Just a Little Bit Better, Part 2 - HIF Global Advancing Plans for First World-Scale eFuels Plant - RBN Energy
Just a Little Bit Better, Part 2 - HIF Global Advancing Plans for First World-Scale eFuels Plant | RBN Energy
As the push for decarbonization in the transportation sector gathers momentum, electrofuels — also known as eFuels, which are produced by using electricity to combine the hydrogen molecules from water with the carbon from carbon dioxide (CO2) — are beginning to attract attention as an alternative fuel with three important selling points in today’s environment. First, eFuels are available now and can be made with current technology, although there is a lot of room for future improvements and growth. Second, because they are considered drop-in replacements, they are essentially indistinguishable from the fossil-based conventional fuels in use today, which means they can be used without any changes to the existing energy infrastructure. Third, they can capitalize on a rapidly growing set of hydrogen and CO2 suppliers eager to secure a diversified set of offtakers. In today’s RBN blog, we look at HIF Global’s approach to eFuels production, its demonstration plant in Chile and its big plans for Texas and beyond.
As we noted in Part 1 of this series, there are a number of alternative fuels and government policies that support them. That includes ethanol, a biofuel found in virtually all of the gasoline purchased in the U.S.; biodiesel, another biofuel that is produced from a variety of feedstocks, including corn oil, soybean oil, animal fats, and used cooking oil; renewable diesel (RD), a biomass-based fuel that can be used in diesel engines or as home heating oil; and sustainable aviation fuel (SAF), which is also made from renewable feedstocks and is a substitute for jet fuel (see our Come Clean series to learn more). RD and SAF are especially important because, like eFuels, they are considered drop-in replacements for conventional diesel and jet fuel, respectively. We should note that although eFuels have the same CO2 emissions as conventional fuels when used, the carbon savings come from how they are produced and their reliance on large volumes of CO2 captured either from the atmosphere via direct air capture(DAC) or directly from industrial sources, resulting in fuels with about a 95% reduction in lifecycle CO2 emissions. The process essentially recycles CO2 that is already in the atmosphere to create new fuels.
In our previous blog, we outlined the eFuels production process being developed by California-based Infinium, which begins by running water through an electrolyzer that is powered by renewable energy to produce green hydrogen. The next step is to combine that hydrogen with CO2 captured from nearby sources, such as natural gas processing, steel production, or other industrial activities. The process results in three end products — what Infinium calls eDiesel, eSAF, and eNaphtha — with the product mix varying based on project and offtake demand. (Naphtha is a product of processed crude oil and is a critical component in the manufacture of many plastics and chemicals — see Through the Looking Glass for more.)
Figure 1. Planned HIF Global eFuels Production Facilities. Source: RBN
The approach being developed by HIF Global might appear similar to Infinium in the overall scheme of things — produce power from renewables in remote locations, then convert that power into eFuels — but they’re putting their own spin on the process and have partnered with some very recognizable names. Let’s start by looking at Haru Oni, a demonstration plant developed by HIF Chile (a wholly owned subsidiary of HIF Global; additional subsidiaries are noted below) in the Magallanes region of Chile. The plant delivered its first eFuel in December 2022 and is expected to begin commercial production as soon as this month. Haru Oni (red star in Figure 1) is located about 15 km (9.3 miles) north of Cabo Negro near the country’s southern tip. The Magallanes region is known for its prolific wind resources, making it ideal for wind power. (Producers of eFuels typically target areas with plentiful, low-cost renewable power.) Before we get into HIF Global’s overall plans, let’s take a minute to walk through its production process.
