From the EAH team, welcome to everything about Hydrogen. This is the podcast that explores the world of Hydrogen and its derivative technologies and interrogates how it is changing the world of energy as we know it. Join host Patrick Maloy, principal of the Breakthrough Technologies Group at RMI, Elyssa Eastman, co-founder and board director of Intercontinental Energy and Chris Jackson, CEO of Proteam, as the team speak to some of the most innovative and exciting players in the industry. If you were a fan of the show, we would absolutely love if you would leave us a five-star review for everything about Hydrogen, wherever you get your podcast from. It really does help boost us up the charts and help people to find us. And with that, I'll leave it to the team and let's get on with the show. Well, I want to just say, because I don't think our listeners realize this, how much of a unicorn event this is. We have Patrick, Chris and Elisia, but we've actually managed to get all three of us on the call. How fun is that guys? It's nice to be together, you know? I mean, I know. I still can't see Patrick, obviously, but that's also familiar, so that if he showed up, it might be weird if he was in video and we were all together. I mean, Elisia, we're just going to find out that Patrick's been in AI for the last four years, and that's why he's never had the video on, right? He's just actually been a really sophisticated version of Gemini. Believe it or not, it's been longer than five years, right? So, no, yeah, there you go. I just haven't upgraded to the visual package yet. That's all that this is, right? So, with the early beta testing. I saw the movie last night, actually, which was going to get the title wrong, but it's a good look. Have fun, don't die. If you haven't seen it, it has some interesting parallels to our AI universe, and it's apparently very well regarded director and not, but certainly I am not that version of AI at least. So here we are. What can I say? Good AI, but still friendly. We're really sure to hear. Yeah. Well, look, non-AI Patrick, what have you been doing in the world of hydrogen? I've been for the last couple of weeks. What should I listen to as know that you've been up to? I mean, what has been going on in the world of hydrogen? I mean, in the funny sorts of ways, we continue kind of on from a rather, like 2025, into a somewhat, it seems that leads to a little more optimistic 2026. So I think we're seeing some movement, I think, on a few different fronts, but also more generally, obviously we've seen kind of conversations, I think we've had, like, unifer kind of with their announcement, but other kind of pieces going on. So I think what have I even been doing on hydrogen? I mean, I spend most of my days looking at hydrogen and ammonia pieces of work. So Chris, if you want to go into the details of an ammonia nitrate manufacturing facility, I'm very happy to do that. I think the other aspect that we really got to get to here, folks, is the conversation about deals done now with some places and non-subcity environment and what that actually looks like and how things like EACs start to play a role. So there we go. So maybe I'll pass the baton here, at least you're off mute. What have you been doing? I've been doing a lot. I mean, really, non-stop travel. As you know, one of the portfolio companies, Chippex, is taking up a lot of my time, but in a good way, really exciting stuff. Just got back from India. AI is definitely going to be a big part of their future. I heard a disturbing statistic about data centers and that sort of the AI sector. They now expect that aviation will be outstripped by data centers and AI in terms of pollution. So that more pollution will be created by these data centers. I find it particularly irritating because it's not all necessary at all. I'm not just saying that because I have a company with four products that will reduce the amount of energy required in every data center for semiconductors and all sorts of different types of chips, but basically people are really just taking the mickey out of the government around the world. I mean, I don't know if you've heard this about AEP and Ohio, but they basically did, they said, "Okay, a lot of data centers have been knocking on our door asking for allocations, mostly gas, mostly methane, so nothing green, really." And they've received 80 gigawatts of demand. And they said to these operators, "Okay, okay, fine. Yeah, you want that 80 gigawatts, that's fine, but for at least 80 percent of it, so if you ask for a gig, you're going to either take 800 megawatts or you're going to buy it, one or the other." And the demand went down to like two gigawatts from 80. So most of these people are just greedy little, you know, just energy grabbers who are saying they need all this energy and saying they need all this energy is forcing utilities to produce more energy and to invest in more energy, all of which is fossil fuel in a lot of cases. So you know, that is really disturbing. So I'm really like I'm really interested in hydrogen because there are going to be these data centers. They obviously can have a microgrid. They obviously can use things like bass and hydrogen and all these different things along with wind and solar to have greener, a greener footprint, but also they need to be taking advantage of all of these energy efficiency tools, not its art products, but others. And just in general, wasting less. I mean, God, we went from, like, there's just no bars. Everyone is just talking about it. This is the new reality that you can just, you know, use as much fossil fuels as you want. And it is ridiculous. And in a couple years, we'll be back to normal and people will want to, you know, to reduce their needs. You can think just for cost alone, people would be like, let's find a way to do this without, you know, purchasing so much energy. And the greed outbranks, like almost all other thoughts. It's amazing because I think every day this week, someone has talked to me about hydrogen and data centers, right? And I think interestingly, one of the reasons it's coming up is because everyone exactly to your point is going, I'm bypassing the power grid and I'm going straight to natural gas grid. And everyone is going, well, this is going to blow all your climate plans up. There was a, for those who are listening, I'll listen as, you know, today is the 27th of February. The FT is just done in headline editorial today on data centers, AI, you know, there was also a header on Monday this week by the times in the UK also talking about this and saying that it's a major concern and that Ed Miliband has been challenged as the energy minister in the UK on exactly this question. How is AI compatible with, with decarbonization? So this theme is very, very live. And of course, the answer for everyone in that space right now. And I guess this is the challenge for the hydrogen industry. Is it an opportunity or is it greenwashing? And I think we've got to find the line on that is, you know, is there a legitimate case to make to say this is actually about providing access to something that is going to be a critical part of the modern energy system and a