Three Takeaways from CERAWeek 2023

More than 110 countries and 200+ of the world’s largest companies have now pledged to achieve net zero carbon emissions by or before 2050. To reach these goals, the energy industry is thinking bigger, faster, and more collaboratively than ever before.

At this year’s CERAWeek – the world’s premier energy conference – energy executives, financiers, scientists, engineers, policy makers and academics came together in Houston to discuss how the energy sector is leading, and will continue to lead, the energy transition.

From modeling decarbonization solutions across sectors to commercializing breakthrough technologies, from future-proofing existing energy assets to leveraging new policy initiatives such as the Inflation Reduction Act (IRA), our industry is undergoing a transformation to reach net zero.

After a week of discussion and collaboration at CERAWeek 2023, it’s clear the industry is navigating the current complexity and accelerating progress.

1. Goals Have Been Set – Now, We’re Seeing Proof Toward Progress

The energy and power generation industries are playing a leading role in the transition. We’ve already lowered the grid’s carbon footprint by nearly 40% since 2005, and we continue to see steady progress toward decarbonization goals. Last year, carbon-capture facilities alone captured almost 45 metric tons of carbon dioxide, up from 41 metric tons the year before. Now, new technologies and business models can help the sector speed up carbon reduction in the coming years and decades.

The Advanced Clean Energy Storage Hydrogen Hub (ACES Delta Hub) in Utah – the nation’s first utility-scale renewable energy hub – is currently under development and reflects four years of collaboration between Mitsubishi Power and Magnum Development. The hydrogen hub will both produce green hydrogen via electrolysis and store it in two massive underground salt caverns, each capable of storing 150,000 MWh, nearly doubling global green hydrogen production capacity. The hub can expand between 70 and 100 caverns—enough room to provide storage for much of the Western United States. When completed, ACES Delta Hub will serve as a model for other hydrogen hubs and an incubator for other hydrogen innovations.

“In order for hydrogen projects and carbon capture products to take off, it’s up to the companies with the balance sheets to demonstrate that the solutions are real and scalable,” explained Takajiro Ishikawa, President and CEO of Mitsubishi Heavy Industries America, on a panel about the business of carbon management. “It’s up to the MHI’s, Mitsubishi Power’s, the ExxonMobil’s of the world to be the technology provider, applying our know-how and resources to get this thing off the ground.”

2. The Portfolio Approach to Tech and Innovation is Working

As renewable power becomes more widespread, flexible power sources and innovative storage solutions are increasingly important. Pumped hydro, battery storage, long duration energy storage, and demand-side management help provide adaptability to the grid. Carbon capture, utilization, and storage (CCUS) projects are also entering front-end engineering around the globe.

Green hydrogen – hydrogen produced from water using renewable electricity – plays a crucial role in reaching net zero. As more renewable energy sources are developed, energy in excess of what the grid requires at a given moment can be used to produce hydrogen that can be stored nearly indefinitely. This process has the potential to reduce renewable power inefficiencies and make long-term energy storage a reality.

And it’s happening now.

“The technology is here, it’s been here, and it’s being developed as we speak,” said Samir Vora, Vice President of Market Intelligence, Strategy and Pricing at Mitsubishi Power Americas, at a session on hydrogen and ammonia.

While technology is advancing, we are also beginning to see investments starting to make an impact today.

“We’re at the point today with hydrogen and other clean energy solutions, where the IRA represents $369 billion of investment which is going to drive $200 trillion of economic growth in the United States,” said Bill Newsom, President and CEO of Mitsubishi Power Americas.

3. Public + Private Investment Enables Scale

The transition to net zero cannot be accomplished by a single technology nor a single business model.

The ACES Delta Hydrogen Hub didn’t wind up there by chance. In 2020, Mitsubishi Power won a bid for hydrogen-capable gas turbines to replace a coal-fired power plant on the site. That meant finding a way to source the hydrogen.

“Rather than sitting back and waiting for the market to find the solution, we decided to invest,” said Michael Ducker, Senior Vice President of Hydrogen Infrastructure at Mitsubishi Power Americas, at a panel on collaborating to reach hydrogen’s full potential. “In 2019, we weren’t talking about hydrogen hubs – we were viewed as throwing our money away doing a science project.”

In 2022, the project secured more than $500 million in funding from the U.S. Department of Energy, ensuring the future growth and scalability of the hub. The Loan Programs Office continues to look for partnerships such as ACES Delta.

“We have 135 active applications right now in the Loan Programs Office seeking $125 billion of loan proceeds,” said Jigar Shah, Director of the DOE Loan Programs Office. “If you assume that we’re providing 50% debt, then that’s $250 billion worth of projects.”

This infrastructure is necessary to drive energy diversification, which will in turn help provide flexibility in global energy systems. That flexibility is becoming a greater necessity as renewable energy sources continue to gain traction and geopolitical uncertainty impacts energy decisions around the world. And more funding, like that promised by the IRA and the $6 billion commitment to innovative solutions announced by U.S. Secretary of Energy Jennifer Granholm in her CERAWeek keynote speech, will be instrumental in scaling technology.

“The IRA has made a big impact in the U.S. and globally,” said Hitoshi Kaguchi, Executive Vice President and Chief Strategy Officer at Mitsubishi Heavy Industries (MHI) and President and CEO of MHI Energy Systems, in a session focused on strategies to lower emissions. “Following suit, the European Union slightly modified their strict and complicated dues to create clearer, centralized incentives for the industry. The Canadian and Japanese governments likewise issued green transformation funding and incentives – the IRA has created increased economic interest in clean energy.”

When it comes to reaching the ambitious and necessary goal of achieving net zero by 2050, game-changing technologies and legislation have an important role to play. As #CERAWeek once again proved, we are not afraid to tackle the world’s biggest issue – and we are on the path to get there.