Low Carbon Pulse - Edition 5

Welcome to Edition 5 of the Low Carbon Pulse – sharing significant news in the progress towards net-zero emissions. This edition covers the period November 23 to December 13, 2020. 

On December 7 2020 the Global Towards Zero Emissions team published the first article in The Shift To Hydrogen (S2H2) Elemental Change series. This is a sister publication to Low Carbon Pulse. 

With the calendar year ending, and the looming holiday season in many parts of the world, the Low Carbon Pulse will recommence in mid-January, with three editions planned for the month, including a special focus on the ramifications of the US election result for net-zero.

From the Ashurst Global Towards Zero Emissions team, best wishes and seasons' greetings to you all.

COVID-19 and GHG emissions

Throughout the COVID-19 period, the World Meteorological Organisation (WMO) has provided a reasonably consistent message. GHG levels in the atmosphere reached record levels in 2019, to a little over 417 ppm to May 2020, with the rate of increase in concentration slowing (marginally) during 2020, as GHG emissions have fallen.

This fall is not sufficiently to stop the increase in the concentration of GHG in the atmosphere (let alone to start to reverse it-this takes time).

"The last time the Earth experienced a comparable concentration of CO₂ was 3 to 5 million years ago, when [the] temperature was 2^o-3^o Celsius [or 3.6^o to 5.4^o Fahrenheit] [above today] … . But there weren’t 7.7 billion inhabitants." (WMO Secretary General, Professor Petteri Taalas)

Population growth and associated economic activity will continue, so taking a "wait and see approach" is not a viable strategy. As is increasingly the case, we are not waiting to see, but the pace at which we reduce GHG emissions is key. The commitments to reduce GHGs are there, but the pace of reduction needs to quicken, with the developed world best placed to take the lead on this, with the next target to strive for being negative GHG emissions. 

Despite COVID-19, or perhaps, at least in part, because of it, 2020 has seen record levels of new renewable electricity energy capacity developed, and record commitments to develop more, and commitments to carbon neutrality by 2050, critically, from the Peoples Republic of China (PRC), Japan and Korea, and to enhanced commitments from the European Union (EU), and the United Kingdom (UK), and the clear momentum for the development of hydrogen as an energy carrier. As such, there is a clear basis for cautious optimism. 

To this cautious optimism, with the anticipated re-entry of the US into the Paris Agreement, and the appointment of John Kerry, as Climate Envoy, it is possible to add more optimism with the anticipated return of the US to global climate leadership shown under the Obama Administration. 

At the European Hydrogen week starting on November 23, 2020, it was noted that:

"2020 will be remembered first and foremost for other things, but it has also been a big year for hydrogen at the EU level".

It is difficult to fault this assessment, and it is appropriate to add that the momentum for H₂ as an energy carrier is at a global level. The key is not to overstate the rate of progress, or to underestimate the scale of investment and time required, for hydrogen to develop as an energy carrier. 

The UNEP Emissions Gap Report 2020 published in December 9, 2020 anticipate a fall in GHG emissions by 7% compared to 2019 and promotes the idea of a "green pandemic recovery" which will bring the world close to achieving the Stabilisation Goal in the Paris Agreement (see Edition 4 of the Low Carbon Pulse).

See: Carbon dioxide levels continue record levels despite COVID-19 lockdown; Greenhouse Gases still at Record Levels Despite COVID-19 Lockdowns, UN Warns; and UN: Greenhouse gas levels hit record high despite lockdowns

EU accelerates to 55 by 30

As foreshadowed in the first item of Edition 1 of Low Carbon Pulse, on December 10, 2020, EU leaders determined on an EU-wide net GHG emissions reduction of 55% by 2030, compared to 1990 levels. This is seen as a realistic acceleration of the EU reduction target. The basis for this acceleration was stated clearly in September, in a European Commission statement: 

"Achieving this increased climate ambition will require an investment boost, which will contribute to a green recovery from the current COVID-19 crisis. In this context, the European economic response to COVID-19 offers a unique opportunity to accelerate the transition to a climate-neutral economy".

This increased commitment, from 40% to 55%, is further cause for cautious optimism. During final quarter of 2020 the realisation of a need to accelerate reductions has been manifested in increase commitments to reduce GHG emissions from the PRC to the EU.

The UK is accelerating to 68% by 2030 and possibly 78% by 2035

In the first week of December, 2020, the UK Government announced that it will accelerate the rate of reduction in GHG emissions from 55% of 1990 emission levels by 2030, to 68% by 2030 (68 by 30). The UK Prime Minister, Mr Boris Johnson, called the accelerated rate of reduction "ambitious". The UK Business and Energy Secretary, Mr Alok Sharma, stated that it reflected "the urgency and scale of the challenge that our planet faces". 

It is to be hoped that the change to the UK's commitment will encourage other countries to increase their reduction commitments too. Increased rates of reduction are required to allow the Stabilisation Goal of the Paris Agreement to be achieved. An increase in any country's commitment to reduce GHG is effected through a change to that country's Nationally Determined Contribution (NDC) under the Paris Agreement (see Edition 4 of Low Carbon Pulse).

