VANCOUVER, British Columbia and NEWPORT BEACH, Calif.— Clean Power Capital Corp. (CSE: MOVE)(FWB: 2K6)(OTC: MOTNF) (“Clean Power” or the “Company” or “MOVE”). The Company is pleased to announce that its investment, PowerTap, plans to participate in the California Low Carbon Fuel Standard (“LCFS”) Carbon Credit program.
California’s LCFS market may be one of most unique Carbon emission credit trading program, reflecting California’s commitment to greenhouse gas reductions.
The LCFS Carbon Credit program provides PowerTap an opportunity to generate revenue even before dispensing any hydrogen from its fueling stations by allowing PowerTap to sell its earned LCFS credits on an on-going basis on the emission trading markets. Purchasers of these credits are oil companies and other gross polluters, who are required to offset their CO2 emissions in California. PowerTap will be eligible to earn LCFS HRI credits as soon as its fueling stations are installed in California. PowerTap plans to rollout its fueling stations during the second half of 2021.
The California LCFS program, established in 2009, was one of the first to focus solely on the transportation sector, a difficult sector to de-carbonize due to its numerous stakeholders. California’s LCFS program required the main fuel suppliers to reduce the carbon intensity of their fuels by 10% by 2020 – from a 2010 baseline. The program was extended to require a further reduction of 10% by 2030 – thus, a 20% total reduction1. This goal of decreased CO2 is measured in grams of CO2 emitted per MJ of fuel (heat value). The baseline for gas and diesel is drops each year, and any fuel supplied to the State and put into motor vehicles that has life cycle emissions less than the baseline can generate what are called LCFS credits. When a large carbon emitter like an oil company is working toward meeting their annual LCFS target, they rely in large part on the purchase of LCFS credits. These credits can be generated from electrical vehicle charging, biogas (for CNG vehicles), ethanol, other biofuels, and hydrogen production. In 2020, the LCFS program is estimated to be a multi-billion carbon credit trading market2.
Hydrogen fueling posed an interesting challenge for California regulators because of the current “chicken-and-egg” aspect of the alternative fuel, but the resultant program works in the favor of companies like PowerTap. Vehicle purchasers will not purchase hydrogen vehicles until there is a more robust hydrogen fueling infrastructure in place. However, hydrogen industry participants would not build more fueling stations until there were more hydrogen cars that use them. Thus, the regulators who oversee the LCFS program at the California Air Resources Board (CARB) created the Hydrogen Refueling Infrastructure (HRI) credit in 2019, which allows LCFS credits to be issued simply if the hydrogen capacity (measured in daily capacity of hydrogen that can be produced in kg) were installed, even if no hydrogen were dispensed. The theory is that once the stations are in place, more consumers will buy hydrogen cars and the use of these stations will rise. There are two types of credits – the capacity or HRI credit and the more traditional LCFS fuel dispensing credit, which is based on the amount of hydrogen fuel that goes into vehicles. As a hydrogen station begins to dispense hydrogen, the proportion of HRI credits goes down and the number of “dispensing” credits goes up, generally keeping carbon credits stable.
By participating in the LCFS Carbon Credit program, PowerTap plans to generate revenue from the earning and subsequent sale of HRI credits even before the sale of any hydrogen from its fueling stations. To earn HRI credits, PowerTap must build fueling stations that meet certain criteria such as, the station must be open to the public, be available to all drivers, allow all major credit cards, have confirmation from three vehicle OEMs that their customers can use the station, and other standards that PowerTap plans to meet with its modular hydrogen fueling stations; and apply to CARB for the HRI credits. These credits are available for 15 years from the quarter following CARB’s approval of the qualifying hydrogen station application. Once the HRI credits are validated with CARB, PowerTap plans to sell the credits in the emission trading markets on an on-going basis at approximately $200 per credit, a value which is reflected on the most recent Weekly LCFS Credit Transfer Activity Reports3. Purchasers of these credits are oil companies and other gross polluters, who are required to offset their CO2 emissions.
A third-party consultant analysis of the value of LCFS credits that may be potentially earned by PowerTap has estimated that PowerTap has the potential to generate California LCFS credits of $2.95 per kg per day of hydrogen capacity; thus a 1,200 kg capacity hydrogen station can generate $1,292,100 of annual gross LCFS carbon credit revenues per each 1,200 kg hydrogen station installed and opened even if no hydrogen is sold. A summary of the third-party analysis (including assumptions and qualifications) of PowerTap’s potential LCFS credit generation value may be found at https://www.powertapfuels.com/pdf/carbon_credits.pdf. In connection with PowerTap’s process of completing its 3rd generation design of its patented onsite hydrogen production stations, it will retain leading California LCFS Carbon credit experts as agents and consultants to establish the necessary infrastructure and reporting protocols to receive these very attractive daily Hydrogen Fueling Infrastructure carbon credit revenues.
“California carbon credits are an important incentive that will greatly assist PowerTap in its hydrogen fueling station rollout plan by generating attractive revenues for PowerTap even before hydrogen is dispensed and sold. Revenue from the sale of these credits is expected to be generated once PowerTap completes the rollout of its hydrogen fueling stations in California. Major clean technology companies have depended on carbon credits for years to augment cash flow and allow them to aggressively grow. In fact, Tesla recorded US$397 million of carbon credit revenue in Q3 2020, assisting Tesla in reporting $331 million of Q3 2020 net income”, said Raghu Kilambi, CEO of PowerTap Hydrogen Fueling Corp.4
The Company invested in PowerTap on October 27, 2020 (see the Company’s news release on October 28, 2020). PowerTap is leading the charge to build out cost-effective hydrogen fueling infrastructure through its environmentally friendly intellectual property, product design for the modularized and lowest tier production cost of hydrogen, and launch plan. PowerTap technology-based hydrogen fueling stations are located in private enterprises and public stations (near LAX airport) in California, Texas, Massachusetts, and Maryland. Additional information about PowerTap and the Hydrogen Industry may be found at its website at http://www.powertapfuels.com
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