This $1.5 billion startup promised to deliver clean fuels as cheap as gas. Experts are deeply skeptical.

This $1.5 billion startup promised to deliver clean fuels as cheap as gas. Experts are deeply skeptical. thumbnail

Last summer, investors gathered in the parking lot of a converted warehouse in Santa Cruz, California.

Rob McGinnis was ready to display his “Maxwell Core” pipe-shaped device. It is made with a membrane containing carbon nanotubes that forms pores that separate alcohols and water.

That day, it was connected to a tank filled with both. McGinnis explained the technology to his staff. They used it to fill the tank on a Harley-Davidson motorcycle. He says that alcohol seeped through the membrane and concentrated enough fuel to power the motorcycle.

Attendees were then invited for a ride on the Harley.

It was a theatrical demonstration of the technology key to McGinnis’s beguiling pitch: Prometheus will transform the global fuel sector by drawing greenhouse gas out of the air and converting it into carbon-neutral fuels that are as cheap as dirty, conventional ones.

Investors have invested in the company. Prometheus says it has raised more than $50 million from BMW’s investment arm, shipping giant Maersk, Y Combinator, and others. The startup has already struck deals to sell millions of gallons of its fuels to American Airlines and other aviation companies. It earned a shoutout in a Biden administration announcement detailing US efforts to shift toward sustainable aviation fuels. And after closing its venture round last September, the company announced that it was valued at more than $1.5 billion.

The problem? It is not clear that it can live up to its lofty claims.

McGinnis and his staff have built a prototype that combines the nanotube membrane with a device that sucks down carbon dioxide and a novel electrochemical cell. The system converts the carbon captured into alcohols and then concentrates them. This eliminates what would otherwise be a costly and energy-intensive distillation step.

A commercial-scale version would run off renewable power and add a final stage, which is the conversion of alcohols into synthetic forms such as gasoline, diesel, or jet fuel. McGinnis claims that the resulting fuels are “price competitive” with fossil fuels, and will not emit more greenhouse gases than the process removes from air.

The technology would not look like the large refineries that supply transportation fuels to the world. These modular units could be easily built anywhere and relatively inexpensively. Last April, Prometheus announced it expects to have half a million of these plants operating by 2030. Those could collectively produce about 50 billion gallons of fuel per year and suck down nearly 7 billion tons of carbon dioxide by the end of the decade.

If these fuels could be produced at the costs and on the scales claimed, Prometheus might well overhaul the global energy marketplace. It would be a simple way for the world to reduce the emissions from the cars and trucks that are already on the roads, as well as those of the ships and planes. It would also reduce the need to continue to extract fossil fuels and build oil refineries. This would ease the grip on petrostates as well as the world’s dependence on petroleum.

But Prometheus’s claims have raised eyebrows among entrepreneurs, researchers, and venture capitalists. Several experts who reviewed a presentation for investors obtained by MIT Technology Review doubt that the company can afford the claimed costs. It’s laughable,” Eric McFarland of the University of California Santa Barbara, a professor of chemical and engineering. He added, “It’s the technology bubble again.” “People are putting money into lots of things that ultimately won’t ever work, and this is one of them.”

Others are skeptical that a small startup has quietly integrated leading-edge chemistry, novel catalysts, and a breakthrough membrane into a single cost-effective package that will easily scale to commercial levels. The company has not publicly demonstrated a working system, submitted it to peer review or given more information about how it works to potential investors.

The fact that the company has not met its own targets to deliver synthetic fuels to market has raised more doubts. McGinnis originally said that Prometheus would sell its alternative gas for $3 a gallon by sometime in 2020, undercutting fuel sold at the pump. Two years later, however, the company has not yet developed a system that can produce fuels that can power standard cars.

All of this has created a perception among some that McGinnis, a theater major and playwright before he earned a doctorate in environmental engineering from Yale, is a bit of a showman. Although his bold claims may have helped the company to strike deals, observers claim that it has made it more difficult to discern the reality from the hype.

Most outside observers that MIT Technology Review spoke to still believe it could take decades for carbon-capturing factories to produce fuels as cheaply and easily as we can dig them up. Some believe they will never be able to.

