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On the way in which to deep decarbonization

Batteries: A family of do-it-all solutions to electrify (almost) everything

Batteries are a central all-round component at the heart of the energy transition. By providing grid balancing services and storage for inexpensive intermittent energy sources such as wind and solar power, batteries enable decarbonization and increased flexibility of the power system. The promise to achieve a carbon-free electricity system in the coming decades has led many climate protection advocates to adopt the mantra of “electrifying everything,” using cheap wind and solar energy to decarbonise and, possibly, electric vehicle (EV) traffic through heat to build heat pumps.

Fortunately, batteries make the same steep jump down the cost curve as solar power. Lithium-ion battery prices have fallen nearly 90 percent from their 2010 average of $ 1,100 per kWh to $ 137 per kWh in 2020. This rapid decline in costs has made battery EVs a serious competitor for internal combustion engine (ICE) vehicles much sooner than expected. On a lifetime operating cost basis, they are already cheaper for many applications, and BloombergNEF estimates they will reach upfront cost parity with gasoline vehicles when battery prices hit $ 100 per kWh in 2023.

China's focused approach to the development of this industry has brought a significant lead in the supremacy in the production of this critical technology and is following a similar path as its successful development of the solar industry. According to BloombergNEF's 2020 lithium-ion battery supply chain ranking, China built its industry in just a decade, beating long-time leaders Japan and Korea, and gaining control of 80 percent of the world's refining of battery raw materials, 77 percent of the time global production capacity for battery cells and 60 percent of global component production. This success is in large part due to China's 2009 New Electric Vehicle Policy, an ongoing, comprehensive national effort to promote the adoption of electric vehicles through domestic production quotas.

The industry is still young, however, and the 30-year-old chemistry of today's lithium-ion batteries is likely to improve significantly over the next decade. Analysts Predict the Rapid Spread of Electric Vehicles in Countries Outside of China; S&P Global Market Intelligence predicts that annual global electric vehicle sales will more than triple over the next four years to 9.5 million units in 2025, with more than half of that growth coming from Europe and the United States. This global boom and market diversification will result in massive growth in the size and geographic spread of battery production facilities, which could cut costs in half over the next decade.

Source: S&P Global Market Intelligence

Following the example of China, the development of the electric vehicle market will be the main reason for this diversification in the production of lithium-ion batteries, as automakers enter into collaborations with locally-located, integrated cell-to-pack suppliers in order to reduce transportation costs (which are significantly higher than with solar cells) as well as maximizing delivery reliability and adaptation to certain vehicle models. For example, LG Chem and General Motors recently announced plans for their second US battery plant, and Northvolt has expanded its partnership with Volkswagen in Germany.

Overall, S&P Global Market Intelligence predicts a similar tripling of lithium-ion battery production by 2025, led by a tenfold increase in European manufacturing capacities. Its global market share is expected to increase from 6 to 25 percent thanks to long-established conglomerates like Saft and up-and-coming giants like Northvolt. This success is reinforced by the billions in investments already announced by the European Commission to support the construction of battery plants, to promote the introduction of electric vehicles, to tighten emissions regulations and to phase out vehicles with internal combustion engines (ICE). The cumulative impact of these measures could allow the European Union to overtake China as the world's largest electric vehicle market in the next five years, and achieve similarly rapid growth in battery manufacturing, according to S&P.

However, the United States appears as a potential wild card in this equation, with great potential, developing its own EV markets, domestic battery production capabilities, and even domestic mining of select raw materials such as lithium, graphite, and nickel. BNEF currently ranks sixth in the US in its battery supply chain ranking, and the country is projected to climb to third behind China and Japan by 2025 (EU countries are broken down) thanks to manufacturers like Tesla, LG Chem and, Panasonic. Additionally, BNEF analysts believe the United States has a chance to take the lead by 2025 with aggressive policies and market focus under the Biden administration.

On the raw materials side, potential supply bottlenecks, China's increasing consolidation of control over critical minerals and metals, and increasing control over human rights and environmental issues are all concerns for lithium-ion battery supply chains. Seventy percent of the cobalt, a critical material in the cathode of today's lithium-ion batteries, is mined in the Democratic Republic of the Congo (DRC), with up to 30 percent coming from artisanal mines that involve child labor and violence. Similarly, the water consumption of lithium production, particularly among underground, brine-based South American producers like Chile and Argentina, raises questions about the long-term sustainability of today's mining practices and supply chains.

Ensuring and reviewing sustainability practices will be critical to achieving and maintaining future leadership in the industry. Environmental concerns are driving demands from consumers, automakers and, increasingly, intergovernmental and nongovernmental coalitions to innovate to reduce or eliminate these problems. For example, the car manufacturers BMW, Daimler AG and Ford recently joined the Initiative for Responsible Mining Assurance (IRMA) and have committed to only use lithium and cobalt for their electric vehicles, which are mined in accordance with IRMA's social and ecological performance standards. Battery manufacturers are also increasingly focusing on cathodes, which minimize or eliminate cobalt in favor of iron and other elements. For example, Tesla is increasingly using iron phosphate batteries in its vehicles, and Panasonic has announced that it will manufacture higher density, cobalt-free batteries for Tesla vehicles within the next three years.

In addition to increased production in Australia, deep-sea mining will help provide access to seabed cobalt, which is estimated to be six times the terrestrial reserves, and will also generate new lithium and nickel deposits. Japan has already successfully mined cobalt from deep seas and off its coastal waters, and larger deposits of deep-sea minerals in international waters could be exploited at a lower cost than conventional mining while avoiding human rights issues. The prospect has generated a lot of interest from companies including DeepGreen Metals, which was recently valued at $ 2.9 billion, as well as some environmentalists who are concerned about the impact on deep-sea ecosystems. The debate is picking up speed as the International Seabed Authority prepares seabed mining rules for release this year.

