WEBVTT - Electrolyzers Help Heat Up the Great Hydrogen Debate 0:00:00.240 --> 0:00:02.880 Hi, this is Dana Perkins and you're listening to Switch 0:00:03.000 --> 0:00:05.800 on the b F podcast. Today, we're going to talk 0:00:05.840 --> 0:00:10.480 about hydrogen electrolyzers. With a number of favorable policy incentives, 0:00:10.560 --> 0:00:12.760 we really expect to see this market take off over 0:00:12.760 --> 0:00:15.280 the next decade, and this is going to be around 0:00:15.320 --> 0:00:18.680 the world, from the US to Europe to China. The 0:00:18.720 --> 0:00:22.080 conditions are right for growth, but let's think about how 0:00:22.160 --> 0:00:24.840 much money is this actually going to require, and what 0:00:24.960 --> 0:00:28.200 technologies are the front runners, and also what will be 0:00:28.360 --> 0:00:31.200 the emerging fuel source to make all of this hydrogen, 0:00:31.640 --> 0:00:34.400 and will it be more locally produced or shipped around 0:00:34.400 --> 0:00:38.199 the world, and a lot of other questions. So on 0:00:38.280 --> 0:00:41.520 today's episode, I get to speak with Adithia Bashum and 0:00:41.760 --> 0:00:45.360 Matthew Bravante. They are both hydrogen analysts at b F. 0:00:46.040 --> 0:00:48.360 Note that B and EF does not provide investment or 0:00:48.400 --> 0:00:51.040 strategy advice, and we have a full disclaimer at the 0:00:51.159 --> 0:00:53.800 end of the show. But now I want to talk 0:00:53.840 --> 0:01:04.800 about hydrogen with Addie and Matt. Let's have a listen. Addie, 0:01:04.840 --> 0:01:07.360 thank you for joining the show today. Hight A great 0:01:07.400 --> 0:01:11.319 to be here, and Matt thank you for joining as well. Thanks. Dana, 0:01:11.360 --> 0:01:14.600 happy to be here great, So we have two members 0:01:14.760 --> 0:01:17.840 of our team that focus on hydrogen here to talk 0:01:17.880 --> 0:01:22.040 about electrolyzers. And for the uninitiated, that begs the question, 0:01:22.640 --> 0:01:26.200 what is an electrolyzer. An electrolyzer is it's fundamentally a 0:01:26.200 --> 0:01:29.480 piece of equipment to gas separating piece of equipment. So 0:01:29.640 --> 0:01:34.720 it takes water and electricity and separates that into two gases, 0:01:34.800 --> 0:01:38.880 hydrogen and oxygen. So it's a way to produce hydrogen gas, 0:01:38.920 --> 0:01:41.399 which we'll get into as a range of applications. But 0:01:41.400 --> 0:01:43.960 it's a way to produce hydrogen gas without any sort 0:01:44.000 --> 0:01:46.840 of residual carbon leading the system. So it starts with 0:01:46.880 --> 0:01:49.280 a carbon free source of hydrogen water and ends up 0:01:49.320 --> 0:01:52.320 with a hydrogen product that can be considered zero carbon 0:01:52.360 --> 0:01:56.200 emissions depending on the electricity source. And the zero carbon 0:01:56.200 --> 0:01:59.320 emissions aspect is why hydrogen is likely to take off? 0:01:59.400 --> 0:02:02.040 Is that correct? Yeah? I think hydrogen it's gone through 0:02:02.040 --> 0:02:05.040 many boom and bus phases of excitement, but fundamentally, the 0:02:05.080 --> 0:02:07.320 thing that's exciting about it is it can be used 0:02:07.400 --> 0:02:10.160 as a molecule for chemical applications. It can be used 0:02:10.160 --> 0:02:12.480 as an energy molecule, but at the point of use 0:02:12.800 --> 0:02:15.280 because it's a molecule with no embedded carbon. So when 0:02:15.280 --> 0:02:19.200 you think of conventional hydrocarbons, they're usually some amount of 0:02:19.240 --> 0:02:21.799 carbon molecules some amount of hydrogen molecules, and when they're 0:02:21.800 --> 0:02:24.600 combusted or used in industry, there's usually some sort of 0:02:24.600 --> 0:02:28.040 oxidation reaction which creates c O two, which is released 0:02:28.040 --> 0:02:29.880 in the atmosphere, and we all know that is a 0:02:29.960 --> 0:02:32.920 negative outcome with hydrogen, but there is no carbon in 0:02:32.960 --> 0:02:35.560 the molecule, so when it's oxidized or used in some 0:02:35.600 --> 0:02:39.120 other chemical application, usually the byproduct is a bit of 0:02:39.120 --> 0:02:42.080 heat and some water, So much better for the world 0:02:42.120 --> 0:02:45.560 in terms of carbon question. What's interesting