What are CHAR Technologies’ solutions and why are they important for sustainability?
The original concept of CHAR Technologies was to make activated biocarbon that could be re-used to create biochar sulphur fertilizer (SulfaCHAR), which evolved into biocoal to help decarbonize heavy industry (CleanFyre). In addition to creating biocoal, CHAR’s process can simultaneously create Renewable Natural Gas (RNG). Both the biocoal product and renewable natural gas can be useful in the heavy industrial space to decarbonize hard-to-abate processes. It is very challenging to replace hhigh-temperature processes with electricity and even though steel plants receive subsidies for electric arc furnaces, these systems still rely on some solid carbon (currently coal). Considering the steel industry generates 9% of GHG emissions (roughly the same as the entirety of the U.S.), solutions such as the ones we are proposing are truly important to support the green transition.
How far advanced are you in your work? Are you already in the production phase?
We have been running a demonstration plant since 2018 and we are in the midst of building our first commercial plant in Thorold, with the intention that we can start initial carbon and gas production in 2024. In addition to these, we have seven other plants in the pipeline. In order to accelerate our path to market, we can modify the existing equipment in proportion such that around 80% can be off the shelf. We have a modular approach to building these systems, so from that perspective, we should have easier conversations with the financing side, especially since Canadian utilities are willing to offer long-term offtakes. Partnering is a crucial aspect in building projects in an accelerated way, so the relationship we have with local communities provides us with the security of social license to operate, while our liaisons with feedstock suppliers ensure we have the necessary materials.
How do you intend to educate the market and local communities on the importance of your solutions?
Market-wise, we plan to make presentations to ask for support from the city council or the regional government. As for educating the public, we will continue our open house Q&A sessions where we underline the importance and meaning of our technology. Across this quest to raise awareness, the more inbound questions we can get, the better chance we have to identify opportunities. If ultimately our goal is to deploy enough systems and facilities that we can meet and exceed GHG reduction plans, we need partners, suppliers, and offtakers.
What would be the demand drivers for your future footprint?
The biggest driver in the North American market is renewable natural gas, and in Canada, gas utilities offer enticing 20-year offtake agreements. The IRA (Inflation Reduction Act) did a lot to promote these renewable gases, so the Canadian government had to respond to this to make sure local companies do not move their business to the other side of the border. In Europe, the biogas plants in Germany are retrofitted from electricity production to renewable natural gas facilities, and other European countries are poised to come out with a huge RFP type of document for renewable natural gas supply.
When it comes to biocarbon, part of the demand is policy-driven. In Canada, it is expressed through carbon pricing mechanisms at provincial and federal levels, while in the U.S. it is built on green steel procurement requirements. As for going beyond North America - we will likely start in Western Europe, where there is more push for renewable natural gas, and traditional Scandinavian forestry, where there is interest to move towards high-quality biocoal. We are always looking at other places to go with the right partners.
What is the main challenge for your company?
The commercial plant that we are building now can produce 10,000 tonnes of biocarbon per year, but one steel plant could need 50,000 tonnes per year. While getting through that scalability is a challenge in itself, nowadays we are fortunate to be able to use incentives like the IRA to get to a more competitive price point for the products that we are trying to commercialize. The Canadian government's early-stage grant funding has been instrumental for getting us to where we are today, but de-risking for larger project financing is something we must figure out on our own.
What is the appetite for investment in your sector?
We went public in 2016 through a mechanism similar to a SPAC specific to the venture market which, completed by the unique junior market system in Canada, helped us take off and get easier access to capital over the years. In venture exchange there is an appetite for a little more risk so investors are accustomed to junior companies; and thanks to disclosure requirements, we can demonstrate credibility and go for government or bank funding. Although quarterly results are still of interest in the venture exchange, they are nicely balanced by long-term thinking. Concerning the capital for cleantech, the "build it and they will come" approach does not work because we are making a new kind of product, hence offtake agreements remain a critical piece of the puzzle.
In fact, we just signed a memorandum of understanding with leading steel manufacturer, ArcelorMittal, under which ArcelorMittal Dofasco has agreed to purchase 5,000 tonnes of biocarbon produced at our facility in Ontario, Canada. With a 91% reduction in greenhouse gas emissions, our biocarbon aligns with the steel industry's ambitions to reduce its carbon footprint, helping us bring in around $USD 5 million in additional funds from the steel giant.
What objectives would you like to achieve with priority in the near future?
In the next five years, we want to have in production three million gigajoules of renewable natural gas and, simultaneously, we are looking to sell all of our biocoal. Ultimately, we are moving towards getting beyond the million tonnes of GHG reduction per year and although the revenue metric is renewable gas, reaching these sustainability targets as soon as possible would make us tremendously successful.
As an entrepreneur, I cannot be anything but optimistic. Although it is going to be a tight deadline for some of the global ambitions, 2050 is definitely a reasonable timeframe and, if we can keep the momentum we have seen in the last year in climate tech investment incentives and policies on carbon pricing, it is also perfectly achievable.