Lithium suppliers are also looking for more sustainable modes of production as the industry continues to scale. For example, the Chilean lithium giant Sociedad Quimica y Minera (SQM) is aiming for IRMA certification and is aiming to reduce brine consumption by 50 percent by 2030 and 65 percent of water consumption by 2040. A variety of direct lithium extraction (DLE) techniques that are conventional. Replacing brine evaporation basins with chemical processes to separate lithium from other elements are also a source of growing interest and promise to reduce both environmental impact and production time. Investments in new "green" lithium production from aboveground (and much less water intensive) geothermal brine resources in the UK, Germany and the United States using DLE techniques are increasing, potentially creating important new domestic lithium supply sources for these rapidly growing EV markets.

Perhaps the most important alternative source for new battery raw materials is recycling, although it may not be realized on a large scale until the first wave of mass-market electric vehicles reaches the end of their life. IHS Markit predicts that by 2050, up to 48 percent of the lithium, 47 percent of the nickel and 60 percent of the cobalt for global battery markets could be supplied by tripling recycling. Recycling offers battery manufacturers the potential to secure a domestic source of raw materials regardless of mining resources or supply chains; it also reduces the environmental impact and potentially lowers costs, depending on transportation and processing costs. The reuse of batteries also has significant potential, as EV batteries at the end of their life for transport applications typically retain sufficient charge capacity for less demanding grid storage and service applications.

January 2021

United Kingdom

Investment: $ 5.4 million

In Cornwall, Cornish Lithium announced direct lithium extraction attempts in British coastal waters.

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March 2021

Western Australia

Investment: $ 66 million

In Darwin, Core Lithium started production in the first Australian lithium mine outside Western Australia.

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March 2021

Australia

Investment: $ 304 million

In Adelaide, Cobalt Blue Holdings is reducing the risk of a large cobalt project by securing groundwater allocation to comply with water management regulations.

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May 2020

United States

Investment: California Raised $ 7.46 Million, EnergySource Raised $ 350 Million

The California Energy Commission has granted grants to Hell's Kitchen Geothermal LLC of Berkshire Hathaway Energy and Controlled Thermal Resources (CTR) for geothermal lithium projects in the Salton Sea.

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September 2020

United States

Investment: Unknown

Tesla has announced the acquisition of land for lithium mining in Nevada.

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February 2021

Germany

Investment: $ 2.1 billion

Joint pilot plant announced by Vulcan Energy and DuPont for geothermal direct lithium production in the German Upper Rhine Valley.

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February 2021

Chile

Investment: $ 400 million

Pilot project for direct lithium production developed in San Pedro de Atacama, Chile.

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April 2021

Canada

Investment: $ 2.9 billion

DeepGreen Metals went public and raised capital to continue deep-sea cobalt mining.

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August 2020

Japan

Investment: $ 330 million

Japan's Jogmec has successfully excavated cobalt from Japanese coastal waters.

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On July 10, 2019, a truck crossed the flooded Uyuni Salt Flat in Bolivia, the site of a future lithium mine. PABLO COZZAGLIO / AFP VIA GETTY IMAGES

Competition and diversification in battery chemistry, as well as increasing diversity in end-use applications, may increase. In contrast to the unassailable dominance of crystalline silicon-based solar modules for power generation, many experts believe that due to the differing demand for energy storage devices, there will be room for other chemistries and architectures than lithium ions on the market. For example, the electrification of heavy commercial vehicles and other more sophisticated transportation end-use applications require higher energy density, while network services require maximization of storage time.

According to think tank RMI, "The advanced battery technology markets will not be a winning opportunity for Li-ion batteries." Solid state chemical batteries such as lithium metal, lithium sulfur and rechargeable zinc-alkaline batteries could be commercialized between 2025 and 2030, and that dramatically deliver the higher energy densities required for the electrification of long-haul freight transport and medium-range passenger aircraft. In a similar timeframe, the commercialization of zinc-, flow-, and sulfur-based batteries is expected to provide alternatives to lithium-ion that might be better suited for stationary storage and grid service applications.

It is still possible that the sheer scale and cost advantage of incumbent lithium-ion manufacturers and supply chains could overwhelm any new battery architectures; Even then, a steady stream of incremental innovations in advanced lithium-ion battery chemistry and manufacturing processes offers numerous opportunities to further reduce costs and improve performance on key metrics for a variety of end-use cases. While non-cobalt and lithium alternatives remain a small fraction of the market, efforts to reduce the use of these materials and diversify sources of supply can improve the environmental, social and governance (ESG) performance of today's supply chains.

The battery industry is re-entering a new phase of development and opportunities are abundant for countries with determined and holistic strategies to innovate, collaborate and compete in the market for this fundamental technology essential to the 21st century power industry. The most important elements of such a strategy include:

Research, development, demonstration and deployment

New and improved battery chemistry: Research, development and demonstration funding for advanced lithium-ion batteries as well as new battery technologies can help to open up new markets for storage and create new competitive advantages. Support for battery research and development is a growing focus of government support, including the European Union's EuBatin program, which recently received $ 3.5 billion in grants for R&D projects to improve lithium-ion electric batteries with attendees such as BMW and Tesla announced the UK's Faraday Battery Challenge; and public-private partnerships in support of solid-state research and development in Japan with Panasonic, Toyota and Honda, and in South Korea with LG Chem and Hyundai. Funding new grid battery technologies is also an area where government support is increasing, such as Australia's recent funding for a supply-scale flow battery demonstration facility.

