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Ed Reed

Hello and welcome to The 10 Point Pod, a special podcast boxset from Energy Voice Out Loud, in which we assess point by point the UK government’s plans for a green industrial revolution, drawing together expertise from our sponsor for these series, EY, and leaders from across the energy industry.

My name is Ed Reed, I’m an editor at Energy Voice, where we are leading the global energy conversation, and I’m delighted to be joined for this conversation by my co-host Tim Calver, UK&I Executive Director for Energy and Infrastructure Advisory at EY, and special guest, Dr Graham Cooley, CEO of ITM Power.

In this episode, we’re talking about hydrogen, the second of the ten points. Over the last 12 to 18 months, hydrogen seems to have become something of a panacea. If there’s a problem, hydrogen will fix it. Depending on who you talk to, this element could crack the renewable energy storage riddle, supply warmth and power to homes and industry, and you could even run your car on it.

Certainly, the government has some high hopes for it. The UK aims to be able to produce 5GW of low-carbon hydrogen by 2030, with the government willing to provide up to £500 million for the sector. Not all hydrogen is created equally. Green hydrogen produced from renewable sources. Blue hydrogen involves reforming of natural gas with carbon capture. The laggard though, grey hydrogen, involves unabated gas processing, with the IEA reporting this may be responsible for around 2.5% of the world’s carbon emissions.

The UK government has talked of plants for hydrogen neighbourhood in 2023, moving into a hydrogen village and then a hydrogen town by the end of the decade. And we’ve seen some progress of this very recently, with show homes opening in Gateshead, running entirely on hydrogen.

Tim, you’ve worked with Graham before. Maybe you could start with a question in production. Do blue and green hydrogen compete?

Tim Calver

Thanks, Ed. I think starting point is hydrogen can do all of the things you just talked about, which is what makes it so exciting. I guess the degree to which it does them and where it comes from is one of the topics we’re going to explore today.

My view would be that in the long term, blue and green hydrogen do indeed compete for the same markets, and eventually they can compete on costs and potentially quality. I think at this stage the UK government has been pretty clear that it wants both of those in the mix, and actually, the UK, we’re well positioned to have some quite favourable structural advantages for both blue and green hydrogen. In terms of green hydrogen, loads are available. Offshore wind, in particular, for blue hydrogen. Favourable geology. Oil and gas industry.

The first challenge really from production technology is to get the attention of policy and the funding mechanisms of government. The government has identified that it wants to progress both green and blue hydrogen in the UK. I think beyond that both sources will need to demonstrate their ability to deliver on the promises made to government, and in the long term, indeed they’ll compete. But in the short term, they’re both part of the mix in the UK.

Ed Reed

Graham, obviously speaking incredibly impartially as you will, what’s your feeling about that green versus blue competition?

Graham Cooley

If I respond to the first observation you made, most of those applications, the energy is supplied using molecules from fossil fuels, so using natural gas. At the highest level, what you’re doing with hydrogen is you’re replacing fossil fuel molecules, carbon-containing molecules, with net-zero molecules.

So if you use green hydrogen made from renewable power, you have a net-zero molecule, and the world uses energy in two forms. It either uses electrons, or it uses molecules. And the only net-zero energy gas and net-zero molecule is the hydrogen molecule, and so that is the principle. So you might say can it really do all of those things. But of course all those things are done by fossil fuels.

What you have with green hydrogen is a replacement for those fossil fuels. That’s net zero. That’s the first point I’d make. Why green hydrogen rather than blue hydrogen? First of all, green hydrogen is net zero. Blue is not. You can’t get complete capture. You continue to use a natural gas infrastructure, which inevitably leaks, and you then have the problem of what you do with the CO2. You’re going to store it off the coast of the UK, and somebody’s got to take the liability of those stores that will increase in size every year.

And somebody’s got to take the liability for them for generations to come. So my view is you should not make CO2 in the first place. And then the final point about green hydrogen is it provides you with an energy storage medium for renewable power. We’re all interested in green hydrogen now principally because the cost has come down so much. Because as the cost of renewable power comes down, the cost of green hydrogen comes down.

