The Future of the Hydrogen Industry

Title: The Future of the Hydrogen Industry
Speakers: Greg Len and Dan Archuleta and Wes Hansen

Greg Len (00:07):
Welcome to Troutman Pepper’s podcast on the hydrogen industry’s present and future. My name is Greg Len, and I am a partner in the intellectual property group based in the Boston office of Troutman Pepper. With me today are Dan Archuleta, also from Troutman, and Wes Hansen from Ivys Energy Solutions. As I mentioned, I am part of the intellectual property group here at Troutman, and in that role, I’m able to leverage my master’s degree in mechanical engineering as well as my years of experience working as an engineer at a clean tech hydrogen company to advise and guide our clients through the IP litigation process. Dan leads the firm’s natural gas pipeline practice where he advises a broad array of clients on regulation, competition, and transactional issues. His extensive industry experience and engineering background enable him to understand the real-time logistical and operational problems his clients face. Dan leverages his unique skillset to tackle emerging issues and navigate complex matters for his clients.

But more broadly, Troutman’s energy lawyers have counseled and consulted utilities and other energy clients regarding the changing regulatory challenges since the 1920s. We are recognized as a national top-tier energy practice providing industry leadership and outstanding advice that maximizes client value within the applicable federal and state regulatory frameworks. We will flash the Troutman Energy Law Insights web link on the screen if you’d like to find out more about our group. I’ll turn it over to you, Dan.

Dan Archuleta (01:41):
Thank you so much for that intro, Greg, and wonderful to be here. I think that leaves me with the distinct pleasure of introducing our third and probably most valuable contributor for today, Wes Hansen. Wes has over 22 years of experience in both the hydrogen and an alternative energy field, both from a technical and theoretical research perspective as well as product design, hands-on commercial space as well. Currently, Wes is the director of business development at Ivys Energy Solutions. Among other products, Ivys has developed an integrated onsite hydrogen generation, compression, and dispensing system using water and electricity to produce high purity fuel cell grade hydrogen. Wes specifically has led the design sale and installation of roughly 25 hydrogen systems during his career. Wes, wonderful to have you on the program today. What else are we missing at the outset that you would like to share with us, both in terms of your experience and Ivys particularly?

Wes Hansen (02:46):
Well, thank you, Greg. I appreciate that. Makes me feel important. Yeah, I would say, so let’s talk about Ivys Energy Solutions a little bit here and the things that we work on. So we have a strong focus in the hydrogen space, hydrogen refueling stations. You mentioned what we call a simple fuel, which is an all-in-one hydrogen fueling station for either 350 bar or 700 bar fueling, electrolyzer-based. Currently the offerings are a 20 kilogram a day small box. But we also do larger hydrogen stations that are either, as I said, 350 bar fueling for buses or 700 bar fueling for passenger vehicles, 700 bar fueling for trucks. Those are larger dispense quantities there. But we also are involved in the electric vehicle charging space.

So we have a proprietary access to DC fast chargers, so level three chargers, that can go up to 360 kilowatt size. Most of our customers are fleet-based or municipalities looking for mixed fleet. We’d like to think of ourselves as the and solution rather than hydrogen or electric. But Ivys Incorporated is a larger organization. Again, I’m part of Ivys Energy, which is mostly the hydrogen and vehicle charging. We call it mobility. But Ivys Incorporated, we also have Ivys Absorption in Canada, which is just outside Montreal and works quite a bit in the space of hydrogen purification, so PSAs, pressure swing absorbers, sorry for those who aren’t familiar, and biogas upgrading as well.

So we reach in, and actually Ivys Energy and Ivys Absorption, we work very closely together on projects where maybe it’s a pipeline gas that needs to be upgraded to SAE quality hydrogen and then converted to fueling pressures for 350 or 700 bar vehicles.

Dan Archuleta (05:20):
Thank you very much for that background, Wes. So with introductions in hand, and I think part of what you covered in your background as well as what Ivys specializes in leads to a perfect segue for today’s podcast, which at a high level is to talk about hydrogen, all the excitement surrounding hydrogen, but leveraging Wes’s very real hands-on experience, some of the issues that all companies might want to consider in the hydrogen space, given the vast potential it holds as well as future projections for increased production and demand. So building off of a couple of the items you touched on, heard you talk plenty about hydrogen, but also about renewables in general as well as natural gas. If we look at the energy industry from a global perspective, we’ve really seen a big boom over several decades and in the US in particular, in the renewable space in terms of carbon reductions.

