One of the largest News Agencies recently asked me about the Energy Transition. These were some really tough open-ended questions: “What are the industry challenges and solutions,” “the key trends and developments“, What are the Challenges I face,” then “What critical solutions are there to the challenges” and finally “What value and guidance would you offer.”

The energy transition is a vast, complex area to view. I took a deep breath and thought about how I would break this down over a discussion of only 45 minutes. I decided to break it down into bite-size chunks such as Key Challenges, Worries, Big Ticket issues, My working issues, and finally, How the energy industry needs to get organized.

On reflection, I realized how many more points I could have raised or explained. Still, the structure of my breaking this down allows for some further thinking and additions that help me build this out, as many struggles with absorbing this energy transition, and I can build on my initial reactions here. Well, that is in my plans going forward.

Key Challenges

I put these into different bullet points.

+We get far too much-mixed advice (it often freezes us)

+Energy is a very closed-up industry- it does not open up its thinking to others for easier transformation

+The need to evolve (global) standards as quickly as possible (for faster adoption)

+Absorption of knowledge and its pace often is overwhelming

+The clarity of different assessments (vested interests, independent views)

+The struggle of individual needs and solutions fitting “standard” offerings

+There is a heavy reliance on peering through the engineer’s lense or mindset, often shutting out broader thinking, especially the customer side on their needs.

+Lack of insight sharing on what works, what is happening, and what is progressing (no great “go too” resource) for broader knowledge understanding.

+Government or Regional Authority issues, different understanding or awareness and the roadblocks of the “lead/ lag” on. this

Worries

• The pace of change
• Level of technology pace, understanding, roadblocks, coming down the pipeline
• Global / EU/ US / Asia, Regional and Local political and economic conflicts
• Regulations are constantly catching up, causing uncertainties
• The Bureaucracy of all the different engaged agents and bodies
• Engagement and involvement of the ultimate consumer

Big Ticket Items

+The swirling, whirling Climate Issues- opinions, facts, fiction and growing realities

+The Green Deal views and Fossil to Green Renewables- the managing of this carefully

+Resilience is the need to achieve in any forward-thinking

+The issue of circular transformation to recycle, repurpose etc.

+The growing worries over Grids, their design, their ability to transmit and distribute for different energy sources and managing central and decentral demand of peaks, storage and troughs.

+The breaking down of the Global supply village and the old value chain dependencies

+Critical rare components, minerals and metals- location, quantity, environment impact and price volatility

+The Electricity needs, scope and coping in this lengthy transition (what is chasing and reconfiguring to what)

+Building constantly for sustainable energy, at what cost to the immediate and the in-between

+Accelerating the digitalization for Energy and building Data reliance

+Demand, Growth and Prosperity are optimistic in change but realistic in reality.

+Securing the Energy Transition- the rhetoric, hype and realities, individual or national- who chooses

My issues

• Energy is a “laggard” in innovation creation, transfer and adoption- it needs a structured process.
• Risks and the barriers of a) Regulatory, b) Financing, c) Enabling infrastructure, d) Social, and e) Cultural constantly do not get evaluated as robustly as they should
• The New Technology Understanding is often piecemeal and driven by the strongest internal voice.
• The ability to listen broadly, the time to read and learn, the time to discuss specifics (outside events)
• Knowing the capabilities, competencies and capabilities in resource, knowledge, and capital internally is often lacking in clarifying context or scoping (and more on briefing external advisors)
• I don’t have time; I need resources and a better platform for helping, advising etc.

The need to get the Energy Industry organized

+The fantastic work of many from IEA, IRENA, UN etc., down through all the think tanks, market intelligence and analytics offered is utterly overwhelming to absorb and translate- global source Energy Wikipedia?

+Central sourcing of Independent funding, criteria, broader acceptance of returns of value

+Instruments, Institutions and the variability of (success) measurement stops promising concepts.

+The need for better roadmaps for key industry transitions, constantly updated, not once a year if you are lucky, and it is of interest to more than a few

+The opening up of public procurements, differences, complexities, resolutions

+Early stage accreditation, experimenting and prototyping methodologies and universal guidelines

+Super transparency of Research and Development, not one-liners placed in an annual report

+The pursuit of standards at national, regional and global levels needs resourcing and directing as it is constantly developing at periodic steps (CoP work, perhaps)

+The CoP meetings need to be SPLIT- experts in one, influencers in another, then finding the assessed middle ground where local politics or lobbyists join the fray ( hope is certainly a fine thing here!)

Summary

If you notice, I avoided or did not even want to get into debates about fuels, generation options, storage, utilization, consumption or the mind-draining points covering distributed, dispatched and variables etc., in a fairer, equitable world, all needing energy.

A lot of knowing where to start is to partly do with anyone’s embarking points and their energy journey, as I have outlined; that is why I invest so much of my time in research and translating this Energy Transforming narrative into a real understanding of its multiple parts.

So how many of these was I able to get across- don’t ask! Hence why I’ve written this post. Therapeutic, perhaps or just simply how hugely challenging and complex the Energy Transition is to grasp and translate as my posting site states; “Innovating the Energy Transition, a transition in all of our lives in knowledge, application and discovery.“

The post Thinking about the Energy Transition first appeared on Innovating the Energy Transition.

This has undoubtedly been a year where the Energy Transition has felt, more often than not, thrown into reverse.

In Germany, coal mines have been reopened, and nuclear power stations scheduled to be decommissioned been given an extended lease of life. Nearly all EU countries, very dependent on Russian oil and gas, have been scrabbling like crazy to find alternative sources, all at rising prices and growing difficulties in finding supplies. The cost of energy to the consumer has risen significantly, and many Governments have been forced to offset winter bills with different incentives, payments or credits that will be highly expensive, so where does that cost come from, and what gets sacrificed?

France struggles with a rapidly ageing fleet of Nuclear power plants and the issue of how many of these can be up and running and functioning at levels to maintain power to their network and be able to support neighbours at times of their need.

