Speech by Allard Castelein, CEO Port of Rotterdam Authority at the 2nd World Hydrogen Summit
The inaugural World Hydrogen Awards took place as a virtual ceremony during the 2nd World Hydrogen Summit, an annual international conference on global trends in hydrogen technology and its applications. With 6 winners recognised in different categories for their contribution to the hydrogen industry, the Port of Rotterdam won the Port of the Future award for their strides in establishing a large-scale hydrogen network across the port complex including production, import, application and transport.
The keynote speech of Allard Castelein at the 2nd World Hydrogen Summit
One of the major challenges and opportunities of the energy transition is the large-scale replacement of fossil energy with renewable electricity and carbon-neutral hydrogen. This is a key element in our strategy.
The Port of Rotterdam is one of the most energy-intensive regions in Europe. Industry here uses a lot of energy. But most of the energy now arriving here finds its way to Germany and other countries. Only a third of the energy that flows through Rotterdam is used in the Netherlands itself. Rotterdam really is the energy hub of Northwestern Europe.
The current energy and fuel system will be completely overhauled over the next 30 years. Hydrogen is going to play a crucial role. In Rotterdam, we are setting up projects that, together, realize all parts of the hydrogen chain: the production of carbon-free and low-carbon hydrogen (green and blue); a pipeline infrastructure in the port area; the use of hydrogen in industry, road transport and inland navigation; the import, storage and transit of hydrogen to other industrial regions; and the development of a trading platform for hydrogen. In this way, we are simultaneously building on all parts of the hydrogen chain. We do that with various coalitions of companies and in consultation with and support from the government.
Green hydrogen production
Right now we are developing a business park especially for electrolysers. Here, for example, power connections and water are centrally organized. The first two electrolysers to be built here are those of Shell and H2-Fifty of BP & Nouryon. The plan is for the first of these to be operational in late 2023 or early 2024. That means FID before the end of this year. And we’re also doing a feasibility study with Uniper for an electrolyser on their premises. These three together have a capacity of more than 500 MW, operational in 2025. Towards 2030 we are confident that at least 2GW of electrolyzer capacity will be operational in Rotterdam.
As electrolysers need loads of electricity, we are in consultations with the national government regarding 2 GW of extra wind farms at the North Sea directly linked to electrolysers in Rotterdam on top of the existing plans for wind farms. In this way we aim to get a vast green hydrogen production in Rotterdam by the end of this decade.
Open access pipeline
In the second half of this year we expect to take FID on an ‘open access’ hydrogen pipeline through the port area. In this way, producers, import terminals and users will be linked to each other.
The Backbone figure visualises how all of these projects intertwine. To the left are the electrolysers. From there, we have the hydrogen backbone through the port area.
We are also working on blue hydrogen. There’s a consortium that focuses on the production of hydrogen mainly from refinery gas and natural gas, with carbon capture and storage under the North Sea seabed. Blue and green hydrogen production will support each other, in such way that blue accelerates the hydrogen economy and reduces the cost price of hydrogen.
High temperatures, Building block & Transport
Hydrogen is both energy and raw material for the industry, just as oil is now. So it will be used to realize high temperatures for instance in the chemical industry and steel manufacturing. But it is also a building block creating materials we use in everyday life. Hydrogen is essential in realizing a circular industry.
Now the transport sector is also looking at hydrogen. The Port Authority is participating in two projects focusing on the use of hydrogen as a transport fuel. A project has been set up with Air Liquide, among others, to have 1,000 trucks running on hydrogen by 2025. Another project focuses on the use of hydrogen as a fuel for inland navigation on the Rhine to Germany.
In this way, we are working with partners on the entire chain: from production and transport to setting up a trading platform, a hydrogen exchange, and import and transit to Germany in particular.
Northwestern Europe consumes far more energy than can be sustainably generated regionally. That is why the import of renewable energy is necessary. Together with parties in various countries, we are examining the possibilities of setting up import chains for hydrogen. This is being done with Morocco, Portugal, Iceland, Oman, Uruguay and Australia among others – all countries with lots of sun, wind, hydropower or geothermal energy, with plenty of space and situated along the sea.
