US turquoise hydrogen producer Monolith has received conditional approval for a $1.04bn loan from the US Department of Energy’s Title XVII Innovative Energy Loan Guarantee Program, which will enable a massive expansion of its commercial facilities in Hallam, Nebraska.

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The Olive Creek plant will be ramped up about tenfold, increasing its annual output from the current 5,000 tonnes of turquoise hydrogen — derived from natural gas with minimal greenhouse gas emissions — to almost 50,000 tonnes, which will be used to produce about 275,000 tonnes of ammonia.

Monolith uses renewable electricity to superheat natural gas inside a pyrolysis oven in a combustion-free and CO2-free process that produces hydrogen and carbon black, a powder-like form of pure carbon used in the production of tyres, plastics and inks.

The income from selling the carbon black effectively offsets the cost of producing the hydrogen, enabling it to be sold at an affordable price.

The Nebraska-based company, which was formed in 2012, says its methane pyrolysis method results in 0.45kg of CO2 equivalent per kg of H2 produced, although it plans to eventually replace fossil gas with biomethane, which would make the process carbon-negative, removing 2.08kg of CO2 equivalent from the atmosphere for every kilogram of hydrogen.

“The Title XVII Innovative Energy Loan Guarantee Program's purpose is to recognize and support technology that reduces emissions and supports a clean energy future,” explained US Energy Secretary Jennifer Granholm. “Advanced, clean production technology like Monolith’s are the types of impactful projects that support not just sustainability, but economic growth and clean energy jobs for the American people.”

Neither Monolith nor the Department of Energy (DOE) has explained the exact conditions that must be met for the 20-year loan to be finalised, but the announcement suggests that both are confident it will go ahead.

“While this conditional commitment demonstrates DOE’s intent to finance the project, several steps remain, and certain conditions must be satisfied before a final loan guarantee is issued,” Monolith stated.

Company CEO Rob Hanson added: “This loan, which comes after several years of due diligence, further supports what our customers, employees, investors and strategic partners already know: Monolith's pyrolysis technology will play a vital role in the energy transition.”

“We are honored to have reached this significant milestone on our path toward helping the world to decarbonize, and we are appreciative of the confidence shown by the Department of Energy and Secretary Granholm.”

The Monolith loan would be the first provided by the DOE’s Loan Programs Office (LPO) — now run by solar pioneer Jigar Shah — since a 2016 award to the Vogtle nuclear plant in Georgia, as the office was almost totally inactive during President Donald Trump’s tenure.

Title XVII of the 2005 Energy Policy Acts allows the DOE to guarantee loans for projects that “avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued”.

Monolith’s existing investors include one of the world’s largest renewables developers, NextEra Energy Resources; South Korean conglomerate SK Group; the US arm of Japan’s Mitsubishi Heavy Industries; and New York-based global private equity firm Warburg Pincus.