October 30, 2025 • 38 mins
Just three companies control the lion’s share of the $120 billion global market for industrial gases: Linde, Air Liquide & Air Products. And because the production of these gases is so energy intensive, each company consumes as much electricity as some small to medium-sized European countries. This week on Zero, Sanjiv Lamba, CEO of Linde, tells Akshat Rathi how he sees electricity demand changing, what Linde is doing to transition to clean sources, and whether low-carbon hydrogen can ever become big business.
Explore further:
- Read Akshat’s article on Linde and other hidden electricity giants.
- Expect to Keep Paying Record Prices for Coffee. This Is Why
Zero is a production of Bloomberg Green. Our producer is Oscar Boyd. Special thanks to Eleanor Harrison Dengate, Siobhan Wagner, Sommer Saadi and Mohsis Andam. Thoughts or suggestions? Email us at zeropod@bloomberg.net. For more coverage of climate change and solutions, visit https://www.bloomberg.com/green.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to zero I am Akshatrati this week a hidden
electricity giant. The demand for electricity is soaring, and you
(00:21):
likely know why. It's because of air conditioning, electric cars,
and data centers powering artificial intelligence. But if you looked
at a list of the single biggest electricity consumers in
the world, you would be surprised. It's not just tech
companies like Google or Meta, oil and gas firms like
PetroChina or Shell, or retail giants like Amazon and Walmart.
(00:43):
It also has companies that you may not recognize linder,
air licked air products. These are all producers of industrial gases.
That's right. These companies make things like nitrogen and oxygen
and hydrogen gases that get used in steel manufacturing and
refrigeration and chemicals production, among many other things that you
(01:08):
are consuming on a daily basis. Together, these three companies
control about seventy percent of what is a one hundred
and twenty billion dollar global market for industrial gases. And
because the production of these gases is energy intensive, individually,
these companies consume as much electricity as small to medium
(01:30):
sized European countries. So as the world looks to electrify,
faster and do so at lower energy prices and with
fewer carbon emissions. It's important we understand what these electricity
giants are doing. Today's guest is Sanjivlamba, CEO of Linda,
the biggest of the three industrial gases companies, with operations
(01:51):
in more than eighty countries. What Linda does is a
strong reflection of where the industry as a whole is
going on climate goals. So I wanted to find out
from sun Jeev how he sees electricity demand changing, what
Linda is doing to transition to cleaner sources, and whether
low carbon hydrogen can ever become big business. Do also
(02:12):
check out a more deeply reported story I have on
this topic of hidden electricity consumers on Bloomberg Green. The
link is in the show notes. Also, if you have
any feedback about this episode or any others, please write
to me at zero Pod at Bloomberg dot net. Welcome
to the show, Sanjeef.
Speaker 2 (02:33):
Thank you, Aksha. Delighted to be here with you today.
Speaker 1 (02:35):
So I grew up in India and there was a
series of books that got me hooked on science and engineering,
which is why I ended up studying chemical engineering and
then doing a PhD in chemistry. But I'm a journalist now,
but that series of books still stays with me. It
was called How Things Work, and it had these engaging
explanations and diagrams showing the insights of everyday things like
a refrigerator or an iron, and it revealed the inner
(02:59):
workings of everyday objects that most people didn't say and
give me an insight and made me feel a little
smarter than everybody else. You run Linder and it does
something that most people just aren't aware of. So let's
start with just trying to understand what does your business do.
Speaker 2 (03:19):
That's a great way to start, uc SHOT and I'm
delighted you read those books. I remember reading them as well.
So industrial gases such as oxygen, nitrogen, organ hydrogen, carbon
dioxide are largely invisible. You can't smell them. But the reality,
uc shot is, and I say this often, you know, jokingly,
(03:39):
to my friends and colleagues, they are in every bit
of the world around you. If you have an iPhone,
we have a bit of our gases helping manufacture the
chip that goes into the iPhone, or indeed the glass.
You know, if you're having a nice beer or a coke.
You know, the carbonation we provide in there makes all
the difference. Imagine a flat coke or a flat beer,
(04:02):
it would be terrible. So it's in different ways that
we contribute to either the industrial processes, being very much
part of the industrial process or in other cases we
kind of as an example, will freeze about two billion
pizzas a year. I'm not quite sure who eats them.
Probably most of them go to my kids. But that's
(04:22):
another example of where industrial gases come into play. What
do we do These invisible molecules make our lives better,
Whether it's your vegetables that are that are fresher, whether
it's your television that is brighter and gives you a
better quality picture, or of course your beer or your
coke that that you will enjoy. Maybe one example to
try and give you the breadth or the diversity of
(04:43):
applications as well, I'll start with oxygen. It's a well
known molecule. You and I are breathing it as we speak,
so it's obviously important to life, but we use it
in manufacturing across a range of industries. And I want
to give you that breadth because it kind of is
breathtaking if you.
Speaker 1 (04:59):
Will, breadth giving too, bread.
Speaker 2 (05:02):
Giving too indeed, but outside with metals right, so steel,
No steel can be produced without oxygen, nitrogen and argon
being being part of that. But oxygen particularly or glass
for instance, you know, if you're having a you know,
a drink, you're using a glass that's had some oxygen
built in it. Aquaculture increasingly more oxygen usage in aquaculture today.
(05:23):
Now on the slightly more esoteric side, we help rockets
launch using oxygen as part of the fuel that cambus.
Obviously we talked about breathing it. Therefore, for health care,
you know, during COVID, we had to bring medical oxygen
from all over the world to hotspots where COVID patients
were essentially gasping for oxygen, and we had to do
(05:45):
our best to make sure that that was available. Now,
levels of purity, how the application actually happens, et cetera,
that varies. But the molecule itself is life giving. It
provides industrial you know, momentum in every industrialty or almost
every industrial activity, and can be used to help humanity generally.
Speaker 1 (06:04):
Give me an example of a weird gas. Maybe it's
not a big business, maybe it's not something you think
about daily, but you know, is interesting is weird?
Speaker 2 (06:14):
Oh, there are many at the most interesting levels in
nitros oxide obviously also known as laughing gas, essential in
many surgeries and procedures as an anesthetic.
Speaker 1 (06:25):
Yes, but also there's recreational use of nitrosoxide. Let's be
careful here.
Speaker 2 (06:30):
We have done a lot of education around to make
sure that that you know, is not something that is
actively done. And I think, but you're right. I mean
every you know, every product in the world has elements
that can be abused around it. Helium is the other
one which is an interesting gas. I think it's it's
one that has you know, wide usage from semiconductors to
(06:53):
MRIs for cooling of course, and then I mentioned, you know,
cryogenic cooling using helium and helium isotol for quantum computing.
Speaker 1 (07:02):
Just because I am a nerd and I feel like
this is a stat that people should know about. The
fact that people could perhaps share is that hydrogen, the
first element on the periodic table, is so light that
if it escapes, it can escape the gravity of Earth
and go into space. Helium does that too, to some extent,
(07:24):
but not as easily as hydrogen does it let's come
to the business side. You talked about all these gases.
Just talk me through where are you seeing the business grow,
where is it shrinking, and where is it most uncertain?
Speaker 2 (07:41):
So industrial gases, because of the nature of the application
that I just described to you, the breadth that we
see are embedded in every industrial activity and beyond. So
for us, growth is intrinsically linked to how the economic
activity is progressing around the world, and we often, you know,
kind of think of ourselves as a proxy for industrial activity.
(08:05):
So for us, the industrial production index or IP is
really where you know, we see the most level of correlation,
if you like, in terms of where growth for gases
comes from. Clearly, you know, we've been in a kind
of an industrial recession over the last two two and
a half years. When we look around the world, industrial
activity hasn't been growing at that level. But intrinsic to
(08:27):
every industrial activity and every industrial cycle is the growth
of gases. The growth today is coming from largely the
resilient markets, which are healthcare, food, and beverage. It doesn't matter,
you know, if the economy is doing well or otherwise.