On December 9, 2020 the UK's Climate Change Committee (CCC) delivered its "Sixth Carbon Budget – UK's path to Net Zero" which reports on how to achieve net zero GHG emissions by 2050. A key recommendation is the need to develop 100 GW of offshore wind by 2050 (100 by 50), noting that the Budget contemplates up to 125 GW. This recommendation builds on the 40 by 30 policy setting announced in October by Mr Boris Johnson (see Low Carbon Pulse 1). In the most detailed roadmap yet delivered globally, routes to stated goals and destinations are now provided. 

One of the routes is the implementation of the 100 by 50 policy, others are the use of "low-carbon" hydrogen and carbon-negative solutions. There is a role for CCS / CCUS, but not over the long term, rather it is a route to the production of clean-carbon hydrogen. The role for hydrogen is clearly stated in the Budget, with a route required to achieve a goal of 25 TWh of low carbon hydrogen by 2030 (and up to 90 TWh by 2035). This will allow a shift to low carbon hydrogen use by industry (in particular in difficult to decarbonise industries) and provide sufficient supply of hydrogen consistent with the phasing out of all existing gas boilers by 2033, and all new boilers being hydrogen ready by 2025. These recommendations will be considered the next article in The Shift To Hydrogen (S2H2) Elemental Change, a sister publication to Low Carbon Pulse. 

The CCC provides a clear basis for the UK to progress towards zero net emissions by 2050. It is for the UK Government to determine whether, and, if so, how best, to implement the recommendations of the CCC. It is timely to remind oneself that progress towards zero emissions started as an environmental and social policy, but is now a fully integrated, and the most important, economic, environmental and social policy issue. In the words of the Head of the IEA's renewables division, Mr Paolo Frankl, "Energy transition depends on government policy, regardless of wind and solar". 

All the signs are good with the UK Government having already announced 68 by 30, as policy, consistent with the recommendation of the CCC. If the UK Government accepts the enhanced target of a 78% reduction in 1990 GHG emissions by 2035 (78 by 35), the UK will be well and truly at the front of the pack among developed countries in having policy settings that will achieve net zero emissions by 2050.

See:  World's first national roadmap to net zero by 2050 calls for 100GW backbone of offshore wind.

Japan is providing funding foracceleration

On December 4, 2020, Japan's Prime Minister, Mr Yoshihide Suga, announced that the Government of Japan is to establish a Y 2 trillion (USD 19.2 billion) fund to provide funding to, and otherwise to support for, companies to 2030 for the purposes of achieving Japan's 2050 GHG target (see Editions 1 and 2 Low Carbon Pulse).

The key message from the Japanese Government (and relevant for other governments globally) is that Japan regards the move towards zero GHG emissions as both an economic growth, and an environmental, strategy, emphasising again the perspective of the Japanese Government that hydrogen will play a central role in the Japanese economy:

"Positioning the inexhaustible hydrogen as a new power source, we will realize large scale, low cost hydrogen production equipment. We will also develop hydrogen airplanes and hydrogen cargo ships"…

In order to shift our thinking toward such a virtuous cycle of environment and growth, the government will take a big step forward in environmental investment in this economic measure."

In the statement, Prime Minister Suga, made it clear that "Environmental preparedness is no longer a constraint on economic growth". For those that have long worked in the renewable energy sector (and the sustainability sector generally), the practical application of the triple bottom line looks as though it is becoming a reality. Edition 6 of Low Carbon Pulse will contain more detail on this initiative. 

See: Japan to Create a 2 trillion yen ($19.2 billion) Green Fund to Include Hydrogen

Japan is continuing as a first mover

While not a surprise (given the Japanese Hydrogen Strategy published at the end of 2017 and the shipment of blue ammonia from the Kingdom of Saudi Arabia in September 2020), the Japanese government has recently confirmed its intention to introduce the use of ammonia into power generation (mixing ammonia with coal) and to use ammonia to power and to propel shipping. 

Director General of Oil, Gas and Mineral Resources at the Ministry of Economy Trade and Industry, Mr Ryo Minami, stated that: "Ammonia is expected to be introduced as fuel on a commercial basis for thermal power generators and shipping in the late 2020s, and it is expected to be used [in] significant amounts by around 2030". In 2021, the combustion of ammonia and coal will be tested as part of a feasibility study being under taken by the government body, the Industrial Technology Development Organisation. 

In August 2020, NYK Line, Japan Marine United Corporation and ClassNK entered into a joint research and development agreement to commercialise the use of an ammonia-fuelled ammonia gas carrier (AFAGC) and an ammonia floating storage and regasification barge (A-FSRB). Ammonia, in gaseous form at room temperature, is cooled and compressed for transportation using LPG vessels (which are capable of multi-purpose use). There are likely to be clear benefits in the development of dedicated AFAGCs and A-FSRBs. 

In the short term, blue ammonia will be used, but in the longer term green ammonia is considered as a highly promising low emission fuel. Strictly, ammonia is not a GHG free energy carrier because on its oxidation (use) NOx arise, but CO₂ does not arise, and NOx may be regarded as easier to capture.

