EIT InnoEnergy is setting up a center for the development of industrial value chains for energy production based on green hydrogen. The center is called the European Green Hydrogen Acceleration Centre. The amount of business revenue in the value chain is estimated by EIT InnoEnergy to be worth around €110 billion by 2025.
The value chain of the green hydrogen industry comprises all the companies that are needed to make a particular product, says Jacob Ruiter. He is the Benelux CEO of EIT InnoEnergy. “From the supplier of raw materials to the developer of the relevant technology, to the customer who purchases the final product.”
Green steel from Sweden
The first project will start in Sweden. There, a group of companies will produce steel using energy from green hydrogen. Green hydrogen is hydrogen that is made via water electrolysis with the help of sustainable energy, such as energy from the sun and wind.
The green steel manufacturer has signed a contract with an automobile manufacturer who plans to purchase the steel. “The manufacturer will be announced at the end of this year,” says Ruiter. He is unable to make any statements about this for the time being.
Ruiter claims that as there is an immediate major customer (namely the automobile manufacturer plus all the suppliers needed to make the car and the steel) the company has successfully made a solid business case.
The reason behind Ruiter’s initiative to set up a center for the accelerated development of value chains that use green hydrogen, is that the industry will not otherwise be able to produce in a fully sustainable manner by 2050.
Nowadays, electricity from fossil fuel sources is often used for hydrogen production. Electricity from that hydrogen is CO2-free, albeit the production of the hydrogen itself is not. Ultimately, this involves CO2 emissions. “Which is exactly what we want to get rid of,” Ruiter notes.
The plant that is going to be built in Sweden will need some €5 billion in investment. Part of this will come from EIT InnoEnergy, which receives an annual grant from the European Commission. (In 2020 this amounted to €80 billion). This money is intended for investment in innovation that will help achieve the climate target of becoming CO2 neutral by 2050.
Furthermore, EIT InnoEnergy draws in investors within the ecosystem to encourage them to participate. These may involve private investors, but EU-affiliated organizations such as the European Innovation Council as well. The latter has a fund of billions of euros at its disposal.
Bill Gates is co-investing
One of the prominent donors from outside the EU involved in establishing the European Green Hydrogen Acceleration Centre is Breakthrough Energy. This is the innovation fund set up by American entrepreneur Bill Gates. Other well-known tycoons such as George Soros, Mark Zuckerberg, and Jeff Bezos are also participating.
For the representatives of Breakthrough Energy as well as for the Swedish manufacturer that aims to set up the green steel plant, the contact with EIT InnoEnergy occurred naturally, Ruiter adds. “They know that if we invest in something, the chances of success are high.”
EIT InnoEnergy previously set up the European Battery Alliance with backing from the European Commission. The idea for an open ecosystem that develops the value chain of green hydrogen in the EU is based on this, Ruiter goes on to say. In 2017, EIT InnoEnergy set up the battery alliance because they foresaw that the number of electric cars is bound to increase enormously over the coming years. As will the demand for batteries.
Volkwagen has also started its own battery factories
“At that time, there were no giga-factories for batteries in Europe,” says Martijn Koerts, marketing manager at EIT InnoEnergy. “Car manufacturers in Europe were dependent on the global market for batteries. That became increasingly unappealing because the demand for batteries grew so rapidly. The first factory was eventually built by Northvolt (in which InnoEnergy invested). The second also came from Northvolt and is located in Germany and is a partnership with Volkswagen. The third will be in France and is a collaboration between the start-up Verkor and Schneider Electric.
European Commissioner Maroš Šefčovič (until 2019 for Energy, now for Foresight amongst others) actively supported the European Battery Alliance from the start. In total, the European Investment Bank provided a loan of €350 billion, Ruiter states. “EIT InnoEnergy has played a major role in this.”
One of the reasons why green hydrogen is presently underused as a carrier of sustainably generated energy is a shortage of supply, says Ruiter. Not enough is left over to be used for the conversion and utilization of green hydrogen. Everything is now spent on energy that we are using on a daily basis.
“That’s why I was extremely pleased with the statement by Euro Commissioner Frans Timmermans. He said that we need to hurry up with the construction of wind farms.”
Some factories should be demolished
It is not always the case that the existing industry can easily switch to manufacturing based on energy from green hydrogen, Ruiter continues. “In fact, you should even scrap some plants and rebuild them. That will cost billions. That’s pretty intense.”
That’s one more reason to develop the entire value chain for green hydrogen in an industry branch. All the way from producer to end customer. “If you work out the calculations together, you will succeed in creating a solid business case.”
The center’s investments for the acceleration of green hydrogen are aimed at large-scale consumers of energy. These include the steel and cement industry, heavy road traffic (such as trucks), and shipping. Along with the production of chemicals such as ammonia for fertilizer where green hydrogen is used in feedstock.
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