People have to eat and they have to go go
and visit a doctor or oftentimes even go to the hospital. Electronics,
(08:47):
which because of this momentum around AI, data centers, et cetera,
is finding, you know, a lot of opportunity providing a
lot of opportunity for growth as well. So again, I
think those resilient markets are proving to be exact actually
that being resilient through this economic cycle and providing some
growth for us.
Speaker 1 (09:05):
So this is a climate podcast, and I want to
spend a lot of our time talking about energy and
emissions and hydrogen. Now, as a trained chemical engineer, I
knew these gases are very energy intensive to produce, but
there were still things about Linda's scope one and two
emissions that surprised me when I was looking at your
(09:25):
sustainability report, because if you add up your scope one
and two emissions, they're actually comparable to what we think
of as carbon giants like Chevron or BP, or even
retail giants like Amazon and Walmart. So what have you
done as a company to reduce your scope one and
two emissions?
Speaker 2 (09:45):
That's a great question. And Acsha, let me start off
by providing a headline and then I'll break it down
and tell you how we think about sustainability and the
impact that we have, and I'm going to give you
some real examples to kind of illustrate and make the point.
The headline that I want to just leave you with
is our products and services and technologies have helped our
customers avoid ninety six million metric tons of COOTO equivalent.
(10:08):
That's an important piece. That's two point six times the
emissions that we have on our own. So that's an
important piece to just keep in mind. And where does
that happen. So let's give those real examples to underpin that.
Let's start with steel, right, a large customer for us.
For steel, every one percent of oxygen enrichment that we
do in a blast furnace increases productivity by about five
(10:31):
and a half percent, and that's important because that leads
to lower emissions. If you look at Linda's contribution in
the last year, so twenty twenty four, you'll see this
in our sustainable report as well. For steel making a loan,
we helped avoid eleven point nine you know, million metric
tons of COEO to equivalent. So there's an example where
obviously we have an energy intensive process in the air separation,
(10:54):
but the gases that we provide then help reduce and
abate eleven point nine million metric tons of ZEO too
equivalent for steal alone. The same applies for desalturization for fuels.
Right here we provide hydrogen as an agent for cleaner fuels,
and essentially last year we helped our customers avoid sixty
(11:15):
seven point two million metric tons of COEO too equivalent
through this desulfurization process, making clean fuels. Well before people
were thinking about you know, clean hydrogen, clean energy, et cetera,
we were already on the path to doing that. But
we're not satisfied with that. So we set out a
sustainability roadmap and we set some goals for ourselves for
(11:36):
Scope one and two. Our goal is to reduce our
Scope one into emissions thirty five percent by twenty thirty five,
while we continue to grow and help our customers continue
to reduce and abate SEO two at their end. So
I think that's an important metric to keep in mind.
We've also said that by twenty fifty we expect to
be climate neutral, and that's again a big obligation. Now
(11:58):
I have to be honest and tell you lot needs
to happen around the grid. Scope to emissions, which I
think we have less control over, but we obviously are
doing a lot of work around that, doing our bit
to make sure that we're supporting the planet. And it's
at a time where I think that that change and
sustainable effort is essential. I think remains a critical piece
(12:19):
on our agenda and something that we take ownership of.
Speaker 1 (12:22):
Let me come to electricity as well, but before I do,
the measure around two point six times of emissions avoided
relative to what you produce is a useful measure to know,
so that you know that there are impacts that are
positive on the carbon balance sheet. But I'm sure you're
also aware that avoided emissions as a accounting method has
(12:45):
its challenges and are tricky to use and sometimes very
much open to abusing, and which is why there has
been some movement towards making these scope for emissions sort
of these emissions that are influencing or helping some other
to account for them, but they don't really negate, so
to speak, the emissions that the company is generating in
(13:06):
the process. Those still need to be reduced. So that's
why you said you have this climate plan, which you
know is there for a good reason. It's not just
that you can only help others avoid emissions, you also
have to reduce your own.
Speaker 2 (13:18):
Actually, i'll make two points over here. The first I
want to make is our first Sustainabiley Report came out
in twenty thirteen, well before it became fashionable to talk
about sustainability and set goals. Our carbon productivity measure was
instituted at that point in time. It's almost twelve thirteen
years ago. It's not new, it's something that stood the
(13:38):
test of time. It's something that we've publicly communicated every year.
So I just want to make the point that we
don't do this because it's fashionable or you know, esgs,
you know, in everyone's focus. We do it because it's
the right thing to do. Our mission as a corporation
is to make our world more productive sustainably, and I
think our sustainably roadmap, you know, kind of leads us
(14:00):
into that mission that we're trying to achieve. So you're
absolutely right, and I think from our perspective, we are
not really you know, either concerned or excited about the
carbon accounting of a measure of abatement and support that
replied to a customer. We believe it's right for the
planet that we do that, and I think that's one
of the reasons we will continue down that path.
Speaker 1 (14:21):
So coming to electricity, Yeah, it is kind of surprising
that Linda consumes as much electricity as the entirety of Denmark.
And even if we look at just comparing you to
other companies, Linda's electricity consumption is as much as Google
or Microsoft, or if we look at oil and gas companies,
as much as Sinopeck and Total Energies. Linder consumes a
(14:45):
lot of electricity and that also means that electricity must
be a big part of your spending. So what have
you done to try and reduce the amount of electricity
that you are using.
Speaker 2 (14:57):
That's a great question. So you know, most of these
large industries have outsourced their gas requirements to US, which
previously was captive and therefore you know those emissions scope
to emissions would sit in their balance sheet. They've outsourced
that to us for a number of reasons, including the
fact that we are constantly thinking about how we make
that process more efficient. But also more importantly, actually the
(15:19):
fact that we are a large consumer of electricity is
in some ways a good thing because it gives us
the leverage that we need to push to say how
renewable energy can become a larger part of that portfolio
of energy that we consume. Let's talk about what are
we doing about it? That was your question. Let me
answer that fairly directly. In my mind, our sustainability goals
(15:42):
put us on a path to ensuring that every action
we can take to reduce electricity consumption and to ensure
that we increase the portion, the proportion of low carbon
energy that we can access, you know, for our operations
is a key measure, not just a key measure. Actually
we have that metric sitting in the compensation program for
(16:06):
our leaders as well, including my own, to make sure
that it has the focus that it deserves. There are
two ways we address that issue. The first is by
reducing consumption, and the way we do that is by
continuously looking at our operations, finding innovation, finding solutions that
ensure that we're creating a higher efficiency ratio within that,
(16:28):
investing in technology that shows that happens. A good example
of that is, you know, we've introduced a flex asu
flex a su a sus you know are notorious for
not being able to turn down effectively quickly.
Speaker 1 (16:39):
Yeah, I think it's worth explaining what an ASU is
because that's the core part of your gases. So an
air separation unit, which and tell me what one looks like,
because I feel like most people haven't seen one. But
it's supposed to use energy, typically either coming from electricity
or from some form of fuel that is making steam
which is then running a compress, right, and so yeah,
(17:01):
describe what an AESU looks like and tell us what
part of it needs to become more efficient and how
do you move away from fossil fuels in the process.
Speaker 2 (17:11):
So I could spend hours describing an air separation I'll
resist that temptation. Actually, then just say that if you're
driving down and you see a very large one hundred
and fifty to two hundred meters tall white column, usually
with the Linder logo on it, that is the column
that does the distillation for an air separation. What effectively
(17:31):
happens is we take air, we use electricity, and through
a process of distillation, we're able to separate the gases.
