At the occasion of the recent Movin’On Summit, BNP Paribas led a working session with experts and members of the Movin’On ecosystem to discuss how to scale up solutions for heavy mobility to enable the hydrogen transition.
A recurring conversation at Movin’On 2021 proclaimed that alternative energy sources need to be prioritised going forward, and that ingenuity, policy and investment in infrastructure were going to be the keys to a decarbonised future.
For example: the idea of electric vehicles (EVs) isn’t enough; EVs need to have infrastructure built around them to ensure simple and effective charging, and so the grid as a whole can function more efficiently and sustainably.
It is also important to note that the solutions that exist to decarbonise everyday cars, i.e. EVs, doesn’t necessarily work for larger vehicles. As aerospace and train transit modes are embracing hydrogen, it is worth analysing similar solutions for trucks, buses and the like.
The heavy mobility sector will need to make some dramatic changes in the years ahead to meet our decarbonisation and net-zero ambitions. Namely, it will have to invest in hydrogen-based energy solutions. If so, how, when and what has to happen systematically and politically before that can happen in a real, meaningful way?
An underutilised asset
Hydrogen is the most abundant element in the universe but with regards to its application to get to net-zero, it has been underutilised. This working session explored how hydrogen-based solutions could be created and implemented in mobility, what the obstacles are and they can be overcome.
Hydrogen needs to be viewed as a tool to achieve net-zero because it will dramatically reduce greenhouse gas (GHG) emissions. Decarbonisation as a concept is evident, but as part of the process, there needs to be an entire infrastructure created to achieve it. How and when it is created determines its end-uses. Large scale renewables integration ensures a cleaner and more sustainable end-product; a hydrogen-based energy system decarbonises major sectors like transportation and industrial energy use. The entire supply chain between energy production and consumption is itself decarbonised.
The importance of the political factor
To date, 30 countries have announced a hydrogen strategy, and though that’s good, the key issues preventing widespread adoption are located in scalability and economic viability. Hydrogen as a solution for the heavy mobility sector is too expensive, and the ecosystem to support such a solution does not exist yet.
As with other conversations revolving around decarbonisation, political will is a vector. A carbon tax that incentivises hydrogen energy over diesel, and a discussion of the public and private sector investments that will make our collective dreams a reality, but can such a thing happen in a way (and fast enough) to make the kinds of change we want (and need) to see?
Ecosystems and the regulations around them will have to improve and evolve, and that multiple stakeholders would have to come together to present a cohesive effort.Astrid Behaghel, Hydrogen Coordinator, BNP Paribas
Reducing the cost difference between hydrogen and diesel, a viable solution?
If hydrogen is going to become competitive, it has to be less expensive: how can we create that kind of competitiveness, in terms of capacity and capability? A hydrogen transition in this sector would require tremendous infrastructure, but also significant energy production to even get us there. One of the solutions discussed during the session was the creation of a Europe-wide carbon tax to encourage the industry to make the shift.
The main conclusions of the session were:
- Hydrogen is currently cost prohibitive, and if this is to change, we have to solve the problems around regulation and solving this problem at scale.
- An ecosystem has to exist; investments in infrastructure and systems need to be made.
- We need to figure out how we’re going to generate enough energy to produce the hydrogen energy, and then we need to fine-tune that.
- The technology is pretty much there, but the will and the commitment aren’t.
Supporting our clients in their transition
- In May 2021, BNP Paribas acted as joint book runner on Air Liquide’s inaugural €500m green bond with a 10-year maturity. As a world leader in gases, technologies and services, industry and health, Air Liquide’s green bond will be used for green eligible projects aligned with the Sustainable Financing Framework including hydrogen (production, storage, transmission and distribution, and mobility), biogas, green buildings and energy efficiency amongst others. The bond will support Air Liquide’s commitment to the energy transition, as the company strives to be carbon neutral by 2050.
- In March 2020, BNP Paribas acted as sole Structuring Advisor and joint bookrunner for Cadent when they issued the UK’s first ever transition bond. The €500 million 12-year bond aligned to the EU Sustainable Finance Taxonomy available at the time and the UK’s National Adaption Plan, and supports the retrofit of gas transmission and distribution networks, including replacement of pipeline to facilitate the integration of hydrogen and other low-carbon gases. The transition bond framework also outlines investment potential towards hydrogen fuelling stations as part of Cadent’s mission to scale up clean transportation.