The massive challenge of hydrogen interview with Florian Kern episode 63. Welcome to the My energy 2050 podcast where we speak to the people building a clean energy system by 2050. I'm your host, Michael LaBelle. This week we speak with Florian Kern. He is the head of the research field of ecological economics and environmental policy at the Institute for Ecological Economy Research in Berlin. He holds a PhD in Science and Technology Policy from the University of Sussex, Florian and I discuss the challenge of hydrogen, and what needs to be done before large scale deployment occurs. We talked about hydrogen ready infrastructure, and whether this is just a PR exercise on the part of the gas sector? Or is there really a future of hydrogen being transported like gas is today, I would say our conversation is is pretty raw in the sense, this conversation with Florian delivers a fairly objective and lively discussion on the requirements of what is needed to make the hydrogen economy part of the industrial base. As you'll hear the electrification of the energy sector is essential to make hydrogen a reality for industry. I came away from this conversation with a deeper understanding of the massive energy requirements for industry. That's why I'm using massive in the title, replacing coal or gas. You know, fossil fuels for industry is a huge challenge that requires giving up fossil fuels in other areas of life in order to enable either the remaining fossil fuels to be used in industry, or to enable large scale renewable energy infrastructure to produce green hydrogen. So if that's too complex, listen to this episode. And you'll understand how, how the challenges that we faced of producing hydrogen are quite large, and how industry can use it in a cost effective manner. But yeah, there's still a lot of ifs out there. And particularly when we start talking about the timeline. By the end of this episode, you should understand that to build the renewable energy infrastructure to produce green hydrogen, then electrification of transport and residential heating needs to occur first. Once sufficient, renewables are built to meet everyday uses, then hydrogen can be produced from renewables. Okay, I'm simplifying our discussion, but hopefully, that makes sense. So for me, this episode delivers a newer appreciation of scales of renewables that need to be deployed to produce hydrogen to promises that the new gas infrastructure being built for hydrogen appears far off because of the massive amounts needed for industry. In short, the energy transition includes hydrogen, but we need to rationally assess the demand for hydrogen in the short term, basically, the cost this includes the cost and how it can be produced to meet the requirements for industrial processes. A final note the interview was done for my current role as an open society University Network Senior Fellow at Chatham House, the Royal Institute of International Affairs, the funding was generously provided to produce the podcasts and to the end of 2022. So we have some amazing interviews coming up. The intent of the my energy 2050 podcast is to spread the knowledge about the about how the energy system can assist our transition towards a greener future. And just to note acknowledges my absence for the past few months, I'm back and committed. I had too many commitments these past few months, so I had to cut back a bit, but I am excited to be back and producing more episodes for the next year. This actually is great because I'm on sabbatical from my day job, which means more time for podcasting. So stay tuned for more great episodes. And now for this week's episode. I'm here today with Florian Kern to discuss hydrogen Florian I just want to first start off and thank you for joining the my energy 2050 podcast. Thanks very much for having me. And and we should mention where we are because we have this unique sound I think sound environment we're in the nice garden. Would you call this like a coffee garden tea garden?
Yeah, I think it's a it's a nice coffee place instead of Park.
Okay, perfect. So we have some outdoor noises. I think coming through Florian, my first question to you is about your background. You do a range of research in the energy sector with with different policies, different technologies involved, but we're gonna specifically talk about hydrogen today. And how did you become interested in this topic, but also kind of what's your career path that brings you to the head of your institute?
Yeah, thanks. I mean, I've a degree in political science originally, and then it was very I'm interested in environmental issues, especially climate change. And obviously, we're very much so energy policy sensitive, so closely related. I did a environmental policy and planning degree in Denmark, obviously, in terms of addressing climate change, clean technologies are really part of the answer, not the only answer. And we can come back to that. So I really became interested in this idea of, of low carbon transitions, and how can we support them? What can policymakers do to direct and accelerate the transitions towards low carbon energy systems, that led me to do a PhD at the University of Sussex at Spro, the Science Policy Research Unit, where you could do a degree in Science and Technology Policy. So and it's was there as part of the Sussex Energy Group, one of the largest independent energy policy research groups that are researching these issues? And, yeah, I've been studying a range of technologies, and the latest hype is hydrogen. And here we are talking about hydrogen.
