Hydrogen will meet 25% of oil needs by 2050: Bank of America analyst

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According to the head of global thematic research at Bank of America, hydrogen will play an important role in global energy markets in the coming decades, displacing much of the demand for oil.

Speaking to CNBC’s “Squawk Box Europe” on Friday morning, Haim Israel accepted that oil and gas would be needed in the future, but that demand was nearing a peak. “We think it’s peaking this decade, it’s soon – a lot sooner than anyone thinks,” he said.

Israel listed several factors that would affect oil and gas in the future, including cheaper renewables, regulation and electrification of cars.

“We believe hydrogen will meet 25% of all oil needs by 2050,” he continued, adding that oil “has faced headwinds left and right. Yes, we will still need it, yes, it still goes in.” to be close, but oil’s market share will decline. “

As the US Department of Energy notes, hydrogen is “an energy carrier, not an energy source,” which means it is a secondary energy source like electricity. The DOE adds that hydrogen “can provide or store a tremendous amount of energy” and “can be used in fuel cells to generate electricity or electricity and heat”.

Times are changing?

In the past few years, governments and companies around the world have announced goals to reduce their environmental footprint and move away from fossil fuels. For example, both the UK and the European Union are targeting zero net greenhouse gas emissions by 2050.

If these kinds of goals are to be achieved, the world’s energy mix must shift significantly to renewable and low-carbon sources, a mammoth company. For its part, Bank of America’s Israel emphasized the importance of diversification for fossil fuel companies.

“We … firmly believe that the ‘big oils’ must think differently,” he said. “You don’t have to think of ‘big oil’ anymore, but of ‘big energy’ in order to invest much more in renewable sources and diversify your sources.”

As a sign of how things may change, a number of energy companies that remain big players in the oil and gas space are increasing their investments in renewable energies like solar and wind.

Last September it was announced that BP had agreed to acquire a 50% stake in the Empire Wind and Beacon Wind projects from Norway’s Equinor. The $ 1.1 billion deal is expected to close in early 2021.

According to Equinor, the Empire Wind and Beacon Wind projects, which are said to be located in waters off the east coast of the United States, can each supply over 1 million households with electricity.

Hopes for hydrogen

Hydrogen is another area that is gaining momentum. The EU has plans to install 40 gigawatts of renewable hydrogen electrolysers and produce up to 10 million tons of renewable hydrogen by 2030.

Hydrogen can be produced in a number of ways. One involves the use of electrolysis, where an electric current splits water into oxygen and hydrogen. If the electricity used comes from a renewable source such as wind, it is referred to as “green” or “renewable” hydrogen.

Currently, the majority of hydrogen production is based on fossil fuels. In recent years, however, large companies such as Repsol, Siemens Energy and BP have been involved in projects related to the production of “green hydrogen”.

Earlier this week it was announced that a subsidiary of the German industrial giant Thyssenkrupp had won an engineering contract to install an 88-megawatt water electrolysis system for Hydro-Québec. The electricity for this project will come from hydropower.

A few days later, on Wednesday, the Danish energy company Orsted announced that it was moving forward with plans to develop a demonstration project that would use offshore wind energy to generate green hydrogen.

The International Energy Agency states that global hydrogen production is around 70 million tons per year, and states that demand continues to grow and has “more than tripled” since 1975. According to the Paris-based organization, “Less than 0.1% of global hydrogen production today comes from water electrolysis.”