Of course, as the cost of green hydrogen comes down, so the intervention of renewable power goes up and you need more, more energy storage. And the best way of storing electrons is by turning them into molecules. I think you’ve got a cost driver, you’ve got a need in terms of energy storage, and you’ve got the overall policy, which is net zero. And they all point you towards green hydrogen.

Ed Reed

I suppose it’s worth thinking about the other types, aren’t there? As I mentioned, there’s clearly the world is currently dominated by grey hydrogen, which is obviously highly emitting. But there’s also been talk in The 10 Point Plan about the potential production of hydrogen from advanced modular reactors, and this is something that I’d never really encountered before. What do you think the prospects are for those sorts of development?

Tim Calver

As Graham described, the electrolyser technology can basically take electricity as an input and output hydrogen. As such, I don’t think there isn’t any technical obstacle why other sources of electricity can’t be used in that way. I think that, in my head, is a separate policy decision in terms of what overall production methods for electricity government wants to use, which I recognise is another part of The 10 Point Plan.

Ultimately, yes, it can. I think the question is, always from an electrolysis point of view, where does electricity come from? I think, as Graham said, the critical thing is we take the opportunity for that electricity to be truly low carbon itself to ensure that the hydrogen is low carbon. And in the event that small-scale nuclear modular reactors are part of the UK energy policy, absolutely they can support the production of hydrogen.

Ed Reed

I think clearly the world’s dominated by grey hydrogen at the moment. Clearly the unabated carbon capture issue. What do you think is the best way to resolve that particular problem? There are structures. Should we be thinking about carbon prices? What do you think the future is for grey hydrogen?

Graham Cooley

Grey hydrogen is, without a doubt, the entry market for green hydrogen. In Europe, we use 400TWh a year of grey hydrogen in industry, so the industries are… The largest one is the production of ammonia, then refineries and methanol production, and also metals treatment.

And actually green hydrogen can be a direct replacement. You can implement green hydrogen very rapidly. You deploy an electrolyser refinery, for instance, produce green hydrogen, and put the green hydrogen directly into the refinery as a replacement for grey hydrogen, which is made using a reformer and natural gas.

One of the very important things about green hydrogen is early deployment. If you look at blue hydrogen, the timescale for deployment is the late 2020s, whereas you can build a large green hydrogen scheme today.

We are working with Ørsted and Phillips 66 in Humberside. It’s a 100MW front-end, engineering design study to connect a 100MW electrolyser directly to Hornsea, which is the world’s largest offshore wind farm currently, and make green hydrogen and put it directly into the Phillips 66 refinery.

What that does then is replace the existing demand for hydrogen. When you do a green hydrogen project or indeed any hydrogen project, particularly a green one, you take the electrolysis solution to where the demand is. You put the electrolyser down where the demand is.

If you have the opportunity to connect directly to renewable power, then that gives you a direct coupling and makes the hydrogen absolutely green. And the whole point about green hydrogen is you can do that without the need for additional infrastructure. And I think one of the advantages of green hydrogen then is early deployment to decarbonise grey hydrogen that you can do in a short timescale, you can build it up in a modular way, and there’s no need for additional infrastructure.

Ed Reed

Tim, just bringing this to you, obviously that question of speed of deployment I think is a really interesting one, and particular, given that we’re on this obviously fast track to try and make things happen in actually fairly prompt time, 2030 being the timeline, it’s only nine years away. That seems pretty soon.

Do you think that there’s…? Would you agree with Graham that there’s that risk about blue hydrogen, and do you think there’s maybe a possibility that blue hydrogen misses the trip by stranded infrastructure? Do you think it will…? If it takes, I don’t know, say, five, ten years to get to a viable position, does that mean that we might not see blue hydrogen come through in that way?

Tim Calver

There were a number of really interesting points in what Graham was talking about that I might pick up on. Possibly not all in one go. One, I think, was how do you get large-scale demand quick enough to support investment in hydrogen production. The other one was a local versus regional versus national business model. And then I’ll come on to your point about speed of deployment and blue hydrogen.

