In this episode of the Capital Compass, we get an update from Cielo Waste Solutions (TSXV:CMC; OTC:CWSFF), which is progressing its clean fuel strategy in northern British Columbia through Project Nexus, a waste to fuel development focused on producing low carbon renewable fuels.
Since our last conversation in October, Cielo has confirmed its target location in Prince George, advanced its feedstock agreements and outlined how federal and provincial policy from Clean BC to LCFS credit framework strengthens the economics for its chosen output, Sustainable Aviation Fuel.
Joining Ricki with the latest developments is Ryan Jackson, CEO of Cielo Waste Solutions.
Ricki: Let’s start with the progress since your October update, you’ve now confirmed Prince George as the planned site for Project Nexus. Why was this location selected and what advantages does Prince George offer for a project of this scale?
Ryan: Well, a number of things Ricki, but Prince George is more than a site selection. It’s a strategic anchor, right?
It sits at the intersection of British Columbia’s forestry rail and energy corridors, and it gives us direct access to feedstock, a skilled industrial workforce and robust logistics environment. And it positions us within a region that understands industry and supports clean energy quite frankly.
With our recently signed MOU with a major North American rail company, we’re reinforcing both our feedstock and logistics strategy at a scale that is able to be handled by this corridor at Prince George. That gives us the right foundation to build a world class SAF or Sustainable Aviation Fuel facility, and that can scale us over time as demand grows.
Ricki: Well, you’ve also spoken about taking a more disciplined stage gated approach this time around. So what progress have you made on securing foundational feedstock supply and what are the next steps before finalizing the site and engineering work?
Ryan: Right. So, we have laid out a defined progression. So, I mentioned the foundational MOU agreement or MOU that we have with respect to scrap railway ties. We’re adding onto that with feedstock as we move forward in the Prince George area.
But we are advancing our pre-feed engineering. We’re progressing permitting and early site development planning. We’re finalizing our feedstock frameworks and our logistics partnerships and we’re advancing our capital structuring and we’re also preparing our LCFS related funding submissions.
So, the next phase is really about execution. We’re turning Project Nexus into a tangible operating SAF platform capable of delivering a sustained environmental and economic value and de-risking the project as we move into the funding stage, which will early in the new year.
Ricki: And so, both the federal government and the Province of BC have strong policy signals supporting renewable fuels from the Clean Fuels Fund to BC’s Low Carbon Fuel Standard. How do these incentives influence the economics for Project Nexus, and what opportunities do they open for Cielo as you move toward a construction ready plan?
Ryan: Well, quite frankly, British Columbia provides one of the strongest clean fuel policy environments in North America. Clean BC, abundant biomass feedstock, regulatory frameworks are all ideal for this project.
The bigger story though, is Canada, quite frankly, and we see Canada emerging as a global hub for low carbon industrial development. And it’s backed by predictable policy, clean electricity, coordinated federal, provincial climate commitments.
All of that is when there is so much geopolitical uncertainty pushing capital towards sustainability and towards Canada, quite frankly. And Canada does stand out for us, for Cielo, it means that we can invest and have investors with confidence and build that confidence by de-risking the project that I mentioned earlier.
Ricki: And so, you’ve now officially committed to Sustainable Aviation Fuel, or as the cool kids call it SAF, as the primary output for Project Nexus. So what makes SAF the right pathway for Cielo and can you speak to the demand you’re seeing in the market?
Ryan: Absolutely. And SAF is the right pathway for us, and it’s where the policy, the economics and the real demand finally do line up. And I want to take a step back or acknowledge that hydrogen was a very valuable step in our learning curve.
It had great carbon intensity, it’s technically solid, but the market signals just quite frankly weren’t there. SAF is absolutely different. Airlines don’t have optionality. They can’t electrify long haul, they can’t wait for miracle technology, and they’re staring down federal and provincial mandates that ratchet up every year.
They need low CEI SAF at scale today, not in 2040. So that’s exactly where we fit. Our feedstock is locked in, our technology pathway is proven, and the LCFS credit environment in BC makes SAF production economically compelling. It’s a policy regime that literally funds a meaningful share of our operating and capital costs.
And if we deliver a low carbon SAF, that’s a tailwind from a policy standpoint that you just don’t ignore. So, on the demand side, it’s really not theoretical.
Airlines are signing long-term SAF offtake agreements at a pace that this industry’s never seen before. So every carrier in North America is under pressure. This is not just a localized deal and even globally there’s a lot of pressure from a regulatory and customer driven SAF story today.
So, it’s really about our shift to SAF isn’t really a pivot, it’s just a logical next step in building the business that we identified in Prince George.
Ricki: And so, looking ahead, what are the key milestones investors should watch out for as you move through pre-FEED, advanced feedstock agreements and prepare formal funding applications under BC’s LCFS initiative?
Ryan: So, the first is pre-FEED, and that’s something when the project stops having been a concept and becomes an engineered cost and schedulable asset. Pre-FEED gives us all the technical backbone we need for everything that follows. So that is what we’re in right at the moment. It gives us a better understanding of cost estimates, site specific design and the package, quite frankly, that the government funders want to see.
Parallel to that track is also our feedstock. We’re finalizing our commercial frameworks in long-term supply of feedstock that we were looking for and other wood waste streams, whether they be from forestry slash, from mill byproducts or even landfill wood waste redirect as an example of how abundant the feedstock in the Prince George area is, which I know I’ve spoken to.
So that bankability of that feedstock also has us going down that very same path. And then the other one is our LCFS initiative agreement with BC. It’s quite frankly covering half of our CapEx through forward credit mining. And if we do want to move forward and we are moving forward with that, we do need to be able to provide that pre-FEED engineering.
So that is our milestone we’re working towards, and we’ll have accomplished that pre-FEED process by the end of Q1 of this next year.
Ricki: Brilliant stuff. Well, thank you so much for joining us today, Ryan, and giving us the latest from Cielo Waste Solutions.
Ryan: My pleasure, Ricki. Thanks for having me.
Cielo Waste Solutions Corp. trades on the TSXV under the ticker CMC. To learn more about the company and its technology visit www.cielows.com.
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