Speaker 1: This is Tom Rowlands Reese and you're listening to Switched
Speaker 1: on the podcast brought to you by b and EF,
Speaker 1: and today we bring you a recording from our b
Speaker 1: and EF Summit Munich, which took place on the twentieth
Speaker 1: of May. The panel featured on today's show is titled
Speaker 1: getting Industrial Decarbonization mega Projects on their Feet evaluating early
Speaker 1: success with large scale carbon capture hubs in the UK,
Speaker 1: carbon storage facilities in Denmark, the Netherlands and Italy, and
Speaker 1: cross border carbon transit facilities being built in Norway. Europe
Speaker 1: has been making quick work of successfully executing large industrial
Speaker 1: decarbonization infrastructure facilities. But just how have policymakers managed to
Speaker 1: facilitate installation of these massive projects and what can other
Speaker 1: companies and governments glean from their successes. On today's show,
Speaker 1: the panelists share their learnings and discuss what forms of
Speaker 1: policy have proved successful and what more is required to
Speaker 1: facilitate further growth in the sector. The panels include Kristin Nishka,
Speaker 1: Director General and Head of Climate Industry and Technology for
Speaker 1: the Norwegian Ministry of Energy, Andres Hoffmann, Deputy Permanent Secretary
Speaker 1: for the Danish Ministry for Climate Energy and util is
Speaker 1: Deek ben Shop, chair of the Border Mission Possible Partnership,
Speaker 1: and Stephanie Heisinger, head of Unit Low Carbon Solutions for
Speaker 1: DT Climber at the European Commission. The panel was moderated
Speaker 1: by Martin Tangler, BNF's head of Hydrogen Research. For more
Speaker 1: information regarding BNF summits, including our upcoming BNF Summit New
Speaker 1: Delhi on August twenty second, and t V recordings from
Speaker 1: our previous events, head to about BNF dot com slash summit. Now,
Speaker 1: let's say it from our panel.
Speaker 2: At least three things are needed in other Industrial League
Speaker 2: organization projects to go ahead, and that's government support, infrastructure
Speaker 2: and demand. And the thing that we will discuss, the
Speaker 2: question we will discuss today with our four brilliant panelists
Speaker 2: is if you are a government, how can you best
Speaker 2: foster these conditions in your country? And let's start by
Speaker 2: looking at the current situation with a question to Dick. So, Dick,
Speaker 2: you are at the Mission Possible Partnership MPP, and on
Speaker 2: your website there's a beautiful map of more than five
Speaker 2: hundred industrial decarbanization projects and the one common problem that
Speaker 2: they all have is that very few of them have
Speaker 2: actually reached a final investment decision or FID. I think
Speaker 2: it was eight between April and November, if i'm if
Speaker 2: I'm not mistaken. So beyond the three things that government
Speaker 2: incentives infrastructure demand, is there anything else that these projects
Speaker 2: need in order to go ahead?
Speaker 3: Yes, so, thank you very much and good morning.
Speaker 4: Yeah.
Speaker 3: The Global Project Trecker is one of the things we
Speaker 3: do in order, yes, to keep track of the progress,
Speaker 3: we map it against where do we need to be
Speaker 3: in twenty thirty and worldwide in the seven harder to
Speaker 3: abate sectors from steel, ce mental, aluminium, aviation fuel, we
Speaker 3: need about seven hundred plants in operation by twenty thirty.
Speaker 3: Perhaps we have around twenty percent now at FID under
Speaker 3: construction or in operation. And if you quoted the progress
Speaker 3: between April and November last year, it's not going fast enough.
Speaker 3: We'll have an update in a couple of weeks time
Speaker 3: next half year update to see where we are. So
Speaker 3: it's not that we have not started at the beginning
Speaker 3: is there, But the pace and the question of the
Speaker 3: scaling is absolutely important, and it's not going fast enough.
Speaker 3: I think fortunately that the and you see that in
Speaker 3: the European Commission and in national governments as well, that
Speaker 3: the attention for industrial decarbanization is growing. It's thirty percent
Speaker 3: of emissions. So it's not just the energy sector, it's
Speaker 3: the industrial sector as well. It's and it's in the
Speaker 3: heart of what we are currently living heavy we have
Speaker 3: to have. We have the clean deal, the green deal,
Speaker 3: the clean deal. We have finally in Europe attention for
Speaker 3: competitiveness because green stuff only get built if it's competitive.
Speaker 4: Is the Drugy Report.