Manufacturing aid and domestic content requirements: Grants and financing for the construction of new production facilities, especially the first commercial facilities of its kind for advanced battery chemistry, can come at any stage of the market development. South Korea, home of battery giants LG Chem and SK Innovation, recently announced over $ 100 million in funding for a variety of innovations in the electric vehicle supply chain, including battery localization. Requirements for domestic battery content in electric vehicles, either as a condition for subsidies or participation in public procurement programs, can also help fuel the development of battery manufacturing and component supply chains, as China has shown with quotas that are 80 percent of those domestically manufactured Require electric vehicle components, including batteries. However, these must be implemented in the light of local resource realities and with realistic quotas and schedules in order to avoid unnecessarily restricting market development, which could be a problem for President Biden's ordinance for federal fleets for the procurement of electric vehicles, which exceeds the 50 percent Meet domestic content. Buy America “threshold.

Emerging applications for battery recycling and mineral extraction: A number of new approaches to improving the security of the battery minerals supply chain can benefit from political support and public-private collaborations. These efforts include recycling-focused initiatives such as EuBatin's Battery Recycling R&D Grants and the U.S. Department of Energy's ReCell Center, as well as demonstrating innovative lithium extraction techniques such as DLE, supported by the EuBatin program and the newly created U.S. Department of Energy Price for geothermal lithium production.

Securing the raw material supply chains

Open up new sources of supply: New sources of battery minerals, including lithium, nickel, and cobalt, are increasingly recognized as critical to national security and economic development, promoting mining initiatives such as Australia's recently established Critical Minerals Facilitation Office, California's grants to aid lithium mining in the Salton Sea and the US Department of Energy grants to aid lithium mining. Country governments and other stakeholders may also participate in the World Economic Forum's Deep-Sea Minerals Dialogue and the International Seabed Authority (ISA) standard process to identify potential environmental risks and potentially create a viable commercial framework for deep-sea mining of these minerals.

Ensure the sustainability of the supply chain: National and international bodies must continue to work to set standards for the responsible mining of battery minerals, including traceability and supply chain monitoring, as in the proposed "battery passport" legislation of the European Union and Energy, established by the United States, Australia Resource Governance Initiative, Canada, Botswana and Peru. These and other policy initiatives can leverage the work already done by private sector certification programs like IRMA and the Responsible Sourcing Blockchain Network, which uses a blockchain-based platform to track the origin of mineral supplies and counts Ford, Volkswagen, LG Chem, Huayou Cobalt and other companies as members.

Maximize reuse and recycling: While battery reuse and recycling may be limited at this time, given the early stage of electric vehicle adoption, it is important to create a framework for industry to operate in anticipation of ever-increasing amounts of waste batteries, such as China's battery design guidelines and Extended Producer Responsibility (EPR) and the EU circular economy action plan. Key elements include regulations for the transport and recycling of used batteries, approval of recycling facilities, requirements for the collection of used batteries, and EPR guidelines that instruct manufacturers to design batteries to make recycling easier. When recycled materials enter the supply chain, minimum standards are also needed for their inclusion in the manufacture of new batteries.

Promote the development of the EV market

Incentives and Procurement: Financial incentives for EV buyers are proven means of stimulating demand, such as the US EV tax credits of up to $ 7,500, China's NEV discounts of around $ 1,350 per vehicle plus a 10 percent VAT exemption, and the multitude of purchase incentives found in 20 EU countries. In addition to light passenger cars, electric two- and three-wheeled vehicles such as e-scooters and e-rickshaws can be important market segments for the entry-level market, especially in developing countries. So it is important to expand incentives for these vehicles, as in India's FAME, and refine the programs as needed. Electric fleet vehicle procurement support and mandates, including mandates such as California's Innovative Clean Transit Regulation and South Korea's recently announced taxi and truck leasing partnership with Hyundai, can help scale electric vehicle production while reducing fleet operating budgets. Private sector initiatives such as Ceres' Corporate Electric Vehicle Alliance (CEVA) can also play an important role in the private sector in building a strong base for fleet demand to scale in the light, medium and heavy electric vehicle markets.

Regulations: In addition to incentives to stimulate the purchase of electric vehicles, regulation can be essential to ensure their availability in the market. This can include ever more stringent regulations on fleet-wide CO2 emissions, such as the EU target for cars to reduce emissions by 37.5 percent by 2030, and increasing requirements for the sale of emission-free vehicles, such as the target of 22 percent electric vehicle sales 202525 through California's long-standing zero-emission vehicle program and China's NEV target of 20 percent electric vehicle sales by 2025. The most aggressive jurisdictions have set deadlines for stopping ICE sales, including a target of 2025 in Norway and 2030 in the UK and India. While most EV regulations target the light-duty vehicle market, the introduction of longer-term regulations for heavy-duty vehicles, such as in California's Advanced Clean Trucks program, can help invest in emerging higher-density storage technologies like solid-state batteries help to accelerate the reduction of emissions in heavy goods traffic.

Charging infrastructure: While most of the charging of electric vehicles can be done overnight at home and in fleet depots, the public charging infrastructure is crucial for mass market acceptance. Charging facility development can be supported in a number of ways, including local and national incentives to reduce up-front costs, such as in China's NEV program, US federal tax credits and state rebates, and the UK's electric vehicle homecharge and workplace charging scheme, as well as electricity tariffs that have been specially developed for the fast charging infrastructure. Public-private collaboration in designating loading corridors and streamlining permits can also accelerate adoption, and utility involvement in network planning can be critical in many jurisdictions. Here, too, the focus on fleets will be decisive in order to achieve a comprehensive effect.

Market development for network storage

Deployment Incentives and Mandates: Financial incentives can accelerate the use of battery storage in addition to wind and solar parks, as in the "innovation auctions" under the German Renewable Energies Act and the US investment tax credit for renewable energies, the expansion of which is demanded by storage advocates for independent battery applications. Network storage mandates, such as those in California, New York, and Massachusetts, can also effectively advance provision on a utility scale. Incentives for customer-side storage, such as in Brandenburg and Bavaria in Germany, can stimulate distributed storage markets and serve equity and resilience goals if they are aimed at homeowners in low-income areas or regions in which the grid connection is either unreliable or threatened by extreme weather events (B. Forest fires), as in the California Self-Generation Incentive Program.