Yes, but let me let me go first, the next question will be about hydrogen or promise, but the degree in science and technology, because it's kind of unique, because I would say it's interdisciplinary degree that you got. And so you had to look at technology from a and science, of course, from a different type of angle, rather than I'm a geographer, so I had kind of this geographic lens, or we have sociology that could look also look at social trends and energy. But what how does a degree in science and technology influence how you approach? Well, technologies in the energy sector?
Yeah, it's a good question. So it's a Science and Technology Policy. So actually, the focus is on policy. The question is really, how can policy support science and technology development. And you're right, this is an interdisciplinary research area. This is something where Spruance, my PhD is one of the world's largest and first centers to study the development of science technology in an interdisciplinary way. So it draws partly on economics, evolutionary economics, especially, but also other things like institutional theories, political science, and one of the things that was always very close to the heart. sprue is that people need to understand a little bit about the technology so that they're studying. So we have quite a few people who had an engineering background, who understood a bit of the the technical issues as well as the social science issues. And it's really that unique combination of bringing together though these different colleges to study these issues.
Okay, great. So then let's move on to the hydrogen, because how does actually how does that inform your approach to hydrogen? If we can do that? Because we definitely have that there's technology out there for hydrogen, but and then there's the policy environment. So far, there's some missing links to make full scale deployment of hydrogen, a possibility. My question to you then is Why is it so hard for new technologies to be introduced into the energy system?
Yeah, that's, that's a great question and a great starting point. I think what we've seen over the last 20 years or so where people have studied these historical transitions, and of course, energy systems have historically changed hugely over time. But there are a number of characteristics of energy systems that that make that a really slow and often painful process. One of them, of course, is that we're very much locked into current ways of doing things. And that's partly because energy is very much a sector where you have long term investments where you have huge infrastructures, where getting rid of infrastructures entails huge sunk investments, of course, also, the oil and gas sector, very powerful actors politically, and so therefore, to do things that are potentially not in their interest is very difficult to do. So when we think about transitions, we really see those as socio technical configurations that need to change. So it is partly about the technologies. It's partly, you know, on the production side is partly about the infrastructure is needed, whether those are wires, or pipelines or what have you. And, of course, there's a need for technical change in terms of, for example, generation technologies, and so on. As I said, it's about much more than that. It's also about cultural issues. For example, you know, if you think about oil, and you think about car and car dependency and cultural issues attached with that. So there's a range of social issues that come into that, because, of course, huge role for regulation for policy in terms of I mean, energy is obviously a very regulated sector. And I mean, I think the bigger picture is that you have so many different elements that make up a socio technical system that are very closely aligned and are actually working pretty well. I mean, we have a relatively good transport system, we have electricity, that when you flick on the light, the light comes on, and all the rest of so actually, these systems have been developed over decades. There's a lot of investment in them. And therefore there a strong interest in keeping things as they are. And if you want to start changing things, you have to literally change all of the individual bits from the technology to the infrastructure to maybe some behavioral issues to market arrangement policies. So that makes it very difficult and very slow to change things.
And then is this one of the areas where hydrogen is attractive? Because you mentioned the oil and gas sector, for example, hydrogen, I would say is being promoted as an alternative or just a step away from gas. In one sense, is the appeal for hydrogen is because it's not a radical change, even though I mean, we can get into how radical change it is. Because in one sense, it is what why is hydrogen? Maybe I just frame it in a bigger sense? Why is hydrogen and technology that's appealing to many gas companies?
