Glimpse of fuel’s future seen in a pasta factory
CONTURSI TERME, Italy — Near Naples, something unusual was taking place at a pasta factory in February. In an olive grove, engineers in safety gear had hooked up tanks of a hydrogen and natural gas mixture to an existing gas line. It fed the boiler that provided the heat to dry and sterilize the noodles being produced.
Inside, regional specialties kept rolling out as employees in white coats and head coverings supervised. But because hydrogen fuel is free of emissions, the operation was sending less carbon dioxide into the atmosphere than one using just natural gas, an emitter.
Mixing hydrogen and pasta-making is a gambit in a multifaceted campaign by Marco Alverà, the chief executive of Snam, an operator of natural gas networks in Italy and across Europe. Alverà, who took the job in 2016, is trying to keep his company on the right side of growing pressures, especially in Europe, for energy companies to change their business strategies to tackle climate change.
Snam, whose Italian operations are valued at about $21.9 billion chose an industrial area that is home to Orogiallo, a pasta company, for an early trial.
Alverà has embraced hydrogen as a clean substitute for natural gas. Hydrogen is emissions-free and, he hopes, can be carried in Snam’s existing 25,000-mile web of transmission lines.
When used as a fuel, hydrogen’s only byproduct is water. But the most common way to produce hydrogen requires fossil fuels, themselves heavy emitters, which would cancel the benefits of hydrogen use. There are clean ways to make hydrogen, with renewable energy, but storage is an issue.
Alverà said his epiphany about the element came in late 2017, when his strategists persuaded him late one evening that, despite concerns about safety and cost, hydrogen could win a substantial portion of the energy market of the future. It could become a winning ticket for Snam. The company estimates that in three decades, about a quarter of Italy’s energy could come from hydrogen.
At 44, Alverà is a seasoned veteran of the energy business. After a stint at Goldman Sachs, he worked at Enel, a large electric utility, and Eni, the Italian oil giant. Paolo Scaroni, a former chief executive of both companies, said that of all the young executives who had worked for him, Alverà was “the most talented.”
Alverà wants to spend about $2.2 billion, on testing and upgrading Snam’s network to make sure it is safe to carry hydrogen, and on seeding new applications for hydrogen technologies.
While natural gas emits less carbon dioxide when it is burned than other fossil fuels, like coal and oil, many experts still say that its use in countries like Britain, Italy and the Netherlands may need to be sharply reduced if governments are to meet their increasingly ambitious climate targets.
Replacing gas with something else — electricity from renewables is the oft-mentioned candidate — will be challenging. In the winter, demand for gas can be more than double what it is in the summer.
“It is not easy to replace all that gas with electricity,” said Meike Becker, an analyst at Bernstein, a market research firm.
Alverà’s enthusiasm for hydrogen comes when the fuel is attracting attention as a means for moderating climate effects from industry and governments.
Signs of this new enthusiasm can be seen in a flurry of deal-making. Cummins Engine bought a Canadian fuel-cell maker, Hydrogenics, last year, while CNH Industrial, which owns the Italian truck maker Iveco, invested $250 million in Nikola, a company based in Phoenix that is developing hydrogen-powered trucks.
For those carrying heavy loads long distances, some experts say, a tank of hydrogen is better than battery power.
“Pure battery trucks are good for up to about 250 miles,” said Dale Prows, head of hydrogen supply at Nikola.