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05Chapter 1 IntroductionToward breakthroughsfor low-carbon hydrogenHydrogen for the Port of Rotterdamin an International Context– a Plea for LeadershipJune 18, 2020 Chapter 1Introduction – Towardbreakthroughs forlow-carbon hydrogenHydrogen is gaining increased attentionfrom policymakers and industry leaders asa necessary element for a fully renewableenergy system. It is also seen as an economicopportunity for greening existing industriesand as a basis for entirely new ones, suchas biobased industries. In the Dutch portof Rotterdam, this growing attention forhydrogen has led to activated and interestedbusiness and industries, policy collaborations,and other initiatives, but overall, a coherentperspective and a sense of urgency is lacking.This document is the first step to that end and is theresult of a “transition arena” consisting of dialog sessionswith people from both industry and science with differentperspectives (see also Textbox 2). The focus is on “green”hydrogen developments in connection to “blue,” but as(many) other colors of low- to zero- carbon hydrogenexist and have comparable developments (see Textbox 1),we usually refer to “low-carbon” hydrogen. Parallel toand in connection with this process, the Port of Rotterdam has also released its vision on hydrogen, whichresembles many of the ideas presented here1.Examples of other hydrogen-related activities withinthe Rotterdam cluster are the project H-vision for bluehydrogen (feasibility study)2, green hydrogen production plants announced by BP-Nouryon3 and Shell-Eneco4 (feasibility study and tender proposal), and theconstruction of an openly accessible hydrogen pipelinein the cluster by the Port of Rotterdam and Gasunie5. In the north of the Netherlands, Shell, Gasunie,and Groningen Seaports have stated the ambition ofrealizing “Europe’s largest green hydrogen project” bycompleting a wind park with a capacity of 3 (2030) toa of maximum 10 (2040) gigawatt in the North Sea toproduce 0.8 Mt of green hydrogen6.On the policy side, the Dutch government announcedsignificant innovation funding and, recently, theirhydrogen vision, in which carbon-free hydrogen is animportant element in a sustainable energy system7. Italso highlights the strategic importance of Rotterdamas an international energy hub and the opportunitiesthat hydrogen provides the Rotterdam cluster. Theseinitiatives have arisen at the Dutch national level, butthere have been similar developments by other regional (Zuid-Holland8), national (Germany9), European(Hydrogen Europe10) and international (InternationalEnergy Agency11) organizations. Despite these policiesand innovation funding, financing hydrogen initiativesis easier said than done.The Port of Rotterdam urgently needs to define itsposition in the hydrogen chain, as it risks losing itsimportant mainport position for Northwest Europe.Much effort is needed to bring low-carbon and especially green hydrogen to scale in the coming years,where all parties need to work together to benefit fromthe potential hydrogen offers. Low-carbon hydrogen isone of the few chances for Rotterdam to gain a competitive edge in transforming its fossil commodity chemical industry (and build up a new green industry) andto preserve and strengthen Rotterdam’s position as animport hub for Northwest Europe. A “wait-and-see”attitude is thus not an option.The above-mentioned initiatives do show that in a relatively short timeframe, low-carbon hydrogen movedfrom a marginal niche strategy to a serious ambition ofboth governments and businesses. Several (pre-)feasibility studies and (pre-)coalition developments havebeen published. However, for the Port of Rotterdam tobecome a serious frontrunner in low-carbon hydrogen, these ambitions must be translated into concreteaction. More investments beyond the current feasibilitystudies are required, and collaboration between a groupof the willing and able is needed to develop this marketfor green hydrogen. In addition, green hydrogen is oneof the very few chances for an alternative to the fossilenergy import hub in Rotterdam.Of course, developments in the Rotterdam clusterdepend on developments in the international policy stage (e.g., carbon pricing). However, this shouldnot lead to a waiting game in the Rotterdam cluster.The favorable conditions for the Port of Rotterdam tobecome a frontrunner in green hydrogen chains can(and must) be created largely in the scope of Northwestern Europe.

