March 13, 2023 • Paul Rodden • Season: 2023 • Episode: 196
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In episode 196, Can the US scale fast enough to send green hydrogen to the EU? And Hyzon comes in first in Germany. All this on today’s hydrogen podcast.
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Can the US scale fast enough to send green hydrogen to the EU? And Hyzon comes in first in Germany. All 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 opinion piece on energy monitor, transatlantic policymakers give hydrogen a clear mandate scale now written by Natalie Janzow, Oleksiy Tatarenko and Thomas Koch Blank , the author’s write green hydrogen regulations proposed by the European Commission on the 13th of February offer crucial clarity to prospective us suppliers, and an incentive to start operating as quickly as possible. project developers all over the world set their sights on European markets in early 2022. When the EU announced its ambition to import 10 million tonnes of green hydrogen by 2030. They now have much more clarity on the product type that industrial consumers in Europe will be looking to deploy. A key provision will determine which imported green products ultimately reach EU end users.
The new regulations include a phase in period to support immediate market development, during which producers are incentivized to scale up without having to comply with more stringent regulations. Critically green hydrogen produced at sites operational before 2028 will be exempt from additionality requirements. This means potential exporters can launch their operations and deliver their first products to Europe within the next five years, will not need to demonstrate that the renewables they use are newly commissioned, nor will they have to prove that their renewables have not received any public funding for their development.
After 2028, newly operational sites will need to prove the renewables powering their production are additional, but already active sites can continue operating without restrictions until 2038. This is particularly significant for US green hydrogen producers targeting early EU offtake as they are uniquely well suited to deliver green fuel more quickly and cheaply than other early suppliers. The hydrogen production tax credit in the US will effectively reduce the cost of exported green hydrogen derived commodities. But with generous provisions in the inflation Reduction Act supporting new clean energy build up Few hydrogen producers will likely build new renewables without taking advantage of state aid. Once post 2028 additionality restrictions are enacted in Europe, publicly subsidized renewables will prevent new US hydrogen from complying with EU standards. And so green hydrogen producers must act quickly. Hydrogen project developers that want to take advantage of US tax credits and still qualify for their product for use within Europe will need to act quickly. via its new regulations, the EU will structurally reward first movers who can supply its industries with alternative green fuels as fast as possible, but its rapidly decarbonizing market will not stay open to subsidized providers for long.
The EU’s proposed phase in period postpones stricter hydrogen regulations for a few years, which can benefit first movers on both sides of the Atlantic. European heavy industries will be able to access near term imports and expedite the transition away from hydrocarbons. While they are still facing sky high gas, oil and electricity prices in the midst of an energy security crisis. Early green hydrogen imports can help the EU meet its increasingly ambitious renewable energy deployments, targets and reduce reliance on Russian hydrocarbons, while crucially decreasing short term strain on domestic renewables that can in turn be used to enable rapid continent wide electrification. In the US Green hydrogen producers can scale up early operations by locking in contracts with ready to move end users in the EU. In addition to pursuing local offtake options, policy support mechanisms in the US will effectively reduce the cost of green hydrogen commodities delivered to Europe while mechanisms in the EU will incentivize fuel switching and energy intensive demand sectors.
Symbiotically the US and the EU can help grow each other’s hydrogen markets, adhering to a framework of hydrogen regulations that promote immediate large scale project development while prioritizing long term emissions reduction. Several immediate actions are still necessary to facilitate the buildup of green hydrogen trade routes into Europe. The EU must publish clear and specific guidelines describing how imports will qualify as a green fuel. To promote policy certainty for international suppliers. project developers in the US must secure contracts with EU off takers and make final investment decisions on large projects as quickly as possible to ensure they can deliver green hydrogen to Europe in the near future. The adoption of green hydrogen regulations proposed by the commission is a crucial step to enable the EU to achieve its deployment ambitions with a phase in period that facilitates early Green fuel deliveries from abroad, the bloc might reach its strategic hydrogen targets even sooner than foreseen.
Okay, so this opinion piece really stood out to me, as it seemed extremely positive on the US and the EU working together to set up hydrogen trade between the two areas. The biggest concern I have though, is the timeframe that they’re talking about 2028 is really right around the corner and not much time to get any kind of scale up necessary to one produce the hydrogen with their needed green process in the EU, and lock down transportation logistics to get the hydrogen there. And while I understand that this opinion piece is really targeting the US and EU relations, there are a lot of other countries around the world looking to export green hydrogen, most notably right now would be Australia and Saudi Arabia. Now Australia is already exporting green hydrogen to Japan and South Korea. And Saudi Arabia is looking to have several of the world’s largest green hydrogen production sites. And not only that, but they also have a distinct geographical advantage being so much closer to Europe. And so really, the biggest driving force that the US can take advantage of in getting its hydrogen over to Europe is that Europe has a market for the extreme price point of green hydrogen.
Next, in a press release on March 10, Hyzon Motors announced his first truck in operations with DB Schenker, Hyzon Motors, a global supplier of zero emission heavy duty fuel cell electric vehicles. Today, march 10. Announced DB Schenker has deployed a Hyzon fuel cell electric truck in operations in Germany. DB Schenker, one of the world’s leading logistics service providers is using the truck in daily operation between Cologne Germany and Eupen, Belgium. This is the first fuel cell electric vehicle in the heavy duty weight class to be used in commercial operations in Germany. DB Schenker is using the Hyzon truck and a pay per use model offered by Hylane, a rental company specializing in co2 neutral commercial vehicles. As a wholly owned subsidiary of DEVK, one of Germany’s largest motor insurers. Hylane specializes in providing comprehensive hydrogen solutions for the logistics sector, minimizing the risks for customers and accelerating the rate at which zero emission vehicles replace diesel. Germany is expected to be one of the major global markets for zero emission commercial vehicle technologies in the coming years, as there are already significant domestic incentives in place to transition heavy vehicles off diesel.
And a quote from Parker Meeks, president and interim CEO of Hyzon motors, Hyzon’s proprietary fuel cell technology developed, tested and implemented over the course of two decades is purpose built for heavy duty applications and perfectly aligns with the needs of logistics customers such as DB Schenker. He continues by saying our trucks are being deployed in challenging environments around the world. And we are gaining real life operational experience with forward thinking EU partners, such as Highline and DB Schenker, helping us progress our vehicle performance and thus, global decarbonisation. Okay, so a big congratulations, I think goes out to Hyzon and taking the crown as being the first fuel cell heavy duty truck in Germany. So now the next big question is, since we know that there’s going to be hydrogen available for this truck to run, who’s going to be next? Would it be Daimler who’s being built there in Germany? Or could it be Volvo? Or since Hyzon is first to market in Germany? Well, we just see more Hyzon trucks being shipped overseas.
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