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Speaker 1: Hi, this is Dana Perkins and you're listening to Switch

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Speaker 1: on the b F podcast. Today, we're going to talk

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Speaker 1: about hydrogen electrolyzers. With a number of favorable policy incentives,

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Speaker 1: we really expect to see this market take off over

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Speaker 1: the next decade, and this is going to be around

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Speaker 1: the world, from the US to Europe to China. The

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Speaker 1: conditions are right for growth, but let's think about how

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Speaker 1: much money is this actually going to require, and what

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Speaker 1: technologies are the front runners, and also what will be

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Speaker 1: the emerging fuel source to make all of this hydrogen,

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Speaker 1: and will it be more locally produced or shipped around

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Speaker 1: the world, and a lot of other questions. So on

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Speaker 1: today's episode, I get to speak with Adithia Bashum and

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Speaker 1: Matthew Bravante. They are both hydrogen analysts at b F.

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Speaker 1: Note that B and EF does not provide investment or

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Speaker 1: strategy advice, and we have a full disclaimer at the

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Speaker 1: end of the show. But now I want to talk

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Speaker 1: about hydrogen with Addie and Matt. Let's have a listen. Addie,

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Speaker 1: thank you for joining the show today. Hight A great

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Speaker 1: to be here, and Matt thank you for joining as well. Thanks. Dana,

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Speaker 1: happy to be here great, So we have two members

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Speaker 1: of our team that focus on hydrogen here to talk

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Speaker 1: about electrolyzers. And for the uninitiated, that begs the question,

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Speaker 1: what is an electrolyzer. An electrolyzer is it's fundamentally a

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Speaker 1: piece of equipment to gas separating piece of equipment. So

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Speaker 1: it takes water and electricity and separates that into two gases,

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Speaker 1: hydrogen and oxygen. So it's a way to produce hydrogen gas,

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Speaker 1: which we'll get into as a range of applications. But

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Speaker 1: it's a way to produce hydrogen gas without any sort

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Speaker 1: of residual carbon leading the system. So it starts with

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Speaker 1: a carbon free source of hydrogen water and ends up

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Speaker 1: with a hydrogen product that can be considered zero carbon

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Speaker 1: emissions depending on the electricity source. And the zero carbon

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Speaker 1: emissions aspect is why hydrogen is likely to take off?

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Speaker 1: Is that correct? Yeah? I think hydrogen it's gone through

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Speaker 1: many boom and bus phases of excitement, but fundamentally, the

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Speaker 1: thing that's exciting about it is it can be used

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Speaker 1: as a molecule for chemical applications. It can be used

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Speaker 1: as an energy molecule, but at the point of use

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Speaker 1: because it's a molecule with no embedded carbon. So when

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Speaker 1: you think of conventional hydrocarbons, they're usually some amount of

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Speaker 1: carbon molecules some amount of hydrogen molecules, and when they're

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Speaker 1: combusted or used in industry, there's usually some sort of

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Speaker 1: oxidation reaction which creates c O two, which is released

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Speaker 1: in the atmosphere, and we all know that is a

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Speaker 1: negative outcome with hydrogen, but there is no carbon in

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Speaker 1: the molecule, so when it's oxidized or used in some

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Speaker 1: other chemical application, usually the byproduct is a bit of

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Speaker 1: heat and some water, So much better for the world

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Speaker 1: in terms of carbon question. What's interesting about hydrogen or

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Speaker 1: low carbon hydrant specifically is that as a molecule it

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Speaker 1: can replace uses where it's already being used today, where

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Speaker 1: it's produced from fossil fuels, for example as a feedstock

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Speaker 1: for industry, but to produce ammonia in oil refineries, to

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Speaker 1: produce methanol, all these chemicals that we really depend on,

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Speaker 1: and also as a molecule to decarbonize other sectors with

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Speaker 1: hydrogen is not used today, for example in steel, where

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Speaker 1: it can help reduce iron oxide to iron and be

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Speaker 1: precursor to green steel. So an important molecule for the future,

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Speaker 1: would we think about decarbonizing And what we're going to

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Speaker 1: talk about today really is you've done this forward looking

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Speaker 1: market outlook on the electroalizer market, and to use your

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Speaker 1: own term, you say that the market is about to

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Speaker 1: take off. What do you mean by that? And why

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Speaker 1: is it about to take off? I guess there'll be

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Speaker 1: a lot of this kind of onion to unpeel here.

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Speaker 1: I guess In short, what is it that has put

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Speaker 1: us at this precipice our starting point? Our Global Electoralizer

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Speaker 1: Outlook twenty thirty is really the Hydrogant team's first attempt

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Speaker 1: at assessing policies by region, looking at announced projects and

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Speaker 1: aggregate and looking at the economics of producing carbon hydrogen

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Speaker 1: in certain locations, putting all of that knowledge together in

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Speaker 1: one document and come up with an estimate for how

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Speaker 1: many giga outs of electrolyzer capacity we can see deployed

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Speaker 1: by the end of this decade. Yeah, I think the

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Speaker 1: reference you're onion the first kind of thing to peel back,

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Speaker 1: and the real impetus around this report is just, at

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Speaker 1: least in my mind, it's the funding that we've seen

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Speaker 1: come online for hydrogen in the past twelve to eighteen

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Speaker 1: months from very large federal or regional government levels, and

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Speaker 1: I think when you think about the long term or

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Speaker 1: the the medium to long term out a lot of

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Speaker 1: that activity is going to be driven by public financing,

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Speaker 1: public support. It's very analogous to the way wind and

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Speaker 1: solar initially got their boost and climbed down the cost curves.

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Speaker 1: We think we're seeing similar type of incentives for hydrogen,

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Speaker 1: and we think that will help hydrogen climb down the

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Speaker 1: same sort of cost curves get to a point where

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Speaker 1: we're going from now where we hardly use what we

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Speaker 1: would call renewable hydrogen or electrolytic hydrogen to a point

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Speaker 1: where in ten years we could be using a serious

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Speaker 1: amount of this stuff. And it really starts with many

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Speaker 1: million billions of dollars that we see coming across the

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Speaker 1: world from different governments to help this technology get a footing,

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Speaker 1: so in ten years the cost declines, maybe at a

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Speaker 1: place where private industry is ready to take it over.