We have large storage tanks, usually also white and large,
into which we will take the liquid oxygen, liquid nitrogen,
and liquid organ After having liquified the gases. Some amount
of gases will go to a gas pipeline and serve
(17:53):
a customer directly as steel mill or a semiconductor fab
and the others will go into these tanks and be
stored as liquor quid cryogenic liquids, which will then be
put into row tankers. Again, you may see some of
these and transport it to our mid sized customers where
we would provide that liquid oxygen nitrogen organ for their
industrial processes and usage.
Speaker 1 (18:13):
And people should realize, like even though air is everywhere,
to be able to separate these gases requires just a
ton of energy compressing a gas. And you know, if
you're providing gases that are at minus two hundred degree celsius,
you know, nitrogen is minus one ninety six degree celsius.
That's a lot of energy that needs to be taken
out of the system, which is what these separation units
(18:36):
are doing. Now, you said electricity, but some of them
also just use fossil fuels, right, They'll generate steam and
then the steam is running compression plants.
Speaker 2 (18:45):
Actually it's not our preferred option to use steam, but
there are steam drives and that usually happens when the
customer has excess steam available and wants to find a
way to utilize that. So in some ways that excess
steam is effectively utilized using a steam drive that runs
the ASUS and provides the power that would otherwise have
come through the grid, And I think that's one way
(19:06):
to think about it. I have to say, most of
this steam driven assets that we have sit in China,
which are integrated into an industrial park where customers typically
would have excess steam available, and many of those are
going through a process of conversion to electric drive. So
from our perspective, that is an area that we would
like to address as quickly as possible, and in fact,
(19:27):
I'm pleased that really we've already undertaken I think two
to three conversions already, and I expect most of the
other conversions will happen fairly quickly. But let's talk about
the grid, because that's where most of our power consumption
comes from. So as grids are seeing more and more
renewable power, you're also seeing greater volatility on the grid
and the ability to access power the FLEXASU and I
(19:50):
said earlier on for a ASU to turn down at
short notice is quite a challenge. Our FLEXASU design is
being specifically done allowing production levels that can be optimized
to synchronize with the availability of renewable energy, and that
flexibility I think will go a long way. We have,
as you know, a flex asure currently operating, and we're
(20:12):
looking at deploying many more for exactly the reason that
we can now synchronize with the ebbs and flows that
come from renewable energy coming into the grid. We're now
using AI based models that we've trained over the last
few years, using our own propriety technology and models to
find ways of increasing operational efficiency as well. So you know,
(20:32):
a good example of that is when we know that
there is variability on access to power, we're able to
you know, run the power up, run the ASU up
using the power available, build some stock levels through a
predictive mechanism which kind of looks at what the grid
is doing, you know, what our production levels are, what
the customer inventory is, and triangulating a lot of that
(20:54):
data and trained to focus is to the level of
production we can have whereby we are actually running the
air separation units at the most optimum level that we can.
The second piece I want to just talk about is
sourcing low carbon power. So, as you said, you know,
we do consume a fair amount of power, and we
have made some really good progress in sourcing renewable power,
(21:15):
and I think that's an important piece as well in
trying to manage our scope to emissions, but more broadly,
provide the impetus that the renewable energy development needs by
ensuring that we are signing PPAs we are in some
cases even participating in those projects directly ourselves, either through
(21:36):
equity or providing bankable guarantees to those projects, and ensuring
that those projects then come to fruition. And I think
since twenty twenty one, I think, if I'm not wrong,
our data would be that we have literally, you know,
through pow purchase agreements in places like the US and
China and India, Spain and Philippines and many other markets.
(21:57):
You know, we've almost now doubled our consumption of renewable energy.
Speaker 1 (22:02):
Let's look at the fine print of that. Forty seven
percent of electricity comes from low carbon power, according to
your sustainability report, but only about twelve percent comes from
power purchase agreements that if you directly signed up rest
of it. So the thirty five percent is green because
(22:22):
of things called energy attribute certificates or renewable energy credits,
and those are at one point they were very important
instruments to try and bring on more renewable energy onto
the grid when it was more expensive. It needed this
additional layer of payment in the form of a renewable
(22:43):
energy credit. So what power plant producers did is not
just provide the power, but they also got this additional layer,
which is like, because it's green power, we can also
provide you the attribute of green power. So anybody can
consume the electricity, but we'll give you the attribute if
you give us a little premium. Those certificates and those
attributes now are by most experts considered non additional, which
(23:05):
is to say, they are not driving more renewables to
be added to the grid. So what are you doing
to move away from renewable energy credits or energy attribute certificates.
Speaker 2 (23:14):
We've never been fans of credits or attribute certificates, to
be honest, and our view always has been that we
want to be participating in additionality the point that you
just made in creating new renewable energy assets on the ground.
So as an example in India where we have a
very aggressive Program for Sourcing renewable energy. These are all
(23:36):
PPAs that we signed with new generation facilities that are
coming up, and we continue to push, push hard on
that you talked about twelve percent. I mean, I want
to go back and remind you that over the last
four years we've doubled that. So there is an active
push today to move forward and ensure that we're signing
PPAs that allow us to be able to access the
(23:56):
clean electron that actually goes into our system. I think
that's the way to go. There isn't there isn't another way.
I think that, you know, has to be the purpose
that we all embrace and kind of move forward with.
So I'll give you two examples just to kind of
illustrate the point where we think we've been successful. And
obviously it's been helped by the fact that those countries
have you know, done a lot of work to get there.
The UK is a good example of that. You know,
(24:18):
in the UK, almost entire user power that we have
is actually renewable. Another good example of that is Brazil,
where most of our power comes from hydroelectric and again
those are great sources of renewable energy, and those countries
have over time build those assets in We're just hoping
to see the same scale of build up. And again
(24:38):
I mentioned India because I'm excited about what I see
in terms of developments in India at the moment, I'm
excited about China. To be honest, I'm seeing a lot
more push three years ago that wasn't the case. I
am pretty bullish on the fact that we will see
the renewable energy development happen now. There is all this
AI data center hype that's not hype. Should correct myself
(25:00):
there and say, there is an AI data center development
that is going to pull on that renewable energy. At
the moment, any electron is welcome, but renewable energy will
clearly be a target electron for them as well. So
there will be a little bit more increased competition in
sourcing those electrons, but we remain quite committed to moving
forward in that direction.
Speaker 1 (25:23):
Join us after the break for more of my conversation
with Sanji Blamba and Hey, while I've got you here,
fancy writing us a review on Apple Podcasts or Spotify. Recently,
Moira wrote my number one podcast for Climate Updates. Thank you, Moira.
(25:53):
Coming to hydrogen and your role as the co chair
of the Hydrogen Consoles Board. It's a that obviously does
things today in the real economy that are very important
and crucial. Most of the hydrogen that is produced used
in places like a refinery come from natural gas, so
(26:13):
gray hydrogen, as it's known. There is a move to
try and a move that to green hydrogen, but also
find ways in which green hydrogen could play a role
in cleaning up other areas of energy use. Where do
you stand on hydrogen as an opportunity for the industry.
It's been something that people have talked about as a
(26:33):
promise to thing for a long time, but it needs
renewable electricity to be produced, It needs in many places
government subsidy to be actually affordable for industry. Do you
see this as a business opportunity or do you think
green hydrogen's time is never going to come?
Speaker 2 (26:51):
So I'm going to rephrase that respond by saying, I
absolutely believe clean hydrogen is a great opportunity for industrial
decarbonization broadly and for US as an industrial gas company.