So if we’re painting a very large and broad brushstroke, maybe the 1990s is when we saw wind really take off and hold, vast growth and development within the US, solar start to really ramp up in the 2000s, and then the 2010s, the emergence of batteries, which then might lead us to the 2020s as the launching point perhaps for the next major development on the frontier of the energy transition, that being hydrogen. From a high level, presently, there are immense benefits to developing and expanding on hydrogen use. Probably the biggest benefit in particular is to help use hydrogen to offset or fill the role of traditional uses of fossil fuels with zero emissions in the process. That then leads to reduced emissions both from a climate change and overall air quality perspective that helps provide some extra energy security, which is always an important issue and we’ve seen that come up in particular recently in the last coming years and going forward with the ongoing conflict in Ukraine.

And then the fact that hydrogen can help integrate variable resources, renewable energy in particular on the electric grid, acting as a long-term storage solution, an option for electricity where there is abundant or surplus electricity can be stored, potentially using newly developed or existing storage caverns or storage facilities, and then utilize when and where it is most valuable. I should note upfront that hydrogen is in fact used in large quantities in specific locations already. Most of that use comes from refining chemical and other end use manufacturing and industrial uses, primarily produced utilizing fossil fuels and accounting for roughly 6% of global natural gas use and 2% of coal. So scaling up that use to increase the amount of hydrogen produced, particularly in a lower carbon fashion or from renewables in particular will be critical to bring down costs of technologies for production, and using clean hydrogen, such as electrolyzers, fuel cells, and hydrogen production with carbon capture and storage.

Wes Hansen (09:09):
Sure.

Dan Archuleta (09:09):
Going forward, we will see hydrogen-based fuels increasing in terms of projected growth, and for instance, a net zero emissions projection model could increase to 60 gigatons in CO2 emissions between the time period of 2021 and 2050. That’s a pretty aggressive projection, but vast amounts of reductions and growth from hydrogen. And then I will note the International Energy Agency or IEA and the International Renewable Energy Agency or IRENA, thank you for staying with me through those abbreviations, expect hydrogen to meet 12 to 13% of energy demand by 2050 up from virtually zero use today. With those projections, with that growth, I think we’ve seen countries also put out projections and adopt hydrogen as a growth strategy in the last five years alone, roughly 30 or more countries have developed or started national hydrogen strategies.

For instance, Japan recently updated their hydrogen strategy, which now is looking to supply 12 million tons of hydrogen by 2040, excuse me. Nevertheless, despite all of its promise, the pathway for clean hydrogen in particular remains uncertain, thus the value Wes brings to the table today. Two primary fault lines have emerged, how to produce hydrogen, which I’ve already alluded to, and then which sectors to deploy it for large scale end use purposes. On the production side, I think the dominant projections are to have clean hydrogen coming from green hydrogen, which is produced using renewable electricity and blue hydrogen from natural gas equipped with carbon capture technologies. And then in terms of consumption, hydrogen might not always be the best tool for the job. For example, hydrogen combustion might be less efficient, based on the circumstances based on the intended use than direct electrification for cars.

So with that big windup setting the stage for today, whole lot of promise, but a whole lot of uncertainties involved as well. And let me kick it over to Greg to start to tee this up and talk about some of the next steps within the hydrogen space.

Greg Len (11:57):
Thanks, Dan. So with that, as a backdrop, let’s turn to Wes now, our resident expert in the hydrogen industry, to help us sort through some of these issues and expand on where hydrogen may go in the near and the long-term. And I think we wanna emphasize some of the most important considerations that various companies should keep in mind for their future hydrogen products since Wes has really been there in the field over the past two decades, in first person dealing with them. So I think Wes, to start that off, in terms of, you talked about a little bit at the beginning of where Ivys is now, in terms of the part of the hydrogen industry or the value chain of hydrogen, can you talk a little bit about where Ivys focus is now and if its focus has shifted at all over time as the market has changed?

Wes Hansen (12:46):
Sure. Yeah. So I’ll take it in two parts there. So Ivys, well, let me talk about hydrogen where it’s used today a little bit. That’ll help because hydrogen right now is used a lot in refineries and you’ll see very large scale hydrogen production facilities that utilize natural gas, steam methane reforming. I’ve got about 20 years background in steam reforming, small scale, but the chemistry’s the same. And that hydrogen is used to, as Dan was saying, to synthesize whether it’s oils, waxes, or other components. But that’s generally where a lot of the hydrogen from the industrial gas companies has been coming from. There’s a lot of focus on green hydrogen and wanting it to come from a carbon neutral or net carbon zero source.

We’re seeing a lot of that coming from electrolyzers, and as Dan said, green electricity, whether it’s coming from hydro up in Hydro Quebec, it is either liquefied and transported or compressed in the tube trailers or put into pipelines. So that’s, it’s been a growing industry for sure. And up to now, our focus has been really helping municipalities reach out to underprivileged communities that need to improve their air quality. So it could be bus fleets in urban districts. We build hydrogen refueling stations where we take either an electrolyzer source of gas that electrolyzer could be powered by a solar array or could be coming from the grid. Or we can take tube trailer gas or we can take liquefied hydrogen, which is compressed through cryogenic pumps and vaporized for fueling into vehicles.

