January 09, 2023 • Paul Rodden • Season: 2023 • Episode: 179
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In episode 179, Germany and Norway make a huge hydrogen announcement. And India announces that they've earmarked $2.3 billion for hydrogen investment. All of this on today's hydrogen podcast.
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Germany and Norway make a huge hydrogen announcement. And India announces that they've earmarked $2.3 billion for hydrogen investment. All of this 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.
In an article in cnn.com on January 5, Anna Cooban writes Germany and Norway will build a big hydrogen pipeline. Germany just took a step closer to finding a long term greener replacement for Russian natural gas and coal, German power producer, RWE, and Norwegian state owned energy firm Equinor. On Thursday, January 5, announced plans to build hydrogen fueled power plants in Germany over the next few years, as well as a major pipeline between the two countries to feed them. The agreement, which is not yet legally binding is part of Germany's efforts to phase out all coal fired power stations by 2030, and decarbonize its energy sector, Berlin has pivoted dramatically away from Russia as a source of energy since its invasion of Ukraine and needs to find secure alternative suppliers. And a quote from Anders Opedal. Equinor, CEO and president he said in a joint statement, through this collaboration, we will strengthen the long term energy security for Europe's leading industrial country.
The power plants jointly owned by RWE and equinor will initially run on natural gas produced in Norway before transitioning to Blue hydrogen, also produced in Norway using natural gas and pumped through the underwater pipeline. This is going according to the companies, more than 95% of the carbon dioxide emitted during the production of hydrogen will be captured and stored under the seabed. equinor plans to develop a two gigawatt production capacity for blue hydrogen by 2030. The ultimate aim is to generate so called green hydrogen using renewable energy produced by offshore wind farms. This again according to the company's without providing target dates. The European Union has a target to build a 40 gigawatt renewable hydrogen production capacity by 2030. And a quote by Markus Krebber RWE's Chief Executive, there is an urgent need for a rapid ramp up of the hydrogen economy. Blue hydrogen in large quantities can make a start with subsequent conversion into green hydrogen supply. The companies did not state how many power plants they intend to build or the value of their joint investments.
Norway is now Europe's biggest supplier of natural gas. This according to EU official statistics, ever since Russia started slashing its exports to the block in retaliation for European sanctions over the war in Ukraine, the Nordic country has ramped up its own exports to fill in the gap. In a quote from Norwegian Prime Minister Jonas Gahr Stoere. In the midst of the energy crisis, we see how important Norway is as a reliable supplier of gas to Europe. But we also see how crucial it is that we switch more quickly to more renewable energy. Just before Russia invaded Ukraine in late February, Germany scrapped plans to use the Nord Stream two pipeline, which was built by Gazprom to deliver up to 55 billion cubic meters of natural gas per year, or more than half of Germany's annual consumption. In the months that followed, Russia dramatically cut flows of natural gas through the Nord Stream one pipeline flows on that pipeline stopped altogether in August when it shut for repairs and didn't reopen. Both pipelines were hit a month later by a series of explosions, Denmark and Sweden has said the infrastructure was deliberately targeted, and Sweden's Security Service has said that it cannot be rolled out that a foreign power is behind it. Suspicion has fallen on Russia as the only actor in the region believed to have both the capability and motivation to deliberately damage the pipelines. The Kremlin has denied striking the pipelines.
After the explosions NATO vowed to mount a united and determined response if the damage proved to be deliberate. Okay, so some of the biggest news between two nation states involving hydrogen transactions to date. Now, as stated, There are no real numbers that are coming out of this announcement. Only that we know equinor And RWE are going to be joining forces to deliver hydrogen blue hydrogen From Norway into Germany through a pipeline, now with so much still in question as to how much infrastructure they're going to be building out for this project costs will continue to remain in question until more information becomes available. Now, I do know that the pipeline on land roughly costs about $2 million a mile, I have no idea just how much a subsea hydrogen pipeline would cost to build. But what I do know is that distance is roughly 600 miles between Norway and Germany. And so a $2 million a mile that translates to $1.2 billion just for that pipeline. But this is subsea, so I would estimate perhaps even double that cost just for the pipeline. And so just considering that pipeline and a few power plants to go along with that, I wouldn't be surprised if this pushed $10 billion all in.
But aside from those costs, I also really like the players involved in this equinor and RWE are some of the best energy players in the world. And equinor knows natural gas, and the fact that they're using a hydrocarbon source for this hydrogen speaks volumes about the transitioning mindset in Germany about what kind of hydrogen to use. But until more information comes out about this project, we'll just have to speculate about things like economics and the infrastructure build out. Next, in an article from AP news, SIBI ARASU, writes, India approves $2.3 billion to develop green hydrogen. The author writes the government has approved $2.3 billion to support production use and exports of green hydrogen aiming to make India a global hub for the nascent industry. The funding announced late Wednesday January 4, is a first step towards establishing the capacity to make at least 5 million metric tons of green hydrogen by the end of this decade. The aim of the funding initiative is to quote make green hydrogen affordable and bring down its cost over the next five years. It will also help India reduce its emissions and become a major exporter in the field. This according to Anurag Thakur, India's minister for Information and Broadcasting. He said the financing would also help add about 125 gigawatts of renewable energy capacity by 2030. Now as of October, India had about 166 gigawatts of renewable energy capacity.
Other aims are to create more than half a million new jobs attract more private investment into the sector, reduce hydrocarbon imports and cut greenhouse gas emissions by 50 million metric tons. Many of India's leading renewable energy companies including companies owned by the Adani Group, Reliance Industries and JSW Energy; public sector companies like Indian Oil and NTPC Limited; and renewable-only companies such as Renew power are investing in production of green hydrogen. Green hydrogen now amounts to a small fraction of global hydrogen use, estimated to be about 70 million tons per year. Most commercially produced hydrogen is gray hydrogen produced using hydrocarbons and blue hydrogen, also made from hydrocarbons. But with carbon capture systems to reduce emissions. The production of green hydrogen results in the emission of little to no greenhouse gases, and providing policy incentives for green hydrogen production. India is following the lead of many other countries such as China, the European Union and the United States. Energy analysts expect manufacturing costs for green hydrogen to fall significantly in the next few years and estimate the green hydrogen market will grow 20 fold to $80 billion by the end of 2030.
In a quote from Shreyans Jain, an India based sustainable business strategy consultant, who closely tracks developments in the green hydrogen industry said a robust policy framework requisite financial support and an enabling ecosystem for technology development are essential to displace the country's conventional fuel mix with green hydrogen and enhance its industrial competitiveness in an increasingly decarbonizing world. Okay, so good news and interesting news coming out of India and quite a bit of money from that country to devote to establishing a green hydrogen economy. Now, while I'm excited to hear about India wanting to start taking part in the hydrogen economy, what I would really like to see them do is start looking at opportunities to invest in waste to hydrogen developments. The country has such a vast supply of solid waste, that using a waste to hydrogen system could potentially produce all the hydrogen that they need while starting to get rid of that solid waste.
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