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Speaker 1: If you are really going to draw that parallel between

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Speaker 1: solar and wind and other renewables that have a really

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Speaker 1: low levelised cost of electricity. So now that we're talking

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Speaker 1: about hydrogen the fact that policy plays such an important

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Speaker 1: role in the next decade. For it where in the world,

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Speaker 1: and I guess which governments are supporting it. So where

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Speaker 1: we see the strongest policy support within our global electrocalizer

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Speaker 1: outlook is within Europe, US and China. Like the biggest

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Speaker 1: markets leading on hydrogen will be these in terms of deployment.

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Speaker 1: We can talk about each one individually, but I'll start

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Speaker 1: with Europe. Europe really wants to become a hydrogen champion

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Speaker 1: in terms of technology deployment, in terms of expertise, it

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Speaker 1: is developing within this sector and has been on the

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Speaker 1: forefront of trying to set standards for hydrogen production and

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Speaker 1: also setting the subsidies that they are leading. At the

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Speaker 1: same time, China has been building manufacturing expertise within the sector,

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Speaker 1: especially in electrolyzer technology. They have much larger factories already

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Speaker 1: building much larger projects. So for comparison, we in Europe,

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Speaker 1: the biggest project that we have today is about twenty

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Speaker 1: megawats and sizes. In comparison, in China we already have

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Speaker 1: about a hundred fifty megawat project commission and next year

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Speaker 1: we expect another two hundred sixty megawats project to be commissioned.

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Speaker 1: So in terms of size, China is already establishing projects

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Speaker 1: that are an order of magnitude larger than what we're

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Speaker 1: seeing in Europe. And the last one is the U

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Speaker 1: S which I think Matt can comment on. Yeah, and

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Speaker 1: just to bring in the global perspective on it, I

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Speaker 1: think when we at a high level, when we think

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Speaker 1: about how these governments subsidize hydrogen, there's a couple different

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Speaker 1: ways to do it. In China, it's very much a

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Speaker 1: heavy hand of government approach, having big industrial users of

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Speaker 1: hydrogen adopt low carbon practices to kind of hit their

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Speaker 1: emissions peak by twenty thirties at the national government it

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Speaker 1: wants to hit. In the US, you see a very

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Speaker 1: different approach. It's pretty much all on the supply side. Um.

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Speaker 1: There was recently passed as a part of the Inflation

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Speaker 1: Production Act hydrogen production tax credit, the first ever hydrogen

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Speaker 1: production tax credit in the world, which is just gonna

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Speaker 1: make hydrogen extremely cheap to produce in the States and

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Speaker 1: then it will kind of be up to the demand

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Speaker 1: side to figure out, now we have this cheap hydrogen,

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Speaker 1: what are we gonna use it for? And then you

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Speaker 1: see in Europe which you know Addie can talk about

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Speaker 1: in much greater detail, kind of a hybrid approach where

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Speaker 1: there's going to be a fiscal incentives on the production side,

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Speaker 1: there's probably going to be some element of demand side

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Speaker 1: incentives for the use of hydrogen. Were really kind of

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Speaker 1: trying to balance the approach in the US UM specifically,

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Speaker 1: and in North America Canada is taking. It looks like

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Speaker 1: Canada's going to take a very similar approach, but it's

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Speaker 1: really a supply side story driven by low economics. So

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Speaker 1: the production tax credit that the US just passed is

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Speaker 1: going to make without any other subsidies you know, coming

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Speaker 1: online and other regions, is going to make the US

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Speaker 1: the cheapest place to produce hydrogen in the entire world

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Speaker 1: through when the tax credit expires. So we think that

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Speaker 1: there's there was very little activity in the US before this.

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Speaker 1: Europe has been signaling for a few years now that

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Speaker 1: they had very strong hydrogen ambitions. China is much the same.

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Speaker 1: In the US, it wasn't It was a pretty quiet

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Speaker 1: market and then seemingly out of nowhere, really out of

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Speaker 1: the last twelve months, we've gotten this hydrogen production tax

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Speaker 1: credit ount of the Biden administration, which really changes the

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Speaker 1: game in terms of level life costs of hydrogen and

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Speaker 1: then in terms of what you can do with it

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Speaker 1: as an energy molecule or chemical molecule when you have

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Speaker 1: it at such a low price. What's really interesting right

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Speaker 1: now in Europe is Europe, and in european industry is

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Speaker 1: now looking at the US and the Inflation Reduction Act

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Speaker 1: and seeing that as a huge opportunity to deploy capacity

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Speaker 1: within the US and now using that as a way

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Speaker 1: to justify more subsidies within Europe. So there's very much

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Speaker 1: a race going on or like people, the industry is

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Speaker 1: making it a race of like who has the better

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Speaker 1: framework to deploy hydrogen projects. So both in the stories

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Speaker 1: are currently learning from each other, which is interesting in

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Speaker 1: terms of what what will come out of this. Yeah,

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Speaker 1: and it's very much like a I mean, I don't

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Speaker 1: know if we go so far as call it a competition.

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Speaker 1: It's very much like who has the most funding, who

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Speaker 1: has the best funding? You know, where do the project

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Speaker 1: developers want to go? Where does the capital that's going

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Speaker 1: to deploy this stuff want to go? And it's kind

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Speaker 1: of been a five months ago it was all in

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Speaker 1: Europe and the inflation reduction happens, and we're talking to

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Speaker 1: folks in Europe who are quite jealous and see a

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Speaker 1: lot of capital moving to the US. So it's very

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Speaker 1: much a game of tag here between the US and

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Speaker 1: you in terms public dollars in public support well in

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Speaker 1: a forward looking race for cost declines in terms of

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Speaker 1: hydrogen production, But what's it going to cost in order

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Speaker 1: to drive that? And I guess how much money it's

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Speaker 1: been committed to be spent on driving the cost down.