Electrofuels

Prometheus, and some other startups working to produce fuels from captured carbon, describe the end product as “electrofuels,” since the process would effectively transform the energy in electricity into liquid fuels. They could be a key piece of the climate puzzle, providing a carbon-neutral source of energy for the entire transportation sector.

Batteries are fine for electric passenger cars, but it will take decades to replace all the world’s vehicles and trucks and create the charging infrastructure. No one is expecting batteries to power large aircraft and ships anytime soon. It’s difficult to beat the energy density of liquid hydrocarbon fuels and their convenience. They are cheap and easy to store, ship, and burn, according to Merritt Dailey of the Center for Negative Carbon Emissions (Arizona State University).

Electrofuels offer a way to continue using such fuels, along with our existing infrastructure, without adding any more greenhouse gas than the process removes. The clearest path for producing these fuels is to build direct-air-capture plants that use sorbents or solvents to capture carbon dioxide. Separately, electrolyzers are able to split water to make hydrogen. This can then be combined with carbon to create hydrocarbons.

Zero Net carbon fuels funnel concept

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All that is straightforward chemistry, and it’s the path that one of Prometheus’s rivals, Carbon Engineering, is pursuing. In 2017, the company, based in British Columbia, added the ability to produce fuels from captured carbon onto its pilot plant in Squamish. In addition, it announced plans late last year to begin design work on a commercial plant near Merritt, BC, which could produce more than 25 million gallons of low-carbon versions of gasoline, diesel, and jet fuel per year.

But the problem is that direct-air-capture equipment and electrolyzers are both expensive to build and run. It takes considerable heat to separate carbon dioxide from the sorbents, and to concentrate the gas. Also, the electrolyzers require a lot of electricity.

A study on electrofuels last year in Environmental Science & Technology found that with standard technologies, even at full commercial scale, a gasoline equivalent would cost around $16. 80 a gallon. The cost of a gallon might drop to $6, according to estimates. 40 in the next decade and $3. 60 by 2050, but only if there are major cost reductions in the necessary equipment and electricity.

Given these costs, most observers believe that electrofuels won’t gain a foothold in the market without emissions mandates, steep carbon prices, or other supportive policies. Carbon Engineering, for example, claims it is relying on government subsidies to make the economics succeed.

Prometheus claims that its fuels will be able to compete with those made from crude oil. This is largely due to Prometheus’s avoidance of key steps that can make other electrofuels more expensive. The company claims that it won’t take decades for this to happen, but only a few years.

Undercutting gasoline

In 2012, McGinnis left a desalination startup he cofounded, Oasys Water, but continued working on ways of improving a core piece of the technology: membranes.

He began to focus on the potential for carbon nanotubes which can be used to absorb or reject certain compounds. He spent many years trying to figure out how to embed them in plastic sheets and align them perpendicularly to the surface to create selective pores.

He coauthored a 2018 paper in Science Advances that showed he could manufacture carbon nanotube membranes that were effective at rejecting salt and magnesium sulfate. Further refinements and experiments led to nanotubes that had openings large enough to allow complex alcohol molecules to pass through. However, the interior was able to repel water. McGinnis was convinced that the technology could simplify a complex and costly step in one way to produce synthetic fuels.

In late 2018, McGinnis responded to Y Combinator’s call for carbon removal startups to apply to its accelerator program and got in, which he says marked the formation of Prometheus Fuels.

During YC’s Demo Day in San Francisco the following March, McGinnis reportedly stood on stage to deliver his pitch to the crowd of investors and show off a refrigerator-size prototype of the device he had completed days before the event.

It had sprung a leak and wasn’t operating, Science wrote at the time, but that didn’t prevent him from making a bold claim: “Today, gasoline sells for $3. 50 a gallon in California. Next year, we will be selling it for $3 per gallon.”

The process

The process breaks down into four main stages, according to Prometheus’s investor materials.

