“How quickly can we implement the energy transition?” This question has been posed for some time by the Port of Rotterdam, the largest European sea freight transshipment point. In the past – and still today – the huge industrial area was shaped by the oil and gas industry. Among other things, four large refineries are located there, which now need to be decarbonized. Boudewijn Siemons, CEO and COO of the Port of Rotterdam Authority, stated, “If it can be done electrically, it should be – with hydrogen otherwise.”
To drive this transformation process forward, together with the gas supplier Gasunie, the port company is initially dedicating itself to infrastructure, because “infrastructure is an enabler,” as Gasunie CEO Willemien Terpstra states. One of the main projects is a new pipeline system – for hydrogen and carbon dioxide. The new construction of the Hydrogen Backbone (H2) as well as the Porthos pipe system (CO2) started in October 2023 with the groundbreaking ceremony by the Dutch king Willem-Alexander.
The port is receiving significant political support. “I see a government that is really working to remove obstacles,” says the port head. This also benefits Germany, where a large proportion of the energy supplied will be forwarded. Accordingly, the Netherlands also sees Germany as the main customer for hydrogen –particularly the state of Nordrhein-Westfalen.
The time of waiting is over, because large coal-fired power plants in the port will be shut down in 2030 (see Fig. 2). However, eliminating CO2 emissions from fossil fuels is only one path to reducing carbon dioxide emissions 55 percent by 2030. In addition to increasing efficiency, negative CO2 emissions will also be necessary, so the carbon dioxide produced must be stored using CCS (carbon capture & storage). “If we want to reduce CO2 emissions, there is no way around CCS,” according to Siemons.
Fig. 2: The coal-fired power plant located behind the substation will be shut down by 2030
The goal is CO2 neutrality by 2050. By then, the approximately 100 million tonnes of crude oil imported annually in Rotterdam are to be replaced by other media. For example, around 15 million tonnes of oil are to be substituted by 20 million tonnes of hydrogen, whereby about 90 percent of the hydrogen required will be imported.
As to the question of how long the planned “temporary use of blue hydrogen” could last, the answer came clear: “Decades.” Blue hydrogen or “low-carbon hydrogen,” as it and other non-green H2 compositions have been called for some time now, are to serve as the initial spark for building an H2 economy. It is already clear today that the associated lock-in effects will be considerable, as the billions invested are to be amortized over at least 15 years.
The capture of CO2 is only part of the task to be accomplished. Extracting small amounts of carbon dioxide from a gas stream is still relatively simple and efficient, but the larger the percentage is to be, the more complex it becomes. The port has initial experience in this area: For example, CO2 is already being captured there and used in greenhouses to improve plant growth. Ulrich Bünger from the energy consulting company LBST is nevertheless skeptical and stated in Rotterdam that CCS is still a long way from being where it is supposed to be. There is “hardly any experience,” according to the energy expert, while the impression is given that the technology is tried and tested.
Infrastructure is key For the infrastructure and its operators, it doesn’t matter how the hydrogen was produced. Willemien Terpstra, CEO of gas transmission company Gasunie, said on the matter: “We are ready to transport any color.” Accordingly, Gasunie already made the final investment decision for the pipeline construction last year, although only five percent of the capacity has been sold so far, as the appointed CEO since March 2024 has explained. Of course, the government’s strong commitment was decisive here, which is contributing 50 percent of the costs. The aim is to jointly complete the pipe system by 2030, which will then be able to provide 10 GW of power.
Shell refinery in Port of Rotterdam
To H2-international’s inquiry of how the hydrogen would be transported to Rotterdam, CEO Boudewijn Siemons named all the options: ammonia, methanol, LH2 and LOHC – No variant is excluded from the outset. When asked whether the port company could handle large quantities of ammonia safely, Siemons initially hesitated briefly, but then replied confidently, “Yes, I think we can do that. I’m pretty sure of that.” At the same time, however, he conceded that “not every place in the port” is suitable.
As ammonia tanks have been present in the port for a long time, the corresponding expertise already exists. The plan is to triple the storage capacity for ammonia in the next few years compared to 2023. However, such a change in fuels and energy storage media is unlikely to significantly alter the appearance of the world’s eleventh largest port, the operators are certain. Even though the media will be different, many installations will look similar to before. It is already clear today that an infrastructure for LOHC and LH2 is also being developed. Corresponding partnerships with Chiyoda and Hydrogenious already exist.