Approval and planning regulations: Allowing, or even requiring, utilities to assess the full potential of battery storage technologies to provide energy storage and ancillary services in their grid planning processes can help deter them from investing in traditional – and increasingly less competitive – vulnerable fossil fuel producers from becoming stranded assets . The UK recently opened its energy storage authorization process for battery systems over 50 MW, a move that is expected to facilitate the development of many more large-scale projects. Voluntary or required measures are in place in a growing number of US states, including Arizona, Hawaii, and Washington, to include storage in utility company's integrated resource plans.

Market participation rules: Batteries can provide a wide range of services to the grid, including energy and auxiliary services, but they usually require specific rules to enable and encourage them to participate fully in competitive markets. These may include frameworks for the participation of aggregates of distributed energy resources that include batteries that can function as virtual power plants. South Korea has used favorable tariff structures (including renewable energy (REC) bonuses under the Renewable Portfolio Standard (RPS) program) to encourage grid storage, and regulations that allow aggregators to participate in energy markets have fueled the growth of these applications stimulated in Australia. Great Britain, Denmark and the Netherlands. Recent steps by the US Federal Energy Regulatory Commission (FERC), including Order 841 and Order 2222, will oblige regional electricity operators to open markets for individual storage projects or aggregations.

Hydrogen: An (expensive) do-it-all solution for sectors that are difficult to electrify

Hydrogen can play a role similar to batteries in the energy transition, providing a medium for converting wind, solar, and other carbon-free resources into stored energy useful for a variety of end uses. In contrast to batteries, which store energy in the form of chemical reactions, hydrogen stores it in a stable molecular form, similar to existing fossil fuels, which leads to a much higher energy density and practically unlimited storage duration. As such, it has long inspired visions of a “hydrogen economy” in which hydrogen covers practically all energy needs from electricity to heat to means of transport.

Despite this promise, the topic of hydrogen, given its seemingly endless development horizon, often arouses weary skepticism among observers of the energy industry. According to President Bush's 2003 Hydrogen Fuel Initiative, it was still a decade away from the energy revolution. Further down, the idea of ​​a “hydrogen economy” was coined half a century ago, and hydrogen, not gasoline, powered the first internal combustion engine in 1886, more than a century ago. However, there are good reasons to believe that the time for hydrogen has finally come, even if it plays a supporting role and with some caveats.

First, the incredible success of renewable electricity and batteries over the past decade has paradoxically made it clear that these tools are unlikely to decarbonise huge industries by 2050. Diese Endanwendungen wie Schwerindustrie und Fernverkehr Schifffahrt und Luftfahrt erfordern in der Regel eine sehr hohe Energiedichte, sehr hohe Wärme und spezifische chemische Eigenschaften und haben eine außergewöhnlich lange Lebensdauer der Anlagen. Diese „schwer zu reduzierenden“ Sektoren machen heute etwa ein Drittel der weltweiten Emissionen aus und werden einen größeren Anteil an den Gesamtemissionen ausmachen, wenn weniger anspruchsvolle Sektoren dekarbonisiert werden.

Die einzigartigen Eigenschaften von Wasserstoff machen ihn jedoch zum wahrscheinlichsten Weg zur Dekarbonisierung vieler dieser Sektoren. Für die Grünstahlproduktion kann Wasserstoff die hohen Temperaturen bereitstellen, die für den Betrieb von Hochöfen benötigt werden und Koks im Eisenreduktionsprozess ersetzen. (Recycelter Stahl wird mit Elektrolichtbogenöfen hergestellt, aber für High-End-Anwendungen wie die Automobilherstellung ist Neustahl mit Hochöfen erforderlich.) In ähnlicher Weise kann Grünzement Wasserstoff zum Befeuern von Öfen verwenden, was eine Netto-Null-Produktion ermöglicht, wenn Emissionen aus dem Kalzinierungsprozess erfasst werden. Diese Sektoren sind gut geeignet, um sich als frühe Wasserstoff-Endverbrauchsmärkte zu entwickeln, da Stahl und Zement typischerweise nur wenige Prozentpunkte der Endkosten eines Gebäudes ausmachen, was es der Stahlindustrie und dem Bausektor ermöglicht, sich leichter an Preisaufschläge für grüne Materialien.

Die Langstreckenschifffahrt ist ein besonders schwer zu reduzierender Verkehrssektor, und Wasserstoff wird voraussichtlich eine zentrale Dekarbonisierungsstrategie sein, um die jüngste Zusage der Internationalen Seeschifffahrtsorganisation zu erfüllen, die Treibhausgasemissionen der Industrie bis 2050 um 50 Prozent zu reduzieren in Form von aus Wasserstoff gewonnenem Ammoniak, das sich in Joint Ventures zur Produktion von grünem und blauem Wasserstoff von Schiffsgiganten wie Maersk und Hyundai als kohlenstofffreier Kraftstoff der Wahl herauskristallisiert. Ammoniak hat eine höhere Energiedichte und Umgebungstemperatur als Wasserstoff, und in den meisten Häfen existiert bereits eine Infrastruktur zur Speicherung von Ammoniak. Es könnte auch die Verwendung von Erdgas in der Düngemittelproduktion ersetzen, einer der emittierendsten chemischen Industrien und heute der größte Verbraucher von Ammoniak. Wie bei Baumaterialien machen die Versandkosten einen sehr kleinen Teil der Kosten für den Endverbraucher aus, wodurch mehr Raum für vorgelagerte Finanzinnovationen geschaffen wird, um die Auswirkungen auf die Industrie zu minimieren.