critical part of where we go? And actually, as some people have said, especially in place like Europe, maybe more so than the US, one of the reasons why power cross have been going up is because as Europe has been deindustrializing, you have the same cost base, but you don't have the same demand. And so actually adding demand to the system should actually reduce costs because you're sharing some of that over, as long as you're using the brownfield sites and the existing connections and you're not just going to Greenfield and and somewhere else. So I think it's going to be a super interesting nexus and this theme keeps coming up. But of course, the other link theme is nuclear, right? And how does nuclear play into this and what is the role of nuclear? And I think maybe on that topic of nuclear and sort of energy transition, I guess this week is a fascinating intersection of the things we've discussed because Alistair has background in computer science. So you know, has been long thinking about sort of AI and computers and what that means. But he's also very passionate about sustainability, about green fuels and about what we can do to decarbonize, you know, and how effectively all of these different trends come together. So what do you think team? Should we get him on the show and get him to tell us a little bit about who he is and what carbon neutral fuels are trying to do? Asda, great to have you with us. Welcome to the show. Thank you. Long time no secrets. Indeed, indeed. Well, look, there's loads of topics and questions. So why don't we dive right in and Alistair? I can see that you're very excited to jump in. So why don't you kick us off for today? Great. I am very excited. I know the least about you and the company. So I'd like to start with the basics who are CNF, maybe what's the CNF stand for that could be helpful. And what is your company's main objective? What is your purpose for being? Yeah, of course. Normally I'd be here with my co-founder Sophie, but unfortunately she's in Spain working remotely and has come down with food poisoning, but I will do my best to fill in for her. I guess this all started a very long time ago in the sense that I was one of those kids that used to shove knives and forks into every plug socket and shove crayons down the back of electric heaters and stuff and just had this insatiable appetite for information and figuring out how everything works. And in my final year of primary school, the teacher told us about climate change. And I imagine for a lot of the other kids they went outside and started playing ball, But I--
I was like, "What? We need to solve this." And I've always wanted to fix problems. And that kind of started my interest in this subject. But I had a couple of detours along the way, 'cause in the 1990s, when I was a teenager, the internet kind of came out. And I fell in love with that. I ended up getting accepted into Imperial to study computer science. I still had that energy interest, while I was at university. And I learned about this thing called Peac Oil, which was this idea that every oil well follows a production bell curve, and it ramps up, it plateaus, and then it kind of goes down. And if you kind of map all the wells in a country, you also get a bell curve. And the guy that kind of came up with this theory, Marion King Hubbard, he predicted that the US would peak in the 1970s, and that actually did happen. And he predicted that the whole world would peak in 1995. And I kind of learned about this around the year 2000, through a website called The Oil Drum. And there were just huge numbers of people that were kind of, I guess, doomers about the impending doom of civilization. Because energy is involved in absolutely everything that we do. Do you guys love stats? - Of course. - Cool, I love that stuff. - You love us, yeah. - Exactly, probability is green on, right? Radicals, come on. - Great, well, did you know that for every, one calorie that you eat in the US, it takes seven to 13 calories of fossil fuels to deliver that one calorie to your plate. And in the UK and the EU, it's more like six to eight, but it's still an insane ratio. And fertilizer, of course, is made from ammonia, which is made from hydrogen that is produced from fossil fuels today. And hopefully that will change with renewable electricity and electrolysis. But today, around a quarter to half of the calories in your food actually comes from fossil fuels. So that's fascinating, but also kind of terrifying. And people, obviously, it didn't happen. And we're all still here. And the technology advances horizontal drilling, fracking and everything, and have been developed. And technology always marches on. And the US is now a net exporter of oil, despite having sort of peaked and declined. It's now at the top of its game. And all that just fascinated me. But I did study computer science. And so after I graduated, I ended up starting a cloud computing company. And we kind of did some IT management consultancy. And around that for 15 years, and sold it in 2021. But whilst I was running that company, I was still interested in energy. And I did what every normal person would do. I started attending nuclear energy conferences as a hobby, including thorium energy conferences. And learned about nuclear. And if you want to solve climate change, everyone was talking about renewables. And renewables are great, but nuclear is a bit edgier. So I thought that was quite an interesting thing to kind of learn about. And it was through that route that I ended up attending COP26 in Glasgow in 2021, which is where I met my business co-founder Sophie. She was also at COP. And we were both there on the nuclear ticket, as part of something called net zero needs nuclear. And we were running around evangelizing our religion, basically, telling everyone that would listen. We need to start doing more nuclear. I think nuclear has kind of-- that's a whole other subject. But renewables seem to be where it's at with China and huge, enormous manufacturing of it. But that's where I met Sophie. And Sophie was brilliant. She did a sort of live interview on Sky News, talking about nuclear. And the interview was just grilling her crazy about, what about meltdowns, what about this, what about that. And Sophie was just cool, calm, and collected. And I thought that was brilliant. And we just happened to sit next to each other over dinner one evening. And she said she wanted to start a company in sustainability. So once my own out from selling my company was done, I approached her about doing parrots of liquid e-fills. And she said, yes. So yeah, so that leads us very neatly and nicely into our next question, which is, who are C&F? And I suppose you've kind of somewhat covered the-- the how you got there. But what are the missions and objectives now that you're in full flow having had that dinner conversation evidently formed the company that you had envisaged? Yeah, absolutely. I guess there's a huge clue in the company name. And our mission is basically to replace fossil fuels with a carbon neutral replacement. And the idea is that you don't have to change any of the equipment. If you swap the fuel from a fossil fuel to a green