Paul Rodden • Season: 2024 • Episode: 351
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Welcome to The Hydrogen Podcast!
In episode 351, In this episode, Paul discusses Shell and Equinor’s exit from hydrogen projects in Norway, the ongoing regulatory challenges of the US 45V tax credits, and the promising development of the North Adriatic Hydrogen Valley in Eastern Europe. He explores how these events shape the future of global hydrogen deployment.
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Transcript:
Shell follows Equinor and backs out of Norway. The US 45V turmoil continues, and Eastern Europe grows into a hydrogen Valley. I’ll go over all of this and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy, where is capital being deployed for hydrogen projects globally, and where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
First today in an article in Reuters, Shell shelves Norway hydrogen project due to lack of demand. Shell has scrapped plans for a low carbon hydrogen plant on Norway’s West Coast due to a lack of demand, the energy company said Last Monday, days after Equinor canceled a similar planned project in Norway. Hydrogen derived from natural gas in combination with carbon capture and storage, known as blue hydrogen, has been touted as a stepping stone to decarbonising European industry and meeting climate goals, but it is more costly than traditional methods.
“We haven’t seen the market for blue hydrogen materialize and decided not to progress the project,” said a spokesperson for Shell in Norway. On Friday, Equinor said it scrapped plans to produce blue hydrogen in Norway and export it to Germany because it was too expensive and there was insufficient demand.
Together with partners Aker Horizons, opens new tab and CapeOmega, Shell had planned to produce about 1,200 metric tons of blue hydrogen a day by 2030 at the Aukra Hydrogen Hub near Shell’s Nyhamna gas processing plant. The Partnership was not renewed when it expired in June this year, and shell does not currently have other active hydrogen projects in Norway. This again, according to the spokesperson.
Okay, so not a big surprise that blue hydrogen projects are getting canceled in the EU with such strict regulations around hydrogen development and use demand centers will be hard to come by, as nearly all of them will be looking for green hydrogen for the tax incentives, regardless of the cost difference. And this really does pose an interesting question of what will the hydrogen landscape look like in the US, assuming the Treasury Department ever announces the regulatory framework for clean hydrogen.
And that question gets opened up even further in this next article from the Financial Times. Amanda Chu writes, ‘People are waiting’: US hydrogen industry warns over regulatory limbo. Amanda writes, tough macroeconomic conditions and policy uncertainty are putting us hydrogen projects in limbo and the sector at risk of moving abroad. This, according to industry members. Jennifer Rumsey, chief executive at Cummins, told energy source that lack of financial hydrogen tax credit rules in the US have slowed down new equipment orders and timelines for projects in their backlog, saying people are waiting, adding that inflation and high interest rates have also challenged products. Customers are reexamining. What do the economics look like? Can I still afford to invest President Joe Biden’s landmark climate law, the inflation Reduction Act offered lucrative tax credits for clean hydrogen, which has hailed for its potential to decarbonize, hard to abate, sectors such as heavy industry.
But two years after the IRA’s passage, the tax credit rules have yet to be finalized as a fierce debate rages over the criteria hydrogen producers must meet to claim green subsidies. And a quote from Andy Marsh, the CEO of plug power, the inability to have regulations which are clear and which are usable has delayed the US market without a doubt, and the hydrogen equipment manufacturer is facing a cash crunch and received a $1.7 billion conditional commitment in May from the Department of Energy’s Loan Programs Office for six us hydrogen projects. He also said, back in 2022 everybody in Europe was afraid all the jobs were going to go to America. I think the exact opposite will happen if the US just keeps on going slow. Earlier this week, the hydrogen Council, which includes plug power and Cummins released its annual report on the state of hydrogen industry. The report co authored by McKinsey found that while $96 billion has been committed to North American sector by 2030 only 18% of the commitments have reached fid.
The report tackled, quote, renewable hydrogen projects produced using renewable electricity and low carbon hydrogen products produced using hydrocarbons and then capturing the emissions uncertainty over regulatory frameworks such as the IRA tax credit was cited as a critical challenge impeding project bankability. And a quote from Ivana Jemelkova, Chief Executive of the hydrogen Council, we’re leaving opportunities on the table in areas where regulation is not clear or missing, or where it’s not workable. Treasury Deputy Secretary Wally Adeyemo told es, the department has quote talked to a number of companies that say they will be able to build projects with the help of the rules. He said, We are carefully considering the feedback and comments that have come in, and we’re working hard to get the final rules done and to provide certainty as quickly as possible. A lack of commitment is widespread across the global hydrogen sector. While the report tracked $680 billion in clean hydrogen project announcements through 2030, only $75 billion of these announcements have reached fid. The hydrogen Council estimates this needs to grow eightfold to remain on track with climate targets.