about hydrogen or 0:02:45.560 --> 0:02:49.000 low carbon hydrant specifically is that as a molecule it 0:02:49.000 --> 0:02:52.120 can replace uses where it's already being used today, where 0:02:52.160 --> 0:02:55.040 it's produced from fossil fuels, for example as a feedstock 0:02:55.080 --> 0:02:58.680 for industry, but to produce ammonia in oil refineries, to 0:02:58.720 --> 0:03:01.840 produce methanol, all these chemicals that we really depend on, 0:03:02.120 --> 0:03:05.120 and also as a molecule to decarbonize other sectors with 0:03:05.240 --> 0:03:08.120 hydrogen is not used today, for example in steel, where 0:03:08.160 --> 0:03:11.840 it can help reduce iron oxide to iron and be 0:03:12.160 --> 0:03:15.760 precursor to green steel. So an important molecule for the future, 0:03:15.800 --> 0:03:18.840 would we think about decarbonizing And what we're going to 0:03:18.919 --> 0:03:22.040 talk about today really is you've done this forward looking 0:03:22.240 --> 0:03:26.079 market outlook on the electroalizer market, and to use your 0:03:26.120 --> 0:03:29.640 own term, you say that the market is about to 0:03:29.800 --> 0:03:32.480 take off. What do you mean by that? And why 0:03:32.560 --> 0:03:34.440 is it about to take off? I guess there'll be 0:03:34.480 --> 0:03:37.240 a lot of this kind of onion to unpeel here. 0:03:37.520 --> 0:03:40.000 I guess In short, what is it that has put 0:03:40.080 --> 0:03:43.840 us at this precipice our starting point? Our Global Electoralizer 0:03:43.880 --> 0:03:47.560 Outlook twenty thirty is really the Hydrogant team's first attempt 0:03:47.640 --> 0:03:52.080 at assessing policies by region, looking at announced projects and 0:03:52.160 --> 0:03:55.760 aggregate and looking at the economics of producing carbon hydrogen 0:03:55.840 --> 0:03:58.480 in certain locations, putting all of that knowledge together in 0:03:58.520 --> 0:04:01.320 one document and come up with an estimate for how 0:04:01.320 --> 0:04:04.720 many giga outs of electrolyzer capacity we can see deployed 0:04:04.720 --> 0:04:07.120 by the end of this decade. Yeah, I think the 0:04:07.240 --> 0:04:09.560 reference you're onion the first kind of thing to peel back, 0:04:09.600 --> 0:04:12.560 and the real impetus around this report is just, at 0:04:12.640 --> 0:04:15.040 least in my mind, it's the funding that we've seen 0:04:15.160 --> 0:04:18.800 come online for hydrogen in the past twelve to eighteen 0:04:18.839 --> 0:04:23.520 months from very large federal or regional government levels, and 0:04:23.560 --> 0:04:25.800 I think when you think about the long term or 0:04:25.839 --> 0:04:29.520 the the medium to long term out a lot of 0:04:29.560 --> 0:04:33.320 that activity is going to be driven by public financing, 0:04:33.360 --> 0:04:35.919 public support. It's very analogous to the way wind and 0:04:35.960 --> 0:04:39.640 solar initially got their boost and climbed down the cost curves. 0:04:39.680 --> 0:04:44.120 We think we're seeing similar type of incentives for hydrogen, 0:04:44.320 --> 0:04:46.760 and we think that will help hydrogen climb down the 0:04:46.839 --> 0:04:49.200 same sort of cost curves get to a point where 0:04:49.360 --> 0:04:52.120 we're going from now where we hardly use what we 0:04:52.120 --> 0:04:55.600 would call renewable hydrogen or electrolytic hydrogen to a point 0:04:55.600 --> 0:04:57.520 where in ten years we could be using a serious 0:04:57.560 --> 0:04:59.840 amount of this stuff. And it really starts with many 0:05:00.040 --> 0:05:02.800 million billions of dollars that we see coming across the 0:05:02.800 --> 0:05:06.120 world from different governments to help this technology get a footing, 0:05:06.279 --> 0:05:08.279 so in ten years the cost declines, maybe at a 0:05:08.279 --> 0:05:11.039 place where private industry is ready to take it over. 0:05:11.279 --> 0:05:13.680 If you are really going to draw that parallel between 0:05:13.800 --> 0:05:16.160 solar and wind and other renewables that have a really 0:05:16.279 --> 0:05:20.040 low levelised cost of electricity. So now that we're talking 0:05:20.040 --> 0:05:23.240 about hydrogen the fact that policy plays such an important 0:05:23.320 --> 0:05:27.279 role in the next decade. For it where in the world, 0:05:27.279 --> 0:05:31.120 and I guess which governments are supporting it. So where 0:05:31.160 --> 0:05:34.760 we see the strongest policy support within our global electrocalizer 0:05:34.800 --> 0:05:38.960 outlook is within Europe, US and China. Like the biggest 0:05:38.960 --> 0:05:42.600 markets leading on hydrogen will be these in terms of deployment. 