I think 100% agree with Graham about the replacement of grey hydrogen being the obvious and best place to start in terms of demand. I think the other one that we should talk about is grid blending. We need to look for places where you can have large volume demand for hydrogen that decouples the scaling up of production and demand because that’s one of the biggest policy challenges we’ve got here.

When we were deploying offshore wind, there was no question about the demand for it. It was electrons in the same way there was already a deep liquid market for. With hydrogen, we need to stimulate production and supply, and a good way of doing that is to decouple volume and supply.

Then, in terms of the speed argument, one of the key things I think that people see as a potential attractor for blue hydrogen is scale of deployment and speed of deployment. And I think ultimately we’re going to need to see all of the participants, including government, are able to meet those timescale ambitions for blue hydrogen in order for that to be a strong part of the mix.

I think Graham made some valid points about some of the long-term drivers that guide you towards green hydrogen. We’re seeing some countries already focus on that from a policy perspective. From my point of view, it will be key that blue is able to move sufficiently quickly.

And that means both the blue hydrogen production and also the CCUS methods that go with it in order for that to really fulfil its potential the UK government sees in terms of being part of the mix.

Ed Reed

And just coming to that question around pricing and inputs into it, do you think there’s potential for areas with renewable energy capacity to move more into green hydrogen and areas with gas resources into blue hydrogen? I suppose I’m thinking about places like, I don’t know, Qatar, which obviously has massive gas resources. Is this a potential opportunity for people to find their own way through?

Graham Cooley

We’re already seeing, I think, countries’ strategies refer to export and import potential. In Australia, we’ll talk about export of hydrogen. In Germany, we’ll talk about imports of hydrogen. It seems likely that ammonia as a long-term transport is perhaps more likely than hydrogen in terms of just its energy density, the temperature which you need to store it.

I think certainly there’s potential around international development of a hydrogen market facilitated maybe by transport of ammonia. But I think also a long way to go in terms of national development of production and demand in order to really stimulate a significant international market.

Tim Calver

I think a very important principle of hydrogen is that you can use it as a vehicle to import and export renewable power. If you import most of your energy and don’t have significant renewables, you could import renewable power from places like British Columbia, for instance, or Australia. So I absolutely agree that that’s very important.

I think the important principle of green hydrogen is that the cost is denominated by the cost of the renewable power. And so wherever you find renewable power generation at low cost, then you’ll make low-cost green hydrogen. Also when you need energy storage.

And I think it’s very important to realise that if you’re a renewable energy company, in the past you supplied electrons to an electricity grid. And if you’re renewable company, you supply net-zero electrons to an electricity grid. Now you have the option to supply both electrons and molecules, and I think that’s very important because it gives you a storable product as a renewable energy company.

And round 4 of offshore wind announced by the energy minister only a few weeks ago removes the price protection for renewable energy companies against negative pricing or zero pricing in the market. You now have a driver for renewable energy companies to adopt a long-duration, massive-volume energy storage medium, and the only that’s available for very long duration energy storage is to turn the electrons into molecules.

As a renewable energy company, it protects you against negative pricing. It also gives you another market to export your energy to when the electricity grid is in a position of excess. And if you’re a policymaker and you’re interested in the national energy system, it means that you don’t have to pay for curtailment.

You don’t have to pay wind farms to turn off. So to me, it’s joined up thinking between the electricity industry and the molecules, the gas, or the oil and gas industry, where you’re using a serious problem in the electricity industry, which is intermittency and the need for energy storage with a new market developing for requirement for gas grids and industry to decarbonise. And it’s that sector coupling and that joined-up energy thinking that makes green hydrogen so important.

Ed Reed

I think we’re going to take a short break, and then we’ll pick up with some thoughts about we might use hydrogen for and what its impact on the UK may look like.

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Ed Reed

I think, clearly looking at the near-term question about what’s changing, what’s coming down the pipe, obviously the government announced the plans at the end of last year, and there’s a real sense of timeliness about this. But looking at the very near term, this year/next year, what’s coming and what needs to come?

