WORKWEEK

For today’s deal in focus, we’ll take a step off the beaten path and check out an acquisition rather than a venture fundraising announcement. Earlier this week, Hydrofuel Canada, a green ammonia and hydrogen producer, bought Lumos Laboratories. Lumos has a variety of patents on technologies to produce green hydrogen, ammonia, fertilizers, and other products. Specifically, they focus on waste-to-energy technologies.

Getting gassy

Why are hydrogen and ammonia so important? We’ve talked about hydrogen a fair bit – it’s a critical industrial input for making iron, steel, fertilizer, and more. Secondly, it’s use is being evaluated as a flexible form of energy storage (see a raise from Tree Energy Solutions later on in this email) as it can be transported in tanks, which is easier than building long-range electricity transmission infrastructure. It could also be a useful fuel for things like cars and planes – another deal later today highlights ZeroAvia, who make hydrogen-electric powertrains for aircraft. 

Even if you produce hydrogen with 100% renewables, the opportunity for leaks across the entire supply chain is dangerous. Hydrogen reacts with other greenhouse gasses in the atmosphere, increasing the rate at which they contribute to global warming. 

Meanwhile ammonia, while undersung, is one of the world’s more essential ‘materials.’ It also typically require hydrogen for its production – manufacturers combine hydrogen, often separated from methane (CH4), with nitrogen to make ammonia (NH3). Ammonia is the dominant nitrogen fertilizer, both directly and as an input for other synthetic nitrogen-rich compounds (like urea). And as we’ve also explored, nitrogen fertilizers are the foundation for global population growth (by increasing crop yields). 

There are problems with nitrogen fertilizers once they’re used on fields. Nitrous oxide emissions have a super high global warming potential, and nitrogenous runoff from farms pollutes waterways. And producing ammonia is also an emissions-intensive enterprise. Ammonia is created by way of the Haber-Bosch process, first invented more than 100 years ago, and worthy of a Nobel Prize. The Haber-Bosch process produces more than 1% of global emissions annually, comparable with ~half of the aviation industry’s footprint. 

Green gasses

Controversy over ammonia and synthetic fertilizers is at the core of farmer protests worldwide. It’s important not to just look at their emissions and pollution without appreciating that 4 billion people have enough food because of them. 

Still, there’s a big opportunity to decarbonize the production of these gasses, especially considering how important they are to society. Decarbonizing ammonia, hydrogen, steel, and concrete are among some of the more considerable climate challenges to tackle – cleaning up electricity production is more manageable in comparison. 

The net-net

Back to the acquisition, Lumos Laboratories, based in Nigeria, has been working on technologies that valorize human and animal waste, turning them into electricity or using them to produce ammonia & fertilizers (as waste is already high in nitrogen). The acquiring party, Hydrofuel Canada, focuses on last-mile production and delivery and will now invest in Lumos’ tech to see if they can scale the waste sanitation and remediation benefits that that tech offers. 

Beyond the tie-in to structural climate and industrial challenges, this deal also caught my eye because it’s intercontinental – Hydrofuel Canada is in … Canada, and Lumos is based out of Nigeria. It also shows the co-benefits that climate solutions so often come with. Hydrofuel Canada is likely most interested in decreasing the cost of the hydrogen and ammonia they sell to customers. But if they can help clean up sub-Saharan African communities in the process & offer them access to sanitation… that’s a good outcome, too!