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Scaling Global Clean Hydrogen Financing

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Clean hydrogen is being touted as a solution to help decarbonize industries and support countries as they become energy independent. But high production costs and limited infrastructure have been hampering the commercialization of clean hydrogen at scale. What supportive policy frameworks and financial innovations are available to help deploy the technology more broadly?

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[Demetrios Papathanasiou] Welcome, everyone. It really is a great pleasure to have you here. We're for the panel to discuss how do we scale up global clean hydrogen financing. This is a really hot subject which is getting warmer every time. I think we're going to have a great conversation. My name is Demetrios Papathanasiou. I'm the World Bank's Global Director for Energy and Extractives. Today, we have a really very good panel from private and public sector stakeholders in this field. My colleague from the IFC, Bertrand de la Borde, is going to introduce them afterwards. Interest in clean hydrogen has been around for quite some time, but in the last two, three years, we see interest growing exponentially. What is really fascinating for us is that this presents a great opportunity for developing countries as well. We will discuss why this is so. We work with governments on how we can decide policies, how we can improve the regulatory framework so that the offtake of clean hydrogen can be addressed as well. As many of you know, as we try to transform the world's system from the current fossil fuels towards clean hydrogen, we really have a chicken and egg problem. There's not enough supply of clean hydrogen, and because there's not enough supply, people don't invest in the devices that can use clean hydrogen, and then we can really get things going. We need to be working both, on the supply side and the demand side. We are doing a little bit on that. At the World Bank, we have approved in just this last calendar year, a total of 1.65 billion dollars to promote hydrogen around the world. The even better news is that more is under preparation. We're taking this seriously. We're financing it, and we believe that it is one of the good ways to take the energy transition globally forward. IFC is already engaged and discussed with various sponsors in 10 green hydrogen projects globally, and the estimate of the investment is roughly about 10 billion. This is important and it is significant, and we're very serious about it. Now, the reality, again, is that there's a huge number of announcements of projects, but we still see very few of them coming in the final investment decision. There are issues to be sorted out. Some of them are policy issues, some of them are regulatory. And the other big issue, of course, is that at the moment, clean hydrogen is about three times more expensive compared to the alternative that comes from gas. So, how can we bridge the gap? What is it that can be done? So just ahead of this COP28, we issued a report trying to answer the question, and it is called “Scaling Hydrogen Financing for Development.” If you Google that, it will pop out and it has a quite brisk pace of downloads from our website. We feel strongly that this is a good report and with good insights on how we move forward. What we're really proposing there is analysis of why is this not happening, and then an action agenda. We propose four key items. First of all, we commit to work and get done 10 gigawatts of clean hydrogen at the electrolyzer space and we want to do this in emerging markets by 2030. The goal is to try and find projects between 100 megawatts to 1,000 megawatts in size from the existing project pipeline and support them from announcement to feasibility studies all the way to final investment decision. Ultimately, we believe that what happened in most of clean energy technologies will happen for electrolyzers and for clean hydrogen, and we will see it becoming more and more competitive and we need that for the clean energy transition. The second part of what we do is create the enabling policies, the regulatory environment, and the institutions that can help with moving this agenda forward. This includes promoting a global digital platform where we can exchange information on best practices and bringing more financial resources for technical assistance. Thirdly, we're working with a lot of partners in coordinating and bringing a consensus on global standards and certification, which is a key enabler for markets. Finally, we want to have more capacity building and knowledge sharing through various events under our Hydrogen for Development Initiative and a digital hub that brings people who have an interest in that together and again collects, curates and disseminates the best practices and really good, reliable knowledge in this area where a lot is happening and it's a really changing environment, so we need good, reliable information on that. With this, I will turn it over to Bertrand so that we go to the panel discussion. But I will close by saying that we are serious about clean hydrogen. We see it as a very key component of the world's energy transition for the net zero target by 2050, and we expect to do a lot. Thank you very much.