Speaker 3: We see progress there and I guess with security, the
Speaker 3: whole question of what are we producing in Europe is
Speaker 3: becoming more and more important. And inside this trilemma between clean, secure,
Speaker 3: and competitive you find the question what's going to happen
Speaker 3: to the European industry in general terms? What we have
Speaker 3: learned and I think the Potsdam Institute did great work
Speaker 3: on that. On the policy mix, you need three elements.
Speaker 3: You need an element of pricing see carbon pricing, see
Speaker 3: the ets, which Europe has other geographies only to a
Speaker 3: certain extent. You need an element of support, which Europe
Speaker 3: has to a certain extent, which others had more at
Speaker 3: least us with now the uncertainty around it. And you
Speaker 3: need regulations, and for example, one of the things that
Speaker 3: really worked in Europe was the aviation mandate, the blending mandate,
Speaker 3: because if you look at the tracker, the number of
Speaker 3: sustainable aviation fuel plants is really growing. The investment is
Speaker 3: happening because of that certainty that is there because of
Speaker 3: the mandate. So get this policy mix right. And in
Speaker 3: the regulatory part, I would say we have to focus
Speaker 3: on the demand side because subsidies give it the deficits
Speaker 3: defense spending, they won't go over the moon in Europe.
Speaker 3: You can't do it FIA pricing alone. I think demand
Speaker 3: side interventions, but will probably come to that is the
Speaker 3: key to be looking at now.
Speaker 2: Okay, so as the government carrots, government sticks, and demand
Speaker 2: side is what you find to be the most important.
Speaker 2: Let's talk about the financing the government carrots for them
Speaker 2: for a moment, and let's start with you, Kristin. So,
Speaker 2: Norway has almost fully financed one massive carbon capture and
Speaker 2: storage project, which is called long Ship in Norway, and
Speaker 2: you've pretty much paid for almost the entire project. Now
Speaker 2: that that project is almost about to come online, is
Speaker 2: the private sector going to be able to take over?
Speaker 2: Is that enough to get the sector going.
Speaker 5: Well, thank you for that question.
Speaker 6: I think it takes more than one project for this
Speaker 6: market to come online. But I think it's important to
Speaker 6: keep in mind that this is not sort of a
Speaker 6: static picture. In a way, it's dynamic. We started working
Speaker 6: on the long Ship, which consists of you to capture
Speaker 6: from a cement facility, be hydlriy materials, ways to energy facility.
Speaker 5: And alslow on by Hochlin.
Speaker 6: And then it's the Northern Light Storage Solutions on the
Speaker 6: west coast of Norway.
Speaker 5: We started working on that.
Speaker 6: In twenty fourteen twenty fifteen, where we saw that from
Speaker 6: a sort of government perspective in Norway, the Climate Mitigator,
Speaker 6: if we are to reach the climate targets in the
Speaker 6: Paris Agreement, it's not possible without CCS. So we started
Speaker 6: working on that as a public private partnership to develop.
Speaker 5: The CCS technology.
Speaker 6: And one of the aims for the Longship project is
Speaker 6: that Norway and Europe are to reach sort of the
Speaker 6: climate targets as at the lowest possible cost. So this
Speaker 6: is our contribution to the entire sort of CCS development
Speaker 6: as a technology.
Speaker 5: And then what's next and then is this enough?
Speaker 6: Well, what we've done and what's important to us with
Speaker 6: the longship project is to share the knowledge. We have
Speaker 6: de risked a lot of the CCS chain. Northern Lines
Speaker 6: recently made a commercial Phase two decisions, so they have
Speaker 6: spare capacity. They were open for business for European industry.
Speaker 6: It's well, there are discussions on going for C two
Speaker 6: storage on the Norwegian continental shelf. And then we are
Speaker 6: also from a Norwegian perspective, now assess saying so what's
Speaker 6: next for you to capture for the rest of the
Speaker 6: Norwegian industry, which is a debate in our way.
Speaker 5: So I think this is it's not a static picture.
Speaker 6: The different countries have sort of different approaches.
Speaker 5: It's important to.
Speaker 6: See this as a it's a joint solution. We have
Speaker 6: a common target here and then there's an element of competition,
Speaker 6: but that is just it's good to have that competition.
Speaker 2: So you said, there's some learnings that you've derived from
Speaker 2: this for not just Norway but for the global community.
Speaker 2: What are the what is the one thing that you
Speaker 2: think you did really really.
Speaker 5: Well in I think what made this happen is that we.
