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Climate

Energy efficiency

Number one metric for electrolyzer manufacturers is energy efficiency. It is measured by the electrolyzers ability to produce hydrogen gas at a certain level of input energy. HydrogenPro’s single 4.8 megawatt electrolyzer has been validated to produce 1,050 Nm3/h hydrogen at normal current density, which equals ~100 kg of pure and pressurized green hydrogen per hour. This means that the world’s largest high-pressure alkaline electrolyzer is validated with 80% energy efficiency, setting a new global standard for large-scale production of green hydrogen.

3rd generation electrodes

In addition to optimizing our existing high-pressure alkaline technology, we are on track to establish what we call 3rd generation electrodes. This is new electrode coating included in the existing high-pressure alkaline system based on novel research, which is currently being developed by HydrogenPro’s daughter company in Aarhus, Denmark. Initial tests show that the 3rd generation technology can deliver an impressive energy efficiency of 93%, which is a 14% improvement from today’s technology. The efficiency gain is due to improved performance of the used electrodes obtained through a surface coating on the electrodes. This implies that the splitting of water molecules into oxygen and hydrogen is done in a more efficient manner lowering the overall voltage for hydrogen and oxygen formation.

One of the commonly cited critiques of a hydrogen-based economy is the high energy consumption involved in conversion of electricity into hydrogen. The energy efficiency that HydrogenPro can offer with the 3rd generation electrolyzer technology will potentially be a game changer for global deployment of hydrogen as a clean energy carrier. It means that we can mitigate climate change and replace hydrocarbons with significantly higher energy efficiency – lower energy usage – and corresponding economic burden than what today’s solutions are capable of.

The 3rd generation electrodes will reduce end-customers’ operational costs of electrolyzis significantly. As electricity costs are around 75% of the levelized cost of hydrogen production, a 14% reduction of electricity need over a 30-year lifetime is a significant cost saving. The 3rd generation electrodes represent a revolutionary technology within the green hydrogen transition. This is good news for the planet and will undoubtedly ensure HydrogenPro a superior position in the market.

Mission

Accelerate global decarbonisation with world-class green hydrogen solutions

Making a positive impact

Avoided GHG (greenhouse gas) emissions

Our greatest sustainability contribution is that our product is a key enabler for the global society to reach a decarbonized energy system. We contribute directly to reduced greenhouse gas emissions by offering technology to produce clean fuel that can replace fossil fuels in large parts of the energy economy. The Advanced Clean Energy Storage-project in Utha, with a staggering 220 MW electrolyzer capacity, is estimated to help prevent 127,000 tons of CO2 from reaching the atmosphere annually, based on the difference in emission profiles between using natural gas and green hydrogen as fuels. Our short-term goal is to abate 1.5 million tons of CO2 emissions from an installed production capacity of 6 gigawatt by the end of 2027.

In addition to the direct contribution to abatement of greenhouse gas emissions, green hydrogen plays a crucial role in allowing for a decentralized and resilient energy system that can be completely based on renewables. Hydrogen is offering a clean energy storage solution that can be used to buffer intermittent renewable energy sources and stabilize the grid both locally and regionally. Hydrogen is thus indirectly enabling this green shift, allowing for an energy system based on production of large-scale renewable energy from various sources. Renewable energy is the most critical component of a future net zero society and for the world to reach the Paris Agreement.

Energy security

Hydrogen is also a contributor to energy security, as green hydrogen can be produced and stored domestically. It will reduce the countries’ dependence on foreign energy sources, and thus, reduce society’s vulnerability to lack of energy supplies. In 2022, the global energy crisis emerged as a historic turning point that has been on top of mind among all state leaders. The governments around the world are now working for a cleaner and more secure energy system.

Scalability

The most significant way we can contribute positively to the environment is by bringing our product out on the market. If succeeding with our ambitions of global deployment of the HydrogenPro electrolyzer, we are enabling customers around the globe to operate largescale hydrogen production facilities that can buffer renewables and replace fossil fuels – and they can do this with significantly lower energy consumption compared to alternative technologies.

At closing of 2022, the active sales pipeline in HydrogenPro consisted of 18.5 gigawatt of electrolyzer capacity. We are eager to fulfil those orders, and to further upscale our manufacturing capabilities.

Today, HydrogenPro has manufacturing facilities in Tianjin, outside of Beijing in China, with a capacity of producing 500 megawatt per year. In addition to the China manufacturing facility, we have announced an ambition to establish an additional 1 gigawatt manufacturing capacity by the end of 2023, preferably split between Europe and the US. Our goal is to reach an annual production capacity of more than 5 gigawatt within 2027. We are right now creating the foundation for successful growth, by ensuring financial robustness and by building a responsible and resilient organization and value chain along with our growth strategy. In March 2023, HydrogenPro announced our plans to expand in the US with a new plant in Texas with a manufacturing capacity of 500 megawatt. The site will have the option to significantly scale up the capacity to several gigawatts in due time.

