Brookfield Renewables (NYSE:BEP) and carbon capture and transformation company LanzaTech have announced a $1 billion investment agreement. The deal will see Brookfield invest $50 million in Lanzatech, commit to $500 million in plant finance with a further $500 million in further funding if milestones are set.
- Brookfield to finance LanzaTech with up to $1 billion if milestones are met.
- LanzaTech has been developing its approach for years, now it can deploy at scale.
- Circular models turning waste into useful material could transform the market, where recycled emissions replace fossil fuels.
LanzaTech converts waste CO2 using a biocatalyst to transform emissions into fuels and chemicals. Through application of their technology, steel mill emissions have been converted into sustainable aviation fuel, clothing ranges, laundry detergent, household cleaner and fine fragrances.
What makes LanzaTech’s technology interesting is that it enables the creation of industrial symbioses where the emissions from heavy industry can be used by consumer goods companies to make products that would otherwise come from fossil inputs.
LanzaTech technology to be deployed at scale
“LanzaTech’s technology provides a new way to decarbonise hard-to-abate sectors across the economy,” said Natalie Adomait, Managing Partner and Chief Investment Officer of BGTF. “We view this as an attractive opportunity to accelerate deployment of this technology at scale and be a partner to grow in an emerging area of infrastructure in a decarbonized economy.”
LanzaTech converts carbon through the application of biology, using a biocatalyst to transform emissions into fuels and chemicals. Through their technology, steel mill emissions have been converted into sustainable aviation fuel, clothing ranges, laundry detergent, household cleaner and even fine fragrances. That in turn supports the creation of industrial symbioses and the development of circular industrial models.
LanzaTech’s platform combines expertise in synthetic biology, bioinformatics, artificial intelligence and machine learning coupled with engineering, that converts waste carbon into new products that are in everyday use.
Put simply, LanzaTech uses bacteria to convert CO2 into ethanol, and the useful thing about ethanol is that it can be used as a feedstock to convert to a hydrocarbon using established chemical processes – replacing the need for virgin hydrocarbons.
Not only that but it has found a way to modify the bacteria to create other commercially important molecules such as acetone and IPA. So far LanzaTech is understood to have been granted over 1,000 patents, with nearly 500 more patents pending.
So far, LanzaTech’s first two commercial scale gas fermentation plants have produced over 30 million gallons of ethanol, which is the equivalent of offsetting the release of over 150,000 metric tons of CO2 into the atmosphere. Additional plants are under construction globally.
New carbon economy will need new financial models
Brookfield Renewable, and its institutional partners, have agreed to co-develop and build new commercial-scale production plants that will use LanzaTech’s CCT technology, which transforms captured carbon into valuable raw material commodities.
“Creating a new carbon economy will require new ways of financing technology scale up and deployment,” said Jennifer Holmgren, CEO of LanzaTech. “, we have the potential to target significant commodity markets and keep fossil resources in the ground. Each additional plant deployed has the potential to keep the equivalent of around 100,000 tons of carbon from the atmosphere each year. This is the new carbon economy in action!”
How the finance agreement will work
Canada-based Brookfield Renewables is one of the world’s largest investors in low carbon energy. Mark Carney, former governor of the Bank of England, UN special envoy on finance and a driving force behind the launch of the Glasgow Financial Alliance for Net Zero (GFANZ) is its head of transition investing. He is set to become the become chair of its asset management division when it is listed separately lists on the Toronto and New York exchanges in November 2022.
The funding partnership commits an initial $500 million to be invested by Brookfield Renewable in constructing and operating new CCT projects that have achieved certain pre-agreed milestones. The funding will be provided through the Brookfield Global Transition Fund, which is the largest fund in the world focused on the energy transition.
Brookfield will then be LanzaTech’s preferred capital partner for LanzaTech CCT opportunities in Europe and North America and following initial investments totalling $500 million, Brookfield could commit to making an additional $500 million available for investments in the strategic partnership if sufficient projects are available at the agreed milestones. Brookfield will also invest $50 million in LanzaTech to support further corporate development.
