Why H2 is now ready for the energy transition · 1 Battery-hydrogen hybrid to ensure sufficient power 2 Split in A- and B-segment LDVs (small cars) and C+-segment LDVs (medium to

Why H2 is now ready for the

energy transition

2McKinsey & Company

AGENDA

1. Energy Transition urgency

2. The H2 role

3. On going dynamic

4. The case of Air Liquide

3McKinsey & Company

Despite COP21, Emissions continue to rise….

4McKinsey & Company

Oil & Gas keep massive investments in Fossil based projects

Urgency growing

5

GHG Emissions Projections

Gt C

O2

eq

uiv

ale

nt

2010 2020 2030 2040 2050

10

20

30

40

50

60

Current policy trajectory

2 °C trajectory

1.5 °C trajectory

Based on : UN-The Emissions Gap Report 2017

AIR LIQUIDE, THE WORLD LEADER IN GASES, TECHNOLOGIES AND SERVICES FOR INDUSTRY AND HEALTH

∙21/11/2017 Hydrogen Initiative AL Board Presentation

THIS DOCUMENT IS ••CONFIDENTIAL-RESTRICTED

6

7McKinsey & Company

Current efforts are not enough to limit climate change to below 2oC

Temperature increaseby 2100 due to global energy

related GHG emissions, in Gt

CO2e/year1

Current policies lead to 44 Gt CO2e/year2

INDCs3 decrease emissions to 37 Gt CO2e/year2

Emission reductions limit emissions to 19 Gt CO2e/year2

Significant emission reductions yield zero CO2 emissions2

Source: IEA (2014), CO2 Emissions from Fuel Combustion; IEA (2015) World Energy Outlook; IEA (2015) World Energy Outlook Special Report on Energy and Climate Change, IEA ETP 2016, ECCE 2016

1 The GHG emissions in 2013 were 34 Gt CO2 e/year

2 The GHG emissions forecasted for 2040 within the specified scenario

3 Intended Nationally Determined Contributions. The climate actions communicated in these INDCs help estimate whether the world achieves the long-term goals of the Paris Agreement

+4.0oC

+2.7oC

+2.0oC

+1.5oC

1970

2000 2050

“Overshoot & Collapse”

Rapport du Club de Rome

1970 Rapport du Club de Rome



Kaya

CO2 = CO2

Kaya

CO2 = CO2CO2 = CO2/Energy x Energy

Kaya

CO2 = CO2CO2 = CO2/Energy x EnergyCO2 = CO2/Energy x Energy/GDP x GDP

Kaya

CO2 = CO2CO2 = CO2/Energy x EnergyCO2 = CO2/Energy x Energy/GDP x GDPCO2 = CO2/Energy x Energy/GDP x GDP/POP x POP

Kaya

CO2 = CO2CO2 = CO2/Energy x EnergyCO2 = CO2/Energy x Energy/GDP x GDPCO2 = CO2/Energy x Energy/GDP x GDP/POP x POP

Energy efficiency of the economy

Carbon content of energy

Economic Welfare

Population

7.6

today8.6

20309.8

2050

World10

China8

US57

FR37

Philippines 3Senegal 1

17McKinsey & CompanySource: IEA ETP 2016

1 Final energy consumption within the 2DS of the IEA

2 Increase of energy demand is determined via the relative increase of CO2 emissions w/o energy efficiencies

3 The fossil fuels amount processed using CCS/U was determined to be 25% of the total amount of fossil fuels by relating the CO2 emission reduction compared for the 2DS and 6DS

4 The fossil fuel power sector also includes nuclear energy

Final energy consumption1,2, 2013 and 2050, in EJ

Four major levers are needed to enable the energy transition

640

20502013

373

Fossil fuels

Biomass and waste

Power sector – Fossil fuels

Power sector – Renewables

431

4. Renewables replace fossil fuels

2. CCS/U decarbonizes the use

of fossil fuels3

1. Increasing energy efficiency

limits the rise of energy consumption

3. Switch to zero emission energy

carriers, e.g., electricity or hydrogen

18McKinsey & Company

Progress on the Primay energy side are enabling next steps….


