In this issue: Transatlantic Clean Hydrogen Trade Coalition; Hydrogen's Demand-Side Barriers; Sustainable Metal Production

Signal from MPP | Issue No. 14 | June 2024

Dear MPP community,

We are excited to share several updates and insights from our recent work. We've been moving our mission forward while participating in global events and conversations over the past few months. You’ll read on to hear about some highlights from these events that represent major progress in our work. Thanks as always for your support and please reach out with any questions or comments.

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1. Transatlantic Clean Hydrogen Trade Coalition moves forward

Removing offtake barriers is critical to achieving the first clean hydrogen shipment across the Atlantic ahead of 2030.

2. Addressing hydrogen’s global demand-side barriers

Alignment of transatlantic regulations, standards and subsidies remains key to accelerating the global transition to new markets for clean hydrogen.

3. Sustainable metal production

Video: James Schofield, ITA Deputy Director explains the Industrial Transition Accelerator and its role helping the global metals industry decarbonise at pace.

1. Transatlantic Clean Hydrogen Trade Coalition moves forward

Removing offtake barriers is critical to achieving the first clean hydrogen shipment across the Atlantic ahead of 2030.

The Transatlantic Clean Hydrogen Trade Coalition (H2TC) initiative took a further step forward towards its goal of bringing the first shipment of clean hydrogen and derivatives from the United States to Europe by 2026 when coalition partners gathered at the World Hydrogen Summit in Rotterdam in May to press forward the ambitious plan.

In a wide-ranging discussion hosted by the Port of Rotterdam at the summit, participants emphasised the reality that early demand for hydrogen (and derivatives) is still lagging behind the early supply signals due to high premiums. Participants highlighted the vital need for industry to engage further down the value chain and with end-consumers to put in place the policy and practice required to accelerate the transition to clean molecules.

Key coalition partners such as the Port of Rotterdam took part in the discussion which emphasised that premiums on hydrogen remained high compared to other renewables in part due to global inconsistency in subsidies. Existing and prospective members were urged to act now to help shape a global agenda needed to accelerate the transition to hydrogen.

For H2TC this means focusing in the short term on identifying the priority value chains that can absorb these costs so as to get the early demand side ready to accelerate? transatlantic trade in hydrogen and its derivative products.

H2TC spearheads new transatlantic hydrogen markets

The H2TC coalition will connect US fuel producers to heavy-industry consumers in Europe to help establish the market conditions needed to grow transatlantic trade in hydrogen to three million metric tons annually by the end of this decade.

The initiative is driven by a team of industry leaders from MPP, RMI , Systemiq Ltd. , and Power2X . The coalition includes players from suppliers to off-takers, as well as important market-making entities including major ports and associations in the United States and Europe and aims to support first-movers in the hydrogen market in the US Gulf Coast and Northwestern Europe.

Its dual goals are to realise the first shipment of low-carbon hydrogen and its derivative molecules such as ammonia and methanol by 2026 and to develop a sustainable market with infrastructure in place by 2030. To accomplish this and leverage the global momentum across industry leaders, the first tranche of membership will close 5th July. You can reach to one of the H2TC implementation partners to get engaged, information below.

“H2TC is essential for aligning the growing hydrogen market. Moving from a passive approach to recognising high commercial opportunities is crucial.” said MPP Senior Fellow Jeremy Bentham. “This strategy supports smart business, policy, and politics, leading to explosive growth and job creation.”

Removing barriers; taking advantage of opportunities

Three key issues were highlighted as barriers and opportunities to the development of hydrogen and derivatives market acceleration underlining the value of the H2TC coalition’s work:

• Market dynamics and entry timing: Rapid, demand-led growth is anticipated for hydrogen and H2-derivatives. Entering the market early will be advantageous for establishing competitive positions and to securing high-quality, first-mover supply of low carbon hydrogen derivative products.
• Policy and regulatory support: Clarity on regulations and subsidies is needed to support the hydrogen and H2-derivatives market. Partnerships and feedback loops between policy offices and industry are crucial for scaling and cost management.
• Mechanism to overcome demand-side barriers: Addressing demand-side barriers and extending reach further down the value chain are necessary. Storage solutions, better articulation of cost drivers, and identifying additional sources of value created by clean molecules are essential for market maturity.

