Navigating the complexities of the transition to lower carbon energy sources will be daunting as unpredictable market and political forces whipsaw efforts to keep energy reliable, sustainable and affordable—while growing profits.

“There’s going to be a lot of volatility and there’s going to be a lot of external noise,” said Baker Hughes CEO Lorenzo Simonelli. “I think one thing we can all appreciate is that this world is chaotic, and if we try and understand it on a daily basis, we’re probably going to go crazy ourselves.”

But Simonelli and Sanjiv Lamba, CEO of industrial gases company Linde, had some advice for attendees of the CERAWeek by S&P Global conference in Houston.

“Focus on the fundamentals of what is happening from a macro perspective around the globe and what is it that we, within the companies that we work in, can control and impact with a positive outcome,” Simonelli said. “At Baker Hughes, we know energy demand is going to increase. We know that there’s a need and a drive toward affordable, sustainable and secure energy and our role as an energy technology company is to provide the innovation, the capability, the efficiencies that deliver positive outcomes … For all the whirlwind that happens on a daily basis, if we stay focused on that, the results on the other side is a positive outcome and a positive outcome for society at large.”

Simonelli and Sanjiv Lamba shared their insights on what it will take to achieve success in evolving markets while adding lower carbon resources to the energy mix.

Scaling hydrogen

Hydrogen is a lower carbon route some are taking toward lower carbon emissions. The carbon-free energy carrier is versatile and seen as a promising way to reduce emissions as a fossil fuel alternative in hard-to-abate sectors, heavy-duty transportation and industrial processes.

Hydrogen can be produced using natural gas, or low-carbon blue hydrogen, and renewable electricity.

“My view is you need a cost-effective solution at scale,” Lamba said, later adding. “Stick with low-carbon hydrogen. That’s the way to go. … That technology is available today. It’s at scale and, it’s being set up in very large projects.”

Linde has two large hydrogen projects underway: a $1.8 billion facility in Beaumont, Texas, to supply hydrogen to OCI for a blue ammonia plant; and a $2 billion facility in Alberta, Canada, to supply Dow Inc. with hydrogen. Both involve use of low-carbon hydrogen made from natural gas. As part of the project with OCI, Linde aims to sequester more than 1.7 million metric tons of CO2.

“We’ve got great autothermal reforming technology now in place. We have a very scaled up model around carbon capture. And of course, if you’ve got the right partners, we have a great sequestration opportunity as well,” Lamba said. “That is what brings together a cost competitive, at scale, low carbon hydrogen project and makes it feasible such that you will see adoption coming.”

Lamba said he remains “pretty bullish” on improvement in those areas, with green hydrogen development taking between 7 years and 10 years to scale and become cost competitive.

“We should absolutely be putting effort and energy into doing whatever innovation we can,” Lamba said. “We should be making sure that that technology is not just reliable and safe but it’s available at scale, so that ultimately, when we see the transition happen, you have a portfolio. … You will always have fossil-based hydrogen available,” which is a compliment to the energy basket with carbon capture if it has low carbon intensity.

Natural gas ‘best solution’

The sector will still need customers, including those in hard-to-abate sectors, willing to pay premium for cleaner power, Lamba added.

“Hydrogen will be part of the energy mix. Now it won’t be as large as natural gas. … But it has a role to play,” Simonelli said. “In fact, today we are already active on several hydrogen projects and we’re already using a 100% driven hydrogen gas turbine.”

He agreed with the 7- to 10-year timeframe to scale hydrogen, but he added a natural evolution is already taking place.

The same can be said of geothermal energy, when technological advances are making geothermal opportunities accessible in more countries.

“Major breakthroughs in technology is increasing. But are you looking to geothermal to displace natural gas? No. We’re not going to do that in the short term,” Simonelli said. “Again, similar to many of the discussions we have around the energy mix, it’s going to take time. Right now, the best solution is natural gas. And as we look at the next few decades, that’s going to be the predominant driver of making sure we have affordable, secure and sustainable energy going forward.”

Key to advancing lower-carbon technologies are partnerships, Lamba said.

“For me, it is all about actions and actionable things that you can do. … Partnership is the cornerstone of a successful energy transition. Without it, we all fail. Together the outcomes we will get are going to be significantly successful,” Lamba said.

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