Leilac signs Direct Air Capture MOU for global licence and collaboration agreement with Heirloom

The licence agreement

Under the terms of the proposed global and binding perpetual licence agreement set out in the MOU, Leilac will receive a royalty based on the value of the CO₂ captured with the technology.

The royalty will:

1. Have a floor price set at the greater of US$3/tonne of CO₂ separated in a Leilac kiln, or 3.5% of the prevailing CO₂ price for lime decarbonisation; and
2. Have a variable price based upon the total volume of CO₂ capture capacity installed and the prevailing CO₂ price for lime decarbonisation, less the amortised cost of capital of the Leilac kiln per tonne of CO₂ separated.

It is expected that the floor price will be the initial royalty rate. As the technology application develops in scale and maturity, the costs of deployment are expected to fall correspondingly and cause the variable price to become the prevailing future royalty rate.

As part of the licence and collaboration agreement, Heirloom will contribute US$3m towards mutually agreed upon DAC and lime related research and development activities. Leilac will retain all IP relevant to its technology.

Why Direct Air Capture?

Industrial decarbonisation is vital to achieving net zero emissions by 2050 and avoiding the most catastrophic effects of climate change. However, urgently decarbonising our industries will not be enough to achieve global climate goals. The excess carbon dioxide already in the atmosphere must also be mitigated.

The Intergovernmental Panel on Climate Change projects that carbon dioxide removal in the order of 1-10 billion tonnes of CO₂ per year could mitigate residual emissions and, in most scenarios, achieve net negative emissions to return global warming to 1.5°C, following a peak.

Modular, scalable and low-cost DAC technology, paired with geological carbon storage, can offer a path to removing ambient CO₂ at the scale.

Applying Leilac’s industrial decarbonisation technology to DAC

Leilac’s decarbonisation technology was developed for, and in partnership with, the cement and lime industries. It provides an efficient solution for the separation and abatement of unavoidable process emissions released in the production of cement and lime and is designed to be powered by renewable energy sources and clean alternative fuels.

Heirloom will apply the same core Leilac kiln technology for direct air capture of CO₂ emissions from the atmosphere, leveraging eight years of significant investment from the European Union and cement and lime industries to support and progress the DAC industry.

Leilac’s technology is proven at pilot scale, including through its pilot plant, Leilac-1, and three smaller electric units. In operation since 2019, Leilac-1 has a capture capacity of 25,000 tonnes of CO₂ per year and is currently the largest carbon capture installation for cement in the world, outside China. Currently, Leilac’s proven capacity is more than double the current combined capture capacity of all DAC facilities globally.

Leilac-2, a demonstration plant that will be retrofitted to Heidelberg Materials’ operation plant in Hannover, Germany with a capture capacity of 100,000 tonnes of CO₂ per year is due to open in 2024. Multiple engineering studies are in progression for full-scale installations of the Leilac technology at cement plants with capture capacities of ~1 million tpa of CO₂.

The partnership will also further accelerate development of Leilac’s decarbonisation solutions for industrial emissions in cement and lime, helping to pave the way for full scale industrial electrification and CO₂ abatement.

Mr Rennie continued, “The collaborative and cooperative approach outlined in this agreement aims to accelerate the learning, synergies and steps to scaling that are needed to achieve our global climate ambitions and commitments. We are very excited to see the results we can achieve together.”