Manufacturers that do not produce products with renewable energy and zero-carbon industrial processes may soon find themselves at a disadvantage in the marketplace, Vattenfall chief executive Magnus Hall tells Recharge, as he explains the thinking behind his company’s recent investments in green cement, green steel and green hydrogen.
“Would [manufacturers] be fine with using CO2-heavy materials [such as cement or steel], or are they going to find themselves in a situation where CO2-free materials are available and they are still not [using them]? So you can make the calculation — if you buy fossil-free steel, for instance, it would perhaps increase the total price of a car by 2-3%.”
He believes that many customers would be happy to spend a little more on a car built with zero carbon emissions, particularly for more luxury models.
“I think the manufacturer will have to make a choice… perhaps they will have a line of fossil-free [cars], and see it if works. But we think that the pressure from the markets [for green products] will be one of the drivers in electrification or climate change issues in general.”
Vattenfall is pioneering work on decarbonising the emissions-heavy steel and cement industries, as well as on the large-scale production of green hydrogen, which can be used for zero-carbon industrial processes, transport and heating while also acting as energy storage to help balance a renewables-reliant grid.
The utility, which is 100%-owned by the Swedish state, decided to invest in these emerging industries partly to reduce Sweden’s carbon emissions and partly in response to demands from manufacturers in the eco-conscious country.
Hall explains that electricity production in Sweden is now largely carbon-free due to the reliance wind, hydro and nuclear, but that 30% of the country’s emissions come from industry.
“We have traditionally had a very good connection with Swedish industry because most of them are our customers. And we had discussions [with them] — what are your issues, can we be part of solving them? And then from that came the green hydrogen and the new solutions we are now testing.
“And there was a clear commitment from these companies because they know there’s going to be a significant pressure on them to make sure that they are pioneers [in zero-carbon production]. We now have more and more companies coming to us and wanting to talk to us about this.”
Vattenfall is currently working with cement manufacturer Cementa on using renewable energy for heating in the cement-making process, rather than the traditionally-used coal or other fossil fuels. Similarly, the Swedish utility is working with local steel maker SSAB and miner LKAB on a pilot project to commercialise carbon-free steel. This will use green hydrogen rather than coal or coke to extract iron from iron ore.
Vattenfall is also working with Swedish fuel refiner Preem to design a utility-scale green hydrogen plant that produces hydrogen using water electrolysis powered by clean electricity. Hydrogen is usually derived from methane and is needed to convert crude oil into petrol and diesel, but Vattenfall and Preem plan to use its green hydrogen to produce biofuel derived from residues from the Swedish paper industry.
“We see that there's a business opportunity. Our idea is that we would be the supplier of, and storage holder of hydrogen in that process. And if we develop that, then we will have knowledge in hydrogen, which we can then apply to other parts of the business.”
Vattenfall hopes that the three projects lead to the commercialisation of green cement, green steel and green hydrogen, which together could reduce Sweden’s carbon emissions by 30%,.
Hall tells Recharge that these pilot projects are very much part of a commercial plan.
“I would say that that we should, within a five-year period, have something which is really commercial. But it could be one of these things [rather than all three].”
And Vattenfall is unlikely to stop there. “We potentially also have some other discussions [in green industrial processes] coming too.”