Figure 2. Schematic of HIF Global’s eFuels Production Process. Source: HIF Global
As shown in Figure 2 above, the first step is to capture CO2. In the second step, renewable electricity (supplied by a wind turbine in the case of Haru Oni) is used to produce green hydrogen through electrolysis, which separates the hydrogen from the oxygen in the water. The green hydrogen is then combined with the captured CO2 to produce eFuels in a process called synthesis. In the next step, the eFuel undergoes further processing to become carbon-neutral fuels that are drop-in replacements for traditional gasoline and jet fuel. The last step is for those fuels to be used by existing cars, trucks, ships and airplanes, releasing the same CO2 that was initially captured (and which could be captured again, setting up a carbon-recycling system). HIF Chile expects to initially produce 350 tons (65,100 gallons) of eMethanol annually at Haru Oni, which would then be processed into other low-carbon fuels, including 130,000 liters (34,342 gallons) of carbon-neutral gasoline (eGasoline) and liquefied gas (eLG). (The eMethanol could also be sold directly or used as a maritime shipping fuel.)
Go to Cluster
After the demonstration phase, annual production capacity in Chile is expected to scale up dramatically, reaching 55 million liters (14.5 million gallons) by the mid-2020s and 550 million liters (145 million gallons) two years later as additional plants come online. The demonstration site’s partners include Siemens Energy (plant design and integration), Enel (wind generation and green hydrogen production), Enap (Chile’s state energy company), Empresas Gasco (research and development), ExxonMobil (technology) and Porsche (research), which also plans to use the fuel produced there for its Porsche Experience Centers and the Porsche Mobil 1 Supercup, an international racing series.
Porsche Mobil 1 Supercup. Source: Porsche
The demonstration plant is just a starting point for HIF Global. Next, let’s look at what HIF USA has in mind for Texas, where its first world-scale facility is being planned for Matagorda County (gold star in Figure 1), southwest of Houston. The project is expected to cost about $6 billion, with construction beginning in Q1 2024 and production commencing in 2027. Similar to Haru Oni, the production process will use captured CO2 and green hydrogen to make low-carbon fuels. HIF USA said February 23 it is working with Texas-based Denbury to source and transport up to 2 million tons per annum (MMtpa) of CO2 captured from industrial sources. Denbury is a leader in carbon capture, use and storage (CCUS) and has operations in the Gulf Coast and Rocky Mountain regions, and already sequesters more than 4 MMtpa of CO2 captured from industrial sources. HIF also plans to work with point sources within proximity of the facility to engineer and install carbon-capture equipment to source more CO2 supply. To boost its carbon-capture efforts, HIF USA said March 7 that it had also reached an agreement with Baker Hughes to cooperate on developing its Mosaic DAC technology to accelerate deployment at commercial scale. HIF USA said the technology could be deployed at the Haru Oni and Matagorda County locations.
HIF USA is working with Bechtel, Siemens Energy and Topsoe on the Texas facility’s front-end engineering and design (FEED). Bechtel will conduct the engineering and design of the overall facility, while Siemens Energy will be responsible for the engineering and design of its proprietary Silyzer 300 electrolyzers required to produce approximately 300,000 tons per year of green hydrogen at Matagorda. (HIF and Siemens Energy announced March 8 the execution of a manufacturing capacity expansion agreement to ensure the supply of electrolyzers required for the Matagorda project are available.) Topsoe will provide engineering and design for the methanol and methanol-to-gasoline processes, which will combine the green hydrogen and CO2 to produce approximately 1.4 million tons of eMethanol, which would then be synthesized into 750 million liters (200 million gallons) per year of carbon-neutral fuels, most of which will be eGasoline.
Texas is the next step in HIF Global’s plans, but there are additional developments taking shape elsewhere. HIF Asia Pacific, headquartered in Sydney, announced in June 2022 that it had begun development of Australia’s first world-scale eFuels facility in Tasmania (blue star in Figure 1), an island state south of Melbourne. Plans are for construction to begin in 2024 and the facility is expected to produce 100 million liters (26.4 million gallons) per year at full operation. The facility is designed to use water for electrolysis and source CO2 primarily extracted from biowaste. There are no current plans for a facility in Europe, but HIF EMEA reached an agreement in August 2022 with Germany’s Lother Gruppe and eFuel GmbH to accelerate the availability of eFuels in Europe. (Lother Gruppe is one of 10 companies that support eFuel GmbH, an association that seeks to promote new technologies.)