So that’s kind of our background. We do hydrogen stations is kind of the long and short of it. And the vehicle charging portion of that is when communities wanna take that next step to be able to offer grid resiliency, we can do vehicle to grid. So you have this battery vehicle that’s charged up wherever that electricity comes from in the event of a natural disaster, you wanna be able to use those vehicles to operate the town’s water pump system or something at the water tower, or take those buses and park them at Hosting Power Hospital. So that’s kind of our approaches and is really community focus. But we’re certainly involved in a lot of these discussions of hydrogen hubs. We are contributing from a technical perspective as to how these sorts of things should happen.

When do you need to, what are those inflection points for compression, compressed gas, rest gas distribution, higher pressure trailers, or liquefaction? So did that answer your question, maybe?

Greg Len (16:10):
Absolutely. And there’s a couple great points I wanna circle back on. First, what are some of the kind of efficient characteristics or unique chemical characteristics about hydrogen? You mentioned you’re helping municipalities improve air quality. And how does, for the layperson, how does hydrogen help achieve that?

Wes Hansen (16:28):
That’s a great question. So let’s take an energy pathway and I like to think of the boundaries of our energy pathways as this little marble that we live on floating in space. So well to wheel is the term that we used many, many years ago. Where does the energy come from and how does it get to what we’re using it for? So if you, let’s say you’re going to use a fossil fuel like natural gas to generate that hydrogen and then put it into a fuel cell vehicle, whether it’s a truck or a car, you’re gonna be looking at a net reduction in CO2 emissions. And the reason is because the efficiency of using a hydrogen fuel cell is greater than that using an internal combustion engine. So even though you have an extra step, you’re pulling that fossil fuel out of the ground and you need to convert it to hydrogen.

There’s equipment involved. But the net efficiency of the end use is greater than making a bunch of explosions every couple of seconds. To drive a wheel down the road, you can use an electric motor, which is very efficient. So that’s where we are. And —

Greg Len (17:43):
Sorry to interrupt. You talked about the efficiency side. Can you also talk about the chemical reaction emission side? What happens when you put hydrogen and oxygen into a — What comes out?

Wes Hansen (17:51):
Thank you. Yeah. So the way that a fuel cell works basically is a membrane, not so dissimilar from the cellophane that you have to wrap your food up in the refrigerator. But it’s chemically treated to react hydrogen on one side in the air, oxygen on the other, and the byproduct that’s formed as water, and some waste heat. So it’s not 100% efficient. It’s about 60%, from the chemical energy coming in from the hydrogen is utilized to generate electricity, which can be used in a hybrid electric system to drive a vehicle down the road.

Greg Len (18:30):
And do you consider hydrogen an energy source or an energy carrier?

Wes Hansen (18:35):
Definitely an energy carrier. I mean, I’ve worked with some folks. I don’t know if it’s… It’s just to say I didn’t coin this term. But hydrogen is an electron carrier, basically. The proton of hydrogen carries that electron. And hydrogen offers the ability to have the convenience of a fuel with the benefits of an electric drivetrain by using that electron that’s carried with it, to power vehicles.

Greg Len (19:07):
And you mentioned that you’re seeing increased interest not only from municipalities, but from larger scale national programs such as the DOE’s hydrogen hub programs. Are you seeing the interest more from a local displacement in emissions or more in a view of we have a lot of renewable excess energy and maybe storing it in batteries or pumping up water uphill isn’t always the answer. Maybe hydrogen storage is the answer. Where are you seeing the greatest market needs from?

Wes Hansen (19:40):
Well, both. But the greatest market needs are really I think coming from municipalities. I mean, there’s mandates right now that say your fleet or your transit has to be zero emission by 2040, develop your pathway to get there. And some vehicles that make sense. Let’s take buses, for example. It makes sense to use an electric bus where you charge overnight while the buses are sitting there. Some buses, electric buses, they run into range issues, so they need on route charging. And then in some climates where it’s cold or it’s very hilly, those all electric buses, battery electric buses, run into some challenges. And that’s where a hydrogen fuel cell really starts to shine because it doesn’t see a performance diminishment from temperature.

It gives you that power as long as you give it fuel. And again, refueling a bus with the proper station could be 12 to 18 minutes where charging that bus might take much, much longer. Again, it depends on a lot of things like the size of the chargers and the type of batteries that are on board. But that’s where having a mixed fleet is important. You might have some shorter route inner city buses that could be all electric, but the ones that have to run the outer loop really benefit from a hydrogen energy pathway.

Greg Len (21:19):
And before I turn it back over to Dan for his view, kind of on the future, one last question thinking back on my notes here. For the layperson, can you explain to the layperson what an electrolyzer is at the high Wikipedia level?