[Bertrand de la Borde] Thank you, Dimitrios. I'm Bertrand de la Borde. I'm the Global Head of Infrastructure at IFC, delighted to be here this afternoon. As Dimitrios mentioned, on the World Bank side, there is a lot that we want to do in that space. We are very ambitious, but at the same time, we also see all the challenges and constraints faced. We, on the IFC side work with private clients in the early stage of developments through our pre-investment window, be through finance feasibility studies, helping the structuring of these projects. What we do see is that while there are a number of projects and then development, a lot of enthusiasm, for now it's not straightforward to say the least to reach financial investment decision. The open discussion we will wish to have with you and we have on stage both developers as well as you, on the government or enabling foundation side will be to have a very open discussion on where we are, what's going ahead, what are the challenges, and what do we need to unlock and make this investment that Dimitrios referred to happening? But perhaps let me pause and let each of you introduce yourself as well as briefly what your company or entity is doing in that space. Would you wish to go first?

[Ana Maria Ruz] Thank you. Thank you for inviting me. My name is Ana Maria Ruz. I'm the Executive Director of the Green Hydrogen Committee of CORFO. CORFO is Economic Development Agency of the Minister of Economy of Chile.

[Vineet Mittal] Good afternoon, everyone. I am Vineet Mittal. I am from Avaada Group based in India. We are currently setting up a half million-ton green ammonia plant, which has got cabinet approval from the Indian government. We have taken out the IPC tender, the feed, etc., is done, and we expect it would be operational by 2027, 2028, when we will be starting exporting the molecule. We are in advanced stage of getting our half million-ton green methanol project approval hopefully, by this month. The cabinet has approved, we have not got the formal data yet.

[Susana Moreira] Hello. Good afternoon. My name is Susana Moreira. Thank you so much for having me. I'm representing H2Global. I'm Executive Director at H2Global. H2Global is a market maker. It has been designed to help accelerate clean hydrogen by combining a mechanism which is called the H2Global Mechanism. It's a double auction mechanism that is combined with an intermediary called Hintco. And Hintco enters into contracts with both buyers and suppliers of hydrogen. And then, it involves governments which are supporting these auctions by coming in and financing the cost of difference between the price that suppliers are producing, the hydrogen and the willingness of pay by the producers. Thank you again.

[Hanane Mourchid] Hi, everyone. Good afternoon. I'm Hanane Mourchid. I'm Chief Sustainability Officer of OCP. OCP is a Moroccan company that is today leading the market for fertilizer production, mainly phosphate-based fertilizers. We are present in all the continents with a special dedication to Africa, for whom we created a subsidiary to support food security and the Green Revolution in Africa. And with, let's say, roughly 80,000 employees. And today, we committed to carbon neutrality by 2040. This means 10 years ahead of the Paris Agreement because we are relying on a lot of competitive advantages and investments that we already made in green energy, renewables and so on. One of our flagship projects is the 1-million-ton green ammonia production in Tarfaya region in the center of Morocco that we intend to bring by 2027. Already well advanced with the land granted, with the pre-feasibility study already achieved and we are pretty sure to be on time by 2027.

[Bertrand de la Borde] Many thanks. Perhaps let me first start with a question for both of you on the developer side. In terms of on this first project that you are developing, what are the main challenges that you do face?

[Vineet Mittal] The main challenge we are facing is that most of the port infrastructure in India did not even have a grid connectivity of the magnitude which you need. Educating the policymaker, what is green hydrogen? What is green ammonia? What are the global policies which will drive those changes? Why should India even participate in that whole value chain when we are still subsidizing our fertilizer sector? A lot of our time even today goes in educating our policymakers at federal level, at provincial level, because it's a very new topic. There is lack of awareness, there is lack of knowledge about it. The second challenge which we are facing is that to convince them that the energy banking, which is what federal government allowed as part of their policy, but the project comes into the provincial government and that they should honor the federal government policy and sign the long-term banking agreement of 25 years or 20 years. Their question is why should they sign for such a long tenure? There is an ongoing challenge, but hopefully one or two states where leadership in that state has taken a view that we have to be an early mover and we have to support it. That's where the take-off will happen for the project.

