Written evidence submitted by Anglo American (CGE0046)

Introducing Anglo American

1. As one of the world’s leading mining companies, one of the world’s largest producers of platinum and a significant producer of copper and nickel, Anglo American has an interest in low/zero emission technologies, including battery technology. However, our focus for this submission is on the future of hydrogen and fuel cell technologies (including hydrogen for mobility, heating and storage).

2. Platinum is a vital component in hydrogen and fuel cell technology that can be used in either hydrogen powered vehicles (road, rail, water) and production of green hydrogen via electrolysis, which can also be used to make hydrogen for use in energy storage. The metal acts as a catalyst as part of the chemical process that converts hydrogen into electricity, with the only by-product being water.

3. We believe in the potential of the “Hydrogen Economy”, which uses hydrogen for various applications ranging from fuel cell electric vehicles (FCEVs) and storage, to heat and power. We support the development of the hydrogen and fuel cell value chains through several initiatives including investing in start-up companies that have developed new hydrogen and fuel cell products. This is done via an Anglo American founded venture capital fund, AP Ventures[1]. We also invest directly in hydrogen and fuel cell demonstration projects globally, including co-funding the roll-out of hydrogen refuelling stations. Further to this, we actively participate in various industry associations.

4. We are proud to be an important industry partner in the low carbon transition. Anglo American is a founding member of the global Hydrogen Council[2], launched at the World Economic Forum’s Annual Meeting in Davos in 2017. The Council now consists of 54 leading companies from across the hydrogen value chain. Our vision sees hydrogen achieving roughly 20% of the required CO2 abatement in 2050, powering more than 400 million cars and building on the existing gas infrastructure to meet roughly 10% of global demand for heat[3].

Summary

1. Reducing emissions from transport and heating is an essential part of meeting emissions reduction targets. We believe this objective is best served through the development of multiple technologies that complement each other and provide options for different use cases.

2. Hydrogen technology, including through the use of fuel cells, has immense potential for use in transport (not only in road transport), as well as heating and storage. We believe the committee should look at this technology as part of its evidence and assess whether more can be done to unlock its opportunities.

3. There is plenty of room for hydrogen technology to continue to grow. Fuel cells, electrolysis and other associated hydrogen technologies are usually nearer the beginning of the cost reduction curve, when compared to battery technology (which has benefitted from significant public sector support and subsequently wide consumer use over many years).

4. However, Government investment has so far been skewed in favour of battery technologies. There is currently £446m of funding available for battery electric vehicle (BEV) technology, compared to £43m in Government funding for hydrogen technology (£23 m from the Office for Low Emission Vehicles[4] and £20m from the Department for Business, Energy and Industrial Strategy[5]).

The areas that are proving hardest to decarbonise – like heavy transport, industry and heating – are also the areas where hydrogen has the greatest utility. Hydrogen is light and energy dense, making it ideal in, for example, freight, where large, heavy batteries would compromise payload capacity. Policy Exchange’s latest report claims that “hydrogen production is most scalable and cost effective when targeted towards the certain segments of the transport sector, such as heavy goods vehicles, buses, trains and potentially shipping”[6]. Hydrogen can also be generated at periods of low grid demand and used during periods of high demand, making it an ideal option for load balancing.

5. We support the recognition of a “hydrogen pathway” in the Clean Growth Strategy, but caution against the Government “picking winners” and expecting other technologies to survive and be available for deployment in the future without the necessary public sector support in their development and commercialisation. Favouring one technology, specifically BEV technology, over others (like FCEVs) risks distorting the market and giving one technology a competitive advantage over others. This could then hold back other technologies, and with it, overall emissions reductions.

6. Developing electrolysis technology – the method by which hydrogen is created from water using electricity – is essential for this vision of the future. The Committee should recommend that Government explore the cost trajectory of electrolysis and how the UK can unlock its potential.

7. Through electrolysis, hydrogen can be generated from curtailed renewable energy, making this electricity useful where it is currently lost. We recommend that the committee explore what opportunity there is for using curtailed renewable energy to create hydrogen.

