Speaker 1: This is Dana Perkins and you're listening to Switch It
Speaker 1: on the B n F Podcast. Today, I speak with
Speaker 1: Martin Tangler, who is our lead hydrogen analyst here at
Speaker 1: B and F, and today we're going to talk about
Speaker 1: well hydrogen, which has been a pretty buzzy topic as
Speaker 1: of late. But rather than go into detail on something
Speaker 1: specific or technical, we're going to zoom out way out.
Speaker 1: For example, it seems like every time I turn around,
Speaker 1: there's a new color associated with the hydrogen color wheel.
Speaker 1: Of course, there's been green and blue hydrogen, but what
Speaker 1: about pink, yellow, or gray? I could keep going, but
Speaker 1: you get the idea. Martin recently wrote a research note
Speaker 1: titled Hydrogen for Beginners, Everything you Need to Know, where
Speaker 1: he breaks down this hydrogen primer into history, physics, and
Speaker 1: economics in order to see the future of this clean
Speaker 1: burning molecule and to understand how it might fit with
Speaker 1: some of the hard to abate sectors. We're going to
Speaker 1: start with the fundamentals. For Bloomberg subscribers who want to
Speaker 1: read this or see some of the charts that Martin made,
Speaker 1: you'll be able to find it on the Bloomberg terminal
Speaker 1: at B NF Go at b enof dot com or
Speaker 1: on our mobile app. As a reminder, B andF does
Speaker 1: not provide investment or strategy advice, and we've got a
Speaker 1: complete disclaimer at the end of the show. But now
Speaker 1: let's talk about hydrogen. Martin, thank you for joining today.
Speaker 1: Thank you. So we're here to talk about hydrogen. We've
Speaker 1: done a few hydrogen podcasts in the past, and they
Speaker 1: were on very specific topics. But today we're going to
Speaker 1: try something different. We're going to zoom way out and
Speaker 1: we're going to talk about We'll try to in one
Speaker 1: show explain the basics of hydrogen and how this market works.
Speaker 1: Because there's so much buzz around it at the moment,
Speaker 1: Can you explain to everybody why you ended up writing
Speaker 1: a primary research report when we have historically gone much
Speaker 1: deeper on topics. So I think that's exactly the reason
Speaker 1: why we have historically gone very deep on topics with
Speaker 1: let's say an assumption that the average B and EF
Speaker 1: either would understand most of the basics, and then we
Speaker 1: had a couple of conversations, you know, with our clients,
Speaker 1: even internally with our colleagues, there turns out to be
Speaker 1: a pretty wide range of people in terms of how
Speaker 1: well they understand hydrogen for obvious reasons, and so we
Speaker 1: thought that writing a report that helps everybody be on
Speaker 1: the same page, and after they've read it, then they
Speaker 1: can read any other b NF report on hydrogen and
Speaker 1: feel like they can understand it, feel that they get
Speaker 1: the context. So that was really the purpose of the report.
Speaker 1: What I realized today when preparing for our discussion was
Speaker 1: that there are certain colors in the hydrogen wheel. You
Speaker 1: may like referred to as a wheel of different colors.
Speaker 1: There's certain colors within hydrogen that I understand much better
Speaker 1: than others, and we will come to that and discuss
Speaker 1: what each of those is. But let's take another giant
Speaker 1: step back and let's start with history. So I think
Speaker 1: many of us associate hydrogen with Zeppelin's. You know, this
Speaker 1: is a natural resource that has been around for some time,
Speaker 1: So let's talk about when it kind of first came
Speaker 1: on the radar and where hydrogen has been in the past,
Speaker 1: so that we can talk about the potential in the future.
Speaker 1: The idea of using hydrogen is absolutely not new. It
Speaker 1: goes back to at least the eighteen hundreds, when in
Speaker 1: eighteen seventy four French writer, as you'll learn, wrote a
Speaker 1: book in which he said that one day hydrogen will
Speaker 1: provide an inexhaustible source of heat and light. That's kind
Speaker 1: of how it's translates. Have you read this book. I
Speaker 1: have not read this book. I've just I've just from it.
Speaker 1: But you know what, it's on my reading list. I
Speaker 1: definitely want to read it. Jewels were in the visionary.
Speaker 1: I will add it to my book club reading. Absolutely.
Speaker 1: So that's the idea of using hydrogen for energy, right.
Speaker 1: Hydrogen is a very energy dense molecule, which is something
Speaker 1: that I think we'll talk about later as well. But
Speaker 1: then the idea of using hygen for energy, you know,
Speaker 1: there have been a couple couple of waves in the middle.
Speaker 1: You know, you mentioned the Zeppelins. Then they have been
Speaker 1: you know, the US and the Soviets. Apparently we're testing
Speaker 1: planes that would fly on hydrogen in the nineteen fifties,
Speaker 1: which hasn't exactly worked out. But then a hundred years later,
Speaker 1: in nineteen seventy four, the roadent Track magazine in the
Speaker 1: US published on its cover this thing that said hydrogen
Speaker 1: new and clean fuel for the future. And the reason
Speaker 1: they did it was because Back then, there was this
Speaker 1: idea of using hydrogen as a fuel for cars because
Speaker 1: it was in the middle of the oil crisis. Oil
Speaker 1: was scarce or was expensive. People are looking for ways
Speaker 1: to feel their that their vehicles without having to rely
Speaker 1: on oil. But then all crisis finished, you know, hydrogen
Speaker 1: cars didn't really go anywhere, and then we've got a
Speaker 1: couple more of these waves throughout history. You know, George
Speaker 1: bush Into in two thousand and three said that the
Speaker 1: first car driven by a child born today could be
Speaker 1: powered by hydrogen. So now if you fast forward to today,
Speaker 1: there are about thirty thou cars globally that have been
Speaker 1: sold that run on hydrogen. So maybe there's a a
Speaker 1: child somewhere whose first card happens to be a totemm
Speaker 1: ME RAI. But it's definitely more like the exception than
Speaker 1: the rules. So there have been a lot of a
Speaker 1: lot of waves of interest, but much less in terms
Speaker 1: of actually following up on those waves with action in
Speaker 1: terms of using hydrogen for energy. So they're definitely have
Speaker 1: been these points where, oh, maybe hydrogen will be really
Speaker 1: great for transport, and it is used in some spaces.
Speaker 1: It is you know, you have hydrogen ferries being developed,
Speaker 1: and you have different vehicles, land vehicles being using hydrogen.
