Finding winners in the hydrogen hype
Prakash Sharma A * , Flor Lucia De la Cruz B and Jonathan Sultoon CA Wood Mackenzie, 3 Church Street, #29-01 Samsung Hub, Singapore.
B Wood Mackenzie, Avda. Europa, 2-B Ala Oeste 1° Alcoron (Madrid) 28922, Spain.
C Wood Mackenzie, One Park Place, Suite 575, Annapolis, MD 21401, USA.
The APPEA Journal 62 S67-S71 https://doi.org/10.1071/AJ21168
Accepted: 28 March 2022 Published: 13 May 2022
© 2022 The Author(s) (or their employer(s)). Published by CSIRO Publishing on behalf of APPEA.
Abstract
The global energy trade is set for its greatest transformation since the 1970s and the rise of OPEC (The Organization of the Petroleum Exporting Countries). Electrification is central to this as countries plough money into renewables to reduce emissions and enhance energy security. But electrification can take the world only so far. With higher carbon prices looming on the horizon, fossil fuel exporters and industrial sectors – as well as heavy-duty trucking, shipping and aviation – need alternatives to decarbonise. Most are looking to electricity-based fuels and feedstocks such as hydrogen, ammonia and methanol to replace hydrocarbons. This will revolutionise energy trade, with total trade declining by as much as 50% and virtually all remaining traded oil gas and coal being either completely decarbonised or backed by offsets. With 147 GWel (giga‐watts electrolyser capacity) in announced projects, green hydrogen produced from renewable electricity is ahead of the game. And while its export supply chains are complex, requiring conversion into a ‘product’ to allow delivery, there is no exploration risk as in oil and gas projects. Worldwide, national hydrogen roadmaps are being passed, with virtually all oil and gas companies, utilities and industrials backing at least one hydrogen project. Focus is now shifting to future sources of hydrogen supply. Lenders will be drawn to locations with a proven track record of exporting natural resources, suitable conditions for low-cost renewable electricity and the potential for large-scale carbon capture. A few countries already stand out, but none more so than Australia. Using our proprietary research, we will present a case study evaluating hydrogen supply options from Australia, Saudi Arabia and Canada – delivered into key markets like Japan for different applications. We will also assess when costs will fall across the value chain – production, midstream and downstream – and reach parity to incumbent fuels.
Keywords: Australia, bio energy, blue hydrogen, Canada, carbon emissions, carbon prices, CCUS, China, electrolysers, energy markets, green ammonia, green hydrogen, green methanol, green steel, India, innovation, Japan, long-duration storage, majors, mobility, net zero, renewable gas, Russia, Saudi Arabia, solar, South Korea, trade, venture capital, wind.
Prakash Sharma has over 25 years’ experience in energy, metals and mining, and climate change policy developments, ranging from change management to business strategy and commodity markets. He joined Wood Mackenzie in 2006 and is currently based in Singapore. He is responsible for net zero emissions scenario modelling, and leads discussions on hydrogen, CCUS, next-gen nuclear and geothermal technologies for WoodMac. He has presented to board and senior-level management teams, as well as at major industry conferences. Previously, Prakash spent 2 years in Beijing as head of Wood Mackenzie’s China research, guiding a team of analysts on China’s energy and economic trends, including supply-side reforms, inter-fuel competition and commodity prices. He has also led global coal markets analysis for 5 years, delivering research on decarbonisation policies, the impact of renewables, alternative scenarios and evolving patterns of supply and demand. Prakash is a Mining Engineer from the Indian Institute of Technology with an MBA from the International Management Institute in India. |
Flor De la Cruz is a subject matter expert in hydrogen and emerging technologies for Wood Mackenzie’s Energy Transition Practice. She works on modelling hydrogen markets, tracking deployments, policy, investments, technology trends, and analysing the adoption of hydrogen in industrial processes including ammonia, methanol, heating, blending, midstream logistics and the power and storage sector. Before joining Wood Mackenzie, Flor led the innovation team at IDOM working on developing low-carbon and circular economy projects for green and blue hydrogen, advanced biofuels, hydrotreated vegetable oils, plastic recycling and carbon capture. At IDOM, she also worked as a process engineer on LNG projects in Brazil, Colombia and Poland and a natural gas processing facility in Morocco. Before IDOM, Flor worked as a health safety and environment engineer at Tecnicas Reunidas, where she worked on the Al-Zour refinery for Kuwait and a nitric acid plant for Yara in Norway. Flor holds a bachelor’s degree in Chemical Engineering from the Massachusetts Institute of Technology (MIT). While at MIT, she also worked as a researcher at the Strano Laboratory on a team that developed a breakthrough antibody test using near-infrared fluorescent single-walled carbon nanotube sensors. The work was published in Advanced Healthcare Materials in 2014. Email: florlucia.delacruz@woodmac.com |
Jonathan Sultoon has over 20 years’ experience leading analysis for global energy markets including power, coal, gas and LNG. At Wood Mackenzie he leads a team of analysts designing research for the energy transition. The team extends across all segments, all markets and all fuels and technologies. Previously, Jonathan led Wood Mackenzie global coal markets practice. His areas of expertise were in supply, demand and price forecasting for the international coal markets, competition between multi-fuels in the power generation sector across Europe and Asia, and corporate analyses of the major producers and utilities. Jonathan fulfilled a similar role covering European gas and power between 2006 and 2008, driving short- and long-term European gas market fundamentals and provided expert support on bespoke consulting projects in the European gas and power arena. Jonathan holds a BA (Hons) and MA (Hons) in Physics from the University of Oxford, UK. Email: jonny.sultoon@woodmac.com |
References
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Sharma P (2021) The blue-green planet. Available at https://www.woodmac.com/news/opinion/horizons-live-the-blue-green-planet/
van Dorsten B (2021) Can green hydrogen compete on cost? Available at https://www.woodmac.com/news/opinion/can-green-hydrogen-compete-on-cost/