The UK Government announced this week it’s the first opening of a new open coal mine in Cumbria a year after the UK lobbied to ‘consign coal to history. The developer, West Cumbria Mining, said it was “delighted” it could now deliver what it called “the world’s first net zero mine”. It plans to offset the emissions from the construction, mining and domestic transport phases. I hate the word “offset”. West Cumbria Mining says the coking coal it produces will be used for steelmaking in the UK and Europe. The local council had granted permission to dig for coking coal until 2049, with the mine expected to create about 500 jobs.. Yet the two prominent companies that still make steel using coal in the UK – British Steel and Tata – say they plan to move to lower carbon production methods. According to the UK Telegraph, this Cumbrian coal mine is economical and diplomatic idiocy.

LNG has taken on an entirely new lease of life, with shipments from the Middle East suddenly backing up and waiting around Europe to be offloaded as Europe rushes to increase their LNG receiving facilities. Many renewables, offshore wind, off the Northern coastal part of Europe are attempting to send power closer to the places of industrial or urban need.

The US has suddenly transformed itself within its energy approach.

The Inflation Reduction Act (IRA) of 2022 is the good news of 2022, this act makes the single largest investment in climate and energy in American history, enabling America to tackle the climate crisis, advancing environmental justice, securing America’s position as a world leader in domestic clean energy manufacturing, and putting the United States on a pathway to achieving the Biden Administration’s climate goals, including a net-zero economy by 2050.

The location of COP27 this year highlights the importance of the Africa and Mid-East regions on global net-zero objectives. Africa is set to take an increasingly pivotal role in the energy transition. Both its greatest challenges and most significant opportunities lay in the fact that its energy infrastructure is still largely under development. Thus a transition towards greener energy alternatives is highly feasible. The orderly energy transition could then unleash the crucial economic growth that the region is committed to, per the 2063 Agenda, becoming an economic, social, and climate win-win-win scenario.

There was a strong view that CoP27, held in Egypt, failed.

There is no doubt that countries could’ve done much more. It is also unquestionable that powerful actors, petro-state governments, and the fossil fuel industry are to blame for the insufficient progress made in Egypt. 

Compared to Glasgow’s CoP26 summit last year, fossil fuel lobbyists joining the climate talks in Egypt rose 25%, amounting to 636 people lobbyists. “The influence of the fossil-fuel industry was found across the board with the Egyptian Presidency of CoP27 producing a text that seemingly was protecting oil and gas petrostates and the fossil-fuel industries. This trend cannot continue in the United Arab Emirates next year for the CoP28, but the UAE is one of the fossil fuel giants. At present, it does not auger well.

The world has already warmed by 1.2°C above pre-industrial levels, and meeting the 1.5-degree target would require far more ambitious pre-2030 emissions cuts. Many experts and negotiators at the CoP27 felt this was the COP where we lost 1.5C as the target and began the significantly different debates on mitigation, which will, in the end, have a much higher, more devastating price to pay, in recovery, loss, disruption etc.

With its lower economic activity, caused mainly by a constant focus on controlling Corvid, China has not been so in the global market for oil and gas. That will change in 2023, and that added pressure of chasing less gas and oil globally will see the continuance of prices rising. Energy price protection costs are rapidly eroding the funds that would have been moving into the continued renewable changes we need.

We are pushing more Carbon into the atmosphere, goodbye 1.5C as our target

So we are pushing more carbon into the atmosphere due to the current Russian position on continuing the war on Ukraine and boycotting supplies.

Finally, our grids are under increasing strain, as power balance, effective responses, grid infrastructure limitation and present solutions are at a knife edge for possible blackouts and power shortages here in Europe. Power consumption and power generation are among the most difficult balancing acts for the winter of 2022/23. We can have severe bottlenecks in curtailment and activated response, insufficient transmission capacity at time of need and limited reserve capacity. Grids will operate under constant stress during these coming months.

Facing the challenges at the end of 2022

At the end of 2022, we will face more of the same issues as before but at heightened levels of risk.

In summary, we still have to continue to deal with ageing or outdated energy infrastructure; we are grappling with growing supply chain failures delaying changes into renewables we would like. The cost and availability of the raw materials to build at competitive prices new wind turbines, electrolyzers, solar, and batteries, all reliant on rare, expensive and limited raw materials, is yet to peak.

We continue not to inform the public in ways they increasingly support the need for a rapid energy transition; we have public opposition and permit delays and constraints due to multiple bodies required to approve any new energy project. A lack of streamlining or even harmonizing is a real drag on making change. The environmental impact always needs assessing, but the time, cost and vested interests are hard to modernize or adjust.

There is still a severe lack of funding for new technologies, renewables etc. The business models for renewables are still very immature, and the lack of (guaranteed) returns to investors, banks, institutions or venture companies needs some higher levels of underwriting by the Governments to change this.

Four other aspects are also holding back the energy transition.

The increased complexity of power grids is yet to be recognized as equal in importance to the shift from fossil fuel to renewables, not just due to variations but the technical abilities of distributed grids that need different designing. Cables, substations, switches, and thermal load limits require a radically different design.

The threat of cyber-attacks is a continued threat. When you are in the middle of substantial change, these become higher as you need to open up previously closed loops to accommodate new apps for monitoring, measuring and greater visibility.

We increasingly have extreme weather events, and the ability to build greater resiliency into the energy system is highly complex, expensive and time-consuming to change. With growing floods, fires, severe snow and ice storms, ground slippage etc., energy companies have their hands full in being able to respond and have spare parts on hand, anticipating what?

Lastly, our project management and development remain poor. We constantly reinvent the wheel, duplicate resources, and face difficulties in knowing if the solutions offered are the best of breed or a passing bridge solution. We lack a global “clearing” house to provide knowledge and understanding as the marketplace for competitive solutions is far from easy to compare or determine if they are the right fit for today’s energy system, let alone for one in 5, 10 or even 20 years with regulations changing, technologies still emerging and visualizing final supply/demand needs.

So for me, 2022 has been an actual energy crisis year. I have only touched on a group of issues.

McKinsey, in one of their constantly “encouraging” reports, suggests we have a nine-step problem-solving framework for debating (in my view, we need to be past debating!) and addressing barriers to unlock 1) Physical building blocks, 2) Commitments and enabling mechanisms and 3) economic and social adjustments.

