Energy & Infrastructure Insight - Issue 3

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Page 10 of 29

11 In this article we highlight the fast-growing commercial opportunity that green hydrogen presents, and financing structures that can be used to facilitate investment in projects capable of exporting this new energy source. The article explores how existing hydrocarbon supply chains can be adapted for green hydrogen going forward, and why it is therefore an attractive industry for energy players to diversify into. The project will comprise the world's largest electrolysis facility by far—2GW—and will produce green hydrogen- based ammonia for export to global markets. Air Products will be the exclusive offtake of the green ammonia and intends to transport it around the world to be dissociated to produce green hydrogen for the transportation market. The transition from a hydrocarbon-based global energy market to zero-carbon alternatives is accelerating faster than many have expected. Green hydrogen is increasingly being recognized as a cornerstone of this evolution. The cost of production is falling while demand rises as energy importers worldwide position hydrogen as a key fuel of the 21st century industrial economy. In a political declaration on 15 June 2020, seven European energy ministers committed to "enable a forward-looking European hydrogen infrastructure and liquid market in the near future," while recognizing the importance of a timely scale-up to create a global renewable hydrogen market. Days earlier, the German government had released a comprehensive National Hydrogen Strategy. Adopting the motto "shipping the sunshine" and based on the principle that only hydrogen produced on the basis of renewable energies (green hydrogen) is sustainable in the long term, the government's energy policy assumes that a global and European hydrogen market will develop over the next 10 years and that most of the hydrogen [Germany will need] will have to be imported. On the other side of the world, in March 2020 Japanese Prime Minister Shinzo Abe, cutting the ribbon for a green hydrogen research facility in Fukushima, said: "I have a firm resolution to make a great the conventional energy frameworks all over the world. Clean hydrogen will become a source of energy for operating manufacturing floors in plants and fuel for various vehicles.... Let's work together and cultivate a new era of hydrogen to accomplish these goals." Now, the world's first green hydrogen export megaproject has been announced. What does this mean for development of the hydrogen market, and for project development going forward? GREEN HYDROGEN Green hydrogen is simply hydrogen, the most abundant element in the universe, produced by processes that are powered entirely by renewable electricity, such as solar and wind power. The renewable electricity powers an electrolyzer, equipment that combines anode-cathode technology with a chemical catalyst, to split water molecules into hydrogen and oxygen. The resulting hydrogen gas has the highest energy content of any common fuel by weight. It is manufactured without any emissions, pollutants or greenhouse gases, and emits none when used. The only by-product of the industrial process is oxygen, which is itself marketable or otherwise easily and safely disposed of by release into the atmosphere. Green hydrogen's zero-carbon characteristics distinguish it from other forms of reduced carbon hydrogen that form part of ongoing decarbonization efforts. Whereas historically hydrogen has been produced from coal or natural gas, which generates significant carbon emissions and is known respectively as brown and grey hydrogen, there has been increasing interest in blue hydrogen, for which the carbon emissions are captured and stored, or re-used. Green hydrogen removes carbon entirely from the equation. Hydrogen – Is It the Answer to Clean Energy? In July, Neom Company, Air Products and ACWA Power announced an agreement to develop the World's first green hydrogen-based megaproject – a US$5 billion facility located at Neom, Saudi Arabia's city of the future.

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