I mentioned clean hydrogen and I'm going to kind of
elaborate a little bit more on that. I'm sure you're
going to ask me that anyway, But let's just talk
(27:13):
about the Hydrogen Council for a minute. So the Hydrogen
Council recently issued this Global Hydrogen Compass Report, which I
think is a really good piece of work, and you know,
as it's a CEO led organization, therefore, the insights that
we're able to marshal out of that, you know, are
quite amazing. And I think the conclusions that came out
(27:35):
of that was the hydrogen development is maturing. We're over
the hype cycle, HiPE cycles done, We're now seeing a
more mature development. They pointed out that there have been
about five hundred projects that have gone to a FID
or are under construction, commissioning, or operational. That's an investment
of about one hundred and ten billion, which has picked
(27:56):
up significantly over the last three or four years. And
I think that that's an important measure of validating the
role that hydrogen is going to play going forward, particularly
clean hydrogen is going to play in helping the process
of industrial decarbanization. It's also true to say that while
we went through this euphoria or hype around clean hydrogen
(28:20):
development go back three or four years ago, hydrogen today
and the demand and the supply side dynamics that we
see are real now. In our case, we've selected those
projects carefully. Not only that, for us, there are some
conditions to be met. A good condition for that is
we need a binding long term off take agreement. For us,
(28:42):
that's a critical measure of whether a project is going
to move forward or not. And I'll give you two
examples where we've achieved that, which are under construction today.
The first is, you know, our example of working with
Woodside as a partner in Beaumont, Texas. Here we will
supply low carbon hydrogen to their world scale ammonia complex.
You know, we will produce the hydrogen. We'll also produce
(29:03):
the nitrogen. In the case of hydrogen, we'll be doing
auto thermal reforming, which provides for a highly concentrated SOEO
to stream which can be captured. In this instance, about
just over two million metric tons of CO two will
be captured, and we are using a partner to sequester
that down hole. That's not expertise we have, so we
have to work with a partner to do that. We'll
(29:23):
be working with them to sequester that downhole and there
by providing low carbon hydrogen to wood Side for their
Cleanneumonia process that they are instituting. The other example is,
you know, spending more than two billion dollars in Alberta, Canada,
and there it is for helping Dow on their Path
to Zero project, which is you know, basically providing hydrogen
(29:44):
and atmospheric gases to help them decarbonize their ethylene and
derivative production facility that sits over there that they're also
in the process of expanding. Here's an example of bringing
up an investment case together, working with a good counterparty
like Dow and making sure that you put that whole
design parameters in place to provide low carbon hydrogen to
(30:06):
DOO to allow them to move down the path of
fuel switching to get to the decarbonized ethylene and downstream
products that they will be looking at. So two examples. Now,
for the last four plus years, maybe five years now
action we've been operating an ATR and clearly where we've
been capturing the CO two and are now providing that
(30:27):
to Selenese who is a customer in terms of low
carbon hydrogen captured CO two which they will then use
for methanol production, which is an input into their process.
Here's a good example of something that's been operating for
a number of years already. This is not fictional, right,
So when I say hydrogen supply side dynamics are real
(30:48):
and available today at scale and competitively cost it. Now
you asked a question about green hydrogen. We are building
a number of electrolyizers around the world, but electrolyzer technology
and what I call renewable hydrogen, I don't like colors.
Just to make sure that I make this point now.
My view is we should walk away from colors which
tend to be very emmotive and usually lead to misunderstanding
(31:10):
and talk about carbon intensity, and I think that really
is is the way to go, and reducing carbon intensity
must be our purpose. There is no option around that.
But you know, we are building a number of electrilyizers
which will produce renewable hydrogen. The challenge with the electrialized
technology today is a scale and maturity. We're currently building
electoralizers from almost every conceivable OEM who can provide that technology,
(31:34):
because we want to test each one of that and see,
you know, where we can bring our expertise to enhance
the efficacy and allow for that scale up to happen.
But I still see that at you know, probably five
six seven years out to achieve scale maturity. We like
to run things twenty four to seven. Electrilized technology isn't
that robust, and it has a challenge around carpal intensity.
(31:55):
Capital cost for electricizers need to come down by sixty
to seventy percent for them to be a viable with
some marginal premium to higher carbon content hydrogen production. And last,
but not least, we talked about electricity. So you need
access to low cost renewable energy to be able to
(32:16):
run these electrolyizers and produce cost effective renewable hydrogen as well.
Speaker 1 (32:21):
Yeah, if you look at the stack of a typical
green hydrogen project, ten percent capital cost is about electoralizers,
forty percent is engineering works, and then forty percent is
electricity that's going to be consumed to be able to
produce hydrogen. So your capexlessop x has a little more
than ten percent, but it's it's it's still that's just
(32:43):
a stack.
Speaker 2 (32:43):
The balance of the plant is really where the challenge is.
And you know, balance of the plant is where you
know most of the investment has to happen.
Speaker 1 (32:51):
And it's interesting the examples you did bring up, were
all methane being converted to hydrogen through carbon capture, which
is the mature technology that's available now. One question on
carbon accounting is sort of more future oriented. You do
have a lot of businesses in the US. There have
been rollbacks on climate and energy policy in the US.
You know, one recent rollback that has happened is the
(33:15):
Environmental Protection Agency has been told to stop measuring greenhouse
gases or taking greenhouse gas measurements from companies, that kind
of thing. And I'll just pick that one example just
to make a point, which is that it can have
all sorts of downstream impacts that can affect your business.
So if the greenhouse gas emissions measurements aren't done, the
(33:36):
carbon capture tax credit that comes from this CEO two
being sequestered and put into the ground may not be given.
So how are you dealing with uncertainties? Not just in
the US, it's happening now there, but you know you
work in so many countries around the world. Policies changed
left and right. What's your way of dealing with these
sorts of changes as.
Speaker 2 (33:56):
We think about projects today in the cycle And I
think you know a good example of that was the
Hydrogen Council providing that that input. That five hundred odd
project's gone to FID and you know, looking to either
getting constructed or in commissioning or in operations. Many of
those were banking on you know, regulatory frameworks or incentives
(34:20):
or subsidies, and I think it's you know, one of
the things that the report also does is creates a
call to action, asking regulators to look at how they
can provide stability and consistency of policy to help move
these projects in the right direction. There is a call
to action both for governments as well as for corporations
(34:41):
and advocacy groups to make sure that that urgency is
well understood. But five hundred projects did move forward, and
that's an important testament. So I would say to you
what we're seeing in the market today reflecting that is
projects of you know, high quality projects which are underpinned
by sound economics and usually off takes continue to develop today,
(35:03):
and they are reflecting that by putting money in feasibility studies,
pre feed studies, feed studies. All of these cost money,
right because these are billion multiple billion dollar projects, so
you have to have that investment happen. People are making
those investments. That's what gives me the confidence to say
that my expectation remains at sound economics and good quality
(35:24):
projects with continue to see the light of day and
will move to a FID as we move forward as well.
So I think that's that's an important pace. One hundred billion,
one hundred and ten billion precisely of investments in five
hundred projects over the last four or five years is
a pretty tremendous number. I think we're never satisfied. I
have to agree with you. I'd like to see more,
but the reality is that's a good base on which
(35:46):
to start the process. That's about I think about six
million tons maybe one million already in operation, about five
five and a half coming on top of that. So
again I think the study provides some really good valid
as to how we're moving behind, you know, beyond that
hype cycle we saw initially, to a more mature model
(36:07):
around this development, and I think there is a little
bit more of policy certainty would provide a greater impetus.
And again the study says that we have a potential
of unlocking another thirty million tons of hydrogen if we
get that consistency to come through, And I think that's
that's a good analysis that the Hydrogen Council has done.
Speaker 1 (36:26):
Now let me go back to the start of our
conversation and to say that you know, as you explain,
Linda provides gases to real world projects and to the
real economy, and so the way Linda proceeds in its
climate plan is a way to look at how the
real economy is going to be moving on its climate targets.
(36:48):
You know, it's a company that does so much but
isn't always known to people because of the customers you
have typically which is industry and not consumers. But thank
you so much for throwing light on the work you do,
and thanks for this conversation.
Speaker 2 (37:04):
Pleasure Roger, thank you, and.