Oh, I wish it was that easy, putting all the energy transition and its multiplicity of complexities into nine building blocks. Still, we struggle to offer broader problem-solving frameworks or detailed roadmaps, let alone common language and KPIs.

Maybe my wish for 2023 is that we can find the best, orderly energy transition, but with what we have been going through in 2022, that might be wishful thinking. It is so complex, challenging and presently in crisis.

Role in 2023, let’s put the Energy Crisis of 2022 behind us.

The post Wrapping up the Energy Crisis Year of 2022 first appeared on Innovating the Energy Transition.

I need to remind myself that my objective is to focus on different aspects of innovation needs within the energy transition. It should be simple for me, but it certainly is not!

The sheer scope of the energy transition often pulls me away in so many different directions from my innovation focal point. Equally, it can force me as a necessity to understand a significant amount of advice, detail and opinion, so I can far more appreciate where innovation has an even more significant potential to contribute.

I keep constantly investing my time in growing my further understanding, expertise, and thinking of energy transition ‘cross-over points’ where we move away from the old energy systems into the new ones.

This knowledge understanding provides some distinctive and inter-related “core” topics, which are admittedly time-consuming but essential based on the in-depth research undertaken.

What I look for is where innovation has a more catalytic effect as these might become ‘flash points’ of future challenges that need a new level of creative or innovative thinking.

The whole Energy Transition has been a growing platform to apply my innovation learning and ecosystem thinking. There are so many inter-related topics, and you have to make choices?

I have decided to narrow these inter-related topics to focus on critical areas that impact any successful energy transition.

The topics I will focus on are shown below. I have also provided links to some of my previous thoughts or views to build out these focal topics.

The critical focal points I have chosen to concentrate upon.

-Firstly on rare minerals and the impact the extraction and use these have within any future solutions requires a radically different approach to the extraction, use, disposal and will have so many fluctuating issues in the years to come,

-Secondly, the growing importance of the (smart) edge for a greater distributed energy architecture.

-Thirdly, the hydrogen story is taking off. Electrolyzers are a place for invention, research, and increased development are coming together for solutions that have more significant scaling potential and innovation.

-You have the whole topic of power generation. The shifts, structures and positioning are ripe for innovating at individual levels to resolve legacy and location and energy sources, and the solution “fits”—Nuclear, wind, solar and hydropower.

– The recognition and investment need for wholesale change in Grids and the growing value of microgrids where the adaptability and flexibility and the emphasis on robustness and resilience grow in importance.

-Storage and batteries have such an important role to play in any new energy system design. They deliver the “response” rate and much of the stabilities we require in any newly designed system.

-No one can avoid decarbonization as a topic to understand and see the need for greater carbon capture and natural solutions. My post “Themes for decarbonizing, my agenda setting post“ offers my thoughts here.

-Lastly, within this current focus area, it is necessary to keep relating to all the complexities of the climate crisis. These ongoing crises will accelerate and progressively alter so much of the energy transition, the timing of investment, and increasing understanding of impact and risk assessments.

Hard choices for all involved.

Choices are needed everywhere in the difficulties of what to invest in and when. These include facing up to the decisions required regarding when to dispose of assets and how to treat these within the P&L, especially in the growing area of stranded assets—recognizing the necessary shifts in structures and the challenges within current business models.

Also, understanding the why with the ‘evolving state and risk’ of the options needed and what options are available to deploy within this deteriorating environment is fraught with issues and business impact.

We are faced with increasing volatile times over the coming decades before any reliable stability returns. The growing recognition and urgency need multiple ‘voices’ and contributions to help those in decision-making roles to gain more significant insights and awareness of the implications.

Implications need to have a more informed, independent understanding. Then, decision-makers can execute their decisions with growing knowledge, in more effective and efficient ways.

Often, it is not recognized that innovation, in the age of disruption and radical change, equips the organization and person far better than often realized.

Each of these focus areas above is massive in its own right.

Simply each of these topic areas has the absolute need for innovation. My other focus area of ecosystem design is to create value, deliver impact and find improved ways to collaborate and learn and gain from increasing collaborations, knowledge and application.

It is finding impactful ways, as they all become interconnected for any business to advance on their journey of understanding delivering sustainable growth and new business potential.

Risk and opportunity are the two sides of the innovation coin.

My focus due to the innovation aspect naturally falls far more at the Front End Of the Energy Transition, at the discovery,  development and validation stages, as this is where innovation emerges.

Today, I see and believe that there is a real gap in many organizations by not having the robust innovation capability, capacity, and competency needed, recognized, well-established and firmly in place.

The magnitude of change required means greater reliance on researchers, scientists, and engineers and their need to ramp up to a whole new performance level. The attention to innovation throughout all of our organizations needs to become a shared sense of purpose, involvement and commitment to contribute.

I have worked in innovation advisory work for over twenty years, advising and transforming the activities and awareness, to help fill those poor understanding gaps of lacking comprehensive approaches to capabilities, capacities and competencies in innovation and the tools to drive change throughout organizations. Innovation is rarely treated as core, and it should be as change emerges from the dynamic environment that promotes innovation.

A critical decision time for Energy requires a different and radical mind shift.

We are presently at a critical decision time; the level of investment needed to achieve this energy transition is massive. The current estimate to create a safe climate system is the need to invest USD 140 trillion of new investments in the energy sector by 2050.

Much of the investments need to be directed away from fossil fuels (the primary carbon emitters) into clean technologies. It is renewables, including most power generation and end-use applications, that need to invest primarily through new generation sources of wind, solar, hydrogen, and biofuels.

This level of investment commitment will radically alter the energy landscape, where Energy is generated, by what means, and how it will be distributed, stored and consumed by us all. I am working on energy fitness landscapes as a way to plot and execute around.

Presently we are not making the essential investments we need to make.

We are all becoming painfully aware that the period until 2030 is absolutely critical for investments not just to be pledged but effectively deployed on the ground in the physical solutions and effective operation needed to make this energy transition required on track to reach the climate goals.