Global reach and global responsibility

The growth of a new hydrogen economy will require use of natural resources and will thus have an impact on the environment. Our internal climate and resource footprint will grow hand in hand with the upscaling of our company, and our customers will depend on renewable energy in order to enable the production of green hydrogen based on our technology. There are potential nature-related impacts associated with hydrogen production that we want to approach with awareness and precautionary measures. Our mission is to ensure that our positive impact on the environment outweighs the negative impact we may have.

Land use and biodiversity

Large-scale green hydrogen production is based on renewable energy infrastructure such as wind turbines or solar panels that may require vast amounts of land. This can lead to displacement of wildlife habitats and potentially harm biodiversity. We recognize that we are part of an industry quickly evolving, and that we need to collaborate closely with partners and industry peers to ensure that biodiversity and wildlife habitats are taken into the equation. We will strive to promote the most sustainable solutions both for today and the years to come for development of new renewable power production.

Water consumption

To produce green hydrogen, the electrolyzis process uses renewable energy to split water molecules into hydrogen and oxygen. The process is regarded as environmentally friendly, but it requires large amounts of water and can thus be challenging in regions where water is scarce. In addition to the water used in the electrolyzis process, we are dependent on cooling water to keep the electrolyzer at the right temperature in steady state production. Regional considerations are therefore important when planning for green hydrogen production. A holistic perspective on the pros and cons for the local community will always be on top of mind when collaborating with regions with limited water resources.

Steps in the right direction – our technology’s contribution to reduced resource footprint

With the HydrogenPro electrodes’ capabilities to greatly reduce energy consumption during green hydrogen production, we have the potential to contribute positively to the environment as the hydrogen economy continues to grow. The main innovation with the new electrode technology is a reduction of the power consumption of 14%, based on the same current density as with the existing configuration. Reducing the needs for renewable energy will have the potential to limit the build-out of new wind and solar power plants, which again will reduce local land-use and loss of nature. In addition, it will reduce the material and resource footprint of renewables manufacturing. Another benefit of our 3rd generation electrolyzer is that it will reduce the need for cooling water by up to 75% since less energy is needed implying that less heat will be produced. This means that our technology is limiting water withdrawal – making it suitable also in regions of the world where water is not an abundant natural resource.

Sustainable and local manufacturing and supply chains

The most substantial environmental and societal impact of HydrogenPro’s activities is through the products we sell. However, it is clear that manufacturing electrolyzers has both an environmental and social impact on our surroundings. We are entering a phase of rapid scaling of our manufacturing activity, and we will establish new manufacturing sites in both Europe and the US in the years to come. The timing is just right for taking a responsible role working proactively to mitigate potential negative impacts caused by our own operations and operations in our supply chain.

The HydrogenPro electrolyzers are today manufactured in Tianjin, outside of Beijing in China. At this site, we have a manufacturing capacity of 500 megawatt per year. The manufacturing activities in Tianjin have been established through the second half of 2022. Covid19 was still creating an enormous burden on the Chinese society in 2022, and not until December were all workers physically present. After updating the manufacturing equipment, the manufacturing process was successfully initiated in autumn of 2022. The manufacturing process is now ongoing to deliver on awarded purchase orders. The next step for HydrogenPro is the announced establishment of additional 500 MW of manufacturing capacity in Texas, USA.

A vital part of our global expansion strategy is to build local manufacturing and supply chains, close to where the electrolyzers are operated. By manufacturing close to our customers, we ensure faster delivery times and lower transportation costs and emissions. It can also help us to understand customer needs better, which enables us to respond more quickly to changes in demand. Offering customization and flexibility when we deliver products and services can give us a competitive advantage. By building a local supply chain, we can work more closely with our suppliers. We can innovate new solutions together that enhance product quality, and we can set requirements on reduced resource footprint or enhanced worker rights. A local supply chain will strengthen the local economy and give us a more resilient supply that can quickly be adapted to changes in circumstances.

Climate mitigation in manufacturing and supply chain

Although our product is having a significantly larger positive impact on reducing greenhouse gas emissions compared to our own climate footprint, we believe that everyone must take part in decarbonizing own industry. We strive to minimize emissions from our own manufacturing sites and to create a foundation for green growth of our operations. To achieve this, we aim to reduce emissions generated both when establishing new manufacturing sites and when operating them. This will empower us to adopt a focused and efficient strategy to reduce our own climate footprint. It is also important for us to set requirements and collaborate closely with our suppliers to pinpoint and alleviate significant sources of emissions.