The summit also reconfirmed H2TC’s workplan for 2024 which will see five workstreams continue to explore actions across policy and public engagement, value chain orchestration, “should cost” valuation simulation, infrastructure requirements, and capital financial support.

Understanding the rationale to act

A number of other key issues were highlighted during the discussion as key drivers for this new transatlantic coalition to help establish the vital stable and secure supply of green molecules in the European market. These included:

• Regulatory action: The market requires regulatory certainty about certification schemes and other incentives on both sides of the Atlantic (e.g. REDIII, and 45V)
• Offtake volume uncertainty: Many announced H2 production projects are not reaching FID, creating delivery risks for downstream actors.
• Cost inefficiency: Distribution of the cost premium requires early discussions to ensure fair risk sharing across value chain.
• Value chain pressure: Downstream markets are increasingly seeking suppliers to reduce their upstream scope 3 emissions.

2. Addressing hydrogen’s global demand-side barriers

Alignment of transatlantic regulations, standards and subsidies remains key to accelerating the global transition to new markets for clean hydrogen.

Immediate transatlantic cooperation and communication to help align and clarify the global regulations, standards and subsidies throughout the entire clean hydrogen and H2-derivatives value chain is essential to secure offtake and accelerate new markets in green molecules.

In a policy roundtable, hosted jointly by the EZK and H2TC at the World Hydrogen Summit in Rotterdam, delegates highlighted that this action was vital to scale hydrogen offtake, speed up investment and reduce costs as key to accelerating development of low carbon hydrogen markets needed to underpin new transatlantic hydrogen trading routes.

Creating a new transatlantic clean hydrogen market was seen by delegates as critical due to the EU's position as a net energy importer. This has become increasingly important since Russia’s invasion of Ukraine and the subsequent energy security crisis, which severely affected European heavy industry.

However, there’s a need for broader collaboration to ensure that the equally important supply and demand markets? develop and scale in parallel.

Removing the hydrogen market barriers

The H2TC coalition aims to significantly contribute to the EU’s goal of importing 10 million metric tons per year of renewable hydrogen by 2030. Clean hydrogen provides a vital substitute for fossil fuels in essential industries such as fertiliser?and chemicals production, and its derivatives are the leading alternative to highly polluting bunker fuel in maritime shipping.

However, the discussion suggested that uncertainty regarding hydrogen off-take was slowing progress in this emerging market, necessitating new transatlantic focus on regulation, support schemes, and infrastructure development.

The wide-ranging discussion focused on three key levers?to unlock and enable this market to thrive:

1. Scaling the market

The creation of a transatlantic market for clean hydrogen requires collaboration with reliable long-term trading partners like the US and Canada. The discussion underscored the interdependency of investment decisions across offtake and demand, with individual players disincentivised to act alone, highlighting the need for large-scale, coordinated efforts to ensure distribution of first-mover risk.

2. Speeding up investment and project delivery

Industry leaders stressed the importance of regulatory frameworks that enable swift action and approach the adoption of low-carbon molecules with the same sense of urgency as broader energy transition objectives. Permitting processes must be expedited to ensure consistency and speed in hydrogen and H2-derivative project development on both sides of the supply chain. This is crucial for meeting the ambitious timelines required for scaling hydrogen production and usage.

Efforts to transition to clean hydrogen and other low-carbon molecules were also highlighted, with projects already underway in various regions, including North America, Europe, and the global south.

3. Focus on spreading costs and regulatory support across the supply chain

Investment in the supply chain is critical, with a focus on ensuring clarity on initial off-takers and identifying additional value created downstream. This is essential to managing the perceived costs of the energy transition and enhancing the long-term economic viability of clean hydrogen.

