Finnish firm Hycamite has developed proprietary methane-splitting technology that uses extremely high temperatures to produce hydrogen and solid carbon. The carbon can be used to make synthetic graphite and the EU earlier this year designated Hycamite's plans in Finland as a strategic project under the Critical Raw Materials Act. Argus spoke with Hycamite's founder and chairman of the board, Matti Malkamaki, about the firm's plans, the outlook in the US and why graphite has emerged as a highly attractive product. Edited highlights follow:
Can you tell us about the sites you have operating in Finland?
We have two sites. We have a pilot plant that has been operating with biogas for almost four years now. But the problem with the biogas is that it is scarce. We do not have it in the quantities needed for the industrial-scale plant and therefore we are considering our technology as a transition technology. We can use LNG or compressed natural gas and whenever there is enough biogas, we can either partially or fully use that at the larger site. It is a seamless transition between the feedstock. Since we also make graphite, we can pay a premium for the biogas feedstock, unlike power generators, for example, which cannot do that.
What is the status of the larger site and what is its purpose?
The nature of the plant is actually in the name of it — the customer sample facility. We got the strategic project status from the European Commission because we are making graphite onsite. In order to enter the market, we need to make larger, industrial-scale samples for customers and the site will provide those. We are making campaigns during which we run the site to make a sample for the customer. And then the customer can see how we might need to alter the carbon or graphite to their needs. Our next plant will be able to produce higher-value carbon and graphite. Our hydrogen plants will be located close to the customers for their decarbonisation needs as well as for carbon production. We are also using the hydrogen for our own production needs. As our scale grows in the future, our hydrogen customers will include local customers in Kokkola, including some fertilizer producers, metal companies and a lithium hydroxide refining plant.
So the facility has a nameplate capacity of 2,000 t/yr of hydrogen, but will it produce only hydrogen during these demonstration campaigns?
Correct. The carbon is the key because that way we can make the decarbonisation more cost-efficient for the customer. The agreements that we are now negotiating for our planned plants in the US do not state that we are selling hydrogen. What we are selling is the carbon removal from the natural gas. And of course, when you're doing that, the remaining element is hydrogen that the customer can use again.
Could your gas feedstock supplier and hydrogen offtaker consequently be one and the same company?
Correct. Of course, there might be some cases where we are producing some excess hydrogen. But for the first sites, we are seeking customers that are willing to decarbonise and hydrogen is just a means for doing that.
Where are you at with your plans in the US?
We have signed the first letters of interest. The deal with [Oregon-based utility] Northwest Natural is the only one that we have published but there are others in various locations. With the new administration, there are quite a lot of changes in the regulation and the first six months have been a little bit like a rollercoaster in a macroeconomic way. But I think, or at least I hope, that the situation is now calming down. It seems that the 45V production tax credits for clean hydrogen will be there until the end of 2027. But there are still a lot of open questions. For example, the consensus seems to be that by the end of this year, the Internal Revenue Service will define what counts as starting construction of your project before the end of 2027. But we have seen increasing interest on the graphite side and that might help us develop the business further there.
Could your projects meet the end-of-2027 cut-off for 45V?
That is definitely something we are working on. We are doing feasibility studies and have started studies with the local gas and power suppliers so that we can fit our units on the grid systems. On the most advanced sites, we are already working on the soil research and what else we need to do on the particular plots.
In the US, are you looking exclusively at using natural gas or biogas as well?
In all of the cases, we are starting with the compressed natural gas but definitely there is interest on the customer side to start using renewable natural gas. But again, there is the problem of where to get that from.
Are you confident that your hydrogen output can qualify for the highest $3/kg tier of 45V even with just natural gas use?
Yes, although it depends on the site and how we heat the reactors. We have sites in the US where we have been able to reach below the 0.45kg of CO2 equivalent per kg of hydrogen even with the full compressed natural gas use. It depends on the exact sources of the natural gas. If you have to follow the Greet model for the upstream emissions of the methane, then it is difficult. But if you can show the project-specific emissions, it is much easier. Typically the customers that we are working with have their own wells relatively close to the sites and they have had methane escape programmes for some time.
What is the sweet spot in terms of project size?
The bigger the better. A 2,000 t/yr site already sounds big and it is a lot bigger than what most of our competitors are saying. But we think that even this is on the small side. At the moment, we are discussing sizes of 10,000 t/yr or even double that.
When do you expect the first plants to start operations?
I would like to see them on line by 2028. We have sites in the US that would meet this timescale if everything goes to plan, but this depends on regulations and government activities.
Outside of the US and Finland, where else are you looking for sites?
Well, we did receive strategic project status from the EU as one of 47 projects. Other projects were typically bigger ones such as mines and so forth, but we are actually one of them and that is because of the better-grade graphite that we can produce. Graphite is, together with aluminium, the most critical material for the defence industry and a very critical material for electric applications such as batteries. We have the same approach in the US, Canada and Europe that everybody wants to cut the dependency on Chinese graphite. About 90pc or even more of the high-value graphite is currently coming from China. But China is already now curbing exports of critical materials and therefore everybody is really interested in graphite at the moment.
