Global Hydrogen Review and Northwest Europe Hydrogen Monitor

okay let's go ahead and begin hi everyone welcome my name is Emily cross and I work in Communications at the national renewable energy laboratory and I support the Clean Energy Solution Center which is an initiative of the clean energy ministerial I'll be helping to coordinate today's event which is titled Global hydrogen review in Northwest Europe hydrogen Monitor and today's event is also hosted in collaboration with the clean energy ministerials hydrogen initiative so a few housekeeping items today before we get started the first is that this webinar is being recorded and it will be shared with attendees so as an attendee you can expect to receive a follow-up email and the days following the event with a link to the recording the slide deck and any other helpful materials shared during the session you will be automatically muted upon joining and throughout the webinar but if you would like to add comments share input or share introductions we encourage you to please use the chat feature if you would like to ask questions at any point to our technical presenters you can do so by using the Q a function on your Zoom toolbar and there's a graphic on the slide here that shows you what that q a icon looks like um please note that we do have time carved out at the end of the event for Q a but you can ask questions to our presenters at any point during the session and we'll make sure they are answered at the end if you're having any technical issues please use the chat feature to message Holly Darrow or myself Emily Kloss and we'll be happy to help you and you can adjust your audio through the audio settings but you're having any issues you can also dial in and listen by phone and all of your dial-in information can be found in your registration confirmation email and lastly we will be launching a survey when this event ends and your feedback is highly valuable to us and with that I will now hand it over to gel Desai who will introduce our webinar topic our speakers and also give an overview of the Clean Energy Solution Center thank you Emily good morning good afternoon good evening thank you all for joining today's webinar um I know it's going to be very productive and interesting webinar this webinar is brought to you by Clean Energy Solution Center and hydrogen initiative two of the work streams of the clean energy Ministry I welcome all the participants and speakers it is great to see the participation from around the world um let me give you a rundown of agenda and speakers for today so uh my name is Joel Desai I'm a researcher at the national renewable energy laboratory in Golden Colorado USA I'm an engineer by background I work on various domestic and international projects in various capacities and enroll is the operating agent of some of the clean energy ministerial work stream and I manage the Clean Energy Solution Center at andal who is co-hosting this webinar and I'll be moderating today's session as well as giving a brief overview of the solutions Center so first uh and then we'll hand it over to Carla uh roblido who will be giving you an overview of the hydrogen initiative so Carla is a senior policy advisor at the ministry of economic Affairs and climate policy of Netherlands she holds a PhD in chemistry and she has worked on the hydrogen team at the ministry since 2019. she's a co-led representative on behalf of the Netherlands for the sem hydrogen initiative and coordinates two of the working groups the round table on the northwest European region and the global hydrogen trade fund next we have Jose Bermudez uh who will be giving an overview of the global hydrogen 2022 Jose is an energy technology Analyst at the International Energy agency iea where he coordinates the analytical work of the iea in hydrogen Technologies he is also the coordinator of the clean energy ministerial hydrogen initiator Jose has more than 15 years of professional experience working in research Innovation and energy policy in the areas of hydrogen bioenergy and Alternate fuels lastly we'll be hearing from Greg monner on topic Northwest European hydrogen monitor Greg um joined the International Energy agency in August 2018 as a gas analyst in the gas coal and power markets division within the directorate of energy markets and security the division is responsible for the development of short and medium-term Market forecast and the publication of the global gas Security review before joining the agency he held several positions in Consulting and private research companies with focus on European gas markets and gas infrastructure next slide please next slide please so I'll give you a brief overview of the Clean Energy Solution Center So Clean Energy Solution Center is one of the initiatives or work streams another clean energy Ministry the objective of the solution Center is to broadly accelerate the transition of clean energy markets and Technologies of developing nations this initiative is co-led by Australia and the United States and enroll which is National renewable energy lab is the operating agent we have got more than 40 Partners to deliver Services free of charge to the users to help developing countries um to achieve clean energy transmission our website is here on the page and you can go to the clean energy ministrial home page and look at other work streams and find out about Solution Center as well Solution Center us is developing nations through three main offerings next slide please so the three main offerings are ask and expert Services training and capacity building and resource Library we'll ask an expert is designed to help policy makers in developing countries and emerging economies to identify and Implement clean energy policy um fine and finance solution the ask an expert service is up and running so any government organization um or any other organization working on behalf of government can reach out to the solution Center and we have a network of more than 50 experts spanning from 15 countries and then the second service is training and capacity building so since in exemption we have delivered 300 webinars um which has more than two more than 20 000 public and private sector stakeholders and in