Speaker 6: Had a trust between the government, the authorities and the
Speaker 6: private companies and a common goal that this was a
Speaker 6: project that we really wanted to see happening together. And
Speaker 6: then there are risks in the chain between the capture
Speaker 6: and storage that we need to sort of be aware
Speaker 6: of and deal with. But I think actually from a
Speaker 6: sort of from our perspective, the trust that this is
Speaker 6: something that we all want to see happening was actually
Speaker 6: the most important success factor in that project.
Speaker 2: Okay, so you were you were one of the biggest
Speaker 2: first projects out there, and you show that this is possible.
Speaker 2: And the follow up question that is was the one
Speaker 2: thing you would not repeat?
Speaker 5: Mm hm hm. That's a difficult one. I don't know, actually.
Speaker 7: I think.
Speaker 6: For in the Launschip project, the States serve as a
Speaker 6: cushion between the capture side and the transportant storage side.
Speaker 6: That we won't be able to do that for the
Speaker 6: coming projects.
Speaker 5: So I think maybe.
Speaker 6: That that is something that we did to actually make
Speaker 6: this project go or happen. But it's not a role
Speaker 6: that the state can take sort of indefinitely for the
Speaker 6: coming projects.
Speaker 7: Right, so the market will eventually need.
Speaker 5: To the market will have to take over.
Speaker 6: And what we've done with this project is sort of
Speaker 6: to get a good overview over the different risks because
Speaker 6: these are mega projects.
Speaker 5: It's I don't know in.
Speaker 6: Euros, two point five billion euros or something for the
Speaker 6: entire chain. Norwegian State is contributing some roughly two billion
Speaker 6: euros into this, so two thirds of course, so maybe
Speaker 6: three of them. So I think the sort of the
Speaker 6: risk picture is something that we've contributed with.
Speaker 2: Great I wonder if Andrews will have any comments on that,
Speaker 2: because Andrews Denmark is taking a very different approach from Norway.
Speaker 7: Is that right?
Speaker 2: Norway has financed this one big project long ship, whereas
Speaker 2: what just happened in Denmark is you've shortlisted ten companies
Speaker 2: on Friday for a three point eight billion euros or
Speaker 2: so of funding and they can all get this funding,
Speaker 2: but the condition is they actually have to start storing.
Speaker 7: They have to store that.
Speaker 2: Carbon before they get any money, whereas in Norway that
Speaker 2: money came up front. So what do you think is
Speaker 2: the advantage of that kind of an approach.
Speaker 8: I think we had great lounges in Denmark then when
Speaker 8: we started designing policy back in twenty twenty. I mean,
Speaker 8: Norway has been doing this for fifteen years, so we
Speaker 8: could sort of piggyback on some of their learnings and
Speaker 8: also from the UK, and I think when we started
Speaker 8: designing policy, I think we had sort of three main
Speaker 8: things we wanted to solve. I mean, first of all,
Speaker 8: we really believe that this should be market based in
Speaker 8: the end, so everything we did on the way towards
Speaker 8: that should enable that.
Speaker 4: Market to be created. So I think that was sort
Speaker 4: of the oral A vision.
Speaker 9: And then secondly, what we heard was what was really
Speaker 9: challenging in this sector was this whole chicken and egg
Speaker 9: You wouldn't if you had the storage, that wouldn't be
Speaker 9: developed because you know, nobody capturing and nobody would make pipelines.
Speaker 9: Because so all of this, I mean, how do you
Speaker 9: have a really complicated value value chain created at the
Speaker 9: same time. So we wanted to fix that. And then finally,
Speaker 9: we had all of these rooms about billions of euros
Speaker 9: being thrown at policy sort of projects that never developed.
Speaker 9: So we're quite worried that we would waste CUD out
Speaker 9: of government money. So based on that, we sort of
Speaker 9: had the decision that, Okay, if you don't want to
Speaker 9: waste money, at least we should only pay if they store,
Speaker 9: So if they store it, we pay. By definition, you
Speaker 9: can't lose money. The second one was we really want
Speaker 9: to have that you shouldn't only be storing, you should
Speaker 9: also sort of manage the entire value chain. So the
Speaker 9: winner of our sobsity would be responsible for the entire
Speaker 9: value chain and would have to pay for all of
Speaker 9: these have to create the contracts and all of that.
Speaker 9: So by that we hope in some way to sort
Speaker 9: of solve the chicken and egg problem at least by
Speaker 9: if somebody have all the money they need to have
Speaker 9: all the other parts of the chain aligned with their deadlines,
Speaker 9: and thereby, hopefully by twenty thirty all of these things
Speaker 9: would be aligned. I think that was sort of the
Speaker 9: name thinking about the design.
