Jonathan Sisto | 00:04
Welcome to Powering Sustainable Ideas, a new podcast series from RBC Capital Markets where we interview the leaders and companies powering the sustainable future. I'm Jonathan Sisto, your host today, and I'm Managing Director in RBC Capital Markets New York City office focused specifically on energy transition companies. Today's special guest is CEO, Tim Vail, from ION Clean Energy. Tim, it's great to have you on.
Tim Vail | 00:31
Jonathan, thank you so much for having me on the podcast today. I’ve certainly enjoy working with you and RBC in the past and, I’m very excited about the future, and love to talk about sustainability issues, particularly around carbon capture.
Jonathan Sisto | 00:44
For some added context, Tim and I have known each other professionally for about five years. We've been batting around the idea of doing a podcast, and, more specifically, to highlight ION’s blue electron product offering. So Tim, maybe tell us a little bit about your career, and again, how you came to be the CEO of ION because I know it's a recent post for you.
Tim Vail | 01:12
You know, it's interesting. I grew up in Houston and in the energy business, and always thought I'd be an oil and gas guy, upstream guy, and I got out of school with a petroleum engineering degree, and plans to get a petroleum engineering degree in ‘84 if anybody is my age can remember those days where oil went to $2 a barrel, so there wasn't a whole lot of activity for us, and so I started thinking about, ‘Hey, what else can I do in the energy sector?’ And actually became a securities lawyer focused on, how do I raise money for large scale capital projects? It really gave me a taste of working, not on the upstream, but you know, what other things can be, what can be downstream, what can other activities out there? And that's what really drove me into, what we called back then, alternative energy, and it's gone through clean tech one, clean tech two, now the energy transition. And so I really got that career started in in the early 90’s and have just been in the space ever since. And have done a number of startups, taking a company public, sold a good number of businesses, built some very large plants, and was intrigued by the new wave of energy technologies, and joined a number of boards through a group called Climate investment out of London, and through that, got to know the investors of the ION guys and then they brought me in in ’23. And so that's, that's really kind of the backstory of how I got into ION.
Jonathan Sisto | 02:29
Tim, I've had the luxury of hearing you tell your team that the science is in our solvent and that you have a better mouse trap. But could you tell our listeners in more detail about ION technology and your product offering?
Tim Vail | 02:44
You think about carbon capture. There's a number of ways to do that. There's new technologies, there's solid state technologies, there's membrane technologies, and then there's the old standby, the amine capture technology, which in its base form has been around in the oil and gas industry for 100 years. And engineering firms know it well, and a lot of gas companies know it well. And so when I started thinking about carbon capture, I wanted to do something that had impact. I wanted to be able to capture large amounts of CO2. We've got a gigaton problem, and we can't solve that with 10 tons a year capture, we need to solve it with millions of tons. At the end of the day, it's all about getting these projects built and financed. And so how do you get bankers like RBC and other big project finance banks, how do you get them done, to get comfortable with the technology? And so the amine process, which is just basically for our listeners, an absorber, which is a large column where it interacts with a solvent, that solvent captures the CO2, and then you pump that around to what we call a stripper, which is another unit that then strips out the CO2 with addition of heat, and you create a high purity CO2 off gas. And so you remove the CO2 from the flue gas, and you create a very concentrated stream of flue gas or CO2 that then you can, can sequester or do something else with. The challenge was, was the traditional technologies, the traditional solvent technologies, were just not high performance enough. They took too much energy. They broke down over time. They and they and they created emissions that were unacceptable. And that's where ION really stands out. Our founder, Dr Brown, in 2008, he came up with a better idea to make an amine based capture solution that did not degrade, did not break down over time. And we're at now into our third generation of that solvent. And that's what really unlocks what we do. That's what allows us to come in and build a plant for less cost. It allows us to capture more of the CO2 and the flue gas. It allows us to do that much more efficiently use less energy, and finally, it allows us to do it without creating the normal regulated emissions that are associated with most amine capture systems.
Jonathan Sisto | 04:57
Yeah. So no VOCs. That's really important.