Speaker 1: We're seeing a few of them out there, but then
Speaker 1: not quite yet beaten out certainly the internal combustion engine
Speaker 1: or really batteries which seem to be taking off. So
Speaker 1: the story of hydrogen is one where there just seems
Speaker 1: to be this fever pitch of excitement in the industry
Speaker 1: and then seeing whether or not it's actually going to
Speaker 1: take hold. So let's talk a little bit about the
Speaker 1: physical properties or the physics of hydrogen so that we
Speaker 1: can understand kind of what we're dealing with before we
Speaker 1: think about the future potential that it has and maybe
Speaker 1: why there is all of this buzz. So with hydrogen,
Speaker 1: where should we start? Should we start with the transport
Speaker 1: or let's start with where we get it from? How
Speaker 1: does one find or create hydrogen currently? That's a really
Speaker 1: good question, So there's at least two two ways to
Speaker 1: answer this. It turns out that hydrogen is by far
Speaker 1: the most abundant element in the universe, and I imagine
Speaker 1: that many people listening to this podcast will have probably
Speaker 1: heard that somewhere. But about three quarters of all the
Speaker 1: chemical elements or you know, the particles in the universe
Speaker 1: are hydrogen particles, but on Earth hydrogen does not appear
Speaker 1: in its pure form in the Union. In the rest
Speaker 1: of the universe, hydrogen is basically what makes up stars
Speaker 1: together with helium, but on Earth we've got no stars.
Speaker 1: Hydrogen is locked in other chemicals because it's a very
Speaker 1: reactive gas, so it's either locked in water, so that's
Speaker 1: H two oh. Familiar with that one, Yeah, yeah, drink
Speaker 1: that every day. And hydrocarbons, which basically is another word
Speaker 1: for fossil fuels, So example would be methane H four
Speaker 1: another more complex hydrocarbon molecules from which then we can
Speaker 1: extract hydrogen. So if we were to extract hygen from water,
Speaker 1: then you need to use this process called electrolysis, which
Speaker 1: means you pass electricity through water in a device that's
Speaker 1: called an electrolyzer. On one end, hydrogen comes out. On
Speaker 1: another end, oxygen comes out, so the H two and
Speaker 1: the oh to come on on separate ends. If you
Speaker 1: were to extract hydrogen from hydrocarbons such as methane, and
Speaker 1: that's how we extract the vast majority of hydrogen today,
Speaker 1: then for methane you could use this technology gold steam
Speaker 1: methane reforming, which means you're bombarding methane molecules with very
Speaker 1: hot steam and unlocking the hydrogen that way. But what
Speaker 1: that does mean is that given that methane is the
Speaker 1: hydrocarbon c H four, you've got the carbon molecules attaching
Speaker 1: to oxygen and leaving a CEO to gas. So then
Speaker 1: the hydrogen that we use today, and we use a
Speaker 1: lot of hydrogen today something we can talk about as well,
Speaker 1: not for energy, we're using it for the chemistry of it.
Speaker 1: We're using a lot of it that's very corton intensive,
Speaker 1: So let's go into that. So that we're talking about
Speaker 1: this hydrogen as a potentially clean burning fuel, but the
Speaker 1: way that we're producing it today, it's not there yet.
Speaker 1: And you were mentioning that there are uses today where
Speaker 1: the chemical properties are critically important. So it's not being
Speaker 1: used as a source of energy, it's being used for
Speaker 1: something else. Where are we currently using hydrogen where is
Speaker 1: it critical? There are really three sectors today that use
Speaker 1: the majority of the hydrogen that we produce. That is
Speaker 1: oil refining or hydrogen is used for sulfur removal. Then
Speaker 1: it's ammonia, which is used for fertilizers. So ammonia is
Speaker 1: n H three, so it's one nitrogen and three hydrogen molecules,
Speaker 1: so you cannot produce ammonia without hydrogen. And then there's
Speaker 1: a methanol which is c H three oh h. Again
Speaker 1: it's a chemical that's used for many different things. Cannot
Speaker 1: produce it physically without hydrogen because it contains hydrogen. So
Speaker 1: that's really the three biggest sectors that use hydrogen today.
Speaker 1: But then hydrogen is produced from mostly steam methane reforming
Speaker 1: releasing that CEO two, and therefore it's not a solution
Speaker 1: for the carbonization, which is how hydrogen is being presented
Speaker 1: a lot today, but it's actually part of the problem
Speaker 1: that will itself need to be solved. So there's the
Speaker 1: uses today and then the potential for tomorrow. About how
Speaker 1: much hydrogen, you're saying, there's quite a bit of it.
Speaker 1: How much hydrogen are we already using today? So if
Speaker 1: you sum up the hydrogen that we use as pure
Speaker 1: hydrogen nos H two and the hydrogen we use mixed
Speaker 1: in with with other gases like sing gas, for example,
Speaker 1: we're using about a hundred and twenty million tons of
Speaker 1: hydrogen per year. Now when I heard this number for
Speaker 1: the first time, I just thought, what what does that mean?
Speaker 1: HydroD and twenty million tons sounds like a lot. But
Speaker 1: but how do you even quantify? Is how do you
Speaker 1: visualize it? And so I ransom calculations. In terms of
Speaker 1: the amount of energy that that this hydrogen contains, it's
Speaker 1: about half of the amount of energy that the US
Speaker 1: consumes every year in the form of natural gas. So
Speaker 1: it's a lot. And if you were to fit that
Speaker 1: hydrogen into a volume, it would be about one thousand,
Speaker 1: three hundred cubic kilometers, which is roughly the equivalent of
Speaker 1: about eleven dead seas. So it's a heck of a
Speaker 1: lot of hydrogen that we're already using today eleven dead
Speaker 1: seas like that. So okay, so we've got hydrogen that
Speaker 1: we need to create. How about the naturally occurring hydrogen.
Speaker 1: I was at a conference last week or somebody at
Speaker 1: this sudden they said, Oh, there might be hydrogen that
Speaker 1: we don't actually have to produce and that we can
Speaker 1: just naturally extract. Is this actually the case is? There's
Speaker 1: got a lot of potential. So if you serve around
Speaker 1: the internet, you will find that even you you will
Speaker 1: find even academic papers that talk about having discovered the
Speaker 1: accumulations of natural hydrogen so H two in its pure form.
Speaker 1: Some of them even claimed to be using that hydrogen
Speaker 1: in in some form or shape for energy. But they're
Speaker 1: very small examples for the moment. So as far as
Speaker 1: we can tell right now, most hydrogen on Earth is
Speaker 1: locked into water or hydrocarbons. There might be some deposits
Speaker 1: of pure hydrogen, we just haven't found them to be
Speaker 1: large enough to really be economically viable. Of course, if
Speaker 1: we do, should that happen, then that could, you know,
Speaker 1: change the game quite quite significantly. But for the moment,
Speaker 1: it would appear that these are more kind of an
Speaker 1: anecdotal piece of evidence rather than a sign of something bigger. Okay,
Speaker 1: so we're gonna have to make it, and we're gonna
Speaker 1: get back into that in a second. But let's let's
Speaker 1: talk a little bit about the potential of what it
Speaker 1: is that we want to use it for. So you
Speaker 1: brought up transport in the past, and then you're talking
Speaker 1: about chemical processes, but the real potential here has to
Speaker 1: do with some of the hard to abate sectors, and
Speaker 1: simply put, the hard to abate sectors and the ones
Speaker 1: where we are having a hard time figuring out how
Speaker 1: to decarbonize them. Which are these There's a lot of them,
Speaker 1: to be honest, Uh, pretty much every sector is hard
Speaker 1: to abate when when you think about it, really we
Speaker 1: could talk about transport, especially planes and ships. Not getting
Speaker 1: back the carbonized is going to be a challenge. We
Speaker 1: could talk about power generation if you're being a research
Speaker 1: which show that if you want to decarbonize your electricity
Speaker 1: grid with just solar, wind and batteries, then you can
Speaker 1: only get up to maybe carbon free, but then you
Speaker 1: kind of gets stuck and you need some other technology
Speaker 1: to get you all the way to carbon free, and
Speaker 1: hydrogen could potentially be that, but there are other candidates too.