fuel, then you're immediately decarbonized. And our primary focus today is on synthetic e-fills, rather than biofuels. And I'll talk a bit about how we make them later on. And the original concept was to do this across all verticals, including road transport and marine, et cetera. But where we've landed is on sustainable aviation fuel. And the reason for that is that electric vehicles have many different options. And hydrogen is an option. But the one that seems to have got a lot of traction, obviously, is electric battery vehicles, which are very efficient. But aviation doesn't really have that many options. And batteries are too heavy. And hydrogen, you need a complete redesign of the plane. And I think one day we will potentially see hydrogen planes. But because it does require that whole systems redesign, the time horizons are quite long. And so the short term solution for aviation is to look at fuel swap. And so there's a bit of an accepted mind share on this within the aviation sector and within governments that the way to decarbonize aviation is through sustainable aviation fuel. And so that's what we've been pursuing. And I guess I could go into a bit about the company and the project that we're working on, if that works. Yeah, I mean, I think what would be great to understand is, as you say, it's kind of a-- it is that interesting space. I mean, maybe just before we kind of get into the project, you mentioned your deep passion for sustainability and this sort of, as a kid, to think about climate change. What's the sort of driving force objective? I mean, because is it sort of that acceleration of e-fuel? Is it sort of a broader decarbonization? Did you ever think that you'd be working in something where the main thing you're trying to decarbonize is people flying on holiday or flying for work? No. And it's a fascinating space aviation. I think the aviation sector are very-- how can I put this politely-- it's its own world and they love it. And they're very into it. But it's quite closely guarded. And we've had to kind of come into that. But the whole-- I mean, to be honest, I wanted to build a nuclear reactor. That was my original thing. I thought that would be really fun and cool. But unfortunately, I was stuck in my IT company for too long. And in the meantime, loads of startups came into that space doing small modular reactors and advanced reactor designs. And the opportunity's going to dried up. But one of the messages that kept coming through that that nuclear angle was this, what are we going to do with all this cheap abundant energy that we're going to have? That hasn't happened with nuclear sadly. Maybe it will happen with renewables. But they kept talking about parotoliquity fuels. And it was kind of heralded as potentially this killer app of if you can turn nuclear energy using that process heat and that electricity into fuels, then you've got this additional angle of decarbonization beyond just electricity. And I actually saw a video by the US Navy where they had a kind of skunkworks project where they were looking at taking seawater and extracting the CO2 from the seawater because about half of our carbon emissions are just sitting at the surface of the sea and also making hydrogen from seawater by electrolyzing it. And then combining that CO2 and hydrogen to make a fuel. And they'd actually done this in the lab with seawater and had flown a radio controlled airplane on it. And the potential use case for this was they've got aircraft carriers with small modular reactors on them if they could make fuel on the aircraft carrier. Then their fighter jets can fly on that fuel and they don't rely so heavily on refueling ships and so they can be fully independent within a kind of strike group. And that fascinated me as well. It's like, wow, that's like alchemy or magic. And that was kind of the genesis of the whole power to the liquid angle. - Well, look, I mean, I think it's super interesting. And actually of course, if we have my chief operating officer, John from Prostium here, he'd say, we were doing all this 70 years ago 'cause that's how nuclear submarines operate. That's how you create oxygen on a nuclear submarine is you take the, is it fundamentally you're taking that seawater splitting it and that's how you breathe and that's how you process the CO2 by creating fuels although as you say, it's a skunk work thing you don't talk about. But look, tell us a little bit about your flagship project and some of the customers because you've, you know, you've spoken about nuclear. And as far as I remember your projects in the Northwest which for our international listeners, they probably don't know the symbolism of that in the context of nuclear. And you've sort of alluded to obviously aviation but haven't sort of given away necessarily who or what part of the aviation supply chain you're working with. So it would be great if you could just share a little bit. When we started the company, we kind of looked at this in a holistic way and it basically, you know, if we wanted to do power to liquidy fuels, what's missing? And we didn't know what form the company would take, you know, are we gonna be a technology company? Are we gonna have to put on some lab codes and be in a lab developing new ways of doing this and new approaches? But what we quickly realized was that a lot of the technology already exists today and a lot of the technology's been used for a very long time. You know, Fisher troughs been around for, I saw an article by a partner that we're working with talking about a hundred years of Fisher troughs. So yeah, the analogy I kind of use is a bit like EVs in that there was nothing stopping anyone doing EVs and in fact GM did do an EV in, you know, long time ago, I think it was in the '70s or '80s. But, you know, all the technology was there, it just hadn't been assembled and put in the right order.
and the policies and wind weren't behind them on the EVs. But the wind is behind us now with the climate change angle. And so we realized, well, if we don't need new technology, and we just need to put it together, then effectively we are a project developer. And we were approached by a company called I/O Consulting that do early stage engagements on developing projects. So following a front-end loading process, feasibility studies, pre-feed and feed, being front-end engineering design. And that's kind of the oil and gas sector approach. If you want to design an offshore platform or an ore refinery, you want to do as much design in the computer early on and get an accurate cost estimate before you go and execute that and build it. And we jointly applied with them into the UK's Advanced Fuels Fund, alongside a direct-air capture company called Mission Zero, to do a quite small demonstration scale project that was around 7,000 tons a year of sustainable aviation fuel. And it's probably worth talking about the Advanced Fuels Fund. The UK government has net zero enshrined in law, and we need to reach net zero by 2050. And the government departments are taking that quite seriously, and the department for transport is also taking that quite seriously. And if you look at the kind of decarbonisation of road