the end um the third service is resource Library we have more than 1500 curated resources policy brief Journal articles um and we're in the process of updating that as well that's a kind of a quick overview of the Clean Energy Solution Center and if you have any questions please do reach out now I will hand it over to Carla to give a brief overview of the hydrogen initiative what do you call thank you very much it's great to be here and welcome everybody happy to tell uh briefly about the Shams hydrogen initiative it's a origin the members and the activities that we are undergoing and please next slides so the clean um energy ministerial has several initiatives one of them being a hydrogen initiative launched in 2019 and with its main objective to raise International ambition and advanced commercial scale of low carbon hydrogen deployments on the long term and across all sectors so in 2019 there was a very large momentum for hydrogen and since then there have been a lot of initiatives um launched on hydrogen we are working together and within this is government-led initiative together called leader Canada the European commission Japan and landlines in the US and we have more than 20 governments involved also the hydrogen Council and individual companies and parts are involved in the advisory meetings and and we are as I mentioned coordinating with also other International hydrogen initiatives such as iphe also the hydrogen um I8 technology collaboration program and more um so basically we have a missions we have targets from the governments and we use this platform to um to share these analogies to also seek uh how we can advance on these inventions what is needed on the political level we have a yearly clean energy ministerial session with the ministers and so it's a great platform to discuss all the um all the updates and and the policy and also the market developments within the hydrogen initiative we have different working groups and different activities ongoing which are led by different country members so one of them is the global aspirational goals and here the European commission is leading this together also with the global ports hydrogen Coalition and and mainly within the global aspirational goals it's a no overview of all the country's goals and what we are aspiring to has made and it's also part of the global hydrogen review of the Ia which will be presented today by our colleague Jose and Global hydrogen Coalition this is a coalition of more than 60 Parts present and to also which also have to go through the transition to accommodate hydrogen derivatives the infrastructure and that really have a great platform to also raise these Ambitions and to also have common goals on developing and share this infrastructure and sharing also the knowledge that is needed and the U.S is leading the hydrogen Twin Cities program so last year was the first initiative were in cities around the world can be nominated and worked together to also share the experiences within their Regional developments the local developments and and there's two different types of programs where knowledge is exchanged but also a mentor mentee program where maybe cities are more advanced on this on the hydrogen developers can also share their experiences with those cities that have less knowledge on it it's a really a nice initiative and also this year will be the second round so please be um also aware of the closing of the calls and from the Netherlands we are leading two of the working groups the international hydrogen trade and Supply chains which will be upgrading to on global hydrogen forum and within the clean energy ministerial activities and the Northwestern European hydrogen Market coordination group we call it a round table for the Northwest European countries which began as a regional group because of course in Northwest European region a lot of activities are ongoing on hydrogen and it's great to have this platform to exchange our knowledge our experiences and also work towards a more Regional policy developments and within this activity we have been performing the monitoring that Gallery will be presented later and as last but not least of course there is a global hydrogen review tracking on policies and markets which leads to a yearly reports which will be shortly presented next slide please and very brief about specifically about the Roundtable and Northwest European region because from this working group is as a result and a product of this is the monitoring and that will be presented today I would like to highlight it's a main objective is with the countries it started with the countries around the North Sea we expanded a bit um and uh involved our at the moment the Netherlands Germany Belgium the UK Denmark Norway and France and we have aligned together with also the pencilateral Forum group working on hydrogen and so also with Austria with Luxembourg and Switzerland and we have um asked the Ia to perform this yearly market report to know the advancements on the market development on the policies to know if we are on track with the policies instruments we are a development on achieving the goals that we have set and so this is very good that we already have this first edition and that each year we will be tracking the progress so also this at the end of this year the second edition will come out and this is one of our core activities within the working group and also dissemination of of these results of course um and facilitating the matchmaking between importers exporters this will also be an activity that we'll be doing within the world hydrogen Summits and Rotterdam in May and so with this I would like to uh conclude this brief introduction and give the word to Jose who will be presenting the global hydrogen review thank you thank you very much Carla good morning good afternoon good evening everyone Jose Bermuda from the International Energy agency I work here as a John mentioned as energy technology analyst coordinating the world that we do on hydrogen technologists and if you allow me just a second I'm going to share my screen to present our Global high-end review um here we go which um is an annual report that we have been putting in place since 2021 and which is a