In this issue: Transatlantic Clean Hydrogen Trade Coalition, Power-to-X for Europe and DIRT

Signal from MPP | Issue No. 2310-8?

In this issue: Transatlantic green hydrogen – new coalition plots exports to Europe; Hydrogen trade policy barriers – what needs to be done; DIRT – a new online tool from MPP and RMI?

GLOBAL TRADE IN CLEAN HYDROGEN is still a vision of things to come – for now, more notional than actual. But the momentum is building. Earlier this month, the US Department of Energy announced a new tranche of ￡7 billion in federal funding for clean "hydrogen hubs”. The decision sent a signal to the world that decarbonising heavy industry is possible, MPP Director of US Hubs, Bryan Fisher , told the New York Times . ?

The Texas Gulf Coast is home to more than half of all US hydrogen pipelines – a network of “grey” infrastructure that can be re-purposed for “green” hydrogen production. Supply-side subsidies apply to green molecules for export, raising the possibility that transatlantic shipments from US producers could help hard-to-abate heavy industries in Europe (particularly in Germany and the Netherlands) to meet ambitious EU emissions reduction targets.??

That ambition motivates a new Transatlantic Clean Hydrogen Trade Coalition launched this month in Washington DC, convened and hosted by MPP. Derivatives such as green ammonia, methanol or synfuels bring many new opportunities to combine “grey” and “green” processes, deploying old and new infrastructure. As the energy and materials transitions converge, First Movers from energy and industry alike see radical – though still unproven – potential in?“power-to-X thinking”.?

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Mission Possible Partnership is?a movement of climate leaders and companies 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.

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1. Transatlantic Clean Hydrogen Trade Coalition?

New MPP-led coalition aims to spearhead global hydrogen trade?

Aim is first shipment from US Gulf Coast to Europe????

Peter Daemen, VP Consulting and Project Development, Power2X B.V.

FROM THE US GULF COAST, European industry looks like a ready market for clean hydrogen. The combination of supply-side incentives for US producers with ambitious emissions reduction targets in Europe means green molecules from the Texas Gulf Coast could play a catalytic role in decarbonising emissions-intensive heavy industry in Europe, complementing local hydrogen production.?

This is the bold ambition that underpins the new Transatlantic Clean Hydrogen Trade Coalition , an alliance of aspirant American producers and European offtakers, which launched earlier this month in Washington, DC. While plans to kickstart this critical energy flow are evolving fast, more than 20 endorsers to the coalition include OCI Global , 壳牌 and Ambient Fuels . Key points:??

• First shipment of green ammonia from the Texas Gulf Coast ports of Houston and Corpus Christi to Rotterdam within three years?
• Incentives under US Inflation Reduction Act for large-scale capital projects could help heavy industry in Europe meet EU decarbonisation goals??
• Deploying installed infrastructure to carry electrolytic hydrogen enables participants to optimise for cost and emissions reductions -- but regulatory framework poses a challenge?

The coalition, convened by the Mission Possible Partnership, with partners RMI , Systemiq Ltd. , Power2X , and other industry leaders, builds on our work with the Bezos Earth Fund and corporate partners in greater Houston to develop a green industrial hub on the Gulf Coast. “The Texan mindset is constructing these assets in a really good way to drive down costs to maintain volumes,” said Charles de Beus , senior associate at Power2X, an Amsterdam-based consultancy. ?

MPP is working with Power2X to model the actual costs – quantifying available incentives, subsidy requirements, and the green price premium – of shipping green molecules from Houston to Rotterdam. The EU expects to import 10 million metric tonnes of green hydrogen annually from 2030.?

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Fig. 1. Pipeline of Announced Power-to-X Projects Falls Far Short of Global Goals???

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By combining existing “grey” infrastructure on the US Gulf Coast with US incentives for “green” hydrogen, we anticipate that project developers will be able to design and optimise a variety of trade-offs between costs and emissions – in effect, defining a spectrum of commercially viable options to re-purpose installed infrastructure. Consequently, the energy and materials transitions are beginning to converge.??

‘This starts the conversation where a chemical company can be an actor on the power grid, and the power company might grow into a molecules player. And then the end-consumer can arbitrate between the different value pools.’?

Scenarios currently under discussion for effective collaboration to reduce costs and emissions raise myriad sensitivities in relation to competition policy and anti-trust law.?MPP teams are working with anonymised data (sourced from coalition members, held in an escrow-type of account) to navigate sensitivities around competition law, anti-trust and confidentiality issues.

“Neither power producers, nor industry, nor end-users can fix the climate challenge on their own. What we’re seeing across all sectors is that people are starting to make the link between energy and electrification and the final use of that energy in materials,” said Peter Daemen , Vice President for consulting and project development at Power2X in Amsterdam.?

Coalition partners including RMI and Systemiq Ltd. are developing policy recommendations and convening prospective offtakers to consolidate demand – see next article. On the supply side, Power2X BV is modelling supply chain simulations and convening infrastructure players.?

Note: Power2X is an energy transition strategy consultancy and project developer, focused on clean and green molecules such as green (and blue) hydrogen, ammonia, methanol and biofuels. As a strategic partner, long-term developer, owner and operator of next-generation energy assets, its activities complement MPP’s core work to incubate green value chains for heavy industry and transport in collaboration with industrial companies around the world.??