200‑MW electrolyzer from Shell The highlight in the harbor, however, is Holland Hydrogen 1 (see Fig. 1), a 200‑MW electrolyzer that is dimensioned in such a way that the green hydrogen produced with the help of wind turbines can then replace the amount of gray hydrogen so far required in the port. The electricity required is sourced from a 759‑MW offshore wind farm (Hollandse Kust Noord) north of Rotterdam, which is directly connected. In order to meet all EU regulations, H2 production (approx. 20,000 tonnes per year) will follow the respective wind supply, even if this means that the electrolyzers cannot run 24/7.
For this project, for which the final investment decision has already been made, Shell received this year’s Green Hydrogen Project Award during the World Hydrogen Summit. The area on which the in total ten 20‑MW electrolyzer modules from Thyssenkrupp Nucera is to be installed is what’s called “proclaimed land” that was wrested from the North Sea. Where the conversion park is being built used to be water. However, it is likely to take until the end of the decade before it goes into operation. In the future, also Holland Hydrogen 2 could follow – a second area with likewise 200 MW. By 2030, this could already be 2 GW.
The H2 pipes (black) and the CO2 pipes (white) are sometimes only 40 cm apart
The corresponding H2 pipeline, which is currently under construction, will then connect the H2 production facility with the various refineries and other customers. Sufficient wind for green hydrogen production is available in Rotterdam. In the port area alone 300 MW of wind power are installed. As this is more electricity than is needed, a large stationary accumulator has already been installed, to be able to temporarily store at least some of this green electricity.
The hydrogen tubes measure 1.2 m (48 inches) in diameter and are pressurized with 30 to 50 bar. The construction of the first 30 kilometers across the port is costing 100 million euros. The entire H2 Backbone network within the Netherlands (1,100 km) is expected to cost 1.5 to 2 billion euros. However, 85 percent of the future H2 pipeline system will consist of repurposed natural gas pipes.
Parallel in construction is the CO2 pipeline Porthos. This pipe system connects numerous locations in the port with the platform off the coast, via which the carbon dioxide is then to be fed into subsea gas fields.
The H2 pipes for the Hydrogen Backbone are ready and are currently being placed underground
Future Land informs about H2 activities To be able to inform about all these activities, the port has set up “Future Land,” a contact point for tourists, school classes, the press and investors, where they can get answers to their questions about the future of the port. The information center is located right below the world’s largest wind turbine. The Haliade-X 13 is 260 m high (853 ft) and has an output of 14 megawatts. It is designed for offshore wind farms in the North Sea, but has been tested on land since 2021 and can supply six million households with electricity.
In view of the fact that a third of the energy required in Germany comes into the country via Rotterdam, Ursula von der Leyen, President of the European Commission, stated: “If the Port of Rotterdam is doing well, the European economy is doing well.”
E-fuels – irrespective of their disputed suitability for the car sector – will be essential for the decarbonization of the transport sector. Hence German transportation minister Volker Wissing is continuing with his campaign to ramp up e-fuels. On June 4, 2024, he underlined his approach by hosting the second International E-Fuels Dialogue in Berlin and used the event as a launchpad for his “Berlin declaration.” According to information from the German transportation ministry, it was an “agreement on technological openness, joint research and development and uniform standards.”
Fig.: The Berlin declaration is signed by German transportation minister Volker Wissing, the Lithuanian minister for transport and communication Marius Skuodis and the Japanese parliamentary vice minister for economy, trade and industry Taku Ishii (from right)
efuels-dialog-2024-07.jpg
Source: BMDV
Wissing explained: “E-fuels are, alongside battery electric propulsion and hydrogen, an important option for future climate-smart transportation – in the air, on the water and on the road. […] We want to encourage research and development as well as the construction of production plants. For this, we’d like to attract private-sector investment as well. We will further accelerate the expansion in renewables.”
Marius Skuodis, minister for transport and communication in Lithuania, said: “Thanks to its considerable renewables potential, Lithuania is in a position to become a producer of hydrogen and associated synthetic fuels.” Taku Ishii, parliamentary vice minister for economy, trade and industry in Japan, added: “The concept of the ‘triple breakthrough’ – realizing decarbonization, economic growth and energy security simultaneously – has a key role to play in achieving a carbon-neutral society. In this context, e-fuels are capable of contributing significantly to the triple breakthrough.”
The next edition of the E-Fuels Dialogue will be held in Tangier, Morocco, in summer 2025.