[Bertrand de la Borde] Thank you, Hanane?

[Hanane Mourchid] Thank you very much. I will just build on that to say that I think that the two main challenges that we are facing is, first of all, cost competitiveness. We need to make the business case for green hydrogen and green ammonia, and the cost is key for that. The fact also that the market is still unpredictable. For the cost, for example, there are a lot of key things and factors to leverage. It's very important to think about how to make aggressive investments, out-of-the-box investments, because if we treat these projects such as we treat already renewable projects, this will not necessarily bring an advantage in terms of costs. The second leverage for me is the carbon pricing mechanisms in general. We see today the CBAM coming, the Carbon Border Adjustments Mechanism, and this is the kind of incentives that could make the business case of green hydrogen and green ammonia, for sure. Absolutely necessary also to work on the production costs to make them down. It's very important. To bring the production cost down, it's important to work on the overall efficiency of the system, how to integrate renewable with batteries, to deal with the intermittency, to deal with new technologies of electrolyzers that are today promising. The technology development is also key. For sure, there are some mature technologies, but there are also some very promising technologies and you need really to know where to put things and when to invest exactly in which capacity and which technology. Also, local manufacturing is key because first of all, they're putting their neck in the overall value chain. We know that today with all the commitments around the world in terms of green ammonia production and green hydrogen, the value chain is not ready yet. Integrating locally the ecosystem is also helping to provide the needed capacity, but also to bring the costs down. It's very important. About the fact that the markets are still unpredictable, at OCP we are following very closely the market movements and how many players are stepping in to commit to new projects on green hydrogen and green ammonia. But we have the opportunity of being our own offtaker. Today, OCP, let's say, imports all the ammonia that it needs, and we are the first importer in the world with two million tons of green ammonia. It's half of ammonia per year. It's half of our production that we are today integrating locally, which brings a lot of positive outcomes for the economic balance of the system. But we also consider the new opportunities behind integrating the downstream parts of hydrogen and ammonia. When you have hydrogen with very competitive cost and you can also think about decarbonizing a large, let's say, range of industries like green steel needs, methanol, and so on. The downstream integration is also a way to, let's say, incentivize and create a new market for green hydrogen.

[Bertrand de la Borde] Thank you very much. Quite a lot. Susana, for short, I'll come to you on offtake. I will come to you, Ana Maria, on authorities, and you mentioned educating authorities are getting the support. But in the meantime, let me put you on the spot on this bringing cost down on your hand. How do you see it? How you do address it?

[Vineet Mittal] Any new industry actually needs a lot more support. When I started solar way back in 2009 in India, we were getting 30 US cents tariff. Currently, I have won a project of 1,400 megawatt in a reverse auction process at 3.5 cents tariff. The cost is almost like 11, 12% of what it used to be and in less than 13 years period. That's a challenge. That's an opportunity because the early buyers are saying, “Why should we be the first one to sign the offtake agreement if the cost curve is already clear that it is going to go down and people are looking at support?” What we are seeing is that the way Japan, METI has announced the initial plan of 100 billion dollar or 106 billion dollar contract for difference with very clearly articulated matrix that who would be eligible for those benefits or say what Europe is doing with the 42% mandate. If this industry has to succeed, you can't be putting in pressure from day one on a dollar hydrogen cost. Otherwise, it will not take off. I think you have to let it first mature, stabilize, and then think of making it most optimal. That's the exact thing which happened in solar and wind sector when many countries in Europe in 2010 and 2011 started signing 10 gigawatt, 15 gigawatt projects. That's when the whole supply chain became too big and entrepreneurs started realizing that it's a real opportunity. Same thing we are seeing in the hydrogen space that there is a lot of excitement. There is a lot of capital which is also available, we raised 1.3 billion for our first million ton project. But the challenge is the pressure. The pressure from everyone is so big on cost bringing down. Whereas the pressure should be on institutions like World Bank, ADBs, KfWs, and companies like Hintco to actually create that marketplace. Say, for example, if Hintco is saying a billion dollar CfD, it's peanuts. See, today it's a real fact that it's a double the price. If you look at CBAM or ETS, it's only solving for at even 100 euro. At ammonia, they are going to subsidize by 280 US dollar return. The challenge is that the CBAM alone won't serve it. I think there is a need to sign and agree that there are multilateral agencies which can facilitate larger adoption of green ammonia. How to do it is actually through Article 6, which was signed in the COPs Agreement in Paris.

