Inside the Department of Energy’s loan deal to back hydrogen

A conversation with Jigar Shah about why the feds want to support a first-of-a-kind plant for hydrogen and carbon black.

First-of-a-kind projects are, by definition, unproven. Despite the abundance of capital in climatetech these days, the valley of death for new technologies still exists.

But there are solutions out there. And this week on Catalyst, we have a case study of one of them. 

The U.S. Department of Energy’s Loan Programs Office has $40 billion of capacity to help solve exactly this kind of problem. It just announced its first conditional commitment for a $1 billion loan guarantee to help chemicals and energy company Monolith scale up its first megaplant in Nebraska. 

Monolith uses methane pyrolysis — heating methane up to high temperatures — to split the gas into hydrogen and carbon black, which is an essential component of tires, plastics, rubber and other materials.

It’s a key indication of where the DOE is putting its priorities. 

We brought both sides of the negotiating table on the podcast: Rob Hanson, the CEO and co-founder of Monolith, and Jigar Shah, the director of the DOE’s Loan Programs Office. 

Jigar shares what he’s heard from lenders about why loan guarantees are important and why commercial banks are reluctant to place bets on these first-of-a-kind plants. He also addresses misconceptions about the office’s role in the climatetech ecosystem.

Rob dives into Monolith’s decade-long process to reach this milestone and points out key differences between venture capital and infrastructure capital. He also talks about what Monolith’s second- or third-of-a-kind climatetech plant could look like.

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Catalyst is supported by Antenna Group. For 25 years, Antenna has partnered with leading clean-economy innovators to build their brands and accelerate business growth. If you’re a startup, investor, enterprise, or innovation ecosystem that’s creating positive change, Antenna is ready to power your impact. Visit antennagroup.com to learn more.