Exploring the Hydrogen Economy - Transcript

Speaker 1 (00:04):

My name is John Musk. I head up the, utilities equity research platform in Europe for RBC. Welcome to the second session in, navigating the energy transition series. Last time we, we covered CCS. This time we are being perhaps even more ambitious and attempting to cover the wide topic of hydrogen over the course of the next hour. I'll be hosting the session with my colleague, my colleague], who you'll hear from in a second. But please, we are trying to make this session as interactive as possible. There is the ability to ask questions online. So if you want to post your questions, we'll, we'll get to those later in the session over to your garage.

Speaker 2 (00:53):

Thanks. So everyone, so we have three speakers today. We have Gretta today, Equinox, senior vice president, and head of low carbon solutions. Torsten Herbert from Nel, hydrogen, director of market development and public affairs. And we also have Andy brown. Many of you may recognize his name and paste from his days at shell has headed upstream, but now retired from Michelle Rowan. He has a number of other roles, including, an advisory role to a hydrogen aviation startup. So we thought it'd be interesting to bring handy alone. We've got a few prepared questions, but as John said, if you do have one, please submit it online and we'll try and get to them,   as many as we can. So maybe Thorsten to, to kind of set the scene. Noosphere around hydrogen is definitely picked up, in recent months. It feels like I could almost do in a hydrogen webinar three times a day. But could you talk about from your perspective, you know, what role you see for, for hydrogen in the overall economy in the next decade or two decades? And why, why is it so important to restate the power skills?

Speaker 3 (02:05):

Yeah. Hello everyone. First. So, thanks for the question. You you're right, so you can't actually follow up all the news that are coming up. Yeah. Really in a, in a daily manner. And, and since I've been in the, in the hydrogen, area for now over 18 years, um, yeah, there were, there were lots of ups and downs already.  But I guess when we look at the current up, that this is definitely different from the others. And, and, and I think, and my, my thoughts on that are that, the, the last ups were, most of them were very much driven by the transport sector and therefore it was quite easy to take down these with like these one dimensional arguments. You always hear like efficiency is too complex. Infrastructure is too costly.  And this was quite easy then, for, for these transport, applications.

Speaker 3 (03:03):

But now, um, it seems that that finally, as the benefits of hydrogen for a, renewable energy system are widely understood and also acknowledged. Um, and, and let me just mention one, one good example for that, which could be an evidence for this. And that is the fact that, the, you're a European commission decided to publish the, your hydrogen strategy, together with the energy system integration strategies. So this kind of indicates, there seems to be, an understanding now in the role of hydrogen for a renewable energy system. Um, in addition to that, what is different to the last ups is that the, the ambitious international climate targets now really finally for us, the, the hard to abate sectors, like,  industry just named steel chemistry refineries, and have it used in transport, including ships and planes to that, they are forced to develop solutions now.

Speaker 3 (04:11):

And especially for those,  hydrogen seems to be the only promising, and finally, to the existing climate emergency, it's now really the big oil and gas companies that are looking into, these new green business opportunities and are of course very much in favor of hydrogen solutions, since it's quite close to their,   , previous business models. Um, yeah. And, and besides like these, these technical advantages here, we now, um, due to the, maybe that this, this systematic benefits of hydrogen for a renewable energy system are now acknowledged and understood. We now really see ambitious national strategies coming up.   So the very ambitious EU hydrogen strategy with a 40 gigawatt, installed electrolyzer target for 2030,  looking at today where we are around yeah. Something between 100 and 200 megawatts, wherever you are, whatever you count. Um, this is a very ambitious strategy, and this was only let's say the result of a few, national strategies that came up in Europe, in Germany, in the Netherlands, in Portugal, Spain,  France. Um, and, yeah, this also shows, the benefits are understood, the political,   , attention is there. The political will is there, and now we need to talk about implementation and that's, it's actually, I think that another topic in the course of the discussion,

Speaker 2 (06:06):

Thanks for that. Um, I guess, um, political will is, is really important. And maybe I'll get you Andy, um, and to take out your own shell hat. Um, know shell was one of the early pioneers, into hydrogen and, you know, you have pushed, well, you had pushed it for a while. Definitely feels like the market and society and everything else is caught up. Could you just maybe take us a step back and talk about some of the things that didn't work? Was it just governments weren't on board? Was it industry wasn't on board and you, can you talk about why it hasn't kicked off, you know, a decade ago or 15 years ago?