Innovation is critical in this energy transition. I have a clear role to play.

We need to move from research and development through engineering validation into pilot and scaling solutions, at speed, requiring a different innovation approach from discovery to execution.

What is recognized increasingly is that we do not have the luxury of evaluating radical change over standard lifetime returns or observing others over the years, we need to be highly proactive in innovation from discovery to final execution at scale. There is the need to raise validation and take higher risks than in more stable times.

We need to be more pioneering. Without a coordinated and leadership direction, the efforts and the risk will always remain cautious without guarantee or point of crisis. Scientists, engineers and researchers are, by nature, often conservative. There is a need for leadership to instil the imperative to reevaluate risk, seek out opportunities at high speed, and push for discovery and experiment constantly.

We also need to encourage this different mind shift of acceptable risk. Having an innovation mindset helps.

So for me, the energy transition is at the forefront of “cutting edge” innovation to deliver; this is why I have been increasing my attention to understanding, investigation, research, and become more immersed in the changes and challenges, issues, and barriers.

I need to emphasize my positioning and what I offer in innovation system design and building knowledge and expertise. To support and help deliver innovative solutions, I suggest my multipliers for innovation at the front end of the energy transition.

The ability to help discover, see and effectively manage the change in solutions and recognize and build out the business case for building a more robust and sustaining innovation system is critical for the future energy transitions we need to find and then put into place.

As I said in the opening to this post: I need to remind myself that my (sole) objective is to exclusively focus on different aspects of innovation” to help in this energy transition.

I need you as the vehicle and mechanism to deliver! I deliver innovation understanding and capability as the business promise return.

The post Understanding the innovation needs of the energy transition first appeared on Innovating the Energy Transition.

We are presently seeing the vulnerability of the European markets to supply dependence and especially risks of reliance upon Gas from Russia. So how much is Europe dependent on Russian gas?
The EU is so dependent on it, and because it has committed to limiting its greenhouse gas emissions. The EU imported 155 billion cubic meters of natural gas from Russia in 2021, almost half (45%) of its gas imports and nearly 40% of the total amount used, according to the IEA.

There is currently a real scramble to change the dependencies due to the Russian invasion of Ukraine and the implications to Europe, and this growing recognition that Europe is faced with a real energy crisis for the next decade.

The current “talking up” of replacing oil, coal and gas with renewables of wind, solar, green hydrogen solutions (PEM Electrolyzers), new grid infrastructure and battery storage means potentially some very volatile and disruptive energy management problems in the short to medium term.

Over now for the next 10 years replacing existing energy generating solutions, dependent on oil, coal and gas with ones based on renewable solutions needs to be even more central to energy management.

But we also need to be recognizing the next crisis following this present one, that is rapidly coming towards us is the dependences on essential minerals and who controls these and that is China.

As the EU attempts to solve this Energy Crisis it is moving into the next one that is possibly worse.

Yet once this crisis gets resolved and that will require a very intense energy transition over the next three to five years with all the social, political and infrastructure issues to manage in radical ways we will enter the next energy crisis: the reality of securing the essential minerals needed for the solutions offered today for the clean energy transition.

In reality, we are moving from one current dependence on oil and gas into another dependence trap of obtaining the present essential minerals needed for batteries within electric cars or to support renewable storage, green hydrogen solutions, solar and wind.

Moving from today’s crisis of dependence on Russian Gas in Europe we will go through volatility and instability of energy for years to come

Today’s crisis in Europe: dependence on Russia for Gas

A short summary, specifically on Germany’s energy shocking dilemma and its dependence on Russsian Gas- that should have NEVER HAPPENED.

Just read this 2014 article “Energy Dependence Dooms EU to Instability“to not understand what was coming towards us, we kicked the energy dependence can (barrel) down the road. Well, it’s well and truly back!

Europe can’t manage the energy transition in progressive ways, it needs to be aggressively managed

In a recent Q&A: How could Germany and the EU weather a fossil fuel embargo on Russia? by Clean Energy Wire (CLEW) the following fallout issues have been highlighted that the German government fears from cutting Russian energy ties?

Without doubt the EU is in a real energy dependence crisis that constricts how they can react to the Russian invasion of Ukraine.

The next crisis is possibly worse, supply of Essential Minerals for Renewable Solutions

Lithium, graphite, cobalt and nickel and other essential minerals are all presently required for the renewable solutions we require to replace fossil fuels and for that, we rely specifically on China, Chile, the Democratic Republic of Congo, Indonesia and Australia.

An essential report to be read was published by the IEA in May 2021, “The role of critical minerals in clean energy transitions. highlights our need for these essential minerals and while we are facing a growing energy crisis in the world our rush to reduce dependence on oil, gas and coal will take us into another very different energy crisis in the possibly the next 5 years to come.

This offers an extensive review of this topic of critical minerals needed in the Energy Transition and anyone interested, concerned or wishing to understand issues that are critical to a successful energy transition should find time to read this report.

The mineral intensity for renewable solutions will become the critical focus point as we attempt to scale up any energy transition

The mineral intensity for our renewable solutions within the energy transition will have an increasing focus on Rare earth elements, and Manganese, Nickel, Chromium, Silicon, Zinc, Copper for our new power generation capacity

Mineral security will become a new variable in the energy transition, that is for sure. Briefly taking some points from this report.

Will the supplies be resilient and secure?

The reality is today that many of the energy transition minerals are more concentrated on a few countries than oil or natural gas supplies—that indicated real risks.

For lithium, cobalt, and rare earth elements, the world’s top three producing nations control well over three-quarters of global output. In some cases, this is one single country. The Democratic Republic of the Congo (DRC) and the People’s Republic of China (China) are responsible for 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.

China has a very high concentration for processing operations and has global refining shares of 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.

The Chinese companies have been making substantial investments in overseas assets in Australia, Chile, the DRC and Indonesia to make for even more critical mineral control.

The decline in resource quality is becoming a growing concern as well.

One example mentioned in the IEA report was Chile, where the average copper ore grade has declined by 30% over the past 15 years. This extracting the metal content of lower-grade ores requires more energy, exerting upward pressure on production costs, greenhouse gas emissions and waste volumes.