Tim Vail | 04:59
Yeah, and especially as we think about moving forward in emission sensitive areas like California, like non-attainment zones here in the United States or Europe for that matter. And that's where our technology really shines. We love to be brought into areas that are challenged from VOCs or other regulated emissions, that's usually a good thing for us, we usually will win that.
Jonathan Sisto | 05:20
So Tim, let's talk about capture rates, and you know everyone's favorite phrase, economics, but you think back in all like the plus or minus 550 megawatt gas fire power plants that they operated throughout the world. How much would ION be able to capture? And then, what are the unit economics that you could illustratively share with the group here today?
Tim Vail | 05:45
You know, capture rates are very, very important as we think about where we're going in the future and what the product offering is. What we're really seeing now with the advent of this new power revolution, driven by AI and data centers in general, is that we have customers that can afford and are willing to pay for a better product. And you know, we call that product a blue electron. So how do you create that, that electron with the lowest overall life cycle emissions of greenhouse gasses, both on the methane upstream side, as well as the CO2 production side, and that's where, the ION solution really has a competitive advantage over all of our competitors and computing sources be that wind, solar, nuclear, you know, all the other things that everybody gets so excited about. Natural gas based power generation is the answer. And ION is carbon neutral as possible. Traditional amine systems that are based on generic technologies, they capture anywhere from 85 to 90% of the CO2 that's in that flue gas. So you've still got emissions of 10 to 15% which are, still over and above, the ambient conditions. But with the ION solution, we guarantee 95% capture. But we've also been able to demonstrate two of our large pilots that that we can capture over 99% of the CO2, and we can do that with a modest energy penalty. The gas exiting our absorber column actually has less CO2 in it than pre-industrial society. So you know, we are actually not only doing carbon abatement, but we're also actually doing carbon removal. So think of it as a as a point source DAC for lack of a better term. We can get to this very high capture rate, to where we're removing almost all of the CO2 from that flu gas. That becomes very important if you're trying to sell a decarbonized product. So if you're trying to sell a blue electron, you need to capture as much CO2 as you can from that to be able to deliver the lowest life cycle of assessment of that molecule. And that's what we've been able to do. We've been able to demonstrate it at our pilot level. And now are working very hard with some national labs here in the United States, as well as with a large engineering and research consulting group called Carbon Direct.
And so from a technical standpoint, it's really revolutionary. But the second part of your question was cost. If you look at the other solutions that are out there, you know, the cost of carbon capture from a combined cycle natural gas turbine is just, it's not that much. A 550 megawatt turbine, we can go in there and capture, 95% of the CO2 out of that. And we could do it for a cost of about between $20 to $25 per megawatt hour. So you think about it, you know, two cents to two and a half cents per kilowatt hour, and that includes taking that CO2 from the flue gas, cleaning it up, compressing it, sending it in a pipeline, and sequestering it in a geologic formation. That's an all in solution, 20 bucks. I mean, some of the other things they're looking at, like nuclear and others that are in the hundreds of dollars a megawatt hour, and it's just not that great. Now in the United States, where we have fairly inexpensive industrial power, two cents is a lot. But if you look around the world where, you know, power might be 20 cents or 18 cents a kilowatt hour, the two cent uplift is just not that meaningful.
Jonathan Sisto | 09:13
And Tim it's almost like, as you bring down the CI score, one could command a higher price per megawatt hour. Is that a fair way to think about what ION’s delivering a power producer in a way?
Tim Vail | 09:25
Yeah, I definitely think so. I think there is a demand for the product, and people will pay a premium for it. From ION’s perspective and our engineering partners, we want to just build solid projects with returns that make sense for our investors and for our bankers. We don't have to come in and in charge these exorbitant prices and have these long development cycles. I definitely think that the market can support what we want to what we need to charge. For example, we've got a client that's in our shop, they run a cogen facility, and they make steam along with power. And that steam, their customer wants to have decarbonized steam that is willing to pay a premium for it. And so the project looks very economic because of that, that premium that they'll pay for the steam. And so it's a win, win, win. We can, we can provide that decarbonized steam to their customer. We can provide it to our customer at a fair price, and, and I think it's just something that the industry hasn't really understood yet, but the fact that it's an amine plant with a better solvent means that we can get the thing financed and, and that's makes all these numbers work.