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Speaker 1: So we tracked this every six months as part of

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Speaker 1: a hydrogen market outlook globally. We're now seeing as of

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Speaker 1: June this year, we're seeing about hundred twenty six billion

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Speaker 1: dollars committed in funding for hydrogen or to which hydrogen

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Speaker 1: projects can apply. So this includes both direct subsidies to

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Speaker 1: the hydroen industry or technology neutral funds for climate protection

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Speaker 1: in some sense where hydrogen projects can also apply. In

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Speaker 1: terms of where we see it as funding being split

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Speaker 1: out at the US and European Union are really leading

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Speaker 1: within this funding. Whereas European Union fundings is capped by

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Speaker 1: a budget, the US doesn't necessarily have a budget, and

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Speaker 1: Matt can definitely speak to that as well. Yeah, I mean,

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Speaker 1: it's an interesting one, and we can when we get

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Speaker 1: into kind of analysis behind the report and kind of

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Speaker 1: how we set our outlook here. We used a lot

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Speaker 1: of the publicly available information the government, mainly how much

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Speaker 1: money they thought they were going to spend. Some of

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Speaker 1: the systems are a finite pool of money, so the

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Speaker 1: government says we're going to get An example in the

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Speaker 1: US is the Infrastructure Bill is going to give eight

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Speaker 1: billion dollars to projects. And really the only variable you

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Speaker 1: can play with when setting an outlook like this is

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Speaker 1: how cheap is the equipment to produce the hydrogen? Because

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Speaker 1: you get eight billion dollars to build it, and whatever

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Speaker 1: that costs to do per unit of of capital cost,

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Speaker 1: that's how much hydrogen you get. But then there are

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Speaker 1: other buckets like the production tax credit, where there's a

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Speaker 1: set of rules that a project developer has to adhere

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Speaker 1: to around wage requirements, around life cycle emissions of the

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Speaker 1: hydrogen production system. But if you qualify to those rules,

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Speaker 1: you get the tax credit. And and the federal government

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Speaker 1: has released their estimations on how much they think it

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Speaker 1: will cost them, we actually think it's going to be

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Speaker 1: a bit more expensive than they're anticipating, but it's really,

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Speaker 1: however many people want to come get it and adhere

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Speaker 1: to the rules, is going to be the final number

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Speaker 1: that gets deployed financially speaking. So there's a bit of

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Speaker 1: that in the US and around the world, and it'll

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Speaker 1: it will certainly be interesting to see how accurate some

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Speaker 1: of these forecasts from the budget offices of these various

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Speaker 1: governments end up being. Now for a very short break,

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Speaker 1: stay with us now, because hydrogen requires an energy source

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Speaker 1: in order to make it, and I know we could

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Speaker 1: spend time talking about the whole color wheel and all

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Speaker 1: of the different colors associated with the different fuel sources,

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Speaker 1: but let's actually instead talk about exactly what it is

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Speaker 1: is that we want to get to renewables. If we're

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Speaker 1: going to make hydrogen from renewables in the US, in China,

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Speaker 1: in Europe, anywhere in the world. Is the amount of

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Speaker 1: renewables required in order to actually supply all of that

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Speaker 1: energy coming online? Is that being considered as a part

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Speaker 1: of this hydrogen development. Sure, I can give you some

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Speaker 1: numbers around our global Electrolyzer forecast that help frame this discussion.

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Speaker 1: In our forecast that we've said based on policies across regions.

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Speaker 1: We the hydrogen electrolyzer market girls from about two giga

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Speaker 1: wats of electroalizers deployed by the end of this year

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Speaker 1: to about two hundred forty gigawatts cumulatively deployed by the

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Speaker 1: end of this decade by twenty thirty. That's about over

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Speaker 1: a hundred fold increase in installed capacity. All of these electrolyzer,

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Speaker 1: as you say, will need electricity, and likely renewable electricity,

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Speaker 1: So we estimated these electroalizers need about one thousand, three

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Speaker 1: hundred tera hours of electricity by twenty thirty. One thousand,

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Speaker 1: three other terror hours is about four percent scent of

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Speaker 1: all global electricity demand. And this four percent number is

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Speaker 1: pretty much the same as we see, for example, electric

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Speaker 1: vehicles and NEOs economic transition scenarios. To put that into context,

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Speaker 1: so we need to be not only for electrifying vehicles

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Speaker 1: industry and so on, but also hydro production in the

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Speaker 1: same order of magnitude. What's interesting about sort of the

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Speaker 1: electricity side of things as well for electrolyzers is that

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Speaker 1: this number varies quite a bit. So while it might

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Speaker 1: be four percent in China or the US, it's about

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Speaker 1: eleven of all the electricity produced in Europe and manned

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Speaker 1: in Europe will need to go to electrolyzers to deploy

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Speaker 1: the capacity we see it in Europe. And this electrolyzing

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Speaker 1: capacity if it comes from renewables. In a scenario where

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Speaker 1: we assume that about half of this electrolyzed capacities electricity

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Speaker 1: supply is supplied by its solar, we get to about

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Speaker 1: six hundred seventy gigawatts of renewable energy capacity, so both solar,

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Speaker 1: onshore wind, and offshore wind. And we compared that to

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Speaker 1: b nfs A solar and wind forecasts out to twenty

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Speaker 1: thirty And what this number really means is that sixteen

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Speaker 1: percent of all the renewables that we estimate are built

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Speaker 1: between now and twenty would need to go to electrolyzes.

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Speaker 1: So either they are built on top of our existing

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Speaker 1: forecast or some of it is diverted away from existing

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Speaker 1: uses for that electricity. Wow, that is a huge amount

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Speaker 1: of additional electricity that needs to be developed for this use.

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Speaker 1: But then I guess that brings me to the question

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Speaker 1: what is the potential for hydrogen to bring down emissions?

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Speaker 1: Because hydrogen is oftentimes talked about is a fuel for

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Speaker 1: the hard to abate space and the things that we

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Speaker 1: really don't have, at least today, viable solutions for decarbonizing

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Speaker 1: their emissions. So do we have a view on what

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Speaker 1: the potential is for emissions reduction with this investment. I

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Speaker 1: think there's a really important point that our team makes

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Speaker 1: a lot, and it's probably seen as quite controversial in

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Speaker 1: the hydrogen twitter verse or whatever public forum you're reading

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Speaker 1: your hydrogen news in the context of how many go

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Speaker 1: lots of renewables we will need just to get to

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Speaker 1: and if you look at the production numbers of hydrogen,

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Speaker 1: we're still not even close to replacing the hydrogen that

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Speaker 1: we use today, the carbon intensive hydrogen. So I think

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Speaker 1: in terms of emissions reduction essential the most important question

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Speaker 1: to ask is what are we using the hydrogen for

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Speaker 1: and is that the best use of the hydrogen from

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Speaker 1: an emissions reduction standpoint. And we've been speaking about this

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Speaker 1: long time. Our founder Mikelibrick famously has his hydrogen ladder.

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Speaker 1: But there's a set of industries where we think hydrogen

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Speaker 1: is going to be extremely critical to reducing the emissions intensity.