Yeah, no, that's a very good reason. I mean, I think different actors, promote hydrogen for different reasons. But I think, for the gas companies, it's kind of a way to keep their existing business model alive, and maybe even reuse some of the existing infrastructures you have in terms of pipelines, for example. You know, they need to be sort of small technical changes made to the pipeline system, because it is very small. So you got to make sure that you're not losing too much on the way. But in principle, you can use that. But also, I mean, we're looking at this from a policy point of view, obviously. And I mean, for policymakers, one of the main motivations for thinking about hydrogen, obviously, more recently, there's been a lot of concern about energy security, and the supply of gas. But so that's now plays an important role. But many countries started and hydrogen programs of the last five years or so one of the key motivations, of course, climate change, and how to decarbonize the whole energy sector, as well as the entire economy around it. And I think that's the major difference for why there's so much interest in hydrogen now compared to 1015 years ago, because back then, the main story was how to decarbonize electricity. And that's fine. And that gets you so far, and you can reduce emissions, and you know, quite a few countries, and you have made a lot of progress in that regard. But now it's you know, if we're serious about being carbon neutral by 2050, or in the German case, even by 2045, that means decarbonizing the whole economy. And, you know, in over the last five years or so, the the policy goals have changed dramatically to basically that means in every sector of the economy reduced to zero. And we have not even begun to understand what that entails how difficult that is. And therefore, there is this appeal to hydrogen that Oh, great. We can use hydrogen, we believe that hydrogen economy and hydrogen can decarbonize everything. It's not just about electricity or gas, it's about the whole economy.
And is it true? Is can hydrogen solve all our problems? or 80% of our problems? From a policy perspective?
No. Okay. I think this is actually one of the big dangerous, I'm not against hydrogen at all. I think hydrogen is an important part of the transition towards a low carbon economy. But hydrogen has a range of disadvantages. Hydrogen is very energy intensive to produce. I mean, one thing that people need to understand that it's not an energy source, it's not like oil or gas. It's an energy vector. It's a carrier. So you've got to spend energy on producing hydrogen in the first place. And then you can use that for all sorts of things. I mean, from our research, what we would say is that there are a range of applications where we have very few or no technical alternative for decarbonisation. So if you think about the steel sector, you know, how is the steel sector going to be carbon neutral by 2045? There, hydrogen really doesn't make sense as the main technological option to pursue, and we need to see huge investments in that sector over the next decade or so. So that that can be worked out. So there, it totally makes sense. In other applications, how do we hit our homes? You know, now people go around, you know, the energy security concerns is a whole new ballgame. But you know, even before that, people were going around basically telling people, you don't need to change every anything. You have your boilers, you know, natural gas companies, for example, operators was telling people, no, it's fine. You know, no need to invest in heat pumps don't do that. Because, you know, it'll be all hydrogen, it'll be all fine. And I think that is a major danger in terms of continuing carbon locking, and also locking out better alternatives. Yes, and the last point is maybe about vehicles. So you know, people have been talking about hydrogen fuel vehicles. A third of people in service in Germany believe that in 10 years time, they will drive a hydrogen powered vehicle not appreciating that most likely that will be an electric vehicle instead of the battery. It's not a combustion engine. But but in the for these types of applications where we do have a direct battery electric solution, it absolutely makes no sense to use hydrogen because hydrogen, as you know, four or five times six times the energy needs compared to just using the electricity. Oh, really? Yeah to vehicle so but we do see companies push that of course, never done That's
because because you can more easily engineer an internal combustion engine to use hydrogen rather than going electric car. Is that?