Wasserstoff hat auch die Energiedichte, um die Luftfahrt zu betanken, und bietet eine kohlenstoffärmere und möglicherweise breiter verfügbare – wenn auch teurere – Alternative zu Biokraftstoffen für diesen Sektor. In einem Joint Venture mit dem Startup ZeroAviva verfolgen Airbus und British Airways Wasserstoff als wahrscheinlichsten kohlenstofffreien Treibstoff für Langstreckenflüge, sei es als verflüssigter Wasserstoff oder als synthetischer Treibstoff aus Wasserstoff und abgeschiedenem Kohlendioxid. Im Vergleich zur Schifffahrt ist die Passagierluftfahrt jedoch sehr preissensibel, was die Umstellung dieses Sektors auf höhere Treibstoffkosten zu einer Herausforderung macht. Darüber hinaus könnten Fortschritte bei der Batterie die elektrische Kurzstreckenluftfahrt Wirklichkeit werden lassen und einen alternativen Weg für signifikante Emissionsreduzierungen bieten, wenn sie entlang der Punkt-zu-Punkt-Passagierrouten eingeführt werden. Das gemeinsame Unternehmen der EU für Brennstoffzellen und Wasserstoff ist der Ansicht, dass die wahrscheinlichste Rolle von Wasserstoff im Langstreckenflug als Drop-in-Brennstoffausgangsstoff sein könnte.

Auch wenn Wasserstoff für leichte Personenkraftwagen keine großen Perspektiven mehr bietet, könnte er möglicherweise eine Rolle als Treibstoff für den Fernverkehr spielen, insbesondere für Fahrzeuge und Ausrüstungen für die Logistik und den Transport in Häfen, die gut geeignet sind, um zu werden Wasserstoff-Hubs, da die Schifffahrt beginnt, Ammoniak für ihre eigenen Dekarbonisierungsstrategien einzusetzen. Wasserstoff hat auch eine potenziell wichtige Nische in Schwerlastanwendungen für den Nicht-Straßenverkehr gefunden, wie z. B. im Bergbau, wo mehrere große Betreiber das Green Hydrogen Consortium gegründet haben, um den Kraftstoff als Teil ihrer Dekarbonisierungsstrategien zu entwickeln. Wie in der Luftfahrt könnten jedoch Fortschritte bei Technologien für hochdichte Batterie und Elektrofahrzeugen eine Konkurrenz für viele Schwerlastfahrzeuganwendungen darstellen.

Mai 2021

Vereinigte Staaten

Investition: Unbekannt

Port of Corpus Christi unterzeichnete mit Ares Management eine Absichtserklärung zur Produktion von grünem Wasserstoff für den Einsatz in Industrie und Schifffahrt.

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Februar 2021

Schweden

Investition: 3,04 Milliarden US-Dollar

In Schweden wurde ein H2GreenSteel-Projekt gestartet, das vom Mitbegründer von Northvolt mitbegründet wurde.

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März 2021

Japan

Investition: 92 Millionen US-Dollar

Das grüne Stahlprojekt Course50 schreitet voran, unterstützt von Nippon Steel und der japanischen Regierung.

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März 2021

China

Investition: 15 Millionen US-Dollar

HBIS, JFE Steel und China Baowu haben mit BHP Absichtserklärungen zur Erforschung von wasserstoffbasiertem Stahl in China unterzeichnet.

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Februar 2021

Dänemark

Investition: Unbekannt

In Esbjerg, Denmark, Maersk, Copenhagen Infrastructure Partners, consortium announce plans for Danish green ammonia facility.

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May 2021

The Netherlands

Investment: $1.2 billion

The Port of Rotterdam, Thyssenkrupp, and HKM announced a partnership to study green steel.

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May 2021

Australia

Investment: $78 million

Austral funded green hydrogen projects, including ammonia production at fertilizer facility.

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Mar 2021

Saudi Arabia/South Korea

Investment: $720 million

Hyundai Heavy Industries signed deal with Saudi Aramco for blue hydrogen and ammonia projects.

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Feb 2021

Chile

Investment: Unknown

Austria Energy Group, Oekowind, and Trama signed an MOU for a green ammonia project in Chile.

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Salzgitter AG, a steel manufacturer in Germany seen in July 2020, is slowly replacing coal used in its production process with hydrogen and electricity from renewable sources. HILAL ÖZCAN/PICTURE ALLIANCE VIA GETTY IMAGES

At the same time that hydrogen's role in decarbonizing hard-to-abate sectors is becoming clearer, costs of producing clean hydrogen via low-emission or zero-emission pathways are falling.

There are two production pathways for hydrogen of greatest interest in the energy transition, one using electricity as a feedstock and one using natural gas. Along the electricity pathway, “green” hydrogen is produced via electrolysis (splitting water with electricity) powered by renewable electricity, while hydrogen produced with nuclear power is variously called “yellow,” “purple,” or “pink.” In the natural gas pathway, “blue” hydrogen is produced by steam methane reforming (SMR) of natural gas (or renewable gas), with the carbon dioxide emissions from the process captured and sequestered; the less-developed “turquoise” hydrogen pathway is an intriguing variation, producing hydrogen from natural gas via pyrolysis and thus generating no carbon dioxide emissions to sequester (only solid carbon).

Each production pathway has its own advantages and disadvantages, and a given country or region’s hydrogen strategy will be determined significantly by its resource base. Those making the largest push for investments in green hydrogen production include China, Europe (particularly Germany, the Netherlands, and Portugal), Australia, Chile, and Morocco, with India expected to unveil a green hydrogen strategy soon. By contrast, the greatest interest in blue and turquoise hydrogen will be in countries with low-cost gas supplies, such as the United States and countries in the Middle East, including Saudi Arabia and the United Arab Emirates, that are increasingly recognizing the potential of blue hydrogen to become a lucrative export market to replace oil exports in a decarbonized world.