Speaker 2: And the three point eight billion euros that you'll be
Speaker 2: giving to those companies. Is that enough to get the
Speaker 2: sector going in Denmark?
Speaker 9: I think it's enough to get quite a lot of
Speaker 9: tons of sew to start. I think if you look
Speaker 9: at it, we had a first subsidy scheme which was
Speaker 9: won by us. Did they would be starting up capture
Speaker 9: within a few months. Actually they would be storing in Norway.
Speaker 9: Thank you so much for that for the first part.
Speaker 9: And then I think based on that auction that was
Speaker 9: zero point five million tons.
Speaker 4: The next one is much much bigger.
Speaker 9: So we're pretty sure that this auction would develop enough
Speaker 9: U two capacity to meet our seventy percent climate target
Speaker 9: in twenty thirty.
Speaker 4: And that's really the main reason.
Speaker 9: And although if you compare to Norway, I mean Norway
Speaker 9: has a bit more policy and creating a new market,
Speaker 9: I think Denmark's policy was really solving a problem with
Speaker 9: too much carbon dioxide.
Speaker 4: So it's all a slightly different approach.
Speaker 9: Ours is clearly a climate policy. It's just a very
Speaker 9: sort of a cheap way, but a cheaper way than
Speaker 9: some of the other policy we could have chosen.
Speaker 2: Okay, so it will get us certainly a good part
Speaker 2: of the way. And the interesting thing about Denmark is
Speaker 2: you are looking at onshore storage, whereas the Norwegian project
Speaker 2: is offshore. So if you're taking it from Denmark to Norway,
Speaker 2: you need to put it on a ship liquefy it
Speaker 2: then taking on a pipeline.
Speaker 7: That pipeline is pretty long.
Speaker 2: And bears it under the sea, which is quite a
Speaker 2: lot more expensive than what you're looking at.
Speaker 4: Right. Yeah, I think that was the main reason for
Speaker 4: going on shore.
Speaker 9: So and then of course Denmark is blitsed with sort
Speaker 9: of a subsurface that is actually extremely useful and it's
Speaker 9: very I mean, we have gas storage already. We're using
Speaker 9: the exact same technology, the same storage formation. So we
Speaker 9: have been given that we've been storing gas for forty
Speaker 9: years without any problem whatsoever. We thought it would be
Speaker 9: sort of a natural thing to move to that, and
Speaker 9: it turned out that there was quite a lot of
Speaker 9: interest on that. And we do really hope that getting
Speaker 9: back to my point about being market based, that this
Speaker 9: could dramatically reduce costs. And then, I mean, we have
Speaker 9: a lot of carrots in the danger policy might put
Speaker 9: we all to have some sticks.
Speaker 4: I mean, we do have a very strict see two
Speaker 4: tax that.
Speaker 9: Would sort of kick in, and you have the ETS
Speaker 9: price going up, so you have the two sticks, and
Speaker 9: then if you have the on store short storage, and
Speaker 9: if you have some development of technology, we should be
Speaker 9: able to phase out the need for these subsidies over time.
Speaker 2: Yeah, that's great, because the ETS, from my understanding, will
Speaker 2: probably not be high enough for the next five or
Speaker 2: ten years for serious projects Bible, so you need to
Speaker 2: have your own additional program like what happened in Germany.
Speaker 2: Christian I saw you raise your hands before we go
Speaker 2: over to Stefinie.
Speaker 6: Just a very small comment because I think in Norway,
Speaker 6: one of the reasons why we're developing CCS as a
Speaker 6: technology is that we have the competence. We have stored
Speaker 6: CO two on the Norwegian Continental Shelf since nineteen ninety
Speaker 6: six where they started. That's like I feel, due to
Speaker 6: CEO two tax in posts on the Norwegian or on
Speaker 6: the petroleum sector, so we we know that this works,
Speaker 6: we know that it's safe, we monitor it very closely.
Speaker 6: So that's also a reason why this is something where
Speaker 6: we had the competence and the knowledge to develop this.
Speaker 6: And then on shore in Norway the sand that's hard rocks,
Speaker 6: so it's not possible to store to onshore in Norway,
Speaker 6: so the continental Shelf is the only city storage stuff.
Speaker 2: It's closer to Scotland. Then it's Norway right where you're
Speaker 2: staring the COEO two.
Speaker 6: It's not closer to Scotland because then it would have
Speaker 6: been on the UK continental but it's in the middle there.
Speaker 4: But maybe just to add I mean, we'd also store
Speaker 4: in the norseea.