transport and the gas network with heat pumps, et cetera, there's a general trend towards net zero, which is absolutely brilliant. But aviation, because of its limited options, if you project out to 2050, today it's something like 2%, but it was becoming quite a large percentage of total UK emissions unless you tackled that. And so the UK decided, well, we need to do something about this, and they came up with the Advanced Fuels Fund. We applied into Window 2 for 1.4 million for this project, the small demonstration scale. And this was our first major win. We were awarded 1.4 million, and we were over the moon. And this was for a project that we named, and thanks to ChatGPT for the help in coming up with this moniker, ASAP DAC, which stands for Advancing Sustainable Aviation, via Power to Liquid and Direct Air Capture. Yeah, we've been working through that for sort of 18 months, starting out with feasibility study. I know I know we're very good. Once we actually won the award, they said, well, let's step back and evaluate five concepts. Some of them were variations on that 7,000 tons a year. But one variation was the 25,000 tons, kind of more of a commercial scale facility. At the end of the feasibility study, it became apparent that a kind of expensive small demo was going to make fuel that was so expensive nobody would want to buy it. And so we pivoted to doing a kind of small commercial scale at 25,000 tons. That led on to the pre-feed, so the next stage of engineering, and we carried that through. And then after that, we applied into AFF Window 3, and we were awarded 6,000,000 to do the feed, which is where you start getting into the more detailed engineering, you develop a 3D model. And at this stage, we'd secured land. Chris, you touched on the working-to-nangle. It's not the first place you'd want to necessarily put a SAF plant, because if you look at our competitors, most of them are in T-side or humbicide. But we are an E-Fuel's project. And one of the things that we need is a large grid connection. And to make the 25,000 tons a year of SAF that we need, we need 100 megawatts of electricity. And as you'll have heard from everyone else that's trying to connect to the grid, data centers, et cetera, it's very hard to connect to the grid. And there's long cues. And the UK government's trying to do something about this with Connections Q Reform, but it's taking its time. And we were able to engage with the local distribution network operator. And they said they could do it by 2031. So we accepted a grid connection offer from Alicis, North West, and for a site in Wilkinson. And that's been great. And it's quite an advantageous site, because it's a brownfield land. It was formerly a chemical processing facility. It's next to a water treatment facility. You can get water, no problem. A company is not sure of water. And we do need a lot of water for the SAF. And it's also next to a paper mill. And we're in discussions with them potentially one day using the CO2 from their biomass CHP plants. One thing that's worth mentioning is that DAC, missions are a UK-based company. They're backed by breakthrough energy ventures. They've shipped three DAC systems, which is amazing in this industry. But they're doing that at a relatively modest scale, because it's a new technology. And so we decided to keep the DAC at the same size, which is 10,000 tons a year. But to supplement that with 100,000 tons of biogenic CO2, we're looking at getting that CO2 from a range of sources, but places like the biogas industry in the UK who have access to CO2. It's quite easy to get hold of that CO2, because they extract the methane from it. And you don't need to worry too much about too many contaminants that you'd get with post-combustion. And then another company that's looking at capturing it from distilleries. And so we're quite advantaged in terms of feed stock for the electricity, the CO2, and the water. You've also announced some partnerships with technology leaders. You mentioned earlier about Fischer Trupps, and you've announced a partnership with Topso, obviously, they have a long record in that. And also, Honeywell, Johnson Matthew. Could you tell us a little bit about why you decided to work with them and what drew you to that solution and how you're working together, essentially? Yeah, absolutely. Well, when we started off, none of them would speak to us, which was fascinating. They basically told us our plan was when we were trying to do the 7,000 tons a year, they were like, it's too small, not interested by. And then we started to engage with the smaller vendors, and it quickly became apparent that they weren't bankable. And I think that fed into our decision to go larger. And it was quite fascinating. As soon as we were made at larger, suddenly they started speaking to us and became very interested in the project. And that was very counterintuitive for us. We were wanting to take baby steps and start off small, but it was very much a go-large or go-home. And we're very proud to be working with Topso. They're an incredible Danish company with a fantastic science and engineering background. And they have a, we think, world leading high temperatures solid oxide electrolysis process. And something that's quite interesting about their process is that they can not just electrolyze water to produce hydrogen, but they can also electrolyze the CO2 to produce carbon monoxide. And we need that carbon monoxide for the phycia-traffs process. So for the phycia-traffs, we chose Johnson Matthew. And they co-developed their FT with BP. And they've been doing this very long time. And they've invested over 500 million developing this technology. So it's a very mature technology. It's been selected for other staff projects. One of the key things we wanted to do was make this project as bankable as possible and work with technology providers that have a proven track record. And their FT technology is really high efficiency. And one of the things with the FT is that it's exothermic. It kicks out a lot of waste heat. And this also plays quite nicely with the choice of our electrolyzers. If you have a source of waste heat that you can pass back to this solid oxide electrolysis to raise steam, you can get higher efficiencies. And so we'll see a 20% to 30% efficiency gain from doing that versus low temperature. Pam or alkaline. And the FT reactor, it produces kind of a range of hydrocarbons. Everything from heavy wax is through to light hydrocarbons. And you need to convert these into a form that can be used in the jet engine. And jet engines run on caracene or jet A1. And so we need to take that FT and upgrade it. And for the upgrade, we've selected Honeywell ULP. And Honeywell ULP, I think over 4% of the refineries on planet earth are ULP refineries. And so they've got a long track record in this. And that upgrade will produce ASTM D7566 certified fuel. You can't just put that straight into an aircraft. It's very pure. It doesn't have any aromatic compounds. There's no sulfur. And with today's engines, it's just too clean. And they actually depend on some of the impurities to act as a kind of a lubricant. So you can blend it up to 50%. And then it