Graham Cooley

My view is that 2021 will be the most exciting year for hydrogen that we’ve seen. Let me start first of all in the UK. In the UK, in the UK government will be announcing its hydrogen strategy towards the end of Q1 or the beginning of Q2, and in there, it will be publishing the business model for green and for blue hydrogen in the UK.

And it will be publishing the incentives that will be rolled out. They will be contracts for difference auctions and also the renewable transport fuel certificates for green hydrogen and transport. So that’s very, very important. Also, we had the energy white paper towards the end of the year. We will have the transport strategy and white paper published as well around the same time as the hydrogen strategy. So two very important things in the UK.

Across Europe, we’ll see the first… My view is that we will see the first contracts for difference auctions for green hydrogen rolled out and bid for by the oil and gas majors and the large renewable energy companies. And that is, I think, a very important catalyst for some of these very large announced green hydrogen projects to actually come to financial close.

I also see a global movement. Not only will 2021 do those things in Europe and the UK, I think the green hydrogen strategy in Chile, which is huge, actually a target over the next decade of 25GW, some of those projects will move towards financial close and also major projects in Australia and also across the US.

And then one final point is that I believe that the Biden administration will look very favourably on the use of green hydrogen in the US, and so you’ll see policy announcements and developments in the US as well. I think it’s going to be a very exciting next 12 months.

Tim Calver

Graham, just to pick up on that, because I think actually the fact that you talked about the UK and the rest of world is really important here because the context for the UK to publish its hydrogen strategy, its heat strategy, and transport strategy is the rest world moving very quickly as well. I think, in order to get on the path for the government’s 10 Point Plan, those strategies and policies that Graham talked about are there to bring in investment and to drive investment decisions. And they will be taken in international context, so I’d add to that also we will see information around the carbon capture and storage business models, also which is a separate piece of work undertaken by BEIS. And that’s absolutely critical. Because then that clarity of green hydrogen business model, blue hydrogen business model, and coupling with CCUS and therefore what are people investing in and what are the revenue support mechanisms that are going to support investment is absolutely critical. I think also, through things like the transport and heat strategy, there’s an opportunity to signal clear intent around demand-side drivers. So obligations. Need for compliance. Standards, for instance, around boilers, transport. Opportunities to procure hydrogen buses, hydrogen trains. There’s lots of areas in which policy will be coming out, and I think talking about hydrogen in all of those will just build the overall picture of confidence and investability that we need to see to get on the track for The 10 Point Plan.

Ed Reed

As I said at the beginning, that question about what hydrogen should be used for, is it a straight swap of methane for hydrogen? Does it run my car? Does it fuel a plane? Does it cook my breakfast? What should we be thinking about? And how might that impact how we roll it out?

Tim Calver

The answer is really clearly all of those of things, and I think, in my head, it’s wrong to just think about one specific use case for hydrogen and focus on the economics of it. It can absolutely do all of those things with pretty much the same functionalities as existing replacement or methane replacing a lot of time. In all cases, it has some subsidy, be that electricity or some other form of low-carbon energy. But the key thing for me is that hydrogen can do all of those things and be a long-term, high-volume energy storage and also couple the electricity and the gas grids, as Graham said earlier on. I think the key thing is to take a system view. If you look at any one specific use case of hydrogen, you will certainly find a lot of people that might argue it’s not the ideal answer.

I think, if you take the system view, it is a fantastic answer to a whole bunch of things while also addressing the issue of energy storage. I think there are some clear heavy-duty transport cases, some clear industrial cases that Graham talked to. Potential for domestic heating. But the real power from, I think, a net-zero at a societal level is its ability to do all of those things and be an energy storage medium.

Ed Reed

Graham, what do you think? Is there anything that hydrogen can’t do at this point?

