The future of our planet depends on structural, technological, and geopolitical change
In 1992, the Brundtland Commission, named after its chair, former Norwegian Prime Minister Gro Harlem Brundtland, created a term that is still very much in trend today. It came up in Rio de Janeiro during a United Nations Conference on Environment and Development. The commission presented a strategy paper on “sustainable development” at all levels of society. A concept of sustainability was born and defined in a manner that inspired many: Sustainable development is development that encompasses social, economic, and environmental concerns, meeting the needs of the present without compromising the ability of future generations to meet their own needs. Steinbeis expert Prof. Dr.-Ing. Ferdinand Panik outlines the challenges this involves.
The commission described the path to sustainability as both simple and challenging, showing that it would be necessary to switch to the use of renewable energy and climate-neutral recycling processes. In view of the extensive technological and structural changes this involved, initially the Brundtland model gained little acceptance. This has changed in recent years. Companies have recognized that making the required technology shift leads to a variety of opportunities. The global competition to occupy pole position in key technologies is in full swing, especially in the energy and automotive industries. And – more quickly than expected – this will lead to emission-free, highly efficient, and climate-neutral systems and products. At the latest, this could be within one or two decades.
Structural change and geopolitical challenges
The shift that will probably be more difficult and more protracted will be structural change within public communities. New systems are needed, not just for generating and importing energy, but also for building the required distribution networks, including comprehensive networks of charging stations. And this is all against a background of complex approval processes and the need to gain buy-in from members of the public. This is ignoring a key issue: What funds will be available, and how will everything be financed? Germany will only continue to develop as an industrial nation if it safeguards the success of traditional technologies for as long as possible and thus secures the monetary resources required to bring about structural change. At the same time, it will need to introduce new technologies in order to lay a foundation for sustainable industrial development.
All of this is taking place against a backdrop of intense global competition, involving not only the traditional industrialized nations, but also economies in emerging regions, which are moving into the fast lane by entering into new fields of technology – without having to worry about established structures. Germany has very limited resources when it comes to sustainable energy (solar, hydro and wind power) as well as the raw materials this type of energy requires. Aside from structural and technological change, another force is looming on the horizon: geopolitical change. But if change is dealt with together – and wisely – there should be hope and help for many poorer regions. Instead of exploiting raw materials, it will be important to complete key parts of the value chains in the countries of origin.
Furthermore, most of these countries have an abundance of solar energy, wind energy, or hydropower, so investments must be made in technologies such as machinery for producing and processing hydrogen. Geopolitical change is probably the biggest challenge we face, but arguably it’s the most important step in implementing strategies that will genuinely establish a sustainable economy and society.
Sustainable development of the economy and society
One key issue when planning sustainable economic structures is how to share the benefits among different economies involved in restructuring processes. Initial deliberations regarding supplies in Baden-Wuerttemberg point to a number of ways forward. Baden-Wuerttemberg is a highly industrialized state, and it will continue to depend on energy imports in the future. The Rhine Valley plays a crucial role in this. Many goods and commodities are transported into the area – by rail, road, pipeline, or barge – from the major transhipment ports on the Rhine estuary, from where they are forwarded to the southwest of Germany.
The Port of Rotterdam is considered a gateway for energy supplies in Western Europe – 8,800 petajoules of energy are shipped in and out of the port every year. Over the past five years, intensive work has been underway with shipping customers to convert the port of Rotterdam into a hydrogen hub. The aim is to be able to transport 20 million tons of hydrogen annually by 2040/50. Potential customers along the Rhine River, but also overseas producers and exporters of green hydrogen, have been included in this plan. It is an ambitious goal, but the idea is to make the Rhine corridor a carbon-free area. The first step for the project partners will be to push ahead with the construction of hydrogen production on sites along the Rhine between Rotterdam and Cologne. Capacity should hit 1,950 metric tons of hydrogen by 2025. By 2030, the cost of imported hydrogen is expected to be just over €2 per kilo. This should be the kilo price on arrival in Rotterdam, compared to roughly €3/kg for hydrogen produced in Europe using offshore wind power from the Netherlands. The energy source will be ammonia, transported from overseas by ship. The transportation costs, including the process for converting hydrogen into ammonia and back again, are included in the delivery price of €0.50 to €0.60 per kilo of hydrogen.
Most of this imported hydrogen undergoes further processing in the manufacturing sector. Earlier this year, the energy company Enertrag published figures on anticipated annual sales: fertilizers – €80bn; aircraft fuel – €500bn; transatlantic shipping – €259bn; steel production – €1,500. No comparable volumes are expected in the automotive area before 2035.
What would happen if investments were made now in industrial facilities in African or South American countries to produce fertilizers, or synthetic fuels for airplanes and cargo ships, or if investments were made in steel processing plants? This would significantly raise value creation in producing countries, thus contributing to the development of long-term economic structures. It would certainly also reduce overall costs, partly by replacing expensive hydrogen transportation in traditional ocean carriers.
This is similarly applicable to the exploitation of raw materials. Lithium mining in the Andes and cobalt extraction in Central Africa should go hand in hand with investments in manufacturing and recycling facilities for battery components, fuel cells, and electrolyzers. Instead of becoming outraged about child labor in the mines of countries supplying raw materials, investments would provide the means to set up training programs and create jobs, which are in short supply in these regions. This would become an important step in creating a sustainable economy and social structures – worldwide. It is important to include recycling in this process, because most raw material reserves are finite, so as far as possible this should remain the responsibility of producing countries in order to secure long-term supplies of raw materials from their regions.
Regional concepts based on a sustainable hydrogen economy
The cost of hydrogen produced in Baden-Wuerttemberg largely depends on the price of electrical power required for electrolysis. Electricity prices are significantly higher in Baden-Wuerttemberg than in sun-rich importing countries. To nonetheless remain competitive, it will be important to establish smart networks for using energy in the form of sector coupling. The EGS, a Steinbeis Transfer Center based in Stuttgart, has been working on successful projects in this area, including a housing development in the Weststadt district of Esslingen, which is being operated profitably with the aim of becoming climate-neutral and energy-efficient. Electricity is supplied in two ways: Photovoltaic systems have been fitted on the roofs of apartment blocks, and purchasing is managed carefully to access low-price electricity from the grid during off-peak periods. Cogeneration plays a particularly important role in this initiative. Using electrolysis to produce hydrogen delivers an energy efficiency of between 60 and 80%. Thermal energy generated by the process is fed into the heating network of the apartment complex. Hydrogen is an effective way to store electrical energy in the long term, and whenever required, fuel cells can be used to convert it back into electricity. It also offers sector coupling options for mobile applications, such as supplying charging stations used for fuel cell vehicles. Prices start to become competitive in this sector at €4 per kilo of hydrogen. Although work on the project in Esslingen has not yet been completed, the pioneering support provided by the Steinbeis experts in Stuttgart is already paying off in the form of follow-on contracts from the state and federal government. The goal is to continue to drive sustainable developments in the region.