Speaker 4 (06:45):

Thanks. Barite and,  good afternoon, everyone. Yeah, it looks so. I actually, I was personally quite involved in 1999. Now it's on a small team that was advising the CEO and we talked, we looked at the fundamentals hydrogen and said, this is going to be a big business. And, you know, we, then the company then set up shell hydrogen in 2000 and, you know, they did a number of demonstration projects and it was fine. You fold it, they spent quite a bit of money, but, you know, I think what you've got to learn is this only happens if the whole, you know, players in the value chain kind of come together, you know, from the generation of hydrogen, from the use of hydrogen, but also underpinned with, you know, government policy regulations, incentives to actually make it happen. And a lot of those things were not in place.

Speaker 4 (07:35):

And so, you know, I think, you know, what happened then clearly is, is a lot of those things folded beyond petroleum and, and, you know, international companies went back to their knitting. Yeah. Then the momentum, energy transition happened shell as all those companies now talk about scope three emissions and the big, the big numbers come up from renewable electricity generation. And that's where they're focused. I think what they find now is they're now backing into the hydrogen again. Um, whether it's green hydrogen, there's going to be a lot of blue hydrogen. And, you know, there are retail stations that shell is building in Germany. They've now come up with a shipping strategy. So I think it's really happening. And I, as you mentioned, [inaudible], there's a lot of the adjacency between what the oil companies get up to and whether it's because of blue hydrogen or because of its infrastructure, or because they actually owning the customer relationships. I think, you know, they will play big in this and when they put their capital behind it, I think that will help accelerate it.

Speaker 1 (08:44):

Okay. Thanks Sandy. Um, maybe I can, I can, bring Gretta into the conversation here. Um, and you, Andy mentioned blue hydrogen green hydrogen. There's great hydrogen where we don't have, CCS on the end of the hydrocarbon process. Um, but Gretta, maybe you can talk around, acronyms ambitions in this area. And in particular, if there is one part of the spectrum that you see as more attractive. So are you focusing more potentially on green hydrogen versus blue hydrogen, or is, are they completely different businesses for you?

Speaker 5 (09:22):

Let me first say to you and the, you were right titled and is going to be very big business. I believe you were just a bit early, 20 years early, maybe. Um, but Ecuador, we have a leading position in, in carbon efficient operations. Generally we'll win very bold climate goals, both towards 2030 and actually beyond. And if I list up bar our goals, it is first to have an upstream CO2 intensity below eight kilos per barrel produced. And this is by 2025. Today we are at nine. Um, um, the average for the industry is the double. So we done a lot and we focused on this and then going forward, we have, an ambition to have a carbon neutral operation,  and near zero mutation ambitions by 2030. And the third one is that we should be absolute greenhouse gas, reductions of 40% by 2030 and near zero emissions by 2050.

Speaker 5 (10:36):

So of course we have to do something to reach those targets. In addition to that, we say that, we will reduce our net carbon intensity by at least 50% by 2050. So there's intrude scope one, two, and three. And then you can say, is this a good business strategy?   Well we think it is, it's not taking the responsibility of others or undermining the emitter pays principle. In fact, we believe this is actually strengthening our competitiveness and secure, attractive business opportunities for us. And then, um, what do we do to reach, there's a reduction of 50% by 2050, there are several leavers. It's, it's the operational efficiency within the oil and gas. It is your gas, mobile growth as was mentioned earlier here.   but it's also CCU S and hydrogen, which is a lot contributed to this. Um, and then if we move to, I have a slide in here, it's lane, number two, low carbon solution, team, which I lead.

Speaker 5 (11:53):

We are trying to identify and mature and ensure development of hydrogen and CC us. And I understand you talked about CCUS  in your former session. So I'll try to keep talking about hydrogen, but I, I have probably to mention CCUS a little bit, because,  if you can see my slide, number two, we are engaged in activities ranging from open source, CO2, transport and storage. And you might've heard about Northern lights, um, earlier. And we also have several pre combustion and hydrogen projects, as well as traditional post combustion CZ as a product based on gas fired power plant. As you say, gray hydrogen, hydrogen is created from fossil fuels, but without CCS blue hydrogen is also created by fossil fuels, but wait, carbon capture and storage, meaning CCS is actually a prerequisite for hydrogen and Northern light is actually the first flexible CCS project, whereas CO2 can be captured and stored at different locations.

Speaker 5 (13:10):

So basically we can collect CO2 from all industrial sites, which have access to a port. Um, so this CCS infrastructure can, of course also support CO2 from blue hydrogen. And, maybe let me talk to a few of the hydrogen production, projects we have, um, cause we have both blue and green, hydrogen, um, projects and the ship, if you see my slide, I don't,  but it is to the right. It's a so-called, bunker vessel for liquid hydrogen. So transporting hydrogen as liquid from the production side to, for instance, a cruise ship. And this has been designed for the first time in the world, by us together with bill Hansen, which we'll use this,   , hydrogen for two new ships and they will provide support to the oil and gas industry to strand, to transport goods from our base to base instead of doing road transportation.