This impact from poorer quality will add growing scrutiny on environmental and social performance. Consumers and investors are continuing to source the minerals in sustainable and responsible produced ways. Will they?

Increased mining in already highly stressed parts of the world of climate issues will add to higher water stress levels. Some areas or regions in Australia, China and Africa have extreme heat, and flooding gives greater challenges in ensuring reliable and sustainable supplies.

Reliability, affordability and sustainability for minerals will become critically important to manage.

The IEA regards the risks to the reliability, affordability and sustainability of mineral supplies are manageable, but I openly would question that in this changing world of global conflicts and politics.

This supply management will require a greater focus on these critical minerals, collaborations and policy co-ordinations in a rapidly polarizing world of global politics

The suggestion of recognizing mineral security in similar ways to how the world monitors and manages oil or gas security as this critical mineral threat can have far-reaching consequences throughout the energy system if not globally managed and recognized for the risks it will present.

Recognizing energy dependencies in the public domain.

Mineral supplies will not be seen as quickly as “spikes in pump prices” but in how minerals as essential components for infrastructure and our energy transition will make it more expensive and delay the pathway to net-zero even more than we see today.

Pump prices get immediate public attention, less so for essential infrastructure or energy transition delays although this will change, as more dependence on energy resilience comes into play, as we when ourselves off fossil fuels onto renewable clean energy.

A critical overview of the dependencies and crisis potentially coming for securing essential materials can be seen below.

Let’s take the time to evaluate the following slides from the IEA in support of their May 2021 report, “The role of critical minerals in clean energy transitions.

Energy instability will dominate much in the next ten years, in conclusion:

Mineral security and intensity of use will become the energy risk we will all be facing in ever-increasing growing realities, once the transition from fossil fuel dependence is fully on its way to being replaced by renewables, that is for sure.

The EU in particular has to find a way out of its current fossil fuel dependence, especially reliant on Russian gas supplies.

In the next big crisis, both the EU and increasingly the USA has to face up to its even more dependence on China’s dominating role in essential mineral supply and processing both inside China but in all its investments made in Africa, Asia and Latin America to gain world dominance in these.

Energy management at the global, regional, country and local levels is going to be dominating in the years to come.

*This summary has been drawn from the report from the IEA as per the links shown.

The report by the IEA in May 2021, “The role of critical minerals in clean energy transitions“, offers an extensive review of this topic and anyone interested, concerned or wish to understand issues that are critical to a successful energy transition should find time to read this report.
All rights reserved by IEA. The report reflects the views of the IEA Secretariat.

The post Energy Dependence, Vulnerability and Risks first appeared on Innovating the Energy Transition.

Image: IRENA

Since I launched this dedicated posting site www.innovating4energy.com, in December 2019, specifically around innovating in energy, I have written 80 plus posts. Each post was undoubtedly a fundamental learning point for me as I attempted to dive deeper into the topic.

Within this, Hydrogen has been one of the main contributors. Including this post, I have written about different aspects of Hydrogen over ten posts, but most were during 2020.

Posts (with links) have covered Hotter Shades of Hydrogen, Tensions and Bottlenecks and Concerns, Show me the Electrolyzer, Hydrogen is the Big Ticket Needing a Landscape View,

Also, Has Hydrogen got the necessary gas, Massive Doses of Hydrogen Reality, Hydrogens Promise, Believing in Hydrogen and how Plug Power is the Apple of Hydrogen?

Then I suddenly “went off the boil” on Hydrogen. I felt a sense of hijack from the Oil & Gas Majors and the Equipment Suppliers, all pushing hard the interim solutions blending different gases for offering blue Hydrogen as the necessary bridge, over the next ten years or so.

I felt a sense of “lock into” as the investment to purchase gas generating assets and infrastructure can run for thirty or more years. That’s not interim or intermediate and is likely to stay blue as CCUS will get added on at the later stage as the logical option to complete a ROI on this “interim” decision

Then we had considerable commitments in project money from Governments, all claiming the chance to be a world leader in Hydrogen and race to Hydrogen dominance. So this race took hold, the equivalent of a gold rush, the hydrogen rush. Vast sums of money suddenly were caught up in multiple startups, experimentations and small pilot-scale projects, all needing building, validation and proving they “might” scale.

Lobbying has accelerated by the Majors and all with a vested interest in holding onto the status quo and pushing the building of interim solutions can provide the transition answers. They are, in my opinion, “wriggling on the stick on where their existing solutions were getting caught up in the wrong side of the energy transition ” Attempting to sell power generation solutions for example that had thirty to forty-year lifecycles is not interim.

These significant sets of activities began to distort well laid out plans for the hydrogen journey. It gave a period of reasonably intensive (seemingly daily) announcements that confused me more than helped. So I thought, let us leave this for a while. It just has to sort itself out, one way or another as it does seem Hydrogen is becoming a “free for all, grab a piece” and not a structure evolving transition that we really need.

So after nearly nine months, I am back, looking to bring my thinking about Hydrogen back on track for the current and future understanding.

Wood MacKenzie kicked started this with Hydrogen production costs: is a tipping point near., indicated that green hydrogen production costs will equal fossil fuel-based H2 by 2040. Nearly twenty years of ramping up Hydrogen to bring into its potential contribution to building a sustainable energy system.

Then IEA has recently provided an excellent update report, “Global Hydrogen Review 2021“, and it brings me back to wanting to re-engage with Hydrogen after this short break.

The top line summary is

• After several false starts, a new beginning around the corner
• Hydrogen suppliers are becoming cleaner……..to slowly
• Expanding the reach of hydrogen use
• Governments need to scale up ambitions and support demand creation
• Low-carbon Hydrogen can become competitive within the next decade
• Meeting climate pledges require faster and more decisive action.
• More vital international co-operation: a key leaver for success.

