e-Fuels Startup Prioritizes Diamond Production Over Jet Fuel

The Impact of 9/11 and a Path to Sustainable Fuels

The events of September 11th profoundly affected Stephen Beaton, motivating him, like many of his generation, to pursue a career in military service.

From Air Force Academy to Fuel Research

His academic pursuits at the U.S. Air Force Academy led him to a focused study of chemistry, specifically concerning liquid fuels. Beaton reflected on the post-9/11 oil price increases, stating, “How could we replace fossil fuels?” He believed that achieving energy independence was crucial for bolstering national security.

Following his time at the Academy, Beaton continued his education at Oxford University, earning a PhD. He subsequently returned to the U.S. and held various positions within the U.S. Air Force. These roles included leading research initiatives, ensuring the quality of the branch’s fuel supplies, and managing investments in energy-related research and development.

The Challenge of Fuel as a First Product

Upon transitioning from military service, Beaton aspired to establish a company dedicated to the creation of liquid fuels. He readily admits, “I’ve always been obsessed with fuels.” However, he quickly recognized a significant hurdle: “Fuel is a terrible first product.”

Beaton explained that fuel is fundamentally a commodity, characterized by low prices. The established fossil fuel industry has benefited from over a century and a half of optimization for both large-scale production and cost efficiency. He argued that a startup’s initial offering should resemble a high-margin, luxury item – akin to the early Tesla Roadster – while remaining aligned with the eventual production of fuel.

Circularity Fuels and the Diamond Market

Circularity Fuels, Beaton’s startup, has identified a promising initial market: the production of lab-grown diamonds. Diamonds, composed of pure carbon, require methane in their creation, and this methane must be exceptionally pure.

“That methane typically sells anywhere from 100 to 300 times the price of natural gas,” Beaton noted, translating to a price range of $40,000 to $80,000 per ton.

Transforming CO₂ into Methane

Circularity Fuels generates methane by combining hydrogen with carbon sourced from CO₂. While the concept of converting captured carbon dioxide into fuel isn’t new, the company’s approach is distinct. Many attempts to transform CO₂ are hampered by prohibitive costs, making them uncompetitive with fossil fuels. Beaton acknowledges that Circularity currently cannot compete with most fossil fuel prices, but believes scaling their unique reactor will change that.

The core of Circularity’s innovation lies in a specialized catalyst. This catalyst exhibits greater selectivity, maximizing the production of methane while minimizing unwanted byproducts. Furthermore, the reactor’s design allows for simultaneous carbon capture and methane production, eliminating the need for separate processing units.

The reactor is engineered for rapid heating, enabling the catalyst to reach peak efficiency quickly. It also incorporates a system to recapture and reuse waste heat generated during methane production, powering the carbon capture process.

Energy Efficiency and Profitability

Collectively, Circularity’s process reduces energy consumption by 40% compared to alternative CO₂-to-fuel methods, according to Beaton.

Due to the catalyst’s high selectivity, Circularity can produce 99.9999% pure methane at a pilot scale for a lower cost than extracting it from fossil fuels. “Even at the current hydrogen prices of $5,000 to $7,000 a ton, we’re profitable,” Beaton stated.

Future Expansion and E-Fuel Potential

“We envision taking those same concepts and scaling them up for methane, natural gas, synthetic natural gas, as well as other products,” Beaton explained. The company’s ultimate goal is to lower the price of e-fuels to the point where they can effectively compete with and displace fossil fuels in the market.

Funding and Recognition

Circularity Fuels has been recognized as an ARPA-E awardee and is currently finalizing contract negotiations. The company was initially incubated at DCVC, where Beaton serves as an entrepreneur-in-residence, and received pre-seed funding from the firm.

To date, Circularity has secured $4.9 million in grants and awards from sources including ARPA-E, the California Energy Commission, the National Science Foundation, and the Stanford TomKat Center for Sustainable Energy.

Modular Design and Infrastructure Impact

The reactor’s modular design allows for on-site methane and e-fuel production, reducing transportation costs and minimizing greenhouse gas emissions associated with aging infrastructure. This aspect was a key factor in DCVC’s investment, as explained by managing partner and co-founder Zachary Bogue. He pointed out that the current natural gas extraction and transportation system is so prone to leaks that burning coal can be a more environmentally sound option.