Speaker 9: I mean the first project that they have if ID
Speaker 9: in Denmark is in the North Sea really also want
Speaker 9: to uses incoment, just like Norway in the old oil
Speaker 9: and gas fields.
Speaker 2: Let's talk about the EU as well, Stephanie. You told
Speaker 2: me on a call last week when we were debating
Speaker 2: and discussing about this panel, that the EU has realized
Speaker 2: that industrial decorganization projects are not bankable and that's why
Speaker 2: we have the Green Industrial Deal right now in the EU.
Speaker 2: And the question is how is the EU going to
Speaker 2: support the Green Industrial Deal. Is it going to be
Speaker 2: more like Norway with kapex funding for projects before they
Speaker 2: start storing. Is it going to be more like Denmark
Speaker 2: where you must store in order to get paid.
Speaker 7: Is it going to be a combination of the two.
Speaker 2: My understanding is there is a hint, but it's not
Speaker 2: yet clear how this is going to happen.
Speaker 10: Thank you. So I like how the discussion is already
Speaker 10: involving because I think we all want the same thing
Speaker 10: you said, project on a bankable but in the end,
Speaker 10: what we want is that those projects get to the
Speaker 10: market and that they are happening by them. So there
Speaker 10: is this gap. We see it in the Innovation Fund.
Speaker 10: We have the Innovation Fund that we operate at the
Speaker 10: EU level is a fund that has for the period
Speaker 10: twenty twenty to twenty thirteen estimated budget of forty billion
Speaker 10: euros estimated because it is contingent on the EU carbon price.
Speaker 10: But we already in the four years of operation of
Speaker 10: the fund, we already have around two hundred projects in
Speaker 10: our portfolio and committed around twelve billion euros to those projects.
Speaker 10: And a large number of projects are actually familiar to
Speaker 10: people here on stage because they are related to industrial
Speaker 10: comb management. So now well we will when it comes
Speaker 10: to funding, built on that success of the Innovation Fund.
Speaker 10: We have indeed now we had a European Green Deal
Speaker 10: which has now also been going forward into the Clean
Speaker 10: Industrial Deal, as we see that many of the well
Speaker 10: that the industries are not necessarily struggling with the technology,
Speaker 10: but they are struggling with building the business case, and
Speaker 10: that's where the Clean Industrial Deal comes in. There was
Speaker 10: a discussion on that this morning already. So there are
Speaker 10: some drivers. In the speech before our panel we heard
Speaker 10: in particular also that affordable energy is one of the drivers,
Speaker 10: and financing as well. So for the financing part, we
Speaker 10: will build on the Innovation Fund and its success.
Speaker 9: We have.
Speaker 10: The pledge that we will next year, in the context
Speaker 10: of the revision of the EU ETS come forward with
Speaker 10: a proposal for an industrial Decarbitalization bank that is supposed
Speaker 10: to provide one hundred billion euros in funding for clean projects,
Speaker 10: not only clean technology but industrial decarbonization projects. The details
Speaker 10: are not yet there. We will this year have already
Speaker 10: a pilot for this industrial decarbonization banks. My team is
Speaker 10: working on a fixed premium option for industrial process heat
Speaker 10: decarbonization that we will launch in the last quarter of
Speaker 10: this year as well. And while in terms of support
Speaker 10: or support mechanisms, we work a lot with grants, but
Speaker 10: we also know that and the Clean Industrial Deal also
Speaker 10: says that very clearly that we need to maybe make
Speaker 10: that a bit more targeted and looking at what does
Speaker 10: the project actually really need to de risk And Kirsten
Speaker 10: said it, I mean this is really we need to
Speaker 10: de risk those projects as long as needed until the
Speaker 10: market takes over. We have a lot of experience now
Speaker 10: with the hydrogen auction that we have been running under
Speaker 10: the Innovation Fund. Actually today I'm not sure the news
Speaker 10: is already out. We are going to announce the winners
Speaker 10: of the second auction on renewable hydrogen today.
Speaker 2: Just when my European hygien analyst is on holiday in Thailand.
Speaker 10: So there's a lot of experience with different ways of
Speaker 10: providing public support, and in particular this well, it depends
Speaker 10: very much on what it is that you want to support.
Speaker 10: For an auction like the hydrogen auction, you need a
Speaker 10: very homogeneous product like hydrogen. We will do the same
Speaker 10: now for as I said, industrial heat solutions, but you
Speaker 10: cannot have a one size fits all. On the other hand,
Speaker 10: I mean the project that we just have been talking
Speaker 10: about and I just mentioned it's full value chain support.
