Interview with Mark Page included in the Q&As speakers’ booklet of the Financial Times Hydrogen Summit, held in London on 15 June 2023.
What do you see as the biggest obstacle to the scaling up of clean hydrogen?
First, let’s recognise there is huge momentum behind green hydrogen: investors, customers, infrastructure operators, component suppliers, and policymakers have mostly understood the benefits and the imperative to act now. A year ago, we were hearing a lot of doubts (the 2022 FT Hydrogen Conference debated if green hydrogen is real), and now we get questions about how to speed up.
One obstacle to scaling up is aligning everyone’s investment horizons. As a developer and operator of green hydrogen production plants in Germany, HH2E needs certainty of supply on electrolysers, batteries and core electrical components, while the manufacturers need certainty to plan their supply chains and capacity expansion. Industrial and transportation customers also need to invest in the migration to green hydrogen.
Several steps are needed to mature the hydrogen market: first movers help drive green hydrogen adoption, such as the heavy-trucks mobility sector, leading to economies of scale that will bring down costs for everyone. Large-scale production facilities should be pipeline-connected or co- located with industries that need hydrogen to decarbonise; component manufacturers must scale up their operations, and investors need to expand their hydrogen specialist teams and funds to be able to back the right projects/companies today.
What role will policy and regulation play in the expansion of the industry?
Policy, regulation, and state subsidies play a crucial role. In some countries they are an accelerator (as in the US) but other countries spend more time debating details and trying to keep their options open rather than committing to what is a key sector
for energy security and affordability. We’re very happy with the outcome of the RED II debates in Europe but generally would like more pace in regulatory decision-making. The same on subsidy/incentives. It’s depressing to see how much money flows into fossil fuels (and CO2 output) from governments, investors and consumers while hearing that it would be somehow a market distortion to back the growth of green hydrogen.
Here are some key ways policy and regulation can impact the growth of the green hydrogen industry: R&D funding; financial incentives to reduce green hydrogen production costs and to help transportation or industrial production achieve parity on the total cost of ownership with diesel or natural gas; infrastructure development, supporting the setup of hydrogen pipelines, refuelling stations; and last but not least, increasing carbon pricing and tightening emission targets so that we have a genuine level playing field from a global perspective.
Will there be enough cheap renewable energy to produce green hydrogen? Or will CCUS-enabled hydrogen production be needed to meet growing demand?
Sunshine and wind are unlimited but fluctuate. As most countries target 100% renewable power by the end of the next decade, we will see a huge power surplus at zero marginal cost. Power surplus is what we at HH2E use for green hydrogen production. And it makes domestic production more economical than importing from faraway sunny places to Europe.
Hydrogen is an emerging market, and due to its urgent need, people expect this industry to mature more rapidly than any other in the history of the energy sector. It is now clear to everyone that it will be essential for securing the energy supply to industries that need the molecules, and the energy transition will not happen without it. So, of course, there is room for different forms of clean hydrogen, and we all benefit from hydrogen infrastructure investments.
How can financing for clean hydrogen projects be accelerated?
We already see strong interest to fund investment in green hydrogen projects, but many investors/lenders want someone else to take the jump first and set benchmarks. Building confidence in the economics of green hydrogen is therefore essential, and requires serious developers/operators making their case. Of course, it would be very helpful to have government incentives/ guarantees and favourable policy frameworks to de-risk the initial investments along the value chain. Enhancing ESG lending criteria to boost investment in new energy transition sectors as well as familiar sectors would make a difference, as will carbon pricing and emission trading schemes to make green hydrogen more attractive for customers.
Realism would be helpful too – we can’t expect another country to make all the investments (unless we accept ongoing energy/financial dependency); we can’t expect everything to be available for a dollar/euro; we can’t expect the transition to be immediate or easy. We also can’t keep relying on the old energy system (which of course, also took a long time and huge investment to build up) and expect someone else to solve the resulting climate crisis.
Fortunately, we see huge amounts of optimism – in the communities where we build, the companies we work with, the people we hire, and the investors who back us. Optimism and realism get you a long way.
