Climate Action

Stephen Matthews on the greatest challenges that face the development of hydrogen economies

Climate Action caught up with, Stephen Matthews, Director of Business Development at ERM, to discuss the greatest challenges that face the development of hydrogen economies.

  • 09 December 2021
  • Rachel Cooper

What are the key points about your organisation’s involvement with hydrogen? 

ERM is involved extensively in hydrogen both as client adviser and as a developer of technology solutions. On the advisory side, ERM provides services across the energy transition landscape including strategy and planning, technology and market evaluation, M&A and finance, deployment and operation, and reporting and disclosure. Hydrogen is a core part of this, and our business has been augmented by recent acquisitions in this space, such as Element Energy, E4Tech and the Renewables Consulting Group. On the technology solution side, ERM’s Dolphyn project, developed in partnership with the UK government, is an example of a first of its kind, innovative technology, which brings together the latest floating wind and hydrogen technologies, to deliver ultra-low carbon hydrogen at scale, and an economic cost. We are also developing technology solutions for transporting hydrogen cost effectively and safely on land and via shipping. 

Can you give an overview of how hydrogen is being – or is going to be used – to decarbonise energy – through your organisation’s work? 

ERM has been helping clients navigate the transition to a low-carbon economy for many years, and now more than ever, low carbon hydrogen is playing a pivotal part in future planning. Hydrogen will play an increasingly central role in providing a sustainable low-carbon energy mix for domestic, commercial and industrial purposes. It will also play an important role in low carbon transport and will be an important feedstock for industry. Through our work with clients, we aim to help them harness hydrogen’s potential to decarbonise their assets and the businesses, as part of their net zero strategies. Presently, over 5,200+ businesses and 450 financial institutions are now signed up to the UN ‘Race to Zero’ campaign; committing to halve their emissions by 2030 and to reaching net zero by 2050. Low-carbon hydrogen will be a material component of success, and it is estimated that it could provide as much as 25% of the world’s future energy mix by 2050.

At COP26, ERM has made our own a hydrogen pledge as part of the H2Zero initiative, led by the World Business Council for Sustainable Development and the Sustainable Markets Initiative. Through projects such as ERM Dolphyn, we intend to enable the GW-scale production of ultra-low-carbon hydrogen by 2035, while also continuing to help companies implement hydrogen-based solutions. 

What, in your view, are the greatest challenges that face the development of hydrogen economies? 

In the post-COP world, it’s clear that low-carbon hydrogen will be an essential element of net zero strategies the world over. The challenge now is rapid deployment at scale. Many governments and businesses have set net zero strategies and are clear about where they need to get to. However, they are often less clear about how specifically they will deliver on those promises, or how they can work with others to achieve deliverable investments that synchronise and optimise hydrogen supply and demand needs. Our depth of technical knowledge and our breadth of expertise on hydrogen projects and investments are often valued greatly by our clients, as it allows them to move into unfamiliar areas with a high degree of confidence, gained from our real-world experience. Our team of experts (bolstered by recent acquisitions) and demonstration projects like ERM Dolphyn provide us with a wide-angle view of the hydrogen opportunity, the practical challenges that clients face and the routes available to achieve successful outcomes. From speaking to clients, ERM’s ability to deliver a ‘boots to boardroom’ approach is much valued.

What government policies or funding arrangements would be helpful?  

In many ways hydrogen is in a similar position to offshore wind, solar and other renewable energies a couple of decades ago. Government subsidies will be essential in the near term in order to help the sector develop quickly and achieve the kind of scale that will make it even more attractive to potential investors and will help to bring down the unit costs of production. Of course, clarity over long-term government policy will always be helpful as the sector scales, but in addition we need to ensure we are taking an ecosystem-wide view here. We need additional capacity in R&D, skills development, technological innovation, supply chain development, planning etc. All of these areas are important for the hydrogen ecosystem to flourish. Ultimately however, if businesses and the finance community take the initiative, and are bold in their strategies, plans and pledges for hydrogen, this will deliver confidence to Governments and other key Institutions. It is then almost inevitable that policy development will evolve more quickly and coherently across geographies.

How can we be sure that we’re not just ‘talking about’ using hydrogen in five years’ time – but are realising the benefits that it can bring? 

Post Cop26, this debate has moved on.  The majority of forward looking investors, governments and industrial organisations have now accepted that there is no net zero future without hydrogen. Many organisations have made specific pledges and are rapidly moving ahead with their investment plans.  There is a long way to go, and there will be winners and losers, but the tipping point has been reached, and in five years’ time it is inevitable that there will be substantial progress made in the hydrogen sector. The winners will be characterised by investments that synchronise supply and demand, most probably through cross-sectoral partnerships, building scale and market opportunity through early stepping stone projects, which allow supply chains to grow. Industrial clusters provide a real area of opportunity that will provide the catalyst for growth.   

What are your hopes in this area? 

At ERM, we will be looking to work with those organisations that are bold in their thinking and fully committed to decarbonisation.  We are confident that these organisations will see their market value grow substantially. There are great parallels here to the technology sector, and the scale of opportunity is perhaps even greater. We hope that businesses and governments work together in way that delivers not only economic value, but also great social value through job creation, learning and development and community engagement.  From a collaboration standpoint, we’re already seeing our clients collaborating within and across sectors in a non-competitive way, working together at pace to find ways of deploying hydrogen-based solutions and sharing knowledge in a way that does not always happen easily. Our hope is that this spirit of collaboration endures and that we develop a hydrogen ecosystem that drives low-carbon energy transition alongside economic and societal prosperity.  

 What nation / organisation do you think is leading the way – regarding the use of hydrogen – and what can you learn from this / emulate? 

Many nations and organisations are leading the way – it would be unfair to highlight any specific ones.     We would however say that nations with clear hydrogen strategy and a strong commitment to supporting early stage investment in first of a kind projects will be the most successful. From a company perspective, the leaders are those who have showed themselves willing to move quickly and with purpose, who want to work with others and have a core belief in positive change. Those that have already made hydrogen pledges, including as part of the WBCSD initiative, are clearly showing the way here.