See: Japan pushes ahead with ammonia as a shipping fuel of the future

Japan Hydrogen Association (JH2A)

Edition 2 of Low Carbon Pulse reported on the establishment of the JH2A, and that the establishment would be formalised in December. On December 7, 2020 an event was held to mark the establishment of the JH2A. The event was accompanied by the release of a document providing details "About the Japan Hydrogen Association" (Formalisation Document), and formalising its establishment.

The Formalisation Document provides a real sense of the coordinated way in which Japanese business intends to provide resources so as to be able to work effectively with government and together. The Formalisation Document states that as of December 2, 2020, 87 corporations are members of the JH2A, including ENEOS Corporation, Iwatani Corporation, Kawasaki Heavy Industries Ltd, Kobe Steel, Ltd, MITSUI & CO, LTD, Sumitomo Mitsui Financial Group, Inc., The Kansai Electric Power Corporation, Inc., Toshiba Corporation, and Toyota Motor Corporation.

Stabilisation Goal within reach

On December 1, 2020, the BBC ran a report "Climate change: Temperature analysis shows UN goals "within reach"". While Ashurst has not verified the findings of the report, the headline is that the implementation of the commitments of countries (critically the PRC, Japan and Korea), and the implementation of the carbon neutrality agenda of US President-elect Joe Biden, will result in a 2.1^oC increase in temperature, which is just outside the Stabilisation Goal of the Paris Agreement (see Edition 4 of Low Carbon Pulse). The obvious point to make is that the conclusion of the report is based on each country actually implementing these commitments.

See: Climate change: Temperature analysis shows UN goals 'within reach'

Resumption of US leadership on climate change anticipated

As will be apparent form a number of other pieces in this Edition 5 of Low Carbon Pulse, December 4, 2020 was a busy day. In Edition 4 it was noted that it seemed likely with the election of President-elect Joe Biden that the US would resume its leadership role in the progress towards zero GHG emissions. As the Biden Administration rolls out its policies, we will cover them, and we will run a US Inauguration LCP on January 20, 2021. 

As important as the role of the US Government is the role of US business and business leaders. On December 4, 2020, Bill Gates, one of the titans of world business and philanthropy, outlined a USD 35 billion plan for US leadership on climate change. Mr Gates wrote:

"[We] need to revolutionize the world's physical economy – and that will take, among other things, a dramatic infusion of ingenuity, funding, and focus from the [US] Federal Government… 

This is the most important thing the US can do to leader the world in innovations that will solve climate change."

The plan proposed by Mr Gates resonates. As does the open letter from many leading corporations calling for greater leadership on climate change (under the auspices of the Center For Climate and Energy Solutions (C2ES)), including Amazon, Bank of America, BASF, BHP, BP, Citi, Danone, DuPont, Edison, Entergy, Ford, General Motors, Goldman Sachs, Google, JP Morgan Chase, LafargeHolcim, Microsoft, Morgan Stanley, National Grid, Nestle, NRG Energy, Ørsted Offshore, PG&E, Schneider Electric, Shell, Total, Unilever, and Walmart.

See: Bill Gates just released a plan for US leadership on climate change, including $35B in funding

Consistent with the need for innovation, a new report from Coalition for Urban Transitions (CUT) "Climate-Emergency, Urban Opportunity" has highlighted that the introduction of low carbon policy settings and measures in cities needs to be part of the move towards zero emissions. (This will be considered in the second article in The Shift to Hydrogen (S2H2): Elemental Change series to be published at the end of January 2021.)

See:  Climate Energy, Urban Opportunity and The Shift to Hydrogen (S2H2): Elemental Change

Fixed Bottom Wind - A first for Japan's offshore wind industry

On November 27, 2020, Japan's Ministry of Economy, Trade, and Industry (METI) and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) opened the tender process for the first auction for fixed bottom offshore wind by Japan. The tender is stated to be open until May 27, 2021. The tender relates to four offshore areas, three located off Akita Prefecture and the fourth located off Chiba Prefecture. 

The tender process for fixed bottom wind follows the offshore wind tender for floating wind in June 2019. Both the floating wind and the fixed bottom wind are undertaken pursuant to the Renewable Sea Area Utilisation Law which came into effect in April 2019. 

There is an excellent Ashurst LinkedIn feed on the current tender process: 

See:  Japan Launches First Fixed Bottom Offshore Wind Auction

PRC + H₂ = A year of development

In preparing to launch Low Carbon Pulse, we considered jurisdictions that were best placed to accelerate to hydrogen economies - in our assessment the most important was the PRC. Why? Continued policy making at each level of government (central, provincial and municipal) and the level of activity through the COVID-19 period. Increasingly, our perspective is reinforced on a consistent basis. The prospect of achieving scale for the Fuel Cell market may be paving the way for low cost green hydrogen production by the middle of this decade. As noted in Edition 4 of the Low Carbon Pulse, there is a need for close cooperation between government and business. The PRC is well-placed to achieve this, including through the China Hydrogen Alliance. 

It is estimated that close to 67% of the H₂ produced each year in the PRC (around 20 million tonnes) is produced from hydrocarbon feedstocks, with the balance produced as a by-product of chemical production and coking and steelmaking (30%) and renewable resources (3%). 