The IEA policy recommendations for the near term are:

• Develop strategies and roadmaps on the role of Hydrogen in energy systems
• Create incentives for using low-carbon Hydrogen to displace fossil fuels
• Mobilize investment in production, infrastructure and factories
• Provide strong innovation support to ensure critical technologies reach commercialization soon
• Establish appropriate certification, standardization and regulations

A page covers these top-line summaries and policy recommendations that give you the detailed thinking behind these by following this link to the Executive Summary page.

The IEA report provided a fairly comprehensive report on how the Electrolysis deployment is progressing. To quote:

“Water electrolysis is an electrochemical process that uses electricity to split water (H2O) into Hydrogen (H2) and oxygen (O2). In 2020, this process accounted for ~0.03% of hydrogen production for energy and chemical feedstocks.27 Of installed global electrolyzer capacity of 290 MW, more than 40% is based in Europe with the next-largest capacity shares in Canada (9%) and China (8%).

Four leading electrolyzer technologies exist today: Alkaline, proton exchange membrane (PEM); solid oxide electrolysis cells (SOECs); and anion exchange membranes (AEMs) (see Emerging Technologies below for more on SOECs and AEMs). Alkaline electrolyzers dominate with 61% installed capacity in 2020, while PEMs have a 31% share. The remaining capacity is of unspecified electrolyzer technology and SOECs (installed capacity of 0.8 MW).”

The rising concerns of PEM Electrolysers precious metals is a growing worry. Current materials for electrode catalysts (platinum, iridium), bipolar plates (titanium) and membrane materials are expensive, and presently overall costs for PEMs (USD 1 750/kW) are higher than for alkaline electrolyzers (USD 1 000-1 400/kW). Additionally, PEM systems currently have a shorter lifespan.

The technology challenges to bring down costs and resolve technologies that make up the final hydrogen solution are formidable and can have a twenty-year need to be fully resolved.

We do have an inevitable reality in our deployment. It is not going to scale or giving the needed scale!

In the optimistic tone of IEA comparing their Net-zero Emissions Scenario, capacity requirements in 2030 are 850 GW, some nine times the project pipeline when including early development stages. Despite such significant gaps, current efforts are a sound basis for expanding and accelerating deployment, raising ambition as new projects are developed. More countries build Hydrogen into their national strategies.

The point might become one where the alkaline electrolyzers begin to push the PEM electrolyzer out to the competitive race unless the breakthroughs in technology, scale, and costs are not realized, in PLM in the next few years.

China might hold the key.

As the IEA report states, in 2020, costs fell within the range of USD 1 000-1 750/kW (including electric equipment, gas treatment, plant balancing, and engineering, procurement and construction [EPC]). The lower cost is applying to alkaline electrolyzers produced in China, and the upper representing PEM electrolyzers.

The cost of alkaline electrolyzers in China – USD 750-1 300/kW, with some sources reporting as low as USD 500/kW29 – falls well below the average of USD 1 400/kW in the rest of the world.

Concerns over the reliability and durability of Chinese electrolyzers have been raised in the past, and manufacturing is improving quickly. As recently as a few years ago, Chinese manufacturers had to import several components, limiting their ability to reduce costs through industrial clustering and economies of scale. Local component manufacturing is expanding, however, so cost savings should for Chinese electrolyzers be realized soon.

The critical observations from the IEA report are as follows (quoting directly from the report on Hydrogen supplies, deployment and speed.

The cumulative capacity deployment of projects under construction
and planned would reduce capital expenses by almost 60% by 2030.

Shortfalls in electrolysis manufacturing capacity could impede the deployment of all projects currently under development, which could derail long-term government climate ambitions.

Global electrolysis manufacturing capacity was ~3 GW/yr in 2020, with alkaline designs accounting for 85% and PEMs for less than 15%, plus some minimal, artisanal manufacturing of SOECs and AEMs.

The most significant shares of manufacturing capacity are in Europe (60%) and China (35%). Interest in the technology is growing among significant companies such as Thyssenkrupp, Nel Hydrogen, ITM, McPhy, Cummins and John Cockerill, all of which have announced plans to expand their manufacturing capacities. (I thought Siemens was a major player here, surprising not being mentioned).

If all announced expansions are realized, manufacturing capacity could reach ~20 GW/yr, with process automation or improved procurement driving down manufacturing costs.

A dedicated industrialized supply chain and a corresponding industrial supplier landscape will be essential to meet capacity demands to 2030 and beyond. If available soon, this manufacturing capacity could meet the deployment needs of the current pipeline of projects and government pledges (an average of 6-8 GW/y from 2022 to 2030) and approach.

Increased electrolyzer production will affect demand for minerals, particularly nickel and platinum group metals (depending on the technology type). While alkaline electrolysis does not require precious metals, current designs use 800-1 000 t/MW nickel.

Even if alkaline electrolysis dominates the market by 2030, in the Net zero
Emissions Scenario this would entail a nickel demand of 72 Mt (much lower than the amount needed for batteries).

The catalysts in PEM electrolyzers require 300 kg of platinum and 700 kg of iridium per GW. Therefore, if PEMs supplied all electrolyzer production in 2030 in the Net-zero Emissions Scenario, demand for iridium would skyrocket to 63 kt, nine times current global production.

Experts believe that demand for both iridium and platinum can be reduced by a factor of ten in the coming decade. Recycling PEM electrolyzer cells can further reduce primary demand for these metals and be a core element of cell design.

Meanwhile, SOEC production requires nickel (150-200 t/GW), zirconium (40 t/GW), lanthanum (20 t/GW) and yttrium (<5 t/GW). Better design in the next decade is expected to halve each of these quantities, with technical potential to drop nickel content to below 10 t/GW. Due to the higher electrical efficiency of SOECs, these mineral requirements are not directly comparable with alkaline and PEM electrolyzers.

I wrote about “Will critical Mineral Supplies Stop The Energy Transition“, asking will supply be resilient and robust. Securing these critical minerals at economical prices at a time resource quality is becoming a growing concern as well will be making the Energy Transition even trickier to manage.

Hydrogen holds promise, but it is signalling high risk at present

I relate to some of my previous fears, discussed in the articles shown above, with their links.

PEM and Alkaline might be today’s runners for Hydrogen, but the IEA report rightly points out there are other production technologies of the future that hold promise. Let me quote from the report again on the four contenders.

