September 09, 2021 • Paul Rodden • Season: 2021 • Episode: 45
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In episode 045, BP and Macquarie Group are studying green hydrogen, a science focus on the UK’s hydrogen strategy, Japan and Russia to cooperate in hydrogen and a new hydrogen fund from the Bamford family heir. All this on today’s hydrogen podcast.
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Transcript:
BP and Macquarie studying green hydrogen, a science focus on the UK’s hydrogen strategy, Japan and Russia to cooperate in hydrogen and a new hydrogen fund from the Bamford family heir. 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.
BP and Macquarie are studying green hydrogen and a hub concept in Western Australia. This is an article from Reuters. BP said Tuesday it was conducting a joint feasibility study with Australian lender Macquarie group to produce green hydrogen at the oil giants former refinery site near Perth in Western Australia. The study is looking at helping decarbonize the Kwinana industrial area, home to several high emission power plants, mineral refineries, chemical plants, and cement works this according to BP. It would test local industrial demand and appetite for possible partnerships for constructing a large scale electrolyzer to produce green hydrogen in Kwinana. BP last October stunned the Australian Government with its decision to shut the Kwinana refinery, and said at the time, it would explore other options for the site, including a clean energy hub that could produce and store lower carbon fuels.
The Western Australian government is helping to pay for the 400,000 Australian dollars study, which the companies expect to complete in the first half of 2020 this according to BP. BP recently completed another study which found the Midwest region of Western Australia to be a good location for large scale green hydrogen production. So why is this important? It’s not new news, that BP is looking to transition away from oil and focus on hydrogen as a possible replacement. It’s also not new news that they’re looking to Australia as a hub for investment. What is interesting about this is BP joint feasibility study partner Macquarie group, and what it can mean to them and expanding their 563 and a half billion dollar portfolio, so that if this feasibility study comes back positive, I would expect this project to have legs and development very soon.
Next is an article from sciencefocus.com about why we need a hydrogen power network to reach net zero carbon. In August, the UK Government announced its plan for the UK with a low carbon energy derived from hydrogen. What will the gas be used for? And will it really help us reach our emissions targets. The main aim of the UK hydrogen strategy is to have the capacity to produce five gigawatts of low carbon power from hydrogen by 2030. This is the equivalent to the amount of gas used by 3 million UK households. This hydrogen can be used in a variety of ways. Perhaps the easiest to put into place will be replacing natural gas derived from hydrocarbons. Natural gas, which is a mixture of methane and ethane, which is used for heating, cooking and generating electricity. Hydrogen can be burned in exactly the same way, producing only water and no carbon dioxide, though you would need roughly three times as much to produce the same amount of energy. The strategy outlines plans to test the use of hydrogen for heating in a neighborhood by 2023.
In a village by 2025, and a town by 2030. Hydrogen can also be used in fuel cells. In this scenario, nothing is burned. Instead, chemical energy is turned directly into electrical energy, much like a battery. These cells can be used in place of combustion engine and vehicles, even trains or airplanes, or instead of gasoline, or diesel and generators. So where’s the hydrogen going to come from? The gas can come from two sources, which is blue or green. But after the report from the Cornell and Stanford, why use blue hydrogen at all? Well, according to Stewart Hazeldine, Professor of carbon capture and storage at the University of Edinburgh, doesn’t believe the study from Cornell and Stanford is applicable to the UK.
He says the study takes the worst possible case assumption based on a leaky USA system, that lots of methane will leak and very little co2 will be captured. And so it’s not surprising that leaks and poor processes end up with a very large co2 emission per unit of hydrogen. Even so he says that he regards low carbon blue hydrogen, as a transition to rapidly replace methane through diverse uses. His replacement by cleaner green hydrogen will be determined by the pace at which the price of electrolysis decreases. And according to Dr Eike Thaysen experimental geosciences, technical research assistant at the University of Edinburgh. She believes that a more accurate estimate of the emissions for blue hydrogen would be equivalent to 10 to 20 grams of co2 per each million joules of energy produced. For the same amount of energy burning natural gas produces about 63. And with those metrics, that means that blue hydrogen was about three to six times cleaner than natural gas on the condition that the carbon has been split off and permanently stored. So even if 15% of the carbon dioxide escapes into the atmosphere, the total emission is still much less. Furthermore, Thaysen believes blue hydrogen is essential on our journey to net zero. She continues by saying green hydrogen enables decarbonized storage of renewable energy, thereby fueling increased use of zero carbon energy sources and helping the transition to a netzero society. However, blue hydrogen is currently more economical and uses well established existing technologies, which helps develop value chains and can help industry cut emissions quickly. It also ensures that there’s a market for green hydrogen once it becomes cost competitive.