Speaker 5 (14:15):

But of course we are also looking into industrial applications for hydrogen, for instance, as a reduction agent in steel, making a very interesting proposition where hydrogen can replace coal,  in making,  the steel and therefore reduce,  pretty dramatically the CO2 emissions. And of course we can use both clean and green hydrogen for this. Um, so, but, but let me mention an example when we talk about blue or green, because I strongly believe that we need, and if we are going to meet our climate ambitions and really pretty ambitious targets that we have, we need both, but, but my example is Western Europe currently consumes about 8,000 care of hours, energy based on oil and gas annually, or maybe on fossil fuels, including carbon.   , what does it take to eliminate the CO2 emissions from these energy demand? Well, this is only an example first, if we assume that 50% of this can be solved by electrification.

Speaker 5 (15:31):

  , and then, and then of course, when you Google generate electricity, um, that means that we need 4,000 terror hours of new, renewable energy. This is, proximately,  requires thousand gigawatts, installed,  which is about 250 times the dog about wind farm project, which,  is today by far the world's largest wind farm. And it took us 10 years to develop it. So then, um, what about the other half the remaining 4,000 boards hours? Um, well, because then we used all the renewable wind and solar that we are able to generate,   in the short timeframe. So, um, to, um, to find power to the electrolyzers, we, um, we need hundred and 50 new nuclear plants, of the size of the point.  And then of course we need to be able to get electrolyzers and today the largest electrolyzer is 10 megawatts.

Speaker 5 (16:47):

So then we need 50,000 of those electrolyzers and the capacity in the world today is to build hundreds of these each year. So if you do the math, it will take a very, very long time to develop this and, and do this only with green hydrogen. Then of course the argument is technology will move on and we will install capacity to produce this. Yes, we will, but it will take time, unfortunately. So if we look to achieve this by green, sorry, by bringing hydrogen, first of all, we know that we have the natural gas source. We know the we have the supply system in place because we actually use it today, but we will need 500 or the terminal reformers creating hydrogen out of natural gas. Um, and, we need about 200 of these,  sorry, 500 and hundreds are a hundred are produced every year, so five years. So what this tells me is actually we need both, we can't live with blue or green. Let's stop arguing blue or green, both are green, and we need them books.

Speaker 1 (18:01):

Okay. That's that's great. And,  you, you mentioned 50,000 electrolyzers and maybe that's a good,   , prompt to bring costing back into the conversation, um, which is obviously the focus of your business. I'm not sure whether you've got the capacity to build 50,000 a year, but maybe just take us quickly through the, the economics of electrolyzers and how that may have changed,  in the past few years and, and where the costs are now for building these projects.

Speaker 3 (18:33):

Yeah. So it'd be, if we saw that we could definitely have like a, another session of this when we discuss green and blue.  But, I think this was convincing and I think all the,  would say all the national strategies, including the European strategy also acknowledged that, although, and that is again good for our business.   All of the strategies point to the long-term targets, being like a 100% green hydrogen, in the system. And, and what are we doing now? What is happening here?   So it's just one thing to make sure we are not only in electrolyzers we are into hydrogen technologies generally, and mainly they're also bringing up,  hydrogen refueling stations, which is also a very interesting field since I talked about,  one part of the high part to abate sectors, like the heavy duty transport.

Speaker 3 (19:38):

And we are definitely also, invested, let's say in,  handling this challenge that is coming up here on delivering, reliable, large capacity stations,   for the sectors, um, talking about   electrolyzers and,   , what, what let's say a few years back and a few months, in front. So we are definitely in a phase of, of investments here. Um, so we have, as you might know, we have three manufacturing facilities. We yeah, speaking in, in years, three years ago, now we acquired a proton, in the U S with the PEM technology.   They now have a capacity of 40 megawatts a year, which is, scalable, already now, at the current facility up to, um, 100 megawatt. Then, talking about, alkaline electrolyzers, which really from our point of view are the choice of technology.

Speaker 3 (20:58):

When we talk about these large scale opportunities, these large scale customers, um, in, in industry, for example, um, here we are, a big step ahead of, of the competition. We already now invested in a new facility in, in Norway, where, as of next year we will be able to, manufacture 500 megawatts, a year. Um, and yeah, let's say the facilities, there are, able to also, um, facilitate, capacity up to two gig to gig at what,  a year just by adding, let's say additional, production lights. Um, and this is actually where we are, so we are investing upfront, um, but also based on a very large backlog of projects. Um, and then, and, and this gives us the opportunity now with, let's say this automatic manufacturing processes,  in especially in the accolades, an area that we are already now,  in the ballpark of, let's say the CapEx targets, that's that, for example, you, you, European commission is envisioning for 2030.

