NOVEMBER 8, 2023

Good morning!

In today's edition: Amena breaks down the hangups on hydrogen demand, Anca has an exclusive interview with an African climate leader and Bill has an eye-popping Data Dive on China’s dominance in exports of critical minerals from Africa.

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Send your energy photos, story tips and more to news@ciphernews.com.

Close-up of hydrogen pipeline valve and storage tanks. Photo credit: onurdongel via iStock.

How to build demand for clean hydrogen

BY: AMENA H. SAIYID

The United States aims to establish itself in the global clean hydrogen race with generous new federal laws to kickstart its nascent clean hydrogen industry.

But hanging over this ambition are fundamental hurdles: Almost no clean hydrogen exists today, and barely any demand either. To fill these gaps, a debate is brewing about how exactly to use the odorless and abundant molecule in the most effective and efficient ways.

“Without robust demand, there is no market, and the viability of the entire low-emission hydrogen industry is jeopardized,” the International Energy Agency warned in its latest Global Hydrogen Review.

The U.S. government announced seven regional hydrogen hubs to collectively receive $7 billion last month. Guidance for generous clean hydrogen production tax credits from the 2022 Inflation Reduction Act is expected by year’s end.

The U.S. currently produces about 0.2 million metric tons (MT) of clean hydrogen a year. That’s just a minuscule fraction of the overall 10 MT of hydrogen produced in the U.S. today, which comes nearly entirely from unabated oil, natural gas and coal, according to consultancy Wood Mackenzie.

For clean hydrogen production, the U.S. Energy Department has set a goal of 10 MT by 2030 (about the same amount of all hydrogen today) and 50 MT by 2050.

Despite generous federal subsidies and other policies, companies that use hydrogen — such as oil major ExxonMobil and chemical giant Dow — are not yet shifting entirely to cleaner hydrogen mainly due to the high costs compared to the fossil-fuel kind.

While the new tax credits could help some, experts say the price gap still persists primarily because there’s no mandate or price on carbon emissions that would more forcefully compel companies in that cleaner direction.

“The U.S. has the most attractive market for hydrogen production, but the issue is that we don't have an attractive market for hydrogen demand,” Bridget van Dorsten, senior research analyst with Wood Mackenzie’s hydrogen group, wrote in an email to Cipher.

Besides niche deals, like one where New York-based startup Plug Power will supply renewable hydrogen to fuel forklifts, vehicles and power distribution centers for Amazon, she said, “we haven't seen much traction on the offtake side.”

Clean hydrogen can either be made by splitting water molecules with renewable electricity in a process known as electrolysis or from natural gas equipped with carbon capture and storage technology.

Because of its chemical versatility, hydrogen can technically be used in many ways ranging from industrial applications to transportation to power generation, but experts say that doesn’t mean it can be used economically in all those ways.

Clean hydrogen should be prioritized for situations where energy efficiency and direct electrification are not possible, like steelmaking and fertilizer production, according to experts at RMI, an energy nonprofit.

Click here to see how we break down the ways hydrogen is used in the U.S. today, and the way experts say it could — and should — be used in the future.

Lunchtime Reads and Hot Takes

We need a new kind of climate diplomacy — Prospect
Bill’s take: Global climate diplomacy is inching out of the era of the Paris Accords for many reasons. But a new, or at least complementary, path hasn’t really emerged. This is something of a start.

Just 4% of top companies meet UN climate target guidelines, study says — Reuters
Anca’s take: Half of the world's biggest listed companies have set a net zero by 2050 target, but the devil is in the details, as they say. And this is such an important detail to look out for beyond flashy statements and rhetoric.

The low-carbon energy transition will need less mining than fossil fuels, even when adjusted for waste rock — Sustainability by numbers
Amy’s take: This is such an important and overlooked point: Yes, clean energy requires a lot of new material — but not as much as what we currently need with fossil fuels.

China steel association says EU carbon tax a new trade barrier, calls for more talks — Reuters
Anca’s take: As the new EU rules move closer to reality (a trial stage began in October), expect these kinds of messages to increase, as Europe works to put its industries and foreign competitors on a level footing.

‘Loss and damage’ deal struck to help countries worst hit by climate crisis — The Guardian
Amena’s take: This agreement, which the UN COP28 summit has yet to endorse, stops short of resolving the stickier questions: who will contribute to the fund and how much will be needed and by what date.

Green energy investment headwinds threaten Joe Biden’s climate targets — Financial Times (paywall)
Bill’s take: The challenge here isn’t so much keeping the energy transition going — it’s all but unstoppable at this point — but getting it going fast enough to beat back global warming.

Years into a climate disaster, these people are eating the unthinkable — The Washington Post
Amy’s take: I couldn’t stop reading this article when I started. It’s a tragic and important story told on the ground about what poorer nations are grappling with.

Hawaii is New US Hotbed of Legal Activism to Protect Climate — Bloomberg Law
Amena’s take: Hawaii, with its precolonial tradition for resource protection, is setting a precedent for other U.S. states as well as other Pacific Island nations being hit hard by global warming.

