Successful ways forward in clean transition – old, new and blue

Rejlers’ business operations provide an interesting view to clean transition growth opportunities from two distinct perspectives. Finland and the UAE are two small countries with totally different natural resources and infrastructure – both are striving to improve their sustainability and renewal through the transition.

Finland has adopted a very ambitious target of carbon neutrality by 2035 albeit it is one of the most energy intensive countries in the EU due to i.a. cold weather and long distances. Finland’s competitive advantages include low-emission electricity, a strong electricity grid, suitable conditions for the growth of renewable energy, access to biomass and biogenic CO₂, plenty of clean water and significant deposits of critical minerals necessary for the transition. Finland also has a strong track record in sustainable business,[i] innovative technologies and access to highly educated workforce.

 
UAE’s Net Zero 2050 strategy acts as a stimulus for economic and societal advancement. Thanks to being one of the major oil & gas players, the UAE’s competitive advantages include sizeable existing industrial assets for new technology integration, ability to invest in demonstrations and CCUS at scale, and a strong track record in delivering pioneering cutting-edge bankable projects through Masdar. The UAE also has a great geographic location in energy trade with European and Asian markets, excellent conditions for solar power, significant partnerships with leading international firms as well as access to highly skilled own and ex-pat experts.

Finland as a Member of the EU benefits from the promotion of Important Projects of Common European Interest (IPCEI). Neste was the first Finnish company to be granted IPCEI for the clean hydrogen projects at the Porvoo refinery, hence eligible for e.g. 27,7-million-euro public funding from Business Finland. Recently, Neste nonetheless decided to let go of the 120 MW electrolyzer investment. One of the reasons was a mismatch with Finland’s national distribution obligation, which hindered the full utilisation potential of the 120 MW electrolyzer. The next investment decision is awaited from Nordic Ren-Gas on the 60 MW synthetic methane production project in Tampere. It has been granted almost 46-million-euro support by the Ministry of Economic Affairs and Employment.[i] A few smaller 5–70-million-euro investments on green hydrogen or its derivatives are already progressing.

The UAE aspire global leadership in low carbon hydrogen and its derivatives, i.e. ammonia, synthetic fuels and steel production. Cleaner ammonia is taking major steps forward: the Ta’ziz chemicals hub has just inked contracts worth more than $2bn with engineering, procurement and construction firms to build infrastructure for storage and export of blue hydrogen-derived ammonia for global markets in 2027. The chemicals hub will also include the UAE’s first domestic methanol facility. [ii] As per green steel, Masdar has in October 2024 successfully completed pilot production using renewable hydrogen in Abu Dhabi. This pilot facility is a joint project with the country’s largest publicly listed steel maker, Emsteel. Hence, in the UAE, sizeable facilities are both operational and in progress, albeit clean hydrogen is not taking off as quickly as initially thought.[iii]

The price of renewable green hydrogen poses a challenge, and the difference between supply and demand price expectations is difficult to bridge. In Europe, the production cost of RFNBO-hydrogen is strongly linked to the cost of renewable electricity, capital costs and grid tariffs. For example, TNO in the Netherlands has reviewed the costs of 14 real electrolysis projects. This analysis estimated the PPA from offshore wind at a cost of 75 eur/MWh. The investment cost was on a somewhat high side: 2630 eur/kWe for a 200 MW project and 3050 eur/kWe for a 100 MW project. And the cumulative full load hours were only 4800. These data result in a staggering levelized cost of hydrogen of the order of 12-14 eur/kg.[i] Not surprisingly, also green hydrogen derivatives are estimated to be expensive, e.g. unsubsidised e-SAF production costs in Europe are 5–8 times higher than fossil jet fuel prices. [ii]

The current wave of interest in clean hydrogen is characterised by decarbonizing industry, i.e. focusing on those end uses that cannot be readily electrified. Hence, ammonia for fertilizer use, clean hydrogen for refining, green steel and e-fuels are at the forefront of development efforts. All these clean products come at a premium cost. For example, using hydrogen to directly reduce iron is emerging as a promising alternative particularly for decarbonization of steel for automotive industry. On an individual vehicle level, the impact of lower-carbon steel scenarios on the retail price paid by consumers for vehicles is anticipated to increase less than 1% when traditional steel industry will be subject to increasing carbon prices.[iii] Yet, ArcelorMittal decided to delay final investment decisions on decarbonisation and green steel projects despite having already secured 3,5-billion-euro in subsidies. [iv]

The pathway to a cleaner future fortunately does not only rely on developing new technologies but also on improving the performance of existing assets. Improving asset lifetime by taking into use best available technologies and optimizing energy efficiency are cost-effective ways for quickly mitigating CO₂ emissions, lowering energy bills and strengthening energy security. Indeed, both the EU Energy Efficiency Directive and the UAE’s Net Zero 2050 strategy reinforce that energy efficiency will drive key improvements in the industry, transport, and buildings sectors.

In large industrial facilities process improvements driven by energy and CO₂ audits are often the first cost effective steps forward. In Finland, for example electric boilers are increasingly used for district heating to reduce emissions. Rejlers is at the moment delivering a full scale EOCM project with Vantaa Energy’s large-scale 60 MW electric boiler and a 700 MWh district heating battery. In the UAE, Rejlers’ Certified Energy Auditors have a track record in analysing complex sites, process unit​s and utilities to identify cost effective opportunities for improvement. We are known for delivering high availability and good operational control geared to improve heat integration and waste heat utilization. Our audits and engineering services support the delivery of significant energy savings and emission reductions.

Rejlers is committed to improving customers’ existing assets as well as engineering and constructing new green field plants – we are proud of contributing to our customers’ clean transition journey.

[i] https://www.spglobal.com/esg/csa/yearbook/2024/ranking/index

[ii] https://www.kauppalehti.fi/uutiset/energiayhtio-suunnittelee-yli-miljardin-jatti-investointia-suomeen/1b06ee09-3aaa-4082-ad25-62f18bdc9683

[iii] https://www.hydrogeninsight.com/industrial/massive-uae-chemicals-hub-awards-2bn-in-contracts-for-blue-hydrogen-based-ammonia-export-infrastructure/2-1-1735545

[iv] https://www.hydrogeninsight.com/production/masdar-pushes-back-million-tonne-green-hydrogen-target-by-at-least-four-years-report/2-1-1731100

[v] https://publications.tno.nl/publication/34642511/mzKCln/TNO-2024-R10766.pdf

[vi] https://project-skypower.org/news-publications/accelerating-take-e-saf-europe

[vii] https://www.transportenvironment.org/uploads/files/ED18758-TE-Final-report_To-PUBLISH.pdf

[viii] https://www.h2-view.com/story/arcelormittal-freezes-green-hydrogen-dri-projects-blaming-slow-policy-progress/2117719.article/

Authors:
Marita Niemelä, SVP, Sustainable Energy Solutions, Rejlers Finland

Jarmo Suominen, SVP, Middle East Region and General Manager Abu Dhabi Branch