Low Carbon Pulse - Edition 10
Global Developments in progress towards net-zero emissions
Welcome to Edition 10 of Low Carbon Pulse – sharing significant current news on the progress towards net-zero emissions globally. This Edition covers the period from February 10 to February 24, 2021.
During the next week or so, Part 1 of the second article in The Shift to Hydrogen (S2H2): Elemental Change series entitled What needs to be decarbonized? And what role can hydrogen play? will be published, providing an assessment of GHG emissions by sector and industry and the role that renewable electrical energy (electrons) and hydrogen (molecules) has to play in the decarbonization of each sector and industry. Part 2 of the article will be published at the end of March / start of April and will provide A Guide to Hydrogen Road Maps, Plans and Strategies.
Lone Star State committed to more renewables:
The challenges for the people of the Lone Star State have been front-and-centre in the news cycle for the last week or so. While cold-comfort at the moment, the good news for the people of Texas is the plan to add 35 GW of renewable energy (solar and wind) capacity over the next three years (as reported by the Electric Reliability Council of Texas, Inc. (ERCOT)). This will provide more reliable capacity and provide a clear means for grid integrity and stability: the more renewable energy on a grid, assuming appropriate connection and ancillary services, the more reliable the grid. More than this, it is reported that with appropriately calibrated policy settings (including around incentivizing investment), and the promotion of clean energy contracts / corporate power purchase agreements, renewable energy capacity may increase by more than the predicted 35 GW over the next three years.
It is to be expected that battery electrical storage systems (BESS) and fuel cell energy storage systems (FCESS) will accompany the increased development and use of renewable energy across the Lone Star State (and other Sunbelt States). As touched on in previous editions of Low Carbon Pulse, the US has the leading BESS provider, and, in Ballard Power Systems, Bloom Energy Corporation and Plug Power Inc., corporations well able to respond to the demand for FCESS.
See: Texas to Add 35 Gigawatts of Wind & Solar in Next 3 Years — Boosting Grid Resilience; and The Texas Cold Blast Was A Warning To Hydrogen Investors
US moving in from the cold:
On February 19, 2021 the US rejoined the Paris Agreement (see Edition 7 of Low Carbon Pulse).
The question from a number of sources has been: Now What? Leaving to one side the establishment of the organizational structures that have been put in place, in April 2021 the Biden Administration will announce revised GHG emission reduction targets. After this announcement, it is expected that policy settings will accelerate US action to reduce GHG emissions. Both before and after the announcement of revised GHG emission reduction targets, there is a good argument for the answer to the question "Now What?", to be a simple: let the US renewable energy industry continue to do what it is doing well. Just provide the industry with guide-rails. With Federal support added to the support of so many cities and States, it is hoped that market based responses will deliver the required GHG emission reductions. This belief on market based responses is informed by the fact that the renewable energy sector in the US had a record year in 2020, despite the broader economic contraction, and this is anticipated to continue. For example, it is anticipated that across the US more than 10 GW of utility-scale BESS will be installed in 2021, up from the 4.5 GW of BESS installed in 2020. This trajectory for 2021 was apparent (long) before the unprecedented cold conditions in the Lone Star State, but the power outages as a result of those cold conditions demonstrate the need for the deployment of BESS across grids, as an integrated part of each grid, thereby ensuring the integrity and stability of grids. This will allow the benefit of increased renewable energy to be delivered to US businesses and households in the form of lower electrical energy prices across stable grids (see Edition 7 of Low Carbon Pulse).
Australia (19.2 GW of BESS and hydrogen electrolysers were added to the pipeline of projects in 2020, and the packing of the pipeline continues), the Peoples' Republic of China and the US are leading the way in use of BESS to ensure grid integrity and stability. As with a number of parts of the pathway to net-zero emissions, innovation and scale are developing at the same pace or even ahead of the demand side for the market for BESS.
