November 04, 2021 • Paul Rodden • Season: 2021 • Episode: 61
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In episode 061, Consensus over hydrogen at COP 26 can dramatically speed up energy transition. And big news is Fortescue future industries signs up major deal with JCB and Ryze Hydrogen. All of this on today's COP 26 focused hydrogen podcast.
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Consensus over hydrogen at COP 26 can dramatically speed up energy transition. And big news is Fortescue future industries signs up major deal with JCB and Ryze Hydrogen. All of this on today's COP 26 focused 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.
Before I get started today, I want to let everyone know that I had the opportunity to interview Matt Murdock, the CEO of Raven SR recently, and I got permission to share the recording with my audience. For my investors out there, this interview is a must listen as they are going to do another round of funding soon. But the truly exciting part is diving into his waste to hydrogen model and the interesting technology that they've developed. I will release it as part of my special interview series next Tuesday. So keep an eye out. Thanks for listening and sending in your questions. I really appreciate it. So now let's talk about COP 26.
And the consensus over hydrogen and how it can dramatically speed up the energy transition. And an article from fortune.com. Marco Alverà writes, We are now on the cusp of an energy revolution that could see hydrogen play a key role in the way we bring fully decarbonized energy to our homes, offices and factories. The fact that renewable electricity is now so cheap to produce is a game changer. Not only does it allow renewables to gradually replace hydrocarbons and power generation that enables clean energy to reach new sectors in which direct electrification is either too costly or difficult. For the energy transition to succeed, we need to move vast amounts of intermittent solar and wind energy from where it is ample and cheap to where it is consumed.
This is where hydrogen steps in not as a primary energy source, but rather as an energy carrier. Green hydrogen, which is produced by splitting water with green electricity is by far the most cost effective and efficient way of moving energy over long distances, especially when using the existing gas infrastructure. The additional cost of using green hydrogen instead of hydrocarbons is minimal. Manufacturing a car with steel made from Green hydrogen adds less than 1% to the cost. Hydrogen is also far easier to store over long periods of time, it is often the cheapest and sometimes the only option to fully decarbonize heavy industry, long distance mobility and winter heating. That also provides the resilience and flexibility the energy system so badly needs to avoid extreme price volatility and blackouts. By 2050.
Clean hydrogen will make up as much as 25% of our net zero energy mix. This is according to Bloomberg New Energy Finance, generating a $20 trillion infrastructure investment opportunity, new technologies, companies jobs and ultimately a cheaper energy system than we have now. So as the policymakers, media, scientists and businesses make plans in Glasgow, here are the author's four suggestions to speed up development of hydrogen by a decade, saving 40 Giga tons of emissions in two and a half trillion dollars and abatement costs. Number one, he says is the need to define what clean hydrogen really is. Some methods of producing hydrogen emit significant quantities of co2, we need a global organization to define and certify what counts as clean, expressed in terms of grams of co2 equivalent emissions along the value chain for every kilogram of hydrogen produced. This will enable clean hydrogen to be traded across markets and different colors of hydrogen to compete, reducing cost and increasing liquidity and security.
Number two, he says we can create visible demand, governments regions, cities and companies should announce clear hydrogen targets. This could be backed up with measures such as including mandatory quotas for certain sectors or incentives to cover the extra cost of using green hydrogen compared with existing fuels. Number three, we can leverage development. Green investments should be funneled to those countries with more space, sunlight or wind. These are often developing countries. So at the same time, this will allow developed nations to make good on their promise to mobilize $100 billion a year in climate finance. To cut the time required for this money to be deployed. A collaboration between international financial institutions and the private sector should build standardized, replicable and bankable projects.
For instance, as existing coal plants are being phased out, they can be transformed into renewable hydrogen hubs generating soon to be cheaper energy. And lastly, a system of eco labeling would enable consumers to signal their willingness to pay for green products, which will boost the development of the market. So when the dust settles in Glasgow Hopefully hydrogen will have secured its place as a game changing fuel of the future. And also a little bit of background about the author, Marco Alverà, is the CEO of SNAM. And he's also the author of the hydrogen revolution. So he does know what he's talking about. But I would also like to go over his four points.