AGENDA

2. Hydrogen role


The energy transition creates multiple challenges

Global buffering

capacity is currently

based on mostly fossil

sources

Infrastructure needs

to go through a major

transformation

Increasing renewables

share leads to imbalances

of power supply & demand

Some energy uses are

hard to electrify via the

grid or with batteries:

▪ Transport

▪ Industry

▪ Residential heating

Carbon needs to be

reused to decarbonize

feedstock

SOURCE: Hydrogen Council

Enable the renewable energy system Decarbonize end uses

Need to increase

the amount of

renewables by

10 times by 2050

Need to store at

least 15% of energy

global needs

(beyond power)

Need to increase

electrification in end-

use sectors with

75% by 2050


Hydrogen is a clean, safe and versatile energy carrier


Produces clean power and/or heatfor transport and stationary applications

Can be produced without

a carbon footprint through

electrolysis or SMR + CCS

Required as a clean

feedstock in industry when recycling captured CO2

Has a high energy density,

making it suitable for long-term

storage

Can be transported over long distances,

allowing the distribution of energy between countries

Biomass

Batteries

H2


There are seven roles for hydrogen in the energy transition

Act as a buffer to

increase system

resilience

Distribute energy

across sectors and

regions

Enable large-scale

renewables integration

and power generation

2

3

Decarbonize

transportation

Help decarbonize

building heating and

power

Decarbonize industry

energy use

Serve as feedstock, using

captured carbon


4

7

5

6

1

Enable the renewable energy system Decarbonize end uses

100

1,000+10

10,000+

10

0.1

1,000

1

100

WeightTons

Average mileage per day/tripKm

FCEVs will play an essential role in decarbonizing transport

Source: Toyota, Hyundai, Daimler

1 Battery-hydrogen hybrid to ensure sufficient power2 Split in A- and B-segment LDVs (small cars) and C+-segment LDVs (medium to large cars)

based on a 30% market share of A/B-segment cars and a 50% less energy demand

Bubble size representing the relative annual energy consumption of this vehicle type in 2013

Bio- and (H2-based) synthetic fuels

FCEV

BEV

Medium to large cars², fleets and taxis

Small cars/urban mobility2

1

1

Light commercial vehicles

Projected economic attractiveness

DECARBONIZE TRANSPORT

Source: IEA, E4Tech, US DOE, Press research1 Extrapolating the growth to 20 MW in 2017/2018 from outstanding projects, 2 Assuming 20k units production per year, 3 Assuming 100k units production per year in 2025

H2 technologies and markets are already ramping upSelected examples of the hydrogen sector




25

Hydrogen has significant potential across all applications

Relative importance by 2050Market share potential in segment

1 Percent of total annual growth in hydrogen and variable renewable power demand 2 For aviation and freight ships 3 Percent of total methanol, olefin, BTX production using olefins and captured carbon


Bubble size indicates hydrogen potential in 2050 in EJ (1 EJ)

4

1

5

6

7

0% 10% 20% 30% 40% 60% 80% 100%

Steel

(DRI)

CCU for

methanol,

olefins, BTX3Refining

Ammonia,

methanol

Heating/co-generation in

countries with gas networks

Heating/co-generation

in countries without

gas networks

Medium-/low

industry heat

High-grade

industry

heat

Mid-sized/

large cars

Passenger

ships

Vans & minibuses

Coaches & buses

ForkliftsTrucks

Trains & tramways

Synfuel2

Small cars

Power ge-

nerationBuffer1

Industry

feedstock

Building heat

and power

Industrial

energy

Trans-

portation

Power

generation




26SOURCE: Hydrogen Council

10

9

11

16

22

9

2050

78

14

28

10

4030202015

8

Transportation

4

Power generation,

buffering

1

Industrial energy

5

Building heat and power

6

New feedstock (CCU, DRI)

7

Existing feedstock uses10

In a 2-degree-world, hydrogen could contribute ~18% of demandPotential global energy demand supplied with hydrogen, Exajoule (EJ)

18%of final energy

demand

Half of the total CO2 abatement potential will come from transport

0.4

3.2

1.2

0.6

6.0

0.7

CO2 avoidance potential 2050, Gigatons

Transportation

4

Power gene-

ration, buffering

1

Industry energy

5

Building heating

and power

6

Industry feedstock

7

Total

0.8

Cars 1.7

Buses 0.2

Trucks

Total 3.2

Other1 0.4

1 Aviation, shipping, rail, material handling 2 Difference between IEA Reference Technology and 2 degree scenario

SOURCE: IEA, Hydrogen Council

Hydrogen has the

potential to achieve

~40%of the required

abatement2 in

transport by 2050




28

Hydrogen: a central pillar of the required energy transition

SOURCE: Hydrogen Council, IEA ETP Hydrogen and Fuel Cells CBS, National Energy Outlook 2016

18%of final energy

demand

6 Gtannual CO2

abatement

$2500 bnannual sales

(hydrogen and

equipment1)