Speaker 10: So you need to bring all these actors with their
Speaker 10: different needs around the table. And Dick mentioned one important
Speaker 10: aspect also regulation, So it's not only about funding, it's
Speaker 10: also about setting standards. It's about coming forward. We will
Speaker 10: we are working on ZE to Transport Infrastructure infrastructure package
Speaker 10: as well, so to enable that support to the entire
Speaker 10: value chain, not only with money, but also through other
Speaker 10: ways and means we have.
Speaker 2: And when do you expect the market will take over
Speaker 2: in the EU on these big industrially organization projects.
Speaker 10: Yeah, that's of course the one hundred billion dollar question. No,
Speaker 10: I cannot it's impossible to give you an exact timeline
Speaker 10: when these projects will will be taken by the market.
Speaker 10: It very much depends on the speed at which the
Speaker 10: technology is mature. It very much depends on other factors
Speaker 10: like the infrastructure in particular, when it comes to C two.
Speaker 10: We are working on a ze to Investment ATLAS also
Speaker 10: in the EU, so that we start mapping actually potential
Speaker 10: storage site with the industrial clusters that will actually need
Speaker 10: to store you too. And there are lots of other factors.
Speaker 10: If you want me to express a wish, I would
Speaker 10: say as soon as possible, because that would be the
Speaker 10: ideal scenario. But it's really hard to give you an
Speaker 10: exact timeline on this one.
Speaker 2: Yeah, hopefully as soon as possible.
Speaker 7: Indeed.
Speaker 2: And one question that I actually have before we move
Speaker 2: on to talking about demand is about a different way
Speaker 2: that the government can help. Our government agencies can help
Speaker 2: projects get off the ground and dig. That's a question
Speaker 2: to you around dead guarantees or other ways that governments
Speaker 2: can can help. For example, the Stegra project in Sweden,
Speaker 2: there's really large green hydrogen steel making project in northern Sweden.
Speaker 2: It's building seven hundred and forty megabats of electualizers.
Speaker 7: One of the ways through which it.
Speaker 2: Was able to come online, to the best of my
Speaker 2: understanding is through debt and debt guarantees from the German
Speaker 2: government and from the Swedish government. Could these debt guarantees
Speaker 2: be used more broadly for other industrial sectors too.
Speaker 3: Yes, I think so, because companies they are looking at
Speaker 3: the policy side and assurrety around it and is the
Speaker 3: right mix in place. Companies are looking at the demand
Speaker 3: site and I'll say something about it, and companies are
Speaker 3: looking indeed at the risk and the financing site, because
Speaker 3: there's all kinds of hurdles there. For first of a kind,
Speaker 3: project's insurance, risk, engineering risks, project risk accumulated in a
Speaker 3: way that is almost prohibitive in some cases. So that's
Speaker 3: where an element of government support on the risk side
Speaker 3: or on the financing site on the being a backstop
Speaker 3: can help enormously indeed on that part. But Stagger and
Speaker 3: those type of projects are very interesting as well because
Speaker 3: you see that they tend to get the customers in
Speaker 3: as well, even as a shareholder in order to be
Speaker 3: a customer, you get that type of construct which all
Speaker 3: I has to do with that question, can I be
Speaker 3: certain about the demand and how do I organize that,
Speaker 3: Because if you want to have bankable demand, that means
Speaker 3: something in terms of commercial constructs, long term contracts, and
Speaker 3: are you able to get that and not all markets
Speaker 3: are structured in in that way, So that's really an issue.
Speaker 3: Allen just showed the green premium, and it's huge at
Speaker 3: the beginning of the value chain. For even more, what
Speaker 3: it did not show is that it is not huge
Speaker 3: at the end of the value chain when you come
Speaker 3: to the consumer product. Even still in a is in
Speaker 3: the order of magnitude of four hundred or five hundred
Speaker 3: euros for the price of a car, green p amumonia
Speaker 3: to green fertilizer to your bread, you'll hardly see behind
Speaker 3: the scent in terms of the cost of the bread.
Speaker 3: In percentages, ten percent of the new stuff in those
Speaker 3: sectors in twenty thirty is less than one percent price
Speaker 3: increase at the end consumer end. So that gives another
Speaker 3: perspective on affordability. You have always to be very careful
Speaker 3: and we have to go up the learning curve and
Speaker 3: bring the cost down. But if you say even a
Speaker 3: ten percent perspective in twenty thirty is rather higher compared
Speaker 3: to where we are today, that is in terms of
Speaker 3: passing it through, not absorbing it by the government, not
Speaker 3: absorbing it by the companies, but getting it to the
Speaker 3: end consumer is doable, and that gives a very great
Speaker 3: interest in the question and how can we activate that demount?