No, no, no, no, that it's on the it's in terms of how much energy do you use to drive X amount of kilometers? Okay. Yes, the point is that you can use that electricity directly in the car to drive those 100 kilometers, or you can first produce electricity. Yes, then use electricity to produce hydrogen. Okay. Yes, thank you for just hydrogen. Yeah, and you need to get rid of coal, and then convert it back into electricity. So all the losses that you have along that long chain make it so okay, it's not a very efficient way to power vehicle or a large vehicle. I mean, there is an open question there about very heavy equipment, machinery and stuff like that. But even there, China has been making a lot of progress with different types of batteries. And so I think there it remains a bit of an open question, but from our point of view, sort of cars that we drive around, and they feed on a good option. Okay. So it's not a silver bullet. And the concern is that the hype, basically stops also other low carbon trajectories. You know, I mentioned heat pumps as an example. So there's a real concern here that if we're telling people No, it's fine. You know, yes. Just keep your gas boilers. Yeah, it'll be expensive now, but later, we will have hydrogen and then nothing changes in terms of the business models in terms of then
pumping hydrogen into people's homes. That's not logical. No, no, yeah. Yeah. And then I want to go back to because you mentioned it, and you also addressed it in the car example. But as a vector, hydrogen as a vector, kind of, could you explain that a bit more? And just how the process actually works? Is this conversion to technology? For example, in rehab in front of you this green hydrogen, blue hydrogen, maybe talk about what is the difference between these types of colored hydrogens? Yes. And what is how does that make hydrogen a vector? Vector change? Or however you haven't heard that word before?
Yeah. So the point is really, that oil and gas were things we tapped into. And that energy was there, and had been converted from biomass a long, long time ago, but we didn't have to do anything. And then we just took it out of the ground. And we burned it. And that released the energy. So also, there's of question question, of course, how much energy you need to invest to get that energy out. So this was the energy return on investment kind of equation that people have been talking about. But hydrogen needs to be produced somewhere, it's not to be found. It's not like we're tapping into hydrogen reservoir we, the molecule needs to be produced somehow. And we can do that in different ways. Of course, from a climate change perspective, the main way in which people imagine that this would be helpful to decarbonize the global economy would be to use electricity produced by renewables, to then produce hydrogen to then use that in different application areas. So that's a so called green hydrogen. So that means you're using renewable green electricity to produce the hydrogen and then use it for whatever application you want. And that's zero, a relatively low carbon, of course,
is that the best kind of hydrogen?
Yeah, nitrogen. Yeah. From a climate point of view. That's kind of the cleanest, okay. That sense against the climate change targets. That's, that's the best. There is very little of that. In Germany, for example, at the moment, so there are some industrial applications today where hydrogen is used and has been used, for example, in refineries, and that hydrogen is produced from natural gas. Okay. Okay. So that's steam, reformational, gasification from natural gas. And that's the so called gray hydrogen. So that's being used in industry in relatively small quantities. And that's obviously not renewable. So in terms of the carbon footprint of that activity, that isn't great. Okay. Right. That's the green and the gray. Then there's the blue for hydrogen. Yes. Which is produced exactly the same way as the gray hydrogen. Okay, but you capture the emissions. So this is gray hydrogen, plus carbon capture and storage or carbon capture and utilisation. And then you have your blue hydrogen. I mean, the molecules are always the same. It's always the same. Okay. Yeah. The question is about how do you produce it? Okay. Okay. What's the carbon footprint of that activity?
So so the idea then, so let me clarify that so gray hydrogen, there's also pink, but it's not. Yeah, yeah. Okay. So gray hydrogen is when you're converting gas to to hydrogen, but you're not capturing the co2 emissions from that. That's right. But blue hydrogen is when you're producing hydrogen from gas and you're capturing the co2 emissions? That's correct. Okay. And then, what's pink? I love pink hydrogen. What's pink hydrogen.
Pink is basically light green. So you use the same technology. Electron This is but this is not powered by renewables, but by nuclear. Yes. So that's also a low carbon option that obviously has a different risk reward profile compared to some renewables. But that is pink hydrogen. And then we also have turqoise, which is basically like grey, it's made from gas, but it's using a different technology that's done using pyrolysis. And then you separate the carbon out, but it's solid. Okay, okay. I'm not an engineer. So don't ask the question about how that works. But this is kind of the color coding of Yeah, exactly.