ILA in Berlin
E-fuels were also a key topic at the ILA Berlin Air Show which took place in the German capital from June 5 through 9, 2024. It was here that the former petroleum association and now industry association for fuels and energy en2x indicated that there will be “an EU blending mandate for sustainable aviation fuels (SAFs) from next year.” Chief executive Christian Küchen explained: “Quotas alone are, however, not enough to stimulate the investment that is now required in SAF production. The EU’s E-SAF quota will rise to 5 percent in 2035. It’s not clear at the moment if the plants needed for this will be ready in time.”
At the air show, the association handed over a list of demands including 10 suggested actions to the German government’s representative for German aerospace Anna Christmann and the parliamentary state secretary at the German transportation ministry Oliver Luksic.
The decision has finally come. In mid-February 2024, the European Commission approved 24 German IPCEI projects aka Important Projects of Common European Interest. Within the framework of IPCEI Hydrogen, funding is granted to large-scale projects across the entire hydrogen value chain – from H2 production and transportation to storage infrastructure and industrial deployment.
These projects are approved by the European Commission in several “waves.” In the current third wave, attention was turned to infrastructure schemes involving a total of seven EU member states (Germany, France, Italy, the Netherlands, Poland, Portugal and Slovakia). Across all projects, the aim is to build almost 3,000 kilometers (1,900 miles) of H2 pipelines, more than 3.2 gigawatts of H2 production capacity in addition to approximately 370 gigawatt-hours of H2 storage capacity.
“While the renewable hydrogen supply chain in Europe is still in a nascent phase, Hy2Infra will deploy the initial building blocks of an integrated and open renewable hydrogen network. This IPCEI will establish the first regional infrastructure clusters in several Member States and prepare the ground for future interconnections across Europe, in line with the European Hydrogen Strategy. This will support the market ramp-up of renewable hydrogen supply and take us steps closer to making Europe the first climate-neutral continent by 2050.”
Vice President of the European Commission Margrethe Vestager, responsible for competition policy
“For a successful roll-out of renewable and low-carbon hydrogen, all pieces of the puzzle need to come together. With this new Important Project of Common European Interest, 32 companies, including 5 SMEs, will invest in hydrogen infrastructure, for a total of more than 12 billion euro of private and public investment, to match supply and demand of hydrogen. It provides industries with more options to decarbonise their activities while boosting their competitiveness and creating jobs.”
EU Commissioner Thierry Breton
“I’m pleased that the wait for European funding approval has come to an end. It means we have made an important step toward realizing our hydrogen project. I now hope that we will soon receive funding approval from the German government so that we have a good basis for making the final investment decision within our committees.”
EWE Chief Executive Officer Stefan Dohler
It is expected that member states will provide up to EUR 6.9 billion in public funding which will then unlock EUR 5.4 billion in private investment. Involved in the 33 projects is a total of 32 companies, with small- and medium-sized businesses among them. Thus the IPCEI Hy2Infra should go some way in “helping to achieve the objectives of the European Green Deal and the REPowerEU Plan,” according to Brussels.
Most of the participating companies have been waiting a long time for this go-ahead to be given, which will enable them to finally kick off their projects. It is anticipated that several large electrolyzers will be commissioned between 2026 and 2028 and a number of pipelines will be brought into service between 2027 and 2029.
Fig. 2: Hydrogenious LOHC Technologies plans, as part of its Green Hydrogen@Blue Danube project, to trial benzyltoluene as a hydrogen carrier for the purpose of ensuring safe and efficient transportation of green hydrogen for supplying industrial off-takers in the Danube region
The IPCEI Hy2Tech, which focuses on the development of hydrogen technologies for end consumers, was approved on July 15, 2022. This was followed in the second wave on Sept. 21, 2022, by the IPCEI Hy2Use which targets hydrogen applications in the industrial sector.
“IPCEI Hy2Infra contributes to a common objective by supporting the deployment of hydrogen infrastructure important for achieving the objectives of key EU policy initiatives such as the European Green Deal, the REPowerEU Plan and the EU Hydrogen Strategy.
All 33 projects included in the IPCEI are highly ambitious, as they aim at developing infrastructure that go [sic] beyond what the market currently offers. They will lay the first building blocks for an integrated and open hydrogen network, accessible on non-discriminatory terms, and enable the market ramp-up of renewable hydrogen supply in Europe. This will allow for the decarbonisation of economic sectors that depend on hydrogen to reduce their carbon emissions.