can go into a plane. But that's absolutely fine because the SAF volumes relative to fossil jets. You're going to starting off at like 1% or 2% to begin with. And Rolls-Royce and others are working on engines that can take 100% SAF. So by the time we're sort of approaching that 50% mark, we'll be able to put it straight into planes. One final thing that's worth mentioning is that by stringing all these technologies together, as part of the advanced fuels fund, we have to complete one of these enormous spreadsheets about our GHG emissions calculations. And they kind of scrutinize it quite closely because the GHG emissions determine the number of certificates that you'll get under the SAF mandate. And so there's an element of companies potentially looking to game this, to receive more certificates. And they're very keen that it's filled inaccurately. And we filled ours in. And with their spreadsheet in our process, we can get 97% emissions reduction versus fossil fuels, which is market leading. And that's for your SAF, not your SAF combined with the other fuels, with that the aviation will actually run on, right? So-- That's right. OK, just just want to make that clear. But that's great. 97% for your SAF is amazing. So given the kind of the spreadsheets and the kind of compliance requirements for government aspects, I suppose one of the questions we should probably ask here is, do you think that government support, UK government support, for soft through the RSM and the AFF competitions?
is enough, merely sufficient, good, bad, and more importantly, just fundamentally, does it enable companies and projects like yours or are you still making up the gaps? That's a great question. Chris and I attended Saf Investor this week, Conference in London, and it was very well attended. There's a huge number of people there, and there's a huge interest in the industry. But despite being called Saf Investor, though you kind of weren't so many investors there. And I think there's a prevailing sense that development capital in this space is quite hard to come by. And I wouldn't say it was easy by any stretch, but we were able to get our seed capital relatively straightforwardly. And I guess that's because the amounts of capital are a bit smaller at that stage. But as you sort of ramp up the development expenditure into the tens of millions, you do face this value of death, where you've not fully de-risked the project yet, but you need to start spending the proper money to do that. And I think investors generally try and shy away from that stage, presumably waiting for, to see which companies do cross the value of death. And then once they have, that's when they want to invest. And I'd say that's where the government has been fantastic, actually stepping in and helping companies cross that value of death. And so the Advanced Fules Fund has been basically designed to do just that and fund the development capital. AFF Window 3 was a bit shorter than the other windows and a smaller pot of money just due to the change of government and also the way government works from a funding standpoint. So it didn't provide all the development capital that companies need to kind of complete their projects, but there has been an announcement that there will be a future Advanced Fules Fund competition, possibly in a different format this time to try and be a bit longer term thinking we've heard. So we'll see what comes through there. But another big mechanism that the government's looking at in addition to the AFF mandate, and I'm sure the AFF mandate may have been discussed before, the revenue certainty mechanism is something that the government is trying to do to help companies bridge the next challenge they'll face, which is how do you raise the debt and the equity to build one of these things because the AFF projects are hundreds of millions of pounds potentially into the billions. And if you don't know what your future revenue is going to be or there could be an oversupply, then you just can't, is a project not bankable. And the government's kind of copying what they did for the wind sector with the contracts for difference for wind and also the hydrogen sector with the hydrogen allocation rounds. And they're basically going to provide staff producers with an auction and we'll bid in with a strike price and then the low carbon contracts company will then award contracts. And it will be industry funded rather than taxpayer funded. So what will underpin this is a levy on aviation fuel suppliers. And this scheme, it's essential, the government seems committed to getting it through this year. So they've been great, I have to say, the UK is really a leading place to do staff and we're seeing it being copied certain elements in other countries like Australia. And as you're going about getting financing for the project and obviously offtake is always the most important that that's really the key to it all. But you are working with with Topso. Are you working with any export credit agencies like IFO and Denmark or any of these people who can reduce the cost of vendor financing? Are they being helpful? You've hit the nail on the head with Topso. They have put us in touch with the Danish export credit agency IFO. So yeah, we are looking at things like that. We're still relatively early stage in that we're in feed at the moment. We will be taking final investment decision next year. And so those conversations will come more important over the next year as we complete our feed and move into the next phase of the engineering. Yeah, super exciting. And look, I mean, I think as you say, probably, you know, that staff conference this week, Saf Investor was very interesting. There was a lot of content covered. But it's also being quite a busy year, I think, in terms of sort of carbon neutral sort of e-fules in any way. Right. There was also an offtake announced by another guest that we're hoping to get on later. This year, ET fuels that announced one of their first offtakes for their E-Methan Old Plant. And there's a couple of others I know who also are starting to see slow movement around Saf. One of the weirdest ones I saw is that Bentley is apparently signed a Saf offtake, which I didn't realize. But apparently it's because some of their high end customers like to fly their Bentley's in immediately. And so they're willing to pay a premium for for Saf to carbon neutral fly their planes across. So it feels like it's an interesting time. And I thought maybe that was a nice way to wrap up what's been a really fascinating conversation, which is by asking you, you have a set of crystal ball gaze a little bit with us and with our listeners. And just to share where you see the most traction in terms of carbon neutral fuels. And what you see is some of the sort of future headwinds or even tailwinds for the sector as you go forward. Yeah, it's an interesting one. We've seen, I think the entire industry, seen with the changes in the US, that there is a bit of a headwind on this front. And at Saf investor, I saw somebody calling the term "movement need to stop calling it sustainable aviation fuel," but start calling it sovereign aviation fuel. And I think the energy security