30million jobs

created

1 Value add of fuel cells

Estimated impact in 2050

The technologies exist and are ready to be deployed


Trans-

portation

Power

generation

Industrial

energy

Building heat

and power

Industry

feedstock

Today 2020 25 30 35 40 2045

1 Mass market acceptability defined as sales >1% within segment in priority markets 2 Market share refers to the amount of production that uses hydrogen and captured carbon to replace feedstock

3 DRI with green H2, iron reduction in blast furnaces and other low-carbon steel making processes using H2 4 Market share refers to the amount of feedstock that is produced from low-carbon sources

Start of

commercialization

Mass market

acceptability1

In renewables-constrained countries

In other countries

Forklifts

Medium and large cars

City buses

Vans

Coaches

Trucks

Small cars

Minibuses

Trams and railways

Passenger ships

Synfuel for freight

ships and airplanes

4

1

5

6

7

Medium-/low industry heat

Blended hydrogen heating

Production of methanol, olefins and BTX using H2 and captured carbon2

High-grade industry heat

Pure hydrogen heating

Refining

Ammonia, methanol

Decarbonization of feedstock4

Steel3




30

AGENDA

3. On going dynamic

31

A shared vision

Vision for Hydrogen Energy in 2019

The transport shift is part of a more global vision for H2, now widely shared

32

Current H2 Energy Deployments (as of 2018)

Source: Public reports and databases; Desk Research; Roland Berger(1) Sum of government’s publicly stated ambition worldwide (Long-term 2030+); (2) 4,926 FCEVs in California

Status and publicly stated plans of deployment of FCH technology by continent

Status QuoOutlook

(plans and vision(1))

North America

2.6N/A

44>12,000

~4,940(2)

~60m32

N/A~24N/A

Europe

28.8N/A

94>5,800

~1,080~13,5m

59>2,900

N/AN/A

Asia

0.5N/A

110>3,400

~2,760~8,8m

~1,050N/A

~200N/A

Status QuoMost optimistic Outlook

(plans and vision(1))

Global

31.8N/A

248>21,200

~8,800~82m

~1,150N/A

~500N/A

HRS (#)

FCEV (#)

Commercial vehicles (buses and trucks) (#)

FC CHP (in MW)

Electrolysis (in MW)

33

H2 FC TRUCKS FLEET

HYNET & H21 HEATING UK

>30

A change in scale of projects

Vision for Hydrogen Energy in 2019

H2 FC TRUCKS CENTURION – CAVERN –ENERGY FLEXIBILITY

NORTHERN LIGHTS HYBRIT – STEEL CO2 FREE H2 FC TRAINS H2 MOBILITY ENERGY NETWORK

H2 MOBILITY

LH2 SUPPLY CHAINGREEN H2 PROD FOR AMMONIA

MAGNUM H2 POWER PLANT

~2

~5 ~4.5 ~3.7 ~1.3

~1.7

~0.5~1

Building heating Power generation Production Mobility Feedstock Distribution Storage x Foreseen CO2 abatement of project at scale (Mt)

& others & others

& others

& others& others& others & others& others

PROJECTS PIPELINE OF 90 BN$

Source: Hydrogen Council

First signs of scale are ready

34

Announced Targets, Visions and Roadmaps

Source: IEA, December 2018 updates




35

AGENDA

3. AL play




Hydrogen - 40 years of development for industries

> 14 bn m3/yr

> 1,850 km H2 pipeline

> 46 large H2/CO plants

> 40 electrolysers in

operation

> 2 bn € sales

Supply-chain

Production

Production & Supply chain

Distribution Networks

US Gulf Coast

Singapore

Markets Segments Key Figures

Process industries

Transportation

Northern EU

36

Oil & Gas

Steel, Glass

Electronics

Space




37




From Theory to Markets – Shaping Markets

38

Total reach > 10 Million people

POLICIES MARKETS TECHNOLOGIES

39

www. https://www.facebook.com/search/videos/?q=ch2ANGE

40

41 Air Liquide, world leader in gases for industry, health and the environment

CHANGING ENERGY MEANS CHANGING WORLD !

Markets & Politics

Energy Value chain

Debt

Territories

Geopolitics

Individuals and Society

Economics of Energy

Local and Imported Value

Circularities

A NEW WORLDA NEW ENERGY

Documents

Why H2 is now ready for the energy transition · 1 Battery-hydrogen hybrid to ensure sufficient power 2 Split in A- and B-segment LDVs (small cars) and C+-segment LDVs (medium to