The energy transition from fossil fuels to renewables is widely considered as a key action field in decarbonizing the global economy, thus preventing the disastrous, irreversible, consequences of climate change, too well known to all. Yet, the greatest part of the required energy in the coming decade will still come from fossil sources. Fortunately, however, the highest growth rate will be seen in renewable energy sources. The World Energy Outlook 2022 report of the International Energy Agency (IEA) summarizes the longer-term global energy mix. In the ‘Stated Policies Scenario’ (STEPS), coal demand will reach a peak within the next few years, natural gas reaches a plateau by the end of the 2020s, and oil demand reaches a peak by mid‐2030s before it starts to decline. In relative terms, the share of fossil fuels (coal, oil, and natural gas) in total energy supply is expected to decrease from just under 80% in 2020 to slightly above 60% in 2040. The main scenario also shows that about 60% of all new power generation capacity to 2040 shall regard renewables (IEA 2022a). Under the more ambitious ‘Announced Pledges Scenario’ (APS), global energy demand is expected to increase by only 0.2% per annum to 2030 (0.8% p.a. in the STEPS) combined with a much stronger shift to low emission energy sources. The speed of transformation in the ‘Net Zero Emissions by 2050’ scenario (NZE) is even more dramatic.
In recent years, hydrogen (H2) has attracted a lot of attention in the energy transition and decarbonization debate. According to IRENA (2022a), hydrogen is set to meet up to 12% of global energy demand by 2050. The transition to hydrogen is not merely a fuel replacement but a shift to a new system with political, technical, environmental, and economic disruptions. In Europe, hydrogen is hoped to play an essential role in the energy transition. Hydrogen accounts for less than 2% of Europe’s present energy consumption and it is primarily used in the production of chemical products, such as plastics and fertilizers. 96% of hydrogen production is by means of natural gas. This is called grey hydrogen, using a process of steam methane reforming, where natural gas is mixed with very hot steam and a catalyst. Blue hydrogen is also hydrogen produced from natural gas, but this process is made carbon–neutral by capturing and storing the CO2 emissions (also called Carbon Capture and Storage or CCS).
Green hydrogen can be obtained via electrolysis, i.e., the use of (renewable) electricity to split water into hydrogen and oxygen. Green hydrogen has made an undulating movement as an alternative energy source in the past decades; it came and disappeared from the radar again and again. The latest wave, however, has been massive, with large investment budgets and countless projects being released. Green hydrogen has no carbon impacts, as the energy used to power electrolysis comes primarily from renewable sources like wind, water or solar. The use of green hydrogen as a raw material and fuel can thus reduce emissions in industry and make a major contribution to the 2030 and 2050 climate targets. When produced at times and places where solar and wind energy resources are abundantly available, renewable hydrogen can also support the electricity sector, providing long-term and large-scale storage, as well as improving the flexibility of energy systems by balancing supply and demand.
While the interest in hydrogen solutions in the 2010s was mostly driven by oil price shocks and concerns about peak oil demand or air pollution, the current interest in hydrogen seems to be primarily driven by a heightened focus on net-zero emissions, combined with a dramatic decrease in the costs of renewable electricityFootnote 1 and a recent cost surge in fossil fuels due to geopolitical tensions and the war in Ukraine. Still, demand for green hydrogen is expected to really take off only in the mid-2030s. By that time, green hydrogen should have become cost-compete with fossil-fuel hydrogen globally, and this is poised to happen even earlier in some countries like China, Brazil, and India.
This editorial focuses on the potential impact of green hydrogen on seaports and the things the latter should do in anticipation. We particularly explore the critical challenges and opportunities green hydrogen can bring to the economics and governance of seaports. We start the debate by discussing the fast-growing public and private interest in green hydrogen as part of the energy transition trajectory. Then, we analyze key considerations when placing green hydrogen in a seaport context. These range from the role of green hydrogen in the changing energy landscape of ports and the geo-economic repercussions of the adoption of green hydrogen on a port’s cargo flows, to the role of seaports in driving down the costs of a green hydrogen economy vis à vis those of a fossil-based economy. We conclude this editorial with a detailed discussion on the role of landlord port authorities in the adoption of green hydrogen as part of the energy transition.
2 All eyes on green hydrogen?
The strong focus on green hydrogen is visible both in the private and the public sector. By mid-2022, more than 1500 hydrogen-related projects were announced globally, while more than 60 countries have already developed or are developing hydrogen strategies (IRENA 2022c).
There has been strong regulatory and political support in recent years, particularly in Europe. For a long time, European policy was unclear about the potential role of renewable hydrogen in the energy transition and decarbonization debate. In recent years, the European Union has created a new momentum. In July 2020, the European Commission launched a strategy for energy systems integration and a separate hydrogen strategy. The Commission identifies the necessary steps for making renewable and low carbon hydrogen a key commodity in the energy system. The EU’s hydrogen strategy explores the potential for renewable hydrogen to help decarbonize the EU in a cost-effective way and in line with the European Green Deal. The strategy puts forward a vision for the creation of a European hydrogen ecosystem, from research and innovation, to scale up production and infrastructure, to an international dimension. In the same month, the European Clean Hydrogen Alliance was created to support the large-scale deployment of clean hydrogen technologies by 2030, by bringing together renewable and low carbon hydrogen production, industry demand, transportation (among other sectors), and hydrogen transmission and distribution. In July 2021, the European Commission proposed the revision of the RED II (Directive (EU) 2018/2001) under the Fit for 55 package of legislative proposals. The RED II directive sets targets for the use of renewable energy in transport fuels, basically requiring investments in green hydrogen-based fuels. Also, the EU Green Deal identifies hydrogen as one of the priorities in the energy transition.
