The world is messy and complex; and humans make sense of it by creating some sense of order. It first started with creating routines, telling stories, and then we started making things, creating tools, building structures, which changed our own surroundings.
We started changing the environment we lived in, in very profound ways that we didn’t yet realise. We discovered fire and we burnt wood, or leaves, or anything that could be burnt. We then discovered fossil fuel and unleashed lots of productivity, and it sure took a long time to translate these productivity into higher standards of living.
In some sense, by telling the stories about possibilities and changing perceptions, we distorted our own realities. Realities of what will happen to us, about how the world works. Again and again, our assumptions gets busted; either by happenstance or actively resisting our old tales and developing new ones.
Steve jobs was described as having a reality distortion field around him that affected the developers of Macintosh. He manages to convince himself and those around him that those different requirements he put on those around him are possible. Using his charisma and marketing capabilities, he helped to encourage, motivate, taunt his people into persisting through incredible challenges and difficulties.
Distorting reality takes incredible courage; and one could also argue, foolhardiness. The problem of the survival bias is that we don’t see how often the people who follow the strategy fail so miserably they just wither and disappear. We only seem to see those success cases and stand in awe of how they push things through. So at what point are we stretching it? When can we be considered to have gone too far in dreaming? It’s a really tough call.
The idea of the 3Rs were first mooted based on the order of action for each of the concepts. You were to first reduce usage of things that could turn into waste. Reducing packaging, not using disposables when that is not needed, no need for extra plastic bags and layers of bagging. No need for straws when you have a cup to sip from. No need for many other gift boxes, wrappers, or other fancy stuff.
Then you were to reuse if you fail to reduce. Maybe try to take a gift wrapper apart nicely so you can use it to wrap something else. Or reuse packaging into decorative materials and so on. There are limitless ways to reuse things; and they don’t have to be used in the same way they were used the first time. Paper is easy to reuse, as are many plastics that we take for granted and use only once. Single-use is a problem; not the materials in and of themselves.
Finally, recycling as last resort. It is not the first thing that should come to mind but the last. You have no way of reusing and you couldn’t reduce usage so you have to try and recycle it. Of course it doesn’t work when it is too much of a mixture, or too dirty, and the story goes. So a lot of post-consumer or post-commercial waste cannot really be recycled. they eventually get burned in some cases (like in Singapore) or buried (in landfills for most other places).
But what is recycling really? What counts? Crushing them and reforming new materials with them? How about just burning them in some kind of manufacturing plant that requires fuel – like in a cement plant? What to make of paper that gets simply shipped away elsewhere. And when organic waste becomes converted to fertilisers? Are they actually ‘recycled’? It’s really strange what we think of as recycling because technically, if things were left to nature – most of it is simply ‘recycled’, joining the string of things in the world back on the evolution path and lifecycle into something completely different.
I wrote about the corporate ladder previously; I asked the question of what we are actually climbing in our lives. But what if we are really climbing the corporate ladder? What exactly is that about? What if we aspire to have influence over the business, over something that we had thought was important in life. What difference does it make?
Does it matter whether you become a CEO before 40 years old? Or whether you reached there climbing the corporate ladder as opposed to having founded the business? What do others think of a professional CEO? Would it be better if he had worked the grounds and been in operations? Or if he was just a businessman? Or if he had been some office corporate slave who had been putting together powerpoint slides? What do you need to build that path towards that position?
You probably will need some kind of persistence and tenacity. But what do you lose in the process if you try to shortcut it? Who do you actually care about? Is it about yourself? The problem with any ladders including the corporate ladder is that they are designed only with the individual’s desire to rise to the next rung in mind. It appeals to the self, and reinforces it, making one feel more right, more just in serving just oneself. So how can a person who reached the top by climbing be really trying to serve the earth, or shareholders, or the employees, or the customers? If all his life, he’s just trying to lift up himself. Higher and higher.
This is a the last of a series of 3 articles on hydrogen. You can access the other 2 parts here and here.
Green hydrogen is chemically indistinguishable from natural gas that has gone through steam methane reforming to extract hydrogen. There is a need to properly certify the origin and volumes of these hydrogen produced to verify their carbon footprint (or lack thereof). This is the first piece of the puzzle.
And in order for this certification, standardisation must happen. Sustainable Aviation Fuel (SAF) has more or less taken off because of this ability to standardise at least technically. And then lots of different additional sustainability requirements are layered upon them to ensure that the green credentials and identity are more established. Standards for SAF are still not exactly super stringent from the sustainability perspective but the prescribed standards and associated pathways allow for a completely separate value chain developed from the A1 jet fuel.