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Speaker 1: Things like chemical production in methanol and ammonia fuels, refining,

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Speaker 1: both conventional oil refining and also sustainable fuel refining, like

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Speaker 1: sustainable aviation, fuels, renewable diesel, things such as that. Where

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Speaker 1: hydrogen is really going to be needed no matter what,

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Speaker 1: and what's going to be a really high impact area,

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Speaker 1: we can get low carbon or carbon free hydrogen into

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Speaker 1: the space. And there are other places where you know,

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Speaker 1: you definitely can use hydrogen it's completely feasible, like road

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Speaker 1: based transport, things like power generation. Hydrogen, at least in

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Speaker 1: the near term, is going to be a pretty precious resource.

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Speaker 1: So can we incentivize hydrogen to go into the areas

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Speaker 1: where it's going to make the largest emissions impact. There's

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Speaker 1: a big question. And if we can do that, then yeah,

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Speaker 1: there's quite a bit of potential to reduce emissions from

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Speaker 1: these hard to debate sectors. I fully agree with Matt

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Speaker 1: on this. It really depends on where that hydrogen is

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Speaker 1: being used. To give you an example, based on our outlook,

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Speaker 1: all these electrolyzers that were saying are going to get

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Speaker 1: built by twenty thirty produce about twenty five million tons

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Speaker 1: of green hydrogen by twenty thirty. That's about a quarter

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Speaker 1: a bit more than a quarter twenty seven percent of

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Speaker 1: existing gray hydrogen demand. So hydrogen produced from fossil fuels.

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Speaker 1: Current fossil fuel based hydrogen emits about eight to nine

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Speaker 1: hundred million tons of carbon emissions a year, I believe.

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Speaker 1: So if the green hydrogen that is that we see

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Speaker 1: being produced here is replacing gray hydro and you're looking

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Speaker 1: at replacing about a quarter of the existing gray hydrant emissions,

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Speaker 1: that could be reduced. Now, there are other uses where

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Speaker 1: emissions could be higher, for example in steel because steel

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Speaker 1: is currently produced using a coal so the emissions intensity

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Speaker 1: of producing that is quite high, So the benefit of

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Speaker 1: using hydra and could be higher. But these are real

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Speaker 1: choices and tradeoffs that need to be made. And on

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Speaker 1: the demand side, how much of it do you see

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Speaker 1: actually going to fuels versus industries That really depends. So

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Speaker 1: I think in the near term a lot of the

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Speaker 1: mandates and regulation that is being set around encouraging that

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Speaker 1: the clean hydrant industry to develop, particularly is focused on

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Speaker 1: industrial decarbonization, so that's where you see going into refineries,

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Speaker 1: ammonia production, methanol production, and so on. At the same time,

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Speaker 1: when you see a lot from private actors as well

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Speaker 1: as a push for using hydra and as transport fuels.

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Speaker 1: Here we see really see the big potential in heavy

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Speaker 1: duty transport to think about ships, planes, and some very

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Speaker 1: heavy trucks that go very long distances and so on.

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Speaker 1: There is some porsh for that, for example, in Europe,

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Speaker 1: as much as they want to decarbonized industry, at the

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Speaker 1: same time there are mandates being put in place to

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Speaker 1: decarbonized a small percentage of transport as well. But I

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Speaker 1: think especially because in industry right now, hydrogen in the

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Speaker 1: existing use cases is a drop in replacement. So ideally

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Speaker 1: you can take out the gray hydrant and use the

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Speaker 1: green hydrogen in your existing processes without changing much of

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Speaker 1: the equipment. For fuels, you will need to build separate

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Speaker 1: plans to produce them in the first place. So, for example,

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Speaker 1: when we talk about fuels, particularly, the way we're seeing

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Speaker 1: hydrant being used in ships and planes is not as

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Speaker 1: pure hydrogen, but as methanol or ammonia or kerosene that

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Speaker 1: is produced synthetically from green hydrant with a carbon source.

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Speaker 1: And for that we need production plants that actually produce

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Speaker 1: these fields as well. So let's talk a little bit

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Speaker 1: about technology. There are a couple different technologies out there

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Speaker 1: for hydrogen production, which ones are emerging as the front

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Speaker 1: runner or is it too early to tell. I think

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Speaker 1: we could talk about none of There's so many layers

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Speaker 1: to the technology map of hydrogen technologies, but I think

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Speaker 1: in its simplest form, the two most common technologies we

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Speaker 1: often talk about our electrolytic pathways, so that's using electrolyzer

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Speaker 1: technologies and some sort of power source. And then what

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Speaker 1: we define as thermo chemical pathways, which most commonly is

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Speaker 1: the reformation of messane and steam, or there is the

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Speaker 1: restoration of methane and absence of just normal air. But

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Speaker 1: within those two technologies, there's a subset of technologies. On

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Speaker 1: the electrolytic side, there's really two electrolyzer technologies vying for dominance.

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Speaker 1: There's line technologies and pen technologies, a proton exchange, membrane technologies,

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Speaker 1: and we track these as as an input to our

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Speaker 1: market outlook and other things, and I think the story

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Speaker 1: really is still kind of a toss up in most

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Speaker 1: parts of the world. So if you exclude China, which

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Speaker 1: you know is a pretty big to exclude, but if

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Speaker 1: you exclude China from our latest market outlook, it's roughly

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Speaker 1: a fifty fifty split between pen technologies and alkaline technologies

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Speaker 1: in terms of which electroalizers developers are choosing to procure.

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Speaker 1: But China is such a large market and they have

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Speaker 1: such a dominant alkaline industry already that when you aggravate

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Speaker 1: all the numbers, it looks like alkaline is really the

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Speaker 1: dominant technology. Or on the methane reformation side, there's really

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Speaker 1: two technologies vying for dominance steam methane reformation and auto

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Speaker 1: thermal reformation. There are two processes that are quite similar,

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Speaker 1: and they have a couple of quirks that are different

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Speaker 1: that we can get into. But we're actually seeing a

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Speaker 1: lot of technology developers or project developers not making a call,

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Speaker 1: a lot of unknown projects to date, but out of

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Speaker 1: the projects that are announced, we see auto thermal reformation

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Speaker 1: leading the way. So it's still, i would say, just

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Speaker 1: thinking about the market as a whole, it's still probably

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Speaker 1: too early to call which technologies are gonna dominate. They'll

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Speaker 1: probably each have some success in their own right, but

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Speaker 1: that's the market as we're seeing it right now, and

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Speaker 1: within a forecast. The way we see is developing at

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Speaker 1: the moment is that very likely within China, alkaline dominates

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Speaker 1: and continues to dominate production capacity in Europe and the US.

