Startups promising to power planes, ships and trucks with clean fuels have suffered setbacks before they even got off the ground, showing how difficult it will be to wean many industries off their dependence on oil and gas. [emphasis, links added]
A United Airlines-backed company raises hundreds of millions of dollars Projects to convert trash into jet fuel appear to have been halted.
Another project, backed by Airbus, JetBlue Airways and GE Aerospace, is working on Plans to use hydrogen to power planes failed.
Meanwhile, Chevron, BP and Shell Projects that scale back cooking fats, oils, greases and plant materials to create biofuels.
“The early excitement didn't live up to the hype,” Plug Power CEO Andy Marsh said the startup recently opened one of the first U.S. plants to produce green hydrogen, a potential alternative to fossil fuels in industries such as steelmaking and chemical production.
Plug Power shares have fallen more than 90% since the passage of U.S. climate law two years ago. Shares of Gevo, a biofuels startup on which Marsh serves as a board member, have fallen about 80% during that period.
Failures and delays following the passage of the climate law have all but doused early optimism.
Rising costs have delayed project timelines and made it more difficult for companies to raise capital. Government delays in finalizing tax credits have compounded the challenge.
Without clean fuels, emissions from many companies are expected to continue climbing, threatening U.S. and global climate goals.
Industries such as aviation and shipping are relying on new fuels as wind, solar and batteries cannot meet their massive energy needs.
Shipping company Maersk recently said it would order up to 60 new ships that can run on LNG and marine fuels, in part due to uncertainty over the development of green fuels.
Air New Zealand could become first airline to withdraw 2030 emissions targetsciting limited supplies of alternative aviation fuels.
“It's really challenging to leverage new technologies to do what the fossil fuel industry has been doing for over 80 years,” said Jimmy Samartzis, chief executive of LanzaJet, a startup backed by Shell, Southwest Airlines and Microsoft.
LanzaJet will soon begin production at a plant in Georgia, one of the first in the U.S. to produce sustainable aviation fuel, but construction ended up being much more expensive than the company expected.
The company's fuel is made from ethanol, which costs about twice as much as conventional aviation fuel without subsidies.
United Airlines, one of the biggest backers of biofuels and hydrogen startups, has seen a slower pace of investment this year.
Andrew Chang, managing director of United's venture capital arm, said this reflects policy uncertainty surrounding the November presidential election and cash flow and financing challenges faced by many companies.
“If you can't find the money, there's nothing to talk about,” he said.
Many clean fuel projects have become money pits, in part because they require large amounts of electricity. High interest rates, supply chain disruptions and costly grid upgrades have pushed up electricity prices.
Clean fuel producers are also competing for renewable electricity with large technology companies that operate artificial intelligence data centers and can often pay higher electricity prices.
“The only way to solve this problem is to reduce the cost of green electricity,” says Andrew Forrest, one of hydrogen’s strongest advocates.
Forrest, the billionaire founder of Australian iron ore giant Fortescue, said His company's 2030 hydrogen production target now looks unrealistic. Fortescue plans to generate clean energy to make hydrogen in Australia and is considering doing the same in Arizona.
In the United States, the slow rollout of domestic subsidies and weak demand are pushing rivals such as Plug Power and Electric Hydrogen to expand overseas, upending expectations when the climate law was passed.
Read “Break” from The Wall Street Journal