In this way, Rotterdam wants to continue to supply a large portion of Northwestern Europe with sustainable energy and feedstock.
On the visual Rotterdam becomes Key Hydrogen Hub you see two graphs. The one with the yellow point upwards shows we expect substantial imports of hydrogen from overseas, certainly from 2030 onwards. It is many times larger than the green field of local, Rotterdam-based hydrogen production. The North Sea is simply not big enough to provide us with enough wind energy to fully serve the market.
The bar on the far right shows that we expect about one third of the 20 Mton of hydrogen to remain in the Netherlands and two thirds to be transported to Germany and other countries.
We are currently in contact with various companies to explore whether we can supply them with hydrogen from Rotterdam. These companies are mainly located in the Chemelot industrial centre in the southeast of the Netherlands and in adjacent North Rhine-Westphalia. These are chemical industries, refineries but also the steel industry. We are therefore exploring both the supply and the demand side: the production of hydrogen overseas and the offtake, particularly in Germany. Tankers will be used for the transport of the import flows, certainly for the longer distances.
You sometimes here the notion that it wouldn’t make sense commercially to ship vast quantities of hydrogen across the globe. Now we all know that low shipping costs are an important driver behind globalisation. So I could say ‘well, just look at global trade lanes of containerized goods, coal or oil’.
But we also did a bit of calculation regarding this. So here’s an interesting graphic that shows the overall costs of producing green hydrogen in South America and shipping it to Rotterdam in different forms: liquified, ammonia and two LOHC’s.
In this specific situation ammonia proves to be an interesting way for long distance shipping of hydrogen. In other situations liquified hydrogen or other carriers might be more interesting, depending on existing assets or the use of the product. The reason I’m showing this graphic is that whatever the form hydrogen is shipped, the research suggests the shipping costs are between 5 and 10% of the total costs including production of renewable electricity, electrolysis, carrier production or liquification, storage, shipping and retrieval.
Within Europe shipping costs could be less than 5%.
This means that local conditions like the amount of wind, sunshine, hydropower and the stability of government will probably be much more important than shipping costs.
So my conclusion is that shipping costs are not a show stopper, even when the shipping industry will shift to more sustainable fuels.
In the long run for shorter distances pipelines will be constructed. But I’m convinced that just like with oil and gas that for long distances and especially across the oceans, shipping will be the solution.
Next issue is how we get this imported hydrogen to its destination, which will be mainly Germany. We are looking at pipelines, because that’s the most efficient, sustainable and reliable mode of transport. Just as how crude oil and various mineral oil products are now transported by pipeline.
We are in consultations with governments to ensure that new pipelines are in place in good time between Rotterdam and the ultimate destinations for the hydrogen. Existing gas networks may still have sufficient capacity in the first few years, but certainly not in the long term. New energy flows require new infrastructure.
I think that at this moment, none of the projects I’ve mentioned has a positive business case. This is not surprising as this transition towards hydrogen involves new technologies, new infrastructure and setting up new value chains. In my opinion, this means public-private partnerships are necessary. Public authorities have to be clear in their ambitions and consistent in their policies. That will stimulate private enterprises to invest into these new markets and value chains. And when and where that is necessary, public authorities will have to stimulate projects with regulations and subsidies.
All of these initiatives are in line with each other: the production of green and blue hydrogen; the construction of infrastructure; the development of import flows; setting up import terminals; the use of hydrogen in industry and the transport sector; and setting up a hydrogen exchange. These initiatives are mutually reinforcing.
Personally, I find this to be a particularly inspiring time. You can see and feel that we are building a new, sustainable energy system together. This offers opportunities for all parties, but also requires cooperation. It offers opportunities for companies to develop a new business model, for governments to achieve climate objectives and to create prosperity. And for people like you and me to work on wonderful, concrete projects and in this way to make our own personal contribution to this transition.
This article is shared by courtesy of Port of Rotterdam.