Green hydrogen must go through the same; and its derivative products, such as green ammonia must itself be standardised and certified in order to succeed becoming another low-carbon fuel, whether it is for co-firing in power stations or as a maritime engine fuel.
Development of the separate value chain from the grey or brown hydrogen is the second piece of the puzzle. This means that a lot of work must go into the supply chain players getting together, jointly marketing their newly standardised product, and reflecting to the world that there’s actually some kind of established activity and industry with its associated transparency in pricing.
Final piece of the puzzle is in terms of financing. As there is no clear long-term commitments, the projects must first be funded by equity; likely at slightly smaller scale so that the subsequent scaling-up can enjoy the benefits of falling prices of electrolysers or batteries. The equity players who would come in on these projects would be the impact investors, the offtakers of these green hydrogen (including steelmakers, power-to-liquid e-fuel producers, green ammonia producers, etc.). They should be helping with kickstarting these projects because they will need the green hydrogen – and since they will require more of it over time, the cost of production can be averaged down and they don’t have to worry about being locked into higher prices.
Government can step in to fund the first projects using revenue raised from carbon taxes. By pricing carbon, raising its price over time and using the revenues to push ahead greener technologies and applying innovations, the world can move forward with the energy transition.
This is a the second of a series of 3 articles on hydrogen. You can access the other 2 parts here and here.
So hydrogen is not taking off despite it being so integral in the energy transition and the low carbon economy. What is the problem?
Hydrogen often gets peddled around as the wonderful element or molecule (if you think of it in terms of the gas) that will enable us to transition to zero carbon. It can be combusted or reacted in a fuel cell to produce just hot water – which reflects how unpolluting and clean it is. It can be produced by electrolysing water, and the byproduct is just oxygen, which is again wonderful in terms of the way we think about cleanliness.
Green hydrogen today is costly to produce, mostly because the electrolysis process isn’t particularly efficient and very pure water is needed to reduce the deterioration of the electrodes used in the process. Hydrogen is not easy to capture and store by itself as it isn’t really stable in the atmosphere (quick to recombine with oxygen). The cost of producing was about $3-6/kg but of the spike in natural gas prices recently, the cost of grey hydrogen itself already outstrip those levels of green hydrogen costs. The only tricky part is that because the corresponding electricity costs has also risen due to the energy crisis, diverting renewable electricity to producing green hydrogen has naturally become more expensive.
So it seemed that green hydrogen by itself is caught in a bind where its price rises when its ‘grey counterpart’ rises in price; while not exactly falling as much in price when the grey counterpart is cheap. With such features, it is difficult for potential adopter to embrace it wholly at this point. To the extent that demand for it right now is typically short term and no one is able to commit to buying at the high prices over long periods of time as they believe that prices should fall as technology improves.
So we get into a self-reinforcing feedback loop where the lack of adoption keeps prices high which itself keeps adopters at bay. Developers of hydrogen projects are facing challenges financing these projects since they are not able to secure long-term demand for the products of their project. Hydrogen council’s latest update of the market situation indicates that there are many more projects announced but the conversion rate of projects from ‘being announced’ to ‘final investment decision’ remains startlingly low. In fact so low that there seems to be an ever-growing pipeline of projects partly because projects simply don’t get through the pipeline!
There are very specific opportunities where hydrogen production can make some kind of sense at the moment but they remain limited. For example, when large utility scale wind or solar power needs good, longer term storage due to lack of load demand during periods of strong production. Or perhaps renewable electricity production capacity outstrips local supply either due to population departures or long-term planning of power capacities that did not materialise.
Hydrogen can also be useful when the grid is not strong enough to take high productions of these variable renewable electricity and hence the production gets curtailed (ie. they are not allowed to inject into the grid). Hydrogen storage can be viable at scale and it is also cleaner to the extent that it doesn’t have to be replaced as frequently as Li-ion batteries and hence produce less waste from an environmental footprint perspective.
Outside these opportunities, it is difficult to justify producing green hydrogen; and even with such opportunities, it is not clear how long they would last. Curtailment events are undesirable and not exactly what renewable electricity project developers or owners would wish for. Likewise, it doesn’t make sense for more power capacity than required to be built if the local demand is insufficient.