Members of the China Hydrogen Alliance have been instrumental in leading the development of hydrogen refuelling infrastructure (HRI), Sinopec is involved in the development of HRI, and Shandong Weichai is at the forefront of Fuel Cell development. Sinopec, as an existing producer of hydrogen, is perfectly placed to undertake energy transition, as is the case with other oil and gas companies. In some ways, Sinopec is leading the way, with commitments of USD 13 billion to the development of H₂ businesses.

While a good number of provinces in the PRC have announced hydrogen policies as part of broader plans and strategies, Guangdong, Hebei, Ningxia, Shandong and Tianjin have published plans and strategies and set policies specific to hydrogen. Shandong province in particular has been active throughout 2020. Consistent with other road-maps, plans and strategies published (at various levels of government, the PRC has the same emphasis on renewable energy, focusing on wind power (particularly offshore wind for coastal provinces), and solar power. 

In a more detailed article (the second in The Shift to Hydrogen (S2H2): Elemental Change series to be published in late January 2021), the Ashurst Global Towards Zero Emissions team will consider the key themes arising for each country with hydrogen plans, roadmaps and strategies.. 

Adding hydrogen

On November 22, 2020 Sheikh Mohammed bin Zayed directed the Abu Dhabi National Oil Company (ADNOC) to explore opportunities to position the UAE as the world leader in exploiting hydrogen, "the ultimate green fuel". 

ADNOC is an integrated oil and gas company, that produces all manner of hydrocarbon derived products, including hydrogen. ADNOC is able to build on existing infrastructure to derive increased mass of hydrogen from hydrocarbon sources, in the first instance, to produce clean hydrogen, and ultimately the cleanest hydrogen of all, green hydrogen. 

As is the case with other countries in the Gulf Region, the UAE has world class renewable energy resources, as well as existing world class hydrocarbon resources. In this regard, the Mohammed bin Rashid Al Maktoum Solar Park in Dubai is likely to be the first solar-powered hydrogen plant in the Gulf Region.

See: Why hydrogen is the fuel of the future for UAE 

Ørsted Offshore Overseas

On November 24 2020, Ørsted announced its intention to develop a 1.6 GW offshore wind project off the west coast of the Republic of Korea, 70 km from Incheon City, home to greater Seoul's major international airport, Incheon (Seoul's other airport being Gimpo Airport, serving domestic and regional air routes). The project will build upon the leading reputation of Ørsted. 

On the basis that the project proceeds (noting that a final investment decision is yet to be made), the headlines facts and stats for the project include that it will provide electrical energy for up to 1.4 million homes, and displace the use of coal and gas fired power stations, fired by imported coal and LNG. This will reduce GHG emissions by 4 mtpa, and as such makes a material contribution to Korea's renewable energy target to achieve net-zero emissions by 2050. Also the project will provide close to 8% of the planned 12 GW of installed capacity by 2030. 

Interestingly, the project will be located in the relatively shallow waters of the West Sea or Yellow Sea (depending the country from which it is viewed). The development of offshore wind projects in shallow waters and in the proposed location has both development cost and operational cost benefits. 

See: Orsted Plans to Develop Offshore Wind Projects in South Korea

NortH2 – A Giant built by Giants

On December 8, 2020, Shell announced that it is planning to develop the largest "wind-to-hydrogen" (W2H2) project in Europe. The W2H2 project comprises a 10 GW offshore wind field to provide electrical energy for an electrolysis plant that is to produce 1 mtpa of green hydrogen by 2030 (assuming full field development).

The project is called the NortH2 Project, and will be located off the North Coast of the Netherlands. On completion of full field development, at 10 GW, the offshore wind field will be a little over 2.5 times the size of the Dogger Bank Project (described in Edition 4 of Low Carbon Pulse). The green hydrogen produced will be transported using pipeline infrastructure of natural gas pipeline owner, Gasunie. It is intended that the off-takers of the green hydrogen will be industrial users in the Netherlands and Germany (under-pinning the capital investment required for the Project), with quantities of green hydrogen also to be made available for domestic and transport use. 

Equinor and RWE have joined the NortH2 Project. In addition to these energy giants, the province of Groningen, Groningen Seaports are involved in the Project.

From a policy setting perspective, the NortH2 is consistent with the EU goal of 300 GW of offshore wind capacity by 2050. 

See: Big energy partners join Shell's giant NortH2 wind-to-hydrogen project

BEV or FCEV? Or both?

As noted previously, the automotive industry (manufacturers of passenger vehicles) is best placed to provide consumers with the choice between BEV and FECV, including possibly favouring one technology over the other: using renewable energy both BEV and FECV have the potential to be GHG emissions free. 

Some automotive vehicle manufacturers are providing consumers with a choice of both BEV and FECV (in addition, at least for the time being, ICE and hybrid), others are flagging clearly that they prefer BEV over FECV. While the two technologies are not mutually exclusive, one may be preferred over time (for those who remember Betamax v VHS, yes dear reader, the author is that old, this dynamic will be clear), but it appears more likely that together both of these technologies will be the mainstay technologies for the foreseeable future for all forms of passenger vehicles, including motor bikes and scooters in many parts of the world.