report that we release as part of of our work as the coordinators of the clean energy ministerial hybrid initiative which is supported by more than 20 work countries and which of course are important contributors for for the preparation of of this report where we explore annually uh Trends and and deployments around the hydrogen and it's used as a as a clean um energy vector and feedstock um starting with with the project I'm I'm going to say uh something that everybody that is following the development on hygiene is aware of which is that the the momentum behind Hadrian continue to be really strong um hygiene is today widely recognized as an important tool um to support a government climate Ambitions which itself can also simultaneously help in enhancing energy security by by decreasing dependency on fossil fuels by diversifying the fear mix and also diversifying the portfolio of suppliers um The Net Zero greenhouse gas emissions commitments that government have announced in in the last few years have boosted the interest on on hydrogen and and today the the global energy crisis is sparked by Russia's invasion of Ukraine has farther strengthened the interest particularly on on low emission hydrogen as as a way to reduce as I mentioned before dependency on fossil fuels particularly in in Europe um let me give you just a few examples on on this progress that we are seeing or this growing interest that we are seeing on on hydrogen um just in the year between the publication of our 2021 edition of the global high-end review on the 2020 Edition um nine countries adopted a hydrogen strategy and and at least another four have published their strategies since since September 2022 which Rises the the total number of countries with a hydrogen strategy in place 230 and with more than 20 countries currently working on the development of their own strategy um motivation countries have started to implement some of the policies that they have identified in these strategies um to create some demand for hydrogen or to support fresh movers but these uh these cases are still very limited to some isolated examples um industry is pushing for large-scale projects to produce hydrogen from water electrolysis and Renewal Energy or fossil fuels with a carbon capture utilization and storage for some of which have a final investment decision has has been already taken also some major companies have started to sign off the agreements for low emission hydrogen for these derivatives although most of these Agreements are still non-biting due to the large uncertainty that's still on on the future evolution of of a hydrogen Market um finally governments are looking at opportunities to accelerate the development of international trade for Hygiene is and is derivatives again particularly with the objective of reducing dependency on on fossil fuels as fast as possible Japan used to list to lead efforts on the front but the European countries have a step out very strongly uh recently however the the adoption of low emission hydrogen acycle industrial feedstock or cyclinic vector is still at an early and early stages of adoption um as same as with other clear Technologies we need to effectively track progress to assess if the developments are happening fast enough and they are on trajectory that can help hydrogen to play its part in in the clinic transition and to enhance energy security and these are the type of questions that we that we are trying to to respond every year with our Global high-end review um let's talk about the Point of Departure which is a hydrogen demand hydrogen demand reach 94 million tons in 2021 which was already five percent higher than the demand in 2020 and it also represents a recovery to above pre-pandemic levels um when when hydrogen demand reach its previous historical maximum at 91 million tons um however there is no much to celebrate around this uh this progress since this is not a real not a science of of a real world success of implementation of hiring policies the majority of this increase took place in traditional uses for hydrogen meaning refining and the chemical industry um hydrogen demand in in those applications um where um higher income can play a significant role in transition to energy or Energy System and grow strongly um they were 60 percent higher than in 2022 but it this growth still comes from uh from a very small base and it only reached around 40 000 tons in in 2021. still um show important signs of progress um which come on the back of technological advantages advances on on those key applications that I was mentioning that where hydrating is likely to be needed for a net zero emissions feature our example could be still making so the first pilot project for using pure hydrogen in the direct reduction of iron um I started operating in in 2021 and only one year later announcements for new such still projects um are are growing very quickly or we're growing very very quickly if all those announcements were realized around 2 million tons of flow emission hydrating could be used in direct reduction of iron Along by 2030. um in transport the the fleet of Hadrian fear or a First Fleet of um hiring field trains and started operating in Germany in in September 2022 and there has also been a strong growth of heavy duty tracks particularly in China and in addition more than 100 Pilot and demonstration projects for using hydrant and its derivatives in shipping are now are now under developments all around the world now whether or not all these projects will be realized is uncertain of course as it is their economic feasibility our analysis of um existing policies and and confirm projects from all around the world suggest that hydrogen demand could reach 115 million tons by 2030 um but uh we the our analysis suggests that less than 2 million tons would come from uh from these new applications that I have been mentioning um we would need the 130 million tons to meet the climate pitches that the government have put forward all around the world a quarter of which should come from heavy industry transport power generation and the production of Hydra and refuse and we even need around 200 million tons for putting the world on track to meet natural emissions by 2050.