While Australia, the PRC and the US have been leading the charge on BESS, it has become apparent that other countries are seeing the benefits of the use of BESS.
Examples include:
- France: a 1 GW solar-plus-storage project, Horizeo, is planned by Engie and Neoen in Saucats;
- Israel: a 300 MW tender process is underway to provide solar-plus-storage in the Negev Desert;
- Italy: 2 BESS facilities are planned for Sicily, Italy: a 700 MW project is planned by Steag and KGAL and a 78 MW project is planned by Lightsource BP;
- Ireland: the first utility-scale BESS was commissioned in early 2020, and activity has continued, with a pipeline of 2.5 GW of utility-scale BESS projects now planned;
- Sweden: to address the impact of high-spot electrical energy prices in the summer of 2020, but to avoid high capital costs of grid augmentation and enhancement, the use of solar-plus-storage is likely to be considered as a scalable and timely means of addressing the impact of a constrained grid; and
- Germany: 42% of total electrical energy is sourced from renewable resources, and there is increasing recognition of the need for a mix of utility, business and residential scale electrical storage solutions.
See: US set to led utility scale storage market in record year
Brazilian government and industry caucus around Green Hydrogen HUB:
On February 17, 2021 the Hydrogen Council and McKinsey & Co issued a report on the state of the development of the global hydrogen economy. The report noted that projects with a projected spend of around USD 300 billion have been announced for development by 2030, with 85% of those projects announced in Asia, Europe and Australia. The number of announcements does not seem to be slowing.
On 19 February 2021, a partnership of the Federation of Industries Ceará, the Federal Universtiy of Ceará, and the Government of Ceará announced the launch of the Green Hydrogen HUB. During the launch the Government of Ceará signed a memorandum of understanding with Enegix Energy (an Australian corporation) for the development of a hydrogen hub at the Port of Pecém. Enegix Energy is to develop the hub, including an electrolysis plant, with the reported development cost of the entire hub being USD 5.4 billion. The announced development is consistent with two of the three themes identified in the Hydrogen Council / McKinsey & Co report – the development of hubs and the importance of ports. While the timeline for the development of this project may be medium to longer term, this reflects the need for the continued development of the "demand side" for hydrogen (if the demand is not there, the investments will not stack up).
See: Brazil announces US$ 5.4B green hydrogen hub for global supply
South African government creates hydrogen shift valley:
On the other side of the South Atlantic, the South African Government announced the establishment of Platinum Valley as a location for a hydrogen technology cluster for companies to develop solutions to allow South Africa to develop hydrogen applications across the country.
The initial purpose is stated to be identifying "concrete project opportunities for kick-starting hydrogen cell manufacturing". This is an important step for HySA. While South Africa may not be considered as a key market, it is telling that the South African government is positioning the country to play a meaningful role. In time, it is possible to see South Africa becoming an exporter of hydrogen.
See: South Africa moves to manufacture, commercialise hydrogen fuel cell technology
Net-zero GHG emissions, more to do, and with greater pace:
The author has read with interest Mr Bill Gates' book, How to Avoid a Climate Disaster. The book provides a clear plan for the way forward to net-zero GHG emissions, including that we cannot rely on renewable electrical energy sourced from solar and wind resources to do all the work.
Reasonably consistent themes are emerging from many sources; critically the retirement of coal-fired power stations, and for solar and wind capacity to grow by between 3.5 to 5 times current levels by 2030. Augmented, and new, grid and pipeline systems are required, and CCS / CCUS needs to be functioning to capture up to 300 mmtpa of CO2.
To achieve these outcomes, policy settings are needed. Some policy settings already exist, and those in the EU may be considered as providing (the current) high-water mark for policy settings. It should be noted however that the EU policy settings have been developed against a back-drop of a highly developed renewable energy industry (developed over the last 20 years by support policy settings), and a clear acceptance by a healthy majority that decarbonization of energy use is fundamental to achieving net-zero GHG emissions by 2050, and, if anything, it is necessary to increase the pace of decarbonization.