Graham Cooley

I agree with much of what Tim said. To me, the entry market is grey hydrogen replacement market. That one cannot be substituted by different technology. You can’t make an ammonia molecule, NH3, without hydrogen, so there’s no technological fix other than decarbonising the hydrogen that you use. Same for refinery. Same for methanol. And I think a great opportunity in industrial is decarbonising steel production. That to me, it looks like the entry market. Transport. Why is transport very, very interesting? For heavy vehicles, it’s very interesting for decarbonisation because you’re decoupling weight and range, which you can’t do with a battery. And the use case is very compelling if you’re a producer of hydrogen because it’s a very high-value application. You get more per kilogramme for hydrogen in transport than you do in replacing grey hydrogen. The biggest market is to replace natural gas in the gas grid with green hydrogen. And if you look out there, it’s the infrastructure players. Those are gas transmission or gas distribution companies that manage an asset, which is pipes. Those pipes have got to transport a net-zero energy gas for those companies to get to net zero. And so to me, you start with the grey hydrogen replacement market, where there’s no alternative but to use hydrogen. You then are looking at, in parallel, transport applications which are very high value, and then ultimately the largest market of all is the replacement of LNG and natural gas in the gas grid. I think, to me, there’s three tiers to the introduction of green hydrogen.

Ed Reed

You brought up infrastructure, and obviously that starts the alarm bells ringing around who’s going to pay for changes, who’s going to be building things. And obviously the government has talked about some of its plans for helping prop up this shift to hydrogen. But they’ve also said that they want to secure £4 billion of private investment by 2030. Tim, what do you think the prospects for that are? Is that going to be a goer?

Tim Calver

I don’t see any reason why not. There’s, I think, a lot of appetite for investment in hydrogen and in the necessary transition generally. I think there are some really important conditions for success though around that, which relate to clarity of business models and recognising some of the particular challenges around a hydrogen business model compared to stimulating, say, offshore wind. Again, we come back to the need to develop production, demand, and infrastructure in parallel, and I think ultimately people investing in production will need to be, to some extent, insulated from demand risk but ultimately confident that demand applications, and Graham articulated really nicely what the transition of different demand applications might be, that they’re going to come along.

People who are investing in consumption technology and end-user mechanisms will need to know that the production is going to be available for them to have a secure supply. And then alongside that, we are going to need to see industry standards develop, industry processes change to overall create that belief that there’s a strong and valid policy framework, a support mechanism in place.

But the whole of the industry is moving into a position of confidence around ultimately large-scale deployment of hydrogen. And then there is, I think, more than enough funding available within the large companies that we see and institutional investors to deliver that government ambition.

Ed Reed

Graham, what do you think? Is the government doing enough? Ultimately, who is going to pay when I have to get a new boiler?

Graham Cooley

Governments around the world are assessing business models for green hydrogen, and many of them are going to be using the model of contracts for difference auctions, in other words assessing in a given location the difference between the cost of green hydrogen that you can manufacture on site and grey hydrogen and then putting in place an auction for an incentive to bridge the gap. And I think, with the right business models in place, private money will flow into hydrogen. It’s very, very clear to me. We raised 170 million on the London stock market in October of last year. We were two and a half times oversubscribed. The capital markets are now incredibly well informed about hydrogen.

There are specific company notes, research notes, thematics. All of the very large consultancies, all of the very large banks are organising conferences about green hydrogen. The amount of money out there, capital that can be deployed into green hydrogen, it is ready to go so long as the business models work. And in the early days, we will need government incentives to make those business models work in exactly the same way as we needed that for solar and wind. And as soon as those models are in place and those contracts for difference are live, you see the activity from commercial companies and from the capital markets. So I’m very, very confident that private equity, private money will flow into green hydrogen. It’s all about getting the business model tied down and the right incentives in place.

Tim Calver

Graham, just a comment on that, and if it’s okay, I’d love to ask you a question as well about UK versus rest of the world competitiveness. But one important message, I think, from a government perspective is about the pace here of what they’re doing. There’s a hydrogen strategy due, there’s a building and heat strategy due, and I think the market is anticipating those. And from UK perspective, we’re already a little bit behind in timing, where other countries have been in terms of setting out their ambitions and their strategy. I think we’ve seen… And offshore wind, I think, is often a really good example ultimately of where we got to a really successful UK perspective. We’ve been through three different types of incentive mechanisms there, so I think we also need to recognise that you won’t always get it absolutely right first time. That is okay.

