Johnson Luu, Director of CHINT APAC
By now, we are no strangers to the fact that the effects of climate change are upon us. The average global temperature has risen by almost 1°C since the 1880s, causing several devastating effects such as more extreme weather events, rising sea levels, and melting glaciers that our generation has experienced first-hand.
To mitigate climate change and create a more sustainable future, governments, businesses, and individuals are playing their part in decarbonizing the global economy. Alongside governments, many businesses are continually investing resources, revenue, and talent to effect change while they pursue their business ambitions. This is done by offsetting carbon emissions, investing in renewable energy, improving energy efficiency, and the list goes on. Companies are embracing innovation to stay ahead in the game, utilizing solutions that are now familiar even to laymen.
Green hydrogen
In this article, I would like to shed light on the topic of green hydrogen. The concept of green hydrogen has been around for many years, but it has yet to become a trending or common subject of discussion.
Green hydrogen is one of the crucial elements in decarbonization due to its ability to substitute fossil fuels in transportation, industry, and power generation. It is produced through the process of electrolysis where water is split into hydrogen and oxygen using electricity generated from renewable energy sources, such as solar, wind, or hydropower.
Green hydrogen yields maximum impact for climate change goals in the economy. It has the capability to generate high-temperature heat for fueling heavy industrial operations. According to the International Energy Agency (IEA), the cumulative emission reduction of carbon dioxide (CO2) from 2021 to 2050 resulting from renewables stands at the largest percentage of 35%. Unlike conventional hydrogen production methods that rely heavily on fossil fuels, green hydrogen production emits no CO2 when electricity is obtained through a process known as electrolysis, thus lowering the total emission of greenhouse gases.
Businesses around the world that understand its benefits have been doing their best to harness this technology. The first commercial-scale production of green hydrogen began in the 1970s, but the technology began to mature only in the 2000s and has a high production cost. In recent years, green hydrogen has become a more viable option due to the falling cost of renewable energy. As the cost of green hydrogen continues to decrease, it is expected to become a major player in the global energy market. The IEA estimates that the global demand for hydrogen could reach 500 million tonnes by 2050, and that green hydrogen could account for up to 20% of that demand.
Laying the foundation for an electrolyzer factory
While it may be easy to understand the production of green hydrogen and its benefits to the environment, formalizing the production system is not as simple. Renewable energy companies with the production capabilities must first source for a reliable smart energy solutions partner to provide superior electrical equipment solutions for their electrolyzer factory. In other words, without the implementation of reliable and efficient power-to-plug solutions, the production process may be hindered.
A case in point is Fortescue, previously known as Fortescue Future Industries, that has collaborated with third-party companies on the electrical infrastructure of Global Green Energy Manufacturing (GGEM) facility in Queensland. Completed in April 2023, the electrolyzer factory is the largest facility powered by green energy in the world. There is no doubt that they have undergone a rigorous supplier review process while forging strong partnerships with trustworthy smart energy companies to support their project.
The efforts of individuals, businesses and governments in the sustainability race are always interlinked. In this case, the project by FFI involved the collaboration with smart energy companies to support Australia’s government’s public policies to transition from a fossil fuel-exporting country to a green hydrogen-exporting one.
Right partnerships
Another reason that green hydrogen is applauded for is that its production requires a clean, carbon-free and renewable source of electricity. As such, it would be a win-win if electrolyzer factory owners can work with smart energy companies that have experience in supplying electrical and renewable solutions at the same time. This would ensure efficient implementation time without unnecessary delays.
There are some reasons why certain green hydrogen projects have failed:
- The cost of producing green hydrogen is still too high, primarily due to the challenges associated with economies of scale and the substantial investment required in funds.
- Lack of infrastructure for storing and transporting green hydrogen.
- Low demand for green hydrogen from end-users.
Beyond experience, this combo will only be perfect if all parties understand the importance of competitive cost structures. One example is the Hydrogen Park Europe project, which was a plan to build a network of hydrogen production and refueling stations in Europe. Unfortunately, the project was abandoned in 2022 after it was unable to secure enough funding. While the cost of renewables is falling, the increase in third-party prices may end up offsetting the savings which could be passed on to consumers. As such, forming the right partnership would also mean looking for smart energy companies that offer competitive pricing without forfeiting the quality of their products and services.
Conclusion
Evidently, the journey of decarbonization is not as simple as picking solutions from the shelf and implementing them, with hopes for a change in our temperature. Regardless of whether it is individual commitment, collaboration between businesses and governments, or inter-business strategies, all stakeholders in the equation will be presented with a wide range of factors that require comprehensive evaluation. The evaluation standard will hold the key to shaping the outcomes of initiatives that seem promising at the outset. It is by navigating these complexities thoughtfully that we can pave the way for a transformative change and a brighter, more sustainable future.
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