produce different and higher value forms of carbon, including superstrong nanotubes and graphene, as well as petrochemicals used in heavy industry that are normally derived from unabated hydrocarbons. It's very difficult to make a high value carbon product, which is why a lot of people looking into the turquoise hydrogen will say, well, there's so much carbon, it's low quality with poor structure and impurities. We'll bury it under our plants. This is according to Skoptsov again, and our carbon is fundamentally different. And that's what makes us what makes this process different.
Now there are many forms of pure carbon that differ according to how the atoms are arranged, including diamonds, carbon black, which is used in the production of tires, printer inks and reinforced plastics and batteries. graphite, which is used in pencils, one atom thick graphene sheets, and carbon nanotubes, the strongest material yet discovered. According to the information seen by recharge low quality graphite costs about $5 per kilogram. graphene comes in around $175 per kilogram, while carbon nanotubes can fetch up to $2300 per kilogram. But Skoptsov says the real advantage of the company's technology it has to do with the complexity of the pyrolysis process, which most people don't recognize, he says that after you activate methane, it doesn't simply start losing hydrogen leaving carbon behind.
What it does is it starts combining with itself. And through that process, it loses hydrogen starts making chemicals, more complex chemical compounds, which sort of keep assembling themselves into larger and larger structures. If you're very skilled, you can take that process to graphene, it's actually doing it to form a large graphene sheet. But you can also freeze it at the chemical stage before it goes all the way to carbon. So you reduce your hydrogen output, but then you can go make it ethylene, for example. Now ethylene the key ingredient in a polyethylene plastic is the world's most produced organic compounds, and mainly derived by heating natural gas or petroleum processes that are said to account for about point 8% of global greenhouse gas emissions. Skoptsov continues by saying, really, we see ourselves as a company that doesn't just make hydrogen or a company that makes carbon black, we see ourselves as a more broad scale sustainability purveyor, we're making a product that already exists is difficult to decarbonize is made conventionally with a lot of co2 emissions. And we're doing it in a fundamentally zero carbon dioxide way.
And we have a stream of hydrogen that can feed directly to decarbonize existing processes as a source of energy, or as a chemical feedstock. So why has no one done this before. With so much focus on clean hydrogen around the world right now, an oil and gas companies working on blue hydrogen, we're not all the co2 emissions can be captured and stored. Why is no one else thought of using microwaves in this way. The problem is, it's actually very difficult to get something to be heated with microwaves. According to Skoptsov. Water is great in the microwave oven, but ice doesn't heat in the microwave at all. And if your TV dinners half frozen, that half is going to stay cold. And the other half will be steaming, and especially industrial materials, chemicals, oil organics, they're all impossible to heat effectively in the microwave.
We haven't invented the process of creating microwave plasma, but we have done is develop a way for it to be industrially relevant. H Quest is due to complete a pilot project in the next 18 months that will be capable of producing 250 kilograms of turquoise hydrogen, and 750 kilograms of carbon black per day. A first commercial project is projected to cost between three and $5 million to build and is due to be up and running within three years or less. With a daily output of one tonne of hydrogen daily and three tons of specialty carbon black. running costs depend on the price of green electricity and natural gas. But we're looking at something at 40% return on capital per year from this first commercial project according to Skoptsov.
H Quest will initially focus on carbon black for its early plants because it's fairly simple to produce and store at small scale, with ethylene being produced at larger follow up plants. And as the chemical tends to be bought and sold in large volumes. The US company has largely been funded so far by research grants and is owned by Skoptsov, Key employees and advisors and a handful of early investors. But we'll need an additional investment to help fund the pilot and initial commercial projects. The company says that they're looking to partner closely with existing industry. And according to Skoptsov, what we want to sell them is the means of achieving their sustainability goals and decarbonisation with the partnership is going to look like that's really for us to work out.
If they were running as part of their existing plant they would need to license it, but also our equipment that's made with our secret sauce. Now most of the equipment that they're using is off the shelf. But the reactor itself, the place where the magic happens has to be purpose built by fabricators. So a very interesting new development in the world of turquoise hydrogen. And while this technology right now is in its infancy, I can see this method of hydrogen generation becoming very, very popular, especially given their advancements in creating better and better forms of solid carbon. And the fact that they're looking at generating nanotubes from the carbon black that they're creating could be a complete game changer for structural development.
