NEIL MACKAY’S BIG READ: How revolutionary North Sea green energy boom will trigger goldrush and transform Scotland’s debate on independence

With the UN climate summit just weeks away, Writer at Large Neil Mackay, speaks to the industrialist who predicts a coming ‘clean hydrogen revolution’ will save the planet, allow economies to keep on growing, and see an energy windfall for Scotland if we’re smart

EXPECTATION is growing that COP26 will pave the way for a revolution in world energy markets that would see Scotland benefit from a North Sea-style “green” boom, which has the potential to change the course of the nation’s independence debate.

The push to transition from oil and gas to “green hydrogen” – which doesn’t add to global warming – will be high on the agenda at the UN climate summit when it comes to Glasgow in November.

Currently, renewable energy alone isn’t enough to power the world, according to most of the scientific community, many climate organisations and bodies like the International Energy Agency. That leaves the planet facing the climate crisis while still dependent on oil, gas and even coal in some nations – meaning carbon emissions will continue rising.

The key to a workable transition, it is claimed, is creating green hydrogen from renewable energy sources like solar, wind and wave. What’s focusing minds around the world on the possibility of the “hydrogen revolution” is the falling cost of renewable energy.

This drop will allow for the creation of cheap green hydrogen to fuel homes, industry and transport. It essentially paves the way to a mass market of low-cost, zero-emissions fuel from an endless supply of sunlight and water.

Green hydrogen is made by splitting water using electricity from renewable sources. The North Sea is perfectly suited to exploit a “green hydrogen” boom. Green hydrogen could become cheaper than fossil fuels. Revenues from the North Sea could rival the oil windfall.

Wind and wave power can be gathered in the North Sea to make the renewable electricity which is then harnessed to extract hydrogen from water. Existing pipelines and storage sites can be used to hold and transport green hydrogen to the mainland –just like oil and gas – which can then heat and fuel Scotland and the UK, and be sold around the world.

A transition to green hydrogen, it’s being said, would remove the so-called “growth dilemma” from the climate debate. Currently, many green arguments focus on “doing less” –like reducing aviation. However, that’s a hard sell politically and with much of the public. Green hydrogen, it is claimed, would cause little disruption to the way people live but reduce emissions which threaten human life and the planet’s ecosystems.

The idea of addressing climate change without addressing growth, however, won’t be met with open arms by many in the Green movement who believe the environment cannot be fixed without altering the economic system.

The industrialist environmentalist

Marco Alverà is at the heart of the push to transition to green hydrogen. To many environmentalists, he is an unlikely champion. He is CEO of Snam, Europe’s largest gas infrastructure company. However, Alverà is working to make Snam transition from gas to hydrogen. The firm, headquartered in Milan – with a market capitalisation of $15.4 billion – is closely linked to the government in Rome. Its largest shareholder is a company controlled by the Italian state.

However, Alverà, who will be attending COP26, is a full-blooded environmentalist. Clearly, though, his company stands to make a lot of money if traditional oil and gas companies transition to green hydrogen. Snam would be at the forefront if the transition succeeds.

Alverà has just brought out a book championing the green transition called The Hydrogen Revolution: A Blueprint For The Future Of Clean Energy’. He sat down with The Herald this week to outline his vision.

Getting prices down

WE simply cannot store enough energy from renewables. Storage is a vital part of the green transition. Wave and wind power is great but it needs to be held somewhere as electricity. “There’s no way”, says Alverà, that enough renewable energy can be stored. Using batteries “would be ridiculously expensive … the cost would be prohibitive”. Hydrogen, though, can be stored like oil or gas, and similarly transported. The move to hydrogen, says Alverà, isn’t “against renewables. It is enabled by renewables. It takes renewables to the next level”. Making hydrogen though renewables would create a power source as good as oil or gas – but with no emissions – that was “versatile, flexible and able to be transported over long distances”.

However, the problem has long been the cost of creating hydrogen from renewables – that issue, though, looks set to evaporate.

The key is getting the cost of producing renewables down so the price of producing hydrogen falls as a result.

Due to heavy subsidies for the renewables industry by Western nations the cost of making solar, wind and wave power is declining rapidly. “If you go back to 2005,” says Alverà, “the cost of solar was $500-600 per megawatt hour. Today, in Italy, it’s $55-60.” It could soon fall to $10.

These figures are game-changers. Back in 2010, a kilo of hydrogen cost around $24 – the equivalent to $600 per megawatt hour – making it comparatively much more expensive than oil or gas.

