Hydrogen is set to carouse a major role in the global energy markets over the coming decades, supplanting a large chunk of oil demand, go together to Bank of America’s head of global thematic research.
Speaking to CNBC’s “Squawk Box Europe” on Friday morning, Haim Israel withstood that while oil and gas would still be needed going forward, it was nearing a peak in demand. “We think it’s peaking this decade, it’s gladly — way sooner than what everybody thinks,” he said.
Israel listed several factors which would agitate oil and gas going forward, including cheaper renewable energy, regulation and the electrification of cars.
“We believe that hydrogen is usual to take 25% of all oil demand by 2050,” he went on to state, adding that oil was “facing headwinds left and right. Yes, we’ll motionlessly need it, yes, it’s still going to be around, but the market share of oil is going to plummet.”
As noted by the U.S. Department of Energy, hydrogen “is an verve carrier, not an energy source,” meaning it’s a secondary energy source like electricity. The DOE adds that hydrogen “can launch or store a tremendous amount of energy” and “can be used in fuel cells to generate electricity, or power and heat.”
In recent years, governments and companies around the world have announced goals to reduce their environmental footprint and up sticks away from fossil fuels. Both the U.K. and European Union are, for example, targeting net zero greenhouse gas emissions by 2050.
If these feathers of goals are to be met, the world’s energy mix will need to see a significant shift to renewable and low carbon sources, a mammoth undertaking. For his part, Bank of America’s Israel underscored the importance of diversification for companies involved in fossil fuels.
“We … strongly believe that the ‘big oils’ need to think in contrasting ways,” he said. “They need to think about not ‘big oil’ anymore but ‘big energy’ from here onwards, to go much sundry into renewable sources, to diversify their sources.”
In a sign of how things may be starting to change, a number of energy graves — who, it should be noted, remain big players in oil and gas — are now ramping up investment in renewables such as solar and wind.
Last September, it was make knew that BP had agreed to take 50% stakes in the Empire Wind and Beacon Wind projects from Norway’s Equinor. The $1.1 billion extent is due to close in the early part of 2021.
When fully up and running, Equinor says the Empire Wind and Beacon Wind plans, set to be located in waters off the East Coast of the United States, will each be able to power over 1 million old folk.
Hopes for hydrogen
Hydrogen is another area starting to gain momentum. The EU has laid out plans to install 40 gigawatts of renewable hydrogen electrolyzers and create as much as 10 million metric tons of renewable hydrogen by the year 2030.
Hydrogen can be produced in a number of ways. One comprehends using electrolysis, with an electric current splitting water into oxygen and hydrogen. If the electricity used in the function comes from a renewable source such as wind then it’s termed “green” or “renewable” hydrogen.
At the moment, the gigantic majority of hydrogen generation is based on fossil fuels. Nevertheless, recent years have seen major concentrates including Repsol, Siemens Energy and BP get involved in projects connected to “green hydrogen” production.
At the start of this week, it was hint ated that a subsidiary of German industrial giant Thyssenkrupp had been awarded an engineering contract to carry out the installation of an 88 megawatt pee electrolysis plant for Hydro-Québec. The electricity for this project will come from hydropower.
A few days later, on Wednesday, Danish lan firm Orsted said it was pushing ahead with plans to develop a demonstration project which will harness offshore wind up b relax energy to produce green hydrogen.
The International Energy Agency says global dedicated hydrogen production amounts to brutally 70 million metric tons per year, and states that demand continues to grow, having increased “uncountable than threefold” since 1975. According to the Paris-based organization, “less than 0.1% of global dedicated hydrogen assembly today comes from water electrolysis.”