Speaker 1 (37:08):
Thank you for listening to Zero. And now for the
sound of the week. That is the familiar sound of
coffee being ground. Coffee beans recently hit a record price,
partly due to US tariffs, but also because of persistent
(37:30):
drought in Brazil, which produces about forty percent of the
world's coffee. If you like this episode, please take a
moment to rate and review the show on Apple Podcasts
and Spotify. Share this episode with a friend or with
someone who produces industrial amounts of gas. This episode was
produced by Oscar boy. Our theme music is composed by
Wonderly Special Thanks to Soamersadi Moses Andim Laura Milan and
(37:52):
Sharon chen i'm Akshatrati back soon.
Welcome to zero I am Akshatrati this week a hidden
electricity giant. The demand for electricity is soaring, and you
(00:21):
likely know why. It's because of air conditioning, electric cars,
and data centers powering artificial intelligence. But if you looked
at a list of the single biggest electricity consumers in
the world, you would be surprised. It's not just tech
companies like Google or Meta, oil and gas firms like
PetroChina or Shell, or retail giants like Amazon and Walmart.
(00:43):
It also has companies that you may not recognize linder,
air licked air products. These are all producers of industrial gases.
That's right. These companies make things like nitrogen and oxygen
and hydrogen gases that get used in steel manufacturing and
refrigeration and chemicals production, among many other things that you
(01:08):
are consuming on a daily basis. Together, these three companies
control about seventy percent of what is a one hundred
and twenty billion dollar global market for industrial gases. And
because the production of these gases is energy intensive, individually,
these companies consume as much electricity as small to medium
(01:30):
sized European countries. So as the world looks to electrify,
faster and do so at lower energy prices and with
fewer carbon emissions. It's important we understand what these electricity
giants are doing. Today's guest is Sanjivlamba, CEO of Linda,
the biggest of the three industrial gases companies, with operations
(01:51):
in more than eighty countries. What Linda does is a
strong reflection of where the industry as a whole is
going on climate goals. So I wanted to find out
from sun Jeev how he sees electricity demand changing, what
Linda is doing to transition to cleaner sources, and whether
low carbon hydrogen can ever become big business. Do also
(02:12):
check out a more deeply reported story I have on
this topic of hidden electricity consumers on Bloomberg Green. The
link is in the show notes. Also, if you have
any feedback about this episode or any others, please write
to me at zero Pod at Bloomberg dot net. Welcome
to the show, Sanjeef.
Speaker 2 (02:33):
Thank you, Aksha. Delighted to be here with you today.
Speaker 1 (02:35):
So I grew up in India and there was a
series of books that got me hooked on science and engineering,
which is why I ended up studying chemical engineering and
then doing a PhD in chemistry. But I'm a journalist now,
but that series of books still stays with me. It
was called How Things Work, and it had these engaging
explanations and diagrams showing the insights of everyday things like
a refrigerator or an iron, and it revealed the inner
(02:59):
workings of everyday objects that most people didn't say and
give me an insight and made me feel a little
smarter than everybody else. You run Linder and it does
something that most people just aren't aware of. So let's
start with just trying to understand what does your business do.
Speaker 2 (03:19):
That's a great way to start, uc SHOT and I'm
delighted you read those books. I remember reading them as well.
So industrial gases such as oxygen, nitrogen, organ hydrogen, carbon
dioxide are largely invisible. You can't smell them. But the reality,
uc shot is, and I say this often, you know, jokingly,
(03:39):
to my friends and colleagues, they are in every bit
of the world around you. If you have an iPhone,
we have a bit of our gases helping manufacture the
chip that goes into the iPhone, or indeed the glass.
You know, if you're having a nice beer or a coke.
You know, the carbonation we provide in there makes all
the difference. Imagine a flat coke or a flat beer,
(04:02):
it would be terrible. So it's in different ways that
we contribute to either the industrial processes, being very much
part of the industrial process or in other cases we
kind of as an example, will freeze about two billion
pizzas a year. I'm not quite sure who eats them.
Probably most of them go to my kids. But that's
(04:22):
another example of where industrial gases come into play. What
do we do These invisible molecules make our lives better,
Whether it's your vegetables that are that are fresher, whether
it's your television that is brighter and gives you a
better quality picture, or of course your beer or your
coke that that you will enjoy. Maybe one example to
try and give you the breadth or the diversity of
(04:43):
applications as well, I'll start with oxygen. It's a well
known molecule. You and I are breathing it as we speak,
so it's obviously important to life, but we use it
in manufacturing across a range of industries. And I want
to give you that breadth because it kind of is
breathtaking if you.
Speaker 1 (04:59):
Will, breadth giving too, bread.
Speaker 2 (05:02):
Giving too indeed, but outside with metals right, so steel,
No steel can be produced without oxygen, nitrogen and argon
being being part of that. But oxygen particularly or glass
for instance, you know, if you're having a you know,
a drink, you're using a glass that's had some oxygen
built in it. Aquaculture increasingly more oxygen usage in aquaculture today.
(05:23):
Now on the slightly more esoteric side, we help rockets
launch using oxygen as part of the fuel that cambus.
Obviously we talked about breathing it. Therefore, for health care,
you know, during COVID, we had to bring medical oxygen
from all over the world to hotspots where COVID patients
were essentially gasping for oxygen, and we had to do
(05:45):
our best to make sure that that was available. Now,
levels of purity, how the application actually happens, et cetera,
that varies. But the molecule itself is life giving. It
provides industrial you know, momentum in every industrialty or almost
every industrial activity, and can be used to help humanity generally.
Speaker 1 (06:04):
Give me an example of a weird gas. Maybe it's
not a big business, maybe it's not something you think
about daily, but you know, is interesting is weird?
Speaker 2 (06:14):
Oh, there are many at the most interesting levels in
nitros oxide obviously also known as laughing gas, essential in
many surgeries and procedures as an anesthetic.
Speaker 1 (06:25):
Yes, but also there's recreational use of nitrosoxide. Let's be
careful here.
Speaker 2 (06:30):
We have done a lot of education around to make
sure that that you know, is not something that is
actively done. And I think, but you're right. I mean
every you know, every product in the world has elements
that can be abused around it. Helium is the other
one which is an interesting gas. I think it's it's
one that has you know, wide usage from semiconductors to
(06:53):
MRIs for cooling of course, and then I mentioned, you know,
cryogenic cooling using helium and helium isotol for quantum computing.
Speaker 1 (07:02):
Just because I am a nerd and I feel like
this is a stat that people should know about. The
fact that people could perhaps share is that hydrogen, the
first element on the periodic table, is so light that
if it escapes, it can escape the gravity of Earth
and go into space. Helium does that too, to some extent,
(07:24):
but not as easily as hydrogen does it let's come
to the business side. You talked about all these gases.
Just talk me through where are you seeing the business grow,
where is it shrinking, and where is it most uncertain?
Speaker 2 (07:41):
So industrial gases, because of the nature of the application
that I just described to you, the breadth that we
see are embedded in every industrial activity and beyond. So
for us, growth is intrinsically linked to how the economic
activity is progressing around the world, and we often, you know,
kind of think of ourselves as a proxy for industrial activity.
(08:05):
So for us, the industrial production index or IP is
really where you know, we see the most level of correlation,
if you like, in terms of where growth for gases
comes from. Clearly, you know, we've been in a kind
of an industrial recession over the last two two and
a half years. When we look around the world, industrial
activity hasn't been growing at that level. But intrinsic to
(08:27):
every industrial activity and every industrial cycle is the growth
of gases. The growth today is coming from largely the
resilient markets, which are healthcare, food, and beverage. It doesn't matter,
you know, if the economy is doing well or otherwise.
People have to eat and they have to go go
and visit a doctor or oftentimes even go to the hospital. Electronics,
(08:47):
which because of this momentum around AI, data centers, et cetera,
is finding, you know, a lot of opportunity providing a
lot of opportunity for growth as well. So again, I
think those resilient markets are proving to be exact actually
that being resilient through this economic cycle and providing some
growth for us.
