NewCO2Fuels Commercialization Opportunities
ASX ANNOUNCEMENT, 18th March 2019
NewCO2Fuels signs Term Sheets to fund technology commercialisation with new global funding partners
NewCo2Fuels progresses technology due diligence with additional commercialisation partner for regions outside of China
Vivid Technology Limited (ASX: VIV) (Vivid Technology or the Company) is pleased to report that additional commercialisation opportunities for NewCO2Fuels outside of China are successfully progressing, underlining the value and increasing importance of this technology.
Since signing a commercialisation agreement with Sinopec Engineering Group (SEG) in 2018, the focus for NewCO2Fuels Ltd (NCF) has been establishing the right funding structure and seeking additional commercialisation partners outside of China.
With the global regulators continuing to pay more attention to the CO2 emissions of large gas producers and industrial corporations, along with the focus on Hydrogen as a fuel source, the opportunities for a world leading technology such as NCF that can convert CO2 & H20 to Fuel, continues to become more attractive.
NewCO2Fuel’s core technology efficiently produces synthesis gas (‘syngas’) from carbon dioxide (CO2) and water (H2O) by using a one-step high temperature ‘CO2 dissociation’ process. This reaction is a combination of photoelectric, thermal, electric and chemical processes combining heat and electricity. NewCO2Fuel’s technology can also process H2O and make Hydrogen. (Syngas is converted into valuable fuels & chemicals in the market including; gasoline, DME, methanol, synthetic natural gas and a large variety of chemicals & fertilizers.)
NewCO2Fuel’s is currently focused on funding from external parties who would provide the required capital (~USD$15m) to see the technology commercialised over a 24-month period and ready for large scale production. NCF has signed two Term Sheets with prospective funders, one term sheet as a direct equity investment into the NCF entity from a multi-billion-dollar fund. The other term sheet with a subsidiary of an overseas listed entity that would be looking to acquire rights for the technology across specific regions.
Both term sheets are commercial in confidence and provide the board and management of NCF with an exciting picture of the opportunities to fund and see the NCF technology come to fruition. The Term Sheets have a number of conditions attached that would preclude disclosure until certain milestones are met on behalf of the parties.
Whilst finalising commercialisation funding arrangements for NewCO2Fuel are in progress, the near-term commercialisation focus remains with the commercialisation agreement signed with SEG.
Additional commercialisation opportunities outside of China continue to grow, including exciting progress with a global trading company who has recently successfully completed several rounds of technical due diligence and is exploring the best path forward with the company, be that investment or purchasing of reactors. Much like Sinopec, this is a large global conglomerate with Revenues over $30 billion and a market cap over USD$15 billion.
Subsequent to the initial 1992 United Nations Framework Convention on Climate Change, 2015 saw the establishment of the Paris Agreement at COP21, where Countries and Corporations across the globe have increased their focus on reducing carbon emissions, and on reviewing additional clean fuel sources such as Hydrogen. There has also been an awaking to the ineffectiveness of Carbon Capture and Storage (CCS), which captures Carbon Dioxide and buries the problem underground, rather than cleansing / dealing with the CO2 at the time.
NCF is one of the technologies focused on Carbon Capture Utilisation (CCU), a process of taking excess CO2 from its generating source and turning the CO2 into a viable product, be that fuel or other products.
NewCO2Fuels process involves the capture of Carbon Dioxide at its source and using water and excess heat (or solar) to convert the Carbon Dioxide and water into Hydrogen, Carbon Monoxide and Oxygen at a financially viable price. With the current focus on Hydrogen, in Victoria as well as internationally, there are additional opportunities to utilise this technology.
A NEED FOR A REAL SOLUTION TO REDUCE CO2
Australia is requiring a solution to several real and political challenges around CO2 emissions reductions. Under the Paris Agreement, the per capita reduction of CO2 emissions required for Australia is more substantial than any other developed nation(1) because of Australia’s relatively higher population growth. This focus will only increase the need for CCU to be part of the solution. Conversely, if Australia simply looks to shut down CO2 emitting facilities to meet its targets, the resulting lower economic growth will impose a higher and potentially avoidable cost on Australia’s migration to a lower carbon emissions future.
Australian corporates involved in the exploration and production of hydrocarbons (IE natural gas and LNG) also face increasing pressure to disclose their commitment to reducing CO2 in alignment with their relevant countries overarching COP21 commitment. Recently the Australasian Centre for Corporate Responsibility (ACCR) noted the potential for a requirement to disclose emissions by Australian gas and LNG producers, including their planned capital expenditure to decrease CO2 emissions, and how their respective executives will be incentivised to achieve their CO2 emission targets.
Meanwhile, the Western Australia’s Environmental Protection Authority has recently begun to raise questions of longer-term impacts on large scale CO2 emitters, whilst press in the last 12 months notes that the large LNG Gorgon project continues to review the Carbon Capture and Storage focus.
NEWCO2FUELS WELL PLACED AS A LONG-TERM SOLUTION TO REDUCE CO2
With global focus significantly increasing on the need for industry, especially fossil fuel-based industries, on CO2 reductions, NCF is well placed with its technology to convert CO2 to commercially viable fuel sources. The opportunity for NCF continues to look extremely encouraging as a long-term solution to one of the world’s biggest environmental issues.
Through its indirect shareholding in NCF, Vivid Technology has a share of a valuable asset with significant growth potential. (Vivid Technology holds 50% of NCF Global, which is currently negotiating to lift its stake in NCF from 67% to circa 80% based off prior funding previously provided by NCF Global to NewCO2Fuels Ltd).
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