I recently caught up with Skyonic, an Austin (Tex.)-based carbon capture startup that is expanding a demonstration unit into a production-scale facility at a cement plant in San Antonio, Tex. Due to come on line in 2012, Skyonic’s new deployment is designed to snare 75,000 metric tons of CO₂ per year from the cement kilns’ exhaust and convert it into saleable materials.

Founded in 2005, Skyonic has attracted plenty of buzz for its SkyMine process which transforms the CO₂ in smokestack exhaust into a buffet of industrial chemicals – including chlorine, hydrogen, magnesium carbonates, sodium bicarbonates, and sodium carbonates – at lower costs than today’s commodity chemical manufacturing methods, according to Joe Jones, Skyonic’s CEO and founder.

Versatile as its technology promises to be, Skyonic’s business model could prove to be as important. That is, if Jones can get the finances to work. With a solution that promises to generate revenue from both pollution reduction services and chemical production, Jones argues that Skyonic is on track to deliver carbon capture services cost effectively without the need for a regulatory price on carbon.

Notably, Skyonic’s recipe also pulls SOx and NOx and heavy metals such as mercury from flue gases. This scrubbing process is, of course, one that big power plants have used for many years. Jones says Skyonic’s SkyMine process can remove these pollutants more cheaply and at smaller scales than today’s methods.

The Environmental Protection Agency has been ratcheting up pressure for power plants to cut emissions of criteria pollutants, which is in turn driving demand for treatment technologies. Last May, the EPA officially recognized the SkyMine process as a “multi-pollutant control” to help power plants comply with the tougher new rules for hazardous air pollutants (known by the acronym, NESHAP, or also as the “utility air toxics rule”).

Jones ran through the numbers for SkyMine for me when we spoke. According to the company’s Jan. 2011 announcement: Current wet-limestone and SCR scrubbing is only scalable for large (400 megawatt or greater) facilities and costs US$400–650 per kilowatt of generating capacity. The SkyMine process can operate down to the 10 megawatt equivalent level and costs less per kilowatt. Additionally, Jones said, current scrubbing technologies release CO₂ as they capture acid gases; SkyMine does not.

Skyonic’s technology impressed Department of Energy researchers sufficiently that in July last year, the company was awarded $25 million – the lion’s share of a $106 million tranche of DOE funds distributed to a half dozen U.S. companies all focused on productizing CO₂ .

The DOE monies are the second dollop that Skyonic scored from Washington, coming on top of a $3 million grant at an earlier stage of the technology’s development.

“If carbon capture and sequestration policy is going sideways right now,” Jones told me, “demand for technologies that cut conventional pollutants is moving forward.” Their appeal is they can offer a market viable way to develop technology that can in time be focused on CO₂ capture, should a cap and trade program emerge.  “This is a neat little key that fits into the public policy hole right now.”

Writing in GreenTechMedia.com last December, Eric Wesoff rightly points out that that the chief question mark hanging over Skyonic’s ambitious claims is whether the technology will be truly economic and CO₂ negative at an industrial scale.

Jones believes SkyMine bests CCS because of his technology’s superior economics. “Mineralization is the way to get rid of CO₂. You don’t have to do open-heart surgery with the plant.” Since Skyonic’s approach is a post-combustion process, existing facilities can be retrofitted relatively easily, he said. Nor does the process require pipeline transport or geological storage and may therefore be more saleable to policy makers and the public.

Putting some numbers on his claims, Jones told GreenTechMedia that Skyonic’s current “carbon penalty” is 43 per cent, less than what he estimates is the range for CCS, if one includes the full energy toll posed by CO₂ capture, compression, transportation and injection. Jones added: “The DOE’s assessment of our process is the most important and the DOE says the process has a negative carbon footprint. It consumes CO₂ . Period.”

Jones told the Austin Statesman that the construction of Skyonic’s pilot facility is slated to conclude in 2012 with a total project cost in the neighborhood of $135 million. Funding in addition to the government’s share has come from venture investors.

Turning carbon capture into a profitable business, rather than a costly regulatory hurdle, seems like a smart path here in the U.S., especially as the budgetary outlook continues to darken for continued, let alone heightened, research subsidies for carbon capture and other clean technologies.

Enhanced oil recovery, which I wrote about last month, looks to be one of the biggest potential markets for carbon capture and use. And in coming posts I aim to profile the other companies pursuing carbon capture and use technologies backed by the DOE in its July 2010 funding announcement. In addition to Skyonic, these include Alcoa, Calera, Novomer, Phycal and Touchstone Research Laboratory.

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