angle is quite important. And it's something that the UK government is aware of. And today we import most of our fuel, but with the events happening in Ukraine and around the world, I think that focus on domestic energy security is an important one. And obviously with Saf produced in the UK, that's a big win for that, that domestic energy security angle. In terms of offtake, we've got four LOIs in place with quite different entities, ones in airline, ones a fuel marketer, the other is an aggregator, forget what the fourth one is, but we've got a fourth one. So there are movements in that space, but we have, it has been difficult and we have seen a lot of weight and sea, especially with e-fuel, because e-fuel are quite a bit more expensive than, say, biofuels. And people have asked us, you know, are you mad for doing e-fuel in the UK, which has some of the most expensive electricity in the world? And we don't think so. The UK sees a huge amount of innovation. Our electricity has to be additional and renewable, and that means that we potentially qualify for the British industry supercharger and British industry competitive scheme, and that will reduce the cost of that electricity, and that kind of feeds into that government support element there. So, no, I'm really optimistic. The DFT knows what needs to be done. They've got a great dialogue with Saf producers. They've been supporting Saf companies. You know, the UK is a fantastic place for innovation. A lot of technologies developed here. But big question, I suppose, is can the UK, okay, it can establish a staff sector, but can it maintain it long-term and remain capacitive in the face of imports from places like China once they get up to speed? But it's potentially an export opportunity. We're looking at projects beyond the UK, and so we can be a UK-based company taking UK-based technologies like the Direct Air Capture from Mission Zero, or the FT technology from Johnson Matthew, and actually building these plants abroad. And then, at that point, you know, we start speaking to the UK export credit agency, and that's very exciting. And one final thought is that the UK offshore wind sector has been a huge UK success story, and that contrast for difference mechanism was key to doing that. DFT have recognised this, and so that revenue-sertied mechanism that's following in the same footsteps, I think that means that Saf in the UK can be a huge success story as well. I don't think government could have asked for a nicer pitch from a more supportive audience, so I hope they give you some nice news at the end of this year, Alistair, for all of your work, and certainly the idea of being a, you know, the idea of the UK being a place where people learn and innovate and deploy the first of a kind technologies, and then we become, you know, to use that cliched expression, a knowledge powerhouse that exports, that knowledge capability, and the, and licenses that technology overseas. I know that's very much part of the UK government strategy, and so it's so exciting to see a British company helping to lead and drive that. Just want to say a huge thank you to the team, it's been a pleasure being on the podcast, and hopefully we can come back in a year or two's time and update everyone on how we're getting on with project styling. Thank you. So, Alistair, what do you think? Very interesting. I think it's great that, I mean, he started relatively, I mean, not that long ago, so he's basically only been in sort of a bear market, or, you know, in terms of this, of using hydrogen-based fuels, or, so I think it's nice to see that he's gotten along and then things are moving forward, and he has some great partners, and that the UK has been supportive. I thought it was interesting. I mean, he was talking about SAF being sort of part of an energy security policy, and I think, I think most people don't really understand the way that aviation fuel works, but you can really only influence your home, your home base, right? Like, BA can have 100 percent SAF, like, that they can decide to do that. But when they land in Dubai, or they land in Beijing, or wherever the hell they're landing, whatever it is on the ground is what they get. And if it's 3 percent SAF, that's what they get. If it's 50 percent, that's what they get. So, I'm just not how, like, given aviation requires mostly leaving the country, and then getting as a resource outside of the country, I'm just not sure SAF is like going to have the most influence on energy security. It's going to be things like renewables that we
We don't have to import because we've got removals here on the ground that can always come back and with things like heat pumps and all sorts of things that make sense to create for energy security to create them at home. I totally get that argument. I just wonder if staff is a bit of a stretch. I don't know. At Dysalicia, it might be where we disagree. An interesting case study of this right now is Cuba, which has been embargoed effectively. Venezuela was its main supplier has been embargoed. As an island, it's not really been able to import a lot of critical infrastructure because none of the planes can fly because there's no domestic source of jet fuel. People don't realise this, but the UK is the third biggest jet short market in the world. After the United States and Russia, actually, the UK is the biggest buyer of jet fuel. One of the biggest importers. As an island, there's a really interesting headache, which is that we import a lot of things by air. We joke during the interview about bent these being flown out of the UK, but actually a lot of UK goods are very high value and a lot of stuff is flown in and out of the UK, including food. A lot of things like raspberries or blueberries are air shipped into the UK. So, suddenly shutting it down is quite problematic. You've already seen the British Royal Air Force at Lossi Mouth, which is our airbase in the northeast of Scotland, which is where all the RAF intercepts of Russian bombers and strategic aircraft that come over the Arctic. They've already been buying SAF fuel up there to actually have access to sustainable aviation fuel. A, because there's a big carbon footprint, but B, because they are thinking about, you know, it's not going to be 100% if you're absolutely right. Let's see it clearly. We can't cover all the planes in the UK with SAF and you're right, we do fly overseas. But, you know, actually having 1%, 2%, 5% to be able to give some level of security internally. People are thinking very seriously about it. And the other weird one, someone pointed out to me, is that most flights are unsubsidized in the UK, which is unusual for transport, because we subsidize buses, we subsidize trains, we subsidize fairies. But there is one category of flights that are subsidized, and those are mostly the internal flights. And this is in places like Scotland and in places like Wales, where in order to allow rural communities, especially island communities, to remain connected, the government does subsidize flights. So, especially in Scotland, this is actually a very topical thing. But it's been a big debate, which is your subsidizing flying, which has a big CO2 