Jonathan Sisto | 10:27
You mentioned before your product is a blue electron. I would contend that we're in the midst of an electricity super cycle. How are you facing off against these tier three and tier four data center and hyper scale, or customers today?
Tim Vail | 10:41
Well, you know, for us right now, it's all about education. We're telling the blue power story, and we're starting to get some real feedback from end users, hyper scalers that are looking for solutions. But to this day, our primary pathway to our customers is through the large scale engineering firms. And so we work with all of the major engineering firms that build the power plants for the utilities and for the hyper scalers. We want to continue to develop that, obviously, and we've built some great partnerships. We've announced one with Koch. We'll have a few more we'll being announcing here in the near future, but we've got great relationships with them. But then also, what we want to do is be able to get flipped to the other side of the equation and get customer pull, get these end users of the power to understand what we want and say, ‘Hey, I want to, I want to power. Purchase Agreement for these blue electrons in, you know, XYZ engineering firm. You go figure it out.’ And we're getting there. We're getting some, very favorable response.
Jonathan Sisto | 11:36
Got it so you're working with the well-known large EPCs, but then additionally, it seems like there's the ability for you guys to originate green field opportunities, behind the meter solutions, as well.
Tim Vail | 11:55
Yeah, that's right. And so our business has been focused primarily on retrofit of existing plants. You know, we have a contract with Calpine. We'll be creating blue electrons for their customer. We also have a relationship with Tampa Electric, where they want to create blue electrons. And so they’ve brought us in as a technology provider and as a retrofit to current existing facilities. What we've also now started to see is greenfield development. I'm sure everybody noted the Chevron engine one GE Vernova announcement. You know, Chevron is one of our big investors, and they are pursuing the path to decarbonized electrons through that partnership. We hope to be part of that and hope to be building some green field facilities that have our technology integrated.
Jonathan Sisto | 12:42
Tim, earlier, you mentioned Koch, but maybe you could take a second and talk to us a little bit more about the bankability and the product offering that you guys are presenting to end users. You know, I think about a lot of the projects we're working on right now in the energy transition that are centering around project and finance and the like, and some of the things that you guys are solving for are essentially table stakes. And so could you maybe just elaborate a little bit more on that wrapped solution?
Tim Vail | 13:10
Yeah, and that's something that has to happen. We got to get these technologies through the valley of death. At ION, we've got almost 20,000 hours of piloting. We've got tremendous scientific horsepower behind us. But at the end of the day, we've got to make it bankable, and we've got to get a customer to be able to finance and build on these projects. And so, when I joined, it was really about, how do we how do we expand the scope? How do we create a unified offering that includes not only our technology and the license to that technology and the engineering package, but also includes certain pieces of proprietary equipment that allows us to build the value of the overall contract so that we can, we can offer a guarantee that is meaningful to our customers. And we've been able to with Calpine put together a package that we think will be acceptable to them, that is in partnership with the engineering company, as well as with Koch and will be able to deliver a truly bankable package around that with performance guarantees for both the technology as well as the equipment, and a sufficient dollar number that makes sense for the size of the plant that we're going to build. And that's something that has to happen in order for these plants to go forward. And I think I on we might be one of the only ones that is that has that complete solution and being able to bring that to the market, to where, you know, a traditional project, finance, bank, it'll be acceptable to.
Jonathan Sisto | 14:32
So we've got bankability, we've got affordability, and let's go to verifiability. I'm thinking of Williams, Tim. How are you able to work with outsiders to get third party verified emissions or a CI score to make the product all the more attractive?
