Why we invested in INERATEC: Miniaturized e-diesel production in a shipping container

Transportation needs to clean up its act

By Mark Dryden and Brian Walsh

The transportation sector is large globally, contributing a quarter of GHG emissions while driving economies worldwide. Much attention is on decarbonizing this sector, and while the electrification of new (mostly light) vehicles is growing, significantly impacting these emissions will take time. It faces many challenges, like a need for more infrastructure and reliable renewable electricity to power.

For specific sectors, like mining, the challenge is particularly acute. 80% of the mining sector’s CO2 emissions come from diesel, with the bulk from heavy mining haulage trucks. Facing mounting pressure from regulators, investors, and customers, mining companies seek to decarbonize their operations. Yet there are no easy fixes. It is very challenging to convert mining trucks to electric or hydrogen powertrains because these are not suited to such demanding applications (for example, a 400-ton payload is typical), and supporting infrastructure is essentially non-existent. So, while the demand for diesel will remain strong, and as time runs out to avoid disastrous climate change, we’re left with the question, “How can transportation clean up its act?”

The history of early low-carbon fuels

Low-carbon fuels have been around for some time but have their challenges. For example, early low-carbon fuels have been derived from HEFA sources, such as used cooking oil, and while the technology is mature and fuels are cheap, HEFA sources are minimal. Innovators have been looking beyond HEFA and biofuel sources to creatively source energetic inputs such as trash and reinvent processes such as Fischer Tropsch and fermentation to produce fuels more efficiently.

Many current technologies, like older ones, use scale to achieve efficiency, requiring centralized, capital-intensive, refinery-scale processing plants. As a result of this scale, it is often challenging to situate nearest to the best inputs, renewables, and carbon. These expensive technologies face First-of-a-Kind financing challenges that are typical of climate tech. The result? Low-carbon fuel prices today are still far above their fossil counterparts, a real challenge for price-sensitive customers. New technologies could take decades to come to fruition, if at all. And we don’t have the time.

E-fuels as an option to decarbonize transport

Synthetic fuels like e-diesel are a drop-in replacement for fossil diesel with a carbon-neutral footprint. They’re made by combining hydrogen and carbon dioxide using various chemical processes. The carbon dioxide can come from the atmosphere or point source capture, for example, the output of the pulp and paper industry. Hydrogen is typically produced from the electrolysis of water. Producing e-fuels is also, unsurprisingly, energy-intensive and requires 24/7 renewables to be truly carbon neutral.

Introducing INERATEC, the decentralized “oilfield of the future”

INERATEC, a Germany-based startup, set about solving twin challenges plaguing the industry — 1) high plant capital costs; and 2) expensive e-fuels. INERATEC has developed a highly efficient, miniaturized process technology that fits in a shipping container. The INERATEC “Synthesis Unit” modules can be combined like Lego to achieve fuel production levels from small to refinery scale. INERATEC plants are designed to be decentralized, so they can be placed strategically, nearest to the best sources of renewables, carbon, and offtake, such as diesel-thirsty mining customers. Impressively, INERATEC’s miniaturized, decentralized technology does not come at the expense of efficiency; the plants are more efficient than centralized facilities due to a range of very clever German engineering.

Their turnkey technology is highly flexible, producing a range of certified fuels directly from factory-manufactured containers. As the INERATEC e-diesel is drop-in, customers can use the fuels without upgrading their operations. E-diesel can be blended with normal diesel to scale supply while progressively decarbonizing the mining sector. This shifts the burden of decarbonization away from mining operations to INERATEC’s leading technology, allowing mining customers to focus on what they do best. These same benefits apply to other INERATEC fuels: SAFs for aviation, shipping fuel, gasoline, methanol, and more.

INERATEC has been successfully solving the industry’s twin challenges. For high plant capex (challenge 1), INERATEC has been able to validate its technology and iterate designs on a small scale while rapidly reaching the commercial scale it has today. INERATEC has delivered well over ten plants, while others are often still challenged with bringing an expensive first commercial-scale plant to life. Solving expensive e-fuels (challenge 2), is the culmination of INERATEC’s clever tech, modular design, and scaling strategy. We at WIND Ventures see a clear pathway to cost parity by the end of the decade and wide applications for decentralized fuel production.

Coming to Chile soon

The mining sector in Chile is vast, demanding 15% of Chile’s energy and contributing 14% of its GDP. It is the world’s largest copper producer and has 54% of its lithium reserves, both critical metals to the energy transition. Copec supplies most of the fuel this sector consumes, and clean technologies like renewable energy. Chile’s renewable energy resources are unparalleled: it enjoys the global top 5% solar irradiance in the North and the world’s highest windspeeds in the South. As a result, it is one of the countries with the lowest costs for producing hydrogen. Its vast pulp and paper operations are a great source of carbon. With the ingredients for e-diesel in abundance — renewables, carbon, and hydrogen, combined with high demand from the mining and broader transport sector, the fit for INERATEC’s technology couldn’t be clearer. WIND Ventures is excited to collaborate with INERATEC to unlock the potential of the mining sector in Chile and the $600B LatAm transport sector beyond.

About WIND Ventures

WIND Ventures is based in San Francisco and serves as the strategic venture capital arm of Copec, one of the leading energy, mobility, and retail companies in Central and South America. Copec is also one of the most valued brands throughout Latin America. WIND Ventures leverages Copec’s significant resources to accelerate growth, primarily within Latin America, for startups and scaleups across the world within the new mobility, energy, and retail sectors.