Speaker 1: Then you could be using hydrogen as a source of
Speaker 1: heat because it burns, and it burns very very hot,
Speaker 1: So you could use it for steel production, cement production,
Speaker 1: aluminum production, you could use it to heat buildings the
Speaker 1: ones that we that that we live in or working.
Speaker 1: And then of course hydrogen itself already works, already exists
Speaker 1: as a feedstock for all those uh, sectors I've already
Speaker 1: talked about, like all of refining, like fertilizers, some plastics
Speaker 1: and these sectors well also need to be decarbonized with
Speaker 1: clean hydrogen. So I have a friend who is involved
Speaker 1: in developing hydrogen ferries at the moment, and I referenced
Speaker 1: to the very big ending of the show the Zeppelin,
Speaker 1: which is probably one of the most common things that
Speaker 1: we know about. It's a very flammable gas. Was that
Speaker 1: one of the main barriers that is standing in the
Speaker 1: way of application in some of these industries or does
Speaker 1: it have much more to do with the economics. I
Speaker 1: would say it's mostly in most sectors, it's going to
Speaker 1: be the economics more than it is the flammability. But
Speaker 1: there certainly are some challenges when it comes to hydrogen safety.
Speaker 1: It's not like we're not using flammable gases right now.
Speaker 1: Natural gas which you probably use at home to to
Speaker 1: heat your water and cook my porridge this morning, with
Speaker 1: very flammable gas itself, but not not as flammable or
Speaker 1: you know, it just has different properties. Hydrogen as different
Speaker 1: properties from natural gas, just to put it simply, And
Speaker 1: there have been a couple of studies that try to
Speaker 1: compare the safety of hydrogen versus natural gas, and most
Speaker 1: of them will tell you that the hydrogen would tend
Speaker 1: to you know, holding every every other variable constant would
Speaker 1: tend to cause more injuries or more explosions than natural gas.
Speaker 1: So that's certainly something that will need to consider where
Speaker 1: we're going to use this hydrogence. So if you're going
Speaker 1: to be using your home for heating and for cooking,
Speaker 1: of course taking this into account is going to be
Speaker 1: absolutely essential you're going to be using that safely. I mean,
Speaker 1: that makes a lot of sense. So may within these
Speaker 1: hard to abate sectors may end up lending itself better
Speaker 1: to some than others. But let's talk a little bit
Speaker 1: about the emissions or lack thereof, associated with hydrogen for
Speaker 1: the hard to abate sectors. So this question that needs
Speaker 1: to be answered as it's currently produced. It's not a
Speaker 1: net zero option. What needs to happen in order for
Speaker 1: it to be made without emitting CEO two. So today
Speaker 1: I've already said it. Most hydrogen is produced from methane
Speaker 1: using steam methane reforming. Basically, methane is natural gas that
Speaker 1: releases quite a lot of c O two. So for
Speaker 1: every kilogram of hydrogen you produce, you get about nine
Speaker 1: kilograms of c O two. If you're producing this hydrogen
Speaker 1: the standard way, which is what's called gray hydrogen from
Speaker 1: steam methane reforming. Now, the first thing you can do,
Speaker 1: and that's the thing that a lot of companies who
Speaker 1: happen to own these production facilities for gray hydrogen are
Speaker 1: thinking about, is you could put a CCS carbon capture
Speaker 1: and storage functionality on your on your gray hydrogen production,
Speaker 1: then you could try to capture and store that carbon. Now,
Speaker 1: you're unlikely to ever be able to capture of the carbon.
Speaker 1: We tend to assume that typically six of your emissions
Speaker 1: would be captured. Now, there have been some discussions recently
Speaker 1: after a paper was published by academics from Cornell and
Speaker 1: Stanford Universities that the emissions of blue hydrogen with CCS
Speaker 1: might be a lot higher than we had originally thought,
Speaker 1: but regardless, they would probably blue hydrogen would probably result
Speaker 1: in in a less emissions than gray. But the whole
Speaker 1: point in a lot of countries these days is getting
Speaker 1: down to net zero. So you know, blue hydrogen capturing
Speaker 1: of emissions emissions is still not gonna get you there.
Speaker 1: So then your other options would be to use electrolysis
Speaker 1: that's powered with electricity. That's uh that doesn't release any emissions,
Speaker 1: so of course that could be grain hydrogen produced from
Speaker 1: electrolysis with renewables. It could be hydrogen produced from electrolysis
Speaker 1: with nuclear power, for example, So those would be your
Speaker 1: options for carbon free hygen. There are other technologies that
Speaker 1: could produce hydrogen. Okay, so you started to get into
Speaker 1: the Crayola box of colors on hydrogen. So let's just
Speaker 1: spell that out for everybody, given that those listening today
Speaker 1: want to know the basics of this industry. So green
Speaker 1: is the one that I'm most familiar with. Green is
Speaker 1: the renewable electricity produced hydrogen. But let's let's go around
Speaker 1: the wheel, so turquoise is next. Yeah, well, I would
Speaker 1: take a step back first and just make it very
Speaker 1: clear that hydrogen itself is a colorless gas. So hydrogen
Speaker 1: has absolutely no color in the first place, and these
Speaker 1: colors are only used as a shorthand to identify how
Speaker 1: the hydrogen was produced. Some irony here in the color
Speaker 1: wheel for hydrogen. It's completely colorless, yet we want to
Speaker 1: use colors to explain it exactly. So you're right, And
Speaker 1: the other colors that are out there include turquoise hydrogen,
Speaker 1: which is a no, not not a standard way to
Speaker 1: produce hydrogen today. It's quite uh, you know, it's quite
Speaker 1: a nascent, quite a new technology where basically it's methane pyrolysis.
Speaker 1: What you end up with is a hydrogen black carbon powder.
Speaker 1: So that's kind of interesting that you end up with
Speaker 1: carbon not as carbon dioxide, but as as a solid.
Speaker 1: Then there's blue hydrogen, which we've already talked about, So
Speaker 1: that's hydrogen from fossil fuels, the same may we produce
Speaker 1: it today, but with carbon capture and storage. Okay. And
Speaker 1: then there's the gray, which you also referred to, which
Speaker 1: includes ccs. What else goes into the gray category? So
Speaker 1: great gray is hydrogen that is produced from fossil fuels
Speaker 1: waited out carbon capture and storage. That's it. It's just
Speaker 1: made made without any real abatement technology associated with it.
Speaker 1: So that's probably the most polluting and that's how we
Speaker 1: produce most of our hydrogen today. And then we've moved
Speaker 1: up to well, red is the color often associated sometimes
Speaker 1: with nuclear so is that the color that's associated with
Speaker 1: hydrogen there? This is really where it starts getting a
Speaker 1: bit hazy. I wonder if hazy is a color too
Speaker 1: but it is is the color that B and e
Speaker 1: F likes to use to show nuclear in our reports.
