Hydrogen is set to play a major role in the global energy markets over the coming decades, supplanting a large chunk of oil demand, according to Bank of America’s head of global thematic research.
Speaking to CNBC’s “Squawk Box Europe” on Friday morning, Haim Israel accepted that while oil and gas would still be needed going forward, it was nearing a peak in demand. “We think it’s peaking this decade, it’s soon — way sooner than what everybody thinks,” he said.
Israel listed several factors which would affect oil and gas going forward, including cheaper renewable energy, regulation and the electrification of cars.
“We believe that hydrogen is going to take 25% of all oil demand by 2050,” he went on to state, adding that oil was “facing headwinds left and right. Yes, we’ll still need it, yes, it’s still going to be around, but the market share of oil is going to plummet.”
As noted by the U.S. Department of Energy, hydrogen “is an energy carrier, not an energy source,” meaning it’s a secondary energy source like electricity. The DOE adds that hydrogen “can deliver or store a tremendous amount of energy” and “can be used in fuel cells to generate electricity, or power and heat.”
Changing times?
In recent years, governments and companies around the world have announced goals to reduce their environmental footprint and move away from fossil fuels. Both the U.K. and European Union are, for example, targeting net zero greenhouse gas emissions by 2050.
If these kinds of goals are to be met, the world’s energy mix will need to see a significant shift to renewable and low carbon sources, a mammoth undertaking. For his part, Bank of America’s Israel emphasized the importance of diversification for companies involved in fossil fuels.
“We … strongly believe that the ‘big oils’ need to think in different ways,” he said. “They need to think about not ‘big oil’ anymore but ‘big energy’ from here onwards, to go much more into renewable sources, to diversify their sources.”
In a sign of how things may be starting to change, a number of energy majors — who, it should be noted, remain big players in oil and gas — are now ramping up investment in renewables such as solar and wind.
Last September, it was announced that BP had agreed to take 50% stakes in the Empire Wind and Beacon Wind projects from Norway’s Equinor. The $1.1 billion deal is due to close in the early part of 2021.
When fully up and running, Equinor says the Empire Wind and Beacon Wind projects, set to be located in waters off the East Coast of the United States, will each be able to power over 1 million homes.
Hopes for hydrogen
Hydrogen is another area starting to gain momentum. The EU has laid out plans to install 40 gigawatts of renewable hydrogen electrolyzers and produce as much as 10 million metric tons of renewable hydrogen by the year 2030.
Hydrogen can be produced in a number of ways. One includes using electrolysis, with an electric current splitting water into oxygen and hydrogen. If…
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