Energy & Infrastructure Insight - Issue 3

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14 SUPPLY CHAIN ESTABLISHMENT Establishing a route to market for green hydrogen will require capital investment to build new, or retrofit existing hydrocarbon focused, land and sea freight carriers, liquefaction/regasification facilities, as well as pipelines. As we understand it, this is not necessarily technically difficult, but presents a further risk for early players in the new market. Due to the extensive additional investment that would be required for the development of new pipeline networks, we expect that the early green hydrogen projects will rely heavily on sea transportation—not dissimilar to the LNG market—enabling producers to reach a broader range of customers, most likely large-scale industrial consumers to start with, and reducing upfront investment costs in the supply chain. We expect that a number of the practical and contractual issues faced in the LNG market, particularly during its early development, to be relevant to the early hydrogen market—e.g., the need for long-term offtake arrangements with price certainty and a strong offtake. Pilot and small-scale projects have already begun. For example, in Victoria, Australia, a US$350 million plant will ship 5,000 tons of liquefied hydrogen per year to japan, along with 18,000 tons per year of ammonia. It is expected that the pilot phase will demonstrate the integrated supply chain by 2021, with a subsequent investment decision to be made about commercialization. Hydrogen – Is It the Answer to Clean Energy? (cont.)

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