[Bertrand de la Borde] Clearly, Susana, the board is coming in your direction on this, how to support offtake. It was a chicken and egg problem of Demetrios. How do you handle that?

[Susana Moreira] As many of you may know, we have received 900 million euros from the German government to organize the first auction that uses this double auction mechanism and intermediary that I mentioned earlier. We are currently in the process of conducting the auction. And since it's the first, it's having some initial, let's say, delays associated with it. So, we have had to extend it already three times. And the main issue is because the projects weren't ready and it's a lot of information that needs to happen. They need to mobilize. One of the issues, for example, is because this particular auction needs to comply with all the EU regulations, and REDD+, and etc. What is happening is some of the projects are having difficulties in even understanding all of these requirements and how they can translate it into the actual projects. The other thing that we have noticed and other people have mentioned it already, it's the issue of the regulations and the infrastructure. The infrastructure is really an issue. It's related to one of some points of my colleague here, Vineet, mentioned. The infrastructure plays a critical role. The other one that is also really important and you mentioned it as well, is the size. Of course, 900 million euros sounds like a very significant amount of money and it is a lot of money. But if you then divide it by three different hydrogen products over 10-year period, actually the quantities are not very significant. That means that for certain projects that are large scale, they cannot become viable with just that specific contract. They need more projects. To us, it shows that there is a need for some form of effort like the one that we are conducting because the market clearly isn't functioning yet. It also shows that more money needs to go into this pot so that we can really bring it to scale and reach these market tipping points that are required so that we can get these great successes that have happened in the solar panel industry, for example. That's just in a nutshell.

[Bertrand de la Borde] Thanks a lot. Some of the challenges or early lessons, it's again, going back to the chicken and egg problem that some of the projects or most of the projects we're planning are not yet ready or need to understand better what you offer. Very clear. In reference also, Vineet, you mentioned Japan. How would you compare what you are doing and more broadly, what so far the beginning of the European model versus what we do see in Japan or Korea?

[Vineet Mittal] So, uhh…

[Bertrand de la Borde] Maybe the question is for Susanna. You may want to address it?

[Susana Moreira] Okay, please go ahead.

[Bertrand de la Borde] You want to address it? Okay.

[Susana Moreira] Okay. We are all so polite. In terms of the way we are structured, we really see ourselves as a market maker. It's a different approach where we have the intermediary that has access to funds from government that help compensate for the cost of difference. But it's not, let's say, a single auction. There's not a point-to-point contract. It's a very different approach. Our understanding from talking to the Japanese government, because they've also expressed interest in the H2Global approach, is that they will start with contracts for difference, as you were mentioning, but they are interested in looking at this type of approach as well to help deal with some of the issues. I think the main advantage, I guess, of this type of approach is on one hand, you promote competition because you are having auctions on both sides. The other is because of that and the difference in times between the initial contracts, which were 10 years, and then the contracts from the buyer side of one year, you get the possibility as prices evolve that you don't have to compensate so much for the price. From the government point of view with limited resources, that might be interesting.

[Bertrand de la Borde] Thank you very much. Vineet, anything you want to complement on that?