The plan REPowerEU, initiated in 2022, gives further impetus to the hydrogen economy. The plan states that an additional 15 million tons (five of which produced in Europe with the remainder imported) of renewable hydrogen are required to replace imported Russian gas. The European five million would be additional to the 5 million tons already planned in Fit for 55. In September 2022, the European Union announced the setting up of a European Hydrogen Bank to help create a market for hydrogen. The bank will receive 3 billion euro in cash to bridge the investment gap and connect future supply and demand.
In September 2022, the European Commission also approved 5.2 billion euro of public support, by thirteenFootnote 2 Member States, for the IPCEI Hy2Use project. This is the second Important Project of Common European Interest (IPCEI) in the hydrogen value chain. The above amount is expected to unlock an additional 7 billion euro in private investments. Twentynine companies will participate in 35 projects concerning the construction of hydrogen-related infrastructure (large-scale electrolysers and transport infrastructure) and the development of innovative and more sustainable technologies for the integration of hydrogen into the industrial processes of many sectors. Various large-scale electrolysers are expected to be operational by 2024–2026, and many of the more innovative technologies deployed by 2026–2027. The completion of the overall project is planned for 2036, with timelines varying in function to the project and the companies involved (European Commission, press release 21 September 2022).
Since 2014, the European Investment Bank (EIB) has been providing significant support to hydrogen technologies: An overall investment of 1.2 billion euro, with over 550 million euro in direct financial support to technologies such as electrolysers, catalysts and fuel cells, and the co-financing of large-scale hydrogen production, carbon capture and storage, as well as hydrogen stations (EIB, press release 16 March 2022).
The growing focus on hydrogen has given impetus to the development of so-called hydrogen valleys. These are regional ecosystems that link hydrogen production, transportation, and various end-uses such as mobility or industrial feedstock. The valleys are considered important steps in enabling the development of a new ‘hydrogen economy’ (Roland Berger, 2021). To support the concept, a Hydrogen Valley Platform was set-up, commissioned by the European Union and developed by the Fuel Cells and Hydrogen Joint Undertaking (FCH JU).Footnote 3 This global information sharing platform to date already features 32 global Hydrogen Valleys, spread over 21 countries, with a cumulative investment of more than 32.4 billion euro (data www.h2v.eu in late August 2022). Hydrogen valleys thus aim to build local hydrogen ecosystems. By 2050, there would be about 50 in the EU. Worldwide, this number is expected to reach 100 in 2030. There is a strong policy-backed focus of the private sector on technological innovations in, and the manufacturing of, equipment like electrolysers and fuel cells. The 2020s present a big race for technology leadership, as costs are likely to fall sharply with learning and scaling-up of needed infrastructure.
3 Green hydrogen as part of the changing port energy landscape
Quite a number of seaports play an essential role as importing or exporting energy hubs, handling large, fossil fuel flows of coal, crude oil and natural gas. The gas comes in, either via vessel (LNG carriers), using specialized deep-sea terminals, or via pipeline, ending in the port area. Seaports are often home to large energy plants.Footnote 4 The availability of land and cooling water, and the presence of large industrial customers, are some of the reasons for energy-producing firms to set up business in seaport areas. While many wind farms are installed offshore, or in open plots in the hinterland, a number of seaports are also home to wind farms, installed on breakwaters or narrow stretches of land close to the sea. The presence of power plants and power distribution infrastructure generates direct jobs and value-added, not only for the power plants themselves, but also for energy distribution platforms, and terminal operations (i.e., handling of coal, gas, and other fuels). The plant is also a major creator of jobs and value-added in other industries and services such as engineering firms, construction companies, maintenance and repair companies, survey and inspection firms, and security services.
The energy transition challenges existing energy hub ports, preparing them for a future decline in fossil-fuel-related activities, and for embracing the production, handling and storage of renewables, among which green hydrogen. Potentially, this may have far-reaching implications for ports. Green hydrogen is expected to assume a prominent role in an emerging new energy landscape in ports. Royal Haskoning (2022) presented 17 factsheets on this landscape and its impact on ports. Table 1 summarizes the potential physical impacts on port infrastructure, although the actual impacts will of course be port-specific. The table focuses on throughput, cargo handling and needed facilities (incl. grid, pipelines, road, rail, water) in the port, to service energy-related logistics (the text sections in italics in the second column show that hydrogen has a key role to play in 12 of the 17 aspects of the new energy landscape).
Indeed, ports can play a crucial role in the production and distribution of green hydrogen. They are important nodes, given existing and future local demand for hydrogen, the emerging offshore parks, and as junctions of transport nodes, some of which could shift to hydrogen or related fuels (e.g., vessels, barges, trucks). Additionally, the infrastructure and handling capabilities of seaports make them prime locations for the storage and distribution of hydrogen. Seaports can serve as hubs for the export of green hydrogen to other countries, helping to drive the global transition to clean energy.
