1, EV pricing. The threat posed by highly competitive Chinese EV imports seems to be prompting action by other manufacturers at last. "Our mission is to reduce costs as quickly as necessary to absorb the additional costs of electrification and sell EVs at the same price as combustion-engine cars because the Chinese know how to do it’ said the head of Stellantis recently. The price differences are still stark; an automotive web site says the petrol Fiat 500 starts at £16,790 in the UK while the electric equivalent is priced at £28,195. But the last weeks have seen the announcement of several small EVs not made in China that are broadly competitive with internal combustion engine equivalents. Hyundai said it would start production of an electric car in mid-2024 that will retail in Europe for less than €20,000, a price point often stated to be necessary for both competing with Chinese imports and with petrol alternatives. Renault, Citroen and VW have also recently revealed smaller EVs at around €20-25,000.
2 German solar auctions. The requested prices in German PV auctions continue to fall. Accepted bids in the last round of 2023, announced earlier this month, averaged €0.517 per kWh. This is down by 20% from the results of previous auction in August of last year and a quarter less than the results of April 2023. Interest was also higher; bids were entered for 5.4 GW compared to 4.6 GW in the August auction.
3, Hydrogen at Kraft Heinz factory. Carlton Power, a UK renewables developer, will work with Heinz to replace 50% of natural gas use at a large factory in Wigan in north west England. (For UK readers, this is where your baked beans are made). The factory will be Heinz’s first use of hydrogen for process heating worldwide. Carlton Power has four other hydrogen projects at industrial sites around the UK. The hydrogen in Wigan will be made using renewable electricity and a 20 MW electrolyser to replace about 50% of its gas use. Although the construction of this £40m ($50m) hydrogen plan is not yet finally approved, partly because it depends on obtaining government subsidy, Heinz says it hopes to start using H2 as early as 2026. What’s particularly surprising about this announcement is that the hydrogen will be almost certainly far more expensive than the natural gas it replaces.
4, Aviation and sustainable fuels. Thus far, Airbus has presented its vision of the future as being dominated by aircraft burning hydrogen. This attitude appears to be changing. In recent remarks, CEO Guillaume Faury said that the company envisages a completely new mid-range aircraft arriving in the second half of the next decade. This plane would be designed to run on Sustainable Aviation Fuel, probably largely consisting of synthetic kerosene made from hydrogen and captured CO2. I think this is the first public acknowledgement from Airbus that synthetic kerosene may be the crucially important fuel for all but very short distance aviation, where batteries and fuel cells will have an important role. Guillaume Faury is quoted as saying that the new aircraft will be ‘front-and-centre to our strategy to enable carbon neutrality for aviation by 2050’. He didn’t make clear why an airplane burning e-fuels would need to be any different to conventional jets sold today.
5, US geothermal energy. The Biden administration put $60m into 3 geothermal projects intended to help move the US from about 4 GW of geothermal energy today to around 90 GW by 2050. (Expressed as electricity produced per year, the mid-century figure is over twice total UK supply today). The winners include Chevron, which will use new techniques to drill for heat near an existing geothermal field and Mazama, a pioneer drilling into very high temperatures close to a volcano in Oregon. Perhaps the most interesting technology comes from Fervo, the third winner. It is using techniques copied from shale oil exploration to significantly reduce the time needed to drill the wells. The company just reported a 50% reduction in the cost of drilling a well and big improvement in drilling rates to about 20 metres per hour. Most strikingly, it suggests a ‘learning curve’ for geothermal drilling of about 35%, meaning every doubling of accumulated kilometres of well will result in a reduction of more than one third in the time taken, with roughly equivalent impacts on cost. In some areas of the world, such as parts of America, steam from geothermal wells may generate electricity at prices competitive with solar.
6, Biological recycling of plastic. The French company Carbios said it has commissioned an engineering firm to execute the construction of the world’s first biological recycling plant for the plastic PET in eastern France. Carbios uses enzymes to break down the polymers in plastics into the original simple monomers. These monomers can then be repolymerised into virgin plastics. The company’s technology is amongst the first to offer full circularity for PET and it claims it will be able to extend its enzymatic approach to many different types of plastic. (Current plastic recycling technologies are absolutely not properly circular). Carbios’ approach may also be able to produce plastics at lower cost than those made from oil. (My new book, available on March 21, has a chapter on the difficulty of recycling plastics and covers Carbios and its main competitors).
7, Biomethanol. Denmark’s European Energy continues its push into low carbon methanol, the likely fuel for world shipping of the future. It announced a deal with Montauk Renewables in Texas to collect the CO2 collected from landfill waste sites and transport it by truck to European Energy’s methanol production plant where it will combined with hydrogen and turned into methanol. The volumes are significant for the very early stage in this new industry. The 140,000 tonnes of CO2 in the deal will result in about 100,000 tonnes of methanol, about 2% of the amount the shipping industry leader Maersk says it will need to meet its 2030 decarbonisation objectives.
8, The cost of green steel. H2 Green Steel, the highly funded startup developing a hydrogen steel works in northern Sweden confirmed again this week its expectation that its product will be 20-30% more expensive than conventional steel. This is less than many analysts thought. The relatively small price premium partly arises because of the low price of power used to make hydrogen in its chosen location. The premium is roughly equivalent to a €150 carbon tax on slab steel, either in the EU Emissions Trading Scheme or as the Carbon Border Adjustment Mechanism price. So the price to the end-user may be little different from conventional steel made from coal if the ETS price continues to strengthen. In any event, H2 Green Steel appears to be having very few problems selling its steel today on long-term contracts.
9, Electric car sales. Stories proliferate that say that electric car sales are falling. Yes, the rate of increase varies sharply from month to month- often in response to subsidy changes in individual countries - but overall global volumes continue to increase. Consultants Rho Motion reported that world sales increased by 69% in January compared to January 2022. However January 2024 sales fell sharply compared to December 2023, even as total sales of battery and plug-in hybrid cars hit 1.1 million. Although sales of pure electric cars remain strong, concerns over charger availability seem – perhaps temporarily – to be encouraging the rise of hybrid vehicles.
10, Green fertiliser. Three stories from the global south this week on the decarbonisation of fertiliser production. Atome, a UK company focusing on producing low carbon fertilisers in South America, said it was working with the Costa Rican state electricity company to obtain 120 MW of green power for a new factory that will make 100,000 tonnes of fertiliser a year. If I have done my research correctly, this output will approximately match the country’s current fertiliser imports. The plan mirrors an existing Atome project to use hydro-electric power in Paraguay to make green ammonia. A second project in Uganda will use Norwegian money to fund the construction of an even larger fertiliser factory using green hydrogen from hydro-electric power. In Angola, an earlier stage project backed by an Australian mining company also targets the use of very low cost surplus hydro-electric power to make ammonia for fertiliser use and for manufacturing explosives for use in mining. Many countries in the global south import most of their ammonia-based fertilisers. Cheap electricity and efficient production of the hydrogen needed will mean that fertiliser manufacture can occur locally. This may be an early benefit of the energy transition to less developed countries, which so far have seen little advantage from decarbonisation.
My new book - Possible: Ways to Net Zero - will be published on March 21 and is available for pre-order on the Amazon and on the Blackwells UK web sites.
Thanks Chris. Great summary of some of this week’s events, as ever. Congrats on the new publication coming out!