Sep 29 | 2022
EIC’s Duhon Points to Opportunities in Hydrogen and Carbon Capture
Energy-related capital expenditure and decommissioning projects launched worldwide have doubled from 2019-2021, while 2022 is on track to beat 2021, with renewables continuing to lead the way.
Amanda Duhon, regional director at the Energy Industries Council, or EIC, told listeners in a breakbulk and project market outlook session at Breakbulk Americas that 2022 continues to reflect the global transition to renewable and sustainable energy.
“Some 1,250 new CAPEX and ABEX projects were announced in 2019, rising to 1,800 in 2020 and 2,500 in 2021. About 58 percent of new projects we tracked are renewables – largely onshore wind and solar,” Duhon said.
“Energy transition projects – floating offshore wind, carbon capture, hydrogen and energy storage – made up 14 percent of 2020 projects and 20 percent in 2021. That is just behind the share of mature hydrocarbon projects announced last year.”
“We have added 2,050 projects so far this year and renewables, including offshore wind, make up 53 percent. Energy transition projects are 21 percent of that, with hydrogen and energy storage again seeing the biggest growth. In keeping with the 2021 UN Climate Change agreements, we have yet to see new coal-fired generation projects announced.”
According to the EIC, offshore wind projects – both fixed and floating systems – continue to grow. Europe, South America and Asia-Pacific lead the way, particularly in the UK, Brazil and China.
Bigger goals for offshore, particularly floating, will spur US West Coast development with hopes that R&D will cut costs by as much as 75%. Investment will increase as more projects move from development to construction.
Commercial-scale energy storage projects, often linked to hybrid solar and wind, will also continue to grow, with battery technology dominating along with compressed air, liquid air and thermal.
The carbon capture sector meanwhile has been hampered by conflicting government policies, but incentives linked to the US Inflation Reduction Act may improve stability, the EIC said.
Projects tend to focus in the US Gulf due to existing infrastructure, geologic prospects for storage and proximity to industrial hubs. One major project in North Dakota could store CO2 from 32 Midwest ethanol plants.
In 2021, more than 170 large-scale hydrogen projects were announced – led by the US, Canada, Australia, UK, Egypt and Chile. Over 80 percent were green hydrogen facilities powered by renewables. IRA subsidies for green hydrogen of $US3 per kilo would make it competitive in parts of the US Northeast with potential to become the cheapest in the world.
Oil and gas meanwhile still have a “key role” in the energy matrix, Duhon said.
The number of new O&G projects has fallen since 2018, but 2022 numbers may exceed 2021 by year-end, according to the EIC. European demand meanwhile is driving growth in sales and purchase agreements for LNG development in the US Gulf. Biofuels, especially renewable diesel and aviation fuels, have grown considerably.
“We see smaller but roughly similar shares in downstream, renewables and conventional power,” Duhon said. “Offshore wind, hydrogen, carbon capture and energy storage constitute a smaller share now, but clearly there are opportunities for the long run.”
Check out our post-session interview with Amanda:
