The city of Duisburg, Germany's industrial capital, is home to a vast steel complex that is one of Europe's biggest sources of pollution. But alongside factory furnaces and smelters, engineers have developed machines that could soon play a key role in reducing greenhouse gas emissions.
By using electricity to split water into two elements, the test model, called an electrolyser, produces hydrogen, a carbon-free gas that could help power factories like Duisburg. will generate. If widely adopted, this device could help clean up heavy industries such as steel manufacturing in Germany and other countries.
“We are probably in one of the few very promising industries in which Germany has an important and very promising base,” said Werner Ponnikwar, CEO of Thyssenkrupp Nucera, which makes electrolyzers. ” The company was spun off from German steel giant Thyssenkrupp in 2023.
The Nucera project was supported by German government funds worth 700 million euros ($746 million). Overall, Germany's state and federal governments have allocated €13.2 billion to invest in around 24 projects for hydrogen development.
The concept of hydrogen as a renewable energy source has been around for years, but the idea that it has the potential to power heavy industry in place of fossil fuels has taken root, with increased investment and advances in technology. We only connected within the last 10 years.
That support is starting to pay off. Owners of some of the world's most ambitious clean energy projects, including Europe's largest energy company Shell and the Saudi government, have ordered even larger versions of Duisburg's 2-megawatt electrolyser in a bid to go carbon-free. industrial age.
Washington allocated more funds as part of the incentives in President Biden's Inflation Control Act, a 2022 law that provides hundreds of billions of dollars for carbon-free or green technologies. Last month, the Department of Energy awarded Nucera a $50 million grant to further develop gigawatt-scale electrolyser production for North America.
Nucera's head of green hydrogen, Christophe Noelles, said such large subsidies reflected a recognition that the technology would not take off without government support, adding that green hydrogen from Berlin to Washington He pointed to multibillion-dollar commitments for steel and green hydrogen projects.
“I think they realized it had to be big from here on out,” he said.
Analysts say hydrogen produced from renewable energy can reduce carbon emissions from heavy industries such as steel manufacturing and long-distance travel by air and sea.
“The only reason we shouldn't believe in hydrogen is if we don't fully believe in decarbonization,” says Bernd Heid, head of the climate technology platform at consulting firm McKinsey & Company. “There will be ups and downs and waves, but I am confident that we are on a long and steady path towards decarbonisation.”
Germany is committed to radically reducing carbon dioxide emissions by 2045. This means finding ways to reduce emissions from the dirtiest industries, such as steel, fertilizer and oil, as well as moving to lower-carbon fuels such as electricity for heating and transport. cement.
Thyssenkrupp plans to use hydrogen to ultimately help reduce the 20 million tons of carbon dioxide emitted by its Duisburg steel plant each year (about 2.5% of Germany's total emissions). . The company, which traces its roots to the 19th century Industrial Revolution, has recently found its existence threatened by competition from China and other factors that are undermining its core businesses, such as steel manufacturing.
ThyssenKrupp announced on April 11 that it will reduce production capacity at its Duisburg plant, which employs approximately 13,000 people, by approximately 20%. The company cited rising energy prices and pressure to achieve carbon neutrality as reasons for the cuts.
Thyssenkrupp's move into hydrogen through Nucera, in which it owns more than 50%, shows that the seeds of economic growth for German industry may lie in a rusty landscape of industrial decline. Among the businesses Thyssenkrupp assembled was one of the world's leading suppliers of equipment to produce chlorine, a chemical used in many applications, including drinking water and swimming pools. As it turns out, new iterations of these machines can be used to produce hydrogen.
As interest in using hydrogen as a clean fuel grew, ThyssenKrupp executives believed they could secure a position in the renewable energy business. “All the capabilities our industry is striving for are already in our pockets,” Ponikwar said.
Partnering with a well-known company that has helped build factories and other large-scale facilities around the world has proven to be a selling point for potential customers. When major fertilizer manufacturer CF Industries decided to invest in electrolysis equipment to help produce low-emission ammonia at its Donaldsonville, Louisiana, plant, Thyssenkrupp Co. to supply his $100 million unit. Nucera was chosen because of Thyssenkrupp's track record in the industry.
“From a technology perspective, we believed this offered the lowest risk and the highest performance and reliability,” said Tony Will, CEO of CF Industries.
Stockholm-based startup H2 Green Steel chose ThyssenKrupp for similar reasons to supply what is believed to be Europe's largest electrolyser to a factory in northern Sweden that produces emissions-free steel. Maria Persson Gulda, chief technology officer at H2 Green Steel, said there were few potential suppliers “with the stamina” to meet the required performance targets.
Nucera has not completely escaped the renewable energy downturn, which has boosted the prices of other hydrogen-focused companies such as Britain's ITM Power and America's Plug Power. The company's shares, which were listed at 20 euros in July, have fallen to around 12 euros.
Analysts are lowering their forecasts for hydrogen deployment as rising interest rates and inflation upend the economics of renewable energy projects. “Everything is more expensive than originally thought,” said Hector Arreola, lead hydrogen analyst at energy consultancy Wood Mackenzie.
Nucera announced in February that sales for the quarter ending December 31 rose 35% year-on-year to 208 million euros.
The boost was largely due to deliveries of electrolyzers to Saudi Arabia, where the company is building what could be the world's largest project as part of an $8.4 billion project in the ambitious Neom region that Prince Mohammed is building. We supply green hydrogen generation equipment. Bin Salman. The Saudi government owns 6% of Nucera.
The economics of green hydrogen are primarily determined by the price of the electrolyser and the cost of the carbon-free electricity required to run the electrolyser. Saudi Arabia has big ambitions as a hydrogen exporter because its vast desert can produce cheap solar power in an effort to maintain its energy leadership for years to come. H2 Green Steel has won a low-cost contract for hydropower, another of her green power sources.
Green hydrogen produced in electrolyzers tends to be more expensive than so-called gray hydrogen, which relies on fossil fuels and produces emissions when used in industries such as fertilizers and oil refining. An experimental hydrogen index compiled by the European Energy Exchange, a financial market, puts the price of green hydrogen at about eight times the price of European natural gas futures.
CF Industries' Will said the primary energy cost to produce green ammonia would be $600 per tonne. This is 6 times more than gray hydrogen. He's trying to attract customers who are willing to pay a premium for environmentally friendly products.
CF Industries said the gap could narrow considerably with support for hydrogen production under the Biden administration's Inflation Control Act.
At the same time, existing industry players are likely to play a key role in the transition to cleaner processes using hydrogen and other alternatives.
“We need the skill set that Europe, and especially Germany, has developed over the past 100 years.”,” Mr Hyde said. “Industrial companies have the technology and they also have the skills to scale it up.”