Speaker 1 (09:05):
So this is a climate podcast, and I want to
spend a lot of our time talking about energy and
emissions and hydrogen. Now, as a trained chemical engineer, I
knew these gases are very energy intensive to produce, but
there were still things about Linda's scope one and two
emissions that surprised me when I was looking at your
(09:25):
sustainability report, because if you add up your scope one
and two emissions, they're actually comparable to what we think
of as carbon giants like Chevron or BP, or even
retail giants like Amazon and Walmart. So what have you
done as a company to reduce your scope one and
two emissions?
Speaker 2 (09:45):
That's a great question. And Acsha, let me start off
by providing a headline and then I'll break it down
and tell you how we think about sustainability and the
impact that we have, and I'm going to give you
some real examples to kind of illustrate and make the point.
The headline that I want to just leave you with
is our products and services and technologies have helped our
customers avoid ninety six million metric tons of COOTO equivalent.
(10:08):
That's an important piece. That's two point six times the
emissions that we have on our own. So that's an
important piece to just keep in mind. And where does
that happen. So let's give those real examples to underpin that.
Let's start with steel, right, a large customer for us.
For steel, every one percent of oxygen enrichment that we
do in a blast furnace increases productivity by about five
(10:31):
and a half percent, and that's important because that leads
to lower emissions. If you look at Linda's contribution in
the last year, so twenty twenty four, you'll see this
in our sustainable report as well. For steel making a loan,
we helped avoid eleven point nine you know, million metric
tons of COEO to equivalent. So there's an example where
obviously we have an energy intensive process in the air separation,
(10:54):
but the gases that we provide then help reduce and
abate eleven point nine million metric tons of ZEO too
equivalent for steal alone. The same applies for desalturization for fuels.
Right here we provide hydrogen as an agent for cleaner fuels,
and essentially last year we helped our customers avoid sixty
(11:15):
seven point two million metric tons of COEO too equivalent
through this desulfurization process, making clean fuels. Well before people
were thinking about you know, clean hydrogen, clean energy, et cetera,
we were already on the path to doing that. But
we're not satisfied with that. So we set out a
sustainability roadmap and we set some goals for ourselves for
(11:36):
Scope one and two. Our goal is to reduce our
Scope one into emissions thirty five percent by twenty thirty five,
while we continue to grow and help our customers continue
to reduce and abate SEO two at their end. So
I think that's an important metric to keep in mind.
We've also said that by twenty fifty we expect to
be climate neutral, and that's again a big obligation. Now
(11:58):
I have to be honest and tell you lot needs
to happen around the grid. Scope to emissions, which I
think we have less control over, but we obviously are
doing a lot of work around that, doing our bit
to make sure that we're supporting the planet. And it's
at a time where I think that that change and
sustainable effort is essential. I think remains a critical piece
(12:19):
on our agenda and something that we take ownership of.
Speaker 1 (12:22):
Let me come to electricity as well, but before I do,
the measure around two point six times of emissions avoided
relative to what you produce is a useful measure to know,
so that you know that there are impacts that are
positive on the carbon balance sheet. But I'm sure you're
also aware that avoided emissions as a accounting method has
(12:45):
its challenges and are tricky to use and sometimes very
much open to abusing, and which is why there has
been some movement towards making these scope for emissions sort
of these emissions that are influencing or helping some other
to account for them, but they don't really negate, so
to speak, the emissions that the company is generating in
(13:06):
the process. Those still need to be reduced. So that's
why you said you have this climate plan, which you
know is there for a good reason. It's not just
that you can only help others avoid emissions, you also
have to reduce your own.
Speaker 2 (13:18):
Actually, i'll make two points over here. The first I
want to make is our first Sustainabiley Report came out
in twenty thirteen, well before it became fashionable to talk
about sustainability and set goals. Our carbon productivity measure was
instituted at that point in time. It's almost twelve thirteen
years ago. It's not new, it's something that stood the
(13:38):
test of time. It's something that we've publicly communicated every year.
So I just want to make the point that we
don't do this because it's fashionable or you know, esgs,
you know, in everyone's focus. We do it because it's
the right thing to do. Our mission as a corporation
is to make our world more productive sustainably, and I
think our sustainably roadmap, you know, kind of leads us
(14:00):
into that mission that we're trying to achieve. So you're
absolutely right, and I think from our perspective, we are
not really you know, either concerned or excited about the
carbon accounting of a measure of abatement and support that
replied to a customer. We believe it's right for the
planet that we do that, and I think that's one
of the reasons we will continue down that path.
Speaker 1 (14:21):
So coming to electricity, Yeah, it is kind of surprising
that Linda consumes as much electricity as the entirety of Denmark.
And even if we look at just comparing you to
other companies, Linda's electricity consumption is as much as Google
or Microsoft, or if we look at oil and gas companies,
as much as Sinopeck and Total Energies. Linder consumes a
(14:45):
lot of electricity and that also means that electricity must
be a big part of your spending. So what have
you done to try and reduce the amount of electricity
that you are using.
Speaker 2 (14:57):
That's a great question. So you know, most of these
large industries have outsourced their gas requirements to US, which
previously was captive and therefore you know those emissions scope
to emissions would sit in their balance sheet. They've outsourced
that to us for a number of reasons, including the
fact that we are constantly thinking about how we make
that process more efficient. But also more importantly, actually the
(15:19):
fact that we are a large consumer of electricity is
in some ways a good thing because it gives us
the leverage that we need to push to say how
renewable energy can become a larger part of that portfolio
of energy that we consume. Let's talk about what are
we doing about it? That was your question. Let me
answer that fairly directly. In my mind, our sustainability goals
(15:42):
put us on a path to ensuring that every action
we can take to reduce electricity consumption and to ensure
that we increase the portion, the proportion of low carbon
energy that we can access, you know, for our operations
is a key measure, not just a key measure. Actually
we have that metric sitting in the compensation program for
(16:06):
our leaders as well, including my own, to make sure
that it has the focus that it deserves. There are
two ways we address that issue. The first is by
reducing consumption, and the way we do that is by
continuously looking at our operations, finding innovation, finding solutions that
ensure that we're creating a higher efficiency ratio within that,
(16:28):
investing in technology that shows that happens. A good example
of that is, you know, we've introduced a flex asu
flex a su a sus you know are notorious for
not being able to turn down effectively quickly.
Speaker 1 (16:39):
Yeah, I think it's worth explaining what an ASU is
because that's the core part of your gases. So an
air separation unit, which and tell me what one looks like,
because I feel like most people haven't seen one. But
it's supposed to use energy, typically either coming from electricity
or from some form of fuel that is making steam
which is then running a compress, right, and so yeah,
(17:01):
describe what an AESU looks like and tell us what
part of it needs to become more efficient and how
do you move away from fossil fuels in the process.
Speaker 2 (17:11):
So I could spend hours describing an air separation I'll
resist that temptation. Actually, then just say that if you're
driving down and you see a very large one hundred
and fifty to two hundred meters tall white column, usually
with the Linder logo on it, that is the column
that does the distillation for an air separation. What effectively
(17:31):
happens is we take air, we use electricity, and through
a process of distillation, we're able to separate the gases.
We have large storage tanks, usually also white and large,
into which we will take the liquid oxygen, liquid nitrogen,
and liquid organ After having liquified the gases. Some amount
of gases will go to a gas pipeline and serve
(17:53):
a customer directly as steel mill or a semiconductor fab
and the others will go into these tanks and be
stored as liquor quid cryogenic liquids, which will then be
put into row tankers. Again, you may see some of
these and transport it to our mid sized customers where
we would provide that liquid oxygen nitrogen organ for their
industrial processes and usage.
Speaker 1 (18:13):
And people should realize, like even though air is everywhere,
to be able to separate these gases requires just a
ton of energy compressing a gas. And you know, if
you're providing gases that are at minus two hundred degree celsius,
you know, nitrogen is minus one ninety six degree celsius.