Green hydrogen is currently two to three times more expensive than blue hydrogen, although it can be cost-competitive in countries with extremely low electricity prices. Renewable electricity costs are expected to continue falling over the next decade, however, and electrolyzer costs could come down by 40 percent through 2030 with aggressive scaling up of the industry, making green hydrogen cheaper than blue in a growing number of regions by the end of the decade. Similarly, BNEF projects that blue hydrogen will have an edge until 2030, after which green will have a cost advantage in most markets based on steadily falling prices for power and electrolyzers as they scale. Each pathway will see costs from $1.5–$2.5/kg, less than a third of today’s costs and within the $2/kg range targeted for unsubsidized competitiveness with “grey” hydrogen (hydrogen produced from SMR of natural gas without carbon capture).

Despite its near-term cost advantage, blue hydrogen suffers from a major disadvantage, compared to its green cousin: it is not a true zero-emission solution. First of all, existing carbon capture and sequestration (CCS) technologies only capture about 85 to 95 percent of carbon dioxide from a plant, which places a fundamental limit on the role of CCS and blue hydrogen in a net-zero economy. Perhaps equally problematic is the issue of leakage of methane, the main component of natural gas and itself a greenhouse gas, from the natural gas supply chain. This persistent issue plagues natural gas infrastructure from wellhead to end uses, undercutting the credibility of natural gas as a “bridge fuel” and threatening support for blue hydrogen.

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Methane’s impact as a greenhouse gas is short-lived but potent, with an impact 84 times that of hydrogen over 20 years but “only” 28 times that of CO2 over a 100-year time frame. The recent Global Methane Assessment from the UN Environment Programme and the Climate & Clean Air Coalition of the UN Framework Convention on Climate Change demands greater attention to the issue of methane leakage, noting that actions to cut methane emissions by 45 percent by 2030 could reduce warming by 0.3 degrees Celsius by 2050. Moreover, 60 percent of these actions have low mitigation costs, particularly leak-remediation activities in the oil and gas industry, which can often have a negative cost because of extra revenues from keeping gas in the system. The oil and gas industry itself has shown increasing interest in controlling these emissions, working primarily through industry organizations such as the Oil and Gas Climate Initiative and the recently launched Net-Zero Producers Forum of major producing countries.

The task is not trivial; natural gas is invisible and can escape from small leaks anywhere in the supply chain, and current best practices involve surveying thousands of production sites and networks of pipelines with cameras carried by drones, trucks, or people. However, new methane-monitoring satellites launching in the next several years, including the MethaneSAT initiative led by the Environmental Defense Fund launching in 2022 and the CarbonMapper joint project of NASA, the California Air Resources Board, Planet, and other partners launching in 2023, could accelerate progress dramatically. By helping companies as well as regulators detect leaks quickly, satellite-based monitoring could help reduce remediation costs, ratchet up regulations, and improve global monitoring efforts.

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An oil field over the Monterey Shale formation near Lost Hills, California, on March 24, 2014

Another, often-overlooked resource for reducing methane emissions from the natural gas system, and therefore the blue hydrogen supply chain, is the production of renewable natural gas (RNG), also known as “biogas” or “biomethane,” from sources such as landfills, wastewater plants, and livestock operations. By capturing methane produced by these waste resources that would otherwise escape into the atmosphere, RNG can have negative lifecycle carbon emissions when used to replace fossil natural gas. While this resource is limited by feedstock availability—the American Gas Foundation estimates that it could replace a maximum of roughly 10 percent of current U.S. gas consumption—blue hydrogen facilities with access to RNG could potentially achieve near-zero or even carbon-negative emissions for their products.

Addressing the methane emissions of the existing natural gas system could be particularly important as private-sector buyers and policymakers seeking sustainable solutions aim to differentiate green and blue hydrogen supplies (as well as products made from them) based on emissions. The MiQ partnership of RMI and SystemIQ has already created a system for certifying and differentiating natural gas supplies based on their upstream methane emissions, demonstrating the possibility of such a voluntary or regulated system of emissions certification for blue hydrogen as well. The risk to the industry is not hypothetical; in November, the French government delayed a $7 billion contract to import liquid natural gas (LNG) from Texas due to concerns over the methane emissions of the region’s shale production.

Regardless of how these clean hydrogen supplies are produced, and whether they are zero-, low-, or negative-emissions fuels, one thing is certain: they will be significantly more expensive than today’s extremely cheap and dirty incumbents (e.g., coal in industrial uses, bunker fuel in shipping) and will almost certainly continue to be so even after costs decline enough by 2030 to compete with grey hydrogen. Hydrogen thus faces a much trickier transition path than the combination of renewables and batteries in electricity and transportation, which can offer lower costs and superior performance, compared to fossil fuels. Given the potential for advances in breakthrough battery technologies over the next decade, some observers believe that this latest wave of hydrogen enthusiasm may simply be the latest iteration of a mirage that is diverting capital and attention from “electrify everything” solutions.

However, unlike energy costs directly experienced by consumers in electricity and vehicle fuel prices, industries such as steel and freight have minimal direct impact on consumer prices. This means that there is more room for investing in and financing green technologies upstream without substantial, adverse impacts on consumers. Marginal supply chain cost differences can be decisive under current market dynamics, but it may be possible to shift these dynamics with a combination of policy direction, industry coordination, market pull from corporate sustainability initiatives, and innovative financing.