8. The successful uptake of hydrogen and by extension, successful decarbonisation of transport, will depend on the development of hydrogen refuelling infrastructure. The Committee should recommend that Government set out a plan to establish a national network by 2025. Hydrogen Mobility Europe explains that investors will require support in the early years to justify the challenging early investments in hydrogen refuelling stations before mass uptake of FCEVs can take place. As demand on the stations increases, they can become profitable investments.[7]

The Committee should also recommend that Government considers a “Grove Challenge” that reflects the battery Faraday Challenge, to unlock the cost reduction potential of hydrogen and build on the UK’s strength and its competitive position with regards to hydrogen and fuel cell technology, before it is overtaken by other countries with bigger ambitions and more significant public sector funding. Korean industry and government, for example, jointly announced an ambition to build 310 hydrogen refuelling stations by 2022[8] whilst Japan has set itself the target of having 40,000 FCEVs on the road by 2020 and 800,000 by 2030 and China plans 1 million FCEVs by 2030 and is already investing in growing its manufacturing capabilities[9].

9. We also suggest that the Committee tell Government to implement technology neutral support mechanisms for charging and hydrogen refuelling infrastructure.

10. Providing a level playing field for technologies to compete on will lead to investment in hydrogen and, as a result, production efficiencies and cost reductions across the hydrogen value chain. This will then allow hydrogen technologies to be deployed elsewhere, from electricity storage to heating.

11. The Government should consider whether well-intentioned policies are already creating an uneven playing field for new technologies, which would then work against their overall aims to reduce emissions by decarbonising the UK’s transportation system and other sectors.

The need for a level playing field

12. In transport, electric vehicles (EVs) take two forms: firstly, there are FCEVs, which combine onboard hydrogen fuel with airborne oxygen to generate electricity, and secondly there are BEVs, which take electricity directly from the grid to be stored in a battery and then discharged when required. Both have zero emissions at the tailpipe.

13. Advantages of FCEVs over BEVs include their longer range and shorter refuelling times, which make the technology ideal for high-utilisation requirements. Less time spent stationary while refuelling, as well as longer ranges, means that fewer hydrogen refuelling stations will be required for FCEVs than BEV charging points, making the rollout simpler.

14. The hydrogen fuel cell, which powers FCEVs, is a British invention. It was first created by William Robert Grove in Swansea, in 1842. The UK still maintains world-leading expertise in the technology, but countries like Germany, China and Japan, and in the US, California, are currently looking at the technology the most seriously.

15. The UK is currently focusing its efforts on battery technology, yet according to KPMG, more than three-quarters of executives (77% global; 85% U.S.) say they believe fuel cell electric mobility will be the real break-through for electric mobility[10]. Larger vehicles like freight are already recognised as particularly challenging to decarbonise with battery technology alone due to reduced payload capacity. As the Hydrogen Council explains, for trucking, even larger capacities are required to move heavy payloads across long distances, for which hydrogen is well suited.[11]

16. While we believe hydrogen will be used across the energy spectrum, from transport and electricity generation to heating and energy storage, it’s worth highlighting that hydrogen has particular utility in areas that are hardest to decarbonise with batteries – for example heating, logistics, freight, industry, shipping and even planes[12]. Supporting batteries at the expense of hydrogen will only limit our future ability to decarbonise these areas.

17. The UK currently risks foregoing its lead in hydrogen if it makes a political decision to throw its weight only behind battery technology. Looking at Government funding, £200m has been made available for battery electric vehicle (BEV) charging infrastructure (match funded to £400m) alongside a £246m Faraday Challenge explicitly for battery technology. There is only £43m available for hydrogen technology and refuelling infrastructure.

18. The private sector is investing in hydrogen and fuel cell technologies, and Anglo American is doing so through the aforementioned AP Ventures, but Government actions have distorted the market and influenced investment decisions in favour of batteries. Whilst we welcome Government support mechanisms, which will be essential for unlocking private sector investment through increased confidence, these should be technology neutral. At the moment, we fear these mechanisms are skewed towards batteries.

Transport

19. Given approximately 36 per cent of transport-related greenhouse gas emissions come from trains, heavy goods vehicles, light vans, buses and coaches[13] (the market segments that will be best supported by FCEV technology), it is clear that FCEV technology has a big role to play in decarbonising the transport sector. 

20. According to the latest data made available by the Department for Transport (DfT) in November 2017, road transport accounts for 24 per cent of UK emissions. Whilst Britain will not achieve its emissions reduction targets through any one measure in isolation, decarbonising the economy and improving air quality will depend heavily on the successful decarbonisation of transport.

21. The uptake of FCEV technology will depend on the adequate provision of hydrogen refuelling infrastructure, which acts as a barrier to entry to the FCEV market. We welcome the Government’s commitment to spending £1 billion to support the take-up of ULEVs and an additional £80 million to support charging infrastructure deployment, however, it is crucial that this funding explicitly includes hydrogen refuelling infrastructure. The longer range and shorter refuelling times associated with FCEVs mean fewer refuelling stations will be required to achieve national coverage for FCEVs.