06Introduction: Towardbreakthroughs forlow-carbon hydrogenHydrogen for the Port of Rotterdamin an International Context– a Plea for LeadershipTo understand these favorable conditions, we explore thefuture hydrogen chain at three levels: global, NorthwestEurope, and the Rotterdam cluster of port and industry.To better understand the urgency for concrete action,the first half of this document will outline an integralanalysis: The emerging global trade in sustainable energy carriers (Chapter 2); the future energy landscape inNorthwest Europe, including the role of imports(Chapter 3); and the opportunities and challengesfor Rotterdam to maintain its strong current positionas energy (and related feedstock) hub in NorthwestEurope’s feedstock hub for transport and processing(Chapter 4). In the second half, we will address theleadership needed to maintain this position by strivingfor a frontrunner position in green hydrogen (Chapter 5),and we will translate this into an agenda for four challenges and breakthroughs for producing and importinggreen hydrogen in Rotterdam (Chapters 6–9). Figure 1Three levels ofanalysis: global,NorthwestEurope, and theRotterdam cluster of port andindustry area.June 18, 2020

07Introduction: Towardbreakthroughs forlow-carbon hydrogenHydrogen for the Port of Rotterdamin an International Context– a Plea for LeadershipTextbox 1Colors of HydrogenHydrogen is a colorless gas (or liquid), yetthe process by which hydrogen is producedis often designated with a color. Althoughthere can be small differences in impuritiesbetween gray, blue, and green, all hydrogenis essentially the same product regardlessof “color.” There are three main productionmethods:Green hydrogen – a very different production methodin which green hydrogen is produced from water usingelectricity from renewable sources in a process calledelectrolysis, such as alkaline electrolysis or ProtonExchange Membrane electrolysis. Some hydrogen isalready produced this way, for example, when producing small volumes/at remote locations, when coupledto hydropower plants, or as a byproduct of chlorineproduction.Gray hydrogen – produced from natural gas, with CO2 asa byproduct, typically through chemical processes suchas “Steam Methane Reforming” (SMR) or “AutothermalReforming” (ATR). Currently, most of the world’s hydrogen is produced as grey hydrogen, from natural gas.Many other colors are used to refer to other production methods, although less often and less consistently,such as orange (produced in the Netherlands from localrenewable energy sources), yellow (produced by solar,e.g., in the Sahara), brown (from biomass/biogas), golden (biomass with CSS, thus negative emissions), purple(nuclear), black (electrolysis from coal- and gas-firedpowerplants), turquoise (produced by leading naturalgas through a molten metal which releases hydrogenand solid carbon), and many more. These colors can beapplied to physical flows of hydrogen, but through certification (guarantees of origin), the trade can also be separate from the physical flows (as with green electricity).Blue hydrogen – similar production methods (bothSMR and ATR are used) to gray hydrogen, but CO2 is notreleased into the air but “captured” and stored (CCS) orused to make chemical products or grow plants (CarbonCapture Utilization [CCU]). When combined, CCS andCCU is often referred to as CCUS. June 18, 2020 Textbox 2MethodologyThis document is the result of a “transition arena,”a series of dialog sessions with people attending in apersonal capacity from industry and science and withhighly different perspectives. These sessions were fed bytheory about transitions, analysis, and interviews doneby DRIFT (Dutch Research Institute for Transitions, atErasmus University), which also synthesized these dialogs into this document. This document is thus a primeexample of the “co-production” of knowledge betweenscience and practice.The responsibility for this final document, includingany errors or omissions, rests, however, solely withDRIFT, and the views expressed in this document donot necessarily reflect the views of the participants orthe organizations for which they work. The project hasbeen funded by The Port of Rotterdam Authority (Port ofRotterdam in this document), who also participated inthe sessions, along with –Elmer de Boer   EnecoSilvan de Boer   EnecoRobert Bouma   Commercial Manager Energy& New Business, Nouryon)Hans Coenen   Director strategy & businessdevelopment, GasunieSteven Engels    General manager Benelux,ØrstedLeo Freriks     New Energy Business, SiemensEnergy Nederland B.V.Marcel van de Kar    Director New Energies, VopakThijs ten Brinck     Wattisduurzaam.nlJan-Coen van Elburg   RebelNoé van Hulst     on personal titleJohn Kerkhoven   Partner, KalavastaCoby van der Linde   Director, Clingendael International Energy Programme[CIEP], professor Energy andgeopolitics RUG