Gas then cost around $25 per megawatt hour. Today, a kilo of hydrogen is around $4-5. In five years, it’s estimated to be $2-3 and in 10 years maybe $1-2. For green hydrogen to make sense for many big industrial uses, says Alverà, the cost needs to reach $2. At that point “it becomes cost-competitive in several existing markets, from transport to industrial uses”.

The science has long existed to turn hydrogen into a clean energy source but until recently it has been cost prohibitive. “When I first studied hydrogen it was costing 70 times more than oil – that’s why it never made it to the public [mind] because it wasn’t meaningful or relevant,” he says. “It wasn’t doable.”

Revolution at sea

ALVERÀ says the new hydrogen industry in Scotland will see “big offshore windfarms”, adding: “They’ll generate electricity offshore. The electricity will be used offshore to take sea water, desalinate it and convert it into hydrogen. Then that hydrogen will be piped onshore to factories and to districts for heating – to big industrial users to make steel and cement … You’re treating it exactly like you treat natural gas today. So you move it via long distance pipelines and store it underground.”

Green hydrogen for heavy industry, heating and transport – including road, rail and aviation – would mean no emissions. It’s essential, however, to ensure hydrogen is made from renewables. That creates “green hydrogen”.

Hydrogen made from natural gas using carbon capture rather than renewables – which still has lower emissions than fossil fuels – is “blue hydrogen”. Pink comes from nuclear. Grey comes from fossil fuels with no carbon capture.

Scottish windfall

SCOTLAND is uniquely positioned to exploit this transition, Alverà believes. The map of the North Sea is littered with pipelines from oil facilities to the Scottish mainland. “Every one of those pipes can be converted to become a hydrogen pipe,” he says.

Scotland, Alverà adds, “is blessed”. In terms of renewable sources and the North Sea, “Scotland has the incredible benefit of a lot of nearby strong winds, and those winds are the ideal source to create green hydrogen”.

On top of wind and existing pipelines, Scotland also “has the industrial capability to convert the oil and gas sector to the hydrogen sector. It has the companies – it has the DNA. Scotland is used to being part of the energy industry, it’s a big part of the economy – Scotland knows how to deal with offshore work. There’s legacy there. It’s not easy to find workers who’ll get on a helicopter and go offshore in a storm. There’s capability and skills. It takes years to build that”.

Scotland, he says, has “the best energy executives in the world”, adding: “There’s just a culture, a long history, of technical capability, managerial capability, understanding the challenges of building complex energy projects. That kind of depth of skill can help Scotland plough ahead in a very determined way.”

Is Holyrood ready?

ALVERÀ sees “a terrific opportunity” for Scotland to address the dilemma of how to transition away from oil and gas without hurting the economy or causing job losses. With questions around the economy central to the independence debate, the future of “the hydrogen revolution” could have a profound impact on Scottish politics.

At home there’s concern, however, about the Scottish Government’s commitment and ability in terms of the green transition. The SNP is currently under fire after downgrading plans for a Scottish public energy company –focused on renewables – to a “public energy agency”.

Market forces, Alverà believes, will always outflank lack of political will. “When Trump was trying to promote coal,” he says, “gas was just cheaper and there’s nothing anyone could do in Washington to stop the decline of coal.”

The same will become true of hydrogen, Alverà believes.

COP26 moonshot

His firm, together with “some of the world’s largest companies”, have embarked on what they call “the green catapult”. Alverà adds: “We commit to making green hydrogen cost less than $2 a kilo in five years.” Others have called it the “COP26 Moonshot”. Alverà will be campaigning for this at COP26.

“Why is $2 a kilo important?” Alverà asks. “Because $2 would make [hydrogen] a lot cheaper than oil and gas today.

“That’s why I’m at COP26 to promote this green catapult offer – I see green hydrogen becoming so cheap that it will start penetrating. If you think about a world with hydrogen at $2 a kilo, then a lot of magical things happen – people begin to convert ships to hydrogen, people stop investing in new coal plants in China and India.”

Politicians, he says “really like it in the US and Europe. The great news is we don’t need big subsidies to make this happen. It’s just going to be cheaper than oil and then it’s going to become a self-fulfilling vision”. Without action, Alverà adds, “we’ll just be stuck – shaming and blaming the emitters”.

Alverà says he has had discussions about the “green catapult” with John Kerry, the US special envoy for climate, who will be a key figure at COP26. Kerry subsequently created the US Department of Energy’s “Earthshot” – to make green hydrogen $1 a kilo by 2030. America, Alverà says, is “creating credibility” around the hydrogen revolution.

