hydrogen: Linde is investing heavily in hydrogen, but profitable green hydrogen remains in 5-7 years, says CEO

Global industrial gases company Linde, which made headlines last year for helping Indian authorities tackle a severe shortage of medical oxygen, is now in the news for its work on another gas, hydrogen. The UK-based company is considering investments of around $5 billion in hydrogen capacity worldwide over the next three years, some of which could be in India.

“My limit for investing in India is unlimited,” said Sanjiv Lamba, India’s new CEO of Linde. In an interview with ET’s Nehal Chaliawala and Satish John, Lamba also said that if the Indian government’s efforts to champion green hydrogen go in the right direction, an inflection point where clean-burning industrial fuel will be a sales pitch is always five to seven years away. Edited excerpts:

The world is betting on hydrogen as the fuel of the future. How is Linde in this race?
One of the lesser known facts is that Linde now owns a $2.5 billion hydrogen business. We have about 1,000 miles of pipelines and just under 200 large hydrogen plants around the world. And we leverage some of the most complex execution processes around hydrogen manipulation. We talk about hydrogen in several colors. There’s grey, blue, green, yellow and turquoise and apparently pink too; I lost count. It is, of course, a colorless gas that most people overlook. The people talking about hydrogen today, the ads you see, 90% of those people have never had anything to do with gas. It is a molecule that requires the implementation of certain precautions and safety measures. And we’ve been doing it for 50 years. This expertise and this experience that we have, you cannot duplicate it, you cannot develop it in a flash.

We have the ability to participate in the entire hydrogen value chain. We can produce it using steam methane reformer, autothermal reformer, can unit and of course green hydrogen by electrolysis. We have a stake in ITM Power, one of the main players in electrolysis. We are agnostic in many ways about production technology. We are also able to move this asset using our own technologies. And then, at the point of use, we have either industrial application technology or the best hydrogen fueling stations in the world. Our service stations are based on German technology. We’ve been working on it for 20 years, and today there are 2,200 stations installed around the world.

What type of investment will you make in the hydrogen space?

Currently, we are actively working on approximately 288 projects. This represents approximately $5 billion in probability-weighted investments over the next three years. If I look at the total project landscape, it’s probably between $20 billion and $25 billion. Linde has an incredibly strong balance sheet. We have the capacity to invest between 1 and 20 billion dollars; I don’t think it would be a constraint for us. The constraint is not capital, but economic feasibility. Our principle is that for projects to be economically sustainable in the longer term, they must be self-sustaining. The only minor variation we are making is to allow the inclusion of incentives in the financial evaluation of the project. Apart from that, each hydrogen project must meet the same investment criteria that we have as a traditional project. We don’t give him a pass. ‘Cause if it is
do not stand on its feet economically, it won’t last in the long run.

What kind of investments will you make in India?

I talked about the 288 projects we are working on. Of that some are in India but not as much as I would like. I must also give credit to the Indian government for creating the hydrogen mission policy. This is a policy of intent at this time. I don’t think it’s enforceable yet. I think a major step would be to change the policy where the consumption requirement would be imposed on certain industries. I know there’s also a lot of discussion about production incentives.

My willingness to invest in good green projects in India is boundless. So out of the $5 billion, if potentially I have to invest $5 billion in India to grow the business because the opportunities are here, I would be more than happy to do that.

What is the economic situation of green hydrogen today?

I’ve heard projections like $1 per kg for green hydrogen. On an Excel spreadsheet, even I can make assumptions and provide any number you want. None of these smelters operated for more than a few months. We are one of the first 10 electrolyzer operators in Australia. We are building the largest PEM electrolysis plant in Leuna Germany at 24 megawatts, which is tiny. People talk about gigawatt projects, but they don’t have a megawatt on the ground. Previously, I watched this long list of ads every day and got frustrated. Now I see that 98% of those ads go nowhere. And if we build the largest PEM electrolyser today, and it’s only 24 megawatts, you can understand what’s really going on. So the reality is that profitable green hydrogen production is probably five to seven years away. I wish it was sooner. I am a green hydrogen champion. But I also have to face reality.

The Indian government wants the country to be an exporter of hydrogen like the Middle East is today for crude oil. Is this a realistic ambition?

I think ambition is good. I commend the Indian government for having this aspiration. It pushes entrepreneurs and businesses to move in this direction. We also need to look at the competitive advantage that India has in cheap renewable energy. Green hydrogen pricing has two components. The first is capital coming in, and the rest is renewable energy which is about 40-45% of the base cost. India has an inherent advantage in terms of being able to leverage its low cost renewable energy from solar and wind power.

The government also wants to boost domestic steel production. Do you see this as an opportunity for Linde?

We certainly see this as a tremendous opportunity for the steel industry and for us as facilitators. We play a small but essential role: without oxygen, you cannot produce steel. I told the team that I wanted them to be ambitious about their plans for profitable growth. I emphasize profitable growth because sometimes in all the excitement of growth, we don’t always get the best quality projects. We are very rigorous in our approach to project quality. Steel is a good industry. The quality of the customers we deal with – Tata Steel, Jindals,

, etc. – are good customers. Therefore, India will receive a lot of support from me. I would be willing to invest in as many high quality projects as they can bring without constraints. I am open to investing in India as many projects as possible to develop and earn.

Are government subsidies essential to encourage the adoption of green hydrogen?

In my opinion, incentives are absolutely essential from the start; there is no doubt. The nature of the incentives could be different. Some countries offer investment incentives, some countries offer production related incentives. This is absolutely essential because today there is no scale for the production of hydrogen on the green side.

Can hydrogen be an alternative fuel for vehicles?

I’ll be blunt and tell you that hydrogen works best when you have a heavy payload to consider. Like a truck, bus, train or ferry. Hydrogen makes no sense in a passenger car. I mean, it’s very glamorous and sounds great. But from an economic perspective, where you need to move large payloads over long distances, that’s where hydrogen is the best choice.

What do you think of blue hydrogen?

Today, people don’t talk much about blue hydrogen. But the reality is that blue hydrogen, which is essentially hydrogen produced from natural gas, has a very low carbon intensity. You can capture 95% of all CO2 and sequester it. And you can do it on a massive scale today. All countries that have natural gas resources, such as Canada, the United States, Middle Eastern countries and Australia, are on the way to blue hydrogen. I think this is the right bridge to have by the end of this decade towards an ultimate inflection point where green hydrogen will take over. Today, the amount of land blue hydrogen needs for 900 megawatts is 12 acres of land. For an equivalent PEM (Polymer Electrolyte Membrane) electrolysis and solar energy project, 6,100 acres of land are required.


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