Wes Hansen (21:33):
At the high Wikipedia level. So an electrolyzer basically takes water. There are a couple of types of electrolyzers, but let’s just say it takes water and electricity as the feedstocks, the electricity splits the water molecule into its component parts, which are hydrogen and oxygen. And the hydrogen is captured and then compressed into storage tanks and ultimately into vehicles. And the hydrogen… I mean, I’m sorry, the oxygen can be used also to be bottled as a product or released into the atmosphere as what a tree.

Greg Len (22:11):
And thinking about utilizing that hydrogen as a product, whether for commercial or industrial scale issues, I think focusing in on hydrogen, its specific chemical makeup, you mentioned an interesting fact to us in a previous discussion about something that wouldn’t think of, of hydrogen as compared to natural gas in terms of odorizing for industrial and consumer use. So could you touch on that a little bit?

Wes Hansen (22:43):
So hydrogen as compared to natural gas? So —

Greg Len (22:48):
Yeah, the ability to odorize it.

Wes Hansen (22:49):
Oh, the ability to odorize it. Yeah. Well, so yeah, if you wanna put hydrogen in a pipeline, there was in England, I think, one of the first pipelines was a hydrogen rich syngas that was used to run lights and stoves in the 1800s, I wanna say it was, if my memory serves. But yeah, if you wanna run in a large industrial pipeline with hydrogen, the odorization of it is tricky because hydrogen is so light, and it has such a high diffusivity that when it’s released, it leaves the odorant behind. So the hydrogen is gone, but whatever you injected in it to make it smell is left where it was. So yeah, you can’t odorize hydrogen. Somebody will figure out a way to do it someday, I hope. But not yet.

Greg Len (23:40):
I think that —

Dan Archuleta (23:42):
Just kind of following up on that as a limiting factor perhaps in the present. And you talked about municipalities, and their different goals or in some cases, requirements to transition to low carbon or zero carbon or net zero carbon future. Are there any other common characteristics that you or Ivys has seen where hydrogen projects are taking off? Either because municipalities or other potential hydrogen customers, there are certain efficiencies or cost savings or what have you, or there are those limitations where it doesn’t make sense to use the hydrogen in one area, one location, or for a particular end use. But then that drives where there are opportunities to leverage and expand hydrogen production in other areas.

Wes Hansen (24:36):
So okay, so that’s kind of a multi-leveled question.

Dan Archuleta (24:40):
Yes, definitely. Very much so.

Wes Hansen (24:43):
But that’s good. So in some cases, it makes sense to, you’re saying, like, what industries are seeing growth. And I would definitely say the composites. When I say composites, I mean the tanks. So we all are familiar with steel tanks. They’ve been around, in weld shops and tube trailers, you drive past them on the road. Some of those tanks have, they were built in the 1912 or 1920s, right? They’re still in use today. But they’re heavy and they don’t hold as high of a pressure. So therefore, the usable payload of those steel vessels is not as great as we would like to see. So when you talk about how do you transport hydrogen? You can move it as gas. You can move it as liquid.

Liquefaction is energy intensive. You have to chill that hydrogen a lot colder than liquid nitrogen. People think of cryogenic fluid as liquid nitrogen. Well, no, no, no. You gotta go a whole lot colder with hydrogen versus, to liquefy it. But it’s certainly a valuable pathway to transport it. But what we’re seeing now is a huge growth in getting, increasing the payload of each run of a trailer, let’s say. And that’s the desire, because it minimizes the labor cost and it minimizes that transport cost of, which is today a diesel tractor, right, that’s driving it down the road. So there’s a lot of effort in working with the government to get permitting for higher pressure tanks. And these tanks are typically what we call a type three or a type four.

Type three tank would be something with a metal liner, aluminum liner. It’s wrapped with carbon fiber. And type four tanks are basically all composite material. So polypropylene liner, again, with carbon fiber wrap. The higher the pressure you need, the more carbon fiber needs to go to keep everything contained. But the higher pressure transports, they can increase the payload delivered to a site. And also that they basically, when a trailer then goes back to be refueled, you want that delivered payload to be as great as possible, to minimize the cost of the molecule that you’re using. So I would say in terms of what sectors are seeing a lot of focus, definitely in the transport side of things today.

Dan Archuleta (27:27):
And I assume kind of built into that is in part cost-driven demand, right, to your point. But then also, I don’t wanna say a supply demand, but trying to figure out ways in which you can efficiently move, transport, distribute larger quantities of hydrogen compared to I don’t know what the timeline is, but suffice to say several years ago.

Wes Hansen (27:52):
Yeah. So there’s the economics, which should always, in my opinion, should always drive industry. And then there are government mandates that say, “Thou must do this by this date.” Then there’s some money made available. But that gets things rolling, but it won’t sustain an industry. Really, the economics are what have to sustain an industry. But that being said, the government mandates are good, because getting that ball rolling is one of the challenges the industry has faced for the last 20 years is I’d love to have a hydrogen fuel cell vehicle that emits nothing but water. I would love to drive that around my town, take the kids to soccer practice, but there’s no hydrogen fueling station nearby. And the hydrogen fueling stations say, “Okay, well, the government told me, paid for me to build one, but I don’t have enough vehicles coming in to cover the cost of maintenance.”