Aid to individual companies is limited to what is necessary and proportionate, and does not unduly distort competition.”
A good 450 participants gathered at the specialist conference H2 Forum in Berlin February 19 and 20 to discuss innovative H2 technologies, strategies for the market ramp-up and the necessary regulatory framework conditions. A further 1,000 participants were connected online, even despite the considerable time difference in countries such as India and the USA.
The event was opened via a video by Kadri Simson, EU Commissioner for Energy. The two-day program was held under the motto “Empowering the future of hydrogen,” where this year’s focus was on the production of the green gas by electrolysis and its transport in Germany and Europe. At the H2 Forum were, among others, representatives from E.on, Enapter, EWE, Linde, FNB Gas and the H2Global Foundation. They discussed the role of hydrogen in the defossilization of the economic systems. Philipp Steinberg of the German economy ministry outlined the various phases of the development of the hydrogen core grid in Germany.
Feelings of optimism and assurance were tangible throughout the high-ceilinged rooms of the Estrel Congress Center (ECC) as players from politics, industry and the energy sector talked about ambitious H2 projects at home and abroad. Inspiring as well was the approval by the EU Commission a few days before of a series of IPCEI projects, thus ending for some participating companies years of waiting. Additionally, the carbon contracts for difference and the auctions of the European Hydrogen Bank are giving hope to business representatives.
Spain: Megawatt-electrolysis in practice
For example, Özlem Tosun, project manager for green hydrogen at Iberdrola Deutschland, reported on the experience with a 20‑MW electrolysis plant, making it currently the largest in Europe. “I hope it doesn’t stay that way,” she added, in view of the necessary market ramp-up for green hydrogen. The Spanish energy corporation, known in the country primarily as an operator of wind farms in the Baltic Sea, started operation of the plant in Puertollano, May 2022 in the presence of the King of Spain. The city with nearly 50,000 inhabitants is located about 250 kilometers south of Madrid. The electricity for the hydrogen production comes from a 100‑MW photovoltaic park a few kilometers away and flows via an underground cable into the production hall, in which 16 electrolyzers of 1.25 MW each perform their work. These produce annually up to 3,000 tonnes of green hydrogen, which is temporarily stored in tower-high pressure tanks at 60 bar. The electrolysis plant is located next to the fertilizer factory of Fertiberia and currently covers ten percent of their hydrogen requirement, which according to Iberdrola saves 48,000 metric tons of CO2.
“But this is just the beginning,” stressed Tosun. “In the coming years, Iberdrola wants to increase the production more than tenfold – to 40,000 tonnes by 2027.” The demand is there, since otherwise Fertiberia is using for its ammonia synthesis gray hydrogen obtained from natural gas. That no comparable plant for the production of green hydrogen on an industrial scale is yet in operation is also due to the fact that the whole thing is not as simple as it sounds in the big plans and letters of intent. “It didn’t go smoothly from the start,” admitted Özlem Tosun. “On the contrary – we had a lot of problems. But we also learned a lot and were able to improve a lot as a result. Not only technically, but also economically.” One of the most important points was to optimize the efficiency of electricity use. Contributing to this was that the performance and efficiency of the electrolyzers were able to be increased further and further.
Overall, the practical experience in Puertollano was important “to be able to scale the system.” As far as the large-scale production of climate-neutral energy sources is concerned, the multinational energy company not only sees itself as a pioneer, but is also optimistic about the future. Because Spain first wants to become independent of fossil fuel imports and then be able to export renewable energies. So it’s no wonder that Germany is for Iberdrola “a key market,” as Tosun says, “especially for green hydrogen.”
Lack of regulation as a stumbling block
How the development of a German and European hydrogen industry can be accelerated was one of many other topics discussed at the conference. It is important to break down barriers – for example lack of regulation and infrastructure – it was said in a panel discussion. Such hurdles, the speakers agreed, were in addition to the high costs for H2 production, like before, the crucial reasons why not a small number of companies, despite the positive feasibility studies, are still waiting with the final investment decision. The following figures show just how wide the gap is between aspiration and reality when it comes to the gas of the future: In recent years, the German government has raised the target for domestic production of green hydrogen from the original three gigawatts to ten gigawatts, yet so far not more than 62 MW of generation capacity has been installed. That there is a long way to go, but which can go faster, further practical examples have shown.
“Never waste a green electron again!”
