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In an in-depth interview with Zach Jones, CEO of CZero, we delve into the company's groundbreaking technology that transforms natural gas into hydrogen and solid carbon through a low-cost, low-energy catalytic process. Unlike traditional methods, CZero's approach requires minimal electricity and leverages existing infrastructure, making it a viable solution for regions lacking access to renewable energy.
With the potential to significantly reduce CO2 emissions and produce hydrogen at a competitive cost, CZero is poised to play a pivotal role in the future of sustainable energy. As their pilot plant in San Antonio gears up for operation, CZero is already making strides towards commercializing their technology and paving the way for a greener, more efficient energy landscape.
Neil: So the first question I had is, could you just explain how your technology turns natural gas into hydrogen and solid carbon and what sets your method apart from others?
Zach: We split natural gas into hydrogen and solid carbon in a catalytic process utilizing a low cost consumable catalyst. C-Zero has a few key differentiators compared to similar technologies. First, we don't use very much electricity to run our process. It's just a few kilowatt hours of electrical energy per kilogram of net hydrogen produced.
That's very unique in this space because just about everybody else's approach to methane pyrolysis uses electricity in some form, either to generate a high temperature plasma or inductively heat something or use microwaves. We intentionally set off to design a process that didn't require anything other than the chemical potential of the gas itself. The reason for that is that we've always believed that the market for this technology is going to be in places without access to renewable electrons.
Therefore, your energy to power this process, which is inherently endothermic, is going to need to be delivered by natural gas. So I think the low electrical energy consumption is the first big differentiator. The second is the ability to build a single process train that is a world scale plant.
So we think that we can make a single process train that is upwards of 250 tons of hydrogen per day. So when you look around at the landscape, I'm pretty sure that in terms of processes that don't use appreciable amounts of electricity and that can scale beyond a shipping container size unit with a few hundred kilograms of hydrogen a day, we're the only approach out there that meets both of those criteria.
The final one would be a focus on the hydrogen economics. The reason for that is that the volumes we envision running this technology at will make so much solid carbon, that we’re not going to be able to get hundreds or thousands of dollars per ton for it. The way that we plan to monetize the carbon is actually by qualifying for 45Q. The tax credit is currently valued on the order of about one hundred and twenty dollars per metric ton of solid carbon. So we think that this tax credit, if you want to think about it as sort of a floor on the carbon value, provides more than enough to handle transport disposal of the solid carbon and also provide some additional revenue as well to lower the levelized cost of hydrogen. We're working with one of the biggest utilities in the United States on developing the protocol for sequestering the solid carbon. The reason that we chose to work with these guys is they handle millions of tons of coal ash every year.
Coal ash is chemically very different than our carbon. But from a process perspective, it's a solid low or zero value byproduct of electrical energy generation. There's a whole set of protocols that are applied to measuring different properties of coal ash.
Our carbon is much easier to sequester. We've got mildly graphitic carbon, a little bit of a residual catalyst that's non-toxic. All the preliminary signs from that partnership are very positive that we can sequester our carbon at large scale.
Neil: OK, and next question, I think you've kind of partly answered. Your process can be carbon negative when using renewable natural gas. Could you explain how that works and the potential impact if the technology is used widely?
Zach: So there's absolutely no change to our technology required to use renewable natural gas. The way that it's carbon negative is that when you get conventional fossil gas, the carbon atoms are coming out of the ground. Whereas with renewable natural gas, the carbon atoms were recently CO2, and that CO2 from the atmosphere was fixed by some sort of photosynthetic process. Then that biomass decayed through some pathway into methane. And so when you use RNG, every carbon atom is effectively coming out of displacing a CO2 molecule from the atmosphere.
Neil: What industries do you see using the hydrogen and solid carbon your technology produces, and how soon do you expect them to start using it?
Zach: Sure. So we are moving through into more detailed engineering on our first commercial system. Our pilot plant is going to be starting up this quarter in San Antonio, Texas. And that should verify the assumptions that we've made in designing both the first commercial system and world scale system. We've completed FEL-1 studies with our EPC firm at both of those scales, and we're already engaging in the first commercial system with an entity that wants to pay for it, that is going to go use that hydrogen in an industrial complex. We've got another study that is ongoing with a utility firm that wants to burn the hydrogen to make electricity.
I guess I should say in the industrial complex that hydrogen would be used for conventional hydrogen applications in petrochemical processes. And so that's refining ammonia, etc. There are multiple hydrogen pipelines to go put it into.
I think the best use of the hydrogen is in refining processes. It's a way to lower the carbon intensity of refined products like gasoline,diesel and sustainable aviation fuel without needing to change anything about the fleet of billions of turbines and combustion engines that consume those fuels. So it's a really easy way to start lowering carbon emissions.