increasing hydrogen demand is of course only one piece of the parcel the other is making hydrogen production cleaner than today much of the increase on hydrogen demand that I mentioned in that occur in 2021 was met by hydrogen produced from animated fossil fuels meaning that there was virtually no benefit for mitigating climate change the production of low emission hydrogen was less than 1 million tons practically all of it coming from plants used in fossil fuels with carbon capture utilization and Storage um this is of course highly unsustainable but the good news is though that the the projects um for the production of low emission hydrogen are growing at a very impressive speed all around the world our analysis of the current project pipeline or the announced projects uh suggest that if all the projects announced uh that are today and the developments were realized annual production of low emission hydrogen could reach up to 24 million tons by 20 2030 um with around 40 million coming from projects aiming to use electrolysis and low emission electricity and up to 10 million tons coming from Project same into use fossil fuels with carbon capture utilization and Storage um these are impressive figures since they are equivalent to up to 70 percent of the annual low emission hydrogen production that would be needed to meet the government's climate pledges which shows that there is a much more um momentum behind hydrogen production and behind hydrogen demand um these are of course as I mentioned encouraging signs of progress but there are still important challenges ahead because a planned project is not a project that we have in the bucket a significant part of the projects are currently at Advanced planning stages but only around four percent of them are already under construction of how or have taken a final investment decision a firm final investment decision so we are still a long way from realizing the period pipeline um this is low progress on on real world implementation is a consequence of uncertainty in Savannah on demand which makes difficult to Shake it Off takers a lack of clarity in regulatory Frameworks and lack of infrastructure to deliver Hydra and to the end users um nonetheless I would like to underscore that the progress in in electrolysis I was mentioning the potential 40 million tons of hydrogen production through electrolysis that could be achieved from the premium pipeline well this this progress in electrolyzer is another important reason to believe a new energy economy that is emerging following what happened with Renewables uh electric vehicles and now heat pumps and electrolyzers um an important indicator of this new energy economy is manufacturing capacity um the numbers that I mentioned in what I'm presenting today are actually not the same ones that you could find in our Global high-end review but an updated analysis of this topic was presented in our energy technology perspectives 2023 which we have just released in in January um today electrolysis manufacturing capacity is around 10 gigawatts per year which is already twice what was available at the end of 2021 and when we take a look to Industry announcements we think that this manufacturing capacity could exceed 100 gigawatts per year by 2030. in other words this is a very important industrial opportunity China and Europe are currently expected to remain the leaders in the sector accounting for around half of the expected manufacturing capacity but around one quarter of the capacity announcements have not identified a location for the manufacturing sites yet and only around eight percent of those announcements are firm with a final in the investment decision taken or are already under construction this manufacturing sites can be expected to be closed to main industrial main demand sites and so Provisions such as those in the infrastructure and job Acts or the inflection reduction act in the United States could very well possibly make that a significant fraction of the capacity without an identified location or with a potential identified location but not with a final investment decision taken could be the deploy finally in the US which could as I mentioned attract significant manufacturing capacities from other regions this announce manufacturing capacities would be enough to meet current government targets for electrolysis deployment by 2030 but will already be able to meet half of what would be needed by 2032 stay on track with our net serial missions a scenario and here again the build out depends on government targets being translated into real world policy and early support for projects to ensure that they can reach final investment decisions and scale up um another area which is attracting growing interest is the trade of hydrogenes derivatives traditionally Japan and Australia have been expected in efforts on this front and actually the in the world's first achievement of liquefied hydrogen took place between Australia and Japan in February 2022. um the current and in the crisis and its implications for energy security mean that more and more countries are stepping up efforts on on this front today the trade of hydrogen and hydrogen base Fields is limited to few tons of hydrogen or deservatives in asporated shipments from demonstration projects um however based on the export oriented projects that are currently under development we estimate that 12 million tons of hydrogen either in the form of hydrogen or in the form of hydrogen dry fields such as ammonia or synthetic Fields could be exported annually by 2030. with the first projects actually becoming online at the end of this year or early next year um whether or not these projects are realized um again it's highly uncertain and in this case it's because the majority of these projects are at very early stages of development and they are facing significant barriers quite specific to this sort of projects an important challenge is to secure customers to secure of takers um oftake and important arrangements are lagging behind the scale of plan exports right now only 2 million tons of hydration have secured a customer or a potential customer or have an identified potential customer within the project Consortium another 2.5 million tons have identified a specific region to export but there are no off-take agreements yet in place other are sentences that we could flag are a standard regulation certification like infrastructure lack of trade infrastructure and the need to clarify how trade rules can apply to hygiene and its derivatives and quite related to hydrogen trade is the topic of um and hiring infrastructure and and it's also part of the current energy security it's not only about climate change anymore it's also about energy security particularly in Europe and even more particularly the question of how infrastructure particularly exist in natural gas infrastructure can be repurposed to support the future development of hydrogen as a government's address they immediate energy needs due to the energy crisis it is very important that they carefully consider how these new related gas infrastructure that they need to deploy to face their current energy needs can be designed to potentially support hydrating in the future in the case of natural gas pipelines there is