From the Editor: How time flies [GasTransitions]
This does not just apply to our personal lives. Think about how we work today compared to 10 or 20 years ago. I still remember going to conferences …
The global energy system, vast as it is, is slow to change. Yet change it does. I remember when the Top-10 of the Forbes Top-100 companies included half a dozen oil companies. Those days are gone forever.
In the first week of October, the market value of a company that says it’s the biggest producer of wind and solar in the world overtook what long used to be the world’s largest company, ExxonMobil. What producer is that, you may ask? Florida-based, aptly named utility NextEra Energy.
As energy analyst Robert Rapier wrote in Forbes: “If you had invested in Florida-based utility NextEra Energy a decade ago, your total return through this week, including dividends, would have been 600%. That is a phenomenal return for an energy company. In contrast, if you had invested in ExxonMobil a decade ago, you have seen the share value decline by half. Add in the dividends, and the total 10-year return of ExxonMobil is -25%.”
The Financial Times noted that NextEra reported net profits $1.7 billion in the first half of this year and sold 14 GW renewable capacity, a tripling in two years. ExxonMobil inked a loss of $1.7 billion and was kicked out of the Dow Jones Industrial Average.
The same stupendous change happened in the automobile sector in June, when Tesla surpassed Toyota to become the world’s mostly highly-valued car manufacturer. Tesla now is worth over two times as much as Toyota and over five times as much as Volkswagen.
So you think hydrogen is not going to replace natural gas? Maybe you’ll want to think again.
In Gas Transitions we keep track of the rapid developments in the global hydrogen market. We focus on news that we think is significant as indicators of where the market is going. For instance, that German utility RWE is considering converting its German gas storage sites to be used for organic flow batteries. That Dutch gas TSO Gasunie is building an underground hydrogen storage facility and preparing to launch a hydrogen spot market in the Netherlands.
That Mitsubishi in the US won an order to manufacture three hydrogen-compatible turbines for gas power plants. That the sober analysts at Wood Mackenzie believe the 2020s will be the decade of hydrogen and that Woodside Petroleum, Australia’s largest independent oil and gas company, is pushing ahead with large-scale renewable energy projects and studying prospects for the large-scale export of hydrogen in the form of ammonia.
What does this mean for gas? Natural gas could play an important part in the hydrogen economy as a source of hydrogen – if it is combined with carbon capture and storage (CCS). But CCS, as we also report in this issue of Gas Transitions, is still making little headway. The IEA and Columbia University’s Center for Global Energy Policy have both published reports calling on governments to do more to make CCS fly.
But what about gas companies themselves? Are they doing enough in CCS? In whose interest is it to get behind CCS and make “blue hydrogen” a wave of the future?
Interestingly, the German government, as we also report, has indicated it wants to “re-open” the debate on CCS, which is currently forbidden in that country. That’s a significant sign. Clearly Angela Merkel and her team would like to see their future hydrogen economy, which they have already signed on to, based at least in part on natural gas.
There seems to be an opportunity here. A window of opportunity that is. Remember, time flies – especially when you are having fun.