You bring up and then let's move on quickly, because we don't want to go into into into too much that. Okay. So these are all the types of hydrogen? And of course, maybe if there's pink hydrogen in Germany, it's made in France and exported to Germany, rather than made in Germany. So that's my joke. But yeah, yeah. Well,
at the moment, it's the other way around, isn't it? At the moment, Germany need to produce a lot of extra electricity, partly burning gas to deliver it to France, because there's a lack of, I mean, But joking aside, this is actually the The important point here. I was talking about the efficiency earlier, for example, using it in vehicles. And if you need five or six times the, you know, that electricity to power a vehicle the same distance, it's not a good idea, because I mean, in all of this, this is kind of the bottleneck, you were asking, is hydrogen, the solution for everything. And I do think there are a range of sectors where it's really needed as a solution, because we don't have any other possibilities. But the big, big bottleneck at the moment is deployment of renewables. Do we have enough electricity first to fully decarbonize electricity sector? Which, you know, in Germany, we're about 50%. There. So then, you know, that's, that's better than most countries, but not good enough, we still have a lot of coal on our electricity system. So yes, I mean, have an accelerated rollout of renewables is really the basis then for producing that green hydrogen. And that will be the bottleneck, we will have to accelerate renewables deployment in Germany, but also all forecasts all studies that you look at say that well, we probably import 70% of that hydrogen from abroad, which is not surprising, Germany is is not a well resourced endowed country. And it's basically the same situation we're in now, we're also importing most of our energy needs. The difference, of course, is that green electricity can be produced in any country, whereas fossil fuels were concentrated in certain areas. And
so where would those imports come from?
That's an interesting question. There are kind of negotiations going on. Between the German government, they have set up a range of hydrogen partnerships with partner countries. So they're talking about Australia, they're talking to Canada, but also a range of African countries in the MENA region, where the idea is that people would invest in large scale renewable production capacity, that it would be converted, or the hydrogen would be produced over there. And then we would import it in big tankers, like we would now import LNG, liquefied natural,
because how do I? There's different ways, but But it's so much more efficient to produce from renewable energy in, say, more southern sunny countries or more windy countries, or
yes, it's it's partly that then also for, of course, also partly population density, and how much space do you have? I mean, the jungle now has this target of, you know, 2% of the country surface needs to be reserved for wind roll out. But that's just to green the electricity sector that doesn't have them, you know, if you, I mean, the numbers are huge. I mean, that's one of the things when we were talking about what are the application areas and our research, we did sort of a meta study together with colleagues from the border step Institute. And they reviewed the existing evidence. And of course, this is all difficult to assess. But they were trying to figure out sort of, what is the how fast could the production capacity and input capacity increase over time for hydrogen, compared to if all these industrial sectors where people now say this is a great opportunity? We need to decarbonize, you know, calculate what's their need, how much hydrogen do they actually need? And these are completely out of sync. Okay. Because it's so big. Yes. I mean, you know, just the chemical industry, or just the steel industry and their huge energy uses. In Germany, of course, is pretty industrial economies still compared to other countries? We don't I mean, we do have a service sector, but you know, manufacturing is big in Germany. So there's lots of big energy needs of these sectors.
Yes, yes. So and actually, maybe we under appreciate how much how energy intensive industry is. I mean, unless you go and visit one of these facilities, I think like a steel mill, or what Chemical Industry, right how much gas they use and how much gas they require, if you think of what North Stream, whichever pipeline you want to take, but But it's this huge capacity for moving away from coal, you know, which provided this this power this energy, and yeah, the ingredients for, for the steel mills, for example, like the hard, hard coal. But then if you think about the imports that were necessary to maintain German industry in a competitive manner, like a price competitive manner, it was the answer was Russian gas to be more green. And if you think about then, if hydrogen is going to replace that, it's a huge amount of I've never thought about that. So it's a huge amount of hydrogen actually, that's required to displace gas and let's say fossil fuels from the energy mix for industry.