already some experience in terms of repurposing gas natural gas pipelines into hydrogen Pipelines it is significantly cheaper than developing a new completely dedicated pipeline but there are certain limitations related to the materials and The Replacements of existing auxiliary equipment in decay of in the case of um liquefied gas liquify natural gas terminals opportunities to repurpose body depending whether the terminals will ultimately receive a hydrogen or ammonia initial studies indicate that repurposing LNG terminals for ammonia can be possible at an additional 11 to 20 percent of the investment cost of a new LNG terminal um this is because a significant parts of the equipment such as the storage tank or the pipes can be used for ammonia even if the heavier weight of ammonia would limit a storage capacity um repurposing LNG terminals for liquefied hydrogen however phase greater technical challenges because due to the much lower temperature needs for liquefied in hydrogen which limits the possibility of reusing existing equipment um this has important important cost implications um this is just the LNG tank alone accounts for half of the cost of the LNG terminal investment and a newly built liquefied hydrogen tank to replace the existing one could be 50 more expensive than an LNG tank um in general there is no experience in then there is no experience yet in converting this uh the existing LNG terminals to ammonium hydrogen meaning that all these cost estimates are uh are still very uncertain finally design designing LNG terminals to be hydrogen or ammonia ready is another possibility but this comes with uncertainty about the scale of future demand of hydrogen and derivatives which also translate into an investment barrier okay finally I would like to finish with a brief explanation of the policy recommendations that we have outlined in in the report a starting for the fact that governments need to move from announcements to implementations we spoke about the strategies that they have identified but the and the police that they have identified these strategies but the hardware Market is still nascent and certain of in terms of future Revolution and this is preventing first movers to reach or to take film investment decisions governments need to take the next step and Implement those policies to reduce risk and and help first mover to take these decisions um there is I need to raise Ambitions particularly in demand Creation in key applications in the case of existing applications um investment decisions are hindered by the uncertainty around long-term development of energy prices so policy actions to create demand for low emissions hydrogen using auctions using mandates using quotas um requirements in public procurement are needed to create this demand in the case of new hydrogen applications this policy action should be complemented by Innovation and demonstration efforts with a strong focus on sectors where hydrogen has more potential to both support the carbonization and reduce dependency on fossil fuels um they are related to my latest slide governments and the private sector need to identify opportunities to accelerate the development of hygiene infrastructure and ensure that those short-term actions that are taking on the response of uh um the the energy crisis are aligned with the long-term plans for the carbonizing the economy um uh finally not finally almost finally the the creation of an international market for hydrogen trade will require to intensify International cooperation and there are a number of areas in which governments need to work together including the development of a standard for emissions intensity of hydrogen production on transport defining robust and workable regulations and a cooperation on certification to ensure interoperability and minimize Market fragmentation and finally there are a series of um regulatory barriers that need to be addressed and removed the process of a clear and stable regulatory framework must be balanced with Dynamic regulatory approach calibrated to regular Market monitoring um actor symbol from a hydrogen Market will need clear rules but applying very rigid regulatory principles in a nation Market could Discord as these Investments and and governments and Regulators need to extract the right balance on on these two aspects and improving regulatory processes such as licensing and permitting can help shorten Project Lead times for hydrant but also for enabling infrastructure projects so government should work to increase the efficiency and coordination among different agents in different government borders different regulators to speed up these processes of course without compromising environmental standards and public consultation and this is all on my side on the global hydrogen review so now I'm going to pass the word to my colleague Gary Monarch who will present the Northwest Europe hydrogen monitor so gergy floor is yours um thank you Jose and many thanks for this excellent presentation my name is within the gas coal and power markets division of the International Energy agency and today um I would like to share um a couple of the key findings of our Norwest European um hydrogen monitor um as we all know Northwest Europe is at the Forefront of low emission hydrogen development the region accounts for around um total hydrogen demand has a vast and untapped renewable energy potential in the North Sea and a well-developed interconnected gas Network which indeed could be partially repurposed to facilitate this transmission and the distribution of low emission hydrogen from production sites to demand centers so the monitor is an annual report aiming to provide an update of low emission hydrogen Market developments in Northwest Europe this includes an in-depth review of policies and targets subsidy schemes and support mechanisms Supply demand and trade enabling products as well as developments related to hydrogen infrastructure regulation and the evolution of production costs there is currently no International agreement on the definition of low emission hydrogen um so for the purpose of the monitor low emission hydrogen includes three production routes from renewal based and nuclear electricity via electrolysis from fossil fuels by esteemary steam methane reforming or auto-terminal reforming bid ccus based Technologies and as a third option from biomass via perolysis or anaerobic digestion and I would like also to note that business doesn't necessarily reflect the official definition of the countries involved in the monitor um on the carbon intensity or sustainability of hydrogen production methods now we think that the adoption of hydrogen strategies including medium and long-term targets are essential to provide the necessary impetus and guidance for the developments of hydrogen markets in Northwest Europe nine out of the 10 countries included in the monitor have already developed hydrogen strategies or roadmaps and Switzerland is expected to publish its hydrogen strategy this year so the majority of No Rest European countries adopted production targets for electrolytic hydrogen by Norway obtained for a technology neutral approach and all together Northwest Europe targets between 30 and 40 gigawatts of electrolysis of capacity deployment by 2030.