Ports aiming for a strong position in green hydrogen are challenged to be active in all parts of the hydrogen value chain. A favorable location, a well-developed pipeline network, strong worldwide maritime connectivity, state-of-the-art terminal and logistics infrastructures, well-functioning and efficient industrial ecosystems and a strong customer base, are all important factors enabling a seaport to take up an important, pioneering, role in an emerging hydrogen economy, positioning itself as a hydrogen import, transit and production hub.
A number of seaports in Europe are stepping up their efforts to become energy and feedstock hubs and growing producers of green hydrogen. Ports are aware it is essential to offer affordable green energy to all players in port areas, at all times, in order to keep the big industry in the region. Both local production and import play a crucial role in this. The first projects related to imports of renewable energy are expected to take shape between 2025 and the end of this decade. Extensive feasibility studies are conducted to analyze ideal sourcing regions, to prepare seaports for receiving the hydrogen carriers of the future, and to set up specific pilot projects in the context of a sustainable economy.
For illustrative purposes, Table 2 in Annex summarizes some of the national policy initiatives in Belgium and the Netherlands to support the development of a green hydrogen economy. Table 3 in Annex provides a summary of the main green hydrogen projects in the Rhine-Scheldt Delta port system, located in the above two countries. The Rhine-Scheldt Delta port system includes all ports located in the estuary systems of the Rhine, Meuse, and Scheldt rivers. In 2021, the port system handled a total cargo volume of about 924 million tons (+ 5.2% over 2020) and a container throughput of about 30 million TEU (+ 5%). The two largest ports in Europe, i.e., Rotterdam and Antwerp-Bruges, are located in the Delta, as well as Europe’s fourth-largest port (the Amsterdam/Ijmuiden port area along the North Sea Canal) and the tenth-largest port (North Sea Port). It is by far the most important port system in Europe (in volume terms), representing some 27% of all port throughput handled in the EU27 (according to 2021 Eurostat data). The port system is assuming a leadership role, developing into a network of hubs of renewable energy. Although Table 3 in Annex lists large to very large projects, the port industry has also engaged in a lot of smaller initiatives on the production and use of hydrogen. For example, a number of logistics companies are planning to produce green hydrogen on their sites in port areas by using electricity provided by the solar panels on warehouses, or to use hydrogen-powered internal company transport or terminal equipment, linked to mobile hydrogen filling stations.
Overall, the focus on green hydrogen connects different parties and stimulates cross-value chain collaboration in and around seaports. There are many examples of this, such as the PIONEERSFootnote 5 and MAGPIEFootnote 6 projects, funded by the European Commission, which unite dozens of partners, who work together in addressing the challenges facing European ports, in terms of reducing their environmental impacts. Furthermore, several European seaports have joined various partnerships focused on hydrogen, such as Hydrogen Europe, Clean Hydrogen Alliance and the German H2Global Foundation. The latter foundation has set for itself the goal of making green hydrogen acceptable as an energy substitute in Europe, thereby advancing the energy transition of Europe and its independence from Russian gas. The International Association of Ports and Harbors (IAPH) joined the Global Ports Hydrogen Coalition in 2021. The coalition is part of the Hydrogen initiative (H2I), originating from the Clean Energy Ministerial (CEM), dedicated to support the scale up of clean hydrogen in the global economy. The program is managed by the International Energy Agency (IEA).
4 Decarbonizing hydrogen production
While a lot of eyes are on green hydrogen, it was mentioned earlier that 96% of current hydrogen production is by means of natural gas. Blue hydrogen is often said to play a role in the transition phase from grey to green hydrogen, although some scholars argue that the greenhouse gas footprint of blue hydrogen production is worse than simply burning natural gas as fuel. This is mainly due to associated fugitive methane emissions (Howarth and Jacobson 2021). A big challenge is therefore how to decarbonize hydrogen production. Using four scenarios (two scenarios where hydrogen could only be produced via electrolysis and two where blue hydrogen from natural gas with CCS was also allowed), Cloete (2020) concluded that blue hydrogen should not be dismissed from the policy agenda, as using hydrogen to integrate higher shares of wind and solar implies considerable costs. For example, when electrolysers are located near the energy users, expensive transmission network expansions are required to transmit wind and solar production peaks to electrolysers. When electrolysers are instead located close to wind or solar power units, large hydrogen transmission and storage capacity is required to handle hydrogen.
Therefore, the focus of port ecosystems as regards hydrogen should not only be on green hydrogen, but also on the decarbonization of grey hydrogen. Blue hydrogen relies strongly on CCUS (Carbon Capture, Utilization and Storage). Although the concept of CCUS is not new, and despite technology developments in the last 50 years, CCUS remains in its early stages of development, considered as an emerging technology. Deployment had stalled in earlier years, and it is only recently that a surge in planned CCUS projects is taking off, towards realizing commercial projects, in Europe and elsewhere. The use of CCUS in general will be essential for CO2-intensive industries, to achieve net zero emissions, especially in hard-to-abate sectors, with processes inherently generating CO2 emissions. On the positive side, CCUS projects are taking off. For example, Porthos (Port of Rotterdam CO2 Transport Hub and Offshore Storage) is developing a project to transport CO2 from industrial activities in the port, and store it in depleted gas fields beneath the North Sea. Another initiative in the same region of Europe is the Ghent Carbon Hub: an open-access CO2 storage and liquefaction hub, in the Ghent part of the North Sea Port, currently being studied by Fluxys, ArcelorMittal Belgium and North Sea Port. Commissioning is targeted for 2027. The Ghent Carbon Hub would have a capacity to process six million tons of CO2 per annum (MTPA), equivalent to around 15% of Belgian industrial CO2 emissions (press release North Sea Port, 18 August 2022). CCUS will be indispensable in meeting the CO2 reduction targets in port areas. The emerging cross-border and inter-port cooperation in this area is a positive step to bring its implementation to the next level.