Steel usage is the major contributor to HydrogenPro’s carbon footprint, constituting 36 % of our total greenhouse emissions (Scope 1, 2 and 3). Steel production is a carbon-intensive process that is emitting greenhouse gas during several steps of the production process. The most effective short-term action we can perform is to reduce our steel scrap during manufacturing of electrolyzers. We have chosen a steel supplier that works proactively with ESG topics as part of their corporate strategy and corporate development. A major part of our supplier’s work on ESG, is their low-carbon transformation strategy. Starting from an estimated peak carbon emission intensity in 2030 of 1.65 ton CO2 / ton steel, the supplier aim to reduce their carbon emission intensity by 20% within 2035 and by 80% within 2060. In their ESG report of 2021, they published their first GHG accounts, revealing a significant lower carbon emission intensity compared to the rest of China’s steel industry.

HydrogenPro’s absolute greenhouse gas emissions are expected to increase in the short term. Scaling operations and building a global organization with several manufacturing sites will increase our climate footprint. However, doing this is a necessary step to succeed with our mission offer energy-efficient hydrogen production that can realize a zero-carbon future. With a high focus on energy-efficient operations and taking advantage from economies of scale, we aim to reduce the carbon emission intensity going forward, measured as our total greenhouse gas emissions divided by number of electrolyzers manufactured.

HydrogenPro’s own greenhouse gas emissions

Scope 1 emissions included combustion from one company-owned vehicle. Scope 1 emissions were of 2.3 ton CO2. Scope 2 emissions included consumption of electricity for the manufacturing process and consumption of district heating for warming of facility space. All manufacturing processes except welding are based on electricity as energy input and are therefore already compatible with a decarbonized energy system, with an electricity grid based on renewables. Scope 2 emissions were of 141.3 ton CO2 and is calculated based on a location-based method.

Scope 3 emissions included business travels, waste generation in operations, upstream leased assets, upstream transport and distribution and purchased goods and services. Scope 3 emissions were of 5921.5 ton CO2. The most significant contributor to scope 3 emissions and to HydrogenPro’s greenhouse gas emissions in general is the category “Purchased goods and services” of 5628.6 ton CO2. This category covers all activities in China, as the scope 3 calculations are spend-based and derived from the accounts of HydrogenPro ASA in Norway. 37 % of the scope 3 emissions origins from steel usage. The rest of the emissions will be mapped during 2023, in order for us to establish a targeted climate mitigation strategy for the manufacturing activities in China. The full greenhouse gas emissions accounting can be found in Sustainability factbook, please see appendix in Annual Report 2022.

Environmental resource footprint

In HydrogenPro we use innovation as a tool to increase value creation and reduce the utilization of natural resources. We work to establish a culture with sustainability champions in all parts of our organization, where creativity and idea creation is used continuously to maximize technology and process efficiency and minimize our environmental footprint. Scaling of production capacity requires infrastructure and buildings where the job can be done. HydrogenPro aims to situate new operations in established industry parks or existing facilities to promote sharing of infrastructure and reduce need for occupying land. We have good experience with today’s manufacturing activities being located inside industry parks, where infrastructure is in place for us to build robust spill-protection, water recycling and environmental safety barriers. We work to ensure that all manufacturing processes are compatible with high environmental standards and that we meet expectations from our own employees and external stakeholders. One of the proactive steps we are taking involves seeking a ISO14001 certification for Environmental Management Systems at our manufacturing facility in Tianjin, China. This certification process is ongoing and is creating ambassadors among our employees with regard to environmental sustainability and responsible manufacturing practices.

Water management

In the manufacturing process of electrolyzers for green hydrogen production, relatively small amounts of water are needed. Water is used only for cleaning and cooling and can be recycled and reused. None of our current sites are operating in regions where water is scarce. Our location in China is not using water in the manufacturing process, while our location in Denmark has a water recycling facility that can recycle more than 90% of the water used. Our location in Norway uses water for testing of the electrolyzers.

Pollution prevention

As all facilities only use electricity as energy source in the manufacturing process, the emission to air at the manufacturing sites is limited. The manufacturing process at our site in China emits particle dust from a welding machine, but installation of an exhaust treatment system is in process. All chemical waste is collected and handled by specialized companies at all three sites, releasing no pollutants into air or water. The manufacturing site in China is located at a government-owned industry park, with strict regulations when it comes to spill-protection and environmental safety. To prevent any leakages and discharge into water, the floors are designed without connection to the sewage system.

Minimizing waste

We can contribute to reduced depletion of natural resources by reducing waste from our manufacturing process. Our main waste fractions are steel scrap and chemicals (alkaline water, mineral oils and cutting fluids). In addition, we have office waste and packaging materials that are sorted and recycled according to local legislations and property owner procedures (paper, plastic, food waste, and residual waste). The steel that is used for the manufacturing process is of high quality and the steel cut off from our manufacturing process is therefore of high value. We collaborate closely with the steel producer and deliver the steel scrap back to their site so that they can sell it further. Thus, we avoid involving a third party that processes and trades recycled steel.