November 15, 2021 • Paul Rodden • Season: 2021 • Episode: 64
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In episode 064, Total Energies and Mercedes are joining forces. And one of the world's largest investment banks talks green hydrogen, all of this on today's hydrogen podcast.
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Total Energies and Mercedes are joining forces. And one of the world's largest investment banks talks green hydrogen, 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 a press release on November 10, total energies and Daimler truck AG, have signed an agreement on their joint commitment to the decarbonisation of the road freight in the European Union. The partners will collaborate in the development of ecosystems for heavy duty trucks running on hydrogen, with the intent to demonstrate the attractiveness and effectiveness of trucking powered by clean hydrogen and the ambition to play a lead role in kickstarting the rollout of hydrogen infrastructure for transportation. The collaboration includes hydrogen sourcing and logistics, dispensing of hydrogen in service stations development of hydrogen based trucks, establishment of customer base as well as other areas.
In particular total energies has the ambition by 2030 to operate directly or indirectly up to 150 hydrogen refueling stations in Germany, the Netherlands, Belgium, Luxembourg and France. As part of the collaboration Daimler truck is also to supply hydrogen powered fuel cell trucks to its customers in the Netherlands, Belgium, Luxembourg and France. By 2025. The truck manufacturer will support its customers to ensure it's easy operability and a highly competitive uptime. According to Alexis Vovk, President Marketing & Services at TotalEnergies, and member of the executive committee says hydrogen will have its role in total energy's journey to decarbonize mobility, especially in European long haul transportation. Our company is actively exploring all aspects of the value chain of hydrogen for mobility from production to supply and distribution, and is building important partnerships to this effect.
We want to build a multi energies company with the ambition to get to net zero by 2050 together with society. Therefore, he continues the creation of a European Network of hydrogen truck stations for mobility is one of the key challenges we intend to tackle. We are proud to partner with a motivated player like Daimler truck to develop co2 neutral truck mobility through a harmonized approach. Karin Rådström, CEO of Mercedes Benz truck and member of the Board of Management at Daimler Trucks said, we are fully committed to the Paris Climate Agreement and want to actually contribute to the decarbonisation of road freight transport in the European Union. Regarding the long haul freight segment, we are convinced that co2 neutral transportation will be enabled in the future by hydrogen powered fuel cell trucks as well as purely battery powered trucks. For this we want to establish a Pan European hydrogen ecosystem. Together with strong partners such as Total energies, I'm fully convinced that this collaboration will play a key role in our intensified activities on the road towards hydrogen powered trucking.
In order to develop these projects and to establish hydrogen based transportation as a viable option. Both companies want to jointly investigate the means of reducing the total cost of ownership of hydrogen truck operations, in line with their common approach to work together with authorities on the regulatory framework in the European Union, Daimler truck and total energies are both members of the h2 Accelerate Consortium. The two companies remain fully committed to working with a consortium a key vehicle to support the rollout of hydrogen powered transport in Europe in the coming decade. So another large joint venture between an energy developer and a fuel cell truck manufacturer, in what to me sounds very similar but on a much larger scale as the Raven SR Hyzon deal here in the United States. And I've said it before, and I'll say it again, it's collaboration like this that will move the hydrogen infrastructure further along. Next in an article from rechargenews.com Lee Collins writes, even in the lowest demand scenarios, electrolyzer manufacturing capacity will be insufficient, says investment bank Jefferies while criticizing blue hydrogen and oil industry influence, the global supply of electrolyzers will not be large enough to meet demand for green hydrogen by 2030.
Even at least bullish scenarios, according to analysis by US investment bank and financial services firm Jefferies in a 45 page report for clients entitled plugging into the hydrogen ecosystem. The New York headquartered company estimates that the worldwide supply of electrolyzers by 2030, quote could sit somewhere in the 30 to 40 gigawatt range. This compares 54 gigawatts of announced projects and 94 gigawatts of what's called pledged projects. The document also states that the conclusion is that there is unlikely to be sufficient supply even for the proposed projects out to 2030. Even in the lowest demand scenario. It also points out that the International Energy Agency expects to see 180 gigawatts of electrolyzers in use by 2030. Under its announced pledges scenario, well, its net zero emissions by 2050 scenario requires a whopping 850 gigawatts. Current Global installed capacity of electrolyzers, which split water molecules and hydrogen and oxygen is currently 200 megawatts. This according to the Aurora Energy Research. Jefferies note recommends that investors buy shares the electrolyzer manufacturers ITM power, and Nel due to quote our preference for PEM, partnerships and track records.