So after the two-year period of running it, it doesn’t sustain itself so the station shuts down or gets mopped. So that’s where government plays a key role there, right? Is to inject funding, and hopefully they’re learning the right ways to inject funding to kind of really help build that infrastructure.

Greg Len (29:19):
And that might lead us to the next kind of topic that I’ll have Dan take is kind of where are we looking in the future, not only with market-driven demands and needs, but also government. So Dan, I’ll turn it over to you.

Dan Archuleta (29:34):
Yeah, no, I think that’s a perfect segue and kind of Wes already alluded to this, but built it up very well to talk about future growth and projections, right? There’s a mix of kind of three different factors, I think, going on for future use and scale up of hydrogen. The first is significant projections as… Estimates and mandates in some cases, both at the country level and then they’re on down at the state or local level and then company specific levels for hydrogen growth, right? We talked a little bit about future projections globally of 12 to 13%, energy consumption driven by hydrogen fuel that then translates for large energy companies alone into saying, “Okay, by 2050, we think energy consumption or energy supply energy transported, compared to where we are right now on a volumetric basis might be filled anywhere from three to 8% by hydrogen or hydrogen fuel, however they’re defining those products.”

Moreover, right, we’re seeing a big push for green hydrogen in particular because of the development and robust demand for renewable projects and therefore corresponding energy prices coming down for renewables in the wind and solar space in particular, therefore making green energy more cost competitive, and therefore incentivizing further development and cost savings with electrolyzers as well and increased efficiency based on improvements within the technology for each. And then overall demand, overall projections and what have you, as Wes alluded to, at least starts to create the market for hydrogen and therefore attract capital, which is very much needed in a capital intensive industry if we’re really talking about large scale use of hydrogen, depending on whether it is with fuel cells or other uses that we’ve already talked about.

But notwithstanding those three different components and the mix and all the projections going forward, we have yet to see and only in limited circumstances, green hydrogen projects that have been successfully brought to market. A lot of them have been announced, a lot of them are on paper, lot of them are being built as we speak. But in limited circumstances, we have yet to see very large scale hydrogen production projects that are built and in operation, outside of current uses within the manufacturing and industrial industry.

Wes Hansen (32:41):
I’m gonna have to just cut you off there, Dan. So we installed a hydrogen refueling station for buses for the Champaign-Urbana Transit District, which is the largest solar-powered hydrogen fueling station. Maybe in the world, but certainly in the country. It’s got an electrolyzer, a solar array, an electrolyzer to produce that hydrogen, 500 kilograms a day, to fuel buses, and they’re currently up and running today. So it’s working, but I think it’s important to understand the meaning of the word large scale.

Dan Archuleta (33:20):
Yeah. Yeah, definitely.

Wes Hansen (33:21):
I think that that’s where I certainly have gotten hung up over the years. As I said, my background is as a systems engineer. Simple fuel, we talked about in the beginning, is this hydrogen station in a box that we envision for urban centers that can be dropped right next to a building in an alleyway. And we have one in Somerville at Greentown Labs. That is actually what I used to refuel my Hyundai Nexo that I stole from our CEO. But that’s 20 kilogram, or that unit is 10 kilograms a day. Our current central fuels produce 20 kilograms a day. But I’m also talking to people about what are we gonna do with 35,000 kilograms per day? When up in Canada on the pipeline, when the demand is slow from the refineries, we’re gonna need to compress that into trailers, or what do I do with it?

Do I liquefy it? So 20 kilograms a day here, 500 kilogram a day solar station outside Chicago, and then 35 tons a day up in our northern neighbors. So it’s tough for me with large scale. I think when you’re talking about large scale, we’re talking about the planet, it’s more like that, right? 35 tons a day. And that’s really a good size hydrogen plant that we talk about today, it is a five ton or a 10 ton a day. And so when I say tons, that mean metric tons, thousand kilograms, right? So and a good part of those plants, they’re on pipelines that are providing that hydrogen at a different quality than the vehicles need, by the way. But they provide that hydrogen to the refineries.

So are there ways that we can tap into that infrastructure to increase the production capacities of what already exists? And then purify it up a little bit and put in nodes that can support over-the-road tractors. And that’s something that I was gonna get to in a little bit more detail, but I’ll wait to talk about what vehicles are the best, have the best use case for hydrogen. But sorry to cut you off, Dan.

Greg Len (35:39):
No, it leads in. Yeah, it leads into maybe, Dan, if you could tell us a little bit about hydrogen hubs and the government programs for that.