08Introduction: Towardbreakthroughs forlow-carbon hydrogenHydrogen for the Port of Rotterdamin an International Context– a Plea for LeadershipJune 18, 2020 Textbox 2MethodologyJulius Smith     Head of Business Development, ØrstedProf. Dr. Henk Volberda   Professor of Strategy &Innovation, UvADirector of the AmsterdamCenter for Business InnovationProf. Dr. Ad van Wijk   Professor of Future EnergySystems, TU Delft, GuestProfessor Energy and Water –KWR Water Research InstituteIn addition, international experts have been involved tovalidate and enrich the international perspective on Rotterdam through interviews and reviews. Some of theircontributions are included in this document as writtenreflections (see page 12, 19 and 33.). These internationalexperts include – Deputy Director at the GlobalClimate Bureau Ministry of theEnvironment in Japan & PhDCandidate, Nagoya UniversityRoy Green Chair, Port of Newcastle, andEmeritus Professor, Universityof Technology SydneyPaul Hodgson General Manager, Innovationand Stakeholder Engagement(East Coast), National EnergyResources AustraliaStefan Lechtenböhmer   Director of Future Energy andIndustry Systems, WuppertalInstitute & Adjunct Professor,Lund UniversityLastly, the Wuppertal Institute provided additionalknowledge about the emerging hydrogen economy andindustry, especially in the German and internationalcontext, and has also reviewed the work of DRIFT. Thisagenda for low-carbon hydrogen aims to complementthe Port of Rotterdam’s H-vision for local blue hydrogenproduction, although some leadership challenges areshared between blue and green hydrogen.On behalf of DRIFT the arena process has been facilitatedand supported by:Carien van der HaveMartin van de LindtIgno NotermansRoel van RaakProf. dr. ir. Jan RotmansMuneki Adachi Port of Rotterdam by Bert Knot is licensed under CCBY 2.0 / Colors modified from original

09Chapter 2The emerging global greenhydrogen economyHydrogen for the Port of Rotterdamin an International Context– a Plea for LeadershipJune 18, 2020 Chapter 2The emergingglobal greenhydrogen economyCurrent pressures on our global energy system,such as impending climate change, resourcescarcity, and price volatility for fuels andenergy carriers, steer us in the direction of adecarbonized future economy in which lowcarbon hydrogen plays a significant role.Hydrogen is the most abundant element onEarth. It can be used as feedstock for importantchemical industries, as an energy carrier, and asan emission-free fuel. When produced throughwater electrolysis powered by renewableenergy, it is seen as key in enabling the energytransition and realizing a new, green economy.It offers a decarbonized alternative to naturalgas and can be used in aviation, mobility,logistics, building heat and power, industry,electricity generation, and storage.In a hydrogen world, the global energytrade will still exist In this future economy, low-carbon hydrogen tradenetworks will be present on a global level, comparableto the way fossil fuels are traded globally today. Therewill be regions with a surplus of cheap renewable energy because of available space combined with positivewind and solar conditions, such as, potentially, Australia, Northern Africa, Latin America, and the MiddleEast (see Figure 2 and Figure 3). Other regions, suchas Japan, will trade with regions willing to pay for thisenergy, hydrogen production, and its transport becauseof regional energy scarcity, due to less favorable climatic conditions, density of population, and energyintensity of industry. Of course, the level of trade isalso dependent on the need and (in)ability of the sourceregion to distribute their (renewable) energy and fordomestic use through national grids.Blue hydrogen will also be part of this trade system,especially when the market for low-carbon hydrogen isnot yet fully developed. With rising prices of CO2 emissions, the price of blue hydrogen will be comparable tothe prices of gray hydrogen, which eases the marketentry12. In this case, locations with the possibility ofusing, for example, greenhouses, chemical productionprocesses, and plastics or capturing CO2 emissions fromthe production of hydrogen (CCS), supply hydrogen (orcertificates to guarantee the origin of hydrogen). as will the geopolitics of energyAs with fossil fuels, the trade routes will be determinednot only by natural, technical, and cost factors, but alsoby geopolitical factors. History shows that industrialtransitions on a global scale can lead to a shift in powerbetween regions and in the geographic focal points ofhubs. Hydrogen supply will originate in countries withextensive renewable energy capacity that offer electricity for low prices. In addition, countries that have adominant (fossil) energy exporting position and havefavorable climatic conditions for renewable energyproduction (and the resources for such investments,e.g., Middle Eastern countries) may try to maintain thisposition through hydrogen export13. Many countrieswith excellent natural conditions and space availabilityoften deal with political instability, either domesticallyor in neighboring countries whose territory must becrossed for access to the rest of the world.Thus, the global transition to hydrogen might implygeopolitical risks because of new trade routes andsupply dependencies of geopolitically unstable regionsand countries (in North Africa, Middle East, and LatinAmerica). Although what might happen in the future isspeculative, our best guess is that the geopolitical risksregarding the hydrogen trade will at least be comparable with the geopolitical risks related to oil and coaltrading. The very idea of becoming energy autonomousfor the Netherlands or Northwestern Europe is illusory;the dependencies will be at least as large as the current dependencies on fossil fuels. In regions such asNorthwest Europe, which will become a large importerof hydrogen (see Chapter 3), will need to be alert tothe impact of geopolitics on their supply chains. Onesolution can be found in strengthening the resilienceof supply chains by importing via multiple routes andfrom various suppliers.