since Russia's brutal invasion of ukrained several Northwest European countries have doubled or are considering to increase their production targets and similarly the European Union has increased its ambition to rise hydrogen production to 10 million tons by 2030 complemented by 10 million ton of imports and this rapid scale up of flow emission hydrogen could replace between 34 and 68 BCM per year of natural gas by 2013. now in RS your blue Mission hydrogen production capacity is expected to reach 14 million tons per year by 2030 if older announced and planned products would become commercially operational by that time and as such nor as Europe could account for around 80 percent of the total expected production capacity of low emission hydrogen in oecd Europe by 2013. now based on the announced and planned projects the United Kingdom Germany and the Netherlands would account for almost 70 percent of low emission hydrogen production capacity of no rescue in 2013. and electronic hydrogen is set to take the lead meeting approximately two-thirds of total planned low emission hydrogen production capacity by 2030 while the share of fossil fuel based hydrogen projects equipped with ccus would account to around one third of the projected production capacity all together Northwest you approve emission hydrogen production could reach over 6 million tons per year by 2013. this being said according to the Ia hydrogen production database just two percent of the expected capacity by 2030 has already reached FID and less than one percent of them are under construction and as such over 90 percent of these products are in rather early stages of development either conceptual or subject to feasibility studies and this highlights the importance of subsidy schemes and support mechanisms the scale up of flow emission hydrogen we require ineffective framework of subsidy schemes and support mechanisms along the entire value chain including research and development production transportation and also demand creation Public Funding programs and state-backed risk sharing mechanisms such as contracts for difference can help to de-risk investment and improve the economic feasibility of low emission hydrogen products hydrogen products in the monitor we provide a detailed overview of the various subsidy schemes and support mechanisms available both provided at the level of the European Union and at National level in the Northwest European countries so indeed it is very important to highlight that demand creation will be crucial to enable Market development Norwest Europe at the moment consumes approximately 4 million ton of uh pure hydrogen per year and this is mainly concentrated in the refining and chemical Industries this equates to nearly five percent of global hydrogen demand and around half of Europe's hydrogen consumption based on the targets which had been announced nor rest Europe low emission hydrogen consumption could reach close to 7 million ton per year by 2030 with demand almost entirely concentrated in industry so increasing the use of low emission hydrogen will require not only the development of hydrogen production products but also the willingness of the end customers to use this low emission hydrogen so there is a need for demand creation and there are many there are instruments to stimulate investment including via quotas and public procurement rules we also see that Norris Europe is set to play a key role in developing international trade in low emission hydrogen based on current export-oriented projects under development Global hydrogen trade could reach 12 12 million ton per year by 2030. however projects representing only

0.2 million ton per year have reached more advanced stage of development as off-take agreements and import contracts lag behind we also would like to know that the Netherlands and Germany lead the import projects development with a combined volume of import expected to reach about half a million ton of hydrogen by 2030. and the role of ports in Northwest Europe will be fundamental in the definition of new import market for clean hydrogen major ports in the Netherlands namely the port of Rotterdam and the port of Amsterdam have plans for importing a combined amount of more than 5 million ton by 2030 we are portraying this in in the second graph of this slide and in Germany the age to Global auction-based mechanism will facilitate the conclusion of long-term import contracts for low emission hydrogen and hydrogen derivatives under the H2 Global mechanism the hydrogen intermediary Network company or hint Co will conclude long-term purchase contracts on the supply side and sales contracts on the demand side the difference between Supply prices and demand prices will be compensated by hitco using grant funding from the German government so in a way the long-term purchase contracts signed by hindco Will effectively risk initial investment and enable companies on the supply side to set up production facilities on an industrial scale on the user side companies will be able to purchase green energy sources at economic prices for the first time and a such strive forward their decarbonization so this large-scale deployment of low emission hydrogen will need to be underpinned by a cost efficient transmission and storage system strategically designed to connect Supply and sources to demand centers Norwest Europe at the moment has approximately 1 600 kilometers of hydrogen pipelines accounting for over 95 percent of hydrogen pipelines operational in Europe most of them are closed systems owned by large Merchant hydrogen producers and our concentrated near industrial consumer centers based on the current targets set by Northwest European countries to Regions hydrogen Network could increase by almost Eightfold to over 12 000 kilometers by by 2030. so repurposing gas pipelines to hydrogen service can cut investment costs by 50 to 80 percent compared to the Investments required required into new hydrogen Pipelines and this in turn could translate into lower transmission tariffs and improve the cost competitiveness of low emission hydrogen according to First estimates close to two-thirds of the hydrogen pipelines operational in 2030 would be repurposed natural gas pipelines and it is also essential that a harmonized regulatory Frameworks for hydrogen emerge because they enable the development of regional trade in low emission hydrogen and they also can benefit cross Regional synergies in terms of production and demand creation the European commission published its hydrogen and decarbonization gas market package in December 2021. the package lays down the foundations for the integration of low emission gases including hydrogen into the broader European gas system the proposed regulation provides guidelines on the gradual implementation of non-discriminatory third-party access to hydrogen networks blending limits tariffs network codes and operational transparency we also see that harmonized hydrogen certification schemes providing evidence of the emission intensity of a given unit of hydrogen will be key to establish a regional hydrogen Market