0:05:42.720 --> 0:05:45.040 We can talk about each one individually, but I'll start 0:05:45.080 --> 0:05:49.279 with Europe. Europe really wants to become a hydrogen champion 0:05:49.360 --> 0:05:52.920 in terms of technology deployment, in terms of expertise, it 0:05:53.000 --> 0:05:56.039 is developing within this sector and has been on the 0:05:56.080 --> 0:05:59.839 forefront of trying to set standards for hydrogen production and 0:06:00.000 --> 0:06:02.440 also setting the subsidies that they are leading. At the 0:06:02.440 --> 0:06:06.400 same time, China has been building manufacturing expertise within the sector, 0:06:06.560 --> 0:06:10.719 especially in electrolyzer technology. They have much larger factories already 0:06:10.800 --> 0:06:15.479 building much larger projects. So for comparison, we in Europe, 0:06:15.480 --> 0:06:17.880 the biggest project that we have today is about twenty 0:06:17.880 --> 0:06:21.479 megawats and sizes. In comparison, in China we already have 0:06:21.640 --> 0:06:25.000 about a hundred fifty megawat project commission and next year 0:06:25.080 --> 0:06:28.880 we expect another two hundred sixty megawats project to be commissioned. 0:06:29.160 --> 0:06:32.600 So in terms of size, China is already establishing projects 0:06:32.600 --> 0:06:35.000 that are an order of magnitude larger than what we're 0:06:35.000 --> 0:06:37.000 seeing in Europe. And the last one is the U 0:06:37.040 --> 0:06:39.440 S which I think Matt can comment on. Yeah, and 0:06:39.480 --> 0:06:41.600 just to bring in the global perspective on it, I 0:06:41.680 --> 0:06:43.719 think when we at a high level, when we think 0:06:43.720 --> 0:06:47.799 about how these governments subsidize hydrogen, there's a couple different 0:06:47.800 --> 0:06:49.840 ways to do it. In China, it's very much a 0:06:49.880 --> 0:06:54.000 heavy hand of government approach, having big industrial users of 0:06:54.080 --> 0:06:57.360 hydrogen adopt low carbon practices to kind of hit their 0:06:57.440 --> 0:07:00.080 emissions peak by twenty thirties at the national government it 0:07:00.120 --> 0:07:02.160 wants to hit. In the US, you see a very 0:07:02.160 --> 0:07:05.000 different approach. It's pretty much all on the supply side. Um. 0:07:05.120 --> 0:07:07.760 There was recently passed as a part of the Inflation 0:07:07.800 --> 0:07:11.640 Production Act hydrogen production tax credit, the first ever hydrogen 0:07:11.680 --> 0:07:14.040 production tax credit in the world, which is just gonna 0:07:14.080 --> 0:07:16.960 make hydrogen extremely cheap to produce in the States and 0:07:16.960 --> 0:07:19.000 then it will kind of be up to the demand 0:07:19.120 --> 0:07:21.720 side to figure out, now we have this cheap hydrogen, 0:07:21.760 --> 0:07:23.400 what are we gonna use it for? And then you 0:07:23.400 --> 0:07:25.600 see in Europe which you know Addie can talk about 0:07:25.680 --> 0:07:28.160 in much greater detail, kind of a hybrid approach where 0:07:28.200 --> 0:07:31.000 there's going to be a fiscal incentives on the production side, 0:07:31.240 --> 0:07:33.960 there's probably going to be some element of demand side 0:07:33.960 --> 0:07:36.880 incentives for the use of hydrogen. Were really kind of 0:07:36.880 --> 0:07:40.080 trying to balance the approach in the US UM specifically, 0:07:40.160 --> 0:07:42.840 and in North America Canada is taking. It looks like 0:07:42.880 --> 0:07:44.960 Canada's going to take a very similar approach, but it's 0:07:44.960 --> 0:07:48.400 really a supply side story driven by low economics. So 0:07:48.440 --> 0:07:51.080 the production tax credit that the US just passed is 0:07:51.080 --> 0:07:53.680 going to make without any other subsidies you know, coming 0:07:53.680 --> 0:07:56.119 online and other regions, is going to make the US 0:07:56.200 --> 0:07:58.720 