Speaker 1: But typically people who talk about hygiene from nuclear would
Speaker 1: use the color pink. Oh okay, so we need to
Speaker 1: we need to think about our colors slightly differently. And
Speaker 1: then what about yellow and purple? And I mean, we're
Speaker 1: got more colors to get through. There's all these different colors. So,
Speaker 1: for example, purple and orange are both sometimes used as
Speaker 1: colors to say that you're using you're producing hydrogen from
Speaker 1: biomass gasification, which technically could also be another way of
Speaker 1: producing CEO two free hydrogen if you've got a sustainable
Speaker 1: source of biomass. No, I like, I'm saying, these colors
Speaker 1: they get hazier and hazier. You know, why does it
Speaker 1: have to be orange and purple? In are we are
Speaker 1: we burning orange? Peel and lavender? Or you know? Is
Speaker 1: it for every every different color of feats on the
Speaker 1: burning we're getting a different we're getting We're using a
Speaker 1: different color. So you know, at B and EF we
Speaker 1: prefer to away from using colors and just say no
Speaker 1: hydrogen produced from bringewable electricity even better, hydrogen produced from
Speaker 1: solar PV electricity, which is obviously more accurate than brain hydrogen,
Speaker 1: So we prefer to use the you know, the more
Speaker 1: accurate term of nif. That does lead me slightly less
Speaker 1: confused when we do that, or when others in the
Speaker 1: industry call it out, because otherwise it feels a little
Speaker 1: bit too like a you know, session with barbaras and painting. Okay,
Speaker 1: so here we go. Let's talk about the properties of hydrogen.
Speaker 1: So let's bring that down into simple parts. You mentioned
Speaker 1: that it's invisible, it's also odorless. What are the other
Speaker 1: properties of hydrogen that we should know about. There's a
Speaker 1: whole lot of them. It's not naturally occurring, so that's
Speaker 1: something we've already discussed. On Earth, you have to extract
Speaker 1: it from from something. It's very light. So one of
Speaker 1: the things that you might that a lot of proponents
Speaker 1: of hydrogen might tell you, or that you know, if
Speaker 1: you read a random article online, you might might read
Speaker 1: that hydrogen is the most energy dense element in the
Speaker 1: universe or on Earth, which is pretty much true per kilogram.
Speaker 1: So if you if you take all the elements and
Speaker 1: you you look at the per kilogram, which one has
Speaker 1: the most energy, then hydrogen is definitely at the top.
Speaker 1: But the challenge is that if you want to fit
Speaker 1: that kilogram into a reasonable amount of space, that's where
Speaker 1: you really run into problems. So hydrogen takes up about
Speaker 1: three to four times the space compared to natural gas
Speaker 1: to store the same amount of energy, so that really
Speaker 1: causes some challenges when it comes to storing and moving
Speaker 1: hydrogen around in in the tank. The hydrogen is a
Speaker 1: low boiling point, so one of the ideas to shrink
Speaker 1: the volume of hydrogen is to liquefy it by cooling
Speaker 1: it down, the same way you do with natural gas
Speaker 1: to form l n G. But natural gas cools down
Speaker 1: that it becomes a liquid that minus one sixty two
Speaker 1: degrees hydrogen becomes a liquid that minus two hundred and
Speaker 1: fifty three degrees celsius. Wow, that is a level of
Speaker 1: cold I am not even considered. Yeah, it turns out
Speaker 1: that the lowest temperature that you can physically achieve is
Speaker 1: only about twenty degrees celsius below that, so we're talking
Speaker 1: super extreme code and therefore it takes a lot of
Speaker 1: energy to actually reach that kind of temperature. Takes about
Speaker 1: the energy and the hydrogen itself just to liquefy it.
Speaker 1: So there's a lot of inefficiencies that are associated with
Speaker 1: hydrogen if you want to liquify it or if you
Speaker 1: just want to produce hydrogen. Just a simple production of hydrogen,
Speaker 1: you need about fifty three two fifty seven kilovered hours
Speaker 1: of electricity to produce a kilogram of hydrogen, and that
Speaker 1: kilogram of hydrogen called obtains depending on how you count it,
Speaker 1: thirty three to thirty nine point four kilo with hours
Speaker 1: of energy, So you already end up with with with
Speaker 1: a pretty significant of thirty two percent loss at least
Speaker 1: with just producing hydrogen from electricity. And then if you
Speaker 1: were to take this electricity dec I didn't make electricity
Speaker 1: from it again, which is the idea in some places,
Speaker 1: you have another fifty loss, So then you basically end
Speaker 1: up with just thirty percent of the energy that you
Speaker 1: started with back in the form of electricity. So that's
Speaker 1: a pretty inefficient way of of of using energy. So
Speaker 1: you mentioned low efficiency, and we talked a little bit
Speaker 1: earlier about how combustible it is, and it's not the
Speaker 1: only combustible thing we use currently, so that's one thing.
Speaker 1: And then also you mentioned that it's reactive, so their
Speaker 1: chemical reactions. But when you were explaining just now several
Speaker 1: of these parts of this gas that we're now kind
Speaker 1: of getting a better picture of what its properties are,
Speaker 1: you started going into various units, not something that you
Speaker 1: can also explain. So how do we given the it's
Speaker 1: gas or you can also be a liquid and also
Speaker 1: has an energy intensity that we need to consider? How
Speaker 1: do people talk about hydrogen when they talk about what
Speaker 1: units are used to apply to it? Yeah, this is
Speaker 1: really tricky because you know, at BNF, we're at least
Speaker 1: most of us would be used to the units used
Speaker 1: for electricity, which typically would be kilo with hours, but
Speaker 1: hydrogen is a is a bit more complicated than that.
Speaker 1: So there are at least three ways in which you
Speaker 1: could talk about hydrogen and or express hydrogen in different units.
Speaker 1: So you could talk about hydrogen in terms of the weight.
Speaker 1: So I talked about a kilogram of hydrogen, So that's
Speaker 1: one way in which you can talk about I mentioned
Speaker 1: be used one hundred seventeen million tons or one D
Speaker 1: twenty million tons per year of hydrogen, so that's kilograms
Speaker 1: tons units of weight. You could also talk about hydrogen
Speaker 1: and in terms of the volumes I mentioned those hundred
Speaker 1: and twenty million tons take up the volume roughly equivalent
Speaker 1: to the two eleven dead seas. Now things get a
Speaker 1: bit more complicated there though, because hydrogen is a gas,
Speaker 1: and because it's a gas, how much volume it takes
Speaker 1: up actually differs based on the pressure and the temperature.
