January 06, 2022 • Paul Rodden • Season: 2022 • Episode: 79
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In episode 079, Hydrogen goes racing in Saudi Arabia. The hydrogen economy in Korea is drawing attention. And let’s talk ESG. All of this on today’s hydrogen podcast.
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Hydrogen goes racing in Saudi Arabia. The hydrogen economy in Korea is drawing attention. And let’s talk ESG. 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.
I wanted to start today’s podcast off with a little bit about ESG, what it means and the impact that it can have your organization. According to Investopedia, ESG, or Environmental, Social, and Governance criteria are a set of standards for company’s operations that socially conscious investors use to screen potential investments. And so when we’re talking about hydrogen, really talking about the environmental side of ESG. Now the environmental criteria to consider would be how a company performs as a steward of nature.
And then to delve a little further into that environmental criteria may include a company’s energy use its waste, its pollution, its natural resource conservation, and its treatment of animals. The criteria can also be used in evaluating any environmental risks a company might face and how the company is managing those risks. And so for this hydrogen discussion, and ESG, I would really like to focus in on oil and gas companies. Now, if you’re an operator in an historically hydrocarbon focused organization, it’s very possible that you look at hydrogen and ESG as some sort of greenwashing for public relations. But I’m here to tell you that hydrogen and ESG are not things to run away from, but to embrace. Okay, so why do I say that? Well, it’s no secret. But over the next coming decades, co2 emissions need to be reduced. And it is something that nearly every government on the planet is talking about. And the oil and gas industry is uniquely suited to drastically elevate the E in ESG worldwide.
Now, you may be asking, How is this possible? The easiest, quickest answer is hydrogen. Now, I know historically, the oil and gas industry has been very slow to change and very risk averse. And I know that when you hear terms like ESG, and energy transition, your ears shut down, and you stop listening to the logic. But when I tell you that you can take the product that you’ve had for well over 100 years, and start embracing more of the hydrogen side of the energy model, the oil and gas industry can start moving forward from the backseat of the bus and start driving the energy transition forward. Now, we don’t necessarily need to dive into the technologies involved in how you can do that. But what I will say is that by embracing these new technologies, generating hydrogen and either capturing the carbon or creating carbon black, you are now decarbonizing your industry, generating new products to sell, all while utilizing the exact same infrastructure you have today. That doesn’t mean it will always be that way.
But this provides you a baseline to start upgrading your infrastructure to be more hydrogen specific. Now, on the flip side of this is embracing transparency showcase how you’re continually dropping your carbon intensity level, and before you know it, you are now seen as an ESG company. But you may be asking yourself, why do I care about being an ESG company? And the answer to that is ESG Investing. As an example, and again, going back to Investopedia. Boston based Trillium Asset Management has $4.8 billion under management as of September 2021, which usess a selection of ESG factors to help identify companies position for strong long term performance. So now with oil and gas embracing hydrogen, these investment firms can now start turning their attentions to you. Next in a fun article from EEnews, Corbin Hiar writes first hydrogen truck races in legendary Off Road Rally. Corbin writes the first hydrogen powered truck to take part in the legendary Dakar Rally set off Saturday, January 1 from the Saudi Arabian city of Jeddah on the first leg of this year’s more than 4000 mile off road race.
Produced by the French automotive startup Gaussin SA and sponsored by the state owned Oil Company Saudi Aramco, the h2 Racing truck ran the first 12 mile stage of the race as a demonstration vehicle Gaussin SA also plans to install a temporary hydrogen powered tin at the end of the race, founded in 2010, and now valued at more than $190 million. Gaussin SA hopes its involvement in the world’s most popular rally will shine a global spotlight on the potential for fuel cells, which produce no planet warming emissions when they run on hydrogen derived from clean energy, and a quote from Christophe Gaussin, the startups CEO, we are above all there in this first year to collect databases with our partners so that ultimately the entire industry can benefit so that fuel cells can get even better. Their vehicle called the h2 has two 300 kilowatt electric motors, which are powered by a combination of hydrogen fuel cells and batteries. The truck can hold 80 kilograms of hydrogen can travel up to 155 miles in race conditions, and takes 20 minutes to recharge commercial versions of Gaussin’s hydrogen fuel cells and all electric Big Rigs are set to go on sale later this year. This is according to the company in a promotional spot featuring Paris Saint Germain FC superstar Lionel Messi originally staged and of course stretching from Paris to the capital of Senegal. The Dakar Rally now traverses the dunes and mountains of the Saudi Kingdom.