The policy settings in the EU are not necessarily the starting point for other countries - but they are informed and (critically) they are capable of achievement. This does not mean that there is accord and consistency across each Member State on the detail of how to achieve net-zero GHG emissions by 2050. These issues will be considered in detail in Part 2 of the second article in The Shift to Hydrogen (S2H2): Elemental Change series to be published in March or April.
Hydrogen Utilization Study Group (H2SG) Update:
Just under 12 months ago the H2SG commenced an assessment of the means to establish large-scale demand for hydrogen in the Chubu region of Japan. On February 19, 2021 the H2SG released a report entitled "Summary of Activities for Hydrogen Utilization in Chubu in 2030". The report takes as its starting point the Basic Hydrogen Strategy (released by the Ministry of Economy, Trade and Infrastructure ("METI") on December 26, 2017).
Undertaken on a rigorous basis, the report outlines potential demand for hydrogen in the Chubu region in 2025 (social implementation stage) and in 2030 (commercialization phase), and the means of satisfying that potential demand from import terminal to end-user. The sectors contemplated as end-users (providing demand) are Airports and Ports, Industrial (including refining and petrochemical and steel producers), Gas and Power (or possibly more appropriately given the findings of the report, Gas-to-Power), and Transport (with delivery to hydrogen re-fueling stations).
The underlying premise is that clean hydrogen will be imported into Japan to satisfy demand. As has been noted on a number of occasions in Low Carbon Pulse, Japan is agnostic as to the colour of hydrogen.
Interestingly, and to some extent surprisingly, the report finds that the largest likely demand for 2030 comes from Refining and Petrochemical and Gas-to-Power end-users, with around 80% of demand anticipated as coming from end-users in these sectors. Within the Chubu region, the report concludes that Chita is the most likely location to establish a large-scale liquified hydrogen gas (LHG) import and re-gasification terminal (or MCH receival and processing facility, or both), with new hydrogen pipelines and existing natural gas pipelines to be used to deliver re-gasified hydrogen gas to users.
Unsurprisingly, the report finds that ahead of the commercialization phase it will be necessary for policy settings to be developed to provide financial support for the capex and opex necessary to achieve commercialization. Consistent with the need to develop supply and demand in tandem (see Edition 2 of Low Carbon Pulse (Supply and demand side development fundamental) and the first article in The Shift to Hydrogen (S2H2): Elemental Change, Why H2? Why Now?), the report notes the need for the establishment of "stable hydrogen supply source" and "offtake agreements with major end users", the two being entirely related and interdependent in the context of a developing market.
The corporations participating in the study, in alphabetical order, are Air Liquide Japan G.K., Chubu Electric Power Co. Inc., ENEOS Holdings, Inc., Idemitsu Kosan Co. Ltd, Iwatani Corporation, Mitsubishi Chemical Corporation, Nippon Steel Corporation, Sumitomo Corporation, Sumitomo Mitsui Banking Corporation, Toho Gas Co Ltd. and Toyota Motor Corporation.
See: Japan: Consortium releases update activities report of hydrogen utilization study group in Chubu
Hydrogen Energy Supply Chain (HESC) project produces first hydrogen:
On February 15, 2021 it was announced that hydrogen was produced from the HESC Project in the Latrobe Valley, Victoria, so concluding the first hydrogen supply chain. This is a world first Hydrogen Supply Chain project. Among other things, the Hydrogen Supply Chain uses the Kawasaki Heavy Industries (KHI) designed and built LHG carrier (the Suiso Frontier) to deliver LHG to the KHI designed and built LHG terminal at Kobe, Japan.