Yeah, absolutely. It's, it's a huge challenge. Okay, that was my that's, I mean, that's why are we we've written a policy briefing about this recently. And that was one of the conclusions to say to policymakers, this idea that hydrogen can sort it all out, is really unhelpful. Okay. Okay. Because, you know, from our perspective, I was talking about comparing the numbers of what are the maybe production capacities in the future, and, you know, there's obviously huge uncertainty, you know, bars on these estimates, but at the, you know, just comparing the estimates for what can be produced, what can be imported to what will be needed is so huge that even that just means we probably need to prioritize and say, okay, here, we don't have a decent technological alternative for decolonization. Therefore, this is a priority sector, steel has to, you know, get the hydrogen, whereas something else where we have a direct electric alternative, that's, you know, technically in terms of efficiency, the better way to go, but it's also in terms of the numbers, if we don't if this is a scarce commodity in the future. Yeah, for the foreseeable future, then we need to, you know, invested where the bit where we get the biggest carbon reduction, right,
which would be industry, I mean, from net, looking at it now is from industry, then, next question. My next question is, what are the key technological developments that need to be solved? Because in one sense, we've talked about the policy? And, actually, I mean, it's, it's a huge challenge, much more than I've ever even thought about. And I know you're coming from this from a policy perspective, but even looking at that, what are some of the technological challenges that the research is showing now to deploy hydrogen at a larger scale than what it is now?
I mean, I think there are a range of, of technical issues that have to do with scaling up. So we've just, you know, talked about the vast scale that that industry would, would have to be and I think history of technological developments, shows that, you know, scaling up is a good thing in terms of economies of scale, it also leads to some teething problems, often technically that it's not that straightforward, to do the same thing at one megawatt scale. And then to do it at a gigawatt scale, which you need to do that this is not so straightforward there. So there may also may be a range of teething issues, because I think in terms of the core technology, at least, in terms of electrolysis, which is kind of the main pathway right now that is being pursued. I think that will be the major issue is not so much. You know, we need r&d, and we need all sorts of new technologies, although I mean, I was at a stakeholder event here in Berlin yesterday, where there was a range of industry people there basically saying, Well, why is there this monopoly on this one? technological solution? Surely there are a range of ways in which we can produce hydrogen. And coming up, you know, should the government not be spending more money on this? And I'm not against that. And obviously, it's good to have alternative pathways. And r&d is also from a policy perspective is relatively cheap to support some r&d. And, you know, it's a good idea if I mean, if we are to become a hydrogen economy, then surely, it's worth spending some money on exploring alternative technologies. But I think what's at stake now is really the rollout the scaling up? And there, I think it's it's actually not so much the I mean, there are the teething issues that I mentioned, but it's mainly about, you know, upscaling cost reduction, economies of scale, and rollout. That's the main challenge
as a rollout. And you mentioned to you or at a stakeholder event, maybe, yeah, I don't know what phase of the research that was, but but could you maybe give some feedback or discuss what was discussed? What was some of the industry feedback about hydrogen? Or in general, what what are you hearing?
There was huge interest and there was companies from all across the chain, if you want from people who preach technologies to produce hydrogen to industries that are interested in maybe buying it using it and their products, because you saw there is a lot of interest in hydrogen. There were quite a few also gas companies interested in that and we talked a little bit about that. And I think what they're mainly asking for is a Germany has a hydrogen or has had an hydrogen national hydrogen strategy since two years ago, and they've developed a range of policies to support hydrogen and they wanted to provide some clarity to the industry that yes, we are planning with hydrogen, and that this is an area worth investing in. So I think there's, I think they got industry on board. I think there's a lot of interest in that. But they were also pointing, of course, to a lot of open questions. There were two panels with policymakers, some from the respective German Ministry, so the Ministry for research and, and education, as well as the Ministry of Economic Affairs and climate change. And of course, they have to do their homework, they have to have good subsidies available for these things. But people were also pointing to the European level where they're, you know, we discussed about green hydrogen, in principle, this definition of what is green hydrogen is fairly straightforward, yes. But in practice is not that much, or at least not in the first formulation, because it actually that that definition is being worked on at the European level. Okay. And that was one of the things that the stakeholders pointed to yesterday to say, because, in one sense, what policymakers are trying to do is to make sure that this is additional green electricity that is being used to produce the hydrogen, and it's not taking off the grid to produce hydrogen. And then we use coal to both electricity and electricity. So the question is, how do you do that? Is that a second by second thing that you have to balance? And you have to make sure that the, you know, the grid is 100%. Renewable? And then only then it's green? Hydrogen? Yes. Or is it? I think, just taking
from the grid, whether it's also maybe 10 15%. Coal
in? Well, that's a different matter. I mean, I think that that can be served, that can be solved via certificate solution. So you know, overall, your consumption is this. And you have to make sure that all of this what you bought the screen accuracy, so it's not so much a question of what's in the grid. It's more a question of is this additional electricity that is being used? Or are you taking it from the electricity system? And that means are the electricity users use coal? more, there's more coal on the system. So I think there's a compromise being worked on. But so that's kind of one of the things that stickers were pointing to. So we need to have that definition. We need to have it soon. Otherwise, we can't make any investment decisions.