This pathway does not promise an easy solution, but these sectors are regarded as hard to abate for good reason—and unlike electric solutions, hydrogen-based technology solutions have the virtue of existing today. Creating the necessary market alignment around hydrogen in these sectors is a complex problem that neither policy nor voluntary action alone can solve, underscoring the importance of holistic approaches that work with industry and address the full value chain even more than in the case of batteries. Elements of such a strategy may include:

Research, Development, and Demonstration

Production technologies: While electrolyzers and steam methane reformers are established technologies, they can each still benefit from R&D support; the former has yet to be deployed at a large scale or with intermittent electricity sources, and the latter is limited by the state of carbon capture technology. Government R&D programs to reduce costs along each of these pathways include the European Union’s Horizon 2020 research and innovation program targets for improved electrolyzer performance and the U.S. Office of Fossil Energy’s Carbon Capture R&D Program, which works on carbon capture and storage processes that can capture a higher proportion of emissions as well as applications for industrial facilities (e.g., cement production). Turquoise hydrogen production is another, less-developed but potentially important pathway for R&D investment, as exemplified by Australia’s funding for Hazer Group’s biogas pyrolysis demonstration project.

Demonstration of key end uses: Public-private collaborations on hydrogen production tied to promising end-use applications serve to simultaneously scale up electrolyzer and carbon capture technologies while also demonstrating their potential for transforming these industries. Recent examples include the Japanese government’s work with Nippon Steel and JFE Steel to demonstrate the use of hydrogen for iron reduction as well as fuel for blast furnaces in the steelmaking process, and the Australian government’s investments in an Engie-developed green hydrogen production facility located at an existing fertilizer plant, which will produce ammonia. The European Union’s H2FUTURE project previously funded a green hydrogen and steel production demonstration project by Voestalpine and Siemens in Austria, and the European Union’s Horizon 2020 research and innovation program is seeking new projects to fund “that demonstrate real-life use cases in an industrial or port environment.”

Use of hydrogen in the gas system: Existing natural gas transportation and storage systems have potential to be repurposed for hydrogen, but more detailed understanding of this potential and its limits are required before these applications can be carried out safely at scale. Public-private initiatives such as the HyBlend Project headed by the U.S. National Renewable Energy Laboratory and H21 in the United Kingdom led by Northern Gas Networks provide examples of public-private research programs currently underway. These efforts can also leverage testing by natural gas utilities in the United Kingdom and southern California that see hydrogen blending as an important strategy for preventing their assets from becoming stranded in a zero-carbon future.

Scaling Up Hydrogen Production

Support for large-scale green and blue hydrogen production: Green and blue hydrogen production must be built out rapidly over the next five years to achieve targeted 2030 cost reductions for competing with grey hydrogen, and a growing number of countries are funding development of commercial-scale facilities to accelerate the process. Examples already underway include the U.S. Department of Energy’s H2@Scale program, Chilean government grants for green hydrogen production, and Australia’s investments in green hydrogen production, but these pale in ambition compared to the European Union’s Green Deal target of deploying 40 GW of green electrolyzers by 2030—up from less than 1 GW today—including $10 billion already committed by the German government. Perhaps as ambitiously, a recently announced $5 billion joint venture between Air Products and Saudi Arabia’s ACWA Power would build the world’s largest green hydrogen and ammonia production facility at Neom, the country’s sustainable city project.

Standards, certification, and regulation: Standards for hydrogen transportation, storage, trade, and emissions reporting are all important underdeveloped frameworks required for the industry to scale. The leading intergovernmental initiative addressing these issues is the International Partnership for Hydrogen and Fuel Cells in the Economy, with 22 nations (including the United States, United Kingdom, European Union, Chile, Australia, Japan, and China) working to develop regulations, codes, and standards as well as lifecycle emissions certifications. The European Union’s hydrogen roadmap similarly recognizes the need for common quality standards for hydrogen transportation across the gas network as well as certification of renewable and low-carbon hydrogen. Chile is developing its own regulations for hydrogen production, transportation, and storage as part of its National Green Hydrogen Strategy, and Australia’s Smart Energy Council has launched a national Zero Carbon Certification Scheme for renewable hydrogen, ammonia, steel, and other derivatives.

Regional hubs: Because hydrogen’s likeliest end uses are tied to heavy industry and shipping, public-private partnerships to support the creation of regional hydrogen hubs around existing industrial facilities and ports offer potential to catalyze development by co-locating hydrogen production, end uses, and transportation/pipeline infrastructure. Current initiatives include Australia’s plans to invest over $200 million to develop four regional hydrogen hubs and New South Wales’ support for hubs at two port cities, and the United Kingdom’s Tees Valley multimodal transport hub, which includes shipping and aviation.

End-Use Market Development

Infrastructure support: Beyond funding for hydrogen production and coordination of end-use collaborations, hydrogen development requires storage and pipeline infrastructure to connect production and use, as well as fuel-dispensing facilities for transportation applications. In the Netherlands, the Port of Rotterdam is developing hydrogen transport and storage infrastructure as part of its hydrogen hub plans and is jointly investigating potential for hydrogen pipeline connections to steelmaking facilities with Thyssenkrupp and HKM. Japan is similarly planning to provide funding for hydrogen transportation infrastructure for trucking, aviation, and shipping as part of its $20 billion Green Growth Strategy.

Government procurement: Governments at every level are major purchasers of steel and cement used in public buildings and roads projects, as well as indirectly through fleet vehicles and other products using steel. Establishing procurement guidelines for green building materials could provide a market for hydrogen-based steel production and should be based on performance measurements and standards developed in partnership with the industry, including product-specific standards for different types of products (e.g., rebar vs. structural steel), as well as lifecycle analyses that take lifespan and recycling potential into account. These types of market-building public procurement measures for low-carbon building materials are included in the German government’s Steel Action Concept and the Climate Crisis Action Plan of the U.S. House Select Committee on the Climate Crisis and are being studied for cement and steel as part of California’s Buy Clean program.

Sector coordination: Several industry groups have emerged across key end-use sectors to align demand toward decarbonized pathways including hydrogen, such as the SteelZero initiative, whose steelworks and construction industry members aim to procure 100 percent net-zero steel by 2050; the Getting to Zero Partnership, which brings together maritime industry stakeholders to put “commercially viable” deep-sea zero-emission vessels into operation by 2030; and the Poseidon Principles and Mission Possible initiatives founded by RMI, under which finance providers in these and other hard-to-abate sectors pledge to align their portfolios with roadmaps to net-zero emissions by 2050. Coordination with such groups is essential for policymakers to understand the ecosystem of hydrogen end uses, the opportunities and challenges each sector faces, and where the greatest impact can be had.