in Northwest Europe amidst tightening regulatory standards so this slide gives us a bit an overview of recent Dynamics related to hydrogen production costs the majority of hydrogen in Norwest Europe is currently produced by a steam methane reforming or Auto Channel reforming and natural gas typically accounts for 70 percent of the levelized cost of production and for about 80 percent of the operating expenses in 2021 the average production cost of unabated hydrogen produced via SMR student at approximately two dollars per kilogram of hydrogen hence low emission hydrogen production Roots were still not competitive with animated production in Norwest Europe now Russia's strategic behavior in using natural gas as a political weapon has intensified obviously since it started its Invasion against Ukraine and we all know that Russia reduced quite drastically its plant gas supplies to the European Union and the steel production in plant gas flows drove up European gas prices to all-time highs in 2020 to um for instance gas prices on ttf Europe most liquid and most widely traded gas Hub averaged at 40 dollars per mmbtu uh in 2022 this is more than six times their five-year average consequently the assessed cost of production of gas-based hydrogen uh increased to over five dollars per kilogram of hydrogen and the surge in gas prices contributed to over 90 percent of the increase in hydrogen production costs hence the near-term cost competitiveness of hydrogen produced via SMR is contested possibility abated and unabated gas-based hydrogen production via unabated SMR would be competitive against onshore wind power electrolysis at a gas price below 20 dollars per mm BTU now I think that um when we are looking a bit more um the longer term Horizon um our production indicate that low emission hydrogen will be competitive with gas-based hydrogen by 2030 even when we are assuming that natural gas prices will be returning to their historic range natural gas with ccus would be actually the cheapest production alternative below natural gas with ccos assuming a carbon price of over 130 ton per CO2 equivalent and the cost of renewable electrolytic hydrogen uh production would be between two and a half and three and a half kilogram uh of hydrogen the strong decline in low emission hydrogen production costs relates to several factors increase including decreasing electrolysis CC us and renewable Technologies costs and expectations of higher carbon prices for example we estimate that the total cost of deploying an European or American manufactured actualizer in 2021 stood at about 1 500 US dollars per kilowatt capacity and we expect that to decline to just um 400 US dollar per kilowatt by 2013. um I stopped there um and um now I would like to give back the floor uh to Jal uh to introduce the Q a session thank you for your kind attention thanks Greg again yeah uh now we'll move on to the Q a section and again thank you so much for sharing um valuable insights um so the first question that I have and Jose I think and Greg when you touched um in your presentation but can you talk more about the policy barriers for hydrogen production as low emission energy vector okay I think I can kick you start I think that more than policy barriers um for today um there is uh there are certain barriers that are related to policy or regulation in this case of low emission hydrogen production a particular lesson on on how countries Define low emission hydrogen uh we use this word low emission but we have seen countries speaking about green hydrogen low carbon sustainable hydrogen and that creates a lot of uncertainty on on investors actually we have just published a report specifically on this topic for the G7 negotiations of this year in which we address the need of giving Clarity to prayer developers to investors to retention users of what the countries mean with this um with these definitions and how the actors in a hydrogen Market can demonstrate compliance against those regulations so I think the first thing is regulatory Clarity this is creating a lot of a lot of doubts and then another value is that we need to to mention is the lack of infrastructure so today most of the hydrogen production on demand are co-located in the same industrial facilities but we can expect that now production will not necessarily be in the same locations as the demands and also we can expect the appearance of a lot of um distributed users of hydrogen so you need to create the infrastructure to deliver the hydrogen from those big production centers to the big demand sectors and also to this distributed users and and finally the the cost differential today um in general the production of low emission hydrogen is more more costly than than the animated fossil based production um some of our numbers for example the ones that have presented garages or numbers that are present in the in the global high in review kind of challenge this understanding but we we have to be clear on something so the fact that in the current energy crisis in certain parts of the world the production of low Mission highly may have become cheaper does that not mean that it's still competitive first of all because we don't have the capacity jet of producing that low Mission hydrogen we need to build it and for build it we need Investments and those Investments are being hindered by the long-term uncertainty around the energy prices so so there is a need for having supporting schemes and policy incentives to create this uh this demand to depending on how the prices for um for fossil fuels will vary in the future to see whether low emission hiring will be really competitive against them both for using renewable or nuclear electricity or biomass or the use of fossil fuels with ccus awesome thanks Jose um Greg would you like to add anything if not we can move on to the second question yeah no thank you John and maybe maybe just to compliment what um Jose said that indeed um regulatory uncertainty is one of the key issues and and then also I think it is important to know that um we are talking about a vertical value chain when it comes to low emission hydrogen and and in as such it would be maybe beneficial to have a support mechanism and subsidy schemes which do take into account this vertical nature of of the value chain and you know which provided more sort of holistic approach um you know and giving maybe a bit more Focus also on the demand creation um I think in Northwest Europe that's um that's one of the key key issues and maybe one third point is is regarding the uncertainties related to the technology side for instance the storability of hydrogen in in Porous reservoirs on which there is obviously need for a more research and and development thank you right and to piggy bank on that on the regulatory framework there's another question right so does regulatory framework include technology exchange or financial supports to developing economies for them to increase the hydrogen penetration so concretely on the on the exchange with with emerging economies I think we have not um specifically addressed this topic on on the