It turns out that the most common way (more than 90% of hydrogen made in the U.S.) of producing industrial amounts of hydrogen is steam-methane reforming (SMR). In other words: You take methane gas (CH4), and you chuck a load of steam (H2O) at it under high pressure. The chemistry gods do their thing, and you get a bunch of hydrogen (yay!) and a load of CO2. If you’ve been reading about climate change, you might recall that CO2 is something we’re trying to avoid. As you’re cruising your saucy Toyota Mirai, Honda Clarity or Hyundai Nexo into the sunset with a drizzle of water toppling out of the tail pipe, without a trace of CO2 in sight, it’s easy to feel smug. There’s a snag: Unless you know where the hydrogen came from, it’s possible that instead of being thrown out of the tail-pipe of your car, it was instead produced at a big factory somewhere. Whoops. Of course, there’s a chance they capture and repurpose the CO2 at the source, but wouldn’t it be delightful if we didn’t produce it in the first place? Funny you should mention that.

The other major way of making hydrogen is by splitting a water atom. H20 has two hydrogen and one oxygen atom. Wouldn’t it be neat if you could just convince them to part ways peacefully, creating oxygen (in case your high school bio-chemistry is a little out of date: oxygen good) and hydrogen? Well, in a nutshell, that’s what Verdagy is doing. Using a large electrolyzer (ideally) hooked up to renewable energy sources such as solar or wind power, the company can create large amounts of hydrogen. They do that with no byproducts, other than the aforementioned bio-hazard of “smug grin” on the faces of the drivers of hydrogen fuel cell vehicles. A hazard I am just about willing to tolerate in the name of a cleaner climate.

The company’s core innovation is to incorporate the advantages of alkaline electrolysis (AWE) and proton-exchange membrane (PEM) electrolysis processes, while designing out their inherent disadvantages. Verdagy created a new membrane-based approach, leveraging very large active area cells with the ability to operate at high-current densities and wide dynamic operating ranges. In other words: The cells have a max-efficiency operating range, but if you find yourself with a lot of electiricy on your hands (for example because your solar array is producing more power than your industrial applications and/or the power grid can absorb), you can dump it into the electrolysis cells and generate high amounts of hydrogen, which then can be used or stored.

“If you take a look at something like alkaline water electrolysis (AWE), they’re using a diaphragm, which has a physical limit of how much current density it can use. There may be similar materials and constructions to what we’re doing in terms of cells, that diaphragm limits their ability to run at higher current densities. [Proton-Exchange Membrane] PEM has a limited active area that the cell can use,” explains Marty Neese, CEO at Verdagy, demystifying and outlining the company’s patent-pending technology. “Our cells are very, very large, and it would be very hard to replicate what we do. We have a single-element architecture cell, which means you take an anode, and a cathode, and a membrane in the middle. The interior architecture of the cell is what’s proprietary at patent pending. How the cell actually dissipates heat, circulates gas and liquid, and how you can manage the circulatory flow within the cell — that’s the difference in what we do compared to everyone else.”

The over-subscribed $25 million round was led by TDK Ventures, with additional investment by an impressive array of investors. These include Khosla Ventures, who was also an investor in the company Verdagy was spun out from last year — Chemetry. Other investors include oil and gas giant Shell Ventures, energy and climate-tech investors Doral Energy-Tech Ventures, the Singapore government investment company Temasek, material commodities giant BHP, Orbia (formerly known as oil and gas, construction and agriculture giant Mexichem) and a number of additional investors, some of whom the company declined to identify to TechCrunch.

The fact that Verdagy was able to round up such an incredible lineup of strategic investors for a $25 million round just a few short months after it announced its spin-out is a testament to the enormity of what the company is doing — and the quality of the team. The company’s new CEO Marty Neese has a hell of a background, including a seat on the Ballard Power Systems board (which, incidentally, makes PEM fuel cells), COO of home solar pathbreakers SunPower for nine years and a founder of aluminium and silicon recycling company Nuvosil.

“TDK” is an initialism of the original Japanese name of the company: Tokyo Denki Kagaku K?gy? K.K. (Tokyo Electric Chemical Industry Co., Ltd.). “If we don’t invest in electrochemical companies like [Verdagy], what will we invest in,” jokes Anil Achyuta, investment director at TDK Ventures. “Our vision is to invest in companies that will be guiding the future path for TDK Corporation. And electrolysis — specifically for green hydrogen — is one of the key areas for strategic thrust internally. TDK has over 110 factories across the globe and just decarbonizing each of those could be quite exciting, as it will bring our footprint down. For us to be investing into the future of the world means we’re thinking of decarbonizing these big petrochemical or industrial chemical facilities.”

The company points out that — my lame jokes about fuel-cell vehicles aside — its main focus is industrial uses of hydrogen, typically as part of large industrial parks, for large-scale hydrogen applications, including oil refining, producing fertilizers, food processing and creating metal alloys. Making the hydrogen on-premises (or at least in a distance that a short pipeline can supply) is beneficial to all of these industries — and Verdagy promises to do that with a smaller footprint and a far greener eco impact than most of the current solutions.