[Vineet Mittal] I think where Japan, Korea, and Singapore are unique is their use of Article 6. What they are saying under the Joint Crediting Mechanism, the countries which are willing to share their ITMO with Japan would get credit for that. That actually is the spirit of the COPs that the Global South should get an opportunity to participate in the green hydrogen transition. They don't have those deep pockets like US’ IRA or Japan's 106 billion dollar support or Korea's contract for different support and Europe's support for CfD. Those country needs someone to enable them so that projects come there initially for the global market, and then they will start adopting in their local market. It is very essential to look at that only by decarbonizing Europe and Japan and Korea won't solve the problem. Now, the largest emitters are China, India, and many other emerging countries. They have to decarbonize as well. How to motivate and incentivize them to become the first mover in that space? I think JCM exactly does that. By motivating them to build the projects in their country, give them the entire carbon benefits, as well as they offtake the 100% quantum as long as it's competitive. It actually solved similar to ENCO, but with a different incentive also aligned.

[Bertrand de la Borde] Thank you very much. Perhaps it's time to move to Chile. Chile has been a front runner in that space. Combination of tremendous potential in renewable energy, wind and solar, as we all know, and also very proactive and deliberate policy from the government and Euro-organism, CORFO, which the World Bank is supporting through 150 million loan. On your hand, what are the initial lessons? What do you see working or not working? What would you wish to see different? And what would you wish developers to do?

[Ana Maria Ruz] On 2021, we called for financing the first large industrial scale green hydrogen plant in Chile with a subsidy of 50 million dollars. At that time, we asked for companies with more than 25 millions of annual income, and international risk less than BBB minus. Ten proposals arrived. Now, CORFO have contracts signed with five projects and we were very happy at that time because the projects are regionally distributed. Also, some of the projects are local for domestic demand in order for exporting metanol or ammonia. And, what happens now as a reimbursement scheme, this year, now, December 2023, is key because if they don't have to see the stage now, probably they are not getting the step of commissioning by December 2025. That is the end time that we put in the call. One of the lessons when we learned there that the cost of energy that when they applied the cost of the energy was close to 30 dollars by megawatt hour. Actually, the cost of the energy and also the cost of connection to the grid, that is very important. When they applied on 2021, the cost of connection to the grid, it was close to 5, 10 dollars. Actually, it's more than 20 dollars per megawatt hour. What is happening is the increasing quantity of renewal that we have in our matrix and the decarbonization plan that we have, the complementary service that is required for the grid has increased more than 20, 25 dollars per megawatt hour. The projects now cannot get the fifth stage because they have a really large cost of the electricity. We need really to think out of the box and the other in looking for ideas in order to help those projects. All these projects are not so large. The largest is 24 megawatts of electrolyzer, the case of Faro del Sur in Magallanes. The project is going to feed hydrogen to the Haru Oni plant in Magallanes for exporting e-fuels to Europe. All the project there is the first phase and then they are going to go to gigascale. If we are not successful with this step, probably they are not going to the next step. Those are not all the projects that you can find in Chile, they are the projects that we have the experience. Another lesson that is very important, the project apply with a utility. But utility didn't come as a partner. It came just as the supplier of energy. They don't have now the freedom of having a bidding about the cost of electricity, about the electricity that they could need for the project. That is very important because the complementary services have increased from 2021 from one dollar by megawatt hour actually to five to seven dollars by megawatt hour. And also, the technical minimum and other cost are increases from one dollar to five to eight dollars by megawatt hour. Offtakers, the cost, the cost of the hydrogen is 50 or more percent the cost of electricity. If we are not able to have a low cost of electricity, we cannot go to have a low hydrogen cost and we are not going to have offtakers. The offtakers that we have for this project in Chile are the same that you have in Morocco, in Australia, in South Africa, etc. We are competing with other countries. Who is able to have the lower cost of the final product? I mean, hydrogen or derivatives.