Industrial emission regulations: Beyond market-building activities to provide demand pull, governments can accelerate investments in industrial hydrogen through binding emissions targets or regulations. Currently, steel and cement users are included in cap-and-trade programs in the European Union, California, and soon China, but they are all providing the industry with ample free allowances to ease their transition—and carbon prices under the last two regimes remain extremely low. In the EU Emissions Trading Scheme, where carbon prices are highest, steel producers claim that carbon prices are increasing their production costs by nearly 10 percent despite getting free allowances covering 80 percent of their emissions. More targeted, demand-side measures are potentially a more politically viable and effective alternative; for example, embodied carbon regulations on the automotive or building industries would require lowering the lifecycle emissions associated with structural materials including steel.

Transportation emission regulations: Regulating the shipping and aviation industries represents a policy challenge given their crossing of international borders. The International Maritime Organization has formulated a target of reducing total shipping emissions by 50 percent by 2050 but currently lacks details for implementation under its MARPOL pollution regulations. Similarly, the International Air Transport Association (IATA) has set targets of carbon neutral growth from 2020 and a 50 percent reduction in net emissions by 2050, but it relies significantly on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) mechanism established by the United Nations instead of directly reducing fuel emissions. While intra-European flights are currently covered by the EU Emissions Trading System (ETS), their typical compliance costs net of free emissions are a mere fraction of the value of their fuel tax exemptions; the European Union is considering taxes on conventional jet-fueled aviation as part of its Green Deal, but without ample industry protections such as border adjustments, this will undoubtedly draw opposition from airlines and member countries.

Carbon Border Adjustments: Border adjustment policies are a critical cost-containment mechanism in countries where aggressive decarbonization policies are pursued, as they can help level the playing field for domestic industry by imposing costs on imports from high-carbon-intensity countries. This is of particular concern to producers of internationally traded goods such as steel, and the European steel industry is calling for a carbon border adjustment mechanism to offset rising compliance costs under the EU ETS. These initiatives face difficulties owing to the complexity of emissions attribution in supply chains as well as the policy challenge of crafting a regime that meets World Trade Organization rules. The European Union is studying frameworks for a border adjustment tax as part of its Green Deal strategy, and the Biden administration is evaluating options for one as well.

Different Technologies on Similar Paths, with Similar Lessons for the Clean Energy Transition

Batteries and hydrogen are very different technologies, with varying trajectories for development over the next decade. Batteries are entering a new stage of mass-market deployment and technological development, while hydrogen has relatively high costs that create basic questions about its commercial viability, and it still requires many billions of dollars in capital to begin to scale. At the same time, they are similar, complementary technologies—together, they have the potential to use the rapidly decarbonizing electricity grid (and lower-carbon or carbon-captured natural gas supplies) to decarbonize significant shares of the economy.

While they may compete in some industries and use cases, such as aviation and long-range trucking, the market and many policymakers are increasingly recognizing the distinctions among the sectors these technologies will deploy in: hydrogen for heavy industry and some long-range transportation, and batteries for everything else.

There may be complementary interactions among these industries as well. Hydrogen is very unlikely to be a major source of zero-carbon electricity, but bringing down its cost to serve industrial markets could provide a valuable source of fuel for dispatchable peaking or backup plants (e.g., gas turbines or fuel cells). Similarly, by reducing the costs of keeping the grid reliable and accelerating progress toward a zero-carbon grid, batteries will help green electrolyzers run more consistently and efficiently than intermittent wind and solar alone.

Similar lessons can be drawn for policymakers about how best to support the growth of these industries and partner with key private-sector stakeholders:

It is essential to accelerate zero-carbon electricity on the grid and lower costs. Access to cheap renewable power is fundamental to the economics of both battery- and hydrogen-enabled end uses. Without continued rapid progress on the grid, none of these decarbonization futures is possible.
Targeting sector-specific regulations is challenging. Regulations to achieve decarbonization can benefit from targeting specific sectors, but they must be crafted to consider technology availability (e.g., heavy-duty trucking) and implementation costs in internationally traded goods (e.g., hydrogen), which may require border adjustments.
Public procurement is a powerful tool for market development. While government budgets are not sufficient to scale up these industries by themselves, well-designed programs can provide an important spark, particularly when paired with achievable domestic battery manufacturing or hydrogen production content goals.
Private-sector partnerships are essential collaborations. Private-sector consortia are emerging to decarbonize end-use industries and improve the sustainability of supply chains among automakers, steel manufacturers, shipping companies, and natural gas producers, offering resources to improve policy, guide government procurement, and foster public-private partnerships.
Certifications of sustainability and emissions are growing in importance. As these technologies scale, public- and private-sector initiatives to certify the provenance of raw materials and supply chain emissions in areas such as lithium and cobalt mining as well as life-cycle hydrogen emissions (particularly for blue hydrogen) will grow in importance to maintain political support and ensure that these technologies achieve climate change goals.

Finally, while increased international competition is healthy and should be expected, given the stakes of these sectors, it will also be imperative to collaborate across borders to establish frameworks for trade (particularly in hydrogen), emissions certification, and technical assistance and best practices sharing in implementing new technologies. The drive to achieve the goals of the Paris Agreement must ultimately be the largest global collaboration in history, and a race to the top can accelerate the cross-sector response the climate crisis demands.

By FP Analytics. Edited by Allison Carlson and Phillip Meylan. Copyedited by David Johnstone. Development by Andrew Baughman and Ash White. Art direction by Lori Kelley. Illustration by Nicolás Ortega for Foreign Policy.

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