The Hydrogen Supply Chain project showcases cooperation and dedication of Japanese and Australian corporations. The corporations involved in the HESC project are KHI, Electric Power Development Co., Ltd (J-Power), Iwatani Corporation, Marubeni Corporation, Sumitomo Corporation, and AGL Energy, investing in Australian end of the supply chain, and Shell, ENEOS Corporation and Kawasaki Kisen Kaisha, Ltd (K-Line), investing in the Japanese end of the supply chain.
Floating and Fixed bottom off-shore wind:
The potential for the use of off-shore wind to provide electrical energy is becoming a reality (see previous Editions of Low Carbon Pulse). The World Bank has assessed that the use of 10% of the identified off-shore wind resources could satisfy global electrical energy demand.
On February 12, 2021 it was announced that Cornell University has produced a "Wind Atlas".
It is clear that countries and corporations are continuing to realize the potential of off-shore wind: on February 17, 2021 Spanish integrated energy giant Iberdrola announced its plans to develop a USD 1.2 billion 300 MW off-shore floating wind project. This plan is part of a broader plan to develop up to 2 GW of floating off-shore wind projects off the coasts of Galicia, Andalusia and the Canary Islands, which itself is part of a plan to have 60 GW of installed renewable energy capacity by 2025. As ever though, low or lower cost renewable energy is required for the move to make green hydrogen viable.
The Wind Atlas follows the production of the Global Atlas of Closed-Loop Pumped Hydro Energy Storage atlas (reported in Edition 6 of Low Carbon Pulse).
Nuclear energy hydrogen roadmap:
In early to mid-February 2021 the Nuclear Industry Council (NIC) finalized a Hydrogen Roadmap. The NIC frames priorities and thinking for UK government industry collaboration. The potential for large-scale and small modular reactors to produce emissions free hydrogen (Pink Hydrogen) is well known (see Edition 9 of Low Carbon Pulse), and it would appear likely that it will continue to receive consideration.
The Hydrogen Roadmap may be regarded as aligned with the Forty by '50: The Nuclear Roadmap (the Forty referring to 40% of the UK's clean power by 2050). While nuclear energy continues to have mixed reviews, it has the capacity to provide clean energy and clean hydrogen, and as such make a meaningful and sustained contribution to progress towards net-zero GHG emissions.
See: UK nuclear industry launches hydrogen roadmap
Green Ammonia round-up:
- In mid-February, 2021, Aker Horizons AS announced the launch of Aker Clean Hydrogen, with the intention to develop 5 GW of clean hydrogen and clean ammonia capacity by 2030, including the development of the 450 MW Herøya Green Ammonia production facility (with Statkraft and Yara), a European first, and using NEL ASA electrolysers;
See: https://fuelcellsworks.com/news/aker-clean-hydrogen-to-industrialize-clean-hydrogen-and-reduce-co2-emissions-globally/ - Yara's Pilbara, Western Australia, plant proceeding: Yara intends to install electrolysers to derive hydrogen from H2O, and produce 3,500 tonnes of Green Ammonia a year;
- Yara has indicated that it is considering installation of electrolyers at its ammonia plant in Sluiskil, The Netherlands, using renewable energy from a 100 MW off-shore wind field. The expanded Sluiskil plant would have the capacity to produce 75,000 tonnes of ammonia a year;
- Yara has announced plans to install electrolysers at its ammonia plant in Porsgrum, Norway, using hydro-electric renewable electrical energy from the Norwegian grid (around 98% of electrical energy in Norway is hydro-electric sourced), with the Green Ammonia produced to be used to power and to propel shipping (with the final investment decision dependent on the support of the Norwegian government);
- Air Products Red Sea, KAS, Green Ammonia plant may be regarded as the "acid-test" for the development of scalable Green Ammonia production with the plant planned to produce 1.2 mmtpa of Green Ammonia, using renewable energy from solar;
- CF Industries has announced plans to install an electrolyser to develop the capacity of its existing ammonia plant (in Donaldsonville, Louisiana). In one of the quotes of the year, CF Industries, CEO, Mr Tony Will articulated the change to the ammonia industry (NH3):
"Up to this point, we have made a business by selling the nitrogen value of the [ammonia] molecule.