analysis but I think there are there's a significant number of international cooperation efforts uh congrately on on this front now whether this should be addressed through regulatory Frameworks or actually through the provision of um concessional Finance or to the support of cooperation Finance through multilateral development Banks I think this is an area with that really requires a step up from donor countries and and this was actually flagged also on the Breakthrough and recommendations from last year although this is not specific for Hygiene I will say um this is a is a touch upon many other Technologies but in the case of hydrogen is one of them of course and and then definitely um technology best practices and knowledge sharing this is is particularly important especially because hydrogen is going to be used mainly on heavy industry applications on Aviation on shipping which are applications that require a significant investment or very very topics intensive so that increases the the risk profile of the project so it's very difficult to investors to facilitate those Investments on emerging economies in this type of projects if there is not support also from the developed economics which actually are the potential importers in many cases or the exporters of technology so that will have a really important role to to play so I think more than on the regulatory framework I will base the the cooperation with emerging economies and triangles first on finance and then on on technology knowledge sharing great thanks and I know we are at what time we'll take two more questions if that's okay um so this is uh for um Greg so could you please give more uh precise examples of procurement rules or other policies for clean hydrogen demand creation yes thank you that's an excellent question I mean it is basically um giving you know a certain threshold when you launch a public procurement on the share uh which should be met with a local Mission um um hydrogen and I think that that's you know one uh one basic scheme which can which can support uh the initial uh demand scale up of flow emission hydrogen I think we have seen some um initial measures uh but but that's probably not sufficient yet to to scale up the market I don't know Jose if you would like to to complement on that yeah I was thinking um so um one example that we have been aware from a couple of years ago but I don't know if it has already been implemented yet um is in the case of Norway um Norway launched a contract for one of the Ferry routes in the country um that included the need of using I don't know if it's hydrogen and hydrogen that I feel but it was a contract that was granted on the provision that whenever the company took ownership of that product of that ferry route they will need to operate with those low low Mission hydrating I don't know even if even if it's lower Mission but I think it's higher and hydrogen Drive fears and and and also I mean in the case of public procurement in many cases may not be hydrogen specific but if we can think about um you know the the contract or the or the um commission and as a public infrastructure uh in which uh the steel that is going to be used in the infrastructure uh a certain percentage should be low emission still or the cement should be low emission cement according to the the discrete definition that obviously each government established for these products this is an area these are not directly Hydro in demands but it can affect hydrogen demand so both in a steel and in cement hydrogen is part of the pool of technologies that can help in producing low these low emission products so if you force the contractors to meet a certain share of the steel used in the project basically because 100 probably will be impossible at this in the short term um it can it can be a demand pull uh policy for those products now whether those products will be produced with ccs with direct electrification with low emission hydrogen that's up to debate and one more relative data to the decision of the of the contractors but it can be another way of generating certain amount great and then we'll take this last question uh and people uh we'll make sure that all of your questions are answered and um so what is the common form of of hydrogen how is it exported basically it's a is it in form of hydrogen or ammonia or other types of chemicals basically and and do you see that variability across different continents basically or different regions so as I said in in the presentation actually hydrogen is not traded and this is something that will have to keep in mind it's just in certain demonstration projects basically now when we think a product that is about derived from hydrogen or two products are hydrogen derived and there are widely traded today are ammonia and methanol none of them being a low Mission according to our definition of low of low emission products um basically because there's nearly no production of flow emission hydrogen now if an international market for Hydra and his derivatives there is it's a hydrogen base Fields um develops we can expect different ways of trading hydrogen it can be in the form of liquefied hydrogen it can be in the form of ammonia it can be in the form of synthetic fields or it can be informed in the form of liquefied organic hydrogen carrier and for short distances it can be even in the form of compressed hydrogen in dust pipes but for shipping are the other four Alternatives that I mentioned now whether one or the other will occur it will depend on many different things it seems clear that in the short term ammonia is going to be the clear winner basically because as I mentioned there is already trade on ammonia we already have infrastructure we already know how to do it um now for for energy applications that's another story uh Japan has advanced quite a lot in the radius of Harmony applications but probably not in the rest of the world then there is a need to transform it back into hydrogen that has an energy penalty so um policy drivers demand creation and particularly Technology Innovation to see which technologies will actually be more efficient than others or less expensive um will Mark which of the different options for trading hydrogen will dominate in the in the future but in the short term it seems clear that it will be ammonia particularly as a replacement of the existing uses for ammonia more than the existing uses for hydrants no thank you so much Jose and again um thank you um all the speakers and and the participants we really appreciate and we'll record this so we are recording this presentation and we'll share um the slide deck as well and it would be uploaded on the Clean Energy Solution um Center as well so once again thank you so much um Jose and Greg um for sharing your work and Carla uh presenting the is to uh hydrogen initiative so we really thank you very much for your for your invitation much appreciating and looking forward for future webinars as well yeah so thank you all thank you bye thank you bye bye thanks a lot

2023-05-02 23:22

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