But then this is really let let me break that apart a bit. Because this is really difficult then because are they saying or anyone saying that you need dedicated infrastructure? Green energy, like solar wind, producing just green hydrogen, like it's set aside this infrastructure that's dedicated for producing hydrogen?
I think the point is, you need additional capacity to generate that green electricity. And that's really the core otherwise, this is not part of a decarbonisation strategy. Yes, yes. Yeah. And whether that is I mean, so that's dedicated investments, whether that is then linked up to the grid? I think, you know, that's a technical question. But, yes, there will be huge needs for green electricity. And that's the point and yes,
yes. And so, I mean, this, then maybe, maybe we'll go to the EU level or goals overall. And this is not so much about hydrogen, but more about electricity, and kind of the, I would say, fit for 55 or repower EU plans, that it makes these targets that they have. And I won't say what the targets are, but but makes these targets like the decarbonisation of the energy sector. Even more important, especially, you know, in the everyday use of electricity, let's say that electrification of transportation and electrification of heat, and it makes those things, those targets even more important, because then some of the other infrastructure to produce hydrogen or that can feed into industry is really important then to make this transition not to have like existing carbon producing fossil fuels in the energy system. While some of it, yeah, there's insufficient capacity for industry.
Yeah, but this is what I was saying. That is the main challenge that we need huge amounts of green electricity, basically, is the point. We need huge infrastructure for that we need huge amount of investment for that. And first and foremost, of course, we need to sort out the electricity sector. That needs to be 100%, low carbon, and then we will have a whole range of additional needs on electricity for Deaconess and transport heat, but also that hydrogen needs to be produced. Yes. And therefore this plea that we you only use hydrogen, where there is no other option where we can directly use electricity. Let's do that. That's much more efficient. Yes. Yeah. Because otherwise the quantity is quadruple another time. Yeah, yeah. So it's really a numbers game. And it's really important. And I mean, I think that's also one of the rules of the game. at the European level to help fund that infrastructure rollout and connect things up, I mean, people are talking about hydrogen pipelines, hydrogen infrastructure, a backbone. So that's another role for policy as well. It's not just to provide certainty about the investment and the definitions of what is green hydrogen zones, but but also in terms of this infrastructure. And there's funding programs and the way where they're, the commission is funding a range of these projects that are supposed to be linked up and provide sort of a backbone of hydrogen infrastructure in Europe.
Yeah, exactly. So let me follow. I have two more questions. And we can end this one is building the gas infrastructure now and then saying it's like dual use, or I think there's, there's a specific term for this right? And how much it is talking about hydrogen ready? Hydrogen ready? Yeah, that's exactly right. dual use technology, something else right, but hydrogen ready? And how much? Is it about making the gas infrastructure hydrogen ready, but then how much? Does that perpetuate the use of gas? Like I? Yeah, I was just at a conference here. And there's gonna be like four or five new LNG terminals in Germany like this is what's being planned. Hydrogen ready?
