Baker McKenzie and WBCSD Launch Senior Leader Toolkit to Accelerate Strategic Investment in Low-Carbon Hydrogen Offtake
Geneva, 15 October 2024 – Calling on businesses to adopt low-carbon hydrogen offtake at a time when the need to decarbonize is more acute than ever, the World Business Council for Sustainable Development (WBCSD) and global law firm Baker McKenzie have launched “Strategic Investment in Low-Carbon Hydrogen Offtake: A Toolkit for Senior Leaders,”. The toolkit offers C-Suite and board leadership practical guidance to manage complex decision-making and investment decisions around the adoption of low-carbon hydrogen.
Net-zero emission scenarios widely acknowledge that low-carbon hydrogen plays a critical role in decarbonizing industry. According to the International Energy Agency (IEA), annual production of low-carbon hydrogen could exceed 20 million tonnes by 2030, reflecting a strong investment appetite. However, projects are not proceeding at the scale and speed required to drive deep industrial decarbonization; only 10% of the clean hydrogen capacity planned by 2030 has identified a buyer. This is often driven by a misalignment between the long-term demand signal required by the supplier and the relatively short-term framework offtakers use when procuring key commodities.
The toolkit is the culmination of extensive interviews and workshops conducted by WBCSD and Baker McKenzie throughout 2023 and 2024 with hydrogen suppliers and offtakers in heavy industry sectors such as steel, heavy-duty transport, and chemicals.
Practical guidance for businesses
The toolkit identifies four practical actions for businesses to navigate this emerging market and accelerate the adoption of low-carbon hydrogen and drive deep decarbonization:
- Navigating transformation: Senior leaders are urged to inform policymaking and eliminate internal barriers to align low-carbon hydrogen investments with their decarbonization goals. This strategic navigation is crucial for accelerating the adoption of low-carbon hydrogen.
- Seizing opportunities: The toolkit provides a roadmap for identifying business locations and segments where low-carbon hydrogen can significantly reduce emissions. This involves comprehensive technical and commercial analysis to replace fossil fuels and engage supply-chain partners.
- Closed-loop offtake: Businesses are encouraged to explore internal supply chain projects to support carbon neutrality targets. This approach involves allocating capital for transition plans and developing pilot projects within the business group.
- Unlocking the value chain: The toolkit emphasizes the importance of unprecedented collaboration across the value chain, including joining forces with suppliers and other stakeholders across the value chain, from raw materials to retailers. By fostering trust and establishing clear expectations, businesses can support the deployment of low-carbon hydrogen and meet the increasing demand for low-carbon products.
In addition to these practical insights, the toolkit includes case studies and examples from industries such as steel, heavy-duty transport, and chemicals to demonstrate how companies are already taking steps to integrate low-carbon hydrogen into their operations, providing a roadmap for others to follow
The growing pipeline of low-carbon hydrogen projects reveals a strong appetite to invest in this strategic decarbonisation opportunity. Despite this momentum, suppliers are struggling to reach a final investment decision as buyers of green products are unable to enter long-term offtake agreements. This Toolkit presents key recommendations and considerations for senior leaders navigating complex investment decisions. It is time to turn demand signal to demand action
Nancy Gillis, Senior Director Industrial Pathways Transformation at WBCSD
The transition to low-carbon hydrogen is not just an environmental imperative but a strategic business opportunity, and it is clear that low-carbon hydrogen solutions can be taken forward without creating material business risks. Senior leaders have a pivotal role in driving this transformation by making informed decisions that align with their company’s decarbonization ambitions. Based on our extensive research, we have seen various ways companies convert strategic decision-making into profitable projects. With this toolkit, we hope to support and inspire businesses to think about their net-zero future.
Andrew Hedges, Global Head of Climate Change at Baker McKenzie