the cheapest place to produce hydrogen in the entire world 0:07:58.960 --> 0:08:02.040 through when the tax credit expires. So we think that 0:08:02.120 --> 0:08:05.360 there's there was very little activity in the US before this. 0:08:05.680 --> 0:08:08.240 Europe has been signaling for a few years now that 0:08:08.280 --> 0:08:11.360 they had very strong hydrogen ambitions. China is much the same. 0:08:11.560 --> 0:08:14.000 In the US, it wasn't It was a pretty quiet 0:08:14.000 --> 0:08:16.760 market and then seemingly out of nowhere, really out of 0:08:16.760 --> 0:08:19.520 the last twelve months, we've gotten this hydrogen production tax 0:08:19.520 --> 0:08:22.600 credit ount of the Biden administration, which really changes the 0:08:22.640 --> 0:08:25.440 game in terms of level life costs of hydrogen and 0:08:25.480 --> 0:08:27.240 then in terms of what you can do with it 0:08:27.280 --> 0:08:30.280 as an energy molecule or chemical molecule when you have 0:08:30.360 --> 0:08:33.000 it at such a low price. What's really interesting right 0:08:33.040 --> 0:08:36.400 now in Europe is Europe, and in european industry is 0:08:36.440 --> 0:08:39.240 now looking at the US and the Inflation Reduction Act 0:08:39.440 --> 0:08:43.160 and seeing that as a huge opportunity to deploy capacity 0:08:43.280 --> 0:08:46.880 within the US and now using that as a way 0:08:46.960 --> 0:08:50.760 to justify more subsidies within Europe. So there's very much 0:08:50.800 --> 0:08:53.400 a race going on or like people, the industry is 0:08:53.440 --> 0:08:55.600 making it a race of like who has the better 0:08:55.600 --> 0:09:00.280 framework to deploy hydrogen projects. So both in the stories 0:09:00.280 --> 0:09:02.360 are currently learning from each other, which is interesting in 0:09:02.480 --> 0:09:04.640 terms of what what will come out of this. Yeah, 0:09:04.640 --> 0:09:06.959 and it's very much like a I mean, I don't 0:09:06.960 --> 0:09:09.079 know if we go so far as call it a competition. 0:09:09.160 --> 0:09:11.400 It's very much like who has the most funding, who 0:09:11.480 --> 0:09:13.760 has the best funding? You know, where do the project 0:09:13.760 --> 0:09:16.280 developers want to go? Where does the capital that's going 0:09:16.280 --> 0:09:18.199 to deploy this stuff want to go? And it's kind 0:09:18.200 --> 0:09:20.560 of been a five months ago it was all in 0:09:20.600 --> 0:09:23.400 Europe and the inflation reduction happens, and we're talking to 0:09:23.440 --> 0:09:25.720 folks in Europe who are quite jealous and see a 0:09:25.720 --> 0:09:27.880 lot of capital moving to the US. So it's very 0:09:27.960 --> 0:09:30.240 much a game of tag here between the US and 0:09:30.360 --> 0:09:33.079 you in terms public dollars in public support well in 0:09:33.160 --> 0:09:36.240 a forward looking race for cost declines in terms of 0:09:36.520 --> 0:09:40.400 hydrogen production, But what's it going to cost in order 0:09:40.480 --> 0:09:42.439 to drive that? And I guess how much money it's 0:09:42.440 --> 0:09:45.480 been committed to be spent on driving the cost down. 0:09:45.920 --> 0:09:48.440 So we tracked this every six months as part of 0:09:48.440 --> 0:09:52.080 a hydrogen market outlook globally. We're now seeing as of 0:09:52.200 --> 0:09:55.520 June this year, we're seeing about hundred twenty six billion 0:09:55.559 --> 0:09:59.240 dollars committed in funding for hydrogen or to which hydrogen 0:09:59.320 --> 0:10:03.079 projects can apply. So this includes both direct subsidies to 0:10:03.160 --> 0:10:07.320 the hydroen industry or technology neutral funds for climate protection 0:10:07.360 --> 0:10:09.960 in some sense where hydrogen projects can also apply. In 0:10:10.080 --> 0:10:12.280 terms of where we see it as funding being split 0:10:12.320 --> 0:10:15.199 out at the US and European Union are really leading 0:10:15.320 --> 0:10:19.800 within this funding. Whereas European Union fundings is capped by 0:10:19.840 --> 0:10:22.840 a budget, the US doesn't necessarily have a budget, and 0:10:22.920 --> 0:10:25.560 Matt can definitely speak to that as well. Yeah, I mean, 0:10:25.600 --> 0:10:27.560 it's an interesting one, and we can when we get 0:10:27.640 --> 