That's a lot of energy that needs to be taken
out of the system, which is what these separation units
(18:36):
are doing. Now, you said electricity, but some of them
also just use fossil fuels, right, They'll generate steam and
then the steam is running compression plants.
Speaker 2 (18:45):
Actually it's not our preferred option to use steam, but
there are steam drives and that usually happens when the
customer has excess steam available and wants to find a
way to utilize that. So in some ways that excess
steam is effectively utilized using a steam drive that runs
the ASUS and provides the power that would otherwise have
come through the grid, And I think that's one way
(19:06):
to think about it. I have to say, most of
this steam driven assets that we have sit in China,
which are integrated into an industrial park where customers typically
would have excess steam available, and many of those are
going through a process of conversion to electric drive. So
from our perspective, that is an area that we would
like to address as quickly as possible, and in fact,
(19:27):
I'm pleased that really we've already undertaken I think two
to three conversions already, and I expect most of the
other conversions will happen fairly quickly. But let's talk about
the grid, because that's where most of our power consumption
comes from. So as grids are seeing more and more
renewable power, you're also seeing greater volatility on the grid
and the ability to access power the FLEXASU and I
(19:50):
said earlier on for a ASU to turn down at
short notice is quite a challenge. Our FLEXASU design is
being specifically done allowing production levels that can be optimized
to synchronize with the availability of renewable energy, and that
flexibility I think will go a long way. We have,
as you know, a flex asure currently operating, and we're
(20:12):
looking at deploying many more for exactly the reason that
we can now synchronize with the ebbs and flows that
come from renewable energy coming into the grid. We're now
using AI based models that we've trained over the last
few years, using our own propriety technology and models to
find ways of increasing operational efficiency as well. So you know,
(20:32):
a good example of that is when we know that
there is variability on access to power, we're able to
you know, run the power up, run the ASU up
using the power available, build some stock levels through a
predictive mechanism which kind of looks at what the grid
is doing, you know, what our production levels are, what
the customer inventory is, and triangulating a lot of that
(20:54):
data and trained to focus is to the level of
production we can have whereby we are actually running the
air separation units at the most optimum level that we can.
The second piece I want to just talk about is
sourcing low carbon power. So, as you said, you know,
we do consume a fair amount of power, and we
have made some really good progress in sourcing renewable power,
(21:15):
and I think that's an important piece as well in
trying to manage our scope to emissions, but more broadly,
provide the impetus that the renewable energy development needs by
ensuring that we are signing PPAs we are in some
cases even participating in those projects directly ourselves, either through
(21:36):
equity or providing bankable guarantees to those projects, and ensuring
that those projects then come to fruition. And I think
since twenty twenty one, I think, if I'm not wrong,
our data would be that we have literally, you know,
through pow purchase agreements in places like the US and
China and India, Spain and Philippines and many other markets.
(21:57):
You know, we've almost now doubled our consumption of renewable energy.
Speaker 1 (22:02):
Let's look at the fine print of that. Forty seven
percent of electricity comes from low carbon power, according to
your sustainability report, but only about twelve percent comes from
power purchase agreements that if you directly signed up rest
of it. So the thirty five percent is green because
(22:22):
of things called energy attribute certificates or renewable energy credits,
and those are at one point they were very important
instruments to try and bring on more renewable energy onto
the grid when it was more expensive. It needed this
additional layer of payment in the form of a renewable
(22:43):
energy credit. So what power plant producers did is not
just provide the power, but they also got this additional layer,
which is like, because it's green power, we can also
provide you the attribute of green power. So anybody can
consume the electricity, but we'll give you the attribute if
you give us a little premium. Those certificates and those
attributes now are by most experts considered non additional, which
(23:05):
is to say, they are not driving more renewables to
be added to the grid. So what are you doing
to move away from renewable energy credits or energy attribute certificates.
Speaker 2 (23:14):
We've never been fans of credits or attribute certificates, to
be honest, and our view always has been that we
want to be participating in additionality the point that you
just made in creating new renewable energy assets on the ground.
So as an example in India where we have a
very aggressive Program for Sourcing renewable energy. These are all
(23:36):
PPAs that we signed with new generation facilities that are
coming up, and we continue to push, push hard on
that you talked about twelve percent. I mean, I want
to go back and remind you that over the last
four years we've doubled that. So there is an active
push today to move forward and ensure that we're signing
PPAs that allow us to be able to access the
(23:56):
clean electron that actually goes into our system. I think
that's the way to go. There isn't there isn't another way.
I think that, you know, has to be the purpose
that we all embrace and kind of move forward with.
So I'll give you two examples just to kind of
illustrate the point where we think we've been successful. And
obviously it's been helped by the fact that those countries
have you know, done a lot of work to get there.
The UK is a good example of that. You know,
(24:18):
in the UK, almost entire user power that we have
is actually renewable. Another good example of that is Brazil,
where most of our power comes from hydroelectric and again
those are great sources of renewable energy, and those countries
have over time build those assets in We're just hoping
to see the same scale of build up. And again
(24:38):
I mentioned India because I'm excited about what I see
in terms of developments in India at the moment, I'm
excited about China. To be honest, I'm seeing a lot
more push three years ago that wasn't the case. I
am pretty bullish on the fact that we will see
the renewable energy development happen now. There is all this
AI data center hype that's not hype. Should correct myself
(25:00):
there and say, there is an AI data center development
that is going to pull on that renewable energy. At
the moment, any electron is welcome, but renewable energy will
clearly be a target electron for them as well. So
there will be a little bit more increased competition in
sourcing those electrons, but we remain quite committed to moving
forward in that direction.
Speaker 1 (25:23):
Join us after the break for more of my conversation
with Sanji Blamba and Hey, while I've got you here,
fancy writing us a review on Apple Podcasts or Spotify. Recently,
Moira wrote my number one podcast for Climate Updates. Thank you, Moira.
(25:53):
Coming to hydrogen and your role as the co chair
of the Hydrogen Consoles Board. It's a that obviously does
things today in the real economy that are very important
and crucial. Most of the hydrogen that is produced used
in places like a refinery come from natural gas, so
(26:13):
gray hydrogen, as it's known. There is a move to
try and a move that to green hydrogen, but also
find ways in which green hydrogen could play a role
in cleaning up other areas of energy use. Where do
you stand on hydrogen as an opportunity for the industry.
It's been something that people have talked about as a
(26:33):
promise to thing for a long time, but it needs
renewable electricity to be produced, It needs in many places
government subsidy to be actually affordable for industry. Do you
see this as a business opportunity or do you think
green hydrogen's time is never going to come?
Speaker 2 (26:51):
So I'm going to rephrase that respond by saying, I
absolutely believe clean hydrogen is a great opportunity for industrial
decarbonization broadly and for US as an industrial gas company.
I mentioned clean hydrogen and I'm going to kind of
elaborate a little bit more on that. I'm sure you're
going to ask me that anyway, But let's just talk
(27:13):
about the Hydrogen Council for a minute. So the Hydrogen
Council recently issued this Global Hydrogen Compass Report, which I
think is a really good piece of work, and you know,
as it's a CEO led organization, therefore, the insights that
we're able to marshal out of that, you know, are
quite amazing. And I think the conclusions that came out
(27:35):
of that was the hydrogen development is maturing. We're over
the hype cycle, HiPE cycles done, We're now seeing a
more mature development. They pointed out that there have been
about five hundred projects that have gone to a FID
or are under construction, commissioning, or operational. That's an investment
of about one hundred and ten billion, which has picked
(27:56):
up significantly over the last three or four years. And
I think that that's an important measure of validating the
role that hydrogen is going to play going forward, particularly
clean hydrogen is going to play in helping the process
of industrial decarbanization. It's also true to say that while
we went through this euphoria or hype around clean hydrogen
(28:20):
development go back three or four years ago, hydrogen today
and the demand and the supply side dynamics that we
see are real now. In our case, we've selected those
projects carefully. Not only that, for us, there are some
conditions to be met. A good condition for that is
we need a binding long term off take agreement. For us,
(28:42):
that's a critical measure of whether a project is going
to move forward or not. And I'll give you two
examples where we've achieved that, which are under construction today.