Dan Archuleta (35:45):
No, exactly. And they’re all great points, right? If we’re talking about, on the scale of several thousand tons on a daily basis, as Wes already said, that in most scenarios requires additional funding and significant funding. And so we’ve seen in the US as an example, in the last couple of years, real big pushes from the federal government, to help develop not just supply side and production for hydrogen, but also demand as well. The hydrogen hubs or H2 hubs, right, was set out from the Infrastructure Act a couple of years ago, just by way of background that is designed to help create or select six to 10, I believe is the range, regional clean hydrogen hubs, providing funding of somewhere around $7 billion. And so you’ve seen different states, different utilities, different companies all come together in different regions of the United States and submit these bids for their proposed hub, most of which are now pending before the federal government, and will be awarded in months and years to come.

But then on the supply side, we also saw very recently the US announced that it will put forth $1 billion in funding to help drive supply so that those hubs have reassurance and the companies making these investments have some sort of reassurance that there will be some demand on the other end when these projects are built. But it’s all fascinating, right? There, needless to say, there will be significant growth within the hydrogen space, but as Wes already pointed out, whether or not it takes hold on such massive scales is largely dependent on the economics at the end of the day.

Wes Hansen (37:45):
Yeah, I’m so happy to hear that people talking about both sides. I mean, it’s clear. Okay, so human beings, we can learn, right? That if you put in the supply, but you need the demand to fund that, because once the project is done, it’ll shrivel up. So you really need to come at this problem with a two-pronged approach. You need to support the demand side, whatever those vehicles are gonna be, whether they’re buses, passenger cars, class A tractors, which I mean, or people think of a tractor trailer, right? That’s a really strong case for going carbon zero. There’s everything that we eat is delivered to the store by a truck. And that’s one of the most demanding cases.

I mean, those tractors are very expensive and to have them sitting charging up is problematic. But also just something to consider, the beautiful thing that is diesel fuel, or CNG even. You think about these carbon fuels, we don’t live with them because of a whoops. It became the staple of our life because of the amazing energy density that’s there. And when you hold a gasoline pump in your hand and you can put in, I mean, I have about 550-mile range in my car when you… I hold that and I’m filling my car in seven minutes or six minutes, I’m holding a megawatt, right? So when you think about what are we gonna do if we’re gonna say we’re gonna turn every car into a battery electric car?

Well, our… I mean, so what… And think about it, what has to happen there? Think about how much energy comes into the country, either out of our ground or through refineries, but comes into our daily life through something other than the grid. And it’s mind-blowing how much energy that is. So shifting the energy pathways to something that’s carbon zero, carbon negative even, is great. And certainly support that. It’s why I got into this field 25 years ago, Jesus. But yeah, how we do that is important to consider. And are we gonna be building up a megawatt power plant for every hydrogen, or every electric charging station? Well, maybe. Are we gonna convert some of that usage to hydrogen fuel? Certainly. Is it gonna be all of the above?

Yes, it will. How can we do that? It’s gonna take every existing energy pathway because, again, we’re on this little marble floating in space. We only have a few options of where we get our energy from, right? We pull it out of the ground. We get it from the sun. We get it from the wind. We get it from tidal or water falling down, waterfall. Those are basically what we get. So sorry, didn’t mean to stand on a soapbox there, but yeah, we have to think about it in a global perspective to really drive to a solution, I think.

Dan Archuleta (41:14):
And I’ll mention a couple more just from, I guess, predominantly a utility, highly regulated part of the energy industry perspective, in terms of future projections and how you get there or perhaps some obstacles along the way that I think a lot of companies are gonna be wrestling with. Number one, in such a capital intensive industry, if we’re really talking about scaling up that we’re transporting massive amounts of hydrogen, perhaps leveraging existing infrastructure, whether it’s storage or it’s natural gas pipelines, for instance, there really needs to be some sort of cost certainty to give companies assurance that what they are doing has a decent chance of success or profitability. As of right now, by and large, the hydrogen industry is based off of commercial terms, arm length negotiations, et cetera.

And maybe that continues. Maybe it’s unlike natural gas pipelines, where the economics are driven by cost-based regulations. But if it is gonna go to a regulatory scheme, then there needs to be some certainty as to, if you’re putting energy into existing infrastructure that is regulated from a cost-based perspective, who pays for those costs, for upgrading any systems or changes that occur? And then even broader than that, if you’re getting into this space, I think there needs to be some certainty with return in terms of the regulatory regime that may or may not apply. There’s extensive debate, again, long-term down the road, if hydrogen is transported in massive amounts, or distributed in massive amounts in existing infrastructure, who regulates that infrastructure? Should it be a light-handed approach?