0:10:29.880 into kind of analysis behind the report and kind of 0:10:29.880 --> 0:10:32.560 how we set our outlook here. We used a lot 0:10:32.600 --> 0:10:36.120 of the publicly available information the government, mainly how much 0:10:36.120 --> 0:10:38.360 money they thought they were going to spend. Some of 0:10:38.360 --> 0:10:41.160 the systems are a finite pool of money, so the 0:10:41.200 --> 0:10:43.079 government says we're going to get An example in the 0:10:43.200 --> 0:10:45.600 US is the Infrastructure Bill is going to give eight 0:10:45.600 --> 0:10:48.800 billion dollars to projects. And really the only variable you 0:10:48.800 --> 0:10:50.920 can play with when setting an outlook like this is 0:10:51.000 --> 0:10:53.920 how cheap is the equipment to produce the hydrogen? Because 0:10:53.920 --> 0:10:56.680 you get eight billion dollars to build it, and whatever 0:10:56.720 --> 0:10:59.960 that costs to do per unit of of capital cost, 0:11:00.200 --> 0:11:02.200 that's how much hydrogen you get. But then there are 0:11:02.200 --> 0:11:05.200 other buckets like the production tax credit, where there's a 0:11:05.200 --> 0:11:07.400 set of rules that a project developer has to adhere 0:11:07.440 --> 0:11:12.120 to around wage requirements, around life cycle emissions of the 0:11:12.240 --> 0:11:15.400 hydrogen production system. But if you qualify to those rules, 0:11:15.480 --> 0:11:18.600 you get the tax credit. And and the federal government 0:11:18.640 --> 0:11:21.559 has released their estimations on how much they think it 0:11:21.600 --> 0:11:23.719 will cost them, we actually think it's going to be 0:11:23.840 --> 0:11:26.360 a bit more expensive than they're anticipating, but it's really, 0:11:26.840 --> 0:11:29.000 however many people want to come get it and adhere 0:11:29.000 --> 0:11:31.679 to the rules, is going to be the final number 0:11:31.720 --> 0:11:34.360 that gets deployed financially speaking. So there's a bit of 0:11:34.400 --> 0:11:36.640 that in the US and around the world, and it'll 0:11:36.880 --> 0:11:39.800 it will certainly be interesting to see how accurate some 0:11:39.840 --> 0:11:42.720 of these forecasts from the budget offices of these various 0:11:42.720 --> 0:11:45.480 governments end up being. Now for a very short break, 0:11:45.559 --> 0:11:49.440 stay with us now, because hydrogen requires an energy source 0:11:49.480 --> 0:11:51.560 in order to make it, and I know we could 0:11:51.600 --> 0:11:54.280 spend time talking about the whole color wheel and all 0:11:54.320 --> 0:11:56.959 of the different colors associated with the different fuel sources, 0:11:57.120 --> 0:12:00.079 but let's actually instead talk about exactly what it is 0:12:00.080 --> 0:12:02.720 is that we want to get to renewables. If we're 0:12:02.720 --> 0:12:06.120 going to make hydrogen from renewables in the US, in China, 0:12:06.320 --> 0:12:09.640 in Europe, anywhere in the world. Is the amount of 0:12:09.800 --> 0:12:14.520 renewables required in order to actually supply all of that 0:12:14.640 --> 0:12:17.559 energy coming online? Is that being considered as a part 0:12:17.720 --> 0:12:20.360 of this hydrogen development. Sure, I can give you some 0:12:20.480 --> 0:12:24.600 numbers around our global Electrolyzer forecast that help frame this discussion. 0:12:24.840 --> 0:12:28.000 In our forecast that we've said based on policies across regions. 0:12:28.040 --> 0:12:31.960 We the hydrogen electrolyzer market girls from about two giga 0:12:31.960 --> 0:12:34.560 wats of electroalizers deployed by the end of this year 0:12:34.920 --> 0:12:38.199 to about two hundred forty gigawatts cumulatively deployed by the 0:12:38.280 --> 0:12:40.920 end of this decade by twenty thirty. That's about over 0:12:40.960 --> 0:12:44.439 a hundred fold increase in installed capacity. All of these electrolyzer, 0:12:44.520 --> 0:12:48.080 as you say, will need electricity, and likely renewable electricity, 0:12:48.280 --> 0:12:52.839 So we estimated these electroalizers need about one thousand, three 0:12:52.920 --> 0:12:57.360 hundred tera hours of electricity by twenty thirty. One thousand, 0:12:57.400 --> 0:13:00.640 three other terror hours is about four percent scent of 0:13:00.840 --> 0:13:05.000 all global electricity demand. And this four percent number is 0:13:05.040 --> 0:13:07.800 pretty much the same as we see, for example, electric 0:13:07.880 --> 0:13:11.440 vehicles and NEOs economic transition scenarios. To put that into context, 0:13:11.520 --> 0:13:14.560 so we need to be not only for electrifying vehicles 0:13:14.600 --> 0:13:16.720 industry and so on, but also hydro production in the 0:13:16.720 --> 0:13:19.440 same order of magnitude. What's interesting about sort of the 0:13:19.760 --> 0:13:22.920 electricity side of things as well for electrolyzers is that 0:13:23.040 --> 0:13:25.600 this number varies quite a bit. So while it might 0:13:25.640 --> 0:13:28.600 be four percent in China or the US, it's about 0:13:28.640 --> 0:13:32.320 eleven of all the electricity produced in Europe and manned 0:13:32.360 --> 0:13:34.800 in Europe will need to go to electrolyzers to deploy 0:13:34.880 --> 0:13:37.720 the capacity we see it in Europe. And this electrolyzing 0:13:37.800 --> 0:13:41.000 capacity if it comes from renewables. In a scenario where 0:13:41.000 --> 0:13:44.599 we assume that about half of this electrolyzed capacities electricity 0:13:44.640 --> 0:13:47.480 supply is supplied by its solar, we get to about 0:13:47.679 --> 0:13:52.360 six hundred seventy gigawatts of renewable energy capacity, so both solar, 0:13:52.600 --> 0:13:55.920 onshore wind, and offshore wind. And we compared that to 0:13:56.160 --> 0:13:59.080 b nfs A solar and wind forecasts out to twenty 0:13:59.120 --> 0:14:02.640 thirty And what this number really means is that sixteen 0:14:02.760 --> 0:14:06.120 percent of all the renewables that we estimate are built 0:14:06.160 --> 0:14:10.000 between now and twenty would need to go to electrolyzes. 0:14:10.080 --> 0:14:12.240 So either they are built on top of our existing 0:14:12.280 --> 0:14:16.520 forecast or some of it is diverted away from existing 0:14:16.640 --> 0:14:20.800 uses for that electricity. Wow, that is a huge amount 0:14:20.800 --> 0:14:23.480 of additional electricity that needs to be developed for this use. 0:14:23.760 --> 0:14:25.440 But then I guess that brings me to the question 0:14:25.480 --> 0:14:28.920 what is the potential for hydrogen to bring down emissions? 0:14:29.000 --> 0:14:33.080 Because hydrogen is oftentimes talked about is a fuel for 0:14:33.120 --> 0:14:35.360 the hard to abate space and the things that we 0:14:35.440 --> 0:14:39.479 really don't have, at least today, viable solutions for decarbonizing 0:14:39.960 --> 0:14:42.920 their emissions. So do we have a view on what 0:14:42.960 --> 0:14:47.520 the potential is for emissions reduction with this investment. I 0:14:47.560 --> 0:14:49.600 think there's a really important point that our team makes 0:14:49.640 --> 0:14:52.400 a lot, and it's probably seen as quite controversial in 0:14:52.800 --> 0:14:56.600 the hydrogen twitter verse or whatever public forum you're reading 0:14:56.640 --> 0:15:00.080 your hydrogen news in the context of how many go 0:15:00.120 --> 0:15:02.640 lots of renewables we will need just to get to 0:15:03.320 --> 0:15:05.320 and if you look at the production numbers of hydrogen, 0:15:05.520 --> 0:15:09.480 we're still not even close to replacing the hydrogen that 0:15:09.640 --> 0:15:12.960 we use today, the carbon intensive hydrogen. So I think 0:15:12.960 --> 0:15:16.600 in terms of emissions reduction essential the most important question 0:15:16.640 --> 0:15:19.320 to ask is what are we using the hydrogen for 0:15:19.760 --> 0:15:22.800 and is that the best use of the hydrogen from 0:15:22.840 --> 0:15:26.120 an emissions reduction standpoint. And we've been speaking about this 0:15:26.240 --> 0:15:29.840 long time. Our founder Mikelibrick famously has his hydrogen ladder. 0:15:30.000 --> 0:15:33.280 But there's a set of industries where we think hydrogen 0:15:33.360 --> 0:15:38.120 is going to be extremely critical to reducing the emissions intensity. 