Paul Rodden • Season: 2024 • Episode: 345
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Welcome to The Hydrogen Podcast!
In episode 345, With Marathon out, the heartland hydrogen hub needs help to move forward, and as predicted, China is saturating the European electrolyzer market with low cost products. What can Europe do to prop up local electrolyzer manufacturers? I’ll go over all of this and give my thoughts on today’s hydrogen podcast.
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Transcript:
With Marathon out, the heartland hydrogen hub needs help to move forward, and as predicted, China is saturating the European electrolyzer market with low cost products. What can Europe do to prop up local electrolyzer manufacturers? 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 up today in the North Dakota monitor. Jeff Beach writes, Hydrogen hub seeks to adapt to shifting fertilizer market, loss of Marathon. Jeff writes, North Dakota’s Energy and Environmental Resource Center is looking to fill the void left in its hydrogen hub program after a dramatic shift in the fertilizer market and a key partner pulling out.
“We’re working with the DOE (Department of Energy) about, how do we fill this gap?” John Harju, vice president for strategic partnerships, said in an interview with the North Dakota Monitor.
Harju said that the EERC is working with an energy-industry partner after Marathon Petroleum announced last month that it would end its Prairie Horizon project in Dickinson. Prairie Horizon had been a key part of the Heartland Hydrogen Hub, led by the EERC.
On the new partner, “It’s a good North Dakota project with a long-term North Dakota energy player,” Harju said, though he was not yet able to share details about the project.
Marathon Petroleum and TC Energy had partnered on Prairie Horizon, a potential low-carbon energy project. It was intended to use natural gas and other energy sources to create low-carbon ammonia-based fertilizer.
“We are focusing our North Dakota resources on maximizing the efficiency and optimizing the operations of our many existing assets in the state, including our Dickinson Renewable Diesel Facility, our Mandan Refinery, our joint venture soybean processing facility with ADM, our logistics systems, and our natural gas processing facilities,” Marathon said when announcing it would pull out of the Heartland Hydrogen Hub project.
Hydrogen can be produced from natural gas and then combined with nitrogen to create ammonia fertilizer. Harju said the market for fuels and fertilizer from hydrogen is not developing as quickly as some had hoped. Harju pointed to a major drop in fertilizer prices from two years ago, when the EERC was putting together its proposal for the Department of Energy. Fertilizer prices had risen sharply with Russia’s invasion of Ukraine and other global market factors. Now, prices are almost half of what they were at their peak. “Clearly that’s a huge change in terms of the prospect of their monetization,” Harju said of Marathon Petroleum.
Harju said a replacement project needs to be lined up by November, but he wants it to be sooner than that. In addition to fertilizer, hydrogen has many other industrial uses. Charles Gorecki, CEO of the EERC, has referred to it as the Swiss Army knife of energy.
As a clean-burning, consistent source of power, hydrogen is being used to power ocean-going ships and can be used indoors for things such as powering forklifts in giant warehouses. It has even been used to power a Zamboni ice resurfacing machine at Ralph Engelstad Arena on the campus of the University of North Dakota, where the EERC is based.
Frank Wolak, president and CEO of Fuel Cell and Hydrogen Energy Association, said government incentives such as tax credits and the hydrogens hubs are needed to scale up hydrogen production and bring down the cost.
He said the best way to lower the carbon intensity of fertilizers in the food supply chain is with clean hydrogen.
“Shifting from cheap and dirty to cleaner comes with a higher price,” Wolak said.
To make cleaner hydrogen cheaper, Wolak said there’s a need for a large amount of natural gas, which North Dakota has as an off-shoot of oil production. Then there is a need for large scale carbon separation technology and then a place to put the carbon.
North Dakota also has geology that Harju says is well-suited to underground carbon storage.
“Any fossil fuel used for the hydrogen hub would require carbon management,” Harju said. He said that could be either just storing the carbon underground or utilizing it.
The EERC also is involved in research using carbon dioxide for enhanced oil recovery – using the gas to make aging oil wells more productive.
Low-carbon natural gas hydrogen is referred to as “blue” hydrogen. EERC also is looking at “green” hydrogen, produced with renewable energy, such as wind.
The Department of Energy selected EERC from a pool of 79 applications to be one of seven hydrogen hub leaders from across the country.
Harju said the EERC saw its niche using hydrogen to create fertilizer. Farmers rely on fertilizer to boost crop yields but North Dakota is at the tail end of a supply chain that relies on the Mississippi River to transport fertilizer, much of which is imported.
The 2023 legislative session created a $25 million forgivable loan as an incentive for developing a hydrogen-based fertilizer plant in the state. Prairie Horizon was awarded $75 million and NextEra Energy Solutions $50 million, but Prairie Horizon ultimately decided it could not adhere to the state’s loan requirement that the hydrogen be created through the electrolysis of water and declined the loan.