10Chapter 2The emerging global greenhydrogen economyHydrogen for the Port of Rotterdamin an International Context– a Plea for LeadershipJune 18, 2020 Figure 2Example visualization of the current difference in costsof producing green hydrogen locally in the Netherlandsor in other countries and transporting hydrogen.This is based on the HyChain II model. Please notethis is an exploratory model and highly dependenton assumptions. One simplification is that the model assumes production in the geographic center of acountry, so coastal production might be cheaper. For thevisualization, the default values in the reference modelwere used, with a maximum pipeline transport of 3,500km and a maximum inland transport to port of 500km. Please note this visualization does not representthe availability of energy (or whether it is to be usedlocally or exported elsewhere for economic efficiency).The model represents current costs and prices. For moreinformation and the model itself, see here.Cost differencesustainablehydrogen production Figure 3Cost difference between producingammonia locally in the Netherlandsor producing green hydrogen elsewhere and, before transporting it,converting it to ammonia.This is based on the same model asFigure 2, using the default parameters in the reference model.Cost differenceammonia production,local vs. elsewhere

11Chapter 2The emerging global greenhydrogen economyIntercontinental transport costs are surmountable but lead to diverse forms oftransportThe obvious argument against a global hydrogen trade isthe availability of low-carbon hydrogen and the cost oftransport.Although renewable energy has become the lowest-costsource of new power generation in most parts of theworld14, little (less than 0.1% of global dedicated hydrogen production today comes from water electrolysis)renewable energy is used to produce hydrogen. Renewable electricity production can still be absorbed for directuse into national grids almost everywhere in the world,which does not stimulate trade in green hydrogen.However, at some point, the availability of space and theright climatic conditions will become more of a decisivefactor than investment and transport costs. Areas suchas Japan and Northwest Europe will simply run out ofspace for renewable energy production to meet theirenergy demand. Additionally, when the prices of renewable energy drop even further and the market for hydrogen scales up, the cost of hydrogen production throughelectrolysis, in comparison with hydrogen productionfrom natural gas or coal, is no longer significant (e.g.,IEA expects a price drop of 30% for producing Hydrogenfrom renewable energy15).Still, the high transport costs – owing to the high costs ofchemical conversion, liquefaction, or compression, compared to, for example, LNG, and especially oil (products)– will impact the way transport is organized; from sourceto user, supply chains will be formed that minimize costs.This will result in a diversification of the forms of transport. Where possible, pipelines will be used for transport or energy will simply be imported as electricity fordirect use or near-user conversion into hydrogen up to3000 km. Over longer distances, such as intercontinentaltransport, shipping will become the dominant transportmode by using the currently promising liquid organichydrogen carriers (LOHCs), for example.The end use will also determine in which form hydrogenis transported. For example, currently, almost half ofglobal hydrogen usage is feedstock for ammonia produc-Hydrogen for the Port of Rotterdamin an International Context– a Plea for LeadershipJune 18, 2020tion (fertilizer)16. Conversion a

Rotterdam's window of opportunity to become a first mover . 25 Chapter 6. Reorient subsidy instruments into a transition . 27. proposition from society, government, and industry . Chapter 7. Face the need for energy imports, and actively . 30. develop hydrogen trade relations. Chapter 8.