German finance minister rejects 2030 coal exit without affordable and secure alternatives — Clean Energy Wire
Anca’s take: This move is a bit of a reality-check from Europe’s largest energy consumer, highlighting the challenges of juggling energy costs with climate ambition.

China’s Coal Boom Includes 775 GW Of Shelved, Canceled, Or Closed Plants — CleanTechnica
Bill’s take: China continues to raise both fears and hope. Its coal capacity is climbing. But will future consumption and emissions from it go up? That’s less clear, but no less critical to global climate goals.

More of what we're reading:

• BlackRock to invest $550 mln in Occidental's carbon capture project — Reuters

• Global fossil fuel production plans far exceed climate targets, U.N. says — Reuters

• Senate Republicans introduce a climate bill — aimed at China — POLITICO
• Why some of the ‘clean’ hydrogen hubs in the U.S. plan to use natural gas, a fossil fuel — CNBC

African energy leader calls for reality check on minerals extraction

Amani Abou-Zeid, commissioner for energy and infrastructure at the African Union Commission, speaks on a panel at an energy conference in Vienna in November 2023. Photo credit: ©️UNIDO/juhasz.

BY: ANCA GURZU

VIENNA – Africa’s energy commissioner has a message to countries ramping up their clean technologies: Be careful what you call “green.”

The world is failing to pay sufficient attention to the energy-intensive practice of mineral extraction, which takes place under questionable human rights and working conditions in many low- and middle-income countries, Amani Abou-Zeid, commissioner for energy and infrastructure at the African Union Commission, told Cipher in an interview last week.

The commission is the executive and administrative branch of the African Union, an intergovernmental organization that promotes growth and economic development made up of 55 countries and headquartered in Ethiopia.

“If you look at the supply chain, I fail to see where the green part is,” she said. “How can a battery be called green under these conditions? How can an electric car that runs in Canada or in Norway or in France be called green? … Once it’s manufactured and on the road, yes, but if you look at the whole process it’s not really like that.”

Abou-Zeid, an Egyptian national, made the comments on the sidelines of the International Vienna Energy and Climate Forum, which gathered thousands of delegates in a 13th century palace in the Austrian capital to discuss how to scale up climate solutions in low- and middle-income countries.

As the world shifts away from the legacy fossil fuel system, green technologies and infrastructure will drive increased demand for many critical minerals over the coming decades, as Cipher previously reported.

Critical minerals like lithium, copper and cobalt are at the core of the world’s ambition to put more electric vehicles on the road, line more rooftops with solar panels and dot fields and seas with powerful wind turbines.

Africa is a mineral-rich continent, receiving increasing attention from wealthy countries keen to tap its resources. The continent has roughly 85 percent of the world's manganese, 80 percent of the world's platinum and chromium, 47 percent of its cobalt, 21 percent of its graphite, and 6 percent of its copper, according to the Center for Strategic and International Studies.

Read the full article on Cipher’s website.

Africa’s critical minerals could play bigger role in U.S. energy transition

Source: Carnegie Endowment for International Peace • Authors' calculations from World Bank and other data.

BY: BILL SPINDLE

The Biden administration’s new industrial policies to promote clean technology and build manufacturing at home offer African countries new opportunities to boost their economies, balance China’s growing influence on the continent and bolster manufacturers in the United States, according to recent research from the Carnegie Endowment for International Peace in Washington.

Africa has received unparalleled attention from China over the past two decades. China has turned to the continent to fill an ever-greater share of its critical minerals needs as the Asian economic powerhouse has become the world’s dominant manufacturer of clean energy technologies, from solar panels to batteries to electric vehicles. Meanwhile, U.S. imports from the region have stagnated.

Layered on top of these trends is growing concern over human rights in the region, as articulated by a top African climate leader in the Cipher story above.

The Carnegie researchers suggest three ways the U.S. could counter this trend by working with African countries.

First, the U.S. could partner with African countries to directly acquire the metals and minerals required for battery manufacturing. The U.S. mines virtually none of the lithium, cobalt, nickel and graphite needed to make electric vehicles. Instead, the U.S. imports from China between half and all of the processed minerals for more than 10 of the 50 minerals the U.S. government designates as critical to the energy transition.

New U.S. incentives under the 2022 Inflation Reduction Act push manufacturers to source minerals domestically or from free trade partner nations, which don’t include African countries. But there are exceptions and additional programs, such as the African Growth and Opportunity Act, can open the door for imports from Africa, the researchers say. Countries that might take advantage of such initiatives include Ghana, Mali, Tanzania, Namibia, Zambia and South Africa.

Second, the report argues African countries, including Morocco, Namibia and South Africa, can boost research and development ties with the U.S. government and industry, especially in areas like the hydrogen industry to help grow their economies and expand energy access.

Finally, African countries could work with U.S. government agencies, such as the U.S. Geological Survey, to better map out where critical minerals exist and how to access them, increasing global supplies.

AND FINALLY...
Butterfly food

Anca took this photo of a small greenhouse tucked away among trails and forests in Ottawa, Canada. The greenhouse warms the plants and insects inside to observe how climate change could affect the flowers and the quality of the nectar. The experiment is conducted by the University of Ottawa and Environment and Climate Change Canada.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.