The first being, let's define what clean hydrogen really is, he has a point there, as hydrogen becomes more critical in the energy transition space, it is important to clearly define the colors of hydrogen, but also to understand what a fully clean system is. And honestly, the big problem that I have is that few people are really looking into the full carbon lifecycle of all of the technologies involved to create hydrogen. All technologies along their full lifecycle will have some sort of carbon impact. But the importance is to look at the difference between each one, obviously, gray will need to transition to blue. But during that gas lifecycle from in ground to downstream, methane emissions need to be scrutinized and capped.
And on the renewables energy side, the setup of wind and solar farms should really be analyzed for their full carbon impact also. That being said, there are alternatives to blue and green, that provide little to no to negative carbon impact in their development. Something to think about, say if your investment mandates are looking to target projects that are cleaner than the rest. Second, we can create visible demand. Well, I'm taking what he says here with a grain of salt, that being him being in Italy, I'm not entirely sure that mandatory quotas will work in the US. Third, we can leverage development, we can discuss reallocating capital as much as we want, between developing and developed nations.
That being said, so many of these areas that are so great for wind and solar farms are missing one crucial element when it comes to green hydrogen, water, and I'm not entirely sure that $100 billion can cover that small issue. And lastly, number four, a system of eco labeling. I actually really liked this idea, but instead of it just being used for products from Green hydrogen, I would like to see it based more on the products carbon intensity, and in the case of hydrogen development, which source has the lowest CI and next and a press release Fortescue future industries signs agreement with JCB and Ryze hydrogen to become United Kingdom's largest supplier of green renewable hydrogen. Fortescue future industries will become the largest supplier of green hydrogen to the UK after signing a multibillion pound deal with construction giant JC Bamford excavators JCB and Ryze hydrogen under a Memorandum of Understanding signed November 1.
Prior to the climate conference COP 26 JCB and rise will purchase 10% of FFI's Global Green hydrogen production. FFI's green hydrogen production is anticipated to grow to 15 million tonnes of green hydrogen per year by 2030, accelerating to 50 million tonnes per year in the next decade thereafter. Under the partnership, FFI will lead green hydrogen production and logistics to the UK market, and JCB and Ryze will manage green hydrogen distribution in development of customer demand. And UK. FFI Chairman Dr. Andrew Forrest AO said this landmark first of its kind partnership will help the UK to achieve Net Zero particularly in the hard to electrify sectors. Our agreement signals the first major shift in the global commercial landscape from hydrocarbons toward the real practical implementable solution that is green hydrogen. We are delighted to announce this groundbreaking initiative at the critical climate forum of COP 26. The reduction in greenhouse gas emissions associated with replacing hydrocarbons with only 2 million tons of green hydrogen is the equivalent of taking over 8 million cars off the road.
Almost a quarter of the UK is entire fleet this according to Dr. Forrest. The agreement has been strongly backed by JCP, which called it a major advance. JCB chairman Lord Bamford added. This is an important step toward getting green hydrogen to the customer. It's fine having an engine powered by green hydrogen, but no good if customers can't get green hydrogen to fuel their machines. This is a major advance on the road towards making green hydrogen a viable solution. Joe Bamford widely regarded as the UK green hydrogen champion is the founder of Ryze and owner of WrightBus rises building the UK his first network of green hydrogen production plants, while WrightBus built the world's first hydrogen Double Decker.
Mr. Bamford commented, this is a monumental deal not just for us, but for the UK as a whole. We have chosen to partner with the global leaders in green hydrogen, and it is fabulous that the two countries the UK and Australia can come together to create a brighter future. We are walking the walk on green hydrogen. And now we want the government to show its commitment to the sector by investing in buses, trains, trucks, ships, aircraft, and the entire green hydrogen supply chain. At best any hydrogen made from hydrocarbons is being promoted as a transition fuel, but the production of it causes more pollution than it saves.
This agreement demonstrates that green hydrogen does not need to be transitioned via hydrocarbons, hydrogen, production of it can commence at once, to meet the needs of all mobility. This is a monster deal to be announced between Fortescue, JCB and Ryze. And it sounds like Fortescue is up to the challenge of delivering that much hydrogen to the UK. But there are a few questions that I still have. I'm curious about the costs associated with this project, and how the hydrogen will be transported from Australia to the UK, as those logistics could add quite a premium to this hydrogen. And I'll be curious to see how those added costs affect the price point to the consumer.
Alright, that's it for me, everyone. If you have any questions, comments or concerns about today's episode, come and visit me on my website at thehydrogenpodcast.com and let me know. I would really love to hear from you. And as always, take care. Stay safe. I'll talk to you later.
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