Jordan Blum, editorial director, Hart Energy: We are here at CERAWeek by S&P Global in Houston. I'm joined by Marco Alverà, the co-founder and CEO of TES, and the bestselling author of the Hydrogen Revolution. Thank you so much for joining us here today. I really appreciate it. So just starting off this morning, you have a big new announcement for a pretty large partnership for e-NG, that's electric natural gas. Can you tell us about what this is?

Marco Alverà, co-founder and CEO, TES: Electric natural gas, there's nothing new. It's been produced in China for many decades. It's a combination of hydrogen and CO2 and we call it e-NG. The new part is that instead of doing it from gray hydrogen, we want to do it from green hydrogen, hence the electric kind of e-fuel status of this fuel. This is going to be the cheapest and easiest to produce and easiest to scale up e-fuel or hydrogen derivative. And what we wanted to do is to bring together like-minded companies, some of whom we're working with, others we're not yet working with, but people who really want to make this into the big industry that it will be. It's going to be a trillion dollar per year market, and it's just a fantastic e-fuel, so we want to promote it to study technologies together, regulation, certification and help the industry grow and become a liquid market.

JB: The announcement this morning was with TotalEnergies, Tokyo Gas and others, there is obviously a global perspective.

MA: So our philosophy is to partner. We have a 50/50 joint venture with TotalEnergies here in Texas in south Houston. It’s a project to build and produce e-NG here. The beauty of e-NG compared to other hydrogen derivatives is that you can use the existing infrastructure, so you can produce it in Texas, taking solar and wind from the grid, taking biogenic CO2 in this case from a pulp and paper company producing the synthetic methane, which is identical to natural gas. It's just made from solar and wind, so it's a completely renewable fuel. You put it into the grid, you get a certificate, and then you can either sell it via pipeline to a willing customer that wants to decarbonize or you can bring it into Europe via LNG or into Japan. Hence that's why we have European companies, U.S. companies and Japanese companies because it will develop exactly like LNG into a global market.

JB: You said it’s completely renewable, which you all call it, I think, the circular closed loop. If you don't mind taking us through that process a bit more.

MA: That's getting into another level of detail. So we actually have two loops. So the easiest loop is exactly what I described in Texas. I can talk about a project we have in Canada. In Canada, we take the hydroelectric power from Hydro Quebec, we take water, we produce the green hydrogen. We take locally available biogenic CO2 from a pulp and paper company via pipe. We produce the CH4, the e-NG, and we sell it to a local Canadian utility. The utility has an obligation to decarbonize like many utilities have. They have essentially run out of feedstock for biomethane or RNG, and so that's why they moved to e-NG. This is, we call it the open loop. So the CO2 comes from the pulp and paper, it then gets merged with the green hydrogen and creates a CH4 that gets distributed into people's homes, and when they burn the CH4, they emit the CO2 that was captured before.

When there is a more liquid CO2 market, we will take customer CO2 and recycle that. So if you're like a power plant in Spain, for example, running on natural gas, you want to convert that power plant to hydrogen. When you combust hydrogen, you have inefficiencies, you have high temperature, you have NOX, you have some issues, and you have to change the turbine. What we're saying, instead of converting that power plant to hydrogen, is continue with the natural gas and let's gradually make it e-NG. And the carbon captured, we use to make the CH4 from the hydrogen. So rather than converting the power plant to hydrogen, we convert the hydrogen to a fuel that can be used in the power plant. That becomes a closed loop. You can do an extended closed loop, which gets even more complicated if you have a steel company in Germany that is already doing carbon capture, they are capturing the carbon, putting it on a ship to be stored in the Gulf of Mexico.

We take that CO2, merge it again with a hydrogen and bring that LNG ship back. So that's a closed loop. And the whole idea, that's why we're called Tree Energy Solutions [TES], is the tree grows through CO2. So CO2 used right in a circular way is actually a very natural thing. When a leaf of the tree falls and rots, that becomes methane. The CH4 molecule is just a beautiful molecule. It's energy dense, it's easy to liquefy, it's easy to store, it's easy to transport and you use all the existing infrastructure. So you break the chicken and egg dynamic, and you just get going and you can scale up the green hydrogen massively because you don't have to change anything. So that's what we did with renewables. People turn on the light and they don't know if the power is coming from wind, solar, coal or nuclear. They don't care. We have to do the same with energy, with gas, with fuels, because if you have to wait for every factory to change to take on hydrogen, we'll never get there. So it's really like a kick starter.