In step 1, industrial fans draw in air, and blow it through a mixture of water and other compounds. McGinnis suggests that this could include sodium carbonate. This reacts with carbon dioxide molecules in air and changes much of the carbonate into bicarbonate. The resulting solution is then moved into a battery-like device with a membrane in its middle and electrodes at either end. This uses electricity to ignite a series chemical reactions that create complex alcohols. It is equipped with a catalyst that was developed using technology licensed by Oak Ridge National Laboratory. In an earlier description, that lab said it had developed a catalyst made from tiny carbon spikes embedded with copper nanoparticles. When a voltage was applied, it converted carbon dioxide dissolved in water into ethanol “with a yield of 63%.”

Prometheus’s carbon nanotube membranes come into play in step three, separating the alcohols from the water.

In step three, Prometheus’s carbon nanotube membranes come into play, separating the alcohols from the water. Then, different catalysts are used for combining the alcohols to make synthetic gasoline, diesel or jet fuel. In 2020, Prometheus licensed separate technology from the Oak Ridge lab that can be used to produce jet fuel from ethanol, through a multistep process that relies on a novel though unspecified catalyst.

The overall process is quite different from that used by other companies to convert carbon into fuels. As McGinnis explained in a Joule commentary, the Prometheus systems can operate under standard atmospheric pressure and at room temperature. The technology does not require heat energy to produce concentrated carbon dioxide, nor does it require the capital cost of an electrolyzer that produces hydrogen. The company claims that it can make alcohols from carbon dioxide dissolved into water and then convert them into standard fuels.

If they have indeed figured this out, it could lead to significant energy savings and cost savings, says Evan David Sherwin (postdoctoral researcher at Stanford) who produced the Environmental Science & Technology study. One of the slides in the investor materials shows a Prometheus-branded fuel stop, with a red neon sign advertising $3 gas prices. 50 a gallon and diesel at $3. 75, well below current average US prices.

‘Out over their skis’

McGinnis later pushed back his target date for delivering fuels, saying in that March 2020 Joule piece: “We project that by putting all of these advances together, it will be possible to offer renewable gasoline from [direct air capture] CO2-to-fuels within the next two years that is price competitive with fossil gasoline.”

When asked about that line, David Keith, a Harvard professor and founder of Carbon Engineering, mocked it in an email: “I project that by optimally putting all my smart ideas together it should be possible, within the next two years, for me to send a 5. 13b climb [a very difficult rock-climbing grade] while getting elected to the National Academy and also launching an initiative that catalyzes global under-ocean [high-voltage, direct-current electric transmission line] interconnects.”

Both of Prometheus’s self-imposed deadlines have now passed.

McGinnis blames delays on the pandemic, subsequent supply chain issues and declines to specify when the company will sell gas at the pump. He says, “I feel like a fool because I predicted things and then they happened.”

But he adds later that if “everything goes our way,” they could demonstrate the fuel later this year, and “maybe” begin shipping it commercially in 2023.

Other issues have also been noticed by outside observers.

The first is the solar cost Prometheus is banking on for its cost estimates: 2 cents per kilowatt-hour, which McGinnis says was based on the news that the city of Los Angeles had negotiated a contract to purchase renewable power for that amount.

zero net carbon fuels concept

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But the Los Angeles figures reflected a 25-year contract with a giant customer that was able to secure rates not likely to be afforded to a single plant. The unsubsidized costs if you build and draw power straight from a large solar project in the sunniest parts of the US is around 3 cents per kilowatt-hour, says Ramez Naam, a clean energy investor focused on the solar sector, who is bullish on electrofuels. If a plant draws on power from farther away, the costs will go up.

“I think they’re outover their skis a bit,” he said. However, he also stated that solar costs could reach levels the company has projected for the next decade. Relying solely on clean electricity, which is essential to make the carbon neutral math work, creates additional constraints. The plants must be extremely cheap, highly automated, and capable of scaling up or down as electricity generation levels change. In order to make a profit, they will also need to be very flexible. They will also need to include energy storage like large battery banks, which could significantly increase their costs. The plants could also rely upon steady sources of carbon-free energy like nuclear, geothermal or a combination of wind and solar resources that are largely balanced out. McGinnis replied in an email to questions about variable renewable power. He said that the fuel forges can be operated quickly and easily depending on the availability and price of electricity. He also said that the facilities could use hydrogen they produce to power the process in certain situations.

