We discussed the IEA report yesterday at some length, but in such a comprehensive report we missed a couple of things that are probably worth noting today. See more in our ESG Report today.
- The IEA calls for more than 200 million tons of hydrogen by 2030, more than doubling the current global capacity. To do all of this with electrolysis requires a step-change in renewable power, which the IEA covers and includes in its assumptions, but this is part of what drives the inflation fears we have highlighted. The blue hydrogen route would allow for the hydrogen development suggested but without the immediate rush for renewable power and the constraints likely. Adding 120 million tons of green hydrogen by 2030 will drive inflation and take power away from other needs. Endorsing blue hydrogen at scale gets the same hydrogen development result without the power constraints and this can be replaced with green hydrogen in 20-30 years when the power infrastructure is more robust – it is by far the more practical and logical path.
- Especially as the IEA is also calling for 45% of all shipping to be powered by ammonia by 2050. This is a more reasonable goal, and by 2050 it is possible for this all to be done through green hydrogen - the longer-term goals make sense, the shorter-term rush will drive costs too high.
- It is also important to note that IEA includes assumptions around major investment in CCS – 4 GT by 2035 and almost 8 GT by 2050. Our (counter inflationary) view would call for more CCS more quickly, with annual sequestration falling by 2045-2050 as some of the industries dependent on CCS before 2030, finding affordable alternate technologies by 2050 and reducing their CO2 production. But to get the higher levels sooner the world and the industry have to get their act together and align on the benefits and enough long-term support to encourage the investment. The IEA assumptions are shown at the bottom of the timeline below.
Source: IEA Net Zero by 2050 – A Roadmap for the Global Energy Sector, May 2021