0:15:38.480 --> 0:15:42.240 Things like chemical production in methanol and ammonia fuels, refining, 0:15:42.320 --> 0:15:46.480 both conventional oil refining and also sustainable fuel refining, like 0:15:46.520 --> 0:15:50.520 sustainable aviation, fuels, renewable diesel, things such as that. Where 0:15:50.800 --> 0:15:53.200 hydrogen is really going to be needed no matter what, 0:15:53.400 --> 0:15:56.240 and what's going to be a really high impact area, 0:15:56.400 --> 0:15:59.520 we can get low carbon or carbon free hydrogen into 0:15:59.560 --> 0:16:02.080 the space. And there are other places where you know, 0:16:02.360 --> 0:16:06.360 you definitely can use hydrogen it's completely feasible, like road 0:16:06.400 --> 0:16:10.120 based transport, things like power generation. Hydrogen, at least in 0:16:10.120 --> 0:16:12.120 the near term, is going to be a pretty precious resource. 0:16:12.400 --> 0:16:16.080 So can we incentivize hydrogen to go into the areas 0:16:16.080 --> 0:16:18.840 where it's going to make the largest emissions impact. There's 0:16:18.840 --> 0:16:20.760 a big question. And if we can do that, then yeah, 0:16:20.760 --> 0:16:23.560 there's quite a bit of potential to reduce emissions from 0:16:23.560 --> 0:16:26.360 these hard to debate sectors. I fully agree with Matt 0:16:26.440 --> 0:16:28.720 on this. It really depends on where that hydrogen is 0:16:28.760 --> 0:16:31.560 being used. To give you an example, based on our outlook, 0:16:31.680 --> 0:16:34.120 all these electrolyzers that were saying are going to get 0:16:34.160 --> 0:16:37.760 built by twenty thirty produce about twenty five million tons 0:16:37.920 --> 0:16:41.960 of green hydrogen by twenty thirty. That's about a quarter 0:16:42.160 --> 0:16:44.520 a bit more than a quarter twenty seven percent of 0:16:44.720 --> 0:16:48.360 existing gray hydrogen demand. So hydrogen produced from fossil fuels. 0:16:48.760 --> 0:16:52.800 Current fossil fuel based hydrogen emits about eight to nine 0:16:52.840 --> 0:16:56.320 hundred million tons of carbon emissions a year, I believe. 0:16:56.680 --> 0:16:59.480 So if the green hydrogen that is that we see 0:16:59.720 --> 0:17:02.640 being produced here is replacing gray hydro and you're looking 0:17:02.680 --> 0:17:06.760 at replacing about a quarter of the existing gray hydrant emissions, 0:17:06.760 --> 0:17:09.920 that could be reduced. Now, there are other uses where 0:17:09.960 --> 0:17:13.720 emissions could be higher, for example in steel because steel 0:17:13.800 --> 0:17:17.160 is currently produced using a coal so the emissions intensity 0:17:17.160 --> 0:17:20.359 of producing that is quite high, So the benefit of 0:17:20.400 --> 0:17:23.160 using hydra and could be higher. But these are real 0:17:23.280 --> 0:17:25.719 choices and tradeoffs that need to be made. And on 0:17:25.760 --> 0:17:27.760 the demand side, how much of it do you see 0:17:27.800 --> 0:17:32.400 actually going to fuels versus industries That really depends. So 0:17:32.520 --> 0:17:34.520 I think in the near term a lot of the 0:17:34.560 --> 0:17:38.240 mandates and regulation that is being set around encouraging that 0:17:38.280 --> 0:17:41.359 the clean hydrant industry to develop, particularly is focused on 0:17:41.480 --> 0:17:45.879 industrial decarbonization, so that's where you see going into refineries, 0:17:45.960 --> 0:17:49.480 ammonia production, methanol production, and so on. At the same time, 0:17:49.480 --> 0:17:52.200 when you see a lot from private actors as well 0:17:52.240 --> 0:17:55.719 as a push for using hydra and as transport fuels. 0:17:55.960 --> 0:17:58.840 Here we see really see the big potential in heavy 0:17:58.920 --> 0:18:03.880 duty transport to think about ships, planes, and some very 0:18:03.920 --> 0:18:07.640 heavy trucks that go very long distances and so on. 0:18:08.040 --> 0:18:10.320 There is some porsh for that, for example, in Europe, 0:18:10.480 --> 0:18:12.960 as much as they want to decarbonized industry, at the 0:18:13.000 --> 0:18:15.960 same time there are mandates being put in place to 0:18:16.000 --> 0:18:19.639 decarbonized a small percentage of transport as well. But I 0:18:19.680 --> 0:18:23.679 think especially because in industry right now, hydrogen in the 0:18:23.680 --> 0:18:26.920 existing use cases is a drop in replacement. So ideally 0:18:26.960 --> 0:18:28.800 you can take out the gray hydrant and use the 0:18:28.840 --> 0:18:31.960 green hydrogen in your existing processes without changing much of 0:18:32.000 --> 0:18:34.640 the equipment. For fuels, you will need to build separate 0:18:34.680 --> 0:18:37.199 plans to produce them in the first place. So, for example, 0:18:37.240 --> 0:18:39.880 when we talk about fuels, particularly, the way we're seeing 0:18:39.920 --> 0:18:42.440 hydrant being used in ships and planes is not as 0:18:42.440 --> 0:18:47.320 pure hydrogen, but as methanol or ammonia or kerosene that 0:18:47.400 --> 0:18:50.000 is produced synthetically from green hydrant with a carbon source. 