Should it just be focused on safety? Should it be a similar approach to what we see in the utility industry for natural gas pipelines? Just knowing those answers can play a huge role on whether or not companies are looking to actually invest and design and then put into practice transportation, distribution, storage, all the things that it seems there’s a lot of assumptions going to 2040, 2045, 2050 that will occur, but nothing designed yet and nothing final yet because we don’t see what that regulatory scheme looks like.

Wes Hansen (43:55):
Yeah. I mean, I’m really happy that we’re having this conversation. I’m glad people are having this conversation. What seems to me to be, I wanna say finally. It’s… Well, certainly you talked about safety and who regulates. Well, certainly, yes, safety should be regulated, number one. ‘Cause the biggest adversary to the hydrogen industry, I think, today, is the concept around it being unsafe, which couldn’t be farther from truth. We talked about hydrogen being such a small and diffusive molecule. It’s very light. It goes up, it’s very buoyant, goes up and diffuses outward very quickly. So if there is a release of hydrogen, it’s gone basically. So the odorant, we’re used to an odorant in natural gas or propane, but I would argue hydrogen doesn’t need it.

I mean, if it’s released in a very confined space, is it explosive? Yes, it’s a combustible gas. But in terms of how we use our fuels every day, a switch to hydrogen is gonna be an improvement in safety. So but you do also have to be very cognizant of the material of the properties of this gas. It’s not like natural gas, not like nitrogen. It has a lot of its own properties that are different from other gases. And one of the things that I wanna make sure folks are aware of is material compatibility. So people say, “For hydrogen, just use stainless steel.” Well, okay. Yeah, sort of. But if you were to take your dinner fork, which is a 17 or 18 series stainless steel, and put it inside a hydrogen balloon, let’s say, let it sit there for a week, you take that dinner fork and drop it on a tile floor, it’s gonna shatter.

So most people don’t have their dinner forks made out of 316-ounce stainless steel. That would handle the hydrogen just fine. So there… We have to consider we have existing infrastructure. Yes, hydrogen can be used as a percentage of that. You can inject it into pipelines as a percentage. If it’s all hydrogen. And what that percentage is will dictate how long the materials that are currently in use in that infrastructure will last. So does all that, you have a pipeline that’s steel, let’s say, and hydrogen is happy to run inside steel pipelines. But there are the valves and the equipment for handling that, compressors and, there’s a lot of equipment and sensors around this infrastructure. And each little piece that’s in there has to be evaluated for its compatibility with hydrogen gas to make sure that if you have a 5,000 PSI pipeline that you’re used to running natural gas and now you have it running 50% hydrogen, that that one little valve that’s there isn’t gonna embrittle and then blow off, right, and cause what we like to, what cause a thermal event, which would be not good for the industry.

So the… So what I’m happy to hear is who regulates it. Focus on safety is key, right? Across this industry. And I think that’s why I feel so confident about saying hydrogen is a safe fuel, because all of the folks who have been involved in the hydrogen industry in that development up to today, at least all of the ones that I know, and I know folks in the industrial gas world and the vehicle world, everybody’s really focused on safety and all of the codes and standards that are developed in not only in the US but also worldwide, are so really encompassing. They’re far-reaching as to how hydrogen is used and making sure that it’s used safely. So off the soapbox again, that was the second soapbox I was on today. Sorry.

Greg Len (48:03):
Well, I think you’re definitely hitting a lot of the concerns, considerations of real world practical applications as well as potential roadblocks. I think with all of that in mind, I think pointing out, some of those solutions are already in the process of being solved and some will be found in, you know, we’ll find the answers to the problems in the future. As the resident IP lawyer and patent litigator on the panel, I think I’ll put my two cents in on that point that companies like Wes’, Ivys are creating valuable intellectual property and trade secrets every day out in the field. And what we see from a historical perspective is that what we call the patent wars, which have happened in the past in history, may repeat in this new emerging field of the hydrogen industry kind of takeover.

And when I say the patent wars in the past, think of all the major advances. Electric lighting, those famous cases between Edison and Westinghouse. Air travel. I think of between the Wright Brothers and Curtis Airplanes. Telephone Alexander Graham Bell was involved in litigation. And even up to present day of the smartphone wars between Apple and Samsung. And even more recently, the EV battery wars and trade secret cases in which, very influential case in the news between LG Chem and SK Innovation of settlements over a billion dollars approaching $2 billion. So we wanna keep our eyes on this and how IP will not only create value, but be used by companies as they’re trying to either affect or protect their market share as things start to evolve and consolidate as we historically will see those trends in the hydrogen industry.

Wes Hansen (49:49):
Absolutely. Yeah. I wanna just say you couldn’t be more correct there. It’s, for everybody that’s in the hydrogen space, everybody is really, what drives the value of the valuation of the organization is their IP portfolio for sure. There will be battles over it. Somebody in one part of the world might develop something very similar. And then who did it first sort of thing. But yeah, it’s certainly happening just because we’re friends now, we play nice in the sandbox, most of the folks in the hydrogen space today, doesn’t mean that there’s not gonna be these battles coming in the future. It’s certainly an inevitability, really. Yeah.