Solid oxide electrolyzer cells (SOECs)

These are still in the demonstration phase for large-scale applications.

SOECs use steam instead of water for hydrogen production, a fundamental departure from alkaline and PEM electrolyzers. Additionally, as they use ceramics as the electrolyte, SOECs have low material costs. While they operate at high temperatures and with high electrical efficiencies of 79-84% (LHV), they require a heat source to produce steam.

Therefore, if SOEC hydrogen were used to produce synthetic hydrocarbons (power-to-liquid [PtL] and power-to-gas [PtG]), it would be possible to recover waste heat from these synthesis processes (e.g. Fischer-Tropsch synthesis, methanation) to produce steam for further SOEC electrolysis. Nuclear power, solar thermal and geothermal heat systems, and industrial waste heat, could also be heat sources for SOECs.

Methane pyrolysis

Methane pyrolysis (also known as methane splitting, cracking or decomposition) converts methane into gaseous Hydrogen and solid carbon (e.g. carbon black, graphite) without creating any direct CO2 emissions. The reaction requires relatively high temperatures (>800°C), which can be achieved through conventional means (e.g. electrical heaters) or using plasma.

Per unit of Hydrogen produced, methane pyrolysis uses three to five times less electricity than electrolysis; however, it requires more natural gas than steam methane reforming.

The overall energy conversion efficiency of methane and electricity
combined into Hydrogen is 40-45%. Notably, the process could create additional revenue streams from selling carbon black for use in rubber, tyres, printers and plastics. However, the market potential is likely limited, with global demand for carbon in 2020 being 16 Mt of carbon black, corresponding to hydrogen production from pyrolysis of 5 Mt H2. Carbon from pyrolysis could be used in other applications such as construction materials or replace coke in steelmaking.

Anion exchange membranes (AEMs)

AEM electrolysis combines some of the benefits of alkaline and PEM electrolysis. Using a transition metal catalyst (CeO2-La2O) does not require platinum (unlike PEM electrolysis). A key advantage is that the anion exchange membrane serves as a solid electrolyte, avoiding the corrosive electrolytes used in AEL. AEM technology is still at an early stage of development (TRL 4-5), but Enapter (Germany) is developing kW-scale AEM electrolyzer systems combined to form MW-scale systems.

Electrified steam methane reforming (ESMR)

SMR is a widely used process to produce Hydrogen from natural gas,
and SMR can be combined with CCUS to reduce CO2 emissions. To
achieve capture rates of 90% or higher, CO2 capture needs to be
applied to two gas streams: the synthesis gas stream after the steam
methane reformer (characterized by relatively high CO2
concentrations) and a more diluted flue gas stream caused by steam
production from natural gas. Because the latter has a lower CO2
concentration, capture requires more energy.

The technology has been demonstrated at only the
laboratory scale (TRL 4) to date, but a pilot plant is under construction
to use biogas as a feedstock in ESMR to produce Hydrogen and
carbon monoxide, which will then be converted into methanol.

Will these emerging technologies accelerate and become real competitors? They all have some technology or value in how they are made up to get to potentially competitive points, providing they can go beyond small scale into demonstrating the ability to be scaled.

The IEA lays out a plea or journey for Hydrogen.

The IEA’s Net-zero by 2050 roadmap (of IEA) shows that achieving net-zero targets will require immediate action to make the 2020s the decade of clean energy expansion through massive deployment of available low-carbon technologies and accelerated innovation of those still under development.

Hydrogen technologies are a crucial example, with a considerably higher pace of progress and deployment required from now until 2030 is needed.

The three overarching goals are to significantly expand hydrogen use while bringing new technologies onto the market; make hydrogen production much cleaner (i.e. shift away from unabated fossil fuel-based routes), and reduce the costs of technologies for hydrogen production and use.

All of these three overarching goals need a more coherent, extensive push, allowing the markets to evolve in the present fashion is not the ideal way to bring clean Hydrogen (green specifically) and cost of those technologies down without a greater concentration of efforts in the R&D labs, by Government targeted support. Collaborative environments to drive towards green hydrogen solutions that can cost-effectively take out fossil fuel alternatives.

If we do not bring all the parts together, then Hydrogen will not play the part within the Energy Transition it is expecting to play.

The post Getting concerned for Hydrogen first appeared on Innovating the Energy Transition.

Image sourced: IEA report The Role of Critical Minerals in Clean Energy Transitions

An energy system powered by clean energy technologies differs profoundly from one fuelled by traditional hydrocarbon resources.

One real challenge is the impact on this energy transition that critical minerals will bring. These are new, different, perhaps more complex challenges to energy security. The shift to clean energy systems will bring potential new vulnerabilities.

The minerals needed for clean energy have huge questions over the availability and reliability of supply. There are a high concentration of production, long project development lead times, the worry over declining resource quality and growing scrutiny over environmental, social performance and climate risks.

These issues throw an increasing spotlight on supply sources and how critical mineral security can have far-reaching consequences throughout the energy system as we pivot towards a clean energy transition.

A significant report provided by the IEA in May 2021, “The role of critical minerals in clean energy transitions“, offers an extensive review of this topic.

Summarizing many aspects from this IEA report

I want to summarize several points from the report here as critical mineral supply does really have an important part to play if we are going to achieve net-zero globally by 2050.

To achieve the Paris Agreement to stabilize the climate well below 2 C global temperature rise would mean a quadrupling of mineral requirements for clean energies by 2040. An even faster transition to hit net-zero globally by 2050 would require six times more mineral inputs in 2040 than today.

To quote from the IEA report :

“Which sectors do these increases come from? In climate-driven scenarios, mineral demand for EVs and battery storage use is a major force, growing at least thirty times to 2040. Lithium sees the fastest growth, with demand growing by over 40 times in the SDS by 2040, followed by graphite, cobalt and nickel (around 20-25 times).

The expansion of electricity networks means that copper demand for
power lines more than double over the same period.