5 Green hydrogen, hydrogen carriers and the changing geography of energy trade
As local green hydrogen production in Europe is not expected to be sufficient to meet demand, hydrogen transport over long-distance will be necessary. Most of the available techniques to do this require the conversion of wind or solar energy to hydrogen carriers in or near the exporting port, and the transport of a suitable hydrogen carrier to importing areas. The most commonly considered hydrogen supply chains include (Fig. 1):
Hydrogen can be transported in liquid form (LH2) at an extremely low temperature in its pure form, but cooling to below -252.87 °C consumes a lot of energy. A wide range of large-scale hydrogen liquefaction methods and approaches exist (see for an overview Aasadnia and Mehrpooya 2018);
Hydrogen can also be compressed in hydrogen tanks at very high pressures to compressed hydrogen (CH2 or CGH2);
Hydrogen can be packed in ammonia (NH3). Green ammonia is expected to play a vital role as a hydrogen carrier. Reacting green hydrogen with nitrogen forms green ammonia. This allows hydrogen to be efficiently and safely transported in large volumes. Ammonia synthesis is traditionally achieved via the Haber–Bosch process, converting nitrogen (N2) to ammonia by a reaction with hydrogen using a metal catalyst under high temperatures and pressures. In recent years, a lot of research has been dedicated to explore sustainable synthesis of ammonia as an alternative to the capital- and often carbon-intensive fossil-fuel-driven Haber–Bosch process (Wang et al. 2021). The ammonia can then be stored and converted again to green hydrogen, but turning ammonia back to hydrogen requires decomposition (cracking) at high temperatures. Green ammonia is immediately usable as CO2-free fuel, for example in shipping, or as a raw material in the production of fertilizers;
Hydrogen can be transported by coupling it to other Liquid Organic Hydrogen Carriers (LOHCs). These are organic compounds that can absorb and release hydrogen through chemical reaction. A good example is methyl cyclohexane (MCH) which is a liquid obtained from the chemical reaction of hydrogen and toluene. After the initial hydrogenation step, MCH can be transported by ship, truck or tank wagon. Dehydrogenation ensues, followed either by direct use of the obtained hydrogen, or its conversion back into electricity. The byproduct toluene can be returned to the hydrogenation plant for reuse. Obara (2019) concludes that a hydrogen supply chain based on ammonia has better energy efficiency than one based on MCH.
The above processes lead to various possible green hydrogen value chains. Investigating the technical and economic feasibility of such value chain solutions is crucial for the sustainable development of hydrogen-based energy production and consumption. The search for the cheapest way to produce and transport hydrogen has intensified, entailing key questions such as ‘from what distance is it worth transporting via ships?’, ‘when could pipelines be used?’ and ‘in which form are we going to transport hydrogen?’ (i.e., gaseous, liquid, bound with metals (metal hydrides) or carbon) and ‘when can we avoid conversion again? (e.g., immediately enter the industry in gaseous form). At present, there is still quite some uncertainty on the preferred hydrogen carrier, regarding rules and regulations, safety standards and certification, and the impact these will have on hydrogen supply chains (for example, safety issues related to ammonia transport near urban areas). In this realm, IRENA (2022c) calls for the alignment of efforts with standards and certification, through common sustainability criteria for traded and supported hydrogen, as well as the alignment of methodologies for hydrogen certification and efforts to set harmonized technical standards.
Although quite a few initiatives for hydrogen export and import facilities have been announced, we are still in the early days of the creation of a global hydrogen carrier, shipping and port network. In the medium term, until the early 2030s, the industry’s focus is expected to be on transporting hydrogen in the carriers ammonia, methanol and LOHCs. At a later stage, further technological advances are expected to enable the transport of cooled hydrogen in large volumes in a cost-effective way. Ports are challenged to develop the infrastructure required for each of these hydrogen carriers. The Oxford Institute for Energy Studies (2022a) demonstrates that agreeing on the most appropriate hydrogen carrier will be extremely important, as this will make the entire H2 value chain more economical and efficient. Although each of these fuels has its own advantages and offers a distinctive set of benefits, none of them is flawless or possesses the characteristics of a perfect hydrogen shipping solution. Technological progress in other decarbonization applications and, most importantly, full commercialization of CCUS solutions, is likely to dramatically change the approach towards long-distance hydrogen transportation.
Irrespective of the chosen technical solution and standards, green hydrogen is likely to influence the geography of energy trade, regionalizing further energy relations, with the emergence of new centers of geopolitical influence, around its production and use. IRENA (2022a) estimates that over 30% of hydrogen could be traded across borders by 2050; a higher share than the natural gas of today. Net energy importers such as Chile, Morocco, and Namibia are emerging as green hydrogen exporters, while fossil fuel exporters, such as Australia, Oman,Footnote 7 Saudi Arabia, and the UAE, are increasingly considering green hydrogen to diversify their economies. The P4G-Getting to Zero Coalition Partnership analyzed concrete business opportunities in South AfricaFootnote 8 (Ricardo & Environmental Defense Fund 2021), Mexico and Indonesia, which could tap into those countries’ high renewable energy potential and create an export market for clean hydrogen-derived fuels while creating green jobs (World Economic Forum 2022).
