Tulum Energy: Turning a Forgotten Mistake into a Promising Business

It was a mistake that was ahead of its time.

Between 2002 and 2005, engineers with the Techint Group were trying to dial in a new electric arc furnace for a steelmaker when they noticed something odd. The carbon electrodes, rather than breaking down, were growing larger.

The team had inadvertently created what’s known as a pyrolysis reaction, which is basically burning something in the absence of oxygen. In this case, the furnace was splitting methane into pure hydrogen and pure carbon. The team reported their discovery internally and then, basically, forgot about it.

“Back then, nobody cared because nobody cared about methane pyrolysis, about hydrogen,” Massimiliano Pieri, CEO of Tulum Energy, told JS. The experiment was largely forgotten for the next 20 years.

But a couple of years ago, investors for the Techint Group’s corporate VC arm, TechEnergy Ventures, were scouring the landscape for new ways to produce hydrogen from methane without the usual pollution.

Techint’s investors didn’t have to look far. “Someone in the company realized, ‘But we already have that. We have this discovery,’” Pieri said.

So the conglomerate dusted off the idea and spun out Tulum to turn the accidental discovery into a viable business. Recently, Tulum closed an oversubscribed $27 million seed round led by TDK Ventures and CDP Venture Capital, the company exclusively told JS. Doral Energy-Tech Ventures, MITO Tech Ventures, and TechEnergy Ventures participated.

Tulum isn’t the only startup pursuing methane pyrolysis as a way to produce hydrogen. Modern Hydrogen, Molten Industries, and Monolith are among Tulum’s competitors. The reaction has attracted attention for its ability to produce hydrogen from cheap, widely available natural gas without any carbon dioxide emissions. In pyrolysis, methane is broken down in the absence of oxygen, the only products are hydrogen gas and a dust of solid carbon, both of which can be sold.

But Tulum differs in a few ways. For one, it doesn’t need to use expensive catalysts to encourage the pyrolysis reaction, which some of its competitors require. In its use of the electric arc furnace, Tulum is also using a widely used — if modified — technology.

“This gives you a big head start,” Pieri said.

Tulum will use the seed funding to build a pilot plant in Mexico alongside an existing Techint Group steel plant. If all goes well, the steel plant could buy hydrogen and carbon directly from Tulum for use in its operations.

Pieri said that at full-scale production, a commercial plant would generate two tons of hydrogen and 600 tons of carbon per day.

Tulum is hoping its commercial scale plant will produce one kilogram of hydrogen for about $1.50 in the U.S., where electricity and natural gas are both cheap. At that price, it’s just 50 cents more than most hydrogen made from natural gas today, and it significantly undercuts some of the leading green hydrogen methods. That’s before the company sells any carbon that its process generates.

Not bad for an almost forgotten mistake.