The first is, you know, our example of working with
Woodside as a partner in Beaumont, Texas. Here we will
supply low carbon hydrogen to their world scale ammonia complex.
You know, we will produce the hydrogen. We'll also produce
(29:03):
the nitrogen. In the case of hydrogen, we'll be doing
auto thermal reforming, which provides for a highly concentrated SOEO
to stream which can be captured. In this instance, about
just over two million metric tons of CO two will
be captured, and we are using a partner to sequester
that down hole. That's not expertise we have, so we
have to work with a partner to do that. We'll
(29:23):
be working with them to sequester that downhole and there
by providing low carbon hydrogen to wood Side for their
Cleanneumonia process that they are instituting. The other example is,
you know, spending more than two billion dollars in Alberta, Canada,
and there it is for helping Dow on their Path
to Zero project, which is you know, basically providing hydrogen
(29:44):
and atmospheric gases to help them decarbonize their ethylene and
derivative production facility that sits over there that they're also
in the process of expanding. Here's an example of bringing
up an investment case together, working with a good counterparty
like Dow and making sure that you put that whole
design parameters in place to provide low carbon hydrogen to
(30:06):
DOO to allow them to move down the path of
fuel switching to get to the decarbonized ethylene and downstream
products that they will be looking at. So two examples. Now,
for the last four plus years, maybe five years now
action we've been operating an ATR and clearly where we've
been capturing the CO two and are now providing that
(30:27):
to Selenese who is a customer in terms of low
carbon hydrogen captured CO two which they will then use
for methanol production, which is an input into their process.
Here's a good example of something that's been operating for
a number of years already. This is not fictional, right,
So when I say hydrogen supply side dynamics are real
(30:48):
and available today at scale and competitively cost it. Now
you asked a question about green hydrogen. We are building
a number of electrolyizers around the world, but electrolyzer technology
and what I call renewable hydrogen, I don't like colors.
Just to make sure that I make this point now.
My view is we should walk away from colors which
tend to be very emmotive and usually lead to misunderstanding
(31:10):
and talk about carbon intensity, and I think that really
is is the way to go, and reducing carbon intensity
must be our purpose. There is no option around that.
But you know, we are building a number of electrilyizers
which will produce renewable hydrogen. The challenge with the electrialized
technology today is a scale and maturity. We're currently building
electoralizers from almost every conceivable OEM who can provide that technology,
(31:34):
because we want to test each one of that and see,
you know, where we can bring our expertise to enhance
the efficacy and allow for that scale up to happen.
But I still see that at you know, probably five
six seven years out to achieve scale maturity. We like
to run things twenty four to seven. Electrilized technology isn't
that robust, and it has a challenge around carpal intensity.
(31:55):
Capital cost for electricizers need to come down by sixty
to seventy percent for them to be a viable with
some marginal premium to higher carbon content hydrogen production. And last,
but not least, we talked about electricity. So you need
access to low cost renewable energy to be able to
(32:16):
run these electrolyizers and produce cost effective renewable hydrogen as well.
Speaker 1 (32:21):
Yeah, if you look at the stack of a typical
green hydrogen project, ten percent capital cost is about electoralizers,
forty percent is engineering works, and then forty percent is
electricity that's going to be consumed to be able to
produce hydrogen. So your capexlessop x has a little more
than ten percent, but it's it's it's still that's just
(32:43):
a stack.
Speaker 2 (32:43):
The balance of the plant is really where the challenge is.
And you know, balance of the plant is where you
know most of the investment has to happen.
Speaker 1 (32:51):
And it's interesting the examples you did bring up, were
all methane being converted to hydrogen through carbon capture, which
is the mature technology that's available now. One question on
carbon accounting is sort of more future oriented. You do
have a lot of businesses in the US. There have
been rollbacks on climate and energy policy in the US.
You know, one recent rollback that has happened is the
(33:15):
Environmental Protection Agency has been told to stop measuring greenhouse
gases or taking greenhouse gas measurements from companies, that kind
of thing. And I'll just pick that one example just
to make a point, which is that it can have
all sorts of downstream impacts that can affect your business.
So if the greenhouse gas emissions measurements aren't done, the
(33:36):
carbon capture tax credit that comes from this CEO two
being sequestered and put into the ground may not be given.
So how are you dealing with uncertainties? Not just in
the US, it's happening now there, but you know you
work in so many countries around the world. Policies changed
left and right. What's your way of dealing with these
sorts of changes as.
Speaker 2 (33:56):
We think about projects today in the cycle And I
think you know a good example of that was the
Hydrogen Council providing that that input. That five hundred odd
project's gone to FID and you know, looking to either
getting constructed or in commissioning or in operations. Many of
those were banking on you know, regulatory frameworks or incentives
(34:20):
or subsidies, and I think it's you know, one of
the things that the report also does is creates a
call to action, asking regulators to look at how they
can provide stability and consistency of policy to help move
these projects in the right direction. There is a call
to action both for governments as well as for corporations
(34:41):
and advocacy groups to make sure that that urgency is
well understood. But five hundred projects did move forward, and
that's an important testament. So I would say to you
what we're seeing in the market today reflecting that is
projects of you know, high quality projects which are underpinned
by sound economics and usually off takes continue to develop today,
(35:03):
and they are reflecting that by putting money in feasibility studies,
pre feed studies, feed studies. All of these cost money,
right because these are billion multiple billion dollar projects, so
you have to have that investment happen. People are making
those investments. That's what gives me the confidence to say
that my expectation remains at sound economics and good quality
(35:24):
projects with continue to see the light of day and
will move to a FID as we move forward as well.
So I think that's that's an important pace. One hundred billion,
one hundred and ten billion precisely of investments in five
hundred projects over the last four or five years is
a pretty tremendous number. I think we're never satisfied. I
have to agree with you. I'd like to see more,
but the reality is that's a good base on which
(35:46):
to start the process. That's about I think about six
million tons maybe one million already in operation, about five
five and a half coming on top of that. So
again I think the study provides some really good valid
as to how we're moving behind, you know, beyond that
hype cycle we saw initially, to a more mature model
(36:07):
around this development, and I think there is a little
bit more of policy certainty would provide a greater impetus.
And again the study says that we have a potential
of unlocking another thirty million tons of hydrogen if we
get that consistency to come through, And I think that's
that's a good analysis that the Hydrogen Council has done.
Speaker 1 (36:26):
Now let me go back to the start of our
conversation and to say that you know, as you explain,
Linda provides gases to real world projects and to the
real economy, and so the way Linda proceeds in its
climate plan is a way to look at how the
real economy is going to be moving on its climate targets.
(36:48):
You know, it's a company that does so much but
isn't always known to people because of the customers you
have typically which is industry and not consumers. But thank
you so much for throwing light on the work you do,
and thanks for this conversation.
Speaker 2 (37:04):
Pleasure Roger, thank you, and.
Speaker 1 (37:08):
Thank you for listening to Zero. And now for the
sound of the week. That is the familiar sound of
coffee being ground. Coffee beans recently hit a record price,
partly due to US tariffs, but also because of persistent
(37:30):
drought in Brazil, which produces about forty percent of the
world's coffee. If you like this episode, please take a
moment to rate and review the show on Apple Podcasts
and Spotify. Share this episode with a friend or with
someone who produces industrial amounts of gas. This episode was
produced by Oscar boy. Our theme music is composed by
Wonderly Special Thanks to Soamersadi Moses Andim Laura Milan and
(37:52):
Sharon chen i'm Akshatrati back soon.
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