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Governments ‘wising up’ to role of hydrogen in energy transition: Shell boss van Beurden

Oil giant’s CEO says H² will be ‘integral’ to future global power mix but oil & gas will around for ‘a long time to come’.

 

Shell is keen to play a leading role in developing the global hydrogen market but the fuel is unlikely to make a significant breakthrough onto the global energy stage until at least the middle of the decade, chief executive Ben van Beurden has predicted.

 

Van Beurden, speaking in an online interview with IHS Markit chairman Daniel Yergin, predicted a long-term future for businesses that can “seed and develop” the technology and markets for hydrogen.

 

Governments and policy makers are also becoming increasingly aware of the likely importance of the gas, he said: “I think governments are really wising up to the idea that … hydrogen needs to play an integral role [in the energy transition] because it’s not all going to be electrification.”

 

“We will have to have some molecules for … very heavy-duty mobility demand or for high-temperature heat or even for space heating. It can be done quite efficiently with hydrogen. I do believe policymakers are beginning to see the need for this,” van Beurden said.

 

“Does it mean that hydrogen will be the next big thing in the next five years? I don’t think so.

 

“But I do believe that those companies who set themselves up to succeed in that area and can make the right type of investments and can seed and develop the hydrogen markets of the future are going to be a long-term business. And we have every intention to be just that.”

 

The “concept” of green hydrogen — green hydrogen is made from renewable energy sources — is starting to come within reach”, he added.

 

However, oil and gas will continue to play an important role in the global energy mix for a “long time to come”, underlined van Beurden, but he said Shell would be selective about where it “puts its money to work”.

 

“We always had an approach of value over volume. And now that is going to be even more a high grading of the quality type of discussion going forward,” he said.

 

“I think gas will continue to be an important sector going forward. We do believe that growth … is going to be with us for some time and we do believe that gas is not just a bridging fuel but also a destination fuel.”

 

The Shell chief said he did not believe there will be a “v-shaped” recovery from the pandemic and suggested energy demand, especially in transport, is unlikely to recover to pre-pandemic levels.

 

“I think everybody who believed that this was going to be a sharp v-type recovery … are probably at least doubting whether that [will be] the case,” he said.

 

“I’ve always said this has more uncertainty attached to it than I would like. So, it’s very hard to see how this plays out. But it’s most likely not going to be a v-shaped recovery.

 

“I would say energy demand, certainly mobility demand, will be lower even when this crisis is more or less behind us.”

 

Upstream’s sister renewable energy publication Recharge reported in April that a plan by Shell, Gasunie and Groningen Seaports to build the world’s largest offshore wind farm in the Dutch North Sea to produce green hydrogen should survive the coronavirus crisis unscathed due to its early development stage.

 

On 8 July, the European Commission announced plans for at least 40GW of renewables-powered electrolysers to be installed by 2030, producing 10 million tonnes of green hydrogen annually — with blue hydrogen, which is derived from natural gas with carbon capture and storage, playing a back-up role in the short- to medium-term.

 

In May Shell cut its dividend for the first time since the 1940s in a momentous move to preserve cash and defend its balance sheet amid falling demand due to the coronavirus pandemic.

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