- Canadian fuel efficiency company DynaCert gears up for commercial deployment; sets its sights on telematics and climate financing.
- If successful, DynaCert would be one of the first companies to be issued carbon credits based on fuel efficiency technology in the diesel trucking industry.
After spending 16 years and CA$60 million developing its carbon emissions reduction technology, Canadian company DynaCert (TSE: DYA) is ready to scale, seeking to grow its presence with two decidedly modern-day offerings: telematics and the sale of carbon credits.
The company’s technology is currently used in more than 400 vehicles in trial runs that are nearing completion, Executive Vice President Jean-Pierre Colin told FreightWaves.
Targeting the heavy-duty trucking market, DynaCert sells to 40 dealers around the world. In August it reopened (following the COVID shutdown) an upgraded and upsized semi-automated plant in Toronto, with capacity to produce 72,000 units per year.
“That gives you an idea how optimistic we are,” Colin said.
Capitalizing on the diesel transition
Founded in 2001, DynaCert is riding a wave of interest in technologies that can reduce emissions from diesel-powered vehicles. (The company won approval this summer to list its shares on the Toronto Stock Exchange.)
While zero-emission electric trucks grab headlines, millions of trucks still run on diesel. As a result, a growing number of companies, established businesses and startups alike are targeting the transition period, when fossil fuel-powered trucks are still on the road but must reduce emissions to meet increasingly strict government pollution regulations as well as customer sustainability requirements.
DynaCert’s contribution is HydraGen, a product that combines hydrogen and oxygen on demand through electrolysis, enabling it to deliver hydrogen into the air intake of internal combustion engines. This leads to up to 19% fuel savings, the company asserts, while reducing the carbon footprint by up to 50%.
In 2019 DynaCert launched its first software product, HydraLitica, monitoring fuel savings tied to HydraGen. Building on that platform, it announced recently other telematics services such as fleet management, route planning, driver safety and load management.
DynaCert currently is “polishing” those dashboards, according to Colin, which will be offered as a service.
The climate financing connection
As industry ramps up clean vehicle technology offerings and regulators crack down on pollution, the environmental financing sector is poised to take advantage.
Tesla (NASDAQ: TSLA), for example, generated $428 million in revenue from the sale of zero-emission regulatory credits during the second quarter of 2020, and the sale of those credits is responsible for the company’s three-quarter profitability streak this year.
DynaCert hopes to take advantage of a different environmental credit market: carbon offsets, in which companies can trade credits generated from projects that reduce carbon emissions to entities that need the credits to comply with regulations or to meet their corporate sustainability requirements.
About a year ago, DynaCert applied to Verra, a Washington-based organization that ensures projects applying for credits demonstrably reduce emissions. Once projects have been certified, the company can be issued tradable GHG credits known as Verified Carbon Units (VCUs) to be sold on the open market.
Going after the carbon markets is a smart move, according to some analysts.
In his latest research note, Darrell Bishop, head of research at Haywood Securities, reiterated his earlier bullish stance on DynaCert, saying “there is a vast market opportunity in front of dynaCERT given that there are approximately 1 billion internal combustion engines operating globally, with another 100 million being built annually.”
The company is “also primed to seize additional upside from the capture of carbon credits and software licensing – what we see as a high-value recurring revenue stream for the company,” Bishop wrote.
Other clean vehicle experts were more cautious in their assessment.
Simon Mui, deputy director of the Natural Resources Defense Council clean vehicles and fuel group, said he had never heard of fuel efficiency used as a carbon offset.
That kind of tech would seemingly be better suited to meet regulatory mandates, such as California’s low NOx or fuel economy regulations, he told FreightWaves.
Verra has never before issued credits based on fuel-efficiency technology, a spokesperson said, and Colin himself admitted generating credits from HydraGen was a relatively novel and challenging enterprise. But he seemed confident of the project’s ultimate success.
The company is using its telematics services to document fuel and carbon savings, he said, and has retained experts from Apple Pay and PayPal to establish the audit trail.
“This is about as foolproof as it gets,” said Colin.
A long-haul truck can generate up to CA$3,000 in carbon credits, he elaborated, and “we hope we are going to have hundreds of thousands of trucks saving fuel around the world.”
DynaCert’s plan is to share that revenue with fleets 50-50, according to Colin.