An interview with Andreas Schwenzer, Senior Consultant at Horváth & Partners Management Consultants
International climate protection objectives are creating extensive economic and social changes, with companies from across industry being challenged to decarbonise their entire value chain. Energy consumption must therefore be reduced and electricity, heating and transport sectors linked. One solution at the forefront of this revolution is green hydrogen (H2), which can be obtained from renewable energies to play an integral part in the decarbonisation process.
The European caught up with Andreas Schwenzer, an expert on hydrogen and green transformation at management consultancy Horváth & Partners, to discuss hydrogen’s importance in transforming our energy systems, its potential applications across industry, and how subsidies can be secured by getting on board early.
For which sectors of the wider economy is green hydrogen especially relevant?
Andreas Schwenzer: Hydrogen is used in numerous sectors. The energy-intensive industry with its non-electrified sectors especially can benefit from green hydrogen. This applies to steel production as well as the chemical sector, where hydrogen is used as a basic material for refineries and for refining fossil fuels. In the mobility sector, it is used for fuel cells. Hydrogen can also be used to store renewable energies and heat buildings.
What are the preconditions for the successful use
Our energy system is becoming more decentralised, interconnected and cross-sectoral. To achieve climate protection objectives, all sectors must contribute. It is particularly important to link the energy and industrial sectors. In the future, energy generation and consumption plants, such as electrolysers and heat pumps, should be integrated cost-effectively and actively into energy markets. Local or regional hydrogen ecosystems can then be created. This will reduce the time dependency between the electricity generated, coming primarily from wind and photovoltaic plants, and its consumption. Energy storage projects – especially those based on hydrogen – offer enormous economic potential for companies.
How is green hydrogen produced, and can it be made available in sufficient quantities?
Hydrogen can be produced by electrolysis, i.e. the separation of water into hydrogen and oxygen. To produce green hydrogen, it is essential that the electricity used comes from renewable energies. In terms of sustainability, hydrogen should therefore be green in the long run. The demand for hydrogen is already high, but the electrolysis capacities required for green hydrogen are still developing. In addition, the production of green hydrogen is not yet economical.
Transforming to 100% green hydrogen overnight is not realistic. In the transition phase, other forms are needed in addition to green hydrogen, such as grey, blue and turquoise. These alternatives are not climate-neutral. Nevertheless, they bridge the gap to a completely green hydrogen supply. They allow industrial companies to promptly convert processes where originally fossil gas had been used to produce hydrogen.
Through its EU Hydrogen Strategy the European Union has defined clear goals: Europe must reduce its CO2 emissions of fossil fuels. So far, this accounts for around three quarters of the EU’s greenhouse gas emissions. As part of this strategy, the European Commission also formulates the level of electrolysis capacities. According to this, up to 10 million tonnes of green hydrogen should be produced by 2030.
Can companies receive financial support for converting to green hydrogen?
Funding exists at EU level as well as in the individual countries. This should encourage private investors to invest in this technology. Companies are encouraged to apply for and take advantage of these subsidies. In Germany, for example, the government recently subsidised a transdisciplinary H2 project on the North Sea coast with €30m as part of its national hydrogen strategy.
How do you support interested companies?
The “Green Transformation” offers opportunities but presents corporate decision makers with new challenges. A holistic strategy is key. It is important to consider the entire value chain and understand relevant aspects of hydrogen production and the use of hydrogen across industries and functions. Since this is rarely part of their daily business, companies need a partner to help them structure such complex projects.
At Horváth & Partners, our interdisciplinary team has extensive experience in decarbonising business models. We supported a refinery in its efforts to use green hydrogen generated from wind power in its production processes and thus decarbonise its energy consumption. With a nearby cement plant as an additional partner, this regional H2 ecosystem can operate economically. Hydrogen ecosystems are perfectly suited to making hydrogen projects profitable. With our customers, we develop sustainable business models and accompany them through the entire project, from generating new ideas to implementation.
What is your advice to companies looking
Get on board early with green hydrogen. The framework has already been created in the form of specific funding programmes. Many market players ask themselves how they can be successful in the future while handling the transformation to sustainability. Hydrogen is a promising option as an area of innovation for the future. The positive image effect should also not be underestimated.
That means companies should act fast to secure their share of the subsidies. Those who gain experience now will be ahead of their competitors and will be able to position themselves sustainably. ν