Industry news
Things I noticed and thought were interesting
Week ending September 11th 2021
1, Hydrogen in India. The chairman of one of India’s largest conglomerates said his company would work with partners to install at least 100 GW of new renewable electricity capacity by 2030 for the purposes of making hydrogen. For comparison, this is about as much as India’s total renewables today. Mukesh Ambani of Reliance Industries targets $1 per kilogramme (about 3 US cents per kilowatt hour, or half current European natural gas prices) within a decade. The US government has a similar objective. I estimate the Reliance 100 GW portfolio would make about 5 million tonnes of hydrogen, about 7% of current global demand. Another hugely successful businessperson has just decided that he can make a lot of money from hydrogen.
2, Shipping carbon tax. The shipping industry repeatedly tells us it needs a carbon tax because renewable fuels are currently expensive compared to oil. The International Chamber of Shipping, representing 80% of world tonnage, formally asked the IMO, part of the UN, to push for a global levy. The funds raised would be used to push down the cost of low carbon alternatives and to set up full scale bunkering across the world. Perhaps the global trade associations for steel, cement and aviation would also like to appeal for a carbon levy? A call from international business for a uniform carbon tax across the world would be difficult to resist.
3, McKinsey on EVs. McKinsey published a useful short paper on the future for electric mobility. Among other things, it provides an estimate of how much the need for ‘sunset’ components, such as fuel injection systems, will decline before 2030. It says that the value will fall from 26% to 11% of the total European market. The switch to EVs will require 100,000 people to move jobs from 'sunset' to 'sunrise' sectors in Germany alone. McKinsey points also to the increasing localisation of battery production, with European manufacturing meeting all requirements after the development of 24 gigafactories, making almost a terawatt hour of storage a year. But the consultancy also cautions that today’s EVs create 80% more emissions than comparable petrol cars because of batteries and greater use of aluminium. Electric cars will also add 5% to European electricity demand by the end of this decade
Fuel cells get no mention. Electrification of passenger cars is seen as overwhelmingly likely. But only this week Hyundai said it aimed to decrease full cell costs to comparable levels to batteries by the end of the decade and will introduce a hydrogen variant of all its heavier commercial vehicles by 2028. Several Korean and Japanese manufacturers don’t yet see an inevitable victory of batteries for all transport needs.
4, Maersk and WasteFuel. In the wake of its recent commitment to buy 8 large dual-fuel container ships, Maersk invested in a Californian start-up that will make low carbon fuels, potentially including e-methanol, from agricultural and municipal wastes. Other shipping industry participants have repeatedly questioned whether Maersk will be able to source enough e-methanol to fuel the new ships and this investment will only partly address the scepticism. WasteFuel says it is intending to develop five refineries for low carbon fuels by 2025, with a total production of around 40,000 tonnes of aviation fuel. Much of this is already pre-sold to the private jet operator NetJets. But Maersk says it will need 360,000 tonnes of e-methanol just to fuel the 8 ships under order. I presume the shipping company’s investment will be used to help WasteFuel sharply accelerate its growth.
5, Energy island. The plans for the proposed energy island 80 km off Jutland, western Denmark, moved ahead. The newly-constructed island will eventually be the hub for at least 10 GW of offshore wind, including an initial 200 turbines to be put in place by 2030. The consortium was widened to include land reclamation specialist Van Oord and the offshore construction division of Bouygues as well as Danish harbour constructor Aarsleff. They join Ørsted and Denmark’s largest institutional investor.
6, Timber buildings. An all-timber building with a height of 75 metres opened in the Swedish city of Skellefteå. It includes a cultural centre and a twenty storey hotel. Solar panels on the roof will balance the building’s emissions from operation, while the carbon stored in the timber will sequester twice as much CO2 as emitted in the construction of the building. The wood was grown locally. This isn’t the largest building in the world that used only cross laminated timber in construction but it may be most stylish.
7, Green steel in Hamburg. Arcelor Mittal made another move towards hydrogen steel. It obtained a promise of half the €110m cost of a new Direct Reduction Iron plant from the German government. This will enable the production of 100,000 tonnes of DRI by 2025 and the aim is for 1 million tonnes by 2030. Hamburg, where the plant will be located, is likely to a major hub for hydrogen production and use. Although the project is less than half the size of Arcelor’s recent DRI announcement in Spain, it does seem to be part of a wider plan to use hydrogen in the company’s locations across Germany. As the federal elections approach, the minister predictably restated her government’s commitment to funding the German steel industry's move to hydrogen.
8, CCUS. A study looked at the success rate of 263 carbon capture projects.. The authors concluded that 'most CCUS projects initiated in the past three decades have failed'. The failure rate increases with the size of the project. However some countries continue to push on with large scale CCUS schemes, particularly Norway. At the moment, the natural gas that is co-produced with oil from two fields in the Barents Sea is re-injected back into the reservoir. Now Equinor and its partners plan to use the gas for making ‘blue’ ammonia onshore. This will produce about a million tonnes a year or about half a percent of the global total. The CO2 emitted from this process will be captured and transported by ship before being stored in an offshore hydrocarbon field. This is exactly the type of complex project that seems most likely to experience problems. The world needs CCUS to work but we are still a long way from ensuring that projects are both technically possible and financially manageable.
9, Hydrogen for rail. Oil major Chevron says it is trying to develop early markets for hydrogen, particularly for transportation and industrial uses. It announced a collaboration with Caterpillar to create a demonstration railway project. The partnership will run a hydrogen-fuelled locomotive on railways connecting mining sites in the US. The refuelling infrastructure will form part of the plan and work will begin immediately. “Through Chevron New Energies, Chevron is pursuing opportunities to create demand for hydrogen – and the technologies needed for its use – for the heavy-duty transportation and industrial sectors, in which carbon emissions are harder to abate,” said Jeff Gustavson, president of Chevron New Energies. “Our collaboration with Caterpillar is another important step toward advancing a commercially viable hydrogen economy.” This seems a sensible step forward to me; non-electrified railways are prime targets for hydrogen use.
10, Lower carbon cement. Cement is an intractable problem because of the CO2 driven off from the raw material as it is heated. Although it is clearly possible to use hydrogen to provide the heat, avoiding the direct CO2 emissions from clinker manufacture has proved difficult. Several different raw materials have been tried and another alternative is proposed by German and Brazilian researchers. They suggest that the clays frequently found above deposits of aluminium ore (bauxite), particularly in Brazil, can be used to replace part of the limestone required for cement. This is not a new idea – the aluminium trade association has previously proposed 10% to 20% use. But the research recently published suggests the percentage can be increased to 60%. The manufacturing process can also be run at lower temperatures, reducing the need for fuel. The combination of these two benefits might reduce total emissions by two thirds. (This percentage would be less if low carbon fuel, such as hydrogen, is already used for heating).
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