The full $125 million went to NextEra. Harju said it is wrapping up its research related to Prairie Horizon into a report that could be used on similar projects in the future. Wolak said, “Good projects never die, you just have to find the right time for them to happen.” The North Dakota Industrial Commission provided some state funding related to Prairie Horizon. A $10 million grant through the Clean Sustainable Energy Authority went to EERC for engineering and design of the Liberty Hydrogen Facility, which later became the Prairie Horizon project.
The Department of Energy will provide up to $925 million to the Heartland Hydrogen Hub. The total depends in part on the projects EERC presents and the contract it negotiates with the Department of Energy. Harju said EERC also is paying more attention to applying hydrogen to iron ore mining and steel production in Minnesota, as well as shipping through the Great Lakes. “The notion of using hydrogen as a shipping fuel seems to have a lot of traction right now,” he said. But he said the market demand for hydrogen projects in general has not ramped up as quickly as expected. “We are hoping it is just around the corner,” Harju said. He said he thinks it will arrive eventually.
“The global push for decarbonization is not going away,” Harju said.
Okay… So the heartland hydrogen hub is going through a difficult time to gather projects in order to nail down the 900 plus million dollars for the hub with marathon pulling out, it would seem like a rough road ahead to secure another large ENP firm to partner with in such short order, and I hope they do, as there is a part of the heartland hub that I’m very interested in seeing develop. The Heartland hub is one of three hubs to include nuclear in its arsenal of hydrogen production, with the two others being the MachH2 and the Mach2 hubs. Heartland has partnered with Xcel Energy, who plans to invest over $2 billion in new infrastructure, including more nuclear as well as leveraging existing nuclear energy to generate hydrogen, and with this hub keying in on fertilizer production, it will be critical to generate that hydrogen at the lowest possible price point.
Now I’ll say this, as stated in this article, much of the fertilizer needed in the region is transported from the Gulf, meaning that if they can manufacture fertilizer in the heartland, states that should have a nice side effect of decreasing supply chain and logistical issues. Hopefully, the heartland hub gets the partners and projects needed to move forward as soon as possible.
Next in an article in Reuters, Kate Abnett writes, EU to tighten hydrogen subsidy rules after China concerns. Kate writes, The European Commission is working on tighter rules to ensure EU funding for hydrogen projects benefits European companies, after local industries raised concerns over cheap Chinese imports, the EU’s head of climate change policy said on Monday.
The EU will this month launch its next round of funding for green hydrogen projects, as Brussels attempts to kick-start a local industry to produce the fuel. Meanwhile, the EU is hardening its stance on other green technologies from China, imposing tariffs on electric vehicles which it says benefit from excessive subsidies.
European manufacturers of electrolysers, machines that use electricity to split water to produce hydrogen, have warned Brussels they cannot compete with cheaper Chinese producers. They want the EU to protect them by adding criteria that would favour local firms to its Hydrogen Bank funding scheme, something climate commissioner Wopke Hoekstra said the bloc’s executive was now working on.
“I will ensure that the next auction will be different. We will have explicit criteria to build European electrolyser supply chains,” Hoekstra said in a speech at the Eindhoven University of Technology in the Netherlands. “If European cybersecurity and safety cannot be guaranteed, if the data of our people and our companies cannot be guaranteed, companies cannot get support,” Hoekstra said, adding that while Europe a good presence in electrolyser manufacturing, China is oversupplying the market at lower prices.
Hoekstra did not specify whether the rules would ban projects using foreign equipment from receiving the EU subsidies. An EU official told Reuters the criteria are still being finalised. The EU awarded 720 million euros to seven EU hydrogen projects in April. At the time, industry sources told Reuters the low-priced bids from some successful projects indicated that they would be using cheaper Chinese equipment. The Commission has not disclosed if this is the case.
A Commission document, seen by Reuters, showed around a quarter of the projects that bid for the funding planned to source their electrolysers from outside the EU. Nearly another quarter planned to use a mix of EU and non-EU made equipment.Hoekstra said the EU was not aiming to cut ties with China, but would take action where it deemed competition to be unfair.
“Europe needs to counteract Chinese subsidies for electric cars that would otherwise overtake our European brands.”
Okay, so, as predicted, China has been flooding the European market with low cost hydrogen equipment, including electrolyzers, to the point that local manufacturers can’t compete on price. My question now is on quality. Are the Chinese produced electrolyzers built to the same quality standards as the European equivalent products. I would assume no. And if that’s the case, do the European models offer more longevity, greater efficiencies, anything to pay a premium for in the market? If not, we may see projects being shelved due to higher costs and no return for the added capital expense.
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.