Speaker 1: So then you need to define if you're talking about
Speaker 1: hydrogen in terms of its volume, you need to define
Speaker 1: what pressure and temperature you're talking about at in order
Speaker 1: to define the volume accurately. So then the volumetric units
Speaker 1: used for hydrogen would be not cubic meters but normal
Speaker 1: cubic meters, which would be one cubic meter of hydrogen
Speaker 1: at zero degrees celsius and one atmospheric pressure. If you
Speaker 1: want to be even confused even more, there's this other
Speaker 1: unit called standard cubic meter of hydrogen, which is cubic
Speaker 1: meter of hydrogen at one atmospheric pressure. That's the same,
Speaker 1: but fifteen degrees celsius. So that means you've got a
Speaker 1: bit less hydrogen in that cubic meter because it's warmer.
Speaker 1: And then finally you could talk about hydrogen in terms
Speaker 1: of its energy content. So I talked about one kilogram
Speaker 1: of hydrogen containing thirty three kilo hours of energy if
Speaker 1: you're talking at the low heating value, just a whole
Speaker 1: a whole other kind of worms that probably not even
Speaker 1: open at this point, or thirty nine point four kilo
Speaker 1: what hours at the high heating value. So so you
Speaker 1: can talk about that kilogram of hydrogen having an energy content.
Speaker 1: So then when you burn that energy, burn that hydrogen
Speaker 1: or process it's saying the fuel sell, then you can
Speaker 1: end up with with the energy from that that that
Speaker 1: hydrogen happens to contain. So there's these three different ways.
Speaker 1: Of course, energy units would be kiloed hours or the
Speaker 1: most basic units of course is the jewel for energy. Okay,
Speaker 1: there's a lot of different ways to measure this, so
Speaker 1: basically look it up when you're when you're measuring hydrogen. Okay,
Speaker 1: So we're talking about differ friend properties that hydrogen has
Speaker 1: and also how we measure it, which I imagine inter
Speaker 1: relates very much with one of the challenges that you
Speaker 1: highlighted early on, which is transporting it, so not just
Speaker 1: storing it, transporting and given it takes up so much space,
Speaker 1: how is it currently transported? What are our what are
Speaker 1: our options? So there's different ways in which you can
Speaker 1: transport hydrogen. They're pretty similar to the ways in which
Speaker 1: you can transport any other gas, like natural gas. So
Speaker 1: hydrogen today typically is transported either using trucks, So then
Speaker 1: you would need to compress it in that pressurized container.
Speaker 1: Assuming you've got the same pressure, same temperature, you need
Speaker 1: about three to four compressed hydrogen trucks compared to one
Speaker 1: truck with compressed natural gas to transport the same amount
Speaker 1: of energy. So that means, of course transporting hydrogen costs
Speaker 1: more money than transporting natural gas. Very need of energy transported.
Speaker 1: The same applies if you were to transport hydend by ship,
Speaker 1: which is not done a lot today, unlike natural gas,
Speaker 1: which is transport is energy quite quite commonly. You tend
Speaker 1: to produce it and then ship it kind of within
Speaker 1: the same continent today, yes, and of course then you
Speaker 1: can pipe it. You can send it via pipeline. That
Speaker 1: is by far the most efficient, the cheapest way if
Speaker 1: you have a large volume of hydrogen to transport. So
Speaker 1: they're about four thousand or five thousand kilometers of hydrogen
Speaker 1: pipelines around the world today, that's several orders of magnitude
Speaker 1: less than the natural gas pipeline network, So it's it's very,
Speaker 1: very very tiny compared to natural gas. Now we're talking
Speaker 1: about these natural gas pipelines. One of the things that
Speaker 1: are in some of our forecasts is that the natural
Speaker 1: gas industry will need to decrease some if we're actually
Speaker 1: going to meet some of these emissions targets that many
Speaker 1: countries have outlined. Is it even useful and economic to
Speaker 1: think about the natural gas infrastructure as a potential solution
Speaker 1: for hydrogen? I think it depends on the and use
Speaker 1: of the hydrogen, so on the economic viability of hydrogen
Speaker 1: in different sectors. If you ask companies that today transport
Speaker 1: natural gas, say in European natural gas transmission operators, especially
Speaker 1: if they happen to be in countries with net zero targets.
Speaker 1: So again, European natural gas operate pipeline operators, they are
Speaker 1: pretty keen on converting their pipelines to carry hydrogen. It
Speaker 1: can be done. It costs some money, but it costs
Speaker 1: less money than if you were to build a new
Speaker 1: pipeline altogether. But of course the question is, once you're
Speaker 1: transporting hydrogen instead of natural gas, who's buying that hydrogen?
Speaker 1: So are you using that pipeline to to to its
Speaker 1: full extent, and that really depends on the economics of
Speaker 1: the final users. So if you're using it for industrial
Speaker 1: purposes or some of those sectors that I've already said
Speaker 1: are using hydrogen today already, then that might make sense.
Speaker 1: But if you want to pipe that hydrogen to you know,
Speaker 1: every gasoline station in the world because you think that
Speaker 1: there's going to be a large demand for for hydrogen
Speaker 1: cars in the future, for hydrogen from cars in the future,
Speaker 1: then that might not works as well. So it really
Speaker 1: depends on the final use. Now for a very short break,
Speaker 1: stay with us. Let's get into the economics of hydrogen,
Speaker 1: and this is something that we have been really do
Speaker 1: like to spend some time doing. We've got several hydrogen
Speaker 1: relevant pathways and our New Energy Outlook, and for the uninitiated,
Speaker 1: this is a report that goes out to the year
Speaker 1: where we look at the different possible scenarios for the
Speaker 1: future of the energy and the energy transition. So within
Speaker 1: this there are several variables that may impact the cost
Speaker 1: of hydrogen. You mentioned before that in some circumstances you're
Speaker 1: only you're getting much less energy out although you can
Speaker 1: store it. Then what you put into it, Where does
Speaker 1: this become economically viable? And what are the different inputs,
Speaker 1: how they sit now and for the future. And I
Speaker 1: guess let's start. Let's start with renewable electricity, because that
Speaker 1: I think is the space where B and E. F
Speaker 1: maybe first got extremely interested in this space. Let's start
Speaker 1: with with gray hydrogen because that's the one that we're
Speaker 1: using today the most. So gray hydrogen today, if you
Speaker 1: were to produce it from relatively cheap natural gas, would
Speaker 1: cost you around a dollar per kilograph. So that's really
Speaker 1: a benchmark that the low carbon or zero carbon hydrogen
Speaker 1: like hydrogen from renewables is going to have to undercut
Speaker 1: in order to outcompete this, uh, gray hydrogen that we
Speaker 1: use today. So a key question that we keep asking
Speaker 1: ourselves is when will green hydrogen from renewable be able
Speaker 1: to outcompete hydrogen from fossil fuels with and without common
Speaker 1: capture and storage and telling the future is difficult, but
Speaker 1: I think you've probably got a good guess. Yeah, So
Speaker 1: there are really three factors in our view. I mean,
Speaker 1: there's there's an infinite amount of factors, but really three
Speaker 1: key factors that determine the cost of hydrogen from renewables.
Speaker 1: The most important one of them is the cost of
Speaker 1: the renewable electricity that you're using to produce the hydrogen.
Speaker 1: Then there's the cost of the electrolyzer, which is that
Speaker 1: device that takes water and electricity and produces hydrogen oxygen.