But I think being there sufficiently early with the right clarity and incentives is important, so I think message to government is don’t aim for perfection necessarily in terms of getting there.

And then, Graham, the question I’d be really interested to get your viewpoint is, it’s an international competition for capital, and your company are doing projects in more than one location. What’s your view on the international dimension of where the UK sits competitively? Because I think that’s a key thing the government needs to get right as well. There’s plenty of money out there. How are we going to make sure it flows to the UK?

Graham Cooley

I agree with that, Tim, absolutely. If you see the leadership of the EU and the green recovery deal that the EU put in place, there’s €1 trillion for industrial recovery, and of that, 15%, 150 billion, over the next decade is for green hydrogen, with 10 billion a year over the next ten years.

So 100 billion in total for contracts for difference auctions. And we see huge projects being announced all over Europe. Actually, those projects are being announced in response to those policy statements that have been made about green hydrogen.

Today, we have in The 10 Point Plan a 5GW target for hydrogen without a stated percentage of blue hydrogen and green hydrogen. But I always say to the UK government that this is not just a decarbonisation strategy and energy strategy. It should be an industrial strategy, and we ought to be building the equipment in the UK. What we’re actually doing with green hydrogen in the UK is building a new energy industry.

In terms of whether the capital will flow or not, it depends on the business model that the UK government develop. We do have massive potential for offshore wind in the UK. I think we have one of the richest wind resources in the world. If you’re going to deploy a lot of wind power, you’ll need a lot of energy storage.

If you look at deploying hydrogen and what the business models are, if you read the technology report from the Commission for Climate Change, that 17GW of electrolysis that they’re calling for is for energy storage. And actually to avoid negative pricing and curtailment, any nation that’s got a very significant amount of intermittent renewables that wants to use it to decarbonise its network is going to need a significant amount of green hydrogen, in my view. Will capital flow into the UK? It does depend on what that business model is that’s developed.

Ed Reed

Just to pick up on a really interesting point there, Graham, I think obviously the hydrogen is part of The 10 Point Plan, and that’s really woven into the idea of an industrial recovery revolution. Call it what you will. But one of the key questions is, do we have those skills? Do we have the manufacturing capacity? Are we in the right position to just take advantage of this new hydrogen opportunity? Or what should the government be thinking about when it’s thinking about those skills? The jobs required?

Graham Cooley

First thing to say, so thank you for the question. It gives me a chance to be rather self-centred. ITM Power at the beginning of this year moved into the world’s largest electrolyser factory. It has the capacity of 1GW per annum or 1,000MW per annum of electrolysis equipment. We’re a world leader.

We made an announcement about a significant funding round, 170 million. We bid last year for £435 million worth of, quote, fixed price turnkey quotations against commercial tenders all over the world. We worked very closely with Linde Engineering, who’s an EPC contractor, so we have the world’s largest electrolyser factory in the UK.

Can we be competitive? Will it create jobs in the UK? Absolutely. And the point about this is that we created the incentives in the UK, and in Germany, actually the German government did the same for solar and for wind. But we did not end up developing a manufacturing industry in that area. What we’ve done is put the manufacturing in place already, so as the demand comes, we will build up through our factory. But the capacity is in place in the UK now. It’s in Sheffield.

Tim Calver

Graham, it’s a brilliant story. I think about the investment that you brought there and the UK leading the world there. I’d also say we got an oil and gas industry which is looking to transform itself, amongst other things, towards blue hydrogen, and there’s a huge amount of existing engineering capability there and also in our offshore marine industry which will be key. I think we are well placed.

I hear people talk, and I would agree there’s a need to pivot some of the existing industrial educational schemes towards hydrogen. Make sure that that is absolutely included in it, so as part of an overall skills approach for the energy transition and net zero, I think we have to make sure that hydrogen is punching its weight in regard to that. And I think, we’ve heard from Graham, we’re well placed on green. I’m confident we’re well placed on blue as well. I think, as part of the government’s 10 Point Plan, that’s absolutely a strength the UK can bring to bear.