Dan Archuleta (50:40):
Yeah. And I’ll also add, within the IP space, that we still might not know what that breakthrough technology even looks like, right? Because it might be something on the production side because there’s so much on the production side that we’re focused on now, but as Wes already alluded to, it might be on some of the practical solutions, right, for getting large amounts of hydrogen to market or helping create or perhaps support market demand, different uses for hydrogen on the demand side that have not yet matured or even really taken off or developed for large end uses the way that various companies and local and state governments and countries on the whole are projecting 20 years down the road.

Wes Hansen (51:33):
Yeah, we could look to the photovoltaic industry to take some notes from there. There were great strides in the efficiency improvements and cost of manufacture that were happening. The efficiency of panels now are pretty, I mean, from what I’ve seen are kind of leveling off. I think hydrogen generation has been done for a couple hundred years, heavily in industry for at least 100 years. Yeah, we’re seeing improvements in that process now that there’s a focus on the need for more of it. Yeah, I think that that’s an area to keep an eye on, for sure, is the efficiency of hydrogen production. But keep in mind though, nobody’s been wanting to spend more energy than necessary and we still have to live in a world where thermodynamics is still a law, not just a theory.

So I think when we look at what are the emerging segments of technical advantage, the handling of that hydrogen after it’s produced is I think a great point, Dan. I think that that’s something that’s gonna be an area to focus on.

Greg Len (52:45):
Well, with that, I think, Dan, I’ll turn it back over to you for kinda your wrap up and takeaways of where you see the hydrogen industry today.

Dan Archuleta (52:56):
Yeah, it’s all very exciting, right? And as I already mentioned, it’s all but certain given the injection and enthusiasm, injection of funds, enthusiasm to grow, develop, technology breakthroughs within the energy space that we’re gonna see an uptick, certainly on the production side and then coupled on some level on the demand side as well. But whether or not this growth is sustained in, and again, here’s that keyword, Wes, very large scale, on a large scale basis and matches those projections for whatever it is in 2035, 2030, and beyond, TBD. But what strikes me as fascinating and perhaps the topic of further discussion in a follow-up podcast, if we can, again, borrow on Wes’s time, are some of the more practical considerations that I think a lot of companies need to think about.

Just mentioning a couple that Wes alluded to includes public outreach and education, safety concerns or perhaps misconceptions with regard to safety and then operation and maintenance given that hydrogen in some ways is similar to other, not just fossil fuels, but fuels that we have worked with for decades and are very much used to, but in other ways is very different. So seeing how that plays out, not just in a couple years, not just when the funds have kinda reached their maximum, but in the long-term is kinda what fascinates me.

Greg Len (54:43):
Well, that’s great. And I think it, there’s a lot of topics there for the future for us to discuss and explore together. But I think with that, I wanna thank everyone. I wanna thank you, Dan, and I wanna thank you, Wes, especially. And I wanna thank all the listeners for taking the time with us today. Wes, I don’t know if you wanna leave us with any parting pearls of wisdom.

Wes Hansen (55:05):
No, I shouldn’t. Because I don’t have them. I mean, I’m in the midst of this and I think the growth in the hydrogen space is coming. I’ve seen it over the last 25 years. And it’s exciting to be a part of it. But even on a small scale. The community outreach is important for sure, Dan, I think. And it’s great that unlike the last one I tell people I work in hydrogen. It used to be every single person would say like the Hindenburg would say, “Yeah, like that, only without the rocket fueled paint on the outside.” But yeah, so I don’t get that too much anymore, which is great. So yeah, if you guys need some more of my time to talk about details, use cases and what markets I think might grow up in the hydrogen space, I’m happy to contribute.

So, but thanks for having me. This has been fun.

Greg Len (56:06):
Thank you.

Dan Archuleta (56:08):
Yes, thank you, Wes.

Copyright, Troutman Pepper Locke LLP. These recorded materials are designed for educational purposes only. This video is not legal advice and does not create an attorney-client relationship. The views and opinions expressed in this podcast are solely those of the individual participants. Troutman does not make any representations or warranties, express or implied, regarding the contents of this podcast. Information on previous case results does not guarantee a similar future result. Users of this video may save and use the video only for personal or other non-commercial, educational purposes. No other use, including, without limitation, reproduction, retransmission or editing of this video may be made without the prior written permission of Troutman Pepper Locke. If you have any questions, please contact us at troutman.com.

DISCLAIMER: This transcript was generated using artificial intelligence technology and may contain inaccuracies or errors. The transcript is provided “as is,” with no warranty as to the accuracy or reliability. Please listen to the video for complete and accurate content. You may contact us to ask questions or to provide feedback if you believe that something is inaccurately transcribed.