24 April 2022 |

Keep Cool- 04/24/2022

By Nick Van Osdol

DEALS IN FOCUS

For today’s Deal in Focus, I had the pleasure of hearing from Chase Lochmiller, CEO of Crusoe Energy, re: their Series C fundraising announcement this week. 

This raise caused an interesting little debate over the weekend. Crusoe pulled in a massive $350M in equity funding from the likes of Lowercarbon Capital and other leading climate tech investors, indicating there’s no shortage of folks who see Crusoe as a valuable business for decarbonization. I’m in that camp. 

What does Crusoe do? At its most simple, they valorize stranded energy assets. Their v1 operations involve taking unwanted natural gas from oil operations and converting them into electricity. Normally oil & gas operators simply ‘flare’ (burn) these gasses off into the atmosphere, producing methane gas emissions. To date, Crusoe has mostly used the electricity they produce to mine bitcoin. Why BTC? Well, it’s an easy way to monetize electricity compared to: 

  • transporting the natural gas somewhere else via pipeline 
  • trying to find a client for the electricity.

For a longer read on the business, you can peruse our past Deep Dive here

Given this initial set-up, there are a number of folks who contend that by helping oil & gas companies valorize these stranded assets, Crusoe will prolong the life of the fossil fuel industry. And they chime in with familiar refrains that crypto mining isn’t a good use for that electricity.

I think they’re missing the forest for the trees. Why? Hopefully the below Q&A with Chase will shine some light on that. As we’ll explore, Crusoe’s efforts and ambitions reach far beyond flare gas on oil sites and bitcoin mining. Enjoy!

One of Crusoe’s Digital Flare Mitigation systems in the wild (pic courtesy of Crusoe)

For folks who are catching up, can you elaborate on the tech you use to reduce flare gas emissions? 

We work with Waukesha as our primary engine manufacturer for our Digital Flare Mitigation (“DFM”) systems. With them, we use the cleanest rich burn technology in the world, which results in a 99.9% destruction of the methane. We also use the best catalytic converters to strip out things like CO, VOC’s, and particulates that can cause significant air pollution.

When we spoke last year, you all were focused on diversifying energy uses, siting, and the end applications of the electricity you produce. How’s all that progressing? 

Those efforts have been moving along nicely! We launched Crusoe Cloud, and the data center infrastructure that supports our cloud also is used to support colocation customers. We are actively working on a handful of other grid connected carbon free power projects, with the plan to have something operational this year. We are also expanding Digital Flare Mitigation into other basins domestically, with plans to expand internationally as well into markets like Argentina, Abu Dhabi and Oman.

What will the Series C unlock? How many sites are you already up & running at? 

A lot of the things I mention above are unlocked and accelerated by the Series C. The capital will be used to accelerate growth in DFM both domestically and internationally, grow and expand Crusoe Cloud and develop large scale computing projects that unlock value in other grid connected clean power resources. We also have some plans for vertically integrating components of our supply chain, which we’re going to be announcing in the coming months.

There’s a lot of debate about methane’s ‘Global warming potential’. E.g. over a 100 year time  span you’re closer to 30x the GWP of CO2, whereas over a 20-year time scale you’re closer to 80x. What’s your stance on that?

I know this is a debate, but it really shouldn’t be. CH4 oxidizes into H20 and CO2 with a half life of about 9 years. So what that means is that by year 20, over 75% of the CH4 emitted at year 0 has become CO2 and the majority of methane’s warming impact has already happened. Cully has a 6 month old daughter and he made the analogy that it’d be like picking between two different statistics for his daughter’s  average daily diaper usage. You could say that his daughter uses 5 diapers a day over the first 2 years of her life OR you could also say she only uses 0.5 diapers a day for the first 20 years of her life. Which one gives you more meaningful information? Additionally most of the major corporate climate goals are in a time frame of the next 10-30 years, so if we are going to keep warming below 2 degrees, the next 20 years are the most important 20 years.

You & Cully have a much deeper understanding of the O&G energy markets than I do. What’s your vantage point on the energy landscape considering the war in Ukraine? Where do you all net out on natural gas as a ‘bridge’ to a net zero future? 

Global geopolitical conflicts have raised the importance of energy independence and highlighted how much our world is powered by fossil fuels today. So ignoring [fossil fuels] and ignoring their production has a lot of negative consequences. Our goals as a business are to enable the world to produce the oil we need in the least impactful way possible by mitigating associated methane emissions in the production process. We are seeing production and activity picking up quite a bit in response to the conflict and price movement. One big challenge during a rapid shift like this is that building infrastructure like pipelines to support production can often lag significantly, and so in order to produce without flaring, having technologies like Digital Flare Mitigation becomes all the more important. 

On the natural gas as a bridge question, I think it certainly can be a bridge in terms of displacing coal plants as a much cleaner alternative. I also believe that there is a future where natural gas can serve as a carbon free power source with the development of technologies like CCS. Crusoe is actively exploring this market and hopes to help push development in this space forward to become economically viable as a standard practice.

DEAL HEAT 🔥

Here are financing rounds and new funds that caught our eyes this week 🙇.