I think the other application that has some similarities to refining in both scale and breadth, or I guess scale of the hydrogen production technology and also depth of the market, is ammonia production. Lots of countries in Asia that are looking to decarbonize really have it come down to, well, we either need to fuel switch to ammonia or we need to crack hydrogen out of the LNG cargos that we're having delivered today. So the great thing about that from our technology is that we have a role to play in either one of those scenarios. We can either locate our process at the end of the supply chain in Asia and crack the natural gas into hydrogen and solid carbon there, or we can locate it where gas is cheap, closer to the wellhead where ammonia is going to be produced, provide hydrogen to that process and ship ammonia. So I think there's a future for us regardless of how that very complex supply chain and energy decarbonization vector for Asia pans out.
Neil: What are the main challenges in fitting your system into the current natural gas infrastructure and how are you overcoming any hurdles?
Zach: I think no big challenge is putting our technology in between the existing gas infrastructure and existing natural gas consuming processes, like ammonia synthesis, power generation, and refining. I think the advantage that we offer is that the only other way to decarbonize that infrastructure is to make blue hydrogen, which is basically carbon capture on the back of a reformer. What we think of as the advantage of our technology is that you don't have to go build that CO2 transportation and disposal infrastructure. In some places, like many parts of Japan and Korea, there's nowhere to sequester CO2. Your alternative there is liquefying CO2 and shipping it to Australia to be injected underground, which is fabulously expensive and inefficient. So lots of markets where there's CO2 sequestration that isn't available at any price, even in places where there is CO2 sequestration nearby, the average timeline for getting a CO2 pipeline built is seven years.
In order to justify the cost of that pipeline, you need to be handling very large volumes of CO2, which means that the last mile, so to speak, of CO2 handling is going to be really expensive. Even if you're 20 miles away from a big CO2 trunk line facility, the time and cost of moving a relatively small volume from your blue hydrogen facility to that pipeline is going to be really difficult. To bring back around my answer, it's really the fact that we can utilize the existing solids handling infrastructure, either via rail or barge at scale and via trucking for our first commercial system, to move solid carbon.
There are already roads, rivers, and rail that exist. The capacity of those systems for handling solid carbon is just enormous. The amount of CO2 equivalent that you can put in the form of solid carbon on a rail car and move it at very low cost for very long distances is staggering.
We actually think that that's a huge value proposition for our technologies, not needing to build CO2 handling infrastructure.
Neil: How does the cost of your technology compare to other methods of producing green hydrogen, and what financial benefits could industries see by adopting the system?
Zach: I think we're very confident that we're much cheaper than green hydrogen in any scenario, unless maybe you have surplus 100% capacity factor electricity from a hydro dam. Maybe it gets cheap enough there.
We think we're much cheaper than green. With blue, if you want to make a blue hydrogen production facility, and you're right on top of a class VI well that's permitted and ready to go, that's probably cheaper. But the moment that you have to do anything to transport that CO2, we're cost competitive with blue hydrogen.
I think that's really the advantage for industry, because we don't use electricity, or we don't use appreciable amounts of electricity, and because we don't have to sequester CO2, the process can be cited anywhere, because you don't need to locate CO2 handling pipelines or infrastructure, and you don't need renewable electrons. So that's the big advantage, it's a way to produce hydrogen from natural gas at scale anywhere.
Neil: What are the next steps for CZERO in terms of improving your technology and expanding the business?
Zach: Yeah, so we need to demonstrate the technology in our pilot unit, which will be capable of making up to 400 kilograms of hydrogen a day andover a ton of solid carbon per day. We need to demonstrate that what we think is going to happen, at larger than lab scale, is actually what happens. Then we're going to continue progressing through detailed engineering on the first commercial system, which will be six tons of hydrogen per day.
We've signed a letter of intent to have that funded. We're also looking at, should we actually be progressing those engineering studies forward at two different locations? Then the real goal for the company is to get through that first commercial system, and get our first world-scale system online by the end of the decade. Because I think the name of the game for any energy transition technology should be getting to bankability.
If you can get to the point where all the technical risk has been retired, and you can get financing and put debt on technologies, there's, at least for our purposes, an infinite amount of capital out there that is ready to go fund those projects. So that's really our focus, to retire all the technical risk by the end of the decade.
Neil: How do you see hydrogen fitting into the future of energy, and what role will CZERO play in that future over the next 10 years?
Zach: I think that even just decarbonizing hydrogen in its current role, which is a feedstock for petrochemical processes, is a multi-billion dollar opportunity for CZERO specifically. What's exciting about the market is that, in addition to the way that hydrogen is used today, there's an opportunity for the hydrogen market to grow by a factor of 10 over the next decade or so. So it's exciting because it's a huge market that already needs to decarbonize, and that market's going to be growing very quickly to use hydrogen in ways it's not used today.
So that would be electrical generation, using it as fuel for vehicles, converting from conventional refineries to biorefineries. That actually requires twice as much hydrogen as refining crude. So the existing market is huge. It's all going to have to decarbonize, and seeing some of these other applications for hydrogen could be a huge accelerant to the growth of our process as well.