The issue for Governments is ensuring that they do not pick favourites, and more importantly that disproportionate investment is not made in HRI, direct or indirect. 

See:  German Lobbyists are Pushing Hyrdogen Fuel Cells - But German Automakers have moved on

Port of Los Angeles "shore to shore" H₂ storage

On November 25, 2020 it was announced that high pressure hydrogen storage (HiHy) facilities are to be installed by Shell at Long Beach, California. The scale of the HiHy facilities (or the Shore to Store Project) will allow the reduction of GHG emissions on the route from the Port of Los Angeles to Ontario. 

European companies, Tenaris and NEL Hydrogen, have partnered to develop the HiHy technology, through research and development to production since 2018. 

See:  Tenaris Partners with Nel Hydrogen for California Hydrogen Truck Refueling Network

The Big Battery

For those resident in, or lucky enough to have visited, "country Australia", in particular the east coast, and south east, of Australia, Queensland, New South Wales, Victoria, and South Australia, there is a phenomenon known as "The Big": towns known for a particular activity or commodity will promote that by a big depiction of that activity or commodity somewhere within the town. The Big, in any country town, is a favourite photo opportunity for those passing through. The best known of "The Bigs" are The Big Banana, The Big Guitar, The Big Lobster, The Big Merino (breed of sheep that produces high quality wool), The Big Pineapple, The Big Potato, and The Big Prawn. Somewhat improbably, Dadswells Bridge in Victoria, claims The Giant Koala.

It appears more than likely that sooner rather than later, one of the towns in country Australia is going to claim the title of: The Big Battery, The Big Solar, The Big Wind! There are many contenders for each new Big. 

An early contender for the Big Battery is the "Victorian Big Battery" (VBB) to be developed near Geelong, Victoria. The VBB (an Australian beer joke) is being developed by Neoen and Tesla. The VBB will be 300 MW / 450 MWh, and is expected to come into service towards the end of 2021. 

See: Big batteries are getting bigger and smarter, and doing things fossil fuels can’t do

All change, but no one paradigm

There is "no one size all" model for energy transition, and there is no clear line of sight to what energy delivery systems, and what energy use, may look like as we progress towards zero emissions. Australia has long been called the lucky country (it is blessed with two of the three means of "real economy" wealth creation, growing food and raising livestock, and mineral, oil and gas resources). The moniker of the "lucky country" is likely to continue: Australia is blessed with some of the best renewable resources in the world (solar and wind), close to major energy carrier export markets, and having established relationships with those markets, including the PRC, Japan and Korea. The States and Territories of Australia ( will feature in the Zero Hero piece of Edition 6 of Low Carbon Pulse) have made considerable progress towards zero emissions in a relatively short period of time, each in different ways, and with different reasons for making progress. It appears likely (see Edition 2, 3 and 4 of Low Carbon Pulse) that Australia will become a key green hydrogen producer and supplier. 

While there may be a sense of being a later adopter of renewable energy, Australia is now leading in some States, and, as a general statement, has embraced electrical energy storage (EES), in particular battery storage. Australia has a National Electricity Market (NEM) covering the Eastern States of Queensland, New South Wales, the Australian National Territory, Victoria, Tasmania and South Australia. In this market, the generators that are also retailers ("gen-tailers") of electrical energy are innovating in their product offerings and business models in a period of unprecedented market disruption. (The transmission and distribution systems are owned separately, with prices regulated to provide benchmark infrastructure rates of return.) 

In this ever changing electrical energy market, EES is needed for Grid integrity and stability (together with pumped hydro) and to store electrical energy at times of over supply to the NEM. This is giving rise to new markets, including, in the case of EES, a market for EES capacity. 

In a related publication in Q1 of 2021, the Ashurst Towards Zero Emissions team will consider these dynamics, and market responses. Also the Ashurst Towards Zero Emissions team is producing a 2025, 2030 and 2035 business and domestic use of hydrogen scenario paper. 

Green Industrial Revolution … continues

On November 30, 2020 it was announced that the Department of Business, Energy and Industrial Strategy (BEIS), in the UK, approved its largest battery storage facility (BSF) to date, the Intergen 320 MW / 640 MWh capacity BSF. The BSF is to be located at the DP World London Gateway, on the River Thames, in Essex. On completion, the BSF will be the largest in the UK, and in Europe. The BSF has the potential to be expanded to 1,300 MWh (or 1.3 GWh). The BSF provides a further illustration of the role of EES in responding to satisfy load and to ensure system integrity and stability.

See: Europe's largest battery project gets approval in the UK

CH4 Emission Transparency – Reliable Data provides the best basis for outcomes

Projects and transactions across many industries are underpinned by reliable data that measures on a consistent basis: the more reliable that data, the more measurable the outcome, and the more likely that the required outcome will be achieved. 

On November 23, 2020, 62 oil companies signed an international agreement pledging to report CH4 emissions more effectively (Transparent Reporting). The level of CH4 in the atmosphere has increased since the mid-2000s, reflecting increased use of natural gas, but contributing to GHG emissions. 