Speaker 1: And then it's the capacity factor off that electrolyzer. So
Speaker 1: how many hours in a year is that electual electrolyzer operating,
Speaker 1: which of course does not have to be all the
Speaker 1: time if you're powering it from renewab electricity. So starting
Speaker 1: with renewable electricity, those costs, of course, that's something that
Speaker 1: the ANF has been following since we started back into
Speaker 1: a thousand four. Costs of PB have fallen so much
Speaker 1: that by now it's the cheapest source of electricity if
Speaker 1: you are to build a new power plant in most
Speaker 1: of the world, and we expect these costs to continue
Speaker 1: falling so roughly. For ever redoubling in the cumulative installed
Speaker 1: capacity of solar PV modules, we would expect about reduction
Speaker 1: in their cost. For onshore wind the story is very similar.
Speaker 1: The cost reduction curve is the experienced curve is not
Speaker 1: as steep as for solar, but the cost are set
Speaker 1: to continue falling, so renewable costs definitely coming down, and
Speaker 1: already pretty cheap electorallyzer costs. There's a really that's a
Speaker 1: really interesting story. In China today electorallyzes cost about less
Speaker 1: than what they cost in Europe and in North America,
Speaker 1: which kind of shows us. Now, if you're producing alcohol
Speaker 1: and electualized, so there's a simplest technology for for hydrogen production.
Speaker 1: Forellectualizes at scale, you've got large customers and cheap production.
Speaker 1: You can already get this low. So it's scale that's
Speaker 1: making this so much cheaper. It's the scale. It's cheaper labor.
Speaker 1: Of course in China. China, the same way that China
Speaker 1: today produces the cheapest alkaline electualizes also produces the cheapest
Speaker 1: solar channels. That's why it's producing eighty percent of all
Speaker 1: solar solar modules in the world. So those costs that
Speaker 1: we're seeing in China are not yet necessarily available in
Speaker 1: the rest of the world. But we're expecting these costs
Speaker 1: to converge one way or another. Either we're going to
Speaker 1: see Chinese companies take over the world the same way
Speaker 1: they did with solar selling it to everyone yep, exactly,
Speaker 1: or we could see Western companies managing to reduce their
Speaker 1: costs enough to be able to compete with with Chinese companies.
Speaker 1: That we're starting to see signs of both of this
Speaker 1: happening at the same time. So it's definitely we're still
Speaker 1: not not being not able to say which one of
Speaker 1: these possible scenarios might happen, but electrolyzing costs definitely coming down.
Speaker 1: Even those costs that we're seeing today in China still
Speaker 1: have room to fall even further. And then finally you've
Speaker 1: got those capacity factors, So how many percent of the year,
Speaker 1: how many hours in the year is that electrolyzer running,
Speaker 1: which of course most importantly depends on what is powering it.
Speaker 1: So if you're if you've got a one hundred megawat
Speaker 1: electoralizer connected to a one hundred mega what solar p
Speaker 1: D plant, then that electrolyzing is going to be running
Speaker 1: in exactly the same hours as that pp plan, So
Speaker 1: it might be running twenty of the time if you're
Speaker 1: if you're say in Japan we're based today, could be
Speaker 1: a bit more. If you're in sunnier places, could be
Speaker 1: a bit less. If you're in less sunny places. But
Speaker 1: you could optimize this further. You could combine your solar
Speaker 1: with wind. You could build a bigger solar factor of
Speaker 1: the solar generated. Then you've got your electroalizer, and then
Speaker 1: you're increasing your capacity factors. Of said it's an optimization exercise.
Speaker 1: The bigger your generated, the higher your capital expenses. But
Speaker 1: then the more you hyd the more hydrogen you also produce.
Speaker 1: So the question is, you know, what's the relative size
Speaker 1: of your power plants to your electrolyze, But that can
Speaker 1: definitely be optimized. So then you could breach capacity factors
Speaker 1: upwards of safe fifty percent for renewable hydrogen. And is
Speaker 1: this in the near term or is this sort of
Speaker 1: fifteen years in the future. You think that these technologies
Speaker 1: and cost clients could be optimized. Well, so this optimization
Speaker 1: it's already being done. A lot of the projects that
Speaker 1: are being announced today there already planning to use solar
Speaker 1: and wind, which conveniently, in many locations, wind tends to
Speaker 1: blow more at night than during the day, So then
Speaker 1: when your solar plant is shut down because it's dark,
Speaker 1: your wind plant is generating a bit more. And then
Speaker 1: some are planning to add batteries as well, and of course,
Speaker 1: the cost of all of this is coming coming down,
Speaker 1: which means that oversizing your renewables facility compared to your
Speaker 1: electoralizer is going to become become the standard. In in
Speaker 1: our opinion, it's already happening. When we're looking at the
Speaker 1: color wheel of hydrogen and we're thinking about what the
Speaker 1: future cost of clients are. We've talked about the gray
Speaker 1: hydrogen or the without any sort of carbon debatement, and
Speaker 1: then we've talked about the green and the renewable energy
Speaker 1: focused hydrogen. What some of the potential is there? What
Speaker 1: about other areas? Are there cost declients for nuclear and
Speaker 1: this pink red, whatever color you want to call it,
Speaker 1: for some of the other areas that are given. There's
Speaker 1: so many different ways to make hydrogen, so that's something
Speaker 1: that we're looking at right now. Nuclear hydrogen produced from
Speaker 1: nuclear would have the advantage of running pretty much constantly,
Speaker 1: so you're electoralizer would be running, you know, if not
Speaker 1: one of the time, then it would have very little
Speaker 1: downtime compared to if it's running on on renewables. Because
Speaker 1: nuclear powers producing constantly, but nuclear power is pretty expensive,
Speaker 1: so in our view, and we're just writing a report
Speaker 1: on this, so I can't really go into too much
Speaker 1: depth until we've published it. For for hydrogen from fossil fuels,
Speaker 1: the most important factor is the cost of the fossil fuel.
Speaker 1: So if fossil fuels get really really cheap for some reason,
Speaker 1: then hydrogen from fossil fuels with or without ccs could
Speaker 1: get cheaper. But of course more likely than not, we're like,
Speaker 1: we're going to see some form of carbon pricing, etcetera.
Speaker 1: So if anything, hygroen from fossil fuels is probably going
Speaker 1: to get more expensive rather than cheaper over time. So
Speaker 1: when you when you sum it all up, we've got
Speaker 1: hydrogen from renewables, which today is by far more expensive
Speaker 1: than producing hagron from fossil fuels. That's why we're producing
Speaker 1: it from fossil fuels today. But by twenty thirty, in
Speaker 1: most countries that we've modeled, or really all the countries
Speaker 1: that we've modeled, it will we think it will be
Speaker 1: possible to produce hasian from renewables cheaper than hydrogen from
Speaker 1: fossil fuels with common capture and storage. And soon after that,
Speaker 1: and certainly before we think that one dollar per kilogram,
Speaker 1: which it costs today in the cheapest, cheapest countries, cheapest
Speaker 1: places to produce gray hydrogen, we'll we'll see green hydrogen
Speaker 1: cheaper than that in a lot of a lot of countries.