Speaker 3 (22:24):

 So with this upfront investment in, this, this, um, um, manufacturing capacity, we are,   now, especially in the alkaline,  technology, very, very cost competitive already now, and the same applies to the facility of the hydrogen fueling stations in, in Denmark.  so this, finally opened in 2018 and the capacity there are in now is 300, stations a year. Um, and colleagues are at the moment, heavily working, in the R and D  on the challenge that,  yeah, heavy duty sector brings. So far the focus very much worse on,   700 bar hydrogen stations for passenger cars,   350 power stations for buses that was like the main customers so far.   But we are now talking about the heavy duty sector, here we, talk about power fueling instead of two to five kilos, hydrogen per refueling.

Speaker 3 (23:40):

We are now talking about something like between 50 and one kilos per refueling, and this needs to be done in, yeah, still 10, 15 minutes to be competitive.   You have to, can compete with a diesel fuel. Um, and, and this is, like the challenge that is currently addressed.  and there's also of course taking, taking resources and, and R and D , investments here. And, maybe one, one thing also with regards to, what we already reached now. So we can say, in the latest years we got the CapEx for us or for the electrolyzers down by 40% and,  like, formulated the other way round for the stations.   We could say that really looking from the first generation station in 2003, we had,  footprint reduction by two-thirds a capacity increase by 10 times.   And, and we are still at the, at the same unit price so much more for the money.   And we are talking about, let's say around 1 million for the, standard, fueling module.

Speaker 2 (25:09):

Just, just building on, um, some of your, your late comments about end-users. Do you know when I think about hydrogen, I'm thinking about heavy trucking, long distances or industries where electrification just doesn't work because the energy density and things like that? But on the aviation is, it's not the most obvious one I think of, I think, of hydrogen. So you recently partnered with zero idea, a hydrogen aviation company. Can you just talk a little bit about that? Um, and how did that come about and what is what they're trying to trying to do?

Speaker 4 (25:46):

Yeah, so when I, as some, I'm a hydrogen believer, so I looked at the industrial or the whole kind of areas that could be used. And the reason I focused on aviation was because I think consumers are really becoming conscious of their CO2 footprint and, you know, a lot of travel. And when we're out of COVID, a lot of travel is voluntary. And therefore, I think people will look to go on holiday and not have a conscious about CO2 footprint. And you've got a travel industry. You've got airlines, you've got socially responsible corporations that all want to be able to move around the world once we can, um, and do so with a very low CO2 footprint. So I call aviation would be something that would, once it's adopted we, cetera, fast, it's also an industry that's growing at 4% a year. So, you know, once we're back to normal.

Speaker 4 (26:37):

So, so it's a, it's a fast growing industry, but then you look at the, you know, what could be the other low CO2 solutions. And I think the battery, um, and the others may have some better data on this, but, you know, a hydrogen system fuel cell system just to compress hydrogen versus battery is four or five times lighter. In other words, kilowatt hours generated per kilogram weight, which really makes batteries. They're going to have a real problem without a breakthrough to actually have the range that you'll need. Um, for aircraft. Now, a lot of people say, wow, synthetic fuels are the solution that just drop in. But boy, you know, I was responsible for building probably the largest synthetic fuel plant in the world. Um, that's not a simple thing to do. Um, it's, it's much more energy intensive. You use hydrogen in the process.

Speaker 4 (27:31):

When you get on the plane, it's still emitting CO2, okay. CO2 has been manufactured renewably, but I think there would still, I think there's still going to be some question marks and particularly the entrails of contracts actually have global warming potential. That means that reductions in about 50 years, well, 30 to 60%. Um, similarly with biofuels, biofuels are 500 times less efficient on land use for generating electricity or power than solar. So I think those two things, which a lot of people are looking at and the batteries I'm not going to win over hydrogen. And I think the other thing about ocean it's actually really energy dense in terms of 33 kilowatt hours per kilogram versus 13 for gas, yeah. Has a product. It has a lot of energy storage is the issue. And that's, you know, that we can't get away from that.

Speaker 4 (28:26):

But, you know, even on the current designs and, and the way I went to white for, for zero either is they basically had a simple, the solution compressed hydrogen and a fuel cell to fly a plane. And they were selling it not on basis of, you know, incentive. They were selling on the, the basis that it was going to be cheaper than a conventional engine too, for the fuel. Ultimately once we get down into, let's say $3 a kilogram or something like that, but also on maintenance because fuel cells are more durable than, than a combustion engine. So actually their sales pitch is not one of great, give me a subsidy. It is basically this is going to be traditional aircraft. And then I had a plan to commercialize by 2023. Now some of you might know that they had their first flight three weeks ago.