[Bertrand de la Borde] We'll go back soon to Hanane and hear her side of the story and of the competition. But just a follow-up question and you touched on it, but perhaps to expand a bit. As you are in a pretty unique position in Chile where you have a number of projects under development. If you look at, from your standpoint, the best ones, what do you see as making the difference? What's really key in some of these projects making really good progress?

[Ana Maria Ruz] I like all the projects that we have for us as a government agency, the local demand projects are very important. We have started with a very small project. Haru Oni, for example, it's an electrolyzer one that is installed and is running. Probably you have listened to the news that they have exporting 20,000 liters of gasoline to the UK. That is very interesting. This is a supporting project, but also a logistic project, it has a Walmart. Walmart in the distribution center have an electrolyzer of 600 kilowatts for the forklifts that operate inside the distribution center. Those real projects are financed by the private without public subsidies. That is very testing. They could be commercial. The scale, okay, the scale. But we need to go step by step. The other project that is very interesting for us is a project of CAP. This is the natural steel company that they are going to use the hydrogen for the process of producing the steel. Not thinking just in exporting the hydrogen or derivatives, thinking also in exporting green steel or other projects with more added value is very important because we need jobs, we need increasing our GDP, we need industry in Chile, and also regionally distributed.

[Bertrand de la Borde] Thank you very much. Perhaps with that, let's move back to our two developers. In terms of main challenges to address, we have talked first about bringing cost down. We've talked about offtake. We have not yet talked a lot about financing. For your initial project, how do you intend to finance them?

[Hanane Mourchid] Maybe I can go for this one. We already financed a huge program of 8 billion dollars investments between 2008 and 2018 to double our capacity and triple our fertilizer capacity. We intend to do the same approach with several partners. It will be, for sure, a part of debt, equity, and some partnerships with financial institutions that are today trying to bring new models on the market to finance green hydrogen and green ammonia. The main challenge, as I said before, is that we look at green hydrogen and green ammonia projects. They're like renewable projects that require, actually, long term engagement and long term takes. We see some partners already looking into new models to add derisk these projects, but in the same time not necessarily do a parallel between renewable and green ammonia. Otherwise, the cost is not interesting. We've seen some contracts emerging with the first years with fixed price and then an indexed price for the next years and even lower in the period of engagement from 30 years, for example, or 25 years for renewables to 15 years for green ammonia and green hydrogen. We rely on these kinds of partnerships and incentives that financial institutions with offtakers, with developers are looking to develop to, let's say, make a better way of financing and innovating the financial model for green hydrogen. But for sure it will need the three key levers that are debt, equity and partnerships.

[Bertrand de la Borde] The good news is that on our hand we are ready to help on all of them. We have already done quite a lot with OCP in the renewable energy battery sector, including over the last year, what, 200 million euros.

[Hanane Mourchid] Absolutely.

[Bertrand de la Borde] Really willing to do more. But with that, let's move to you, Vineet. So, on the same question on financing, how do you approach it?