Therefore, she continues, a combination of green hydrogen and blue hydrogen will be essential to help us get to net zero fast. So why do I like this article? Well, it’s interesting to get a viewpoint of academics in the UK after the strategy has been announced. And what I like about it is how they’re focused on the blending of green and blue, which are most economical at first, and how over time that can transition. Next in an article from Reuters, Japan and Russia to cooperate in hydrogen and ammonia to fight climate change. Japan and Russia on September 2, agreed to work together on a hydrogen and ammonia production. The Japanese industry Ministry said on Thursday, as a longtime partners in oil and natural gas shift the focus to cleaner alternatives to hydrocarbons, Japanese industry minister Hiroshi Kajiyama and Russian energy minister Nikolai Shulginov off sign in a statement in cooperation after a virtual meeting. As part of the Eastern Economic Forum, which started on Thursday, in Vladivostok, Russia. The two nations will cooperate in research and development on a technology to reduce planet warming emissions in the atmosphere, including carbon capture and storage and carbon capture and utilization. While Russia is energy rich resource poor, Japan is accelerating its efforts to build global supply chains of potentially carbon free future fuels.
Russia accounted for about 10% of global ammonia production in 2020. Japan’s industry ministry also signed a Memorandum of cooperation with Russia’s largest LNG Producer Novatek on hydrogen, ammonia, and CCS and CCU. The ministry aims to sign similar MOC’s with major Russian oil producer and another of its major Gas Producers later this month, a ministry official said Japan an investor in Russia’s Sakhalin liquefied natural gas facility, an importer of Russian oil has a target of carbon neutrality by 2050, or Russia said it will cut its 2030 emissions to 70% of 1990 levels, a target it should achieve because of deindustrialization since the Soviet Union broke up in 91. Japan has been experimenting with hydrogen to displace natural gas and replacing some coal with ammonia. It aims to increase its annual hydrogen demand to 3 million tonnes by 2030 and 20 million tonnes by 2050. For about 2 million tonnes now, and to grow its ammonia fuel demand to 3 million tonnes a year by 2030 from zero now.
So why is this important? Well, it seems like right now, every country that produces and exports hydrogen is aiming its sights at Japan. And I have a feeling that whoever can do at the cheapest will get the biggest slice of pie. And with their heavy investment in hydrocarbon sourced hydrogen, it could very well be Russia that takes the lead. And lastly, in an article from Bloomberg, the heir to a $10 billion JCB fortune forms a fund for hydrogen bets. Jo Bamford, a member of the family behind one of the world’s largest construction equipment makers, has co funded an investment fund to focus on the hydrogen sector. HYCAP has raised more than 200 million pounds to invest primarily in British businesses, as it aims to boost the production and supply of hydrogen made from renewable energy.
This is according to a statement on Monday, September 6. Bamford set up the fund with a multifamily office Vedra Partners, co-founded by Max Gottschalk managed in the UK, the Luxembourg based fund is looking to raise 1 billion pounds and has already identified more than three dozen possible investments. People in the financial world are really excited about going green. Jo Bamford, said in an interview, adding that his family have put in about 100 million pounds into this latest venture. There’s not much around in the world of hydrogen at the moment in terms of how do I actually invest in it. And now this move comes as hydrogen becomes an increasingly popular option for combating climate change in the UK. Prime Minister Boris Johnson is under pressure to show how his government will cut emissions to net zero by 2050. This after announcing a series of goals to slash greenhouse gases. Last month, business Secretary Kwasi Kwarteng unveiled a strategy that aims to unlock a total of 4 billion pounds of investment in hydrogen production by 2030, supporting 9000 jobs.
Hydrogen is a very large part of the world economy going forward. Bamford said in a Bloomberg Television interview on Monday, adding HYCAP’s other investors include family offices and pension funds. Our hope with this fund is to invest 75% of it in the UK to drive the hydrogen economy. Bamford also owns a maker of double decker buses that run on hydrogen and a company focused on creating a network for the fuel. He previously worked for JCB, run by his father Anthony, but left the company about five years ago to focus on hydrogen. The Bamford family who own closely held excavator maker, JCB have a net worth of about $10 billion. This is according to the Bloomberg billionaires index.
HYCAP is seeking to close its next fundraising round by the end of this year, and is set to make its first investments within the next few months. This according to Gottschalk, who also co founded Gottex Fund Management. This fund is really designed to help develop the UK hydrogen ecosystem from start to finish he said. It’s about quote, really getting our hands dirty. So why do I find this interesting? Well, with the news of the UK hydrogen strategy coming out, this is a prime time to release a fund targeting UK investment, and with their target of 1 billion pounds and having already identified 36 possible investments. This could lead to a big trigger event in hydrogen development for the UK. Only time will tell but it’s a very good start.
Okay, that’s it from everyone. If you have any questions, comments or concerns about today’s episode, come and visit me on my website at thehydrogenpodcast.com. I’d really love to hear from you. And as always, take care. Stay safe. I’ll talk to you later.
Hey, this is Paul. I hope you’d liked this podcast. If you did 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.
