The certification of green hydrogen is essential for Rotterdam as a future price-setting region
The future of hydrogen lies in Rotterdam. That’s because the Hydro Generation – a group of forerunners in the energy transition – see Rotterdam as the ultimate place to realise innovative solutions. This group includes the young company Docklab, which is working on transforming global supply chains. Janjoost Jullens from Docklab talks to Dr. Wouter Jacobs from the Erasmus Commodity & Trade Centre (ECTC) about the certification of green hydrogen and Rotterdam as a price-setting region.
Docklab’s international team is working on the digital infrastructure for the energy transition, like the HydroTwin spin-out – a digital platform for CO2 accounting and certification of hydrogen and hydrogen carriers – in the heart of the Port of Rotterdam with around 30 innovators. Chief Strategy Officer Janjoost Jullens explains: “Imagine: you’re selling green hydrogen from an electrolyser and are converting this into ammonia, pumping part of it into a ship and subsequently arranging for this to be cracked or resold. You’ll need to meet a variety of regulations in each of these steps. Our platform enables you to do that.” The platform’s first version was developed based on existing technology.
Wouter Jacobs, Director at the ECTC and a senior researcher at the Erasmus Centre for Urban, Port and Transport Economics (UPT), was involved with the project right from the initial design phase and is pleasantly surprised about the progress realised so far. “It’s great to hear that progress is being made. This is of vital importance to market development.” The import of hydrogen (carriers) is bound by European regulations, which had remained unclear for a long period of time. Jacobs: “We now know that providing evidence of the hydrogen carrier production’s green component is a requirement to allow for trading. We need digital, efficient certification for this purpose. The Docklab tool offers a solution for this.”
Investing in certification, soon be at the forefront
The HydroTwin platform is being set up together with certification experts and energy parties. “We prefer to design it together with the chain now, despite the fact there are no major green hydrogen volumes or trading yet. We’ve therefore managed to get parties who want to learn, dare to invest and want to be at the forefront in the future to commit to us. We expect their contributions will allow us to be fully operational in about 1.5 years. We’ve progressed as far as we can for now”, smiles Jullens.
The platform helps to turn every commodity batch (a portion of a raw material) into a digital twin: a unique digital identity which summarises all information about the batch. This digital twin is linked to a register with all events and changes in that batch’s value chain – the project journey. Then there’s a digital safe, within which all associated documentation is managed. “This means you’re always ready for certification and we also arrange for these certificates to be digitally managed. Plus this digital twin will provide you with a continuously up-to-date and digital insight, allowing you to effectively serve traders and end users. You can tell a buyer: here’s the digital key, have a good click around.”
Jacobs feels it’s essential for the Docklab platform to also be equipped for various hydrogen carriers, including ammonia. The CommodipHy Report, drawn up by the ECTC and supervised by him, states that ammonia is an essential element in the realisation of a hydrogen market and trading in Europe. Jacobs explains: “Ammonia trading already exists as a result of the fertiliser industry. Ammonia prices are therefore now driven by that industry, for example based on the number of hectares of agricultural land. While ammonia can also be used as a fuel and as a hydrogen carrier, so we now need to move towards more diverse pricing.”
From long-term agreement to spot market
The HydroTwin, according to Jacobs, therefore responds to an important future demand. “You want to make the switch from long contracts between two parties – long-term agreements – to a spot market. Long-term agreements are important to initially get production off the ground, as you’re only going to be able to get financing for an ammonia factory once you’re certain your customer will buy it at a certain price. A spot market will arise as soon as there’s more or less during that production process.” You can sell ‘on the spot’ in case of overproduction. Who needs it right now? Volumes are increasing and prices differ more and more each day. That certainly also comes with the necessary risks. Jacobs further explains: “You want to get rid of that risk as a seller. That’s the time to make use of investment capital, like investment banks and hedge funds. This will ensure the product becomes tradable on the stock exchange. Two of those long contracts’ most important tipping points towards a spot market are correct volumes and the right preconditions. In other words; certification and registration.”
Jullens confirms the platform was designed with this specific vision in mind. “It should lower the threshold to be able to trade and execute transactions quickly. What’s different here compared to the way things are currently being done is that it’s done digitally rather than physically. That results in speed. It’s also fully equipped for optionality: there’s a digital ‘twin’ of your batch, which means you can sell your products together or in parts, but you can also cut them apart – in this case into hydrogen and ammonia – and subsequently be assigned the right owner, quantity and certificates.”
Rotterdam has excellent credentials as a price-setting region
The optionality offered by the HydroTwin platform is also evident within the Port of Rotterdam. The ECTC report therefore concluded that the city has excellent credentials to become the price-setting region for hydrogen and hydrogen carriers. Jacobs explains: “You’ll be able to get the best possible price where a great deal of supply and demand come together. That will attract trade. Supply and demand will naturally arise in places which have a great deal to offer. Rotterdam and the region already form Europe’s largest shipping fuel market. They’re known for their expertise and facilities where the storage of molecules is concerned. Plus there are major ambitions to install electrolysers and the Port Authority is working on a pipeline to serve the hinterland together with Gasunie.” “That will definitely present you with a variety of choices as a seller: do I store it in a tank, do I instantly sell it, do I crack the ammonia into hydrogen? Rotterdam truly has an edge where that versatility is concerned,” Jullens adds.
Rotterdam is actually already set to be both Europe’s hydrogen hub and therefore also the price-setting region. “You could almost say it’s inevitable, with all the capital, knowledge, skills and conditions available here to allow for the energy transition to happen. Well-developed economic regions always build on what’s already available. The Rotterdam region boasts an energy economy and associated logistics; exactly what’s made this region great over a 150 year period. That’s why you need to be here for that transition,” Jacobs argues.
Enter into international agreements
But even the very best credentials still don’t mean you’re quite there yet. Other regions which act faster and are able to attract cargo can simply walk away with the price-setting region title. That’s why Jacobs advocates entering into agreements with international parties. “This will create a spot market, no one will be able to perfectly control it, but you can enforce it. That means you have to arrange for cargo flows to come into it and have production stored. The market may not be quite ready as yet, but you can definitely offer some guarantees. Then you’ll be officially listed. Germany is already very actively doing just that.” Jullens: “Offering good facilities also seems very important to me, as well as installing the right (digital) infrastructure and linking parties together. Making it as easy as possible for people to trade.”
HydroTwin often works together with all sorts of different (knowledge) partners as a Docklab spin-out, a subsidiary of the Port Authority. The municipality is also a very welcome discussion partner. “We regularly enter into discussions with the municipality about the acceleration of the energy transition with hydrogen, as well as the numerous non-physical processes involved. Our start-up has been given the time and space to refine the product, partly as a result of the Just Transition Fund.”
Jullens certainly recognises himself in the Hydro Generation and thinks it’s an appealing term. “I kind of walked in backwards,” he laughs. He hopes more innovative thinkers and doers will decide to join this group of forerunners in Rotterdam. “And, in the meantime, I’m also fully committed to developing the appropriate software in addition to the rapidly developing ‘hardware’, like the infrastructure.”
Rotterdam: Europe’s Hydrogen Hub
To read more about Rotterdam as Europe’s Hydrogen Hub and the forerunners who make Rotterdam Europe’s Hydrogen Hub, go to Rotterdam Europe’s Hydrogen Hub.