Hydrogen which costs $1 a kilo would provide a megawatt hour of energy for around $25. That’s substantially cheaper than natural gas which currently provides a megawatt hour for $55. “Where politicians have an option is to make [the hydrogen revolution] happen in five years instead of 10,” Alverà adds. When it comes to emissions, “a tonne abated next year is worth 40 tonnes abated in 40 years time”. The clock is ticking.

The tough stuff

CLEARLY, it’s not all plain sailing for those who believe in the hydrogen revolution. The public knows little about hydrogen as an energy source, and international safety and quality standards need to be ironed out.

There needs to be a push in expanding factories which make the equipment – known as electrolysers –necessary to turn renewable electricity into green hydrogen.

Alverà fears a “chicken and egg” scenario where “developers who have the hydrogen potential are waiting for the market to develop, and the market is waiting for the supply to develop”.

Globally, “there’s now a lot of convergence” among the main players on the need to get the hydrogen revolution under way properly, Alverà says. Mark Carney, former governor of the Bank of England, backs Alverà’s vision.

“The renewables people see it as a way to produce more renewable energy, the oil and gas people see it as a way to convert their infrastructure and teams to new jobs,” he points out.

“Politicians love it because it’s about job creation, not massive subsidies, NGOs like it because it’s a way to decarbonise the hard sectors that have been so problematic. Optimists like it because it’s a way to move beyond the paralysis generated by fear, airlines like it because it’s a way of stopping flight shame and getting clean aviation”.

Road to Damascus

ALVERÀ has experienced multiple “road to Damascus” moments when it comes to the environment throughout his life. He first switched onto environmentalism as a teen in Venice when he saw his city trashed by tourists. “I really became passionate about

anti-plastics, anti-pollution, anti-waste and a more sustainable way of life. But I was working then for 20 years in oil and gas and electricity. I just knew because solar was at $1,000 that there was no way we could subsidise our way out of oil and gas.”

Early in his career, the well-known climate strategist Gabrielle Walker woke him up to the fact that global warming presented an existential threat. Alverà became “desperately focused”, he says, about finding a way to “keep the lights on”, cut emissions, and switch from fossil fuels. His children also told him that as a “gas man” environmentalists “hate you”. That stung.

“I started to educate myself about climate change, and soon recognised that we were in very grave danger indeed.” Four years ago, he realised market trends showed the cost of hydrogen rapidly declining and he saw a way to bring his convictions and business together. “That was an eye-opener,” he adds.

Growth dilemma

WHILE many environmentalists will understandably treat Alverà with suspicion, he says he has never “come out of a conversation” with climate activists without them believing his commitment. “I believe in this more because I believe the company would benefit from it … I’m putting my entire reputation behind hydrogen.” He points out that only 1 per cent of Snam’s revenues “come from gas” – most “come from just renting our infrastructure”.

He opposes the anti-growth position within the environmental movement. “I don’t think we can change the minds of those people,” Alverà says. “They’re just anti-business … They want to fix capitalism by fixing the climate. It’s merging two different objectives. I’m centre ground. I think we can certainly consume less, but we certainly need to continue to consume a lot of energy. If you strip the politics out, the argument should convince every environmentalist.”

The “core of my narrative”, Alverà says, is ending the “growth dilemma”. “We need a story that people can buy into, that’s positive. If you’ve a positive story – that generates action. When you’ve a fear-based story, it generates paralysis. You can never build anything on fear. You can build on hope.”

Big consequences

IN geopolitical terms, Alverà says, the hydrogen revolution could mean potential solutions to poverty in the developing world. With many parts of Africa, for instance, rich in resources like sunlight, hydrogen could be transformative. Alverà believes hydrogen can be “an incredible democratisation instrument”. Unlike oil “it’s more evenly spread –

– all the windy parts of the world, all the sunny parts, get a fair and equal share.” It will give poorer nations “the luck of Scotland”.

Alverà says it is in the West’s interests to “get these nations prosperous” due to issues like mass migration which “we can only address by creating prosperity and jobs.”

He sees hydrogen playing a “big part in soft power” in the 21st century. Nations like Egypt currently import billions in diesel when they could be energy independent through hydrogen. “There’s not going to be an Opec of hydrogen, or an oligopoly of hydrogen, because it’s everywhere. The gas market today is in the hands of Russia, Qatar, Iran and Norway – there’s not going to be a dominant hydrogen producer. Once you connect the desert to the factory or the home, the route is perennial and the marginal cost of the sun is zero.”

Despite fears that it will be a talking shop, Alverà believes COP26 will herald change. “There’s a strong likelihood that there’s going to be some breakthroughs at the political level.” If that happens, claims Alverà, he envisions a cleaner, safer – cheaper – world just around the corner.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992