Kentaro Hosomi on the importance of hydrogen in meeting net-zero targets

After the Sustainable Innovation Forum 2020, we caught up with Kentaro Hosomi, President & CEO of Mitsubishi Heavy Industries Energy Systems Domain, to discuss the importance of hydrogen in meeting net-zero targets.

Hi Mr. Hosomi, thank you for joining us today. Many of our readers will be familiar with the Mitsubishi brand, but can you just give us an overview of Mitsubishi Heavy Industries? 

The ‘Mitsubishi’ which many are very familiar with today is actually a community of completely independent companies that share a common heritage and set of values. As the name suggests, Mitsubishi Heavy Industries Group operates in infrastructure and heavy manufacturing – anything from energy, transport and logistics to machinery, aerospace and defense systems.

As the President &CEO of MHI’s Energy Systems Domain, what is the extent of the company portfolio you oversee?

Energy Systems is the largest of MHI’s four divisions and contributes around 40% of the group’s $37 billion in annual revenue. Within the Energy Systems Domain, we offer customers a wide variety of products and services across the energy value chain.

While MHI Group is a world leader in highly efficient gas turbine combined cycle systems, we are rapidly expanding our portfolio of green energy solutions, from carbon capture to hydrogen and industrial-use fuel cell technologies. As we announced, MHI acquired a stake in Vestas recently, and we strengthen its competitiveness by integrating offshore and onshore wind turbines.

Net-zero is the goal for many companies and MHI Group is involved in many initiatives, including the “Declaration on Challenge Zero”. Where do you see MHI Group having the greatest impact both as a company and solutions provider to so many industries?

I believe we can make a significant contribution in three main ways. For those customers that are ready to make the leap to zero emissions, we can provide them with integrated systems that allow them to participate in the hydrogen economy. We have been working with hydrogen since the 1970s and have a lot of experience. In Utah, for example, Mitsubishi Power will deliver JAC type heavy duty gas turbines to a utility to commission with 30% hydrogen co-firing in 2025, and eventually making it run on 100% hydrogen. They are also jointly developing the project with a partner to generate hydrogen from renewable energy, store it in vast underground salt caverns and then supply the hydrogen to drive those gas turbines. There are also a number of projects in Europe, where we are working with our clients to convert their gas turbines to be hydrogen-ready. Hydrogen can also play a big role in the race to net-zero emissions with its potential to decarbonise CO₂-intensive, ‘hard-to-abate’ industries. Primetals Technologies, also a part of MHI Group, is working to develop a process for replacing fossil fuels with hydrogen in steel production.

Second, in both the power sector and hard-to-abate industries like steel or cement, carbon capture utilisation and storage systems are necessary to achieve carbon neutrality. As the company with the largest global market share in carbon capture, we certainly have experience in this area. More recently, we are piloting a compact CC system for ships to help create cleaner marine transport.

We can also help companies who use heat as well as electricity in their production process to become more energy efficient and reduce their emissions. We have developed a suite of digital solutions that help power plants run smoothly during load fluctuation deriving from the use of renewable energy and also better manage and predict energy demand, in a factory, for example.

You mention hydrogen as one of the technologies, but there is still debate around green, blue and grey hydrogen. Where is the hydrogen debate going and is it really the silver bullet everyone is hoping for?

MHI Group has been promoting a ‘hydrogen society’ for many years now and we do believe it is one of the fuels of the future. Today hydrogen production is largely based on reforming and decomposing fossil fuel but decarbonization of this production process is an essential foundation for expanding the use of hydrogen.

However, we understand that hydrogen has its challenges: it is expensive to produce; we currently lack the necessary storage and transportation infrastructure; and we need to increase demand in order to achieve economies of scale and reduce its cost.

These issues have to be tackled in combination and through the entire value chain. For example, our CO2-recovery equipment and our new partnership with Hydrogen Pro, a Norwegian company specializing in water electrolysis equipment, will allow us to increase the scale and efficiency of hydrogen production. Meanwhile, our compressors can speed up transportation and improve storage – for instance in the Utah salt caverns I have already mentioned.

We also believe ammonia has great potential as an effective first step toward a hydrogen society, especially in countries like Japan. Ammonia can be transported and stored more easily than hydrogen itself and it is easy to convert one to the other and back again. Ammonia can also be used as a fuel to directly decarbonize thermal power plants, ships and part of industry.

Whilst Hydrogen is clearly a technology for the future, many believe it’s not quite there, how can government and industry work together to realise its full potential?

We believe that hydrogen is the most effective carbon-free fuel to replace or supplement fossil fuels. This is because in the field where fossil fuels are currently used, there is a high possibility that they can gradually be converted to carbon-free fuels while utilizing the equipment and systems used. The expansion of these applications will greatly expand the size of the hydrogen market, making a carbon-neutral society a reality.

We think this works to create sufficient demand for hydrogen, so that the private sector can justify the needed investment in facilities and infrastructure.

So not an instantaneous leap to hydrogen, but a steady transition to convert the existing assets to make it run on a decarbonized fuel mix.

In the early days, hydrogen production will still be costly, and it will also be difficult to effectively transport and storage (the volume is huge!!) In order to accelerate cost reduction, innovation in various fields would be required. Carbon trading and carbon pricing, if those are rightly used towards such innovation, shall also be an effective measure to be considered, as long as they are applied cross border in a fair manner.  

The Japanese government just committed to Net-Zero by 2050, how do you think this will shape businesses commitments in Japan and the wider region, especially in regard to the Japanese energy mix and clean energy transition?

We welcome the pledge and while this is a challenging target, there are multiple pathways to get there. Expansion of renewable energy could play a big role, especially by utilizing the offshore wind and geothermal capacity. Japan, however, is not geographically blessed with competitive natural conditions, and the demand for energy is huge.  In the electricity sector, not only renewables but various technologies, including nuclear, decarbonized fossil power generation and hydrogen need to be deployed to make this energy transition a reality.

But the electricity sector is only 25% of Japan’s total emissions. The rest comes largely from transport and heavy industries like iron and steel, and these sectors will need to invest in new technologies. Companies like ours will work hard to provide solutions like those I outlined earlier. However, I believe we must balance green spending with other societal needs so that it does not crowd out other investment.

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