22. Today, it is possible to do entirely zero emissions journeys in an FCEV. Shell and ITM Power opened a new hydrogen refuelling station in Beaconsfield in March with two important features: firstly, hydrogen refuelling is done “under the canopy” alongside petrol and diesel pumps requiring no change in consumer behaviour; and secondly, the hydrogen is created through electrolysis with solar powered-electricity, making it zero emission from well-to-wheel.

23. It has also been proven that hydrogen can be successfully deployed for use in other modes of transport, primarily trains and ferries. French rail operator, Alstom, launched the first passenger train to run on hydrogen technology, the Coradia iLint, in Berlin in 2016. The iLint entered into commercial service in Germany this year[14]. Scottish shipbuilders Ferguson Marine are also in the process of building the world’s first sea-going car and passenger ferry fuelled by Hydrogen[15], and efforts to develop hydrogen ferries are also underway in the US and Norway. The uptake of FCEV technology will lead to cost reductions which will facilitate the roll out of hydrogen across multiple forms of transport.

Transitioning to a wider Hydrogen Economy

24. Cost efficiencies gained from the development of hydrogen powered vehicles and trains will enable the UK to transition to a broader hydrogen economy, which includes hydrogen for heating and storage (and vice versa).

25. In the medium to long term, the development of the technology that powers FCEVs and associated cost savings will play a part in transitioning the UK to a Hydrogen Economy, which encompasses fuel cell technology, hydrogen electrolysis, hydrogen gas for heating and Carbon Capture and Storage (CCS).

26. The wider use of hydrogen has already begun:

1. HyDeploy is an energy trial at Keele University to establish the potential for blending up to 20% hydrogen into the normal gas supply. It will run until 2020 and, if successful, it could be rolled out at scale and would significantly reduce the CO2 emissions associated with heating.

2. The H21 Leeds City Gate Project is a feasibility study being led by Northern Gas Networks to establish if it is feasible to convert the existing natural gas supply in Leeds, one of the largest UK cities, to hydrogen. The project would use SMR and CCS to make hydrogen and sequester 1.5 million tonnes per annum of CO2[16]. 

3. Cadent is planning to create the UK’s first large-scale hydrogen network in the North West of England, called HyNet, representing an investment of around £900 million and creating up to 5,000 jobs by 2025[17]. Operational by the mid-2020s, the facility would create hydrogen from natural gas, with some 93%[18] of the carbon being sequestered in repurposed gas fields in Liverpool Bay and elsewhere off the North West coast, which are due to be decommissioned soon. A new pipeline will deliver low-carbon hydrogen to 10 industrial sites, including oil refineries and manufacturing plants. Hydrogen will also be injected into the existing gas network serving Cheshire, Merseyside and Greater Manchester at blends of up to 20 per cent, reducing the carbon footprint of around two million homes.

27. For storage, electricity can be converted into hydrogen via electrolysis, which can then be stored and eventually re-electrified with a fuel cell. The growth of fuel cell technology means that, over time, the efficiency with which this will be done will increase, making hydrogen storage increasingly useful and economically viable.

28. Likewise, investment in hydrogen storage and heating will have a beneficial effect on bringing down the cost of FCEVs.

29. Essentially, the whole hydrogen ecosystem – the Hydrogen Economy – will benefit from Government policies that create a balanced playing field.

30. We support Clean Growth Strategy plans to invest in low carbon energy technologies, but Government plans should focus on a system-wide approach.

Conclusion and recommendations

31. The Clean Growth Strategy sets out ambitious plans for the future. We were pleased that it explicitly acknowledged a hydrogen pathway, which we believe will be a vital component of a decarbonising economy.

32. The UK has the potential to be a world-leader in hydrogen technology. The Science and Technology Committee should consider whether the UK’s current policy framework satisfactorily supports this potential and how to exploit wider opportunities with hydrogen.

33. We recommend that the Committee urge the Government to undertake a system-wide approach that will unlock the potential of hydrogen across various use-cases, helping to achieve emissions reduction targets.

34. The Committee should recommend that Government explore the cost trajectory of electrolysis and how the UK can unlock its potential.

35. The Committee should recommend that Government adopts a technology neutral support mechanism for charging and hydrogen refuelling infrastructure, setting out a plan to establish a national network of hydrogen refuelling stations by 2025.

36. The Committee should also recommend that Government considers a “Grove Challenge” that reflects the battery Faraday Challenge, to unlock the cost reduction potential of hydrogen.

October 2018