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Speaker 1: You'll see and even split between PM proto and exchange

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Speaker 1: membrane technology and alkaline technology at the same time. So

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Speaker 1: the cost China is such a dominant market, as Matt

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Speaker 1: already said, until we see about seventy of capacity globally

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Speaker 1: being alkaline electroalizers, and from then on the share of

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Speaker 1: autlines slowly drops to about six until still the dominant technology.

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Speaker 1: But you can see how proton exchange membrane technology is

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Speaker 1: already making in rows in that by the end of

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Speaker 1: this decade is taken up a larger and larger market share.

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Speaker 1: Now for a very short break stay with us. So

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Speaker 1: even with the right policy environment, you definitely have private

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Speaker 1: companies that are building a lot of this technology and

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Speaker 1: deploying it. So on the supply side, what are some

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Speaker 1: of the key names that we should know, What are

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Speaker 1: the companies that are doing this. There's definitely already established

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Speaker 1: companies manufacturing companies who are looking into electoralizer as a

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Speaker 1: new busines this area. These are for example, in Europe

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Speaker 1: Siemens Energy, which produces other technologies like gas turbines already

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Speaker 1: but also now getting into the business of producing electorallyzers,

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Speaker 1: particularly proton exchange membering electoralizes that scale. In the US

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Speaker 1: you have the same thing with companies like Commons who

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Speaker 1: produce other equipment but now coming into electoralizing business. Same

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Speaker 1: with again the synchropland others like big established manufacturers who

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Speaker 1: are now looking at the electrocizing business. At the same time,

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Speaker 1: you now have emerging pure play hydrogen players within this

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Speaker 1: which do nothing else other than electoralizers and maybe some

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Speaker 1: refueling stations. These are your nails of the world. So

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Speaker 1: now in Norway, your I t M Power in the UK,

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Speaker 1: your Plug Power in the US which also does other

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Speaker 1: slightly other business but mostly focused on producing electrolyzers and

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Speaker 1: fuel cells, so really focused on the hydrogen industry as

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Speaker 1: a whole. The last players all add to what Ali

434
00:22:54,400 --> 00:22:58,119
Speaker 1: just said is there are some folks on the demand side,

435
00:22:58,240 --> 00:23:01,440
Speaker 1: so people who could either conventionally use hydrogen as a

436
00:23:01,520 --> 00:23:05,320
Speaker 1: drop in replacement for industrial applications or see a pathway

437
00:23:05,359 --> 00:23:08,480
Speaker 1: to using hydrogen in their business model in some way

438
00:23:08,640 --> 00:23:11,840
Speaker 1: really leaning it and trying to develop a hydrogen business

439
00:23:11,960 --> 00:23:15,320
Speaker 1: for themselves. This is like mining company in Australia for

440
00:23:15,480 --> 00:23:19,320
Speaker 1: test key future industries. As you think of conventional energy players,

441
00:23:19,359 --> 00:23:22,119
Speaker 1: oil players like the Exons and Chevrons of the world.

442
00:23:22,560 --> 00:23:26,520
Speaker 1: You think of conventional gas producers, gas handlers, So the

443
00:23:26,560 --> 00:23:29,320
Speaker 1: folks that make the carbon intensive hydrogen today, the air

444
00:23:29,359 --> 00:23:32,159
Speaker 1: lia kids their products, the lens of the world, and

445
00:23:32,200 --> 00:23:35,080
Speaker 1: then other folks, a lot of fertilizer companies getting into

446
00:23:35,080 --> 00:23:37,560
Speaker 1: the ring, understanding that hydrogen is a major input to

447
00:23:37,560 --> 00:23:40,800
Speaker 1: their process, maybe wanting to integrate a bit vertically up

448
00:23:40,800 --> 00:23:43,240
Speaker 1: into the hydrogen production space. So it's a healthy combination

449
00:23:43,400 --> 00:23:46,560
Speaker 1: of people producing the technology and the upstream people in

450
00:23:46,560 --> 00:23:50,359
Speaker 1: the downstream getting interested in understanding a bit more about

451
00:23:50,440 --> 00:23:52,480
Speaker 1: how the changes are gonna work and if there's any

452
00:23:52,520 --> 00:23:55,359
Speaker 1: opportunity for their business in this low carbon transition. But

453
00:23:55,400 --> 00:23:57,440
Speaker 1: it's a pretty good mix of companies up and down

454
00:23:57,480 --> 00:23:59,800
Speaker 1: the supply chain putting their hand up and getting interested.

455
00:24:00,119 --> 00:24:02,080
Speaker 1: So putting myself in the shoes of someone in the

456
00:24:02,119 --> 00:24:05,560
Speaker 1: supply chain and putting my corporate strategist at on. If

457
00:24:05,600 --> 00:24:08,000
Speaker 1: I'm working at one of these companies, what are some

458
00:24:08,080 --> 00:24:09,959
Speaker 1: of the reasons I might be cautious and what are

459
00:24:10,000 --> 00:24:12,399
Speaker 1: some of the barriers that may stand in the way

460
00:24:12,480 --> 00:24:15,160
Speaker 1: of all of this growth? That we're talking about. So yeah,

461
00:24:15,240 --> 00:24:17,639
Speaker 1: if I was in that position, you can see that

462
00:24:17,800 --> 00:24:20,760
Speaker 1: governments are setting out huge targets, a lot of ambition

463
00:24:20,800 --> 00:24:24,560
Speaker 1: on producing hydrogen, and the projects are not yet taking off,

464
00:24:24,640 --> 00:24:27,600
Speaker 1: like very few final investment decisions in this space so far.

465
00:24:27,960 --> 00:24:29,879
Speaker 1: And a lot of that is one because a lot

466
00:24:29,920 --> 00:24:32,440
Speaker 1: of the subsidies is particularly in Europe for example, are

467
00:24:32,600 --> 00:24:35,880
Speaker 1: announced but haven't been given out yet or allocated yet.

468
00:24:35,880 --> 00:24:39,439
Speaker 1: For example, Europe is talking about contracts for difference mechanisms

469
00:24:39,480 --> 00:24:43,880
Speaker 1: to really encourage commercial projects that not just our pilots

470
00:24:43,880 --> 00:24:47,040
Speaker 1: and test facilities, but really commercial projects. Those subsidies are

471
00:24:47,040 --> 00:24:49,160
Speaker 1: not available yet, they will be available over the next year.

472
00:24:49,200 --> 00:24:51,120
Speaker 1: A lot of that still needs to be figured out.

