Startup plans to make synthetic natural gas with green hydrogen

Belgian-based TES says it can produce synthetic natural gas by combining captured carbon dioxide with green hydrogen, either on-site or in countries where renewable power is abundant, then ship and distribute it to European facilities through existing energy pipelines. It also plans to provide its services in the U.S. and Asia.

The firm raised 65 million euros, equivalent to $69 million, in its second round of funding this year. It is developing a hydrogen production and trading hub in the German port of Wilhelmshaven and is planning to build a 500-megawatt electrolyzer to make green hydrogen.

Roughly 96% of the hydrogen in Europe is produced using natural gas, resulting in significant CO2 emissions, according to the European Commission, the European Union’s executive arm. Cleanly produced hydrogen could become a low-emission replacement for petroleum that manufacturers and ocean-shipping companies can use. However, the high cost to produce renewable hydrogenand the need for new infrastructure to distribute ithave created barriers to entry.

Marco Alverà, head of TES and former chief executive officer of Italian gas grid operator Snam SpA, spoke with WSJ Pro Sustainable Business about a green-hydrogen-based process to create synthetic natural gas. Responses have been edited for length and clarity.

WSJ Pro: Tell us more about what TES is trying to do.

Mr. Alverà: I’m a fan of hydrogen, but not of hydrogen in itself. I’m a fan of helping bring very cheap electrons to replace fossil molecules. When you have electrons at €10, equivalent to $10.61,a megawatt hour, all you need to do is to take that solar energy and bring it to factories, ships and at the heart of hard-to-abate sectors as quickly as possible.

[There are] issues with hydrogen. How do you transport it? How do you store it? How do you trade it? What we’re doing at TES is solving all these issues by combining hydrogen with CO2. TES converts the sun of Texas, Australia, Egypt into e-methane. We call it eNG. It’s basically identical to LNG [liquefied natural gas], but made from hydrogen and not fossil.

WSJ Pro: How does the conversion work?

Mr. Alverà: We fill a ship with CO2 [captured from the air in Europe] and we bring it to Egypt. The CO2 is taken off the ship, merged with hydrogen and then put back on the ship as liquid LNG. That ship goes back to Germany, so the CO2 is in a circular loop. We don’t need a hydrogen backbone. We don’t need hydrogen storage. We don’t need to change the factories. They [customers] take the eNG exactly like today they take fossil energy. So it solves all the problems of hydrogen. Suddenly, we’ve turned something problematic and illiquid like hydrogen into something very fungible like natural gas.

What we do with eNG is turn the whole LNG chain into the system of the future. The terminals and the pipes are the same. The ships are the same. Hopefully, by 2025, we will have the first LNG vessel coming in with the eNG. My bet is that we can have eNG in Europe at around €50 a megawatt hour by 2030.

WSJ Pro: Capturing carbon dioxide from the air is expensive and energy intensive, as is shipping it to other countries. Can you walk us through the carbon footprints of this process?

Mr. Alverà: Capturing CO2 directly from the air requires moving large quantities of air due to the low concentrationof carbon dioxide, at just over 400 parts per million. This requires electrical power for the blowers to move the air, so it could create a small carbon footprint.

As a second step, the CO2 needs to be released from the capture chemical, which is typically done by applying heat. The energy needed is typically in the order [of] five to 10 times higher than the electrical energy needed to move the air. If generated on purpose it can have a sizable footprint. However, if a nearby industrial process has waste heat available at the right temperature level, such as the TES methanation reactors and electrolyzers, it significantly reduces the carbon footprint of direct air capture and the OPEX [operational expenditure] of the capturing process. The captured CO2 is converted into synthetic eNG by combining it with renewable hydrogen.

WSJ Pro: What is the end-to-end efficiency of the process to make eNG and how does it compare to other fuels?

Mr. Alverà:The end-to-end process is already around 55% energy efficient and will improve significantly. It may sound like an expensive way to turn an electron made from solar energy in Australia or Texas into eNG, but solar energy can be produced today at $20 per MWh in very sunny places. Fossil methane including CO2 costs is expected to trade at around $100 per MWh in the coming years. Whilst the cost of fossil molecules is destined to remain high or [get] higher, the cost of electrolyzers and solar panels will continue to fall, and the marginal cost of the sun and wind is zero.

WSJ Pro: What are the most attractive markets you’re looking at?

Mr. Alverà: Countries that have sun and wind. For the upstream, you can think about Morocco, Egypt, parts of Australia, parts of the U.S. and Namibia. For downstream, Europe, Japan and Korea, because these are the big LNG markets. They want to get out of coal and nuclear and now also diesel.

WSJ Pro: Is the current energy crisis pushing governments to accelerate the deployment of green energy?

Mr. Alverà: I think Europe had a head start. I think China is where you see the most electric buses, electric vehicles and hydrogen buses. All the Chinese companies we talked to have a hydrogen strategy. I think the U.S. with the IRA [Inflation Reduction Act] is now trying to match China and create manufacturing expertise and hydrogen hubs.

European governments have spent just this year hundreds of billions to lower people’s bills and address energy poverty. And that’s a little bit like pouring sparkling wine on a wildfire. That you’re not fixing anything and you’re not solving anything. With a fraction of that money put into the right infrastructure, we could solve the issue.

WSJ Pro: What is the medium-term outlook for energy?

Mr. Alverà:I think the medium-term outlook is rosy. The short term is problematic, especially if it’s cold. This winter we started with full storage, next winter I doubt we will unless we enter into a new trajectory of very warm winters. But I am very optimistic about the future outlook. I think the war…has really shaken people like us to step up and want to scale up and do big things.

This story has been published from a wire agency feed without modifications to the text