Speaker 4 (29:16):

It was a six seater. They are going to go 300 nautical miles and that 62 by the end of the year, but there'll be a 20 seater that they will develop next year. And 20, 23, they will be going,  basically into commercial operations. So, you know, really quite short time span and there's political momentum behind it. There's the, Hey government get, get zero there's the EU clean aviation initiative. And I'll just say, it's interesting that since I joined Airbus has now come out and said by 2035, they ha they're going to have three new hydrogen designed airplanes that are going to be able to do, you know, medium range flights of 200 people on board. So it's not just zero either who actually have been a bit of a leader in this, but it's the big boys now that are following suit. Um, and really, I think believe that aviation is going to be quite an early adopter of this,

Speaker 2 (30:10):

Just to add answer that. I mean, that was my question is 20 seats are going to a 300 seater, you know, are we likely to see triple seven triple sevens in the next couple of decades? Or is it

Speaker 4 (30:24):

Just, yeah, I think so. I think, you know, I think Airbus is talking about 200 seaters. I mean, there is an argument that very long Intercontinental flights synfuels may be just because of the storage issue may be the one, the one that will be hard to replace with hydrogen, but zero Abe actually have a plan that they'll go commercial operations, 20 seater by 2023, by 2027, they'll go to 50, to a hundred seater. And by 2030 to a hundred to 200 seater, now you will progressively go to more hybrid solutions. You may have, we'll have a hydrogen heat engine on that for takeoff, um, in some kind of hybrid solution. You'll definitely for the longer range, you'll go to liquid hydrogen versus gaseous hydrogen. So I think there will be an evolution of the technology, but the great thing about is there a bit, is that just getting going and, and just proving the technology works and, and, you know, getting Sydney, you know, the approval, um, to fly, I think has been a big barrier and that actually then will gain the competence that will actually create the momentum that I think will then create, you know, some kind of inevitability about aviation moving, a lot of aviation moving to rotation.

Speaker 4 (31:41):

I don't know. My fellow panelists may have a view on that, but I, you know, I clearly believe in it. So,

Speaker 3 (31:50):

So I'm, I'm, I'm a believer since 18 years, as I said, so,   , you can guess my take on this.

Speaker 5 (32:00):

I also strongly believe in, and it's coming. I'm not sure how long time it will take, but I definitely believe this will come. And it was very exciting to hear you talk about this

Speaker 3 (32:14):

One interesting point here is really, also if this comes,   the question of, of infrastructure and which form of hydrogen is used, um, so this, this, this will be also like an exciting development.

Speaker 1 (32:35):

Maybe I can just change that,   and question for you Gretta on your plan specifically in the UK and the, and the Humber cluster, um, as mentioned, we had CCS previously and we had drags talking about their plans for, for backs. Um, but what is it that you are,  looking to, to do at the zero carbon combo cluster and in particular with, H two H sort end?

Speaker 5 (33:09):

Yes.  definitely likely to talk about that. And I sent over three slides. So if you pull up the last one, um, actually last week, Ecuador together with 11 other companies and organizations submitted a joint proposal to create a low carbon cluster in the Humber.  and it will be UK is largest and most carbon intensive. It is your largest and most carbon intensive industrial region. Um, and, the application,  by what we call zero carbon Humber, that's kind of our name on this on with this partnership is the first step in creating actually the world's first net zero industrial cluster. And we believe we can do it by 2040, and it will then support the clean growth in,  east of inland. Um, and we are private to be having the architecture role of zero carbon number and we are partnering with a broad group of forward looking companies.

Speaker 5 (34:19):

Um, this proposal can bring tremendous benefit to the Humber region. It can protect industries that are there today, creating jobs, promoting economic growth and reducing emissions. Of course,  our beds, um, demonstrates the kind of vicious or actions that is needed for, for UK to achieve its necessarily carbon target by 2050. So the big centers around two elements and the first being the Ecuador led hydrogen to Humber solve them, which we call in short H traje souls. And so this is a hydrogen project at salt and chemicals path, and you're the city of health, today emits 3.5 million tons of CO2 a year. And so it emits more than the whole of TSI, the whole of mercy side and south Hampton clusters. So H street Salton will be the largest plant of its kind in the world to convert natural gas, to hydrogen combined adding a 600 megawatts out of thermal reformer with carbon capture.

Speaker 5 (35:31):

So that that's the plan.   It will enable industrial customers in salts them to fully switch over to hydrogen, and, and the existing power plant there, run by Triton. Um, we'll move to a 30% hydrogen to natural gas, bland blend. So Mitsubishi power is engaged with Triton to evaluate, this blending of hydrogen and for the gas, for these power plants and, and, from the first production of straight Saltan, we will reduce the emissions by nearly 1 million total Pierre. So the second element is, the hydrogen and carbon dioxide or CO2 pipeline network that we will develop together with national grid ventures. And these are used to link the age traje and to other industry industrial sites in the Humber region, enabling them in turn to fuel switch to hydrogen and, or capture their emissions to CO2 emissions. So one hydrogen pipeline, being able to serve and deliver hydrogen to all of them.