What's really exciting about this is now there is an opportunity and a market that values the hydrogen [value]….".
While ammonia remains to be "proved-up" as an energy carrier, rather than as a nutrient carrier, ammonia has a higher energy density as an energy carrier than liquid hydrogen, but is less energy intensive in reaching its point of liquid storage (-33OC). Also the point is well made that infrastructure exists with 120 ports globally equipped with ammonia terminals.
| Colour coded ammonia (link to article 1 in the shift to hydrogen (s2h2): elemental change series) | |||
|---|---|---|---|
| Blue Ammonia: H2 from CH4 with CO2 captured & stored (CCS) or captured & used, combined with N using Haber-Bosch process |
Green Ammonia: H2 (from electrolysis of H2O using renewable energy) combined with N using the Haber-Bosch process |
Grey (or Brown) Ammonia: H2 derived from CH4 (without CCS) combined with N using the Haber-Bosch process |
Turquoise Ammonia: H2 from the pyrolysis of CH4 which produces carbon black, storing CO2 in solid form. |
Green Hydrogen round-up:
- On February 19, 2021 Province Resources announced plans to develop a 1 GW solar and wind complex in the Gascoyne, Western Australia. As is the case with many locations around Australia, the site identified by Province Resources has strong on-shore wind resources, and equally prospective solar resources. Province Resources is keeping its options open: one of the good things about Green Hydrogen is that its production is necessary to produce Green Ammonia, and as such a decision on Green Hydrogen or Green Ammonia is not a pressing issue. The HyEnergy facility will have capacity to produce 60,000 tpa of Green Hydrogen or 300,000 tpa of Green Ammonia.
See: Province resources eyes green hydrogen - On February 16, 2021 Enel Green Power and Saras signed a memorandum of understanding to develop a Green Hydrogen supply project at the Saras Refinery, at Sarroch, in Sardinia. The plans for the supply project include the development of a 20 MW electrolyser. This joins Enel Green Power's other projects in Chile, Italy, Spain and the US to supply Green Hydrogen to decarbonize difficult to decarbonize industries.
See: Enel green power and saras team up to develop green hydrogen - On February 14, 2021, Shoreham Port (on the UK's south-coast, close to Brighton) announced the development of a 20 MW electrolysis plant adjacent to the locks at the port to produce Green Hydrogen to be used for fuel-cell buses and heavy goods vehicles and port cranes and forklifts, and, in due course, for vessels.
See: Shoreham port launches plan for green hydrogen plant - On February 12, 2021 a coalition of 30 energy organizations launched "HyDeal Ambition", outlining the means to producing Green Hydrogen at €1.5 kg before 2030, for delivery across Europe. The Green Hydrogen would be produced on the Iberian Peninsula using renewable electrical energy from 95 GW of solar capacity to provide electrical energy for 67 GW of electrolyser capacity to produce 3.6 mtpa of Green Hydrogen.
See: Coalition of 30 energy players forms to deliver green hydrogen across europe at the price of fossil fuels
Green Steel around up:
- Italian Green Steel:
Danieli, Leonardo and Saipem have announced a framework agreement providing the basis for the joint supply of technologies and services for the purpose of reducing CO2 emissions arising from steel production: in short the technology is described as hybrid, combining electric furnaces using electrical energy with direct iron ore reduction plants capable of using methane or hydrogen as feedstock for high-temperature reduction of iron ore. Under the framework agreement, Danieli is to provide the electric furnaces and the direct iron reduction technology, Leonardo will provide technology and safety solutions, and Saipem is to provide construction and installation services, and the technologies for use (including combined use) of methane and hydrogen, and CO2 capture.