Countries that expect to be importers, such as Japan and Germany, are already deploying dedicated hydrogen diplomacy. In terms of the supply–demand balance, the technical potential for hydrogen production significantly exceeds the estimated global demand. Therefore, realizing the potential of regions like Africa, the Americas, the Middle East, and Oceania could limit the risk of export concentration, but many countries will need technology transfers, infrastructure, and investment at a large scale.
The above developments in the geography of energy trade will obviously impact origin–destination relations of cargo flows handled by seaports. Ports vying for a hub role in the global hydrogen network are urged to align their commercial and marketing efforts with the future geographical shifts in energy flows, and to partner with leading private companies and local, regional and national governments in establishing closer relationships with existing and upcoming countries in the hydrogen economy.
6 The role of ports in making green hydrogen competitive
There is still a considerable production cost difference between green and blue/grey hydrogen. Around 70% of hydrogen production cost is directly related to (renewable) electricity, so the price of electricity determines, to a large extent, the price of green hydrogen. The production of green hydrogen costs between two and three times more than grey or blue hydrogen (IRENA 2022a). In July 2022, for example, green hydrogen cost around 13 euro per kilo in Europe, against 6.50 euro per kilo for blue hydrogen (ING 2022). However, the cost of green hydrogen production is going down thanks to the investments being made, the long-term trend of decreasing costs of wind and solar power and the expected longer-term price increases of fossil fuels. Wood MackenzieFootnote 9 estimates that average green hydrogen production costs will equal fossil fuel-based hydrogen by 2040. In some countries, such as Germany, this will happen by 2030. By 2040, the cost of grey hydrogen is expected to rise by 82%, and that of blue hydrogen, combined with CCS, by 59%, mainly because of rising natural gas prices.
A series of studies by Aurora Energy Research in 2022Footnote 10 analyzed the cost of producing hydrogen from electrolysers under four different business models in eight European countries. They conclude that, by 2030, green hydrogen could be produced in some European countries for as little as 3 euro per kg, thus reaching cost parity with blue hydrogen. In order to compete with grey hydrogen, these costs would have to drop to around 2 euro per kg. Germany might have one of the highest production costs and will not reach cost parity with blue hydrogen until the mid-2030s. The country would benefit most from grid-connected electrolysers that can be operated flexibly. In countries such as Norway, Spain and Great Britain, the cheapest way to produce green hydrogen would be to couple an electrolyser with solar and wind energy systems directly on site.
A key factor in bringing green hydrogen costs down, ensuring its availability on a large scale, is scalability. In spite of the many renewable energy projects currently underway, or planned, the challenge of hydrogen scalability remains. As mentioned earlier, less than 2% of Europe’s energy consumption comes from hydrogen, and this is mainly used for making chemical products like plastics and fertilizers. Moreover, 96% of all hydrogen is produced from natural gas, emitting significant amounts of CO2 in the process (according to data from the European Commission). Most scenarios do not foresee green hydrogen playing a significant role in Europe before 2030. Mobilizing investments to scale up the production of green hydrogen will require continued efforts towards more international collaboration to shape policy, regional and multilateral agreements and supportive frameworks from regulatory bodies.
The scalability aspect comes with a lot of requirements which can be met more easily by certain locations such as seaport areas (Fig. 2). The following paragraphs elaborate on these key requirements.
6.1 Locations with available land for hydrogen production and storage infrastructure
The production and storage of green hydrogen requires large surfaces. This challenges ports to make enough land available for production and storage activities which, for many ports, is not an easy task due to land unavailability. Land area is required for electrolysers and related equipment such as transformers, rectifiers, water supply, cooling water towers, separators, dryers and compressors. The overseas import of hydrogen carriers (such as ammonia), requires berths and conversion infrastructure for liquid hydrogen, ammonia and LOHCs (liquid organic hydrogen carriers). Room for energy supply infrastructure, for the cracking of ammonia (conversion to hydrogen) and the recovery of hydrogen from LOHCs is also necessary. Furthermore, one would need storage space for hydrogen carriers and compressor stations, to be able to inject hydrogen in a pipeline system.
6.2 Locations with good maritime and landside connectivity to high capacity electricity grid and to hydrogen infrastructure and assets
Above we discussed the imports of green hydrogen produced elsewhere. The production and storage of green hydrogen in seaports requires a considerable amount of renewable energy and this comes with its own challenges.
First, there is a limited amount of green energy (wind, solar) in Europe. Therefore, some argue that green energy should first and foremost be used for green electricity, i.e., to make current electricity consumption greener (electric cars, water pumps, etc.), and not just as a source for the production of green hydrogen, or the transformation of imported green hydrogen to electricity. IEA (2022b) estimates that Europe will dedicate 7 GW of renewable wind and solar capacity to hydrogen production during the period 2022–2027, encouraged by decarbonisation goals and, more recently, the need to strengthen energy security by substituting Russian gas. Spain is in the lead, accounting for half of Europe’s growth, followed by Germany, Sweden, Denmark and the Netherlands.