473
00:24:51,200 --> 00:24:54,399
Speaker 1: So one subsidy availability. The other one that both the

474
00:24:54,520 --> 00:24:57,399
Speaker 1: US and Europe are trying to figure out is what

475
00:24:57,600 --> 00:25:00,639
Speaker 1: actually counts a screen hydrogen. It's sound as simple as

476
00:25:00,680 --> 00:25:03,560
Speaker 1: it is, but we don't have a clear definition across

477
00:25:03,600 --> 00:25:07,920
Speaker 1: the board of under what conditions can hydrogen be produced

478
00:25:08,040 --> 00:25:11,399
Speaker 1: and be considered a green product. So that's not only

479
00:25:11,520 --> 00:25:15,160
Speaker 1: the emissions threshold which is being set by the US

480
00:25:15,200 --> 00:25:18,040
Speaker 1: and Europe and other countries, but also how do I

481
00:25:18,280 --> 00:25:22,600
Speaker 1: encourage more renewables deployment to overcome this gap and sort

482
00:25:22,600 --> 00:25:25,800
Speaker 1: of not having enough renewable's capacity to supply all these

483
00:25:25,840 --> 00:25:29,600
Speaker 1: hydrogen production, how do I make sure that all these

484
00:25:29,640 --> 00:25:33,200
Speaker 1: electrolyzers don't add too much additional demand on the electricity

485
00:25:33,200 --> 00:25:35,720
Speaker 1: grid and so on. So what the Europe is trying

486
00:25:35,760 --> 00:25:38,520
Speaker 1: to define now the US is at the same point

487
00:25:39,080 --> 00:25:42,600
Speaker 1: is can I produce hydrogen from renewables if I'm still

488
00:25:42,640 --> 00:25:44,919
Speaker 1: connected to the grid, Like, under what conditions can I

489
00:25:44,960 --> 00:25:47,159
Speaker 1: do that? Under what hour of the day can I

490
00:25:47,200 --> 00:25:49,639
Speaker 1: do that? And so on. So that's really where a

491
00:25:49,680 --> 00:25:51,640
Speaker 1: lot of the discussions is still going on, and then

492
00:25:51,640 --> 00:25:54,000
Speaker 1: we don't have a resolution yet. Yeah, Dana, we could

493
00:25:54,000 --> 00:25:57,520
Speaker 1: spend a whole separate podcast just talking about this question,

494
00:25:57,680 --> 00:26:01,760
Speaker 1: the question around grid connection, the time of use, additionality

495
00:26:01,800 --> 00:26:04,399
Speaker 1: of renewables. These are really at the forefront of the

496
00:26:04,440 --> 00:26:07,800
Speaker 1: policymakers and developers in Europe and in the States. It's

497
00:26:07,800 --> 00:26:09,520
Speaker 1: a really important question. I think if I had to

498
00:26:09,520 --> 00:26:11,919
Speaker 1: put my corporate strategy had on that would probably be

499
00:26:12,000 --> 00:26:14,960
Speaker 1: number one. And the number two is just the trickiest

500
00:26:14,960 --> 00:26:17,520
Speaker 1: part of the hydrogen ecosystem right now is the mid stream.

501
00:26:17,600 --> 00:26:20,920
Speaker 1: So thinking about transport and storage. It's famously the lightest gas,

502
00:26:20,960 --> 00:26:24,240
Speaker 1: the smallest gas, and it's really tricky to just put

503
00:26:24,280 --> 00:26:25,920
Speaker 1: it in a pipeline or put it on a ship

504
00:26:26,000 --> 00:26:28,040
Speaker 1: and get it to where it needs to go. Historically,

505
00:26:28,440 --> 00:26:31,080
Speaker 1: hydrogen is almost always produced at the point of use,

506
00:26:31,119 --> 00:26:33,680
Speaker 1: so they have a big hydrogen production facility right next

507
00:26:33,760 --> 00:26:36,600
Speaker 1: to the refinery or ammonia facility that's going to be

508
00:26:36,800 --> 00:26:38,960
Speaker 1: used in And that's because this mid stream aspect is

509
00:26:39,000 --> 00:26:41,000
Speaker 1: so tricky. And when you start to think about the

510
00:26:41,080 --> 00:26:43,960
Speaker 1: variable production of hydrogen from solar wind, so you're only

511
00:26:43,960 --> 00:26:45,720
Speaker 1: producing it when the sun is shining or the wind

512
00:26:45,800 --> 00:26:48,280
Speaker 1: is blowing, and you're feeding that into a system like

513
00:26:48,320 --> 00:26:52,080
Speaker 1: a refinery ammonia facility that has high uptime requirements. To

514
00:26:52,119 --> 00:26:55,600
Speaker 1: the storage aspect gets really challenging. The transportation aspect of

515
00:26:55,640 --> 00:26:57,680
Speaker 1: it gets really challenging if you want to put the

516
00:26:57,760 --> 00:27:01,560
Speaker 1: renewables in one place and the electoralizer or the hydrogen

517
00:27:01,600 --> 00:27:04,240
Speaker 1: demand source and another. So I think when we get

518
00:27:04,320 --> 00:27:07,760
Speaker 1: to thinking about the ten year forecast and what's going

519
00:27:07,800 --> 00:27:10,320
Speaker 1: to be reality over the next decade when this stuff

520
00:27:10,359 --> 00:27:12,159
Speaker 1: really scales, it's really going to be a question of

521
00:27:12,160 --> 00:27:14,159
Speaker 1: what are the smartest ways to move this stuff and

522
00:27:14,200 --> 00:27:17,159
Speaker 1: what are the smartest places to use it considering the

523
00:27:17,240 --> 00:27:20,240
Speaker 1: challenges around the mid stream. This is why initially we

524
00:27:20,320 --> 00:27:23,440
Speaker 1: as a team looking at this industry are seeing hydrogen

525
00:27:23,560 --> 00:27:27,120
Speaker 1: production and demand being very closely located together. So we're

526
00:27:27,160 --> 00:27:30,480
Speaker 1: thinking about big hydrogen hubs where hydrogen is produced on

527
00:27:30,600 --> 00:27:34,439
Speaker 1: site and delivered to an industrial cluster right next door,

528
00:27:34,560 --> 00:27:36,960
Speaker 1: and where you overcome a lot of these issues around

529
00:27:36,960 --> 00:27:39,320
Speaker 1: storage and transport, which needs to be figured out at

530
00:27:39,359 --> 00:27:41,520
Speaker 1: one point as well, and on the other hand, also

531
00:27:41,560 --> 00:27:43,639
Speaker 1: take a lot of time to develop. It takes like

532
00:27:43,680 --> 00:27:46,359
Speaker 1: three to seven to ten years to develop a pipe,

533
00:27:46,400 --> 00:27:50,200
Speaker 1: a new pipeline for hydrogen. So while that is being developed,

534
00:27:50,200 --> 00:27:52,679
Speaker 1: we see a lot of these hydrogen production and demand

535
00:27:52,680 --> 00:27:56,760
Speaker 1: being co located because it's incredibly difficult to contain, is

536
00:27:56,800 --> 00:27:58,879
Speaker 1: it not. Not only is it very light, but it

537
00:27:58,920 --> 00:28:02,399
Speaker 1: can escape from a lot of different spaces quite easily.