Again, in a quote from Jemelkova, we have arrived at a point where hydrogen is embedded in the energy transition. And what happens from here is either the energy transition as a whole moves forward or we do not move the energy transition forward. Brian Murphy, a senior analyst at S and P global commodity insights, agreed with the report’s outlook, saying final investment decisions have been quote below the page required in most Net Zero scenarios. And it’s not all doom and gloom. In 2020 the council tracked only ten billion globally in hydrogen projects with final investment decisions, total investments in hydrogen have grown seven fold. Hydrogen projects are moving the fastest in East Asia, where governments offer strong incentives and targets for the sector, roughly 73% of hydrogen commitments in Japan and South Korea have reached fid and in China, 60% of investments are finalized, compared with the global average of 11% this according to the report.
In a quote from Jae Hoon Chang, Chief Executive of Hyundai and co chair of the hydrogen Council, told that, yes, seven fold increase globally over The past four years is significant. However, considering the climate commitments, the pace and scale of deployment have not been sufficient. The auto giant is involved in hydrogen projects in South Korea, Poland and Indonesia, and has been an early mover in hydrogen powered vehicles.
Okay, so the questions around how the 45v incentives will be allocated is continuing to cause concerns for every project slated for development. The delay is also affecting everything upstream and downstream from these projects. Part suppliers are unable to forecast demand and offtake has no way of being assured a steady supply of hydrogen.
All of this hinges on the US, federal government, making a decision, and that was such an impactful election nearing, I would be surprised if any announcement is made this year. Now, obviously we want the hydrogen economy to be able to stand on its own, but government incentives are there to boost the industry until that happens. But with all this stalled pattern currently in place here in the US and other regions around the world moving forward. The question now is not if, but how many jobs and capital will be shifted to other areas where development is moving forward.
Next, in an article in total, Croatia news.com Lauren Simmonds writes, North Adriatic hydrogen Valley Project holds promise for Croatia.
The North Adriatic Hydrogen Valley project holds hope for Croatia and its partner countries in this commendable feat.
As Poslovni Dnevnik writes, as part of the wider North Adriatic Hydrogen Valley project, seventeen projects are being developed within the territories of Croatia and several partner countries. These are neighbouring Slovenia and Italy, and many partners already have mature projects. It’s now expected that the first few tonnes of “green” hydrogen will be produced by 2026.
This was revealed by North Adriatic Hydrogen Valley project coordinator Jerneja Sedlar. It was noted that after the completion of the project, which began in September 2023 and will last for six years, around 5,000 tonnes of renewable hydrogen is expected to be produced in three countries.
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“Within the scope of this wider project, seventeen projects are being developed in the area of three partner countries. Many partners have mature projects, and we’re now planning to produce the first tonnes, i.e. kilograms, of hydrogen in 2025 and 2026”, she said, emphasising that hydrogen will be produced in different locations.
The project partners recently gathered in Rijeka for a two-day meeting, where they discussed project implementation, risk assessment and integration into social and industrial environments.
The mayor of Cres, a new partner in the consortium, Marin Gregorović, said that hydrogen is the future and that he sees a long-term effect for Cres. “Our expectations are that, along with filling stations and hydrogen storage facilities, our utility system will also be transformed in the future, and we aspire to get a link with the mainland – hydrogen-powered high-speed shipping,” he said.
The North Adriatic Hydrogen Valley project is based on the regional cooperation of Slovenia, Croatia and the Italian Autonomous Province of Friuli-Venezia Giulia. It brings together 37 companies and institutions with the aim of developing innovative solutions for the entire region’s green future. This praiseworthy project, with a massive budget of 25 million euros, represents the first international hydrogen valley in the whole of the EU.
Okay, so the hydrogen economy that Italy has been developing has spun into Croatia and Slovenia also with this hydrogen Valley project, it sounds like scaled hydrogen production will be very soon, and with significant hydrogen production of 5000 tons from the three countries now, as all the EU projects continue to ramp up, I do wonder how the hydrogen backbone is developing. Will the pipeline transportation network be up and running to move the molecule around in time?
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another. Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
