London — Building out the hydrogen economy will require a combination of pricing transparency and commoditization as industry makes projects affordable over the coming decade, panelists said at the World Hydrogen virtual summit March 9.
Published June 2021 by Hydrogen Europe
Key recommendations:
Hydrogen Europe supports the EU’s objective to achieve climate neutrality. We advocate for hydrogen as an enabler of a carbon neutral society. The production of renewable hydrogen contributes to decouple the deployment of renewable energy from grid bottlenecks unlocking the full potential of renewable energy to replace fossil energy carriers in all sectors of our economy. Furthermore, hydrogen enables the integration of ever-growing amounts of renewable energy into “hard to abate” sectors such as steel, chemicals, and transport, including refineries, maritime and aviation.
From the outset, it is important to state that we strongly believe that the revised Renewable Energy Directive (RED) should be more ambitious in contributing to climate targets and accelerating the transition to a more integrated system with hydrogen being a key part of this effort. The existing renewable energy target for 2030 should be revised upwards in line with the new ambition of the 2030 target plan to facilitate faster decarbonisation and the growth of renewable energy. An increase in this target is also an important driver for much needed additional renewable electricity into the system.
Hydrogen Europe does not challenge the direct use of renewable electricity where most efficient. Hydrogen Europe considers that all new electricity demand should be met with new renewable generation. This remains valid for electrolysers and the subsequent electricity demand these generate. Hydrogen production helps accommodate growing shares of renewables, unleashing their potential and enabling the decarbonisation of those sectors where direct electrification is not an option.
We fully recognise the importance and support the principle of additionality, namely the idea that additional renewable electricity consumption must always be covered by additional renewable capacity. Hydrogen Europe has expressed concerns regarding the practical implementation of additionality principle criteria not the principle itself. Furthermore, given the lack of clarity, we raise concern over the possible extension of these criteria to other sectors (beyond the scope of the RED), the subsequent impact on the deployment of renewable hydrogen, meeting the targets set by the EU Hydrogen strategy and ultimately the long-term EU climate objectives.
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Original article published on S&P Global Platts, 9 March 2021
Written by: Jeffrey McDonald
London — Building out the hydrogen economy will require a combination of pricing transparency and commoditization as industry makes projects affordable over the coming decade, panelists said at the World Hydrogen virtual summit March 9.
With more than 30 governments globally launching hydrogen strategies, the hydrogen policy focus is becoming more clear. However, incentivizing supply and demand remains a challenge, particularly as companies consider their appetite for risk, said Joaquin Narro, managing director at Alcazar Investment Management.
“The path to hydrogen commoditization is full of opportunities but it is also riddled with dangerous pitfalls,” Narro said.
Finding the right risk appetite amid market uncertainty is critical for driving projects in the early stages as hydrogen economy takes shape over the course of the decade, panelists said at the World Hydrogen Summit virtual conference.
Project risk for low-and-zero carbon hydrogen is largely tied up with feedstock costs, along with finding long-term customers, according to Astrid Behaghel, energy transition expert and hydrogen coordinator for BNP Paribas.
“Long-term financing is what we are missing at the moment — whether it’s from government or long-term offtakers,” she said.
Projects are not yet bankable, and need guidance for what schemes are needed, said Shiva Dustdar, head of innovation at the European Investment Bank.
The bank is advising a number of projects now where the bankability lies on the upstream generation side of renewable energy, but is lacking on the demand side, she said.
The challenge is trying to go closer to the customer, and trying to map investor risk appetite.
“We are interviewing along the corporate value chain, and determining what will it take for the public side to make it worth the capital,” she said.
Mobility markets provide a potential near-term solution, said Oliver Bishop, general manager of Shell Hydrogen.
Industry is able to provide large quantities of hydrogen, but at lower margins, he said.
“Transportation is closer to where it needs to be at parity to conventional hydrocarbon fuels,” he said.
In addition to hydrogen refinery projects, Shell currently has over 50 refueling stations in North America, Europe and Asia.
Over time, building cross-sectoral demand where industrial users provide hydrogen as a feedstock to spur mobility will be crucial for success, Bishop said.
Once projects are in place, developing a cross-border, global hydrogen market will require a combination of pricing and commoditization, Narro said. although measuring carbon intensity appears to be the answer, he said.
“Low carbon hydrogen uniformity is required to draw investors,” Narro said. “Hydrogen needs to be commoditized.”
Creating a carbon intensity product around hydrogen is the answer, Narro said. Such a mechanism could be created by different grid operators or linked to CO2 prices, he said.
Original article published on Hydrogen Economist, 10 March 2021
Governments at federal and state levels must put in place policies to encourage both the supply and demand of green hydrogen simultaneously if a properly functioning market is to develop, according to industry experts speaking at the World Hydrogen Summit yesterday. Regulators can provide a stable investment environment to ensure production projects go ahead while also putting in place time-limited subsidies to encourage demand, according to Oliver Bishop, general manager for hydrogen at Shell. “We need to make sure we synchronise the demand piece with the supply—that helps all of us get down the cost curve,” he said. “We need to make sure we synchronise demand with supply—that….
Read full article here: http://pemedianetwork.com/hydrogen-economist/articles/strategies-trends/2021/countries-must-balance-hsub2sub-supply-and-demand-whs
Written by: Tom Young
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