538
00:28:02,440 --> 00:28:05,080
Speaker 1: So the physical limitations and where we can store it

539
00:28:05,359 --> 00:28:08,960
Speaker 1: and for how long are part of the restriction. Let's

540
00:28:09,000 --> 00:28:11,760
Speaker 1: not sound too many alarms here. The hydrogen has been

541
00:28:12,080 --> 00:28:15,240
Speaker 1: moved around to pipelines for decades. It's heavily understood, it's

542
00:28:15,240 --> 00:28:19,560
Speaker 1: heavily utilized, so there's no like technological hurdles to getting

543
00:28:19,560 --> 00:28:21,320
Speaker 1: to the point where we can figure out the mid stream.

544
00:28:21,400 --> 00:28:24,480
Speaker 1: I think from a global trade perspective, you hear a

545
00:28:24,480 --> 00:28:28,120
Speaker 1: lot of folks saying they're gonna ship hydrogen from Australia

546
00:28:28,200 --> 00:28:31,199
Speaker 1: to Europe, or Canada to Europe, or ship to Japan

547
00:28:31,320 --> 00:28:33,640
Speaker 1: from South America and those there's a lot of head

548
00:28:33,640 --> 00:28:36,119
Speaker 1: scratching to be down there. If you're shipping hydrogen to

549
00:28:36,160 --> 00:28:38,880
Speaker 1: be used as hydrogen and any of those methods, it

550
00:28:38,960 --> 00:28:41,280
Speaker 1: just adds so much cost. You have to liquefy it,

551
00:28:41,360 --> 00:28:43,520
Speaker 1: you have to compress it and ship a very small

552
00:28:43,560 --> 00:28:45,520
Speaker 1: amount of it, or you can turn it into something

553
00:28:45,560 --> 00:28:47,600
Speaker 1: like ammonia, which you know works if you're going to

554
00:28:47,760 --> 00:28:50,360
Speaker 1: use it as ammonia in the final destination. But if

555
00:28:50,360 --> 00:28:52,320
Speaker 1: you have to re crack it back into hydrogen, the

556
00:28:52,360 --> 00:28:54,600
Speaker 1: economics just really poor. So it's not so much a

557
00:28:54,680 --> 00:28:57,920
Speaker 1: technological issue as is as it is an economic issue.

558
00:28:58,120 --> 00:28:59,640
Speaker 1: But yeah, it's still one that we definitely need to

559
00:28:59,640 --> 00:29:01,200
Speaker 1: figure out. And I guess the less thing I'll say

560
00:29:01,400 --> 00:29:04,200
Speaker 1: not to dampen the party too much, but hydrogen itself

561
00:29:04,320 --> 00:29:07,200
Speaker 1: is a gas with warming potential, and it doesn't make

562
00:29:07,360 --> 00:29:09,080
Speaker 1: that big of a difference today. But if we come

563
00:29:09,120 --> 00:29:11,520
Speaker 1: to this world in where we are using a lot

564
00:29:11,560 --> 00:29:13,560
Speaker 1: of hydrogen, we will need to come up with strict

565
00:29:13,600 --> 00:29:16,880
Speaker 1: control measures for leakage because we don't want to trade

566
00:29:17,080 --> 00:29:20,600
Speaker 1: one greenhouse gas for another. And yeah, it'll it'll definitely

567
00:29:20,640 --> 00:29:24,120
Speaker 1: be a consideration moving forward and seeing some parallels here

568
00:29:24,120 --> 00:29:26,520
Speaker 1: actually with what you've just said regarding how we really

569
00:29:26,520 --> 00:29:29,720
Speaker 1: think about natural gas, and in many respects at one

570
00:29:29,800 --> 00:29:32,960
Speaker 1: point in time that it was lauded as this much

571
00:29:33,280 --> 00:29:37,640
Speaker 1: less carbon intensive energy source that provided tremendous flexible capacity

572
00:29:37,720 --> 00:29:40,520
Speaker 1: for wind and solar when they weren't able to produce.

573
00:29:40,840 --> 00:29:43,360
Speaker 1: But there's a lot of discussion now about actually phasing

574
00:29:43,360 --> 00:29:46,040
Speaker 1: out natural gas use because of the emissions in the

575
00:29:46,160 --> 00:29:49,000
Speaker 1: longer term. Do you think that hydrogen will have a

576
00:29:49,080 --> 00:29:52,600
Speaker 1: similar trajectory or because of the places that it occupies

577
00:29:52,920 --> 00:29:56,760
Speaker 1: in our energy and consumption space that where there really

578
00:29:56,800 --> 00:29:59,720
Speaker 1: isn't a viable alternative, that it won't There's a lot

579
00:29:59,720 --> 00:30:04,240
Speaker 1: of talk about comparing hydrogen to natural gas today. Fundamentally,

580
00:30:04,240 --> 00:30:07,200
Speaker 1: what we're trying to say within our market outlooks and

581
00:30:07,200 --> 00:30:09,720
Speaker 1: what we're seeing as well, is that hydroen will occupy

582
00:30:09,800 --> 00:30:12,000
Speaker 1: some of the spaces where natural gas is used today,

583
00:30:12,120 --> 00:30:14,640
Speaker 1: for example an industry, but it would also not go

584
00:30:14,720 --> 00:30:17,600
Speaker 1: into certain sectors where we don't think it makes sense

585
00:30:17,640 --> 00:30:20,240
Speaker 1: to use hydrogen. We have better technologies, like, for example,

586
00:30:20,280 --> 00:30:23,280
Speaker 1: for home heating. In that sense, the hydrant industry will

587
00:30:23,360 --> 00:30:26,120
Speaker 1: be smaller than the natural gas industry and you won't

588
00:30:26,280 --> 00:30:29,920
Speaker 1: need to use all that equipment. Fundamentally, at this point

589
00:30:30,280 --> 00:30:33,320
Speaker 1: in the industries that we're talking about, we're hydrogen is crucial.