The report also states that Jefferies sees the initial demand for green hydrogen coming from existing hydrogen users rather than new sectors such as transport. The report continues saying we see the nearest use cases as those industrial applications that already use hydrogen, such as oil refining, methanol, ammonia and steelmaking. Beyond that, we believe that there is scope for heavy vehicles with battery EVs winning passenger vehicle race, and beyond that stationary power, mobility and power looked to be medium to longer term aspirations. Jeffries is also unenthusiastic about Blue hydrogen produced from hydrocarbons with carbon capture and storage. The report says explaining that while it expects the nascent sector to grow this decade, its share of the hydrogen market will be far smaller than greens, partly due to the cost and partly due to the issues with CCS. The financier expects the cost of green hydrogen to fall from where it is now, which is between $3 and $6.55 per kilogram today, to $1.50 per kilogram by 2030.
With their expectation of blue hydrogen at $1.25 to $2 a kilogram by decades end. The report continues by saying in our view, CCS doesn't work at scale, pointing to the following reasons 80% of carbon capture to date has been pumped into oil wells to help extract more hydrocarbons. Capture rates are low around 65%. less than point 1% of all carbon emissions are currently captured and stored and fourth, there are quote, limited accessible sealed underground wells suitable for co2 sequestration. The study also points to a report by Ars Technica, which found that quote, even the cleanest blue hydrogen projects had emissions just 12% less than their gray hydrogen equivalents, mainly because of increased need for natural gas to power carbon capture, also adding that it is unrealistic to assume carbon can be stored indefinitely.
The Jefferies report also warns investors that politically influential oil and gas companies are distorting policy in debate over clean hydrogen. It states that big oil is quote, keen to avoid electric taking over and quote, keen to avoid their assets such as pipelines becoming unusable such influence can distort the debate on the best path forward for clean energy, as well as skew policymakers toward favoring hydrocarbon based approach to hydrogen production. So quite the loaded report from Jefferies. Now, I do know several people that work in the oil and gas group at Jefferies here in Houston, and I would be curious to get their take on this report. So let's talk about some of the main points in this article. The first being the lack of electrolyzers needed for the estimated green hydrogen surge in the future. Jefferies estimates that by 2030, the amount of electrolyzers in use can be between the 30 and 40 gigawatt range.
And I think that the limiting factor on that is the access to the special materials needed for electrolyzers. And as I've discussed in the past, there are several companies right now working on making electrolyzers with cheaper and more accessible materials. So as those get developed, it should be much easier to scale up production. And so while I think it is possible to increase that 40 gigawatt range, closer to the 54 gigawatt range that is announced projects, I don't think it will be nearly enough to get to the 94 gigawatts of the quote, pledged projects. But what this report also falls victim to is buying into the green versus blue debate. And so if you've listened to my show in the past, you know, my feelings toward this are in the future, it's going to be all hydrogen hands on deck. And if Jeffries is expecting blue to be between $1.25 and $2 per kilogram by 2030 and green to be $1.50 per kilogram by 2030. Both are cost effective.
But I also take some issues with their CCS argument. Just because most co2 right now is going into EOR wells doesn't mean that in the next decade, other methods of storage capturing and utilization aren't going to be available, and I wouldn't be surprised that within the next 10 years or so, new technologies come out that will take co2 and extract the solid carbon out of it. And also talks about the capture rates being low, around 65%. Going forward, new projects being announced now are showing an increase of up to 90 plus percent capture rate. And again, the whole blue versus green argument really doesn't need to be happening, because along with the blue, along with the green are so many other different technologies that are going to be impacting the hydrogen market technologies such as the solid waste to gas model, that Raven SR has an XcelPlus has the in situ combustion method that Proton has and the methane pyrolysis method that more and more companies are buying into. So overall, I do take a few issues with this report and its analysis of green and blue hydrogen. There is a very real development building in the delivery and scaling up of electrolyzers.
Alright, that's it for me, everyone. If you have any questions, comments or concerns about today's episode, come and visit me at thehydrogenpodcast.com let me know or you can always email me at email@example.com. 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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