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Clean hydrogen industry still upbeat but more realistic

Clean hydrogen industry still upbeat but more realistic

London, 17 May (Argus) — The clean hydrogen sector still lacks tangible progress and final investment decisions (FIDs) for projects remain far and few between, but it is reaching a moment of reckoning essential for market maturity, delegates at the World Hydrogen Summit in Rotterdam said. When asked whether they were more or less positive than a year ago, industry participants gave diverging answers, but there was widespread agreement that progress on clean hydrogen has been slower than expected. This has been "the year of doldrums", the Dutch port of Rotterdam's hydrogen supply chain programme manager Martijn Coopman said. Increasing material and financing costs, the unstable geopolitical situation and a lack of clarity on regulatory frameworks are just some of the challenges developers have faced. This is a "grim environment if you were expecting the Swiss army knife approach" to work, industry body the Australia Hydrogen Council's chief executive Fiona Simon said, alluding to the — misguided — expectation that hydrogen could be used across all sectors to help decarbonise. "We are coming to terms" on the real use and appropriate applications of hydrogen, Simon said, pointing to green steel production. "We are converging on the same concepts and same policies". The industry has reached the point where the wheat is separated from the chaff and it is becoming a lot clearer which projects will actually materialise.There is now a greater sense of "realism" underpinning discussions according to Dutch gas company Gasunie chief executive Willemien Terpstra. And this is why market participants are more optimistic than a year ago. Demanding as ever Still, delegates widely urged more policy action, especially on the demand side, which has been a recurrent theme. Spurring on demand will be key to get to more FIDs, Spanish utility Iberdrola's hydrogen development director Jorge Palomar Herrero, said. "We can have great intentions and great projects but without the demand, they are not going to happen". Even in Europe, which has pushed ahead with efforts to stimulate demand, these have not been enough to spur offtake, Herrero said. Demand-side incentives alone will likely not be enough and eventually there will have to be consumption obligations too, some said. Incentives may help to reduce project costs and kickstart production, but the amount of "carrots" needed is "phenomenal", so "sticks" will be key, the port of Rotterdam's Coopman said. Consumption mandates could help accelerate momentum in emerging markets and developing countries that have big ambitions for exports to future demand centres, the World Bank's private sector arm IFC energy chief investment officer Ignacio de Calonje said. Governments are now ready to act on these requests, according to industry body the Hydrogen Council's director for policy and partnerships Daria Nochevnik. "The penny has dropped," Nochevnik told Argus , noting that the need for demand-side action was the number one priority outcome of a ministerial-executive roundtable held in Rotterdam this week. Red and blue Governments must also remove red tape to speed things up, conference delegates said. European developers in particular are increasingly frustrated with paperwork involved in funding applications, according to German utility Uniper's vice-president for hydrogen business development Christian Stuckmann. Shortening lengthy permitting and funding processes is also high on governments' lists, Nochevnik noted. Some delegates renewed calls for a wider acceptance of "blue" low-carbon hydrogen made from natural gas with carbon capture and storage to address concerns that, if it is up to renewable hydrogen alone, things will start too late — or not at all. There appeared to be widespread consensus that this low-carbon hydrogen will have a key role to play, especially in a transitional period, as it can already deliver significant emissions reductions. But there is still a "stigma" in Europe, according to industrial gas firm Linde's vice-president for clean energy David Burns. This could hamper its adoption, which many delegates argued the world cannot afford. By Pamela Machado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.