See: Danieli Leonardo and saipem working together for the green conversion of steel - French Green Steel:
On February 22, 2021, Liberty Steel Group, Paul Wurth and Stahl-Holding-Saar signed a memorandum of understanding for the purposes of framing the prospective development of a 2 mmtpa Direct Reduction Iron (DRI) plant and a 1 GW electrolyser plant for the production of Green Hydrogen. As with the Italian Green Steel plan, initially natural gas and hydrogen would be used to produce direct reduction iron, and hot briquetted iron (HBI), with use of natural gas to be phased out over time, and hydrogen to be used to provide the high temperatures required to achieve direct reduction in iron ore. The proposal is to use the DRI and the HBI produced in the Liberty electric arc furnace in Ascoval, France, with any DRI not used there to be used at the Liberty Ostrava and Galati steelworks, and at Stahl-Holding Saar's Dillinger and Saarstahl facilities in Germany.
See: Liberty develop hydrogen steel making plant
As noted in Low Carbon Pulse 5 in respect of the thyssenkrupp steelworks in Duisburg, steel producers are able to develop demand for Green Hydrogen, satisfying that demand by own-supply. This allows them to develop Green Hydrogen supply further as the demand side develops. - Building on existing facility and supply chain footprints … in addition to own-supply, super-majors, BP (at its refinery at Lingen) and Shell (at its Rhineland refinery) are involved in the production of clean (including green) hydrogen in Germany, each shifting production from Grey to Green Hydrogen. As the demand side for Green Hydrogen develops, including for the production of green steel, existing infrastructure can be augmented to supply that demand.
| Direct Reduction Iron (DRI): iron ore that is subject to direct reduction by use of a reducing gas (at a high temperature). |
| Pig Iron: iron ore that is subject to melting with charcoal (deriving from coking coal) and limestone |
BlackRock's focus on GHG emissions continues:
In Edition 9 of Low Carbon Pulse we quoted BlackRock CEO, Mr Larry Fink, and the importance to BlackRock of corporations in which it might invest having a net-zero emissions plan. BlackRock has between USD 7 trillion to 8.7 trillion of investments under its control and management, including substantial investments in oil and gas companies.
BlackRock is reported to have developed its thinking further in respect of oil and gas companies requiring them to disclose their GHG emissions and to set targets to reduce them, across each of the three scopes of emissions.
See: https://www.motherjones.com/environment/2021/02/worlds-biggest-investor-blackrock-asks-oil-giants-to-reveal-their-carbon-emissions
Decarbonization to Net-Zero GHG emissions:
On February 19, 2021 Eni SPA announced that it will decarbonize all products and processes by 2050, thereby increasing its earlier 80% target to what is effectively a 100% target. To provide a clear pathway to achieving this net-zero target, Eni plans to reduce GHG emission by 25% by 2030, and by 65% by 2040. Accompanying the net-zero target are renewable energy and carbon capture storage targets: 15 GW by 2030 and 60 GW by 2050, and 7 mtpa by 2030 and 50 mtpa by 2050. As is the case with other majors, Eni will transition to a predominantly gas company (including LNG) over time, which is entirely consistent with projects under development in Angola, Indonesia, Mexico, Mozambique, Norway, and UAE.
See: Eni aims for full decarbonisation by 2050 despite short-term growth in oil and gas volumes
On February 17, 2021 it was reported that TOTAL has set itself a new renewable electrical energy capacity target of 100 GW by 2030. To achieve this outcome TOTAL CEO, Mr Patrick Pouyanne recognizes "more than USD 60 billion worth of projects will have to be financed over a period of 10 years".
See: Oil major total targets 100gw of wind and solar capacity by 2030
Shell is committed to being a net-zero emissions energy business by 2050 or sooner. A net-zero emissions energy business does not add to GHG in the atmosphere.
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Framing, Testing and Understanding any commitment to zero, net or otherwise In considering any commitment from any country (or corporation) it is helpful to frame and to test, so as to understand, that commitment as follows:
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Author: Michael Harrison, Partner
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