0:18:50.359 --> 0:18:52.600 And for that we need production plants that actually produce 0:18:52.680 --> 0:18:55.360 these fields as well. So let's talk a little bit 0:18:55.359 --> 0:18:59.360 about technology. There are a couple different technologies out there 0:18:59.359 --> 0:19:03.560 for hydrogen production, which ones are emerging as the front 0:19:03.640 --> 0:19:06.080 runner or is it too early to tell. I think 0:19:06.160 --> 0:19:08.399 we could talk about none of There's so many layers 0:19:08.440 --> 0:19:12.600 to the technology map of hydrogen technologies, but I think 0:19:13.280 --> 0:19:17.359 in its simplest form, the two most common technologies we 0:19:17.400 --> 0:19:21.560 often talk about our electrolytic pathways, so that's using electrolyzer 0:19:21.600 --> 0:19:24.320 technologies and some sort of power source. And then what 0:19:24.359 --> 0:19:27.800 we define as thermo chemical pathways, which most commonly is 0:19:27.840 --> 0:19:31.280 the reformation of messane and steam, or there is the 0:19:31.320 --> 0:19:34.480 restoration of methane and absence of just normal air. But 0:19:35.000 --> 0:19:37.760 within those two technologies, there's a subset of technologies. On 0:19:37.800 --> 0:19:42.920 the electrolytic side, there's really two electrolyzer technologies vying for dominance. 0:19:43.000 --> 0:19:48.040 There's line technologies and pen technologies, a proton exchange, membrane technologies, 0:19:48.240 --> 0:19:51.399 and we track these as as an input to our 0:19:51.400 --> 0:19:53.119 market outlook and other things, and I think the story 0:19:53.200 --> 0:19:55.440 really is still kind of a toss up in most 0:19:55.440 --> 0:19:58.520 parts of the world. So if you exclude China, which 0:19:58.880 --> 0:20:00.919 you know is a pretty big to exclude, but if 0:20:00.920 --> 0:20:04.480 you exclude China from our latest market outlook, it's roughly 0:20:04.480 --> 0:20:07.879 a fifty fifty split between pen technologies and alkaline technologies 0:20:07.880 --> 0:20:11.840 in terms of which electroalizers developers are choosing to procure. 0:20:11.920 --> 0:20:14.000 But China is such a large market and they have 0:20:14.160 --> 0:20:18.480 such a dominant alkaline industry already that when you aggravate 0:20:18.560 --> 0:20:21.399 all the numbers, it looks like alkaline is really the 0:20:21.440 --> 0:20:25.160 dominant technology. Or on the methane reformation side, there's really 0:20:25.160 --> 0:20:29.040 two technologies vying for dominance steam methane reformation and auto 0:20:29.080 --> 0:20:32.680 thermal reformation. There are two processes that are quite similar, 0:20:32.720 --> 0:20:34.200 and they have a couple of quirks that are different 0:20:34.200 --> 0:20:36.520 that we can get into. But we're actually seeing a 0:20:36.560 --> 0:20:41.080 lot of technology developers or project developers not making a call, 0:20:41.119 --> 0:20:43.159 a lot of unknown projects to date, but out of 0:20:43.160 --> 0:20:45.840 the projects that are announced, we see auto thermal reformation 0:20:46.000 --> 0:20:47.960 leading the way. So it's still, i would say, just 0:20:48.160 --> 0:20:50.600 thinking about the market as a whole, it's still probably 0:20:50.600 --> 0:20:53.560 too early to call which technologies are gonna dominate. They'll 0:20:53.560 --> 0:20:56.119 probably each have some success in their own right, but 0:20:56.160 --> 0:20:58.200 that's the market as we're seeing it right now, and 0:20:58.240 --> 0:21:00.840 within a forecast. The way we see is developing at 0:21:00.840 --> 0:21:04.600 the moment is that very likely within China, alkaline dominates 0:21:04.640 --> 0:21:08.359