Second, hydrogen loses a fair amount of energy when produced through electrolysis of wind or solar energy, or when converted back into electricity. Some sources point to losses of up to 60% of the initial wind energy in the ‘wind energy to hydrogen back to electricity’ cycle.
Third, there are rising concerns in the energy transition drive about the capacity of the electricity grid. In some parts of Europe, high-voltage grid operators can no longer guarantee that new wind turbines, solar parks or power stations can put their power on the grid at all times. Mounting capacity issues in the high-voltage grids are partly the outcome of complex planning and permitting procedures resulting in lengthy trajectories from inception to realization. This can hamper the energy transition efforts. Moreover, the ESG requirements (environmental, social, and governance) imply no shortcuts can be considered in dealing with stakeholders, and with the social aspects of large infrastructure projects in the energy sector. As a result, large infrastructure in electric grid networks typically take 10 to 15 years to realize, while actual construction takes only a few years.
Next to the use of wind and solar power, discussions can also arise about the exact use of green hydrogen produced locally or imported. Renewable power generation, mainly by means of solar and wind, requires the availability of a back-up system of conventional power plants. Seasonal energy storage of hydrogen could help to decarbonize dispatchable power through gas turbines or fuel cells. However, the next decade will also see more focus on the use of hydrogen as an industrial feedstock and the decarbonization of high-temperature heat. For example, steelmakers are working on fossil-free steel production methods and hydrogen could play a role in this transition.
6.3 Locations with a strong demand base for green hydrogen
Quite a number of larger seaports have developed into major industrial and logistics ecosystems, and are well connected to other industrial clusters in proximity. This gives them the possibility to help balancing an (understandable) initial enthusiasm with green hydrogen supply, and the emergence of the necessary demand to absorb it. For instance, this could among others be attempted through the prioritization of hard-to-abate industrial applications for hydrogen demand, as well as by promoting hydrogen uptake in logistics (e.g., as a fuel for ships, barges and trucks, directly or through transformation into ammonia or methanol) and industrial applications (e.g., green feedstock/reactant in chemical production, metal treatment, food processing, etc., or as a fuel). Through initiatives that promote green shipping and the use of renewable maritime fuels (see for an overview Iris and Lam 2019; Notteboom et al. 2020), ports can actively contribute to increase the demand for hydrogen and ammonia to help decarbonize shipping. As supply to some extent creates its own demand, the current lack of large-scale green hydrogen production facilities and logistics infrastructure, combined with an intensive capital cost and the associated investment risks, can deter the demand side to step forward and adopt this clean solution. As such, a typical “chicken-and-egg” problem is never far away, with both the supply and demand sides resorting to a ‘wait and see’ approach, expecting the other party to take the initiative; an issue we further address in our epilogue.
6.4 Locations with a focus on technological innovation and benefiting from strong policy support
The Oxford Institute for Energy Studies (2022b) argues that there are two important key developments that could foster cost reduction in green hydrogen production: technological innovation and policy support measures. In terms of technological progress, the main focus is on minimizing the use of scarce materials for electrolysers, increasing the stack lifetime and system size so that large-scale production can take place, and reducing cold start-up time (solid oxide systems). In terms of policy support mechanisms, direct financial support and fiscal incentives for R&D and production are key at the first stages of market entry and scale-up. Once the technology reaches maturity, and after commercial scale up, there will be a need for strong fiscal incentives, as investors are more likely to be active once a technology reaches critical mass. Apart from electrolysers, supportive policies should also promote renewable electricity and the build-up of infrastructure, as well as demand among end users (e.g. industries and transport).
Innovation is high on the agenda of many seaports (Acciaro et al. 2014; Vanelslander et al. 2019). This includes also innovation in the area of sustainability and energy transition. To drive innovation in the port cluster, port authorities, port industry and branch associations/organisations, private companies and government agencies develop a broad range of local initiatives, such as the setting up of incubators and smart-labs for start-ups and scale ups. Many of such incubators are based on co-creation and co-innovation principles, and the exchange of knowledge among companies. Some port authorities, in cooperation with industry, also contribute in creating a good business environment for universities, R&D focused firms, research centres, consultancy firms and start-ups, to excel in the area of green hydrogen-related research. Often, this is done through partnerships in EU funded projects, the establishment of research chairs and PhD funding, collaboration through hydrogen platforms, etc.
6.5 Locations with access to large-scale project finance which can attract investors and consortia
Large green hydrogen projects demand significant investment, requiring the full spectrum of sustainable finance instruments and technical expertise. Many seaports are home to individual plants or even entire clusters or ecosystems of large energy-related companies. The proximity of these establishments and the existing inter-firm exchanges among them facilitate fostering strong partnerships also in the area of green hydrogen production and distribution. Port authorities from their side understand that such energy-related corporations are essential in making the energy transition in the port area successful.
However, project finance for green hydrogen would only be feasible, making more economic sense, were it to replace grey hydrogen that is already in use in industrial processes. Moreover, this would be particularly the case if there were already hydrogen customers present (e.g., the fertilizer industry or refineries using hydrogen as energy source or feedstock). This way, accruing future cashflows would improve the NPV and IRR outcomes of pre-feasibility studies, limiting the inherent (and often dissuasive) project risk. With emerging innovations, as in our case, this is easier said than done though. Risk here must be assumed through the use of low social discount rates. In other words, public administrations should look at the long-run ‘economic’ rather than ‘commercial’ ramifications of the investments (Haralambides 1991, 1993a, b, 2019).