Speaker 5 (36:45):

And one pipeline being able to collect and transport the CO2 that they capture to a store. Um, these signs includes drags power station, sorry, CCS,  terminal TB side universe Kelly home site and British steel. So Ecuador is not in the Humber by accident gas supplies from Norway land at Easington, very close to the Ember area.   , and it is the UKs largest industrial cluster by employment and emissions. So more than one third of the total emissions from U K industrial clusters comes out of Denver area. And as we believe in blue, hydrogen is, is actually needed to provide low carbon hydrogen at scale, which is needed to, to develop the hydrogen economy.   , we, we really want to focus on this, but we also believe that the costs of pre-IND hydrogen will come down as still sent talked about. And we see that H straight salting will grow over time,   , with further blue hydrogen production, but also supplies of green hydrogen using offshore wind because our, our big wind farms is just offshore of,   , the Humber area.

Speaker 5 (38:09):

Um, and then, um, with the installed pipeline disorder, again can travel all over them or cluster. So, um, I,  H shaped Salton can expand to serve all of these industrial clusters. And do you know what employment in, in the only the manufacturing sector alone in number is 55,000 people? So we are kind of taking care of their, even in an environment where we will, get rid of all,  CO2 emissions. Um, so, and we also estimate that doing this fuel switching will create a lot of jobs and all over UK, it's estimated by external companies that they will create 43,000 jobs, not all of them in number of course. So the world continues to need more energy at lower emissions, so we can achieve, the Paris agreement goals. And I really believe that we then have to decarbonize the industry, and it can't be electrified all of it, as I said earlier here. So we believe we need carbon capture and we do need hydrogen, and I really believe that blue angry and are clean. And we need both.

Speaker 2 (39:30):

Thank you for that. Um, maybe we'll, we'll,  one more question. Um, and then we'll move to the, to the Q and a, um, oh, maybe we can talk about some of the challenges. So, um, the most common pushback I've heard on hydrogen is he says about energy efficiency. I, how much energy you need to create energy, um, and then transporting it and converting it back to electricity of other fuel cells. So Torsten, maybe you could touch on some of those, some of those factors, and you know, what is your view on that?

Speaker 3 (40:03):

Yeah. So if it is okay for you, since I'm a bit tired of this, efficiency, topic,  and, and I think I talked about also in my first, in the first question that I think in the meantime, the majority,  of politicians, but also I can in, in the, in the public area,  it is understood that, renewable energy system and that an energy system based on renewables will not be sufficient working on,  only electrons. So we need, molecules for a renewable energy system. And I think this is understood, and this is displayed in all the national and also European the European hydrants strategy that came out. So I'm,  if you're okay with that, I would not really go into details with regards to efficiency since, I don't know if you know, this, this famous,  chart, that, that is, was on social media, answering to these, these,  efficiency charts, comparing the different paths where it says, okay,  what is the most efficient way,  to wash yourself?

Speaker 3 (41:20):

And that's of course, standing in the rain. Um, therefore I think that quite nicely shows, that it is a systematic,  approach here and, and this is widely understood. Now, I would, I would stress that as, as the main challenge now at the moment. And I touched on that at the beginning, is really now that the hydrogen with all its benefits for, for such a, such an renewable energy system needs to be integrated in this system as S as a fixed asset. And that, that also means that that, or that mainly means, a suitable regulatory framework. Um, so all the functions function, it can deliver as a storage medium, as a fuel for transport, um, its role in the future gas grid. All these things need a regulatory framework and in best case or regulatory framework for all Europe, and this is the challenge we are facing now.

Speaker 3 (42:26):

So we have the technologies we have the political will, and now we need to come up with,  also giving hydrogen to possibility to, to play in its best in its best, shape,  with a suitable, a regulatory framework. And, that is, can be from benefit schemes for grid services like storage and resilience. It needs to be defined as a fuel for transport. Um, it, um, also the, the, as I said, the role and the transition in the natural gas grid needs to be defined. Then we talked about blue and green, what is blue and green? How is this defined, how can this be certified also to, um, enable a global hydrogen market? So what is the value of blue? What is the value of green hydrogen and how is this internationally defined? Um, and then of course, like,   an important topic of reasonable carbon pricing.

Speaker 3 (43:30):

So how does green and lower carbon hydrogen, um, fit into this picture? Um, so I would really stress this regulatory framework now implementing all the net national strategies, really as the main challenge we have, um, that in the best case needs to happen,   , internationally, at least on a European level. Now, if we, if you look at into that, um, and, I’m convinced that international cooperation is also one key, for that. And, we really, saw like this materializing in the last week. So we saw, Germany and France, Germany, and Ukraine, Portugal in Netherlands, Netherlands, and the U S lately signing, memorandums of understanding to work together, to, to tackle these challenges. Um, and, this makes me very positive that,   , with the existing technology, the political will and,   , international corporation also covering the different industries that this, this implementation can happen.

