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Rivan Industries and other startups are betting their new techniques will make green fuel cost-competitive

LONDON—On a quiet industrial estate, engineers at British startup Rivan Industries are working to perfect a system to produce synthetic natural gas from water, sunlight and air.

Their work involves splitting hydrogen from water and capturing carbon-dioxide directly from the air, then combining the two gases to make green methane, a cleaner substitute for natural gas, the source of energy for around a quarter of European households. The entire process takes place in a modular unit, a sort of self-contained mini-power plant, powered by solar energy and that Rivan plans to mass produce.

Green fuel hasn’t been cost-competitive with fossil fuels because making it requires a lot of energy and the equipment needed to do it is expensive. What’s more, green-fuel makers typically have to acquire the carbon dioxide they need from outside sources, such as ethanol and biomass facilities that produce the gas as a byproduct.

But now Rivan—along with companies such as Terraform Industries in California, Brineworks in the Netherlands and OXCCU in the U.K.—are betting they can streamline production and bring down the cost of green fuel by doing everything under one roof, in a self-contained system that runs on renewable power. The three-year-old Rivan says it ultimately hopes to place its modular fuel systems near where gas is needed, such as factories or data centers.

Besides cutting costs, the new technologies would make it easier for green-fuel companies to secure carbon dioxide. They would no longer have to compete for supply with carbon-capture companies that sequester the gas underground and sell carbon-removal credits to heavy polluters, long a more profitable business than making clean fuel.

By capturing carbon directly from air on site, and taking advantage of big drops in the cost of renewables such as solar and wind, Rivan and the others believe they can create a future where industries that can’t be electrified because they require high heat to operate, such as steel, cement and chemicals, move toward greener sources of energy.

Importantly, they say the fuel they make could be fed into the wider power grid, reducing companies’ reliance on imports. Almost 60% of the European Union’s energy needs are met with imports currently, according to Eurostat, leaving the region vulnerable to geopolitical shocks such as the conflict in the Strait of Hormuz, which has strained supplies and sent prices of fossil fuels soaring.

Since natural gas is already piped through towns and cities from refineries, no major overhaul of infrastructure would be needed to support the technology, says Oleksiy Tatarenko, senior principal in the Climate-Aligned Industries Program at energy nonprofit RMI, which was an early investor in Brineworks but no longer holds a stake.

“It’s essentially a drop-in molecule that can piggyback on existing infrastructure,” he says.

The right moment

The startups are all working on the same basic idea—integrate direct-air carbon capture with the equipment that synthesizes natural gas.

Harvey Hodd, chief executive and founder of Rivan, says the rapid fall in the cost of renewable energy in recent years has made his company’s method of producing natural gas feasible.

“Now is potentially the only time ever in history that you can take very cheap electricity and turn it into something like a synthetic fuel,” he says.

Rivan’s technology involves capturing carbon dioxide from the air with large fans that have specialist materials to absorb the gas from the atmosphere. Such techniques were pioneered by direct-air capture companies such as Climeworks and Heirloom, which largely focus on selling carbon credits to companies needing to lower their overall emissions.

Brineworks, founded in 2023, uses a different method for capturing CO₂, one that involves saltwater electrolysis. But its goal is similar to Rivan’s: pull carbon from the air at a lower cost, produce green hydrogen and combine the two to make cheaper e-fuels.

Gudfinnur Sveinsson, the company’s chief executive, says his company’s systems are designed to be flexible, capable of producing different synthetic fuels based on what customers request.

“We see our role in just enabling every single synthetic fuel producer on earth to get to fossil-fuel [cost] parity faster,” he says. “Regardless of the fuel, you need hydrogen and CO₂, so we can do whichever of those.”

Uncertainties remain

Rivan, which has raised 35 million pounds, or $46 million, in series A funding, recently moved from a pilot facility to a much larger factory in South London, where it plans to scale up production of its fuel systems. At another site two-hours from the capital, the company has deployed one of its systems and is producing synthetic gas to be fed to the grid.

Rivan says the cost of the methane it is making at that site is below benchmark natural-gas prices in Europe, which currently sit around 90 euros, or roughly $100, a megawatt hour. The company declined to provide specific pricing, saying it was commercially sensitive.

Of course, European, and global fossil fuel prices are relatively high because of the war in Iran. Whether the startups can undercut conventional fossil-fuel prices on a large scale and over the long term remains to be seen.

Falko Ueckerdt, senior scientist at the Potsdam Institute for Climate Impact Research, says that while the startups are moving ahead, both the hydrogen and renewable carbon used to make green fuels are scarce and expensive resources that struggle with competitiveness and bankability, meaning near-term uptake is likely to be limited.

And while climate policies encouraging carbon pricing can help make these fuels more competitive with conventional ones, green methane will often just be competing with other low-carbon options. “Green-methane competes with hydrogen or electrification,” he says. And “electrification is often the cheapest option, where possible,” he adds.

Still, RMI’s Tatarenko says it’s important to work on these technologies now and not wait until 2030 and 2040s, adding that the past few years of energy shocks only provide more impetus.

“Each of these shocks show the fragility of the fossil-fuel supply chain and that creates tailwinds for alternative supply chains,” he says.