Airex Energy has closed the first tranche of funding for a Series D round that will be spent on developing the Montreal-based company’s biocoal and biochar projects.

The funding is led by French water management company SUEZ Group, with Cycle Capital, Fonds de solidarité FTQ and Investissement Québec participating.

The dollar figure is not yet finalized as more investors are interested in joining a second funding round that is expected to close in the coming weeks, Airex CEO Michel Gagnon told Sustainable Biz Canada.

“It’s a good size. (A round this size) will allow us to continue our growth and to invest into our projects we’re working on.”

The company offers low-carbon alternatives to fossil fuels and solutions for carbon sequestration and greener metal production.

Airex has a facility in Becancour, Que. that produces 15,000 tonnes of biocoal per year, and intends to develop an additional facility with triple the production capacity.

In Port-Cartier, Que. it also has the Carbonity biochar project that will be operational in late 2024. Microsoft will be buying carbon credits from Carbonity.

Expanding biocoal production

Airex’s pyrolysis technology is called CarbonFX, a process that removes moisture and volatile organic compounds from wood sawdust to form biocoal, biochar and biocarbon.

The biocoal is used to help decarbonize the energy sector by replacing coal with a lower-carbon alternative. Biocoal can reduce greenhouse gas emissions by up to 90 per cent compared to conventional coal, Airex says. It is made by subjecting organic matter to torrefaction at temperatures between 250 C and 350 C.

“It’s not coal from fossils, it’s vegetal. It’s coming from woody biomass . . . When you produce energy from coal it emits 1,000 tonnes of CO2 (carbon dioxide) per gigajoule. If you do the same with our material it’s about 70 (tonnes),” Gagnon said.

In addition to serving as a coal substitute, biocoal can be a feedstock for sustainable aviation fuel, renewable natural gas and hydrogen fuel production.

Currently, Airex’s biocoal facility produces two tonnes of the product per hour, but the company aims to develop a facility that can produce six tonnes per hour. Such a facility with the capacity of 45,000 tonnes of biocoal per year is planned to be built in Eastern Canada, with prospective locations including Quebec or New Brunswick, Gagnon said.

The biocoal has been sold to large utilities in France, Asia and New Brunswick, and has met the demands of the companies.

Progress on Carbonity

Carbonity is planned as a three-phase project between Airex, SUEZ and Quebec forestry company Groupe Rémabec. It is expected to reach a total production capacity of 30,000 tonnes of biochar by 2026, rising by 10,000 tonnes of capacity per phase. It is designed to sequester 75,000 tonnes of carbon per year, Airex says.

Sawmill residues and bark will be processed using the company’s CarbonFX-HT pyrolysis technology to turn the forestry waste into biochar. Using temperatures from 350 C to 600 C in a process called carbonization, biochar and biocarbon is made.

Each tonne of biochar can sequester 2.5 tonnes to 3.2 tonnes of carbon dioxide. It can also improve soil productivity or be used for water filtration, while biocarbon can be used to make low-carbon metals or concrete.

The $80-million Carbonity project will sell its biochar production carbon removal credits to Microsoft, with the help of First Climate. The contract has been set for approximately 32,700 tonnes of credits to be issued and delivered within the next three years.

The project is part of a partnership with SUEZ to reach 350,000 tonnes of biochar production capacity by 2035, and the opportunity to sell approximately one million tonnes of carbon credits. Europe and North America are the target markets for Carbonity, Gagnon previously told Sustainable Biz Canada.

Reaching the SUEZ partnership goal will require building a project the size of Carbonity ever year, he noted. An investment plan with SUEZ and other partners to meet this ambition is in place.

A $38-million Series B funding round went toward Carbonity and technology development, Gagnon said. Airex has raised $60 million to date, he added.

The Airex CEO also sees potential in selling the biocoal-production technology and is in discussions with customers, particularly sustainable aviation fuel producers.