It’s important to note that eFuels producers like HIF Global stand to benefit in the long run from the rapidly growing ecosystem around hydrogen and CO2, with suppliers eager to secure a diversified set of offtakers. Provisions under the U.S.’s Inflation Reduction Act(IRA) have been seen by many as a game-changer in terms of creating a strong supply-side incentive for the production of hydrogen (and other alternative fuels) and the capturing of CO2 via DAC and from industrial sources. The demand-side incentives are not as obvious, but as the production of eFuels grows, so too will demand for hydrogen and CO2.
As we’ve noted in several other blogs, one of the biggest selling points for eFuels is that they can be used anywhere, but they are likely to be most attractive in the California market. California’s Low Carbon Fuel Standard (LCFS) assigns a carbon intensity (CI) score for petroleum-based gasoline and diesel, and their substitutes, after evaluating the lifecycle greenhouse gas (GHG) emissions associated with their production, transportation and consumption. The state sets CI limits on finished gasoline and diesel consumed in California — measured in grams of CO2 equivalent per megajoule of energy (gCO2e/MJ) — with those limits moving lower each year. If a fuel has a CI below the limit, it generates a credit, so the lower a fuel’s CI, the bigger the credit. For example, conventional gasoline has a target CI score of 88.25 in 2023 under California’s LCFS. Under that scenario, eGasoline with a CI of 10 would earn about 64 cents per gasoline-gallon equivalent (GGE), according to the state’s formula, which takes into account the fuel’s CI score and the market price of LCFS credits, currently trading at around $66 per ton of CO2e/MJ. (One LCFS credit represents 1 metric ton of CO2 reduction.) By comparison, a fuel with a CI of 30 would earn 45 cents/GGE, and a fuel with a CI of 60 would earn 22 cents/GGE. Carbon markets like the LCFS in California provide a market value for the low-carbon attributes of eFuels and create the market incentive to decarbonize the transportation sector.
Alternative fuels with low CI scores are likely to play an important role in efforts to decarbonize the transportation sector and HIF Global is betting big on eFuels, with plans to eventually produce 150 Mb/d (2.4 billion gallons per year) across 12 plants — six in Chile, three in the U.S., and three in Australia — which would require 4 MMtpa of green hydrogen production and 25 MMtpa of captured CO2, likely from a combination of industrial sources, biogenic sources and DAC.
“Just a Little Bit Better” was written by Kenny Young, who released a single of it under his name in October 1964. Songwriter Young’s best-known song was “Under the Boardwalk,” a 1964 hit for The Drifters, which he co-wrote with Artie Resnick. Herman’s Hermits released their version of the song as a single in September 1965. It went to #7 on the Billboard Hot 100 Singles chart. It was recorded in July 1965 at De Lane Lea Studios in London and produced by Mickie Most. The song appears as the first song on side two of The Best of Herman’s Hermits LP, released in 1965, and on their 1966 EP, A Must to Avoid. Personnel on the record were: Peter Noone (lead vocals), Derek “Lek” Leckenby (lead guitar), Keith Hopwood (rhythm guitar, backing vocals), Karl Green (bass, backing vocals), and Barry Whitwam (drums).
Herman’s Hermits are an English pop group formed in Manchester, England, in 1964 and fronted by vocalist Peter Noone. Noone was only 15 when he joined the group and was already known in the UK as a featured actor on the popular British television soap opera Coronation Street. The band’s name came from a resemblance between Noone and the character Sherman on the Rocky and Bullwinkle cartoon show. Sherman was shortened to Herman. They were discovered by Manager Harvey Lisberg, who hooked them up with hit-making record producer Mickie Most in London. Most used session musicians on a lot of the records he produced (including future Led Zeppelin members Jimmy Page and John Paul Jones), but Herman’s Hermits played on all of their hit records. They had 11 Top 140 hits under Most’s tutelage. They have released eight studio albums, 10 compilation albums, seven EPs, and 29 singles. The group has appeared in four motion pictures, two of which were promotional vehicles for the band. Nine members have passed through the group since its formation. Peter Noone still does concert dates with a group billed as “Herman’s Hermits starring Peter Noone.” He is currently booked for weekend concert dates in the U.S. going into the summer of 2023.