“Did you know that with the wind power that was curtailed in the first half of 2022 alone 1.5 million households in Europe could have been supplied with electricity for a year?“ (The figure refers to average households with a consumption of 3,500 kWh per year.) That was one of several questions with which Alexander Voigt, managing director of HH2E, began his speech. “What could we do with all the green electrons that are not being generated only because the power grid cannot absorb them?” His answer, of course: Hydrogen! But also high-performance battery storage, to be able to offer energy for stabilization of the power grid. That’s how he explained the business model of the planned HH2E factory in Lubmin, Germany. It will use surplus electricity to “reliably and cost-effectively produce green hydrogen.” In addition will come CO2-free heating and, if required, the conversion of the “green molecules” back into electricity.
Alexander Voigt, CEO von HH2E, nutzt künftig Überschussstrom in Lubmin (Foto: Monika Rößiger), Source: Monika Rößiger
With this, the plant could contribute to the decarbonization of industry in Germany and, at the same time, support the energy supply. The final investment decision will be made shortly, according to Voigt, and then the way would be clear for the start of construction. In the year 2026, according to the plan, energy generation is to start: around 100 megawatts of total capacity in the first expansion stage, divided between a 56‑MW electrolyzer and a 40‑MW battery storage system. The electricity for electrolysis is coming from offshore wind farms in the Baltic Sea. Initially, the operators expect to produce around 7,200 tonnes of green hydrogen per year. The production capacity of the plant is scalable up to one gigawatt. Lubmin, once a transshipment point for Russian natural gas, will then become a center for green hydrogen. This can be fed into the existing natural gas grid that extends from the northeast of Germany to the southwest near Stuttgart.
In total, more than 40 companies from the entire H2 value chain presented their solutions and products in the high glass hall next to the conference hall in the Estrel Congress Center. The organizational framework of the H2 Forum was right: There was time to connect during the coffee breaks, lunch and supper. Lively discussions took place at all the tables and stands. That more politicians were present this time than at previous events was, according to Laura Pawlik, Sales Manager of the organizer IPM, particularly emphasized in the feedback from the participants. And also that the representatives from politics and administration were definitely open to further funding.
The date for the next conference has already been set: March 4 and 5, 2025, again in the ECC in Berlin. Focal points will be in addition to politics also the regulatory progress in Germany and Europe.
The share of Cummins Engine brings joy: The share price rose to a new high for the year, after the company was able to settle a long-standing legal dispute – it was about non-compliance with emission standards for engines – with a penalty payment of 1.6 billion USD, and with that this chapter is closed. The total cost of this settlement was 2.04 billion USD. Regarding the value per share, Cummins earned a good 19 USD in year 2023, if including the abovementioned costs. So it was about 6 USD per share.
The dividend remains at a high level – recently 1.68 USD per share in the quarter. Turnover increased by ten percent to 34.1 billion USD in year 2023 and should also further grow in the future. The subsidiary Accelera, which concentrates on the clean energy business (engines, batteries, fuel cells, electrolysis, etc.), was able to increase turnover to 354 million USD and should in the current fiscal year bump this up to 450 to 500 million USD. This area belongs, via the program Destination Zero, to one of the company’s future fields of focus and requires considerable investment. This division will therefore report a loss this year of 400 million USD, which, however, has its logical basis in the high initial investments. Even so, Accelera alone was already able to build up an order volume for electrolyzers of 500 million USD. The spin-off of the subsidiary Atmus Filtration Technologies to the shareholders (swap offer) is also about to be finalized. Cummins holds over 80 percent in this. The company will be valuated with 1.9 billion USD.
New engine development HELMTM
A share price driver, however, can be the development of a new generation of engines. These units, based on the X15 engine platform, can be operated with natural gas as well as with hydrogen (starting 2028) and e-fuels. HELMTM stands for high efficiency, low emission, multiple fuels. They should accordingly contribute to significantly reducing the diesel demand of today’s customers. Test runs are underway with Walmart and UPS, and also with Paccar for its US class 8 truck Kenworth T680. Cummins is investing 1 billion USD in this project for the time being.
At the current price level – the company has a market capitalization of about 39 billion USD – the current valuation seems sufficient to me, where Cummins is considered a standard stock with a high dividend yield. I would now remember and rather bet on the comparable competitor from China, Weichai Power, as this company is only half as highly valued as Cummins and additionally owns a special potential in the area of hydrogen and fuel cells. Cummins but will go its own way in hydrogen. The subsidiary responsible for this, Accelera, has very high growth potential, which will have a positive impact on the company as a whole in a few years’ time.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