Speaker 1: So every country of Model twenty countries and all of them,
Speaker 1: it will be cheaper to produce hydron from renewable stent
Speaker 1: from fossil fuels. So, Martin, you mentioned carbon prices, and
Speaker 1: we've just discussed the economics of the production side of things.
Speaker 1: But within the carbon prices space that one and what
Speaker 1: other mechanimsidence may exist over on the policymaker side to
Speaker 1: try and accelerate the adoption of hydrogen should we believe
Speaker 1: that this is an important part of decarbonization for the
Speaker 1: hard to abad sectors. So carbon prices are absolutely essential.
Speaker 1: Without carbon pricing, but we're not going to see hydrogen
Speaker 1: demand a cup in most places. And there aren't many
Speaker 1: countries today with very high carbon prices or many markets
Speaker 1: the the EU, the UK, and the u e t S.
Speaker 1: We we've seen some record prices this year, you know,
Speaker 1: fifty sixty dollars per ton, potentially rising even further by
Speaker 1: twenty thirty. They could they could get above a hundred
Speaker 1: hundred dollars per ton in Canada. They could get above
Speaker 1: a hundred dollars per ton by twenty thirty, assuming that
Speaker 1: the current government stays in power as an election in Canada.
Speaker 1: I don't know if it's going to happen before or
Speaker 1: after this UH this UH podcast is out, but it
Speaker 1: will determine the economics of hydrogen as well, because without
Speaker 1: the carbon price of at least I would say a
Speaker 1: hundred dollars per ton c O two, it's unlikely that
Speaker 1: we would see hydrogen from renewables or any hydrogen being
Speaker 1: competitive against existing fossil fuels. That's why we're using fossil
Speaker 1: fuels today in most of these sectors, and that's why
Speaker 1: they're had to abate, so carbon prices will be essential,
Speaker 1: and there aren't that many markets today that are on
Speaker 1: track to have carbon prices high enough for hydrogen to
Speaker 1: be competitive. Okay, So Martin, you identify seven signposts that
Speaker 1: we should be monitoring as we are looking at hydrogen
Speaker 1: development and the potential that it could have in the future.
Speaker 1: And there are three that you specifically called out as
Speaker 1: areas where we have made some progress. So why don't
Speaker 1: we go into those in more details. So the three
Speaker 1: that I've pulled out are not necessarily the most critical ones,
Speaker 1: so they're the ones that we've seen progress on. So
Speaker 1: when we published our first market outlook on hydrogen in March,
Speaker 1: we concluded that this time is different for hydrogen. So
Speaker 1: you know, I talked at the beginning about this, these
Speaker 1: different waves throughout history of of use, of interest in
Speaker 1: using hydrogen for sake cars or for its energy, and
Speaker 1: how they never really deialized, and we concluded in this
Speaker 1: time is different, but we're not yet there, and to
Speaker 1: get there, we would need these seven signposts that we
Speaker 1: would need to achieve these seven signposts in order for
Speaker 1: to maximize the use of hydrogen. And what really surprised
Speaker 1: us is that since March when we published that Market outlook,
Speaker 1: three of these signposts have seen significant progress. And the
Speaker 1: first one are net zero climate targets. So by now,
Speaker 1: are as of June of this year, seventy of global
Speaker 1: emissions were covered by some form of net zero either
Speaker 1: legislative target or at least under official discussions to legislate
Speaker 1: some net zero target. So that's that's a lot of
Speaker 1: a lot of emissions that are already under under a
Speaker 1: netzero target. Now, why isn't it real important as opposed
Speaker 1: to say reduction which I'm based out of Japan. Japan
Speaker 1: had an eighty percent emissions reduction target before it announced
Speaker 1: the net zero target at the end of last year.
Speaker 1: Because we mentioned at the beginning, or you mentioned in
Speaker 1: the beginning, hydrogen is really could really have potential in
Speaker 1: those hard to abate sectors, the hardest to abate ones.
Speaker 1: So if you reduce your emissions by eight then guests
Speaker 1: which once you would not be touching it would be
Speaker 1: exactly those that have the highest potential for hydrogen. So
Speaker 1: if you're moving from eight percent reduction to a hundred
Speaker 1: percent reduction and emissions, that's where really the potential for
Speaker 1: hydrogen is multiplied quite quite significant. And as we head
Speaker 1: into Cup in November in Glasgow, this really does take
Speaker 1: center stage because, as you pointed out, an increasing number
Speaker 1: of countries and I don't think we've probably seen the
Speaker 1: finish line on this. We definitely wouldn't get to the
Speaker 1: goals of the IPCC has if we've reached the finish line.
Speaker 1: So let's um, let's see what happens. Okay, So then
Speaker 1: the other signs of life that you've seen here. So
Speaker 1: another one we said is that countries would need to
Speaker 1: set up We called it targets with investment mechanisms. Really
Speaker 1: what we meant by that was a country with a
Speaker 1: clear plan for what it's going to use hydrogen four
Speaker 1: and why, and enough money to subsidize that hydrogen so
Speaker 1: that it can eventually be be competitive or or enough
Speaker 1: enough policies to to make it competitive. And now we
Speaker 1: have over forty countries that have a hydrogen strategy or roadmap,
Speaker 1: or you know, they call it differently. India calls it
Speaker 1: the Hydrogen National Mission, and the US calls it the
Speaker 1: Hydrogen Earth Shot, but you know, we call it hydrogen strategies.
Speaker 1: There's more than forty countries now that either already have
Speaker 1: one or are developing one, and some of them are
Speaker 1: putting some pretty significant funds too to back up there
Speaker 1: were It's not not all of them, but now we're
Speaker 1: seeing the UK recently having announced strategy with some pretty
Speaker 1: significant funding, the some some European countries of pretty strong funding.
Speaker 1: And if the bill that's being discussed in the US
Speaker 1: right now passes, then the US could have some pretty
Speaker 1: strong incentives for the production of clean hydrogen if if
Speaker 1: that passes, and then the last one you've seen signs
Speaker 1: of life is industrial decarbonization incentives are being put in place.
Speaker 1: So why industrial decorganization incentives because a lot of the
Speaker 1: sectors where we expect hydrogen to have to to be
Speaker 1: economical in the future with carbon pricing, of course, would
Speaker 1: be industrial sectors including methanol, ammonia and steel production, aluminum production,
Speaker 1: cement production for example. So if you have policies to
Speaker 1: decarbonize the sectors and those are the hard to abate sectors,
Speaker 1: then you're more likely to see high use of hydrogen
Speaker 1: here they are again hard to abate sectors. That yeah,
Speaker 1: there you go, the how to abate sectors and these
Speaker 1: are that That's why industrial policies, industrial decomganization policies really
Speaker 1: we could say dec organization policies for how to abate sacties.