[Vineet Mittal] Fortunately for us, we have raised the money for the first project and Indian Lender, REC, we have signed an MoU with them for lending. So, both on the debt and equity side. I think what is happening is that investor community, whether debt or equity provider, are all looking at long-term offtake. They treat it as an extension of the Green Energy Project, which were backed by the long-term power purchase agreement. Similar arrangement they are seeking at least for 15 to 20 years on this. And if that is not happening, not everyone is fortunate like her who can do an offtake agreement with the fertilizer company of a group. That's a non-recourse. From the perspective of Indian banks and institutions, they are looking at otherwise corporate guarantees, etc., because they are currently... It's coming again from the lack of knowledge that no one has seen the CBAM continuous, no one is aware of that how the ETS is staying at 79 to 82 dollars or touching 100 dollars. What will be response of Europe on that? Initially, Japan also started talking about blue, green, and everything else. Today, because of so many colors of hydrogen and with pink being signed here in this COP, I think it has created a further complexity. Financing is going to be a challenge, but I think the game-changer will be World Bank should actually look at... They are looking at tripling their funding, actually if the world is sincere about decarbonization, I don't think funding is a problem. We looked at solar, wind, and this sector, funding is not a problem. The challenge is going to be someone needs to enable the market. So, create the market, create probably 20 Hintcos or get their 10 million tons on Europe, which is almost 57, 58 million tons of green methanol, green ammonia, get that contract between the World Bank and the European Union, and become the agencies which is actually trying to create the global marketplace, and use Article Six also, so that you negotiate with country the highest ITMO and benefit the buyer country. It becomes a win-win solution. See, someone who is not involved day-to-day, they have to look at a very detached view. When we look at this sector, I think the biggest support world governments can provide is in the form of offtake. Because even with mandates, people are... Customers are saying, “We will take the allowance in 2026. You give me the 2030 rate.” So how will the projects come between 2026, 2027, 2028, 2029? And everyone is waiting for US’ IRA. The second thing which the World Bank could try and influence the US government that IRA money should not go to the export market. So, you'd use the IRA to create the local market for green ammonia, green methanol. Let that not be exported so that there is a level playing field between the different producers in the world. I think, second thing is creating a global platform for offtake. Even if you do it for 10 years for 20 million, believe me, when we will be sitting two years down the line when you have created that, there will be a supplier-side challenge, not the buyer-side challenge. Even today, if all the policies are implemented in totality, there is a supply-side issue more than the demand-side. But that trust is not coming yet in the banking community. That's the biggest issue, I think.

[Bertrand de la Borde] Okay. By the way, sorry for the background noise. Clearly, what they are talking about is not as interesting as what we talk about. They are trying to compensate by speaking louder. But I hope you can somewhat hear us; otherwise, we'll raise our voice too. Where we were, which is also in terms of critical success factor, the use which will be made of this green hydrogen. We heard from you, easier if it's local use, even better if it's within the fence like OCP, obviously. Now, having said that, the question for the four of you. What else comes to your mind in terms of when you think about your business case, the use which may be a stronger one, which will give you which are more credible, what type of use or sub-sectors for green hydrogen would you favor? As we know, there are a lot which is contemplating across sectors, a lot. What do you find is pretty tangible and what is not?

[Hanane Mourchid] Maybe I can give some figures or some cases that we already looked at OCP. For sure, substituting gray ammonia that we import today; but also, we have an overall objective of being carbon neutral by 2040 and this means that we need to decarbonize all our core industry. We use a lot of fossil fuels today to dry phosphate in the mining, for mining mobility and so on. We consider hydrogen a key lever to achieve decarbonization of our core activities today and then get into this carbon neutrality target by 2040. Green hydrogen can be used to dry phosphate or to dry even other minerals to substitute fossil fuels in these operations. Also, for green mobility, for heavy tracks in the mining, for sure. there is a balance between some new transportation, like hydraulic transportation, let's say, electric transportation instead of mining trucks. But there is a part of the mobility in the mine that you cannot substitute, so you need to keep at least a part of your trucks in the mine and hydrogen is a way to decarbonize this part of the operations. There are a lot of opportunities. Also, what comes to my mind is that for these kinds of utilizations, the business case is already there. You need in some cases, using solar energy to dry is less expensive than using fossil fuels in furnaces. Sometimes, we have some already made ideas that we need also to train and to bring and to experience before being sure that the way that we already did it before is not necessarily the best way that we can use today.

[Bertrand de la Borde] Susana or Ana Maria, any additional perspective on that question of priority uses?

[Susana Moreira] Well, I just can speak in terms of H2Global just to say that we are neutral in terms of if it's hydrogen or hydrogen derivatives because it really depends on the funder, the source of the funds from the public side, and what are the priorities for the government itself. Right now, we are looking at methanol, eSAF and ammonia. The only thing I can say is that it seems that there is more interest, at least, from the ammonia side. I think that's where we see where we will be.

