It reverse-engineered a scenario to meet the goals of the Paris agreement and found that to achieve them low-carbon hydrogen would need to play a bigger role. He denies that the company is just jumping on a new trend and says it overhauled its planning two years ago as investor pressure to do more to address climate change intensified. “Shell is particularly excited about hydrogen as an energy vector as we see it can reach all those parts of the energy system that are really hard to electrify directly,” says Paul Bogers, Shell’s vice-president of hydrogen. The theory is that costs will fall over time as they did for offshore wind and solar power - a shift that made them much more competitive.įor Shell, scaling up in green hydrogen has twin benefits: it would replace the hydrogen produced from fossil fuels that it already uses at its refineries, and it would create new markets at a time when the long-term future of its core oil business is less certain. He calculates that around $150bn is being made available by governments globally to back hydrogen projects, in the form of subsidies and support. “A lot of money is now being thrown at low-carbon hydrogen to de-risk it.” “Almost anyone involved in the energy space over the past year has announced some kind of commitment to low-carbon hydrogen,” says Gallagher. It will be capable of producing around 1,300 tonnes a year of hydrogen to be used in processes such as removing sulphur from conventional fuels. One of the units being manufactured at ITM’s factory is destined for Shell’s Rhineland refinery north-west of Bonn in Germany, where the oil and gas major is installing what will be the world’s largest hydrogen electrolyser. High costs and complexities have stunted previous efforts to create whole new economies centred around hydrogen © Alex Kraus/Bloomberg Big Oil’s latest gambleĪmong the biggest advocates of this hydrogen revolution are the world’s largest oil and gas companies, gambling that greater use of the gas could help secure their long-term future. Solar panels near the hydrogen electrolysis plant at Linde’s Energiepark Mainz in Germany, left, in view of wind turbines. You couldn’t do it without a net zero energy gas.” “The UK government’s legislation for net zero by 2050 changed the world,” says, Graham Cooley, ITM’s chief executive, referring to the UK’s 2019 decision to become the first major economy to enshrine such a target in law. “You now have net zero become law in Europe . . . But, so far only $80bn has been committed. At least $300bn is expected, says the council, to be invested globally over the next decade by the public and private sectors, with some in the industry projecting that - if successful - hydrogen could one day help meet almost a fifth of global energy demand. Last year, the EU and at least 15 other countries published hydrogen plans often backed by subsidies to help lower production costs, according to industry lobby group the Hydrogen Council. Governments adopting net zero targets are desperately seeking ways to slash emissions from highly polluting sectors including heating, heavy industries like steel and long distance transport, where other options either don’t yet exist or are also in their infancy. Yet its high costs and complexities have stunted previous attempts at creating whole new economies centred around hydrogen, which were often driven by oil price surges and shortages, or governments’ desire for energy independence.īut since the 2015 Paris climate agreement, “low carbon hydrogen”, produced either without fossil fuels or by storing and capturing the emissions generated, is firmly back on the agenda. Interest in the kind of clean hydrogen ITM’s equipment produces has ballooned in the past three years, as governments, companies and academics look at whether the light, colourless gas - which doesn’t produce carbon dioxide when burnt - could help solve some of the world’s dirtiest energy problems.įor decades, hydrogen has been hailed as a potentially revolutionary alternative to fossil fuels - General Motors built its first hydrogen-powered vehicle in the 1960s. ITM has since formed partnerships with other industrial groups including Italy’s Snam and the American-German Linde - both have taken minority stakes in the Sheffield company - but faces competition from Chinese, European and US rivals.
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Royal Dutch Shell was an early customer and many of its first electrolysers were deployed to produce hydrogen for refuelling stations at the oil major’s forecourts in the UK.