The companies at the cutting edge of industrial decarbonization received a big boost in the newly announced $6 billion industrial decarbonization funding award announcement from the US Department of Energy.
At least $434 million in grant financing went to projects featuring technology from startup companies working on early deployments of their novel industrial technologies.
The figure shows that the Department of Energy is open to financing first of a kind projects that leverage new technologies, but there are a few factors that are important to note.
In most instances, these early technology deployments were awarded in partnership with much larger companies. For example, Rondo Energy won $73 million in financing alongside Diageo to use its heat batteries in the decarbonization of Diageo distilleries that make Bulleit Whiskey.
Via Separations, the developer of a new gas sparation membrane technology, teamed up with International Paper on a $46.6 million project to improve the energy efficiency of industrial separations. The proposed project would reduce 75% of carbon dioxide emissions per gallon of clean water removed during pulp production. Importantly, the collaboration with Via is intended to be the first project to scale up to another 130 pulp and paper mills — and potentially chemical refining facilities, according to the Department of Energy announcement.
For startups, demonstrating that there are initial buyers for their technology reduces risk and indicates that they should be able to scale. These are key steps to putting companies on a path for eligibility for even larger financing down the road through the Loan Programs Office.
There are still billions of dollars in funding available for first of a kind projects of all stripes. And while $5.5 billion in the most recent funding opportunity went to industrial giants like ExxonMobil, Dow Chemical, and other Fortune 500 companies, the small startup Electrified Thermal Solutions, working with Ashland Co., was able to win a $35 million grant for the deployment of its thermal energy storage technology.
Indeed some of large awards did go to stand-alone projects for startups like Brimstone, which will receive $190 million, and Sublime Systems, a recipient of up to $87 million in grant funding, for their cement decarbonization technologies.
The Biden administration estimates that the projects ranging across decarbonization technologies for aluminum and other metals, cement and concrete, chemicals and refining, iron and steel, and more will reduce the equivalent of more than 14 million metric tons of carbon dioxide (CO2) emissions each year, according to the Department of Energy.
Importantly for future applicants, all of these projects also include a description of their Community Benefits Plan, which is intended to ensure meaningful community and labor engagement. And nearly 80% of the projects are located in a disadvantaged community, as defined by President Biden’s Justice40 Initiative.
These benefits plans are a requirement for receiving federal funding, and, since 40% of the funds from the various Bipartisan Infrastructure Law and Inflation Reduction initiatives are earmarked for projects that meet Justice40 Initiative requirements — having a strategy to engage the disadvantaged communities identified is helpful.
Coupled with matching funds from the private sector, these projects will total some $20 billion to demonstrate commercial-scale decarbonization solutions needed to move the industrial sector toward net-zero emissions.
A part of Emerald Strategy Group, Energy Transition Finance can help companies navigate the state and federal landscape for non-dilutive funding. To find out more, click here. And to learn more about how Emerald Strategy Partners