This initiative is part of the Climate & Clean Air Coalition's Oil and Gas Methane Partnership (OGMP), coordinated by the United Nations Environmental Programme (UNEP), the EU and the Environmental Defense Fund. The UNEP has stated that the Transparent Reporting mechanism is a "new gold standard", that will assist in the reduction of GHG emissions, including a 45% decrease in CH4 emissions by 2025, and between 60% and 70% by 2030. As part of the Transparent Reporting initiative, oil and gas companies will provide details of their CH4 reduction targets to the UNEP. 

The Transparent Reporting initiative is aligned with the World Business Council on Sustainable Development (WBCSD) initiative detailed in Edition 3 of Low Carbon Pulse which requires corporations to have plans to achieve net zero GHG emissions. 

It has been noted that while European oil and gas producers committed to Transparent Reporting, US companies are yet to do so.

See: The Danger of Big Oil’s New Methane Emissions Pledge

Early in 2021, to mark the coming into effect of the Norwegian Amendment to the Basel Convention, in an article entitled Recyclables – sorting through and processing the collection of mixed narratives, the Ashurst Global Towards Zero Emissions team will provide its perspective on plastics and other recyclables.

All roads lead to renewed electrical energy systems

On November 24, 2020, Enel, the largest utility in the EU, announced plans to invest up to €160 billion (USD 190 billion) by 2030. The investment plan is an integrated plan to develop and to integrate renewable energy sources into the Grid. 

The plan includes the development of 75 GW of new renewable capacity to 120 GW by 2030. (This represents an increase of 2.7 times current capacity of 45 GW). These plans are consistent with the stated objective of Enel to achieve an 80% reduction in the level of 2017 CO₂ emissions by 2030.

See: European Utility Giant to Invest $190 Billion In renewable Infrastructure and European utility giant to invest $190 Billion in renewable infrastructure

Biogas and Biomethane

The established producers of industrial gas, Air Liquide and Air Products, are well-placed, in fact, ideally placed, to develop their businesses to produce the full range of gaseous energy carriers. On November 24, 2020 Air Liquide announced plans to develop two bio-methane units.

See: Air Liquide Launches Biomethane Activity in Italy With Two New Production Units

All diesel trains to run on H₂

Consistent with Germany as a first mover, Deutsche Bahn and Siemens have announced a plan to test a hydrogen-powered train. The test is planned to commence in 2024, and to continue for 12 months. Deutsche Bahn currently operates around 1,300 diesel powered trains across those parts of its network not electrified. The plan is intended to pave the way for the phasing out of all diesel powered trains by 2050. 

Siemens is one of the technology developers and providers leading the way in the passenger transport sector. Michael Peter (CEO of Siemens (SIEGY) Mobility) stated: "Hydrogen drives are an advanced emission-free form of propulsion that will help decarbonise rail transport and make a significant contribution to achieving … climate targets".

Austria not far behind Germany, and Italy ahead of both in orders

On December 1, 2020, it was announced that Alstom's Coradia iLint Fuel Cell train had completed three months of test operations on the regional lines of OBB (Austrian Federal Railways). In addition to completion of three months of tests successfully, the Fuel Cell train has been approved by the Ministry for Climate Protection, Environment, Energy, Mobility, Innovation and Technology. Germany has previously approved the Corodia iLint Fuel Cell train. The Fuel Cell train is now ready to move into production.

See: EGEB: World's first hydrogen fuel cell train is approved in Austria and Alstom's hydrogen train successfully completes three months of testing in Austria

Alstom is to supply six Fuel Cell trains and has granted options for eight more to Ferrovie Nord Milano (FNM) the main transport company in Lombardy, Italy. The first delivery is expected within 36 months. The FNM trains will use Alstom Coroadia iLint Fuel Cell technology.

See: CleanTechnica – Alstom To Supply Italy's First 6 Hydrogen Trains

100,000 by HGVTs 2030

On the first day of the European Hydrogen Week (EHW), a study was released that outlined the scale of the anticipated heavy good vehicles and trucks (HGVT) by 2030. It is reported that a coalition of 62 companies have committed to work together to deploy 100,000 H₂ HGVTs, and to develop HRI comprising between 1,000 and 1,500 re-fuelling stations by 2030. 

This scale of deployment and development is seen as core to achieving the commitment to reduce GHG emissions from the transport sector by 90% of 1990 levels by 2050. It is estimated that GHG emissions from the transport sector give rise to around 25% of GHG emissions arising with the EU, and contribute significantly to air pollution, particularly in urban areas. 

It was recognised at EHW that the European Clean Hydrogen Alliance has a critical role to fulfil by promoting the necessary investment to achieve this scale of development. (In the Ashurst publication Glossary and Technologies, the role of the European Clean Hydrogen Alliance, and other key industry organisations, is explained. This publication will be released in  February 2021.)

See: Plans for 100,000 hydrogen trucks and 1,000 hydrogen stations by 2030 unveiled during European Hydrogen Week

Greenlights for New Green Islands

In June 2020, the Danish government announced consideration of the development of green islands in the Baltic and North Seas. On November 23, 2020 the Danish Ministry of Climate, Energy and Public Utilities confirmed progress of feasibility studies, with decision to be taken in Q1 of 2021 as to the locations of green islands in the North Sea. 