Graham Cooley

Tim, I agree with that. I think it’s very important that the hydrogen industry is a solution for the oil and gas industry. It’s very difficult to make the energy transition without the oil and gas industry because of the deep experience in managing infrastructures, because of the massive amount of capital that they can bring to bear on the industry. I really welcome all of the announcements made by the oil and gas industry about their plans for the energy transition.

I think that’s incredibly important. Also all the renewable energy companies that are now moving into green hydrogen and using it as an energy storage medium. And my view is that within a decade, oil and gas companies will look very like renewable energy companies. Actually, you won’t be able to tell them apart.

Renewable energy companies are moving into net-zero molecules at the same time, as the oil and gas industry are deploying more and more renewable power and looking at green hydrogen. So I think there’s a convergence, and I think both of those major infrastructure players working together will be incredibly powerful in making this transition.

Ed Reed

And Graham, just to pick you up on that point about that question of transformation within the oil and gas industry. And clearly looking at the number of jobs at stake, and this is obviously going to be something that is particularly important to the country and to those industries. What do you think they need to do to go through that process of transformation? And what challenges do you think they might need to overcome along the way? Is it a question of change that has come from within, those top-level boardrooms, or do they need direction from government?

Graham Cooley

I think, first of all, the direction and the real driving force they’re being given is actually coming from the City and from ESG investors. And I think one of the most significant announcements that I saw with regard to transitioning the oil and gas industry was from the CEO of BlackRock, who basically said, we’re all ESG investors now, and you need to take this energy transition very, very seriously.

I was delighted to see at the beginning of this week the capital markets day from Shell, where what Shell is saying is they will get to net zero with scope 3 emissions by 2050. What that means is not only deploying capital in a different way but taking their customers with them. The oil and gas industry is now more serious than I’ve ever seen it about making this transition. And the transition for net zero is all about the infrastructure and the investment in the infrastructure and deploying the capital so that the transition happens much more rapidly than it has been doing over the last decade. We are literally running out of time, and that’s why I say it’s very, very important that this journey is, to some extent, led by those very large energy companies like the oil and gas industry and showing leadership and also taking responsibility for scope 3 emissions and those companies taking their customers with them in terms of strategy for transition. I think it’s very, very important indeed. You can’t make the energy transition without very large deployments of capital, so you need the City, you need renewable energy companies. You need the oil and gas industry. All playing together.

Tim Calver

I think, Graham, the key point there was this can only happen successfully with the oil and gas industry. I think their capability, their experience, their ability to deploy capital, and their understanding of how to transform what is a complex energy industry based on fossil fuels into something that delivers the net-zero ambitions is absolutely critical. And I think what we are now seeing is, as Graham said, all of the stakeholders actually aligning now towards that common purpose, which is what we absolutely need to see.

Ed Reed

I think a really interesting point about that question of capital and how capital acts as a driver, isn’t it…? I think it takes industry taking direction from financial sources, which I think is really fascinating point that we perhaps should end on. I’d like to thank you both, Tim and Graham, for participating in the second point of The 10 Point Pod. I think there are a number of really interesting things going on there. I think the speed at which hydrogen can be rolled out is going to be critical, and I think that 2030 deadline is really looming large. And I think also that question about capital and that way in which capital is deployed and who gets to choose where that capital goes. And I think that is clearly a driving influence as demonstrated, Graham, as you said, by your successful fundraising earlier this year. I think that’s a really, really interesting point to end on.

I’d like to say thank you to our listeners. Please let us know your thoughts on this topic through our social media channels or by emailing outloud@energyvoice.com, and if you want to be part of the conversation and share your story with the industry, you can email outloud@energyvoice.com too.

You may already know that every week the Energy Voice team get together to highlight important stories from the world of energy in our regular podcast episodes, so if you’re not already, please do subscribe, free, to Energy Voice Out Loud in Apple Podcasts, Spotify, or wherever you get your podcasts to get this essential briefing every Friday.

We’ll be digging into the rest of The 10 Point Plan over the rest of the year, leading up to COP26, and the third point will be nuclear as a clean energy source. So do please look out for that. But for this, the second episode of The 10 Point Pod, I’ve been Ed Reed. Thank you for listening.

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