Speaker 1: It's it's pretty much one and the same thing really,
Speaker 1: But right now there isn't all that much progress. So
Speaker 1: we did a study being AFTED a study in in
Speaker 1: February of this year where we ranked the G twenty
Speaker 1: countries on a whole different number of indicators, including progress
Speaker 1: on industrial decomganization policies and none of those countries, not
Speaker 1: no G twenty countries called scored the best score that
Speaker 1: we've had. So so that's the strong score where you
Speaker 1: know they would have more than sixty six percent of
Speaker 1: of of the um of the milestones that we that
Speaker 1: we think they should hit that they have that, so
Speaker 1: no country has actually achieved that. By the UK and
Speaker 1: Germany are two countries that got very close and they've
Speaker 1: been strengthening their policies to the comgonized industry, so that's
Speaker 1: where we might see a lot of progress. And that's
Speaker 1: exactly also the kind of countries where we're seeing the
Speaker 1: most projects being announced on the industrial side to to
Speaker 1: use to use, to use hydrogen industry. So there is
Speaker 1: a correlation between carbon pricing, between net zero targets, between
Speaker 1: industrial recoganization policies, between funding and where projects are actually
Speaker 1: being announced today. So let's talk more about the future
Speaker 1: and where we see hydrogen going. We've we've figured out
Speaker 1: what well, no, we haven't figured it out, but we
Speaker 1: have an idea of how it's currently produced, how it
Speaker 1: could be produced, where some of the cost of clients
Speaker 1: are coming from. What is the potential demand to be
Speaker 1: using this in the future, and where do you see
Speaker 1: as a hydrogen analyst, where do you see this industry going?
Speaker 1: How much hydrogen we you is really going to depend
Speaker 1: on two factors, and that's whether and how we decide
Speaker 1: to de carbonized. So first, starting with the question of
Speaker 1: whether or the extent to which we decided to de carbonize,
Speaker 1: I've already talked about if we do reach net zero,
Speaker 1: then we're more likely to use more hydrogen than if
Speaker 1: we don't reach net zero. So net zero is absolutely essential.
Speaker 1: So now let's say that if we assume that that
Speaker 1: we do reach net zero, then there's still different ways
Speaker 1: in which we could reach reach that goal. It could
Speaker 1: be with lots of renewab electricity and the h and
Speaker 1: the green hydrogen. It could be with lots of nuclear electricity.
Speaker 1: You know, if if the world decides to build a
Speaker 1: lot of nuclear No, right now, it doesn't seem like
Speaker 1: a likely option, but it might happen. Or it could
Speaker 1: be with a lot of ccs for example, carbon capture
Speaker 1: and storage while continuing to use existing fossil fuels, or
Speaker 1: a combination of these scenarios. So in our work in
Speaker 1: the New Energy Outlook twenty one, which we published earlier
Speaker 1: in the year. We have these three scenarios for hydrogen
Speaker 1: use in the future, and in the most optimistic scenario
Speaker 1: for hydrogen with this one that we call the green scenario,
Speaker 1: we use about eleven times as much hydrogen in twenty
Speaker 1: fifty as we use today. So I talked about eleven
Speaker 1: dead seas full of hydrogen or they being used today,
Speaker 1: we'd be using one twenty one dead seas full of hydrogen.
Speaker 1: By We're gonna have to pick a different ocean I think,
Speaker 1: or difference. Yeah, maybe maybe one of the Great Lakes
Speaker 1: would would fit better for that. So so definitely a
Speaker 1: lot of hydrogen we could be using if that's the
Speaker 1: method in which we choose to recognized. Now, how do
Speaker 1: we choose to recognized? It's a really really important, uh
Speaker 1: and good question because hydrogen is not only going to
Speaker 1: have to outcompete fossil fuels, it's also going to have
Speaker 1: to outcompete all the other technologies that could be there
Speaker 1: to help us decarbonize. So it's really going to be
Speaker 1: very sector dependent in my in my view, so for example,
Speaker 1: in UM some of the sectors, hydrogen is going to
Speaker 1: be pretty much unavoidable. We're not going to be able
Speaker 1: to go on without using green hydrogen in those sectors,
Speaker 1: and those are the ones that we that where hydrogen
Speaker 1: is being used today, right, So that's ammonia production, methanol production,
Speaker 1: for example. There are others where the potential for hygen
Speaker 1: is pretty high because the carbon price needed is pretty
Speaker 1: load for it to be competitive. Plus all the other
Speaker 1: options are either than early stage or more expensive today.
Speaker 1: So that's things like steel production, aluminum production. And then
Speaker 1: you've got the other end of the spectrum where be
Speaker 1: Any keeps saying this, uh, but we really don't see
Speaker 1: passenger cars running on hydrogen be in something very big
Speaker 1: going forward. Talked about the idea of using hygroen for
Speaker 1: cars being there since at least nineteen seventies. By now
Speaker 1: we've got thirty thousand cars that run on hydrogen globally.
Speaker 1: That's nothing compared that to twelve million cars that run
Speaker 1: on batteries. And those cars that run on batteries are
Speaker 1: much cheaper both the fuel because of course, if the
Speaker 1: fuel is produced from electricity using electricity directly, whereas if
Speaker 1: you're producing hydrogen from electricity, you've got all those losses
Speaker 1: that I talked about earlier. So the fuel and the
Speaker 1: car are cheaper, and you've got more charging points, and
Speaker 1: you've got refueling stations as about six d refueling stations
Speaker 1: around the world compared to millions of charging points, So
Speaker 1: it's a very very different UH situation. So there are
Speaker 1: sectors where we expect hydrogen to be high potential unavoidable,
Speaker 1: other sectors where it's really not going to be competitive
Speaker 1: against other options. But overall, we could potentially be seeing
Speaker 1: anywhere between a doubling of hydrogen used from today if
Speaker 1: we UH in the low scenario, to not that eleven
Speaker 1: times growth in that very high scenario more likely where
Speaker 1: somewhere we gonna end up somewhere in the middle. So
Speaker 1: I'm unlikely to get picked up in my hydrogen fueled
Speaker 1: uber in the future. UM, but I should keep a
Speaker 1: very close eye on carbon prices because that could change
Speaker 1: the game for many other industries that could utilize hydrogen.
Speaker 1: Is that it is that a good assertion? Yes, there
Speaker 1: might be some anecdotal evidence, you know, anecdotal examples where
Speaker 1: you might get even picked up by a hydrogen field uber.
Speaker 1: You know some cities are trying that, but more more
Speaker 1: likely than not, it's going to be in about battery
Speaker 1: electric one. So so that's kind of the point that
Speaker 1: you know, battery electric is just going to see a
Speaker 1: lot much larger sales than than hyrogen. But yes, I
Speaker 1: would agree with your with your assessment. Okay, we will see.
Speaker 1: So Martin, it was really great to have you today.
Speaker 1: I'm really glad that we got to take a look
Speaker 1: backward towards history. We got to talk about the color
Speaker 1: wheel and hopefully makes some sense of that for people,
Speaker 1: how we make hydrogen in the properties that it has,
Speaker 1: and then also looking towards the future of hydrogen. So
Speaker 1: for those listening, keep watching that carbon price and Martin,
Speaker 1: hopefully we will have you back on again soon for
Speaker 1: some more media detail on what is happening in the
Speaker 1: hydrogen market. Thank you Data. Today's episode of Switched On
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