"The [green] island will help to increase the amount of renewable energy significantly, and at the same time make it possible to transform green power into fuels for heavy transport … both on land, at sea and in the air. In other words, the [green] islands will supply the green electricity which is the prerequisite for the climate-neutral Denmark and Europe of the future". (Minister of Climate, Energy and Public Utilities, Dan Jorgensen.)

The Danish Energy Agency and Energinet (Grid operator, for electrical energy and natural gas in Denmark) will start detailed studies for each location, with a view to finalising those studies by 2024. It is anticipated that initially the new green islands will add an additional 3 GW of installed capacity of off-shore wind power, increasing to up to 10 GW. A final investment decision is expected in 2021. 

As a result of the green islands, and other projects, the Danish government intends to install 7.2 GW of off-shore wind capacity between 2027 and 2030, including the green islands, the 1 GW Thor Project in the North Sea, and a proposed 1.2 GW project in the Baltic Sea.

The feasibility studies being undertaken have started to firm-up the likely location as 60 kilometres west of Thorsminde, on Denmark's west coast.

See: Denmark Moves Forward with Energy Islands

Repurposing and future use

The North Sea has a considerable amount of existing infrastructure developed over 50 years as the oil and gas resources from beneath the sea were extracted. While the development of the North Sea oil and gas industry was effective, in relative terms it was expensive. 

The Crown Estate of Scotland, on behalf of the Scottish Offshore Wind Energy Council (SOWEC), is in the process of procuring a study to determine whether it may be possible to repurpose any existing infrastructure, to allow the more efficient, and cost effective, development of H₂ production and transmission. This study will be fed into a broader assessment of the pace with which hydrogen projects may be developed from the late 2020s to 2050. 

The study is significant in that it is likely to inform investment decisions, but also provide a basis for extracting value from existing assets, in particular as oil and gas progress towards zero emission outcomes. 

See: Crown Estate Scotland Seeking Study on Repurposing of Oil and Gas Infrastructure for Hydrogen

Dogger Bankable News

• Dogger Banked: In Edition 4 of Low Carbon Pulse, the 3.6 GW Dogger Bank Project was outlined. On November 26, 2020, Equinor and SSE reached financial close for Dogger Bank Phases A and B. The achievement of financial close for the first two phases of the Project is significant on a world scale, being the largest project financing of an offshore wind project.

• Eni Sails to Dogger Bank, and Dogger Bank sale to Eni: Following the announcement of financial close on Dogger Bank Phases A and B, on November 26, 2020, it was announced that Eni SPA (the Italian Oil and Gas Giant) is to take a 20% stake in the Dogger Bank Project. It was reported that the 20% stake will cost Eni a combined GBP 405 million (USD 554 million), including the purchase price payable to Equinor and SSE, and equity funding commitments in respect of the Project. 
  
  Eni is committed to reducing its GHG emissions by 80% by 2050, and its investment in the Dogger Bank Project will contribute to that. Eni has plans to invest in more than 55 GW of renewable energy capacity by 2050, from a little under 1 GW currently.
  
  Equinor continues as one of the development phase pace setters in the sector, developing and then selling down interests, having done something similar with US assets earlier in 2020.
  
  And the UK would appear to be well on the way to 40 by 30 (see Edition 1 of Low Carbon Pulse). 

See: Dogger Bank Owners Close Largest Ever Offshore Wind Project Financing and Eni Joins North Sea Wind Power Grab with Dogger Bank Deal

Roof-Top Solar Installations Top 2 million in Germany

At the end of October 2020, it was reported that 2 million photovoltaic (PV) roof-top systems had been installed in Germany. In many ways the use of the PV roof-top solar (and increasingly any external surface of buildings) is the quiet over-achiever in the move towards zero GHG emissions. The German Solar Industry Association (BSW-Solar) indicates that this marks an: "energy transition milestone". 

As is the case with many energy transition initiatives, the rate of the development of roll-out of roof-top solar should be accelerated. The challenge for governments is to ensure that this occurs, and that there remain clear regulatory pathways. This is no different for the German Government. 

In many more developed countries home owners and businesses have installed PV systems,  both to use, and to export, the electrical energy produced. 

As with other renewable energy projects, issues of connection, grid integrity and stabilisation arise, but these issues are regarded as manageable. Grid operators are continuing to respond to integrity and stabilisation issues. Most recently in Southern Germany, RWE decided to address these issues with "a plug and play" gas fired power plant solution to ensure that integrity and stability is maintained: the "plug and play" modules are able to be plugged-in relatively quickly, and once plugged-in they have a five-minute start. This is a smart response by RWE, both in terms of current intermittent dispatch sources, but also going forward. Also some business and government entities are entering into "corporate power purchase agreements" under which renewable energy is sold to them. In many ways this is an industry of itself. In some jurisdictions, the market for corporate power purchase agreements is growing, year on year, with business and government contracting to purchase renewable electrical energy. In some jurisdictions, it has changed the market (for example, in Australia during 2020 corporate power purchase agreements have been signed for more than 1 GW of renewable energy).