6.6 Locations which (can) gain public acceptance for large green hydrogen projects
Over the years, ports have gained a lot of experience in dealing with stakeholders through advances in stakeholder relations management programs and principles (Dooms et al. 2013; Notteboom et al. 2015; Felício et al. 2022). Ports which successfully reach out to civil society and industry stakeholders, towards creating public acceptance of green hydrogen projects have a competitive edge in the green hydrogen economy. Reaching out to stakeholders on the green hydrogen theme concerns not only the provision of information on strategic plans and projects. It also requires efforts to educate the wider population on the sense of urgency in energy transition and the wider ramifications of green hydrogen adoption on emissions, infrastructure and asset needs. Next to information provision, port authorities are also challenged to consider an active participation of certain stakeholder groups in project planning stages, where deemed valuable, or when existing regulations and ESG frameworks and practices require such an involvement.
7 The role of port authorities in the green hydrogen economy
Reaching the end of this editorial, it is useful to elaborate on the role port authorities, or in more generic terms the managing bodies of ports, could play in green hydrogen developments and the wider energy transition. One of the factors in Fig. 2 which has not been fully discussed yet, however, regards the creation of a favorable green hydrogen market structure, its governance and regulation. Port authorities have a role to play in this too, in the way they will attempt to facilitate interaction among market players, and define their own role in the green hydrogen economy.
It might be useful at this juncture to say that a port authority (PA) is the entity which, whether in conjunction with other activities or not has, under national law or regulation, the responsibility to manage and administer the port’s infrastructures, and co-ordinate and control the activities of the different operators present in the port (Commission of the European Communities 2001; Verhoeven 2010). We particularly focus on the so-called landlord port authority which is the most common model of port administration, found in more than 80% of ports around the world. The term ‘landlord’ derives from the simple fact that the PA, among its many other responsibilities, is the ‘curator’ and the ‘authorized manager’ of port land and adjacent aquatic surfaces, to be rented out (leased) for economic profit to the private sector. Often, revenues from this activity amount to 50% of total port revenue (Notteboom and Haralambides 2020; Haralambides 2017).
In the past two decades, a number of scholars have provided more insights to the call for a more active facilitator and even entrepreneurial role of PAs, also as concerns sustainability (Lam and Notteboom 2014; Acciaro et al. 2014; Ashrafi et al. 2020), green supply chain management in ports (Notteboom et al. 2020), the green port concept (Pavlic et al. 2014) and energy transition (Hentschel et al. 2018; Wang and Notteboom 2015). The empirical findings presented so far suggest that PAs can follow very different paths in dealing with current issues in the various areas of port activity (Notteboom and Haralambides 2020). It has also become clear that the achievements and progress made by port authorities in a number of areas under their competence remain rather anemic.
As such, PA-centric approaches to green hydrogen transition (or to energy transition in general) might not be the right choice. For every individual initiative ports might be willing to undertake, PAs and their stakeholders should evaluate whether (a) the port authority may have a statutory role to play and (b) if so, whether such involvement is likely to lead to a superior outcome, compared to a more limited involvement. The PA needs also to decide whether its involvement should be restricted to its statutory domain, or extend beyond the confines of its legal responsibility; what tools or instruments to use (e.g., regulation, penalty or incentive pricing, knowledge development, data sharing, investments, etc.); whether or how to co-ordinate or form partnerships with other actors; and, finally, whether the PA should act as facilitator or entrepreneur. Thus, the role and function of a PA needs to be contextual: the PA can be an investor/entrepreneur in one area of activity but remain the usual ‘onlooker’ in another.
Thus, in some cases, (larger) port authorities can consider moving beyond a pure facilitating role and enter into key investments related to energy transition and green hydrogen, particularly in those cases where private investors show reluctance to do so, or when there are possibilities to partner with private or public entities. PAs cannot blindly roll out investments without a cost–benefit analysis included in a convincing business plan. Facilitation of, and investments in, green hydrogen-related projects are often embedded in a port-wide masterplan with its mission, vision and objectives. Stakeholder resistance could arise, however, when a public PA attempts to develop a strong entrepreneurial role in energy transition. Such resistance can manifest itself in the form of rising conflicts with customers and supply chain actors, about commercial investments of the PA which could potentially undermine its presumed market neutrality, or conflicts with local community groups on the correct local input payback.
Large PA investments in green hydrogen-related infrastructure or assets (pipelines, terminals, etc.) can have strong ramifications on PA revenue and cost streams. For PAs with a landlord function, the financial backbone is currently heavily dependent on port dues (i.e., marine charges and cargo dues) and concession fees. In the medium to long-term, the energy transition away from fossil fuels will negatively affect the revenue streams brought by oil tanker and bulk carrier calls, and fossil fuel-related terminal and industrial activities in the port. Through investments in green hydrogen-related projects, PAs can complement cargo volume dependent revenues (port dues and partly also land fees) with other revenue streams. Thus, targeted investments in energy transition can open the door to new sources of revenue streams which might be less dependent on the vessel and cargo activity level in the port area.
Few would today doubt that, in spite of its limited share in meeting energy demand today, green hydrogen will be the clean energy source of the future. Suffices to just observe the strides major economies (and their ports) are making to win the leadership in the hydrogen race. Notable among them are the impressive developments in our own port cities of Antwerp and Rotterdam.
