The potential of hydrogen for the chemical industry has been saved
The potential of hydrogen for the chemical industry
A Future of Energy point of view on hydrogen
The chemical industry is a critical sector in developing innovative solutions to enable the shift towards a sustainable and circular economy, but it is facing a massive challenge to become net-zero. Hydrogen is not only a key enabler to become net-zero for the industry, but also an important opportunity for chemical companies to generate new sustainable revenue streams.
The chemical industry is a critical sector in developing innovative solutions to enable the shift towards a sustainable and circular economy, but it is facing a massive challenge to become net-zero. Only a portion of the net-zero target can be achieved through energy efficiency, bio-based feedstock and closing material loops, stressing the need for other solutions such as hydrogen, carbon capture, and electrification in the chemical industry.
Role of hydrogen and expected future demand
Today, about 10 million tons of hydrogen is already used in the EU industry, mainly as feedstock for the production of ammonia and in the refining industry. Blue and green hydrogen are the two key low-CO2 alternatives that could replace the carbon-intensive grey hydrogen, which represents 95% of the hydrogen production today.
The energy transition and route to net-zero has also led to new potential roles for low-CO2 hydrogen, and therefore the hydrogen market is expected to exceed 100 million tons by 2050, resulting in hydrogen becoming a main energy carriers of the future EU energy system. There are three important demand drivers: industry (heat, steam, reducing agent in steel industry), sustainable fuels for transport (mainly shipping, long-distance road transport and aviation) and sustainable chemical feedstock (methanol, ammonia), and to a lesser extent hydrogen as a storage medium to enable the shift to renewable energy.
Europe taking a leading role
The emerging hydrogen economy is supported by initiatives of policy makers at a European and country level, estimating a required investment of €430 billion until 2030. The increasing number of hydrogen projects being initiated or announced in the chemical industry is a good indicator of the interest in hydrogen, and stress the urge to act now. Countries outside Europe are also catching up with formalising hydrogen strategies and projects, and demand for hydrogen in China is estimated to hit 60 million tons a year by 2050.
Key considerations in your strategy
Chemical companies are uniquely positioned to tap into the opportunities of the emerging hydrogen economy, and can create a competitive advantage by doing so. A set of strategic choices cascading down from “aspiration” to “where to play” to “how to win” to “how to configure” helps to set the right corporate direction and strategy in a structured and thoughtful way.
Hydrogen is not only a key enabler to become net-zero for the industry, but also an important opportunity for chemical companies to generate new sustainable revenue streams. New business and pricing models can be deployed in a profitable way by making smart choices based on the potential and willingness-to-pay for different markets and by focusing on customer centricity. Chemical companies can leverage their strong global assets, interlinked supply chains, existing sales and distribution, and hands-on engineering knowledge etc. to kickstart their future role in the hydrogen economy, and make the shift to a more sustainable portfolio in a profitable way.