Establishing a transatlantic carbon price to support the clean hydrogen market was emphasised, as it would help balance the cost competitiveness between clean molecules and existing energy or feedstock substitutes. Incentives for clean molecule production and infrastructure development are necessary to bridge supply-demand gaps and ensure affordability.

Clear regulatory frameworks are needed to provide certainty to demand-side procurement departments, create assurance ?for supplier projects, and avoid frequent changes that can disrupt investment decisions. Without additional demand-side incentives, the discussion concluded that the cost gap between clean and grey hydrogen remains a significant barrier to trade.

Decarbonising Europe’s industry

H2TC aims to realise the first shipment of clean H2 and derivatives by 2026 and to support the development of a liquid market with connective infrastructure by 2030.

H2TC’s mission is to support first movers in the US Gulf Coast and Northwestern Europe on matters such as policy, infrastructure, and finance. Through its role as an industry and policy convener and development of impartial analytics, HT2C aims to facilitate the scale-up of H2 and H2-derivate transatlantic trade.

H2TC – key to transatlantic trade.

The discussion at the World Hydrogen Summit underlined the need to accelerate? transatlantic trade in clean hydrogen and the value of coalition membership to resolving barriers and to de-risking and providing preferential access to the first, most competitive green molecules in the European market.

Key coalition membership benefits highlighted included:

• Market and policy design: Ability to help shape market and policy landscapes collaboratively, including streamlining of regulatory complexities
• Strategic market insights: Access to a data-driven approach and market analysis to alleviate market gaps
• Offtake diversification: Diversify offtake development between multiple players and reduce risk of procuring insufficient volumes
• Cost efficiency: Help to alleviate cost inefficiencies via competitive sourcing and expediting risk-sharing approaches
• Value chain design: Opportunity to engage in value chain design to access scarce green molecules and achieve desired outcomes

The H2TC coalition was formed by Mission Possible Partnership (MPP) with support from its current partners, the Port of Rotterdam, Port of Corpus Christi, and the Center for Houston's Future . Under the leadership of MPP, RMI, Power2X, Systemiq, and the World Economic Forum serve as implementation partners.

Reach out to one of the H2TC implementation partners to get engaged:

• Nabil Bennouna (Principal, RMI, H2TC) [email protected]
• Peter Daemen (VP Consulting, Power2X, H2TC) [email protected]
• Peter Goult (Director, Systemiq, H2TC) [email protected]

3. Sustainable metal production

James Schofield, Industrial Transition Accelerator (ITA) Deputy Director explains the Industrial Transition Accelerator and its role helping the global metals industry decarbonise at pace.

As Deputy Director of the ITA, James Schofield chaired a discussion on sustainable metal production at the recent Industrial Decarbonisation Europe 2024 summit. In this short video he explains the ITA’s role in help industry to decarbonise global industry and creating sustainable metal production is this such an important and hot topic right now in terms of driving toward a decarbonised industrial future.

The Industrial Transition Accelerator was launched at COP28 in 2023 to bring global industry leaders together with policymakers, finance and technical experts so as to help unlock investment and rapidly scale the delivery of decarbonisation projects. ?

James joined the ITA in April this year with the aim of building the organisation ready to execute its programme effectively. That means staffing the organisation with great talent, putting in place the operational capability to manage multiple work streams quickly and keeping a laser focus on activities that really will drive impact.

“I am delighted to be joining the ITA and to have the opportunity to have hopefully a real impact,” explains James. “I'm surrounded by committed purpose driven people who have a very clear, challenging mission and it's just a privilege to be able to actually contribute to trying to make this happen.”

Mission Possible Partnership is?a movement of climate leaders in business and civil society driving industrial decarbonisation across the entire value chain of the world’s highest-emitting sectors: aluminium, cement, chemicals, steel; aviation, shipping, and trucking. We’re charting the inventive steps and radical collaboration to enable commercial-scale deep decarbonisation projects in this decisive decade.