See: Germany hits 2 million system installations and RWE’s 300-MW ‘Grid Stability’ Gas Plant Will Debut GE LM2500XPRESS Technology

Reverse auctions work for decommissioning fossil fuel as well as for renewable energy builds

Germany has just completed the first reverse auction decommissioning of 4.8 GW of coal fired electrical energy generating capacity. Under the reverse auction decommission process, successful bidders (bidding the lowest cost to cease generating electrical energy and to decommission) will cease to dispatch electrical energy into the electricity market. 

The reverse auction decommissioning model provides a means to grandparent fossil fuel generation capacity in a controlled way that provides both generators and electricity markets with clarity. 

See: Germany's first coal plant phase-out auction a success, with 4 8gw to close

Difficult to decarbonise, made easy in Duisburg

Difficult to decarbonise industries include cement, chemical, glass, and steel-manufacture because of the need for high temperature as part of the production process, with the heat derived from the combustion of feedstock sourced from carbon, whether fossil fuels or other carbon fuels (including refuse derived fuels, including paper and wood in the case of cement manufacture).

In Duisburg, Germany, it is proposed to use green hydrogen to manufacture green steel. The proposal is at feasibility study stage at the moment, with an electrolysis plant, with capacity of up to 500 MW, to produce green hydrogen and oxygen for use at the thyssenkrupp steel mill. The feasibility study is being undertaken by STEAG (an energy company based in Essen) and thyssenkrupp (technology and steel).

For a technology provider and steel producer like thyssenkrupp there is an ability to create supply and demand, and as such not to wait on the development of a hydrogen supply market.

See: Green Hydrogen made for Green Steel is Duisburg

Lower Cost Decarbonisation

In a recent report, McKinsey has suggest that the EU can move towards net zero emissions, and net zero cost. The overarching theme is that there are many roadmaps, and decarbonisation pathways, but not "all are cost optimal". These initiatives proposed by CUT and the themes raised by the McKinsey report will be considered in detail in the second article in The Shift to Hydrogen (S2H2): Element Change series to be published towards the end of January 2021. 

See: How the European Union could achieve net-zero emissions at net-zero cost

Vietnam – Intertidal / Nearshore Project and On-shore Projects to be Fitted In

On December 3, 2020, the Ministry of Industry and Trade in Vietnam outlined an extension of the feed-in-tariff (FiT) scheme, and the amount of the proposed FiT. While the level at which the FiT is proposed has been the subject grumbling, the proposed FiTs provides a clear line of sight to market. Edition 7 of LCP Low Carbon Pulse (at end of January) will look at these proposals in more detail, and the current market in Vietnam.

See: Vietnam: New Wind Power FIT Proposed, GWEC Warns of Negative Effects

Zero Hero – Spain

In Edition 4 of Low Carbon Pulse, a new feature was launched to profile countries that have already achieved or are well-placed to achieve zero emission outcomes, and to contribute to the ability of other countries in achieving the same outcome.

Spain has world class renewable energy resources ("plentiful sunshine and windy hillsides"). Spain has limited oil and natural gas reserves, and a declining coal industry. Power generation in Spain consistently sources over 40% (and not infrequently 50%) of its electrical energy from renewable sources. The Spanish grid operator, Red Electrica de Espana (REE), indicates that nuclear sources provide electrical energy for about 21% to 22% Spain's load, with wind, hydro and solar providing between 35% to 54%, with the balance, of up to 30%, provided by gas fired capacity and coal (up to 2.5%).

In November, Iberdrola announced plans to invest €75 billion (USD 89 billion). As is the case with Enel (outlined above), the investment is for both the development of renewable energy capacity and grid augmentation and development to allow the connection of intermittent capacity while maintaining system integrity and stability.

For Spain, climate change is a serious challenge, with rainfall annually on average being 25% less than 50 years ago. The plains in central Spain (famously where rains fall) and in the south east risk becoming semi-arid. In 2018, Spain announced plans to transition from fossil fuels, and source 75% of its electrical energy from renewable sources by 2030, and 100% by 2050. For these purposes, Spain is committed to installing 3 GW of renewable energy each year, for 10 years. For these purposes, Spain has overhauled its auction mechanism. An auction is currently underway.

On October 6, 2020, the Spanish Government announced its Hydrogen Roadmap: a Commitment to Renewable Hydrogen (CRH). The headlines of the CRH were covered in Edition 1 of Low Carbon Pulse.

On November 12, 2020 Spain announced its plan to be carbon neutral by 2050. Through 2024 Spain is committed to spending €27 bn on renewable energy, and related infrastructure. This is a small part of the cost of policy settings now contemplated, with €750 bn contemplated as the cost of the transition to carbon neutrality and a 90% reduction in the level of 1990 GHG emissions. It is anticipated that, with the policy settings announced in November, renewable energy will supply over 95% of electrical energy demand.

Postscript to Edition 4 Zero-Hero Chile

On November 24, 2020 Chile announced that in May 2021 it would launch an auction for 2.3 TWh of renewable energy and storage, with the bidding rules to be published in December 2020.

See: PV Magazine: Chile to launch auction for 2.31 TWh of renewables + storage in May

Author: Michael Harrison, Partner.