The push to develop hydrogen as a significant energy source could reshape global energy value chains
The push to develop hydrogen as a significant energy source is likely to disrupt and reshape global energy value chains and create opportunities for more countries to play a significant role, according to speakers at the Virtual Edition of the Global Manufacturing and Industrialisation Summit (#GMIS2020) which is being held on September 4-5.
A keynote address by Elisabeth Winkelmeier-Becker, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Energy, Germany, was followed by a panel session moderated by Holger Lösch, Deputy Director General of the Federation of German Industries (BDI), on ‘The Global Hydrogen Economy – Transforming into a Sustainable Industry and Creating New Industrial Value Chains.’
Winkelmeier-Becker said: Making European industry greener, more digital and more resilient is the main goal of our industrial policy. If the industrial sector is to become more independent and resilient, innovative and strategic value chains across Europe and key enabling technologies are of crucial importance. We are determined to continue to promote and give new impetus to the energy transition. Hydrogen that is produced in a climate-friendly manner permits significant reductions in carbon emissions, particularly in industry and transport.”
The panel included Armin Schnettler, CEO, New Energy Business Siemens Energy & President VDE – Association for Electrical, Electronic & Information Technologies, Dr. Kirsten Westphal, German Institute for International and Security Affairs and Member of the National Hydrogen Council, and Daniel Mills, Product Manager Hydrogen and Clean Energy at Linde Australia (BOC).
Producing electricity from renewable energy resources is likely to be the single most effective way to address climate change and meet emissions targets in the future. However, to reach the Paris Agreement climate targets, there has to be more consideration of the ‘green molecule’, because the world, and especially industry, also runs on gaseous fuels. Attention has increasingly turned to the potential of hydrogen and its derivatives to substitute fossil fuels in energy intensive industrial sectors to reach climate targets.
The panel discussed the challenges of developing a global market and building global value chains for hydrogen and the role that it could play in reducing carbon footprint. Dr. Kirsten Westphal said that renewables have transformed the global energy landscape and that hydrogen could potentially have a similar impact in the future. Hydrogen has often been referred to as ‘the oil of the future’ but there is still a long way to go before we see a global hydrogen market on a comparable level to the existing oil market, she said. However, Westphal added that a global hydrogen market, if eventually created, would look very different to current oil markets and could potentially offer more flexibility because hydrogen can be produced using renewable energy. This would lead to the development of energy value chains that include opportunities for countries rich in renewable energy as well as opportunities for countries that produce the technology.
“There are more options with hydrogen and it's really also more about who you partner and team up with and this is very important from the geopolitical and geoeconomic point of view,” she said. “It's really about defining joint ventures across the whole value chain. The oil system is very different. It's basically dictated by geology and then infrastructure. Of course, we managed to build up a global oil trading system but this took a long time. My hope is that a similar system will develop for hydrogen, but it will be very different”
Westphal said there is currently a lot of hype surrounding hydrogen’s potential for decarbonisation, which has been amplified by the growing urgency to tackle climate change and calls for green stimulus programmes to drive a recovery from the crisis caused by COVID-19. She said we should seize the moment to push the case for a greater share of hydrogen in the energy mix.
“I think it's a very important step to include this into the stimulus packages across the world, to encourage an energy transformation,” she said. “But it's also about building bilateral relationships, import-export relationships, and multilateral governance as well. We have to get a better understanding about life cycles and emissions if we really want to achieve low carbon or carbon neutral energy system.”
Armin Schnettler said only around 20-25% of the final global energy consumption is electrical energy, which can be more easily decarbonised using renewables. While it could be possible to increase this to close to 50%, that still leaves around half of all global energy consumption which cannot easily be decarbonised and for that we need green molecules. While hydrogen could help fill the gap, he said it was vital to bring the cost of production down in order to transform and decarbonise existing fossil fuel-based industries. This would depend on continually reducing the cost of renewable energy while scaling up hydrogen production.
“It is very important to drive costs down and the cost for hydrogen or green hydrogen strongly depends on costs for renewable electricity,” he said. “This is something we are very focused on to help existing industry transform and reduce their CO2 footprint. And at the same time, we’re moving towards the green hydrogen opportunity by investing in technology development, but also developing renewable electricity in countries with excellent conditions. In the long run I do see green hydrogen as the key opportunity, the key market.”
Daniel Mills said that while renewable energy is seeing phenomenal growth and gaining a larger share of the energy mix, the electricity is mostly produced in the middle of the day when demand is at its lowest. However, he said this provided an opportunity to use any surplus electricity for hydrogen production.
“We're seeing extremely high peaking power prices in the afternoon as a major challenge to industry and particularly to the manufacturing industries,” he said. “What we'd love to see is hydrogen being used as a storage mechanism to help shift that great peak of renewables we see in the middle of the day to when industry and households are really looking for that power.”
The Global Manufacturing and Industrialisation Summit (GMIS) is a joint initiative by the United Arab Emirates and the United Nations Industrial Development Organization (UNIDO). Under the theme – Glocalisation: Towards Sustainable and Inclusive Global Value Chains, the third edition of the Global Manufacturing and Industrialisation Summit (#GMIS2020) has gathered a cross-section of close to 100 global leaders from the world’s public and private sector to participate across more than 20 virtual sessions to discuss pathways to accelerate the role of fourth industrial revolution (4IR) technologies to build more resilient global value chains and restore prosperity in a post-pandemic world.
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