In the city of Duisburg, in the industrial heart of Germany, there is a vast steel complex that is one of the biggest polluters in Europe. But in addition to the factory’s furnaces and foundries, technicians have developed a machine that could soon play a vital role in reducing greenhouse gas emissions.
By using electricity to split water into its two elements, the device, a test model called an electrolyzer, produces hydrogen, a carbon-free gas that could help power mills like the one in Duisburg. If widely adopted, the devices could help clean up heavy industry, such as steel manufacturing, in Germany and elsewhere.
“We are perhaps in one of those few very promising industries where Germany has a significant and very promising base,” said Werner Ponikwar, chief executive of ThyssenKrupp Nucera, which produces the electrolyzers. The company was spun off from ThyssenKrupp, a German steel giant, in 2023.
The Nucera project was backed by a German government fund worth 700 million euros, or $746 million. In total, Germany’s state and federal governments have allocated €13.2 billion to investments in about two dozen projects to develop hydrogen.
The concept of hydrogen as a renewable energy source has been around for years, but only in the last decade has the idea of its potential to replace fossil fuels to power heavy industry taken off, leading to greater investment and advances in the technology.
That support is starting to bear fruit. The owners of some of the world’s most ambitious clean energy projects, including Shell, Europe’s largest energy company, and the government of Saudi Arabia, have commissioned much larger versions of the two-megawatt electrolyser in Duisburg, as they seek a carbon free future. industrial era.
Washington allocated more funds as part of incentives from President Biden’s Inflation Reduction Act, the 2022 law that offers hundreds of billions of dollars for green or carbon-free technology. The Department of Energy awarded Nucera a $50 million grant last month to further develop gigawatt-scale electrolyzer production for North America.
Such large subsidies reflect a recognition that the technology will not take off without government support, said Christoph Noeres, head of green hydrogen at Nucera, pointing to multibillion-dollar promises for green hydrogen and steel projects from Berlin to Washington.
“I think they understood that now it has to be on a large scale,” he said.
Analysts point to the ability of hydrogen produced with renewable energy to reduce carbon dioxide emissions from heavy industries, including steel manufacturing and long-distance travel by air or sea.
“The only reason we shouldn’t believe in hydrogen is that we don’t believe in fully decarbonizing,” said Bernd Heid, director of the Climate Technologies Platform at consulting firm McKinsey & Company. “There are ups and downs and it goes in waves, but I am confident that we are on a long and steady path to decarbonization.”
Germany is working to radically reduce the amount of carbon dioxide it emits by 2045. That will mean not only switching to low-carbon fuels like electricity for heating and transportation, but also finding ways to reduce emissions from the dirtiest industries. , including steel, fertilizers and cement.
ThyssenKrupp plans to use hydrogen to eventually help reduce the 20 million tons of carbon dioxide that its steel plant in Duisburg pumps out each year, or about 2.5 percent of Germany’s total emissions. The company, which traces its roots to the industrial revolution of the 19th century, recently saw its existence threatened by competition from China and other factors that undermined its key businesses, including steel manufacturing.
On April 11, ThyssenKrupp announced that it would reduce production capacity at the Duisburg plant, which employs about 13,000 people, by approximately 20 percent. The company cited high energy prices and pressure to achieve carbon neutrality among the reasons for the reduction.
ThyssenKrupp’s foray into hydrogen through Nucera, of which it owns just over 50 percent, shows that the seeds of economic growth for German industries may lie in the rusty landscapes of industrial decay. Among ThyssenKrupp’s businesses was a world-leading supplier of equipment for producing chlorine, a chemical with many uses, including in drinking water and swimming pools. It turns out that new versions of these machines can be used to produce hydrogen.
As interest in using hydrogen as a clean fuel grew, ThyssenKrupp executives found they could secure a place in the renewable energy business. “All of those features that, I would say, our industry strives for, we already have in our pockets,” Ponikwar said.
Being linked to a well-known company that has helped build factories and other large facilities around the world has proven to be a selling point for potential clients. When CF Industries, a large fertilizer manufacturer, decided to invest in an electrolyzer to help produce low-emission ammonia at a plant in Donaldsonville, Louisiana, it was ThyssenKrupp’s industrial history that led it to choose Nucera to supply a unit. 100 million dollars.
“We believed it offered the lowest risk from a technological standpoint and the highest performance and reliability,” said Tony Will, CEO of CF Industries.
Similar attributes led H2 Green Steel, a Stockholm-based startup, to choose ThyssenKrupp to supply what could be Europe’s largest electrolyzer for a plant in northern Sweden that will produce emissions-free steel. Very few potential suppliers “have the strength” to meet the required performance targets, said Maria Persson Gulda, chief technology officer at H2 Green Steel.
Nucera has not completely escaped the renewable energy crisis, which has hit the shares of other hydrogen-focused companies such as ITM Power in Britain and Plug Power in the United States. The company’s shares, which were trading at 20 euros in July, have fallen to around 12 euros.
With higher interest rates and inflation affecting the economics of renewable energy projects, analysts have revised their forecasts for hydrogen adoption. “Everything is more expensive than originally thought,” said Hector Arreola, principal hydrogen analyst at Wood Mackenzie, an energy consulting firm.
Nucera said in February that sales for the quarter ended Dec. 31 rose 35 percent from a year earlier, to 208 million euros.
The boost came mainly from the delivery of electrolyzers to Saudi Arabia, where the company is supplying what could be the world’s largest set of green hydrogen producers as part of an $8.4 billion project in the Neom region, the ambitious city being built by Crown Prince Mohammed. bin Salman. The Saudi government owns 6 percent of Nucera shares.
The economics of green hydrogen are largely determined by the price of the electrolyzers and the cost of the volumes of carbon-free electrical energy needed to operate them. In an effort to maintain energy leadership in the coming years, Saudi Arabia has big ambitions as a hydrogen exporter because it can produce cheap solar energy in its vast deserts. H2 Green Steel has secured a low-cost contract for hydropower, another green source.
Green hydrogen produced by 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, pegs green hydrogen at about eight times the cost of European natural gas futures.
CF Industries’ Will said the key energy cost to produce its green ammonia would be $600 a tonne, six times more than with gray hydrogen. He is looking for customers willing to pay more for an environmentally friendly product.
CF Industries said support for hydrogen production under the Biden administration’s Inflation Reduction Act could narrow much of the gap.
At the same time, it seems likely that existing industrial players will play a key role in the shift towards cleaner processes using hydrogen and other alternatives.
“You need that set of skills that Europe (and especially Germany) has developed over the last hundred years.“ Mr. Heid said. “Industrial companies have the technology and skills to scale it up.”