590
00:30:33,440 --> 00:30:37,080
Speaker 1: We don't really have an alternative to using de carbonized hydrogen.

591
00:30:37,160 --> 00:30:39,600
Speaker 1: There might be some innovation coming along the way, and

592
00:30:39,640 --> 00:30:42,440
Speaker 1: we're seeing that, for example and steel already where maybe

593
00:30:42,600 --> 00:30:44,840
Speaker 1: hydrone will be used and it's probably the most mature

594
00:30:44,880 --> 00:30:47,560
Speaker 1: technology to use to the carbonized steel production. But we're

595
00:30:47,560 --> 00:30:50,920
Speaker 1: also seeing new applications and new innovation and steel where

596
00:30:51,120 --> 00:30:54,080
Speaker 1: you don't need hydrogen as if heed stock anymore at all.

597
00:30:54,200 --> 00:30:56,400
Speaker 1: These are less mature and could come up. So there's

598
00:30:56,400 --> 00:30:59,600
Speaker 1: still some open question marks about it, but generally speaking,

599
00:30:59,640 --> 00:31:02,200
Speaker 1: we tend to focus on the sectors where we don't

600
00:31:02,200 --> 00:31:05,560
Speaker 1: have an alternative to using keen hydrogen today. Dana, I

601
00:31:05,560 --> 00:31:07,760
Speaker 1: think I'm gonna come and respond to your initial question

602
00:31:07,800 --> 00:31:10,520
Speaker 1: with a very firm no. I feel like it would

603
00:31:10,520 --> 00:31:13,760
Speaker 1: be very incorrect and quite controversial to let's say our

604
00:31:13,840 --> 00:31:16,640
Speaker 1: view is that we think there's hydrogen and natural gas

605
00:31:16,640 --> 00:31:18,880
Speaker 1: will have a similar trajectory. I think fundamentally they're they're

606
00:31:18,920 --> 00:31:21,360
Speaker 1: different things. There's a lot of parallels. You could see

607
00:31:21,360 --> 00:31:24,200
Speaker 1: the same sort of concern about upstream leakage that you

608
00:31:24,200 --> 00:31:27,480
Speaker 1: see in natural gas. Hydrogen is obviously used or could

609
00:31:27,520 --> 00:31:29,360
Speaker 1: be used in a lot of places where natural gas

610
00:31:29,400 --> 00:31:32,560
Speaker 1: is used today. But the development of hydrogen is for

611
00:31:32,640 --> 00:31:35,080
Speaker 1: a fundamentally different pursuit, and it's carbon free at the

612
00:31:35,120 --> 00:31:36,760
Speaker 1: point of view, So I think there are two very

613
00:31:36,800 --> 00:31:41,160
Speaker 1: different things. The overarching reason why our team exists NS

614
00:31:41,200 --> 00:31:43,840
Speaker 1: and why folks are seriously thinking about hydrogen is the

615
00:31:43,880 --> 00:31:45,800
Speaker 1: truth remains, if we want to get to net zero

616
00:31:46,080 --> 00:31:49,080
Speaker 1: as quickly as possible, we are going to need energy

617
00:31:49,120 --> 00:31:51,239
Speaker 1: molecules to do some things. We are going to need

618
00:31:51,360 --> 00:31:54,200
Speaker 1: energy molecules to do nearly as much as they do today.

619
00:31:54,320 --> 00:31:57,760
Speaker 1: But net zero by twenty fifty looks almost impossible just

620
00:31:57,920 --> 00:32:01,360
Speaker 1: using electrons. So high drogen will undertake some of the

621
00:32:01,440 --> 00:32:04,360
Speaker 1: roles that natural gas did, probably won't have as large

622
00:32:04,360 --> 00:32:06,880
Speaker 1: of an energy footprint as natural gas house today, that's

623
00:32:06,880 --> 00:32:08,960
Speaker 1: not what we're expecting for it to be, but it

624
00:32:09,000 --> 00:32:12,480
Speaker 1: will be pretty critical energy molecule, that is, carbon tree

625
00:32:12,520 --> 00:32:14,560
Speaker 1: that can help get us the last way there in

626
00:32:14,680 --> 00:32:16,600
Speaker 1: terms of net zero in a few of these really

627
00:32:16,640 --> 00:32:19,840
Speaker 1: difficult sectors. So, Matt, you already gave me an idea

628
00:32:19,920 --> 00:32:22,000
Speaker 1: for a future podcast. So thank you so much for that,

629
00:32:22,000 --> 00:32:23,920
Speaker 1: because I'm always on the search for what the next

630
00:32:23,920 --> 00:32:27,320
Speaker 1: switched On is going to be. And for today, Addie, Matt,

631
00:32:27,360 --> 00:32:30,240
Speaker 1: thank you so much for joining and explaining what we're

632
00:32:30,240 --> 00:32:32,880
Speaker 1: thinking about when we think about the electoralizer market and

633
00:32:32,960 --> 00:32:35,120
Speaker 1: where hydrogen is going to go in the future. Thanks

634
00:32:35,120 --> 00:32:37,360
Speaker 1: for having us, Dana. Thanks Dana. Look forward to come

635
00:32:37,400 --> 00:32:45,160
Speaker 1: back and talk more hydrogen soon. Today's episode of switched

636
00:32:45,160 --> 00:32:47,800
Speaker 1: On was edited by Rex Warner of gray Stoke Media.

637
00:32:47,880 --> 00:32:50,520
Speaker 1: Bloomberg any F as a service provided by Bloomberg Finance

638
00:32:50,600 --> 00:32:53,680
Speaker 1: LP and its affiliates. This recording does not constitute, nor

639
00:32:53,720 --> 00:32:56,920
Speaker 1: should it be construed as investment advice, investment recommendations, or

640
00:32:57,000 --> 00:33:00,200
Speaker 1: recommendation as to an investment or other strategy. Bloomberg any

641
00:33:00,200 --> 00:33:02,880
Speaker 1: F should not be considered as information sufficient upon which

642
00:33:02,920 --> 00:33:05,920
Speaker 1: to base an investment decision. Neither Bloomberg Finance LP, nor

643
00:33:05,960 --> 00:33:08,920
Speaker 1: any of its affiliates, makes any representation or warranty as

644
00:33:08,920 --> 00:33:11,440
Speaker 1: to the accuracy or completeness of the information contained in

645
00:33:11,480 --> 00:33:14,640
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646
00:33:14,680 --> 00:33:15,200
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