In their race towards international energy acclaim, the two ports, as well as other ports in the wider Rhine-Scheldt Delta port system, thanks to their superior infrastructure, natural gas pipelines, institutions and maritime clusters, can be safely expected to play a major role, if sensible preparations and investments are made ‘now’. The technological challenges of production, storage and distribution of green hydrogen have already been addressed to a large part, posing few headaches to decision-makers: electrolyser technology is fairly straightforward; (electrolyser) location choice decisions can benefit by borrowing from advances in transport and distribution research; distribution infrastructure (pipelines) will become increasingly available thanks to a decline in the demand for natural gas; port terminal facilities will also be freed for new investments due to a decline in the demand for fossil fuel cargo handling (oil and coal); and finally, technology is also there to minimize the carbon footprint of green hydrogen production.
What has not as yet been addressed convincingly though is the economics of hydrogen, something we reserve for a forthcoming editorial. The issues are not uncommon in dealing with innovation: Who should assume and manage investment risks? Apparently private investment interest will not materialize, or it will be fairly reluctantly evidenced, if sufficient demand is not present. But demand will only emerge if supply is adequate and at a scale which would ensure competitive pricing. This is the typical chicken-and-egg question, requiring a role by the public sector. Here, as it has always been the case with investments in infrastructure, these being the kindle wood of economic development (cf. railroad investments in the US/Canada of the nineteenth century), the role of the public sector is clear: the financing of investments, public or private notwithstanding, ought to be appraised via the usual social discount rates; that is, through finance that looks at the long-term economic-, rather than short-term commercial profitability of investments.
Multilateral investment banking is the right vehicle for this. Here, however, new challenges emerge in this regard: can investment finance be somehow coordinated among capital providers (e.g., EIB, IBRD, Asian Development Bank, etc.), such that i) wasteful overcapacity is not created (as we have discussed, many countries and their ports have aspirations of becoming energy hubs); ii) the free-rider problem, a typical issue in network economics, is limited. Indeed, as we have discussed, mobilizing investments to scale up the production of green hydrogen will require more international collaboration to shape policy, regional and multilateral agreements and supportive frameworks from regulatory bodies. Again, we reserve this discussion for a future article.
We hope this editorial has opened the door to more (port and maritime) green energy research, a new area MEL has prioritized, eagerly soliciting quality contributions.
IRENA (2022b) demonstrates that the cost of renewable electricity decreased by 88% for solar PV, 68% for onshore wind and 60% for offshore wind from 2010 to 2021.
Austria, Belgium, Denmark, Finland, France, Greece, Italy, the Netherlands, Poland, Portugal, Slovakia, Spain and Sweden.
FCH JU is a public private partnership supporting research, technological development and demonstration (RTD) activities in fuel cell and hydrogen energy technologies in Europe. The three members are the European Commission, fuel cell and hydrogen industries represented by Hydrogen Europe and the research community represented by Hydrogen Europe Research (http://www.fch.europa.eu).
Electricity is produced in conventional steam-electric plants (coal and lignite), conventional steam-electric plants (other fuels), combined-cycle and gas turbine plants, conventional hydroelectric plants, pumped-storage hydroelectric plants, nuclear power plants, waste-to-energy plants, biomass power plants, diesel and gas-engine power plants, wind energy plants, geothermal power plants and solar power plants.
PIONEERS builds on the commitment of lighthouse port Port of Antwerp-Bruges to scale up the current state-of-the-art and to demonstrate applicability and feasibility through several demonstrations. The port of Barcelona, Constanta and Venlo are also involved to test these demonstrations, during the project lifecycle.
The MAGPIE project has the ambition to force a breakthrough in the supply and use of green energy carriers in transport to, from and within ports.
Quite a few European-based companies are engaging in overseas investments in this field. For example, the HYPORT Coordination Company, a joint venture between DEME Concessions and OQ Alternative Energy, acquired a site in Duqm (Oman) to build a green hydrogen plant. This project on a site of 79 ha will have an electrolysis capacity of 500 megawatts. HYPORT signed a second land reservation agreement with the Public Authority for Special Economic Zones and Free Zones (OPAZ) in Duqm. The hydrogen plant in Duqm, a partner port of Port of Antwerp-Bruges in Belgium, will be powered with renewable electricity from wind turbines and solar panels with a combined capacity of 1.3 gigawatts. All of this is located in the renewable energy area of the Special Economic Zone, where HYPORT Duqm was allocated an area of 15,000 ha. A high-voltage transmission line will come from the solar and wind farm to the factory. There, the green electricity is used to produce desalinated water, hydrogen and then converted it into green ammonia. It is stored and shipped from the port of Duqm to Europe and other markets.
For example, Boegoebaai, a proposed deep water port planned for South Africa’s Northern Cape province, is set to become an export hub of green hydrogen and sustainable goods from the province. The country’s Hydrogen Valley plans to aggregate demand to kickstart hydrogen production and leverage economies of scale. A maritime hub in Durban—Richards Bay aims to bunker and export green hydrogen to the maritime market.
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Notteboom, T., Haralambides, H. Seaports as green hydrogen hubs: advances, opportunities and challenges in Europe. Marit Econ Logist 25, 1–27 (2023). https://doi.org/10.1057/s41278-023-00253-1