The new technologies that will be most crucial for a carbon neutral future
MHI is sponsoring our Energy Transition Summit. As EVP, of MHI’s NEXT Energy Business, can you tell us a bit more about your role and the goals of the NEXT Energy Business?
I lead the European team that focuses on the growth of MHI’s energy transition related business. What our company can offer, that very few others can, is the technology and expertise, built up over many years, to provide integrated solutions for constructing a hydrogen value chain, as well as for decarbonisation more broadly. As policymakers worldwide – and especially in EMEA -- set increasingly ambitious net zero targets, MHI is committed to launching more and more new initiatives and partnerships to test and eventually scale-up our clean technologies.
For example, together with Vattenfall, Shell and Wärme Hamburg we have launched the Hamburg Green Hydrogen Hub project, which envisages the transformation of the site of a former coal plant to green hydrogen production, with an initial output of 100 MW and further development of the site into a “Green Energy Hub”. We believe this project could provide a blueprint for the integration of production, transportation and utilization of green hydrogen.
As a global industrial engineering company, how will MHI contribute to accelerating decarbonisation within the energy transition?
As a global company, we can acquire knowledge and technologies in one part of the world and apply them elsewhere, as appropriate. Our size allows us to develop a wide range of technologies and gives us economies of scale. We are then uniquely placed to provide the right combination of technologies and solutions for each local market and at the right price – always bearing in mind that each country or region has to meet its own specific energy trilemma – balancing energy security with carbon neutrality and socio-economic viability.
In some markets, for example, it still makes sense to focus on improving thermal efficiency – switching from coal to gas generation, say. Others are already building up renewables production while elsewhere market participants can focus on green hydrogen production.
We must remember that the energy transition requires a whole systems approach and it is crucial to avoid the huge cost of stranded assets. As such, we cannot ignore existing and viable technology and infrastructure while also looking at developing and scaling up new solutions.
What new technologies do you think will be most crucial in helping us realise a carbon neutral future?
While not a truly new technology, we believe hydrogen will be a key component of a carbon neutral future. It will allow those areas of the economy to decarbonize that cannot be simply electrified, such as shipping, heating and heavy industrial processes like steelmaking. However, we also need to look at the development and further expansion of existing hydrogen carriers such as methanol or ammonia, which benefit from established international markets, to create a truly global hydrogen value chain and end demand and thus the ability to deliver on global net-zero targets.
Also, carbon capture utilisation and storage (CCUS) technologies will have a role to play in achieving the ambitious net-zero targets many countries in Europe and worldwide have set themselves. The technology available today can absorb upwards of 90% of CO2 emissions generated by fossil-fuel power stations and industrial plants. The International Energy Agency (IEA) declared recently that without CCS it will be impossible to achieve the ambition of the Paris Agreement. The area in which CCS shows most promise is in decarbonising heavy industries and long-distance transport. While industries like steel can will ultimately move to hydrogen to generate the vast amounts of industrial heat needed, for industries like cement, CCS is virtually the only route to significant emission cuts.
But we should also look at the utilisation of the captured carbon and I’m very proud to say that as MHI Group we have been involved in a number of projects that produce synthetic fuel from captured carbon, which could be another low-carbon option for fuelling long-distance transport such as aviation and shipping. We are also trialling carbon capture systems onboard ships and could help the shipping industry comply with regulations to halve its greenhouse gas emissions by 2050.
And while we see a lot of potential for technologies like CCUS as well as hydrogen, energy efficiency enhancing equipment like heat pumps and waste heat recovery systems, which require far smaller investments, can also make a difference in the short- and medium term.
As one of MHI’s resident experts on hydrogen technologies, can you tell us what role you think hydrogen will play within future energy systems, and what steps need to be taken to get us there? (Please include any examples of projects that MHI are involved with to advance hydrogen technologies)
Excessive renewable energy can be converted to hydrogen, stored until it is needed, and then reverted to electricity on demand. This is a process that Mitsubishi Power is already working on at the Advanced Clean Energy Storage Project in Utah, where green hydrogen is held in underground salt caverns for future use fueling a converted coal-fired power plant.
I mentioned our Hamburg project earlier, which will see the integration of production, transportation and utilization of green hydrogen. At this point, green hydrogen is 2-3 times more expensive than hydrogen produced from natural gas, so it is not yet economically viable and thus government funding will be crucial to bridge the cost gap compared to fossil fuel solutions. At the same time, to ensure sufficient supply to meet demand in the short term, we will also need to ramp up blue and turquoise hydrogen production. Turquoise hydrogen production in particular, so the transformation of hydrocarbons without emitting CO2 but recycling CO2 as a by-product, could offer another route environmentally and economically sustainable supply of hydrogen. We have recently invested in a number of companies – Monolith, C-Zero – and are seeing what makes sense at an industrial scale.
So, overall, it is a combination of government funding and a regulatory environment that allows an initial de-risking as well as long-term predictability to make sure technologies that focus on the production, transport and utilisation of hydrogen, for example, can be scaled to a level that make them commercially viable.
What do you think will be the biggest challenge in implementing new technologies and products, and how does MHI plan on overcoming them?
There are two key challenges: the first challenge is the de-risking of new technologies. Here you need novel funding schemes, including public money, to enable “first-of-kind” installations. The second challenge new technologies face is that of scaling up. Bringing a new technology to a scale that makes it economically viable needs a solid and predictable business environment. Once you have that, the market will take care of the rest.