French energy company Engie has downplayed expectations for the rapid deployment of low-carbon hydrogen in hard-to-abate sectors such as steel production because of the “massive” investment needed to overhaul industrial processes to enable the switch.

Switching to low-carbon hydrogen in existing applications, such as fertiliser production, can deliver decarbonisation “fairly easily” as long as the economics work, but new applications will take much longer to develop, Engie CEO Catherine MacGregor told the International Energy Week conference in London.

“We had this big buzz around hydrogen when we thought that everything was happening at the same time,” she said.  “Obviously things are taking a bit longer.”

In the steel sector, companies need to invest in the conversion of processes to run first on natural gas, before converting to hydrogen. “This is a multi-step process that is going to take a long time,” MacGregor said.

“The alliance of the electron and the molecule will make the energy transition affordable” MacGregor, Engie

Despite her caution on new applications, MacGregor said Engie remain “super excited” about hydrogen and its role in the transition. In the UK, Engie is developing hydrogen storage capacity “to tap into the flexibility of the molecule”. “This provides the

resilience and robustness that we need for the energy transition,” she said. The company is also investing in biomethane production in the UK.

MacGregor stressed the need for both electrons and molecules—including hydrogen and biomethane—to enable the transition. “Not everything can be electrified. It will be the alliance of the electron and the molecule that will make the energy transition affordable,” she said. Hydrogen and other molecules offer the advantage of being able to use existing gas infrastructure, while the electrification will require “massive” investment in transmission and distribution networks, she added.

Amazing numbers

MacGregor rejected claims by some that the transition has lost momentum amid recent geopolitical turmoil and a retrenchment by some investors amid inflation and rising interest rates.

 “Despite some of the noise and the negativity, some of the numbers are actually quite impressive.” She cited a 50% increase in 2023 in the amount of renewable power capacity added globally, compared with the previous year. “These are quite amazing numbers,” she said. Engie is aiming to add 4GW of renewable capacity each year to 2025, rising to 6GW over 2026–30.

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Author: Stuart Penson