Next, in a press release Total Energies, Air Lockheed, Vinci and a group of international companies launched the world's largest clean hydrogen infrastructure fund. Announced October 1 total energies air Lockheed and Vinci are combining forces with other large international companies to sponsor the creation of the world's largest fund exclusively dedicated to clean hydrogen infrastructure solutions. The fund aims to reach 1.5 billion euros and has already secured initial commitments of 800 million euros. Its objective is to accelerate the growth of clean hydrogen ecosystems by investing in large strategic projects and leveraging the alliance of industrial and financial players. The Clean hydrogen infrastructure fund will invest the entire value chain of renewable and low carbon hydrogen in the most promising regions of the Americas, Asia and Europe. It will invest as a partner alongside other key project developers and or industry players in large upstream and downstream clean hydrogen projects. Total commitments to the fund have already reached 800 million euros out of a target of around 1.5 billion.
Total energies are Lockheed and VINCI concessions have been at the forefront of setting up and aggregating commitments to this clean hydrogen infrastructure fund. As anchor partners fully committed to low carbon and renewable hydrogen development, each has pledged to invest 100 million euros. The fund will be managed by Hy24 a brand new 50/50 joint venture between Ardian, a world-leading private investment house and FiveT Hydrogen, a clean hydrogen enabling investment platform. The choice of this fund manager allows to merge with their similar initiative and to add Plug Power as an anchor partner, as well as Chart Industries and Baker Hughes joining together. LOTTE Chemical has also confirmed its intention to participate as anchor investor, and is the first Asian company to join. The fund expects to attract further investments from large financial players, with AXA as anchor investor. Large international industrial players from North America and Europe, which are strongly committed to carbon neutrality, also intend to join the initiative as non-anchor partners, such as Groupe ADP, Ballard, EDF, and Schaeffler.
With solid industrial expertise and significant investment potential, the clean hydrogen infrastructure fund will have a unique capacity to unlock large scale projects under development and accelerate the scaling up of hydrogen markets. With the announced support of public policies, and some use of debt financing the fun should be able to contribute to the development of hydrogen projects with a total value of about 15 billion euros. So an absolutely monster fund now being established by some of the biggest hydrogen players in the world, and not just hydrogen, but energy in general. And it is so great to see such large companies spearheading these initiatives. And what I'm most interested to see is exactly where these funds get allocated. And more specifically, which parts of infrastructure hydrogen infrastructure are they looking to invest in. And lastly, in an article from reuters.com Canadian pipeline operator, Enbridge said on Tuesday, September 28, it had signed a partnership with Royal Dutch Shell and Vanguard renewables to make low carbon fuels. Seeking to tap into sales to companies that want to lower their greenhouse gas emissions. Enbridge will buy 2 billion cubic feet of renewable natural gas annually from Vanguard and collaborate with shell on potential green and blue hydrogen production.
Companies that buy RNG from Enbridge would collect the offsets associated with decarbonisation. That's according to spokesman Jesse Semko. Enbridge, which set emission reduction targets last November hopes to be net zero by 2050. The company said it would buy RNG from eight anaerobic digesters that Vanguard will spend $200 million to build and operate in the US northeast, Southeast and Midwest. Enbridge can replicate the project across the United States and could double the RNG itself within several years. This according to Caitlin Tessin Enbridge's director of market innovation. If natural gas prices which are soaring remain elevated, it could further boost demand for RNG which normally trades at a premium. This again according to Tessin. Enbridge will spend $100 million on equipment to convert gas from food waste, and farm manure into pipeline quality, renewable natural gas and market it to us customers.
Coffee chains, Starbucks and Unilever, maker of Ben and Jerry's ice cream are providing food waste to Vanguard for processing into RNG Enbridge signed an agreement with shell to explore the opportunities to produce hydrogen also, the companies are also looking to develop a carbon capture and storage hub in southern Ontario, where there are lots of industrial emissions and potential storage. This is according to Matthew Akman, Enbridge's senior vice president of strategy, renewables and new energies. So big moves being made right now from Enbridge. And while there hasn't been a lot of news from midstream operators when it comes to hydrogen, I firmly believe that very soon we're going to start seeing more and more press releases from larger midstream companies embracing the hydrogen industry in some form, or fashion.
Alright, that's it for me, everyone. If you have any questions, comments or concerns about today's episode, come and visit me on my website at thehydrogenpodcast.com and let me know. I'd really love to hear from you. And as always, take care. Stay safe. I'll talk to you later.
Hey, this is Paul. I hope you liked this podcast. If you did want to hear more. I'd appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.