Speaker 7: How do we do that?
Speaker 3: Because if I go if I buy a new Folvo,
Speaker 3: I can't say I want green steel in my car.
Speaker 3: It's not on offer if I go to my supermarket, etc.
Speaker 3: So something has to happen there. Mandates. We have a
Speaker 3: sustainable aviation mandate, it clearly works. It triggers investment. Why
Speaker 3: not the green fertilizer mandate? Why not other mandates, fuel standards,
Speaker 3: carbon intensity standards. A lot of things to do there
Speaker 3: which could give that certainty of demand in those sectors,
Speaker 3: which would then help enormously in terms of creating the
Speaker 3: conditions forever. The next to the government support and next
Speaker 3: to the financing and the risk side. One more element
Speaker 3: that you could consider as well. Then you mentioned the
Speaker 3: auctions that are taking place and h to global broader
Speaker 3: use of market makers of intermediaries, because there are markets
Speaker 3: where you have the need for the financing side to
Speaker 3: have long term contracts, but on the demand.
Speaker 7: Side, it's short term.
Speaker 3: Like in aviation, airlines don't buy fuel for fifteen years.
Speaker 3: It's a short term market. But if you want to
Speaker 3: have e fuel project off the ground, you need a
Speaker 3: contract for ten to fifteen years. Who is going to
Speaker 3: do that. Nobody's going to do that. Stuck a bit
Speaker 3: like a chicken and egg. But then on the commercial side,
Speaker 3: so create intermediaries where you absorb the risk and the
Speaker 3: intermediation between the long and the short term. You do
Speaker 3: some government support in there as well to de risk it,
Speaker 3: and you can get a market certainly connected. Individual players
Speaker 3: are not able to make that connection. So I think
Speaker 3: there's a lot to do there on the demand side
Speaker 3: to create a certainty of demand in my view, a
Speaker 3: very affordable end consumer prices in a way that can
Speaker 3: trigger a lot of investment. And now the European Commission
Speaker 3: announced that as well as part of the cleaning to
Speaker 3: deal with the Industrial Decentralization Accelerator Act.
Speaker 7: I really hope and.
Speaker 3: I think we should all contribute to that effort that
Speaker 3: we can create those demond mechanisms because that I think
Speaker 3: that's very interesting.
Speaker 2: Yeah, the intermediary point is really interesting. We had the
Speaker 2: pleasure of having Susanna Morera from h to Global on
Speaker 2: a panel in our summit in London in October last year,
Speaker 2: and it was a really interesting discussion. How do you
Speaker 2: marry the fact that you need a ten year off
Speaker 2: take agreement for the producer, but the off taker does
Speaker 2: not want ten years, They want to take max one
Speaker 2: year maybe two, and they bridge that gap by buying
Speaker 2: this and then selling it on which it's a fascinating model.
Speaker 2: It would be great if it can work for other
Speaker 2: parts of the industrial de carbonization as well. Stephanie, let's
Speaker 2: move to you and the demand question is they was
Speaker 2: saying something really interesting. I think Andrews was saying the
Speaker 2: same thing about quotas. So the EU has different mandates
Speaker 2: or quotas for sustainable aviation fuel for green hydrogen or
Speaker 2: renewable fuel of non biological origin RFMBO use with instead
Speaker 2: of gray hydrogen. And the deadline for member states in
Speaker 2: the EU to transpose this quota for forty two percent
Speaker 2: of green hydrogen replacement for gray into their national law
Speaker 2: is tomorrow, if I'm not mistaken, and also if I'm
Speaker 2: not mistaken, only about five member states have actually transposed this,
Speaker 2: and probably only about two of them actually fully. So
Speaker 2: what's the EU gonna do about that? Is are there
Speaker 2: going to be fines? Are these states going to be
Speaker 2: punished for not meeting it? Or are we just going
Speaker 2: to let them let them not comply with these regulations.