2. EU Hydrogen Policy ?

The policy jigsaw: trade rules, competition and anti-trust?

MPP teams support cross-sectoral dialogue, policy and advocacy?

ABOUT HALF of Europe’s projected hydrogen needs for heavy industry and transport could be sourced domestically from 2030. Another half at least will need to be imported, if the EU’s best ambitions are achieved. ?

Next to the cost simulations and business model, MPP teams are focused on the many policy dimensions for a nascent US-EU hydrogen trade to enable industrial decarbonisation in northern Europe, where prospective demand is concentrated. Offtakers in Europe face high energy costs and rising carbon prices for mandatory offsetting of emissions. ?

• Business case for US hydrogen not proven – MPP supporting cross-sectoral dialogue, policy design and advocacy?for rapid implementation?
• Europe’s heaviest industry located in regions with net deficit in domestic green energy potential, notably in Germany?
• Policy dimensions for the Transatlantic Clean Hydrogen Trade Coalition include green market mechanisms, response to competition and regulatory hurdles?

To date, the installed base of “green” electrolysers globally is minimal. Green molecules comprised just 0.1% of global hydrogen production in 2021. Green hydrogen is produced through electrolysis – separating hydrogen and oxygen from water – powered by electricity from renewables. New capacity is contingent on factors including availability of land, infrastructure for solar and wind, grid connectivity and technology costs. ?

Fig. 2. European Union hydrogen policy forecasts 50% imports to meet 2030 targets?

Multiple studies support the claim that Levelised Cost of Hydrogen (LCOH) exported to Europe from the US can be competitive with import costs from other prospective suppliers in Argentina, Australia, Morocco and Spain. The US Gulf Coast is home to about half of all US hydrogen pipelines, or “grey” infrastructure, suitable for power-to-X derivatives. ?

Key areas of opportunity include fertiliser (ammonia), plastics (methanol), shipping (ammonia, methanol) and sustainable aviation fuel (SAF). Regulatory hurdles are numerous: trade will require harmonising of definitions for green molecules, and green market-making subsidies will be necessary in Europe to reduce the remaining green price premium.?

‘Clearly there is a business case to prove and there's a green value chain which is kind of new. The centres of demand in Europe are concentrated in the northern countries and particularly in the Netherlands and in Germany, so these molecules need to be imported.’ -- Chad Holliday , co-chair, Mission Possible Partnership?

Longer term, the potential for scaling power-to-X derivatives will raise myriad new challenges for industry and policymakers alike. Most current work is centred on decarbonising heavy industry by bringing clean power to existing plants. In a future net zero economy, a new question will surface concerning the best location of heavy industrial plants – currently centred around traditional coal-producing areas – and the availability of green power infrastructure.?

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Fig. 3. Five Potential Barriers to US-EU Clean Hydrogen Trade??

3. Decarbonising Industrial Resources Tool??

Get the D.I.R.T. on financial resources and incentives for clean industry????

Online tool searches for project support, grants, loans, credits at federal level and in California????

GOOD NEWS for project developers confronted by a confusing landscape of tax credits, grants, loans and other opportunities! The online sleuthing often required to track down the available financial incentives for clean projects – and how to unlock them – just got easier: this new Decarbonising Industries Resources Tool , aka DIRT, is custom-built to help companies and other stakeholders find what’s available at the federal level and in California.?

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Key features:??

• DIRT spans comparative data, key information and links for financial policies and incentives at the federal level and state-wide in California – with plans to include more states in future iterations?
• Focused on MPP’s core heavy industry and transport sectors: aluminium, cement, chemicals, steel; aviation, shipping, trucking – including data sets for hydrogen and battery power (for industry)?
• Search incentives by industrial sector, type of incentive, location, and other filters. Note: only financial incentives are included in this tool, while ‘negative’ financial policies such as fees or fines were omitted

Developed by our founding partner RMI with support from MPP and the Bezos Earth Fund , the DIRT online tool enables project developers to compare numerous incentives for industrial decarbonisation at the federal level and in California. Future iterations will add coverage of other states.???

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Heavy industry in the US alone made up 23% of national greenhouse gas emissions in 2021. Analysis by MPP in seven hard-to-abate heavy industry and transport sectors has shown that meeting global goals will require building hundreds of net-zero industrial projects by 2030 .??

The?Mission Possible Partnership?is a movement of climate leaders and companies driving industrial decarbonisation across the entire value chain of the world’s most carbon-intensive heavy industry and transport sectors: aluminium, cement, chemicals, steel; and aviation, shipping, trucking.

These ‘hard-to-abate’ industries account for a combined 30 per cent share of global carbon dioxide emissions. How fast they reach net zero emissions will make or break the world’s chances to stay well below a 2°C rise in global temperatures by mid-century.

MPP’s work to date has demonstrated that there is a technical and economic path to net zero in each of those sectors, by deploying technologies which are available or near market-readiness. We have developed sector-specific roadmaps to decarbonise these sectors, with quantitative 2030 targets endorsed by more than 200 companies. With stakeholders in policy, industry, energy supply, demand and finance, MPP is supporting a portfolio of the first commercial-scale decarbonisation projects in this decade.