The industrial sector hits on hydrogen

Digital Handelsblatt Energy Summit 2021

Hildegard Müller - VDA

Global energy trends are clearly moving in the direction of hydrogen – and away from fossil fuels. That’s the conclusion that can be drawn from the three-day digital energy summit staged by German business paper Handelsblatt which ran from Jan. 13 to Jan. 15, 2021. The energy sector as a whole faces enormous challenges as it continues along the path of decarbonization. Coal will be exhausted and demand for oil, too, will gradually decline in favor of hydrogen – with green hydrogen a credible prospect in the longer term given its renewable credentials. Natural gas must also become cleaner, though carbon capture and storage, CCS, remains a divisive issue. “Turquoise” hydrogen, meanwhile, can be viewed as a sensible option for applications associated with the production of green steel. No mention was made of yellow hydrogen produced from biogas, and was addressed instead in terms of hydrogen created using nuclear power.

The kaleidoscope of hydrogen, each color defined by the means and energy type used to create it, should not, however, be seen in fundamentalist terms: Instead of an “either… or” split as some politicians would have it, there should be more of a “this and that” approach. For the need is so immense that there is no way of bypassing blue hydrogen, which admittedly is a carbon dioxide emitter, though emissions are being significantly reduced. In fact there’s talk of over 70 percent compared with coal.

The energy transition is beginning to gain traction – at an international level. And this transformation with all its dynamism should not be impinged upon by the conditions and regulations of policy. In this respect, the trade in carbon emissions offers a good alternative to Germany’s previous renewable energy law. According to political and industrial thinkers, going forward the prices should rise to EUR 100 to EUR 200 compared with the current EUR 35 to EUR 50 per metric ton in order to massively incentivize investment in clean technologies.

Disruptive change in the energy supply

Several sectors, for instance cement and steel, currently find themselves on the cusp of major changes where carbon dioxide emissions present a real problem. The chemicals industry, too, intends to replace oil and natural gas with hydrogen, with EUR 0.04 per kWh potentially providing the basis for production. This change opens up possibilities for new business areas and new jobs – indeed ones that are in tune with climate objectives. The European Green Deal represents an opportunity for achieving this.

This requires a transnational approach to green hydrogen – not just within the European arena but also globally. While Germany does not have the underpinnings for a sufficient supply of renewables, it does have the capital. Therefore some large-scale thinking is required. For its 2,600 terrawatt-hours of annual consumption, Germany will be depending on imports of energy – despite around 600 terrawatts of domestic renewable production. It makes a lot of sense to utilize the favorable conditions in countries such as Spain, Portugal, Greece and many others for hydrogen production. Industry can channel investment into those locations and use its skills to provide assistance – in its own interest. Hydrogen, it is fair to say, is the oil of tomorrow. Sooner or later there will be a similar level of annual investment to that in global oil production: USD 2,000 billion.

For all these positive developments, it would be well if there weren’t so many different independent hydrogen strategies, be it at an EU, national or local level. Instead a single holistic approach is called for. For this to happen, industrial policy must be linked pragmatically to climate objectives. After all, climate protection is a business model. The demands at the energy summit have therefore so far been: less regulation, more market and no climate alarmism, just technological openness.

The electric transportation sector is primarily ruled by battery-electric mobility. Tesla can be seen as a clear role model here. The company has managed to give a boost to the global automobile industry. German carmakers, however, need to stop hiding behind Tesla, according to VDA president Hildegard Müller. In the lobbyist’s opinion, Germany and its business sector need to now pick up speed and confront the key challenge of digitalization – artificial intelligence systems in vehicles. What’s more, the charging infrastructure, Müller says, must be made simpler to use with increased standardization and compatibility that is independent of the manufacturer or the electricity supplier. She also envisaged that in 10 years, around a third of vehicles will still be running on a combustion engine.

To sum up: Hydrogen has never before been the subject of so much discussion at the Handelsblatt Energy Summit.

Author: Sven Jösting

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