Speaker 10: So, first of all, I think it's even if it's tomorrow,
Speaker 10: it's too early to already kind of throw out the
Speaker 10: baby with the buzz water. Let's let's wait what comes
Speaker 10: our way tomorrow. Usually when there's the deadline, you know,
Speaker 10: things are sent close to the deadline. But I also think, well,
Speaker 10: those quotas have been decided by the co legislators. So
Speaker 10: it's the Renewable Energy Directive and its anexes, So the
Speaker 10: co legislature in the EU, that's the European Parliament and
Speaker 10: the Member States. So the decision how to implement those
Speaker 10: targets have been that has been left to the Member
Speaker 10: States in that legislative process. But that's where I think, well,
Speaker 10: if this is agreed between the Parliament and the Member States,
Speaker 10: we should give them the benefit of, you know, now
Speaker 10: telling us first how they are going to meet those
Speaker 10: targets before we talk about what do we do if
Speaker 10: they don't do what they prompt to do so, I
Speaker 10: think it's the only fair from that perspective. But when
Speaker 10: it comes to demand, if you allow me, in the
Speaker 10: Clean Industrial Deal, we have indeed also strength emphasized quite
Speaker 10: strongly the fact that first of all, we need to
Speaker 10: define the clean products, so we're working, for example, on
Speaker 10: the green steel label. But I think that's really important
Speaker 10: that we all know what it is that we're actually
Speaker 10: talking about. And then second, we will also use the
Speaker 10: public procurement rules to create that demand. And that's actually
Speaker 10: quite a strong driver because public procurement is huge on
Speaker 10: certain markets, and that can also be since we spoke
Speaker 10: about public financing a good way on how the public
Speaker 10: can actually finance that demand.
Speaker 3: For the especially interesting for cement, it's about half of
Speaker 3: the cement is subject to public procure Governments alone can
Speaker 3: de risk green cement.
Speaker 2: That's that's great, Let's do it. What are you waiting for, Stephanie.
Speaker 2: You only answered my question halfway though, so I'm going
Speaker 2: to probe a little bit deeper. So you said, let
Speaker 2: the Member states figure it out. It's up to them
Speaker 2: to meet the meet the EU quotas. Now, if the
Speaker 2: majority of Member states at this moment have yet to
Speaker 2: transpose them, I would say there is a relatively high
Speaker 2: probability that the majority of member states will not meet
Speaker 2: them by twenty thirty. What if that happens, is the
Speaker 2: majority of the EU going to punish itself for not
Speaker 2: meeting you quotas?
Speaker 7: Yeah, I think you know that.
Speaker 10: You will not get me into speculation here because I
Speaker 10: really think let's wait first tomorrow and then there's five
Speaker 10: years until we get to twenty thirty, so there is
Speaker 10: also time to try progress and to then take measures
Speaker 10: in between. On the side of the member states, I mean,
Speaker 10: they they pledged or they agreed to those targets, so
Speaker 10: there's also this drive from the side of the member
Speaker 10: states to make them happen. And I think also the
Speaker 10: in the industrials. I mean, what targets provide you is predictability,
Speaker 10: and and that is what industries strive for. So I
Speaker 10: think we need to, you know, also work towards UH
Speaker 10: giving that predictability through tracking the progress and then if
Speaker 10: if needed, take additional measures. But it's not good I
Speaker 10: find to put in question targets that you know, even
Speaker 10: at that stage when they when the transposition deadline has
Speaker 10: not yet lapsed, and so it's I think it's our strength,
Speaker 10: and Dick mentioned it in the beginning. It's also about
Speaker 10: the regulatory framework in the EU. Will love a climate
Speaker 10: neutrality target for twenty to fifty. It's often forgotten, but
Speaker 10: that is in a law, in legislation. It's a democratically
Speaker 10: agreed climate neutrality target. We not only have that climate
Speaker 10: neutrality target, we have a twenty thirty target that is
Speaker 10: underpinned by a solid climate and energy policy framework, and
Speaker 10: that I think is driving a lot of the action
Speaker 10: that we're seeing today, including CCS because quite frankly, the
Speaker 10: CCS directive dates from two thousand and eight, but for many,
Speaker 10: many years we didn't see anything happening. So now we
Speaker 10: have a fifty million tom C two injection capacity target
Speaker 10: in the natzio industry, and yet that stimulates the debate
Speaker 10: that in not only in industry but also in the
Speaker 10: Member States countries like Austria, like Germany start a public
Speaker 10: debate about CCS, and that's what we actually need. So
Speaker 10: I think targets are important, and it is important to
Speaker 10: of course truct the progress towards meeting them, but not
Speaker 10: speculate on them.
Speaker 2: Okay, so we'll need to wait five years so five
Speaker 2: years from now, I'll invite you to the summit.
Speaker 7: Thank you so much everyone.
Speaker 2: I think we've established that the carbonizing industry is really hard,
Speaker 2: but it seems like with our four panelists, we're a
Speaker 2: lot clearer on what works and what might not work
Speaker 2: as well. And thank you so much to our great panelist.
Speaker 7: Thank you.
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