footprint. But it's also about communities, it's also about access, it's also about, you know, you can't get medical supplies or food or a lot of things into these islands during storms, unless you can fly, because you can't use the fairies. Long-drying rides here. There is interestingly enough also an argument that's coming in around well, if government subsidizing transport, like it's subsidizing zero-mission buses or electrification of rail, then maybe it should be subsidizing at least some part of domestic aviation, where there's also a government subsidy that's coming into it. So, I just wanted to put that perspective out there, because I think it's interesting. I think it's a really, really strong point for the UK in particular, that this might be an energy security move, because you do have to import it all. In general, though, for the rest of the world, basically, here are the whims of the rest of the world, and whether they've decided to decarbonize. So yeah, I think we're integrated. Don't disagree on that. There's an amazing statistic from the Saf Investor Conference this week, and then I want to bring Patrick in, because I think it touches on something that I feel Patrick can comment on quite well, which is, there's also an interesting policy debate around what are we actually trying to do here globally? If this is really about the least amount of money for the most amount of carbon abated, one of the panelists, Stuart Stewart, who's the CEO of Nova Pangia, was making this point, he was saying, if it's just about being the cheapest bank for bulk, why don't we pay people that produce things like, you know, UCO, cooking oil that goes into heifer to use it where it's made? Why do we bother shipping it all the way across the world to fly exactly as you say, when you could just pay to use it in country? You know, if that's your main thing, why not do that? And then, you know, if you really want to have companies like CNF and Honeywell commercializing in the UK, or businesses like OXCCU or Firefly, or, you know, all these others in the UK, you know, why not, you know, pay, again, why not ban imports and say, well, we're going to do it domestically and it's a domestic-only subsidy because we want to commercialize. And we're in this kind of weird halfway house. And that leads to a question I have for Patrick, which is that the big theme of this year seems to be all the American developers and Canadian developers saying they're going to export to the UK. You know, I think I've met five companies now in the last month that are all saying, you know, North American companies, their entire business model as exports to the UK. I wanted to pick up on that and say, you seeing from America that there are more developers going, you know, actually, the IRA is now stable enough that I can probably earn some credits on it. And I think there's a market in Europe, so I should go for it. Or do you still think that that's a bit of an outlier position? A lot to unpack for some producers. I regret it will matter and be material to projects. But and they're still, you know, in some cases funding up in the air and there's like lawsuits and things like that. So, so project by project a little bit. I think when we take off perhaps to remend it the UK specific lands, export markets are certainly attractive. And certainly a target right now, especially, you know, thinking of large projects, Gulf Coast Proxima, there's a lot of a lot of interest or an export there. I do think that we have, I should we say, a kind of an internal pressure as well here, where would the molecules producers writ large have also pivoted to supporting some of these data centers that I think at least you were speaking about. There's been a number of kind of efforts to kind of move the electrons back towards that market because the PPA premiums are so high right now. Take up 100 different perspectives on how credible that is and, you know, great integrity, challenges, et cetera, et cetera. But I think at the point here, you know, this comes back to into which markets are going to pay the premium that makes the project viable. What kind of credits and capital kind of costs are you kind of projecting. And I think it's worth flagging for folks listening, like one of the challenges in probably last calendar year is that for a big portion of it, nobody was really exactly sure what was cut, what wasn't cut, where different kind of strands kind of live, which funding was being withdrawn from hubs, et cetera, et cetera. And that just uncertainty was, I would argue, dramatically more disruptive than it's a certainty of knowing you don't have something. So, you know, I always remind everybody that I work with, that, you know, six or so years ago when we started doing hydrogen work, there were no, there was no 45V, there was no hydrogen upfunding, there was no moonshine, there was no dot, dot, dot. And there were still viable projects. And that remains the case. And then when you talk about, you know, whether it's, you know, Japan, Korea, whether it's, you know, the UK or Europe, you know, any market then potentially offers a premium in pricing becomes a potentially viable option. And then you're down to moving and converting costs, right? So it's going to be, I think, a little more dynamic, but I am not surprised that developers who feel confident in their projects and maybe aren't looking at that, you know, PPA style market around the data centers might be more excited right now about looking at the export markets as long term viable markets. And also, you know, to the point that there's good conditions in those markets for selling, yeah, I think they chase it very aggressively. So it's a rather dynamic moment. Let's put it that way. And I think fundamentally, you know, a lot of like a lot of developers are still building projects, they're reworking in many cases of the financing on a lot of these projects, but there's also a lot of other aspects that are kind of kicking in at the moment. So there you go, Chris, that's an around the world response to a question of it specifically UK. I think UK and is the export target markets at the moment. But the proof of the pudding is in the eating the contract, off take contracts and the actual viability of kind of bankable, kind of, uh, provable revenue, uh, or provable revenue being bank making bankable projects is the next kind of tier on the challenge. Little bit of politics these days though, between Europe, UK, yes. I didn't know that. Oh gosh. Just in the last, uh, I think four weeks. I mean, maybe, maybe since Mark Carney made his statement, there's just generally been a, you thinking, though, US is probably not our best friend, at least not right now. And it seems like they were closer to Putin than they are to us. So those markets might be difficult to penetrate, at least in the end drum, but who knows? It seems like the US changes policy and statements daily. So we'll see. Yeah, we will see. But I think one thing that will be, will be kind of interesting is, you know, you speak about it before, you know, politics does mean that something like aviation and marine are both quite challenging, right? Because they are drop