[Ana Maria Ruz] From our side, all the projects that are domestic-demand are very important because as I said before, not just exporting green hydrogen or green ammonia or e-methane or e-gasoline, also to export green steel, green glass, green copper are very important for us, creating more jobs in our country and increasing our GDP. That is our focus.

[Bertrand de la Borde] Thanks very much. We are getting close to the end of this session, so a question, and to some extent, Vineet, you have already given quite a lot on that, but it's on what else that the World Bank Group can do to help developing these projects, unlocking this market, or solving this chicken and egg situation. So, any other asks for the World Bank group? You want to start?

[Hanane Mourchid] Yeah, I can do it since we already have this partnership on green energy and we are looking to extend it. I don't want to be kind, I'm just telling what I think. The World Bank is an outstanding partner because the World Bank today is looking after this kind of new financial frameworks and creating the market and the big scale opportunity for green hydrogen and green ammonia. I do think that if there is any change, it will come from this kind of partnerships. The World Bank has also the ability to bring a lot of stakeholders around the table. Multi-stakeholder partnership is also key to achieve what we are talking about in this panel. These are my thoughts.

[Susana Moreira] I think the World Bank has a very critical role to play. I think the previous, Dimitrios mentioned this, I think there's all this work around regulation, standards, but there's also about the enabling infrastructure. I think that's going to be a critical role and the World Bank has a lot of experience in working on this group, including IFC, of course. The other aspect that I think is very important is really to advocate for developing worlds in this context because there is a lot of potential. We've all seen the maps, but translating that into actual projects is much harder in those contexts than in other contexts. I think the World Bank and other institutions like the World Bank really need to help these projects so that we can have them participate in auctions like the ones that H2Global organizes. Thanks.

[Bertrand de la Borde] Vineet, you already had a long list. Anything to add? No, you're good? Ana Maria.

[Ana Maria Ruz] My list is very short. Financing conditions.

[Bertrand de la Borde] I think it's time to finish this panel.

[Ana Maria Ruz] I would like to do just one example. One of the projects that we are co-financing, they are making the calculation with software plus 2%, I mean 7.5%. If we could have a rate of 6.5%, they could go with the final cost of hydrogen from 2.5 dollars per kilo to 5.9 dollars per kilo. The cost of financing of the product is very, very important. Just one point, it makes half the difference in the final cost of the product. Sorry, and the other issue that is very important is to work in the H4D partnership because it's a way of acknowledge, to experience the opportunity to see other projects around the world, and that is very, very important. Also, thinking in the suppliers of the technology for the project. We are working on having a manufacturing electrolyzer in South America, in Chile, and all the information that we could get through H4D partner is very valuable for us.

[Bertrand de la Borde] You see they applauded. Now look, on your point, it really does resonate, and I would also echo it and bump it upstairs to our shareholders. The fact that there's really a need to bring in a focused way, a massive amount of concessional finance to help solve this chicken and egg problem, and to help solve it not only in the US you have a massive IRA program, but also in developing countries who cannot afford this type of program. That was your point, Susana. That's really again, music to our ears, something that we use this forum also at COP to convey to our shareholders and to get there. With that, look, I think we covered a lot while being on time and within affordable decibel. Thanks so much for that. Hearing again from developers, Europe, H2Global institution, as well as a country which is a front runner, which I think was very rich. We touched on really both all the potential key uses as well as the key challenges from bringing the cost down, offtake, financing. Thanks so much for that and looking forward in the coming months to work with all of you to help this project, making it to the finish line. Thank you so much.

00:00 Welcome: Opening remarks

06:05 Introducing the panel discussion

10:13 Developers side: Main challenges faced

15:41 Bringing cost down

22:06 Experiences in Europe, Japan and Korea

25:43 Lessons learnt from Chile

33:28 Financing projects

40:40 Critical success factors

44:21 How the World Bank can help

48:03 Closing remarks

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