December 6, 2022
Earlier this year, Point Twelve is born to provide hydrogen producers with the technology and tools to raise and achieve their decarbonisation ambitions. Point Twelve does this by building software to trace sustainability attributes, scale certification practices and automate compliance.
#1: Hydrogen is only as clean as the energy used to produce and ship it
Decarbonizing our global economy counts amongst the top challenges of our time. Direct electrification can take us far on this path, but not all the way. For entire segments of our economy – steel, glass, cement, chemicals, fertilizers, shipping, aviation sectors known as “hard to abate” and responsible for about 22% of global greenhouse gas emissions, hydrogen is the most straightforward energy carrier to achieve decarbonisation. As such, hydrogen stands out as an incredibly important piece of the net zero emissions puzzle. Hence the attention boom for hydrogen in the previous year. In 2022 some 680 large-scale hydrogen project proposals, equivalent to USD 240 billion in direct investment through 2030, have been put forward worldwide – an investment increase of 50% since November 2021 (1).
Yet, there is a catch. Hydrogen is not inherently sustainable.
It is only as clean as the energy used to produce and ship it. If produced and shipped with carbon-rich energy sources, hydrogen will not be a boon to net zero agendas. Hydrogen needs to be produced using carbon free processes in order to contribute to decarbonisation. What does this mean?
Hydrogen can be produced from multiple sources.
If produced through the electrolysis of water, carbon-free electricity needs to be used as the primary energy source. If produced from natural gas, carbon capture needs to effectively take place in the process.
Then comes shipping.
Then comes shipping: as large shares of hydrogen are expected to be traded globally by 2030, the industry will have to make sure that shipping-related emissions do not stifle the benefits of resorting to hydrogen vs. fossil fuels.
The bottom line
If done right, hydrogen can accelerate real decarbonisation. According to the International Energy Agency (IEA), hydrogen has the potential to avoid up to 80 GT of carbon emissions by 2050. Yet, if done wrong, hydrogen could slow down the energy transition. This chemical engineering reality is the main reason for regulatory complexity being created around the topic of hydrogen. Governments and businesses are only interested in hydrogen to the extent that it enables decarbonisation. Therefore they need to make sure that the hydrogen turn is taken right.
#2: Hydrogen and derivatives producers are under pressure to guarantee the sustainability of their production
Hydrogen end customers want to decarbonise. As a result, producers are under pressure to guarantee the sustainability of their production.
As in any ambiguous environment, certification will play a central role in demonstrating carbon emissions. As part of the RepowerEU package in 2022, the European Commission clarified the definition of “renewable” hydrogen, and therefore the fundament for low-carbon hydrogen certification. In fact, in order to certify their hydrogen as “green”, producers will need to prove that the energy used to produce it comes from renewable sources – on a quarterly granularity basis up to 2028, and on a hourly granularity basis from 2028 onwards. This temporal correlation criteria creates a need for detailed monitoring of operations.
Hydrogen offtakers, too, demand proofs of sustainability. The revision of the Renewable Energy Directive, EU ETS and its Carbon Border Adjustment Mechanism, the EU Taxonomy for sustainable activities and the Sustainable Finance Disclosure Regulation – these regulatory packages make it a prerequisite for EU companies to report on detailed carbon emissions to do business. Companies unable to report on their carbon emissions, especially the hard to abate sectors with 2030 targets to reduce GHG emissions – will face fines. Hydrogen needs to be supplied with a detailed carbon content. No label, no sale.
Finally, investors and society in general put increasing pressure on companies to walk-the-talk on sustainability.
The bottom line
Hydrogen producers are being pressured by regulators, their customers, investors and society as a whole to deliver on sustainability targets. Therefore, companies calling “green” what isn’t, will not live long.
#3: Digitalisation and automation are unavoidable
Hydrogen producers currently have no means to provide assurance to offtakers, end customers, regulators and investors that what they sell was produced and handled in a truly green way. At best, they rely on manual calculations to prepare for yearly audits in view of certification. Meanwhile, they face certification processes inherited from the 20th century, relying on onsite visits and non granular data. These instances will not scale to the extent needed when hydrogen and derivatives will become global commodities in the upcoming few years.
Transparency is needed, as well as a certain degree of automation.
That’s where Point Twelve comes in.
We envision an economy thriving on the sustainable use of natural resources. We are on a mission to provide hydrogen and derivatives producers with the technology and tools to raise and achieve their decarbonisation ambitions.
We do this by building software to trace sustainability attributes, scale certification practices and automate compliance.
Traceability and certification at scale, enabled.
Thanks to Point Twelve, hydrogen producers have one single touch point to manage the complexity of carbon traceability and certification. We handle all data flows and exchanges along the H2 value chain between assets, certification bodies, keeping costs and risks under control.
Who are we?
Help us help you.
We are looking for partners to develop our solution hand-in-hand. If you are operating hydrogen and/or hydrogen derivatives plant, a hydrogen consumer, a certification body or have any interest in collaborating with us, we would like to hear from you.