Dec. 5—What do Texas wind and solar farms have in common with clouds of pollution hanging in the air over its industrial hubs? When combined, the two could form an energy source for the future.
Tree Energy Solutions is joining a growing list of energy companies putting down roots in an evolving hydrogen ecosystem in Houston. The Belgian company has based its North American subsidiary, TES Americas, in Houston and aims to make synthetic natural gas by combining carbon dioxide captured from the atmosphere along the Gulf Coast with green hydrogen made from renewable electricity. The resulting "green gas," which the company also calls ENG, can be used anywhere natural gas is used — in the same pipelines, power generators, liquefied natural gas facilities and cargo ships.
Its facilities would combine the captured CO2 with hydrogen produced through the electrolysis of water using electricity generated by wind, solar and other renewables to make methane, the primary ingredient in natural gas, displacing the need for natural gas in applications such as power generation and heavy transportation vehicles.
Launched in 2019 as a green hydrogen company, the multinational parent company is gaining traction in Europe as it develops units that can revert liquefied gas back to its gaseous state for use — infrastructure it can use now for LNG and later for its own manufactured gas as the transition from fossil fuels accelerates.
The company's mission, it said, is to accelerate that transition. To do that, it is pushing to build facilities in areas such as the Gulf Coast, where industrial hubs and wind and solar farms provide ample access to carbon dioxide and renewable power.
TES Americas opened its offices in Houston in October and hired Cynthia Walker, previously Occidental Petroleum's chief financial officer, as CEO. Walker recently sat down with the Houston Chronicle to discuss the company's ambitions in the region.
Q: What would you say the company's mission is?
A: We drill for oil; we drill for natural gas. It gets refined, transported and utilized. But in the future, we can actually manufacture these exact same types of fuels using resources that are completely above the ground. So we can use carbon dioxide from either the air or from an emitter and combine that with green hydrogen that we intend to manufacture in a thermal process so that the end product is natural gas.
The beauty of that is it can be used in all the existing infrastructure pipelines — ships, terminals, distribution networks. We think it's an advantaged approach to accelerate the transition because any end user of natural gas can use this today. Because you're utilizing billions and billions of dollars of infrastructure that is already in place, you hopefully lessen the cost of the transition to green fuels, and a cleaner economy.
Q: What makes Houston an attractive place for the company?
A: It's important that we have carbon; it's important that we have green hydrogen. And we think the Gulf Coast, in particular, but other places around the U.S. as well, have the right mix of carbon capture potential with green hydrogen production potential to allow us to site our green natural gas manufacturing there. It's really the overlay of where do you have the right natural resources of wind and solar or hydroelectric power combined with the regulatory regime.
What's critical is the Inflation Reduction Act. That is critical support for the production of green hydrogen anywhere in the U.S.
Q: Did the passage of the IRA change your timeline?
A: Absolutely. It definitely accelerated the move to North America. We think that legislation is a game changer and puts the U.S. as the leader for green hydrogen production. Not only does it provide the right incentives, but it effectively puts the U.S. government as the financial sponsor to these projects, and that is key to getting them funded in the finance and tax equity markets.
Q: When you say TES is looking to build a global ecosystem, could you paint a picture of what that looks like?
A: We want to produce our green natural gas anywhere in the world where we think it's economical to do so. And that's generally going to be where you have low-cost renewable electricity, combined with that regulatory support to make it cost effective. The U.S., clearly, now screens very high on that list, but there are other places in the world, like the Middle East, which has a lot of sun, and Australia, where we are also working on building supply.
Q: What's next for TES in Houston? Do you see yourselves planning projects?
A: Houston is the energy capital of the world. There is no other place where you can find this unique mix of incredible talent, but also third party service providers, and really supportive local partners, whether it's with the city or even broader than that. Houston is going to be home base for the North American business. No. 1 is to bring in people — looking for a lot of good people to join the team. In parallel with that, we are working on where we site our projects. There are five primary locations across the U.S. that we are focused on. The Gulf Coast is going to be a key aspect of that. We hope that all of that puts us in a position to have a project in a pretty quick time frame.
Q: What are the challenges facing the green hydrogen industry?
A: One of the biggest challenges is the end market. There are not very many end users for hydrogen today. We think ENG has an advantage because its market is as big as the natural gas market is globally. So we think it's a way to get hydrogen in the system quickly and cost effectively. The other challenge is uncertainty around implementation of some of the new legislation. While the legislation is very favorable, the way it gets implemented could have big implications for how quickly and cost effectively the hydrogen market can evolve, so we're watching that closely. Also the regulatory alignment between the US and Europe — we want to make sure that what is called green in the U.S. is green in Europe. That's very important to us.
Q: What attracted to you to the company?
A: When you think about how the company was started, it was started with the ambition to accelerate the energy transition. Our ENG, or green natural gas, is the perfect solution because it's a quick path to decarbonization, but it's also balancing the cost of the transition because we're going to repurpose billions of dollars of investment.
The second thing I would say I considered: do I want to stay in traditional energy or be part of the transition? The transition is in such early days, and when I look at TES technology, we're at the very beginning of what is going to be an accelerating curve. ENG is going to accelerate in cost competitiveness relative to today's fossil alternative. The transition is the future, and this solution is the future, and there's just tremendous potential ahead to make impact.
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