The grueling 14 day competition was televised in 190 countries last year, reaching around 1 billion viewers this according to the organizers. This year’s car competition also includes the first electric entrant, but it is effectively out of the contest after the driver broke his rear axle during the second stage. Gaussin’s participation in the Dakar Rally effectively marks its entrance into the bigger and more consequential race to decarbonize trucking. Other competitors include European incumbents, Daimler and Volvo and newer companies like electric bus maker, BYD of China, and Nikola Motor Company, which is based in Phoenix, Arizona, and is also pursuing a hydrogen fuel cell model. Now hydrogen fuel cells are currently lighter than batteries, making them an appealing option for long haulers. But most truck producers have focused on making battery powered rigs because of the need for extensive infrastructure to produce and distribute hydrogen. So yeah, this is a fun little news blip about the Dakar Rally. But there’s a lot more implications involved in this than you may realize. And that is that the technologies that are being developed for races like these will trickle their way down to consumer products, which can include long haul heavy trucking, and even passenger vehicles.
What also makes this interesting is that there are other competitors there, which include Daimler and Volvo. Now, it’s not clear in this article, what kind of powertrain those two companies are using for this race. But we do know that Volvo does have fuel cell technology that it is working on in their heavy trucking vehicles. But regardless, good luck to Gaussin and all the other competitors in Saudi Arabia. And lastly, in an article from Seeking Alpha, the value pendulum writess, Korea Electric Power, tariff hike and hydrogen economy plans draw attention. Under the section of hydrogen economy plans, the author writes, South Korea has set a goal of becoming, quote, The first mover in the hydrogen economy. This is according to s&p global article published November 26 2021. And Korea Electric Power could be one of the key beneficiaries of the country’s quote, green ambitions. And the s&p Global article. It is specifically mentioned that South Korea aims to make hydrogen the country’s number one energy source by 2050.
And this is aligned with its target of achieving carbon neutrality in the same year. It is very likely that state owned utility companies will be the ones which will get support from the Korean government to be involved in hydrogen production. On December 8 2021, August, media reported that state controlled Kogas is planning on building a hydrogen production base in the country’s southwest city of Gwangju. On its LinkedIn page, Kogas or Korea Gas Corporation describes itself as quote, the sole LNG provider in South Korea, which was incorporated by the Korean government in 1983. There’s a good chance that Korea Electric Power could follow in CO gases footsteps. According to the company’s December 2021 investor presentation slides, Korea Electric Power is 51% owned by the Korean government and boasts a 64.9% share in the power generation market of the country.
The company also has a monopoly over the power transmission and distribution market in South Korea. Early in October 2021. Korean media business Korea noted in a news article The Korea Electric Power was considering setting up a hydrogen production complex at the Bylong Valley in New South Wales, Australia. On October 7 2021 article published by the Korea Economic daily mentioned that South Korea targets to create 30 South Korea based global hydrogen companies by 2030 and will offer to support these corporates in the form of tax deductions and debt payment guarantees there’s a high probability that Korea Electric Power or its subsidiaries will be one of these 30 companies given its status as a state owned company and its market leadership and specific power segments in the country. being heavily involved in hydrogen production going forward will definitely be a key value re-rating catalyst for Korea Electric Power, as the market tends to assign evaluation premium to companies leveraged to the green energy theme.
Okay, so some good insights on how some of the power markets in South Korea are feeding off the hydrogen buzz going on right now. And really something to focus in on was the statement that Korea Electric Power was considering setting up a hydrogen production complex in Australia. And I’m very curious to see how that plays into the current export situation in New South Wales.
Alright, that’s it for me, everyone. If you have any questions, comments or concerns about today’s episode, come visit me at my website at thehydrogenpodcast.com. 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.
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.