🔒‘Hyper-growth’ startup in Old Saybrook inks $105M deal for carbon-removal technology in Arkansas

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An Old Saybrook-based startup is working to harness climate change to its advantage, by essentially reversing the process by which carbon is emitted during decomposition.

As carbon dioxide heats the planet, causing damage to the environment, BluSky Carbon Inc. heats — but does not burn — organic waste until it changes into biochar, a harmless soot-like substance.

Biochar locks in carbon for thousands of years and can be recycled.

The process, called pyrolysis, occurs in an oven, without the presence of oxygen. High temperatures break down the input material, creating a byproduct of combustible gas that can be used to power the system.

“You’re essentially interrupting the carbon cycle, and creating this negative emission source,” said William Hessert, CEO and co-founder of BluSky. “So, you’ve removed atmospheric carbon and you’ve stopped it from re-emitting, or at least you’ve stopped it for thousands of years.”

BluSky bills itself as a carbon-reduction company, because it not only eliminates a source of carbon emission — decaying organic matter, like wood chips — but recycles it into an environmentally friendly product.

The company recently entered into a 10-year, $105 million agreement with an agricultural company to run a 50,000-square-foot biochar production facility in Warren, Arkansas. The plant contains a 24-foot-tall Vulcan Heavy oven, capable of “eating” 5 tons of organic material per hour and removing about 20,000 tons of CO2 per year.

Hessert said roughly two-thirds of the facility’s revenue comes from selling biochar as a soil supplement, and the other third from the sale of carbon removal credits.

The agricultural company, which Hessert declined to name, provides a supply of agricultural waste — mostly wood chips from local tree-trimming.

The Arkansas facility contains one of three Vulcan systems BluSky is developing to service the agreement. The first system went live in October.

The machines will eventually produce a combined output of 40,000 tons of biochar a year, Hessert said.

Amazon-like approach

Hessert formed the business, which now has 15 employees, in 2021. It is not yet generating a profit (BluSky reported a $9.5 million net loss during the nine-month period that ended May 31, 2024, according to a filing with the Canadian Stock Exchange, where the company trades.)

The focus, for now, is on growing the business and its technology, he said.

“The goal is not to just start generating a lot of cash flow…,” Hessert explained. “We’re going to be reinvesting a lot of that (revenue) into growth and expansion.”

Hessert called BluSky a “hyper-growth company,” modeled after e-commerce giant Amazon.

“In the same way that you look at Amazon, and its growth trajectory over like 20 years, at any moment, if they decided to be profitable, they could have been profitable,” Hessert explained. “But they were just constantly reinvesting in expansion and growth.”

Hessert described Amazon founder Jeff Bezos as “one of the greatest businesspeople of all time.”

“He was certainly onto something with (the idea that) you’re constantly focused on growth, and that if you ever need to, you can make a profit if you just slow down the growth,” Hessert said. “That is a strategy that we’re going to be embracing.”

Hessert said the carbon industry will need to scale more in the next 25 years than solar has in the last quarter-century, in order to meet the 2050 goal of net-zero greenhouse gas emissions under the Paris Agreement.

“This will have to be one of the fastest, if not the fastest, expanding industry in human history, and we intend to be the leaders of that charge,” he said.

Technology, in addition to natural processes, are needed to remove the required 10 billion tons of carbon dioxide to meet the 2050 goal, he said.

“Planting forests and whatnot is one method, or you can do it technologically,” Hessert explained. “And while the nature-based solutions are great and will certainly be part of the solution, they will not get us to the scale required in time. And so we need technology that can remove CO2 from the atmosphere, and then after that, to undo some of the damage that’s been done.”

Global footprint

BluSky primarily operates in the United States, but is publicly traded on the Canadian and Frankfurt stock exchanges.

The company has an office in Vancouver, British Columbia, in addition to its Old Saybrook headquarters at 35 Research Parkway. It also has partnerships in Germany.

BluSky has its hands in other U.S. states, too. In June, it secured a $686,155 contract to provide pyrolysis equipment to the city of Minneapolis so it can run a biochar facility for processing wood waste.

In early November, BluSky announced it had formed a joint business venture with Texas-based Red Mountain Biochar LLC, called BluMountain Carbon.

The joint venture has agreements with two commercial prospects.

BluMountain signed an agreement with Carbon Market Exchange Inc., based in North Carolina and Michigan, to develop and operate a biochar production facility in Tanzania, Africa, which uses local feedstock.

In Orlando, the joint venture has partnered with Oregon-based Neutralizing Environmental Trash Inc. to develop a facility that processes local wood waste.

BluSky is raising money on multiple fronts as well. In early November, it issued 6 million special warrants at 50 cents each to raise $3 million. The offering is not available in the United States.

Hessert, 28, graduated from the University of Connecticut, where he studied physics. In his career, however, he has focused on software development. He previously founded an app development company.

“I studied physics, but atoms are expensive, and bits are cheap,” Hessert said. “So, software is a lot more approachable.”