Probably. Right. That's the plan that's in the contract. Yeah, it's in the
contract. But then how much of that lock the system into gas then?
Yeah, I? Yeah, I think this is a really difficult topic, because obviously, there is an energy shortage crisis right now in Germany. And obviously, we need to import gas in the short run, to power the economy to heat people's homes. That's not something that can we can change overnight. I mean, everyone can decry that, of course, the last 1015 years, policymakers should have done much more to get away from fossil fuels. And we wouldn't be in that situation. But I mean, that's a moot point, we are in this situation. And therefore these LNG import terminals are being built, and will help us to get over this winter and next year's winter. But it's a really important point about this. Isn't this continuing carbon lock in? And that's one of our concerns. We were talking about this earlier in terms of the heating, and I think it is a major risk not to tell people No, no, no, just keep your boilers is fine. We'll sort you out with LNG this year and next year. And then at some point, we'll have a hydrogen because as I said, it's a real numbers game. And if we don't manage to produce or import the kind of, you know, huge scale, we need to what's going to happen. They're just going to run on natural gas. Yes, for a long time. And we cannot afford this to happen. And this is also where we're a bit worried. Coming back to that stakeholder conference yesterday, there was then discussion about EU, why is it that we're only talking about green hydrogen? Isn't that the case that if we want to quick scale up this quick rollout that the government is talking about? Don't we don't need to also do gray hydrogen and all the other ones in between. And there was a real discussion going on there, and many people in industry wearing saw that as a way? Well, this is an enabler of green hydrogen in the long run, or this is a bridge to green hydrogen. But for now, we need to do everything. To be honest, I'm not convinced by these arguments at all. I think these are interest driven arguments. And, you know, the German Advisory Council on Environmental Policy has published on this great report, and there was someone presenting the findings yesterday. And they were saying, well, we don't really buy that argument. Because if we want to be Climate Neutral by 2045, that use of gray hydrogen probably would have to stop a few years earlier, let's say 2014. These people who are at the conference presenting that they can do gray, green, green, gray hydrogen, they were saying, Yeah, we can do this. Now, obviously, it's very small. If we need to scale it up, we need to develop that a little bit. So we couldn't do it right now. But maybe by 2030, we'll be up and running. And then I'm thinking okay, 2030 till 2014, a huge infrastructure, very capital intensive for 10 years. How is that going to be a bridge? It's going to be a very expensive and very short bridge? Yes. Yes, it can. And in terms of climate impact, obviously, I mean, what we're interested in at the end of the day is not to reach some kind of arbitrary Mark and 2045. It's the cumulative emissions over time. I don't see how hydrogen that is produced from natural gas is a helpful bridge in that sense at all. Yes, yeah,
I agree. And then my last question, and maybe that shouldn't be the last question. So let me maybe throw in a soft question after this one. And you mentioned it the high high energy price, how much is the high energy price accelerating this discussion, and could accelerate the deployment of really green hydrogen?
There is. I've seen reports and estimates of the cost of green hydrogen, and that for the first time ever, it was cheaper than grey hydrogen simply because the gas price is so high. And then also, of course, cost of renewables have come down tremendously over the last year. So I think that stacks up in favor of green hydrogen, but it's still I mean, someone has to take investment decisions and build all that infrastructure. Yes. And that will not be based on just the last six months of energy prices. That's always a long term calculation. And I have heard at the stakeholder conference also energy world people talk about, well, this is just a temporary blip. And it's those prices will not stay like that they will go down again. So if that's the mindset, if that's kind of the expectation that in the future, gas, again, will be plentiful and cheap, then maybe it's not as much of a help as, as we may like it to be. But on the other hand, I think also, this energy security crisis that we now face has hammered home the message that it is important to diversify our energy imports. And that people need to think about what are the alternatives to fossil fuels? So I think that is a message that was clearly received by many stakeholders across the economy. Yes. And policy as well.
Yeah. Excellent. Excellent. Okay. Florian. Thank you so much.
That was brilliant. Thanks for talking to me.
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