The city of Duisburg in Germany’s industrial heartland has a huge steel plant that is one of Europe’s biggest polluters. But beyond the factory’s furnaces and smelters, technicians have developed a machine that could soon play a major role in reducing greenhouse gas emissions.
The device, a test model called an electrolyzer, uses electricity to split water into its two elements, producing hydrogen, a carbon-free gas that can power factories such as Duisburg. If widely adopted, these devices could help clean up heavy industries such as steelmaking in Germany and elsewhere.
Werner Ponikwar, chief executive of electrolyser maker ThyssenKrupp Nucera, said: “We are probably one of the few very promising industries in which Germany is There are important and very promising fundamentals in the industry.” The company was spun off from German steel giant ThyssenKrupp AG in 2023.
The Nucera project is supported by German government funds worth €700 million ($746 million). Overall, Germany’s states and federal government have set aside 13.2 billion euros to invest in about two dozen hydrogen projects.
the concept of Hydrogen as a renewable energy source It has been around for many years, but it was only in the past decade that its potential to replace fossil fuels in powering heavy industry was realized, leading to increased investment and technological advancements.
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 government of Saudi Arabia, have ordered a larger version of the two-megawatt electrolyser in Duisburg as they look to go carbon-free Industrial Age.
Washington has earmarked more money in President Joe Biden’s Inflation Reduction Act, which will be introduced in 2022 and provide hundreds of billions of dollars for carbon-free or green technologies. The Department of Energy last month awarded Nucera a $50 million grant to further develop gigawatt-scale electrolyser production in North America.
Christoph Noeres, head of Nucera’s green hydrogen division, said such large subsidies reflected a recognition that the technology would not take off without government support. He was referring to billions of dollars in commitments to green steel and green hydrogen projects from Berlin to Washington.
“I think they understand it’s got to be big right now,” he said.
Analysts say hydrogen produced with renewable energy could reduce carbon dioxide emissions from heavy industry, including steelmaking and long-distance air or sea travel.
“The only reason we shouldn’t trust hydrogen is because we don’t fully believe in decarbonization,” said Bernd Heide, head of the climate technology platform at consulting firm McKinsey. “There are ups and downs, and it comes in waves, but I believe we are on a long-term, stable path to decarbonization.”
Germany is working to radically reduce CO2 emissions by 2045. That means not just switching to low-carbon fuels, such as electricity for heating and transportation, but also finding ways to cut 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 emitted annually by its Duisburg steel plant, which accounts for about 2.5% of Germany’s total emissions.The company’s history dates back to the Industrial Revolution in the 19th century and more recently Found its existence threatened by competition from China and other factors weakening its key businesses, including steelmaking.
On April 11, Thyssenkrupp announced that it would reduce production capacity at its Duisburg plant, which employs approximately 13,000 people, by approximately 20%. The company cited high energy prices and pressure to achieve carbon neutrality as among the reasons for its emissions reductions.
ThyssenKrupp’s move into hydrogen with Nucera (ThyssenKrupp owns more than 50% of Nucera) suggests that the seeds of Germany’s industrial economic growth may lie in the rusty landscape of industrial decline. Among Thyssenkrupp’s companies is one of the world’s leading suppliers of equipment to make chlorine, a chemical used in a wide range of applications, including drinking water and swimming pools. It turns out that new versions of these machines can be used to make hydrogen.
As interest grows in using hydrogen as a clean fuel, ThyssenKrupp executives are finding they can carve out a niche in the renewable energy business. “I would say all of these capabilities that our industry is trying to achieve, we already have in our pockets,” Mr. Ponikwar said.
Being associated with a well-known company that helps build factories and other large facilities around the world has proven to be a selling point for potential customers. When CF Industries, a major fertilizer manufacturer, decided to invest in an electrolyzer to help produce low-emissions ammonia at a plant in Donaldsonville, Louisiana, ThyssenKrupp’s industrial track record led the company to select Nucera to provide $100 million in equipment.
“We believe that from a technical perspective it provides the lowest risk and the highest performance and reliability,” said Tony Will, CEO of CF Industries.
Similar attributes led Stockholm-based start-up H2 Green Steel to choose ThyssenKrupp to supply what may be Europe’s largest electrolyser for a plant in northern Sweden that will produce emissions-free steel. Maria Persson Gulda, chief technology officer at H2 Green Steel, said few potential suppliers “have the chops” to meet the required performance targets.
Nucera hasn’t completely escaped the renewables downturn, which has hammered the share prices of other hydrogen-focused companies such as UK-based ITM Power and US-based Plug Power. The company’s shares were listed at 20 euros in July and have now fallen to around 12 euros.
As interest rates and inflation rise Upending the economics of renewable energy projects, analysts have lowered their forecasts for hydrogen adoption. “Everything is more expensive than initially thought,” said Hector Arreola, lead hydrogen analyst at energy consultancy Wood Mackenzie.
Nucera said in February that sales in the quarter ended December 31 rose 35% year-on-year to 208 million euros.
Growth mainly comes from electrolyzer deliveries Saudi Arabiathe company is supplying what may be the world’s largest set of green hydrogen producers as part of an $8.4 billion project in the region Neom, the ambitious city Built by Crown Prince Mohammed bin Salman. The Saudi government owns 6% of Nucera.
The economics of green hydrogen depend largely on the price of electrolysers and the cost of the carbon-free electricity needed to run them. To maintain its energy leadership in the coming years, Saudi Arabia has lofty ambitions as a hydrogen exporter as it can produce cheap solar power across its vast deserts. H2 Green Steel has secured a low-cost contract for hydropower, another green energy source.
Green hydrogen produced by electrolysers 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 financial markets European Energy Exchange puts the price of green hydrogen at about eight times the cost of European natural gas futures.
Mr. Will of CF Industries said the primary energy cost of producing green ammonia is $600 per ton, six times that of producing gray hydrogen. He is lining up customers who are willing to pay a premium for green products.
CF Industries said support for hydrogen production under the Biden administration’s inflation-cutting bill could narrow much of the difference.
At the same time, existing industrial players appear likely to play a key role in the shift to cleaner processes using hydrogen and other alternatives.
“You need the skills that Europe – especially Germany – has developed over the last hundred years,” said Mr. Hyde. “Industrial companies have the technology and the ability to scale.”
