Calix signs Heirloom licence agreement - TechInvest Magazine Online

Australian environmental technology company, Calix Limited’s (ASX: CXL) 93% owned subsidiary Leilac, has signed a binding and perpetual global licence agreement and a collaboration agreement with Heirloom Carbon Technologies (Heirloom), a Direct Air Capture (DAC) company.

Highlights

• Leilac, a Calix subsidiary, has signed a binding and perpetual global licence agreement for the use of its technology by Heirloom for carbon dioxide removal by DAC.

• The agreement specifies Leilac and Heirloom will work together exclusively for DAC applications and that the Leilac technology will be used at all future Heirloom DAC facilities, subject to conditions and both parties achieving agreed milestones.

• Under the terms of the agreement, Leilac will receive a royalty based on the value of the CO2 captured with the technology. The royalty uses Leilac’s standard licensing model with rates specific to the DAC application.

• The royalty will 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. A variable royalty rate, based on the prevailing CO2 price or value less the amortised cost of capital of the Leilac kiln per tonne of CO2 separated, will apply when above the floor price.

• In addition, a collaboration agreement has been executed which includes a US$3m contribution by Heirloom towards mutually agreed upon DAC and lime-related research and development activities.

• Leilac will retain all intellectual property relevant to its technology.

• Heirloom, whose investors include Bill Gates-backed Breakthrough Energy Ventures, use lime as a low-cost solution to directly capture CO2 from the atmosphere.

• Heirloom has signed a long-term contract with Microsoft for the purchase of up to 315,000 metric tons of CO2 removal over a multi-year period, in one of the largest carbon dioxide removal deals to-date.

• Heirloom is a partner in Project Cypress, one of two projects notified for selection by the US Department of Energy (“DOE”) for up to US$1.2b provided through the Bipartisan Infrastructure Law’s Regional DAC Hubs program.

• Carbon dioxide removal in the order of 1-10 billion tonnes per annum is expected1 to be needed to limit or return global warming to 1.5 °C, as committed to in the Paris Agreement.

Leilac and Heirloom’s partnership

Leilac’s partnership with Heirloom, whose investors include existing Leilac shareholder Carbon Direct Capital Management, as well as Bill Gates-backed Breakthrough Energy Ventures, Ahren Innovation Capital and Microsoft, brings together two complementary climate technologies to provide an efficient approach to atmospheric carbon dioxide removal by DAC.

The partnership aims to accelerate the deployment of renewably powered electric calcination technology for DAC and the decarbonisation of hard-to-abate industries, such as cement and lime. It enables the DAC industry to leverage and benefit from many years of investment and technology development, including from the European Union and the cement and lime industries.

In turn, Heirloom’s ambitions for rapid deployment of large-scale carbon dioxide removal – with significant government and private sector support – has the potential to aid industrial decarbonisation efforts, particularly the electrification of heavy industry at scale. This complementary and collaborative approach aims to support a just transition to sustainable local industries.

Heirloom projects

Following the signing of a non-binding memorandum of understanding in February 2023, Leilac and Heirloom have progressed the engineering and design of DAC plants using Leilac’s electric calcination and CO2 capture technology, including a research and development campaign using Calix’s electric calciner pilot-plant in Bacchus Marsh, Victoria. This work is informing the design of new commercial DAC facilities.

Heirloom installations are targeted to rapidly increase in scale. Project Cypress, located in southwest Louisiana, USA, aims to capture more than 1 million metric tons of existing CO2 from the atmosphere each year and store it permanently underground. Heirloom is one of two DAC technology companies participating in the project, and the project is one of two that were notified of selection by the U.S. DOE for up to US$1.2 billion in funding under the Bipartisan Infrastructure Law’s Regional DAC Hubs program.

Heirloom has also signed a long-term contract with Microsoft for the purchase of up to 315,000 metric tons of CO2 removal over a multi-year period, in one of the largest carbon dioxide removal deals to- date.