in fuels and it's a global market, you know? And so I think it's an interesting one here, isn't it? Because I think for shipping, the whole world was really relying on the IMO, you know, obviously Panama today has just announced that they're, you know, less likely to sort of support some of the latest IMO rulings, which clearly appears to be pressure from the United States, you know, which we've also seen in terms of control of the Panama Canal. So clearly there's already sort of. more pressure from the US current administration to challenge on the shipping side of stuff. And that probably is a headwind that's going to continue. And then on the aviation side, you kind of have this weird dynamic where you have this mandate in the UK, but you also have mandates now in Europe, you have mandates in Singapore, you have mandates in Korea, you have mandates in Japan, probably a mandate in China. But it's all kind of hodgepodge. And then as you say, let's see, this is sort of weird dynamic of, you know, the plane doesn't just fly within the country, it's flying between all these different points, you know, and I think the latest statistics from the UK's Department for Transport is that while we doubled the amount of staff consumed in the UK, I think it was nearly 300 million litres of staff consumed in the UK last year, 70% of that was used cooking oil, UCO from China, essentially. So, you know, it's also an interesting thing of how long does that continue? And then, you know, that's also used for HBO, for trucks, that's also being, you know, considered for shipping. And at some point in the Chinese, we'll use it. So, yeah, politics and international trade and energy are never far apart. And I feel like, you know, this year, particularly with the energy transition and with so many things in flux, because 2030 is not long now. It's never been a more interesting or exciting time, actually, to kind of go, it is a bit now or never. Or at least from my side, I don't know how you guys feel, but it feels like this is the year where stuff is going to happen and we're serious about 2030. It's a bit of a dual-die moment. It does look a little bit sunnier in Australia and in Asia, I must say. And, you know, not just because of the time of year, the policies are still there. The ESG focus is still there. A lot of this stuff, they've managed to continue without dropping some of the things that were so important to us. But, I mean, I think it will all bounce back here as well. So, I feel bad for Arsenio, though. I mean, he's from Panama and, you know, nobody fought harder for IML standards and to get something done. It's pretty unsettling to have the USBS boiler on that. That is like, as an American, I am a little it's just stressing to hear. But I think they'll make it. If you really talk to these tipping companies, a lot of them, you know, Maris said straight up, you know, they want to do it. They want, they do want to decarbonize. And one of the biggest ways is to just use less energy. They have, there's efficiencies. And then they can, then they can use green fuels. And so I just think we've been delayed a bit. I don't think it's over. I think we're definitely heading the right direction. And to your point, you've brought this up a couple of times, but this is why book and claim is something that's so important. Like this is the way that you reduce the amount of, of, you know, green fuels being shipped around the world. You might as well just use them where they're made. And if you have book and claim, you can credit for using it in another place. And that makes absolutely the most sense in terms of net cost and also net pollution. I think to the point on global markets, on the global nature of these markets, there are always abs and flows. And actually, Chris, a very long time ago, we did, you know what, I'm not going to tell you the name of the company, but we did a, we did an episode, maybe, maybe season one, season two, I'll let you where we talked about the kind of technology bleed over effects, right, where we had, you know, kind of fuel cell buses being deployed in one place and, you know, you know, hydrogen storage systems for industry in another and how those kind of dynamics of advancing business operations that are viable in one place, spurs, adoption in other places where there's constraint. That's fundamentally, I think that's still true. And, you know, the whole structure of subsidy and support, or should that matter, just reduction in friction and deployment, right? Like the conversation that we just had with with Alistair about like building a facility and then finding a site with a, you know, you know, I think it was a paper company, he said, an extor or a water treatment facility, a brand field site. So those dynamics become enabling infrastructure and they become enabling for high quality projects. In the same breath, and to Alistair's point, if Australia and Asia are moving now, and for the last number of years, you know, Europe and US have been pushing, but, you know, now, you know, other disruptions and not with, you know, IMO and certainty and whatever else. Like the trajectory is still moving forward in lots of ways. So these market formations become more credible, you know, like one of the examples that's in my mind is we've looked at like fertilizer in Africa. And one of the things is that, you know, one fertilizer is underused relative to kind of typical, optimal use, right? And not overused, just optimal use for yield. And a large portion of the African continent. But they also pay an awful lot more in a lot of cases. And it domestic production or localized production opens up the prospect of reducing costs, improving yields. And also opens up the prospect for the technology, you know, cost curves dynamics to actually deploying more projects that are bankable immediately. And suddenly you have some of these virtuous cycles, you have suppliers who have now more running hours and optimized kind of manufacturing of blah, blah, blah. So I still think that these globalized dynamics in the market, even if there is more friction in traded markets or some traded markets, inevitably brings us back to the fundamental question of viability. Are these things viable? Will they be viable? We will continue to import, you know, cooking oil from places until the structures or the cost point for domestic consumption of the same product or like this or the formation of that supply chain market for, you know, cooking oils in the UK in advances. But there's a lot of learning points that are still ahead of us. And sometimes we're, I think we can be a little, perhaps harsh as the word in terms of working at how these things will start to connect each other in enabled markets to for philosophical point to end on. Welcome. That was everything about hydrogen hosted by the team Patrick Maloy, Elisia Eastman and Chris Jackson. If you have a question for the hydrogen team or any of our guests and would like to get in touch, you can shoot us an email on
[email protected] or alternatively you can follow us on LinkedIn or tweet us. Our handle is @abouthydrogen. Thanks again for listening and we'll see you next time.
PodcastTranscript AI