Speaker 1 (44:47):

Okay. Thank you. Thank you for that Dawson. Um, I think we'll spend the rest of the session looking at some of the questions that have come in online, um, and, and just starting straight away. There's a couple in here on,  water availability and how much water is, is potentially needed,   in the production of hydrogen as we,   , hit, try and hit some of these targets. Now, I'm not sure whether, whether that's one for you to Austin or potentially for Gretta, but between you, if maybe you could, or, we’d like to try and tackle that one quickly.

Speaker 3 (45:23):

Yeah. So, so backing up. No, first of course, it's, it's, I think self-explaining that when we talk about hydrogen and also synthetic fuels, for example, that this all needs to happen sustainable in a sustainable way. And, yeah, that's all that also means that, um, the location is crucial. So depending on where we produce,  these,  fuels and gases and green gases, we need to make sure that also the water availability is given and that the water that is used, is not taken from any like, inhabitants there or from any communities around this place. So, and this is definitely also part of what, what I just said in my last answer.  And this needs to be part of the certification, yeah. W what is the water source, for, for, for all these fuels and for, for the green hydrogen. Um, and that, I would definitely include that also in this regulatory challenge I just described,

Speaker 5 (46:32):

I have nothing more to add to that. It's all about the location and the authorities to, to judge it. What kind of regulations that will support the business.

Speaker 2 (46:49):

Thank you both. Um, so the next one, um, I'll get, I'll go to you, Andy. Um, you mentioned in your opening remarks that you use or study the landscape and aviation was one area and market that you thought was, was, was attractive,   , for hydrogen, but could you talk a little bit about the Marine sector? Um, does that display similar prospects? Are there more challenges there in details around that would be helpful?

Speaker 4 (47:19):

Yeah, I look, I briefly looked to Michelle issued a report, I think just last week on a Marine strategy for fuels. And, um, they clearly came out with hydrogen and fuel cells being part of that solution. You know, I think some of that is, do you have a, you know, to have, a carrier liquid carrier ammonia or something as a, as a way to actually make sure you get dense storage of that? So, no, I mean, ultimately Marine, you're never going to have electric tankers. I mean, it just, isn't going to happen just there won't be the battery capacity. So, so you're going to have to have a dense fuel, and if you want to avoid CO2, then there are a few solutions that, you know, that, that are available then hydrogen or a hydrogen based molecule is clearly, you know, the one. So I think that's going to be a big sector. Um, you know, I go sailing sometimes, and I can tell you, there's nothing worse than the smell of diesel fuel in a nice, beautiful Harbor. So, you know, they're also a very personal part of, you know, the cleanness of hydrogen as a fuel in the Marine sector.

Speaker 1 (48:29):

Maybe, maybe a follow up a similar question in on, um, synergies between fuel cells for aviation and cars. Um, do you see one as, as helping the others, um, can some of the learnings in aviation be brought to the, to the car world? Yeah, well,

Speaker 4 (48:48):

I think, and I, one of the things I should have said earlier, the reason it didn't happen earlier is it's all about going down the cost curves. Um, and you know, now let's doing that and, you know, the more you build the cheaper it's going to become. So the more sectors that, that adopt this now, clearly aviation because of the weight constraint is going to have to do a lot of original work. And a lot of research procedure gets a liquid arch and other things. So I think that's going to help a lot. Um, so yeah, I mean, I think, yeah, hydrogen may, or may I, yeah, I'm looking forward to getting a hydrogen car, to be honest. I, you know, I still have rain Jack's artsy around electrical car. So, you know, I think there is going to be, um, the fuel cell manufacturers. There's going to be a lot of interplay between the various sectors. Um, and yeah, I can see, I can certainly see heavy duty transport, but there may even be light transport that starts to look at hydrogen

Speaker 3 (49:45):

If it's okay. I would, I would add two sentences here. Um, definitely I think going down the cost curve as the quantities are needed and there, I would even say it could also work the other way around. So if there is like the success in the automotive sector, really the quantities are when we talk about cells.   , so each fuel cell in a car has between 300 and 400 cells. Um, and,   , this is really real quantities and,   , I think it, it, it rather can also go in the other direction and this shows like a recent publication or reason press release by linking,   and, Airbus aware, like editing Klinger as a classical,   , automotive supplier,   , who started in the fuel. Our business is now partnering up with, with Airbus, also for their, ambitious ambitions in, in hydrogen fuel cells in aviation. So I think it's both ways, but, as Andy said, we need, the quantities and there, automotive as a, has a crucial role.

