Slava Slavinskiy, Head of Banking EMEA for Mizuho, attended this year’s Hydrogen Council 2024 International CEO Event. We caught up with Slava and Junaid Belo-Osagie, Executive Director, Investment Banking after the event to discuss the future of hydrogen, and the opportunities and obstacles for hydrogen to ‘live up to the hype’.
As an energy medium, hydrogen is clean, emits no CO2 during utilisation, can be used to achieve carbon-free energy and allows for the storage and long-distance transportation of large amounts of electricity.
“The hype is real,” says Slavinskiy, “but the hype is still around potential use cases, because when you look at the actual hydrogen projects in play in terms of supply, and particularly offtake, it’s still a very small area.”
As a global bank, headquartered in Japan, Slavinskiy argues that Mizuho is uniquely placed when it comes to facilitating the transition to a carbon neutral economy.
“Mizuho’s role as a global financing powerhouse is to support the transition to carbon neutral by providing advisory services and acting as a long-term, first-to-call strategic partner for our clients. We have the commitment, the products, the sector expertise and the commitment to support our clients’ ambitions.”
Japan outlook
According to Mizuho research, the annual hydrogen demand in Japan will be about 1.5 million tons in 2030 and about 24 million tons in 2050.
“Mizuho’s role as a global financing powerhouse is to support the transition to carbon neutral by providing advisory services and acting as a long-term, first-to-call strategic partner for our clients.”
Slava Slavinskiy,
Head of Banking EMEA for Mizuho
In 2017, Japan formulated the world’s first national hydrogen strategy (‘the Basic Hydrogen Strategy), and since then has been a frontrunner in the global hydrogen industry.
Junaid Belo-Osagie, Executive Director, Investment Banking says that, “whilst Japan can potentially generate several million tons per year of domestic hydrogen, this increase will require overseas resources, with imports from the Middle East, Australia, Africa and North America expected to be the main sources targeting exports to the Asian markets.”
He continues, “in Japan, because of the government induced mandate driven scenarios, we’re potentially looking at power coming to the top of the hydrogen ladder in terms of use cases by 2030.”
Slavinskiy also comments that, “the German Government confirms that 50-70% of demand will be covered through imports stimulating additional offtake opportunities for producers”.
Thinking innovatively to finance the transition
As global economies turn towards carbon neutral, and in the second year after Mizuho joined the global Hydrogen Council, Belo-Osagie says that in order to displace traditional forms of electricity, the economics need to make sense on both the supply and demand side and that there needs to be a clear roadmap on how to bring green low-carbon hydrogen to price parity with fossil based hydrogen.
“We need to get the average cost of renewable electricity to go down from roughly an average of $55 per megawatt hour to roughly around $20.”
Junaid Belo-Osagie,
Executive Director, Investment Banking
“We know that to get green hydrogen to where it needs to be in terms of price parity and Total Cost of Ownership, you need to get electrolyser costs down by around 80% from what they are today,” explains Belo-Osagie, “and more broadly, we need to get the average cost of renewable electricity to go down from roughly an average of $55 per megawatt hour to roughly around $20.”
When asked about what innovation is needed in the sector to achieve price parity, Belo-Osagie advocates the judicious use of emerging asset classes such as the carbon markets and transition credits by evaluating the social impact of those projects. “If properly standardised, you are indirectly creating an asset class that subsidises the production of hydrogen. Governments and policies will need to play a decisive role at this initial stage. Infrastructure needs to catch up with product and tech availability”
In summarising Mizuho EMEA’s views on green hydrogen, Slavinskiy is quick to respond, “at Mizuho EMEA, we believe that without hydrogen use the transition is challenging. As we support the transition to a carbon neutral economy, cost-competitive low-carbon hydrogen will become a feasible mainstream solution.”