🔋 Ningbo Shanshan raised $472M in venture funding to increase its anode and carbon material manufacturing capacity. These materials are important in lithium-ion batteries. BYD, CATL etc. participated in the round. Read more here(China, Hardware)

🥩 Upside Foods (previous Memphis Meats) raised $400M in Series C funding to make lab-grown meat. Massive players like the Abu Dhabi Growth Fund participated. Regulatory approval to sell their product is still pending. Read more here(U.S., Consumer Goods)

🚁 Beta Technologies raised $375M in Series B funding to develop its electric vertical takeoff and landing aircraft (eVTOL). While still in the testing stage, the company’s aircraft aims to carry up to 1,400 pounds of cargo, or five people plus a pilot. The aircraft can purportedly charge in less than one hour and fly for up to two hours on a single charge. Companies such as UPS, BLADE etc. have placed advanced orders. TPG Rise Climate and Fidelity led the round. Read more here(U.S., Hardware)

⚡ Crusoe Energy Systems raised $350M in Series C equity funding + $150M in debt financing to expand its Digital Flare Mitigation technology as well as to launch new cloud computing platform offerings “Crusoe Cloud”. Crusoe’s business concentrates on harnessing stranded energy assets such as methane gas in oil & gas operations or curtailed renewables. G2 Venture Partners led the round. Read more here(U.S., Hardware)

☀️ Gokin Solar raised $251M in Series A funding for its 50 GW solar energy project. Gokin Solar, which focuses on R&D and manufacturing of photovoltaic silicon wafers, currently has a production capacity of 20 GW. IDG and Zhuhai Huafa Group co-led the round. Read more here(China, Hardware)

⚡ JTEC Energy raised $30M in venture funding to develop thermo-electrochemical converters that turn waste heat into usable electricity. Read more here(U.S., Hardware)

📊 Greenly raised $22M in Series A funding for its SaaS platform that helps SMEs with carbon management. Energy Impact Partners (EIP) and XAnge co-led the round. Read more here(France, Software)

🔎 Vaayu raised $11.5M in Seed funding for its carbon tracking platform, which is specifically designed for retailers. Atomico led the round. Read more here. (Germany, Software)

⬇️ Klima raised $10.8M in Series A funding for its climate change app that helps individuals calculate their carbon footprint and provides option to emissions offsetting options. Keen Venture Partners led the round. Read more here(Germany, Software)

🦐 CellMeat raised $8.1M in Series A funding to produce lab grown shrimp. Read more here(S. Korea, Consumer Goods)

🧊 LifeLabs Design raised $6M in Seed funding to commercialize its thermally efficient lifestyle apparel. They position their clothes as a potential climate change resilience play, as they can keep people cool (probably a good sponsor for this newsletter!) Asia Green Fund led the round. Read more here(U.S., Consumer Goods)

🏗️ Carbon Upcycling Tech raised $6M to use CO2 as an additive in cement and concrete production (safely storing the CO2 out of the carbon cycle). Clean Energy Ventures led. Read more here(Canada, Hardware)

♻️ Glacier raised $4.5M in seed funding for its AI / robotics recycling business. NEA led the round. Read more here(U.S., Hardware)

🔌 Tirex Transmission raised $2M in Seed funding to increase the deployment of both its fast & ‘slow’ EV chargers. Read more here(India, Hardware)

♻️ TômTex raised $1.7 million in seed funding to turn agricultural waste into leather alternatives. SOSV led the round. More here. (U.S., Consumer Goods)

🥩 OFF FOODS raised $1.7M in seed funding to develop plant-based meats. Alpha JWC Ventures led the round. Read more here(Indonesia, Consumer Goods)

☀️ EX-Fusion raised $1M in pre-seed funding to develop laser based nuclear fusion technology. The company aims to accelerate the development of the continuous target supply system (CTSS) and the laser target tracking system (LTTS), both vital systems for the (eventual?) commercialization of laser powered nuclear fusion reactors. Anri led the round. Read more here(Japan, Hardware)

💰 Cycle Capital raised a ~$160M fund to accelerate ecological transition. L’Oreal is an anchor investor, contributing ~1/3rd of the capital. Read more here(Canada, Funds)

ELSEWHERE IN CLIMATE & CLIMATE TECH

🏆 Innovation: Planetary Hydrogen, a carbon negative hydrogen manufacturer, and 14 other companies were awarded the XPRIZE Carbon Removal Milestone Award (comes with $1M). XPRIZE is a four year $100M global challenge funded by the Musk Foundation. 

🧪 Innovation (in Nuclear): Mitsubishi wants to get in on (truly) small modular reactor production. Meanwhile, Finland makes strides on nuclear waste storage. 

📚 Good reads: Keep Cool was featured in a piece about climate tech content last week. Thanks for the cover, Stephanie! 

❓ Head scratcher: In other Musk related news, Bill Gates is purportedly short ~$500M of Tesla stock. Whether or not that’s just the notional value of options contracts or truly a $500M position… it’s a bit odd for Gates’, who has his hands in all kinds of climate oriented work, to bet aggressively against the energy storage & EV giant. 

💱 Carbon markets: Figma (occasionally used by yours truly to design graphics for this email) will pay Charm $250,000 to remove and sequester 400 tonnes of CO2. That’s $625 per ton, a serious premium for durability (length of storage)!

🚫 so good news: Deadly heat waves in India and Pakistan remind us climate tech is about much more than venture capital and abstracted atmospheric CO2 levels. 

👍 Good news: More and more storytellers are coming around to the fact that how we talk about climate change matters. This is going to get good!