Speaker 2 (51:04):

Great. Thank you. Um, so the next question has come up, in a few different iterations, but I wanted to throw it out to, um, to Gretta. Um, but as you are involved in a few, um, kind of hydrogen projects in Europe, could you talk a bit about,  you know, what level of carbon price is required to, to, to make these things move forward? Obviously government support in the near term helps, but on a non-subsidized basis, you know, what kind of carbon price are we talking about?

Speaker 5 (51:36):

Um, I've seen a lot of, literature on best,  and it varies a lot to be honest, we haven't calculated that what we see is in the beginning now,   before we go down the cost curve, we need,   funding support, but we do believe that we will move down to cost curve, as [inaudible] said. And, and others, when you get the volume, you will move downwards on the cost curve, then we believe we will need a certain,  CO2 price,  to compete with alternative fossil fuels.   but we also believe that in addition to going down the cost curves and the CO2 taxes or whatever we call it, we do believe that customers over time would be willing to actually pay a little extra, to get a clean, clean product that might be a clean car made out of clean steel, which in foods clean steel, it might be a clean vacation, by the plane. So I think it combination of these things will actually make this an economical business going forward.

Speaker 1 (52:53):

Right. Um, I think we we're coming up towards the end of our time slot here. So maybe, maybe one more, um, and maybe I'll, I'll start with you Gretta, but, others, please, please jump in.   And that is how does the energy input vary or differ between the, production of green and blue hydrogen? So the cost of the energy input, I think what we're talking about here,

Speaker 1 (53:30):

No problem. How, how does the energy input to produce hydrogen compare between green and blue?

Speaker 5 (53:41):

So, I mean, um, I, I do, I do believe first of all, if I understand the question correctly,   , that today,   , probably the green hydrogen is,   , is more expensive than the blue, but it will depend on the location. And if you have available, renewable energy to put in there that comes for free. So it all depends on the location, but we do sincerely believe that over time,   the cost reductions of brain hydrogen will, will move further down or have a steeper decline than we will on the hydrogen. So I think they will be comparable at least, some, some places in the world over time, but I'm not sure that was the question I hope it was.

Speaker 3 (54:31):

Are there there's, there's one, there's one, let's say rule of thumb for green hydrogen. And this shows how important that is for green hydrogen power prices are. And that is that roughly 75% of the hydrogen price that you are generating, comes from the power input price. Um, and, and this shows, power prices, for Korean hydrogen are really crucial. Um, and, this again, fits into my argumentation with, biggest challenge we have, that we have no,  European wide, regulation here, how electrolyzes will be handled in the energy system. So, for example, in Germany, at the moment, if you operate an electrolyze, it's like operating your dishwasher at home, you pay the same levies on the power prices  as if you operate your dishwasher at home. And this could not be,   this is, this cannot be the solution that's obvious, and that is different in each European country.   , and it's well acknowledged also it's mentioned in every, a hydrant strategy, but really, really need to come to a European wide implementation here now. And, yeah, again, 75% of the hydrogen price of the green hydrogen price is , coming from the input price. So the power input price,

Speaker 5 (56:14):

And maybe a come to that because also large, large, um, costs of the green, sorry, the blue hydrogen is of course the natural gas. So if hydrogen is over, we pay using natural gas and there is a surplus of natural gas. Then of course the prices of natural gas will come down as well. So I think it's very dependent on the power prices, whether that is a natural gas or, or it's actually a power, those four blue and green.

Speaker 4 (56:47):

So if I can just add from, you know, I think the question was about energy efficiency, um, constant connect. I think the electric is about 70% efficient. I think ATR is similar, in terms of generating generation hydrogen. Um, so from what I know about this, you know, blue hydrogen is a lot cheaper than greenhouse and perhaps $2 for green hydrogen, um, $5 perhaps per kilo for the green. But if you get electricity prices down at $30 per or 30 pounds per megawatt hour electrolyzer costs, you know, half or a third of what they are today, then they will compete. So that's, that's the equation. And I think there'll be competing in the 2030s.

Speaker 2 (57:34):

That's great. Um, so I think we can, if we can wrap it there. So firstly, thank you all, [inaudible] really appreciate your, your insights. Um, this probably warrants getting another hydrogen eight, five at some point into one of the end markets where there's autos or cement or, you know, something,   , at some point. But, as John mentioned that star, this is the second in our series of navigating the need to transition. And we wanted to break you up, given that there's so much to talk about, um, the upcoming events we have,  working on your renewable fuels event in November and potentially, um, a, event on the future of grids,  the power grant in December to wrap up the end of the year with some more next year. So thank you all for attending and really appreciate it. Okay.