Most of us assume that governments and international organisations will take the crucial roles in the fight against climate change. But over the past year more and more commercial companies have chosen to become the leaders in the battle to reduce emissions. While countries have prevaricated and blustered about their response to the environmental emergency, businesses have quietly taken action to align their activities to the ‘net zero’ objective.[1]

These steps may not pay off immediately. In fact, it is likely that many decisions by corporations will end up by costing them money. Nevertheless, the number, complexity and size of projects announced by major businesses in the last few months have shown a striking commitment to taking important steps to develop low-carbon technologies, even without an obvious monetary incentive.

Here are six examples of very recent path-breaking steps by businesses - many currently involved in activities that produce large volumes of CO2 - in advance of any obligation to take action to decarbonise. Some of these projects have been financially assisted by governments or the EU but all have been partly funded by private companies taking a risk on their investment of money and management time.

1. Norsk e-Fuel will make aviation fuel from renewable hydrogen and CO2 captured from a cement plant.[2]Eventually, the company will incorporate CO2 that has been directly captured from the air. It intends to make 100 million litres of fuel by 2026, enough to cover a large fraction of Norway’s needs for domestic routes. The company is a joint venture between technology providers and two industrial companies seeking to build a business that pioneers low carbon fuel for airplanes. The backers of this ambitious venture know that the price of the synthetic fuel may well be twice the cost of today’s fossil oils. Nevertheless, they have pushed ahead knowing that the long-distance aviation will only be possible if this, or other similar technologies, have begun producing low carbon fuel.

2. Hydrogen made by electricity from a solar power station will provide the crucial ingredient for a fertiliser factory in southern Spain. Spanish utility Iberdrola has said it will take the power from a new 100 MW solar farm and convert it into hydrogen for use in a large fertiliser factory nearby.[3] The company will use advanced electrolysis techniques to make the hydrogen and will store it as a liquid combined with other chemicals. This highly innovative project will require subsidy from Iberdrola in the form of reduced hydrogen and electricity prices but it says that it is willing to bear these costs in order to speed up the development of new technologies.

3. Cement producer Lafarge and the Austrian oil and gas company OMV announced that they would cooperate to design and build a plant to capture 700,000 tonnes of CO2 coming from a cement works and turn it into ‘renewable’ hydrocarbons.[4] The other two partners, the largest Austrian utility and a specialty chemicals company, will respectively provide the hydrogen and turn the hydrocarbons into fully recyclable plastics. The plan will take the rest of the decade to come to fruition but nevertheless this is a highly significant project: four different companies embedded in the fossil fuel economy have become participants in a venture which will develop wholly green alternatives to conventional hydrocarbons.

4. Steelmaking represents about 7% of world emissions, largely because coal is consumed to reduce iron ore to molten metal. Speciality Swedish steel producer SSAB was the first to take substantial action to move away from this fuel.[5] It is constructing a new steel works that will use hydrogen instead of coal. This will be a new process which several other major steelmakers are also beginning to experiment with. SSAB’s initiative is costly, with a total bill of around €200m to the end of the pilot phase, and the steel produced will be perhaps 25-30% more expensive than metal made using coal. Nevertheless, the company and its partners are confident that the switch away from coal is necessary and its new process will, in time, be the most economical way of producing steel.

5. In France, a large paper works owned by Smurfit Kappa has decided to employ hydrogen in a different way.[6] It will replace a natural gas turbine that makes a combination of heat and power with one that uses hydrogen. When the energy market is in surplus, the company will convert electricity into hydrogen, and then burn it to make heat and electricity at times of short supply. This pioneering project may be the first time that a commercial company has built its energy strategy around the conversion of power into hydrogen for later use in a gas turbine. It is highly unlikely that the choice makes financial sense today but successful firms are good at taking decisions that reflect what is likely to happen in the future.

6. Lastly, I wanted to note a very different sort of project. The US payments processing company Stripe recently asked for bids for a pot of $1m of money that it had set aside to pay other companies to collect and permanently store CO2.[7] Winners included a Swiss company that captures CO2 from the air and then injects it into basalt rock. The rock is chemically altered by this action, permanently sequestering the gas. Stripe is doing what we all need to do, thinking about ways in which it can counterbalance remaining emissions once it has taken all the actions it feasibly can to reduce its carbon footprint.

The first five of these examples share a similar characteristic. The companies are intending to use renewable electricity to provide the energy to break water into oxygen and hydrogen in the process called electrolysis. This hydrogen will be made in times when electricity is in surplus. The gas can be turned into other products or transformed back into electricity when renewable sources are not freely available.

This pattern is no accident; we are all becoming increasingly aware that full decarbonisation will require us to invest trillions of Euros in renewables ever year for the next few decades. And because the supply of wind and solar electricity can never be fully guaranteed, we require a storage medium such as hydrogen. Batteries will never provide enough capacity to store surplus power for months on end. The second crucial value of H2 is that it can be transformed relatively easily into close substitutes for fossil fuels. Renewable electricity and hydrogen provides the clearest route to net zero, a view probably shared by all the companies covered in this article.

These six short case histories illustrate the second phase of the long journey towards decarbonisation. The first was the rapidly growth in investments in wind and solar across the world, increasing the production of green electricity. ENEL Green Power was one of the most important actors in this global movement, accompanied on the journey by the many companies that decided that their electricity purchases came from exclusively zero-carbon sources. The business world now needs to ensure that the momentum is maintained, showing governments and the rest of civil society that decarbonisation is both technically and financially feasible.

Chris Goodall July 2020

[1] We use the expression ‘net zero’ when describing a company or a country that has reduced its responsibility for overall emissions down to zero, possibly by employing techniques that capture CO2 to counteract any remaining greenhouse gases which it creates.

[2] https://www.norsk-e-fuel.com/en/

[3] https://www.europapress.es/castilla-lamancha/noticia-iberdrola-entra-negocio-hidrogeno-inversion-150-millones-proyecto-puertollano-20200312140251.html

[4] https://www.omv.com/en/news/200624_lafarge-omv-verbund-and-borealis-join-hands-to-capture-and-utilize-co2-on-an-industrial-scale

[5] https://www.ssab.com/company/sustainability/sustainable-operations/hybrit

[6] https://www.paperfirst.info/smurfit-kappa-saillat-france-will-produce-paper-with-the-worlds-first-industrial-scale-hydrogen-turbine/

[7] https://stripe.com/blog/first-negative-emissions-purchases