Perhaps the biggest question is how well the various experimental parts of Prometheus’s system, particularly the electrochemical cells that produce alcohols, will work outside the lab.

Sean McCoy, assistant professor in the department of chemical-petrol engineering at the University of Calgary, said that academic groups have also explored key aspects of this process. He says that it is mostly early-stage research that has encountered challenges. He also points out that other researchers working on an electrochemical process to convert carbon dioxide to alcohol have produced “very high yields

” Is it technically feasible to do it the same way they propose?” He wrote in an email that he agreed. They are likely many years away from making this a commercial reality unless they have resolved major problems at the front end. I doubt it. It’s unlikely .”

McFarland says that complex alcohols would require a long series of reactions due to the high cost of electrochemical cells and electricity.

“Even if it costs them only 2 cents [per kilowatt-hour] then they won’t be able to compete with fossil fuels,” he said in an email.

Some people believe it’s unlikely that any company or process could ever make synthetic fuels from direct-air capture at comparable costs due to the high cost of hardware and electricity, as well as the ability of oil-producing countries to lower the price of fossil fuels through their decision to produce more oil.

“You can’t beat free energy from the sun that went into fossil fuels to start with,” McCoy states. “That’s the challenge.”

It’s also conspicuous to some that Breakthrough Energy Ventures, Carbon Direct and Lowercarbon Capital–three prominent venture capital firms with a reputation for scientific rigor and a focus on carbon removal–haven’t invested in the company. Sources say that the final cost and technical claims seem unlikely. Also, McGinnis won’t allow them thoroughly vet certain scientific claims which was seen as a red flag.

Stanford’s Sherwin says that the process “doesn’t seem crazy,” but he notes some of Prometheus’s cost and efficiency assumptions do appear “very aggressive.”

He raises another issue, noting that any company working on electrofuels will need to operate openly, or be subject to oversight, to be sure the end product is actually carbon neutral.

“It’s going to be really important for synthetic hydrocarbon manufacturers to have very transparent and clear verification of the source at every step,” he says. “Because it wouldn’t be hard at all to have a magic box and sell gasoline.”

‘Right around the corner’

In an emailed response to these issues, McGinnis said the company will use an impartial means of carbon-neutral certification when it’s available. McGinnis stated that additional methods will be available to verify the production of the fuels, including analysis of the carbon.

He stressed that the investor materials weren’t designed as a stand-alone document, noting they also provided some firms additional information on their process through a spoken pitch and other materials.

“Anyone who has only read the pitch deck and did not receive it in a pitch will be missing crucial context,” he wrote. He also noted that the investor materials were not intended to be a standalone document. However, they provided additional information through a spoken pitch. He claims that he requested such firms to rely upon technical due diligence the company obtained from third-party consultants.

McGinnis had previously declined to discuss specific parts of the process with MIT Technology Review, citing similar reasons.

McGinnis states that he has some tricks that we have filed patents for and some trade secrets that I would love to share with him. “But we’re still working on some of the patents

But McGinnis says that Prometheus doesn’t face any scientific challenges at the moment, and that he plans to hire quickly and get ahead much faster now that the company has raised its Series A funding round.

McGinnis says that they have already begun talking to regulators about the steps they would need to take to directly sell the fuel.

Prometheus’s investors also remain optimistic.

Marcus Behrendt, the chief executive at BMW i Ventures, the venture arm of the auto giant, says his group is “very confident” that Prometheus is on track and that its carbon-neutral fuels are “right around the corner.”

“If he is successful, this is going to be a really big game-changer–and the odds aren’t against him,” Behrendt says.

McGinnis believes it’s safe to assume that all startups will fail. He adds that you might miss the rare breakthrough that delivers a real breakthrough. I understand people saying “I’ll believe in it when it happens to me,” he said. “We either ship fuel or we don’t.” Because we either do ship fuel or we don’t.”

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