Tim Vail | 14:51
I think the carbon credit business has been the kind of the Wild West for good number of years now, with quality credits and non-quality credits. But what we're seeing is this entire ecosystem start to develop. You mentioned Williams, they work with a group called Context Labs that are working to create independently verifiable numbers around their upstream side of their natural gas business. They call it next gen gas solution, which is a very low methane independently verifiable number of what the global warming intensity is of that particular molecule when it gets to the power station. And then for us, we'd like to use the same tools that that will allow us to say, ‘Hey, we've been able to remove 95 or 99% of the carbon from that flue gas and then we can also verify if there is any leakage on the way to sequestration. We need to have independently verifiable carbon intensities and that's, fortunately, that's happening in the marketplace, and we can take advantage of services and we are.
Jonathan Sisto | 15:53
I mean, I would also add, too, in talking to investors, ION also represents a pure-play way to an expressive view in the carbon capture space, whereas a lot of your contemporaries that are in these massive global conglomerates.
Tim Vail | 16:07
Yeah, we're a small fry playing with giants right now, But these are big projects and, and they take a lot of horsepower, so, that's why we're so focused on building these partnerships and in relationships that that with larger names in the business, such as Koch that can stand behind us. We'd like to remain independent and grow. We did complete our series A financing just last March, and with Chevron and carbon direct as our lead investors, also, as you mentioned, Williams came in, and it was great round. We achieved our goals at an evaluation that was very exciting for our founder and common shareholders. And, you know, we're working hard to looking forward to 2026, where we'll go out and do our B round. We've already gotten a lot of interest in larger scale investors that want to write bigger checks. The infrastructure players, and it's incumbent upon Steve, Ben, and I to build a platform here that has adequate throughput, has the verifiability, it has the corporate governance, and ultimately I feel very excited about our future and our and our growth strategy, and I know we've got some changes in the White House, but you know, the business is rock solid, and the customers are demanding this blue electron, and we are in a unique position to be able to provide it.
Jonathan Sisto | 17:15
So we've got your kit in the field working today. Dozens of companies in the feed pipeline, in your office, as you said. Where should we expect to see ION next and maybe, what are some of your goals for the rest of ‘25?
Tim Vail | 17:29
We have a great history of piloting. We currently are operating a pilot with Calpine at the Los Medanos Energy Center, which is near San Francisco. That pilot runs 24 hours a day, seven days a week, operating on a real natural gas power plant and with real natural gas flue gas and, and so we continue to demonstrate solid performance of the solvent. And we are capturing up towards 99.5% at that facility every day. In 2025 and 26 we want to continue to do that. Calpine has been a great partner. But as we move forward, we're not necessarily that interested, Jonathan, in additional pilots. We have been requested by a large Pulp and Paper organization to come do some piloting around their flue gas, and that's something we would be interested in. But for natural gas, you know, we're ready to commercialize. The product is ready, and we're moving forward. What you'll see from us is new, big projects in the pipeline. I think you'll see some license agreements around with these new partners, and perhaps in early 26 you'll see an FID on one of these large facilities.
Jonathan Sisto | 18:30
The puck is definitely bouncing your way. Tim, anything I didn't ask that I should have?
Tim Vail | 18:36
Well, it's not that you didn't ask it, but I think the really important point is that, we have, here in North America and around the world, we've got great natural resources in the forms of fossil fuel, natural gas in particular. We should embrace it as a perfectly green solution sometime in the future. And you know that that opportunity is available to us now. It's affordable. It can allow our countries to grow and prosper, and it can be done right. It can be done cleanly. They've already demonstrated from a regulated emissions they can do it right. And now, with technologies like ION, we could do it from, a global warming perspective, or from a CO2 capture perspective. I mean, there's just no reason to wait any longer. Let's take the reins off and let this run and we can provide a meaningful low carbon solution for the next 20 to 25 years to bridge that gap that seems so impossible to everybody else.
Jonathan Sisto | 19:31
Tim Vail, everyone, CEO of ION Clean Energy. Thank you. Tim.
Jonathan Sisto | 19:37
Well, that's it for today's conversation. Thanks again for listening to Powering Sustainable Ideas, brought to you by RBC Capital Markets. Please remember to subscribe to get more great content and to be alerted about future episodes, this episode was recorded on February 24, 2025. And if you'd like to learn more or continue the conversation, please visit rbccm.com/energy-transition and we'll see you again next time.