The rise of low carbon power generation to meet climate goals also means a tripling of mineral demand from this sector by 2040. Wind takes the lead, bolstered by material-intensive offshore wind. Solar PV follows closely due to the sheer volume of capacity that is added.

Hydropower, biomass and nuclear make only minor contributions given their comparatively low mineral requirements. In other sectors, the rapid growth of hydrogen as an energy carrier underpins major growth in demand for nickel and zirconium for electrolysers (green hydrogen production) and platinum-group metals for fuel cells.”

As the IEA points out, demand trajectories are subject to large technology and policy uncertainties, but they analysed 11 alternative cases to understand the impacts.

Another significant point to consider here is the IEA’s report stated, “Today revenue from coal production is ten times larger than those from energy transition minerals. However, there is a rapid reversal of fortunes in a climate-driven scenario, as the combined revenues from energy transition minerals overtake those from coal well before 2040.”

So what are these critical minerals used by the different technologies we are deploying today or in the near future?

This report assesses the mineral requirements for a range of clean
energy technologies, including renewable power (solar photovoltaic
[PV], onshore and offshore wind, concentrating solar power, hydro,
geothermal and biomass), nuclear power, electricity networks
(transmission and distribution), electric vehicles, battery storage and
hydrogen (electrolysers and fuel cells).

The types of mineral resources used vary by technology. Lithium, nickel, cobalt, manganese and graphite are crucial to battery performance, longevity and energy density. Rare earth elements are essential for permanent magnets that are vital for wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies.

The demand for critical minerals will rise rapidly.

According to the IEA in a scenario that meets the Paris Agreement goals, clean energy technologies’ share of total demand rises significantly over the next two decades to over 40% for copper and rare earth elements, 60- 70% for nickel and cobalt, and almost 90% for lithium. EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end-user of nickel by 2040.

So the energy sector will emerge as a or will be a major force in mineral markets in the next decades.

The final cost structure of the finished product can be at risk

Raw materials are naturally a significant element in the cost structure of many of the clean energy technologies we plan to use

In Lithium-ion batteries, prices have significantly fallen in the last decade, but raw materials now account for 50-70% of total battery costs.

For example, in a possible scenario, what if both lithium and nickel prices doubled around the same time? Then this double “whammy”  would offset the anticipated cost reductions of doubling battery production capacity gained from technology learning and anticipated economies of scale. That would have major implications on prices for EV’s.

An interesting fact is a typical electric car requires six times the mineral inputs of a conventional car. Equally, an onshore wind plant requires nine times more mineral resources than a gas-fired power plant raising potential vulnerability if the material supply has any pricing volatility and security of supplies.

Will the supplies be resilient and secure?

The reality is today that many of the energy transition minerals are more concentrated on a few countries than oil or natural gas supplies—that indicated real risks.

For lithium, cobalt, and rare earth elements, the worlds top three producing nations control well over three-quarters of global output. In some cases, this is one single country. The Democratic Republic of the Congo (DRC) and the People’s Republic of China (China) are responsible for 70% and 60% of global production of cobalt and rare earth elements, respectively, in 2019.

China has a very high concentration for processing operations and has global refining shares of 35% for nickel, 50-70% for lithium and cobalt, and nearly 90% for rare earth elements.

The Chinese companies have been making substantial investments in overseas assets in Australia, Chile, the DRC and Indonesia to make for even more critical mineral control.

The decline in resource quality is becoming a growing concern as well.

One example mentioned in the IEA report was Chile, where the average copper ore grade has declined by 30% over the past 15 years. This extracting the metal content of lower-grade ores requires more energy, exerting upward pressure on production costs, greenhouse gas emissions and waste volumes.

This impact from poorer quality will add growing scrutiny on environmental and social performance. Consumers and investors are continuing to source the minerals in sustainable and responsible produced ways. Will they?

Increased mining in already highly stressed parts of the world of climate issues will add to higher water stress levels. Some areas or regions in Australia, China and Africa have extreme heat, and flooding gives greater challenges in ensuring reliable and sustainable supplies.

Reliability, affordability and sustainability for minerals become important to manage.

The IEA regards the risks to the reliability, affordability and sustainability of mineral supplies are manageable, but this will require greater focusing on these critical minerals, collaborations and policy co-ordinations.

The suggestion of recognizing mineral security in similar ways to how the world monitors and manages oil security as this critical mineral threat can have far-reaching consequences throughout the energy system if not globally managed.

The big difference will not be seen as “spikes in pump prices” but in how minerals as essential components for infrastructure and our energy transition will make it more expensive and delay the pathway to net-zero even more than we see today.

Four critical aspects that need  greater research and development innovation and investment in the future:

1) The searches to diversify sources of critical mineral supply need speeding up. The US has identified current supply dependences, especially on China, as a national security risk. In Europe, this equally applies.

2) Technology innovation on production needs to focus on more efficient extraction of materials, managing mining in different ways and to make sure the application of mining techniques is up to date and effective.

3) Technology for clean energy solutions needs to search for material substitution and alternatives. Ones that can be perhaps more environmentally developed or take a more holistic approach to entire energy systems to minimise energy loss, using digital technologies to manage finite resources and reduce processing across the entire energy chain.

4) An absolute need to ramp up recycling. Waste management needs to become a higher focus as volumes increase, incentivizing consumers and producers to look at recycling products that have reached the end of their operating lives, reduce the effect of throw-away societies, building more efficient collection and sorting activities and invest in an R&D emphasis on new recycling technologies that move way-beyond the cottage industry approach  or simply dumping and ignoring material recycling so often found today

In conclusion- great work, IEA, with this report.

The report by the IEA in May 2021, “The role of critical minerals in clean energy transitions“, offers an extensive review of this topic and anyone interested, concerned or wish to understand issues that are critical to a successful energy transition should find time to read this report.

Mineral security will become a new variable in the energy transition, that is for sure.

*This summary has drawn from the report from the IEA as per the links shown. All rights reserved by IEA. The report reflects the views of the IEA Secretariat. The IEA makes no representation or warranty, express or implied, in respect of the publication’s contents

The post Will Critical Mineral Supplies Stop the Energy Transition? first appeared on Innovating the Energy Transition.