JB: Very good. And obviously as you were saying, you're not just a European company. You've expanded into Asia, Australia and North America pretty rapidly too. Can I get you to elaborate a bit on just how the IRA [Inflation Reduction Act] in the U.S. is facilitating things and making things more cost competitive?

MA: So the beauty of our model is we can find the best places in the world to make the cheapest hydrogen. So we're always looking for the best wind and the best sun, and ideally the best combination of those two. Then we look for countries that have CO2 and that have CH4, that natural gas infrastructure. And so if you put that on a map, Texas works out pretty nicely, plus you have the IRA that makes the cost of production lower, so that works up even more nicely. To be very direct, the Inflation Reduction Act has inevitably, as many commentators say, had an inflationary impact when it comes to stuff made in the U.S. Sometimes we look at other geographies and it turns out it may be cheaper to go somewhere where you don't have that same inflation in terms of the labor market being so tight in terms of tariffs on Chinese made equipment, which is now much cheaper than any western equivalent.

You have pros and cons. What we love about Texas, the U.S. and Canada is just the availability of infrastructure, and the ease of doing business. At the end of the day, we are system integrators. We have to take the power, make the hydrogen, take the CO2, make the methane then sell the methane. That's our job and it's great to be at events like this where you're making it happen. We have an office in Tokyo, we have several offices in Europe, we have an office here in Houston and we have an office in Canada. So we're a young company, we're a startup. We're already kind of a unicorn in terms of values and how we think of ourselves. Our idea is to bring the kind of a west coast kind of startup mentality. We're digital first and we really want to be disruptive and move fast the way Tesla did to the car industry. That's what we're trying to do with the LNG industry.

JB: For those who aren't experts on hydrogen, there's green hydrogen, you mentioned gray hydrogen, blue hydrogen, all the colors under the rainbow. Can I get you to just touch on just the best path or paths forward and any concerns there are about so-called greenwashing?

MA: Yeah, so I think greenwashing is not an issue because Europe in particular is so stringent on the rules. For example, we have to take biogenic [CO2], it has to be physically connected to the very plant, and that's all easily certified. So there's no greenwashing because you're working with the grids. And so it's very easy to certify what goes into the grid and what quality that is. And if you're greenwash, you're just going to be losing a lot of money. So greenwashing is not an issue, especially when it comes to green hydrogen because it's going to be very visible where it's made and very easy to certify. And our product is already compliant and certified. When it comes to the different colors, what we're doing, instead of taking the mountain to Mohamed, like we say in Europe, we're taking Mohamed to the mountain, which is a lot easier.

So instead of asking everyone to convert to hydrogen, and then you can have all these different colors of hydrogen, we convert hydrogen into something that can be used immediately. And I think that by doing that, as I mentioned, we're solving all the problems of hydrogen. If you're trying to do blue hydrogen, you have all the problems of the fossil fuels because it comes from a fossil fuels and you have all the problems of hydrogen. We're kind of doing the reverse. We're turning green hydrogen into e-fuel. And if you take a step back and you look at the whole world, when we hit that net zero goal, whether it's 2050, 2055, 2060, I mean by 2060 China and Saudi Arabia have committed to net zero. Hopefully it's going to happen a decade earlier or in the middle of that decade, but that world is going to be about 50% electrons. So electric vehicles, electric heating, whatever you can electrify up from 23% today, and the other 50% is going to be a combination of e-fuels and biofuels or fossil fuels with CCS [carbon capture and storage], about evenly split. We're talking about, call it a $6 trillion, $7 trillion or $8 trillion per year market for e-fuels, and it's going to be ammonia, methanol, SAF [sustainable aviation fuel], and I think e-NG is going to have a big share of that market because it's the cheapest to make and the cheapest to use.

JB: Thank you so much for joining us for this Hart Energy Exclusive.

MA: Thank you for having me.

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