Welcome to the first edition of Ashurst's Low Carbon Pulse.
These regular updates will outline key developments covering each aspect of energy transition globally, such as renewable energy generation, storage and distribution, technological developments, new and developing policy settings, and major project developments and transactions. We will also bring you more detailed insights into particular developments or issues.
As the world moves to cleaner energy sources, it is clear that this transition remains high on the social, regulatory, political and investor agenda. At Ashurst, we are committed to supporting you through this evolution through providing updates, tailored insights and strategic advice.
European Parliament increases reductions
The European Parliament has voted in favour of increasing to 60% the reduction in GHG emissions by 2030 compared to GHG emissions in 1990 (-60%). The – 60% contrasts with the 55% reduction (- 55%) proposed by the European Commission. It will be interesting to see if -55% is replaced by -60%. Some European Union member states are likely to legislate to increase their national reduction targets in any event. By the second week in December 2020, it will be clear what the reduction target is to be under EU law.
See: The Guardian - EU parliament votes for 60% greenhouse gas emissions cut by 2030
EGCO Fuel Cell Power Plant operational
In early October, ECGO Group's 19.8 MW Fuel Cell Power Plant at Gangdong-gu, Seoul, commenced the supply of electrical energy to Korea Electric Power Corporation (KEPCO). In addition to the supply of electrical energy, the Gangdong-gu Plant supplies heat. The Plant uses a fuel cell that combines hydrogen from natural gas and oxygen to produce electrical energy and heat as a result of an electrochemical reaction, not exothermic combustion.
See: EGCO Group powers up "Gangdong" Fuel Cell Power Plant in South Korea
GAUSSIN – ATM-H2 and APM-H2
The French corporation, Gaussin, has unveiled two new vehicles for use at logistics and port – the ATM-H2 and the APM-H2. Vehicles used at logistics and ports hubs are viewed as being more than likely to transition from the use of fossil fuels to hydrogen. The ATM-H2 has a towing capacity of 38 tonnes (for use in logistics hubs) and the APM-H2 has a pulling capacity of 75 tonnes (for use in the movement of containers at container terminals). These vehicles use a fuel cell that combines hydrogen with oxygen to produce electrical energy.
See: In a world premiere, GAUSSIN unveils two new hydrogen vehicles, the ATM H2 and the APM H2
Hyundai Motor Company – a roadmap on the road
Hyundai announced the formal launch of its plan to develop 1,600 XCIENT Fuel Cell heavy-duty trucks by 2025, said to be the world's first mass-produced fuel cell powered heavy truck. The fuel cell produces electrical energy using hydrogen stored in a 32 kg hydrogen tank (storing compressed hydrogen at 350 bar). XCIENT Fuel Cell heavy-duty trucks were delivered to customers in Switzerland in July 2020. Hyundai's plan is aligned with the "Hydrogen Economy Roadmap of Korea 2040" (and the Hydrogen Economy Promotion and Hydrogen Safety Management Law, a clear legal framework for government support for the H2 industry and for safety standards).
See: World's first fuel cell heavy duty truck, XCIENT Fuel Cell, heads to Europe for commercial use
Peoples Republic of China transitioning to net-zero emissions by 2060
President Xi Jinping has announced a plan for PRC to transition to net-zero emissions by 2060. The implications of the implementation of this policy setting are far reaching, both for PRC and other countries. This would be more transformational than transitional. For PRC, this will necessitate grandparenting of coal fired power stations and re-imagining steel manufacture. For countries that export thermal and metallurgical coal to the PRC and iron ore there will be huge implications. During COVID-19, the export of metallurgical coal and iron ore to PRC have helped cushion the impact of COVID-19 for State Governments in Australia.
For those that understand that potential for Australia to take a leading role in the production of hydrogen as an energy carrier this should be seen as an opportunity: by some estimates, the renewable resources across Northern Australia (above the Tropic of Capricorn) would allow the development of 25,000 GW of renewable energy capacity (about ½ of the estimated production to achieve global decarbonisation), which in turn would allow the production of green hydrogen.
See: Climate change: China aims for 'carbon neutrality by 2060'
Spanish Government approves Hydrogen Roadmap: a Commitment to Renewable Hydrogen (CRH)
The Spanish Government has joined governments of other major European Economies and the European Union (EUHS) in the approval of a roadmap for hydrogen. The CRH is aligned with the EUHS: amongst other things, the EUHS contemplates 6 GW of installed electrolysers by 2024 and 40 GW by 2030. For these electrolysers to produce Green Hydrogen will require between 80 and 120 GW of new renewable electrical energy capacity.
As with other road maps, the ultimate destination is clear -- zero-emissions or carbon / climate neutrality by 2050. The detailed route to get there is less clear. This said, the CRH has a focus on achievable objectives, including 300 to 600 MW of installed electrolysers for Green Hydrogen production, by 2025, increasing to 4 GW of installed electrolysers by 2030. Increasing the production of green hydrogen is key to 25% of industrial hydrogen consumption being provided by green hydrogen by 2030 (one of the objectives set out in the roadmap). Achievable outcomes are also outlined for transportation, including buses, light and heavy vehicles, and trains.
See: The Spanish Government approves the "Hydrogen Roadmap: a commitment to renewable hydrogen"
UK Government wants to quadruple off-shore wind
UK Prime Minister, Boris Johnson, wants to increase off-shore wind electrical energy generation of the UK to 40 GW by 2030 (40 by 30 Plan), at an estimated cost of GBP 50 / USD 58 billion. This additional 30 GW of capacity would cover an area of approximately 9,500 square kilometres (or six times the size of Greater London). Since 2010, the electrical energy generation capacity of the UK off-shore wind industry has increased ten-fold from 1GW to 10GW. While the 40 by 30 Plan is ambitious, it is reflective of a broader recognition that off-shore wind is a key renewable resource that needs to be developed as part, if not as the core, of energy transition. It is understood that in spring 2021 the UK Government will hold a contract auction for the first tranche of the 40 by 30 Plan.
See: Boris Johnson's Wind Energy Plan needs $58 billion from industry
USA Industry releases The Road Map to a US Hydrogen Economy (URM)
The URM recognises key sectors of the US economy to which H2 can contribute to assist in energy transmission. The sectors include power generation and grid balancing / stability, energy carrier for industry (including hard to decarbonise industrial users), energy carrier commercial and residential building and transportation. This recognition demonstrates the versatility of H2 as part of the shift to H2 as part of energy transition. While the URM recognises that there is a long way to go, it is stated that a competitive H2 industry can meet 14% of total US energy demand by 2050, resulting in 16% decrease in GHG emissions and 36% decrease in NOx emissions.
See: 'Road Map to a US Hyrodgen Economy' promotes scale-up activities in the growing hydrogen economy
Author: Michael Harrison, Partner.