Green hydrogen projects can really only properly materialise when there’s a clear definite demand for green hydrogen. And for this, a couple of things must happen; which I’ll address in my next post.
This is a the first of a series of 3 articles on hydrogen. You can access the other 2 parts here and here.
A while back, I wrote about ammonia; and one of the critical chemical precursor is hydrogen. Historically, the focus of ammonia was about getting the nitrogen in a form usable and useful for making fertilisers. The fact is that nitrogen is plentiful in the atmosphere but it needs to be extracted.
The Haber-Bosch process allows for this atmospheric nitrogen to be extracted using hydrogen, producing ammonia or ammonium salts. These chemicals are then more easily transformed into fertilisers. The hydrogen part of the equation had never been considered a challenge so to speak. While it was rare on its own and not the most stable of gases, it was abundant in fossil fuels combined with carbon dioxide. So practically all the ammonia in the world is produced using hydrogen extracted from fossil fuel.
Extraction can be through steam methane reforming of natural gas (grey hydrogen); or gasification of coal (brown hydrogen). All of these processes emits carbon dioxide. In fact quite a bit of them. Not a problem when you’re producing a small amount of ammonia and primarily targeting agriculture rather than using ammonia as a source of fuel. But a big problem when you’re trying to get away from carbon as an energy vector.
So there’s low-carbon based hydrogen. They come from largely electrolysis of water using renewable electricity (green hydrogen). And if you capture the carbon dioxide from those traditional pathways mentioned above, then you get blue hydrogen. These color codes and names are from McKinsey and a shorthand to describe the carbon intensity of the hydrogen production. Useful for layman, not so much for the people in the industry since the actual carbon intensity is not exactly clear.
Nevertheless, it is interesting that because we are now increasingly looking at hydrogen as an energy vector, ammonia becomes a fuel again. It is being explored for a variety of energy applications: as a maritime fuel being combusted in ship engines, as a co-fired fuel with coal in the coal power plants, as well as a co-fired fuel with natural gas in a gas turbine. All of these allows the coal or gas power plants to continue running with lower levels of carbon emissions and allows them to be utilised through their economic life, and continue servicing the loans rather than becoming stranded assets.
So hydrogen seems really important in the low carbon economy. Yet it is not taking off. Stay tuned to understand the bottlenecks and challenges.
When I read about the stories Adrian Tan shared with Lianhe Zaobao recently, I was almost moved to tears – perhaps also due to the awareness that he lost his mum to cancer earlier and is currently fighting cancer himself. I resonated with his experience when I first went to Chinese High myself. My parents didn’t have to pull any strings to get me there but they did do their part in emphasizing the importance of a good education (though not so much the results), and encouraged me to explore my intellectual interests.
Like how ACS changed the life of Adrian, Chinese High changed my life too. I didn’t feel too competitive in school but I never felt like I was an outsider despite the fact that the students who got to the school were mostly from Nanyang Primary while I was from an unknown neighbourhood school. I made friends, I participated in activities with the rest in school. I didn’t do any better or worse than my classmates. I didn’t have additional tuition or music instrument classes compared to my classmates, but it’s okay. I got into an Arts programme in school and spent so much time in the arts studio slogging away on my arts project. I developed my confidence, awareness of the world, politics, sensitivity to culture, work ethic.
For me, education was indeed a leveller. And though I missed out on further opportunities that a more privileged background would have afforded me, I’m really grateful. It was being in Chinese High and around people who had huge ambitions and big aspirations to change the world that drove me to aspire the same. And that was also what granted me access to scholarship applications, one of which eventually landed me in LSE and NYU.
Yet I’m not sure if Singaporeans today had that same access as me if they were from my background. I’m concerned there are greater disparities between the performance of students from better backgrounds compared to those who don’t. This is a reflection of greater and more intense reinvestment of the privileged family in securing educational advantages for their progeny. It is only natural; but the society will really have to try and even out the playing field more.
As humans, status roles and desire for affiliation drives a lot of our behaviour. These are the two fundamental drivers that typically underlie Seth Godin’s thinking and ideas about humans and most phenomena in the market and societies. Both of those ideas involves some categorization of grouping of some kind. A taxonomy if you may. Within our minds at least.
Status roles are driven by some ideas of dimensions, some basis by which to compare. How much more money, talents, capabilities, or recognition. The values that matters, they are in a bucket. The values that don’t are in another and hardly even thought about. You’re putting attributes into pigeonholes of different labels and kinds.
Affiliation is once again about groupings. Wanting to be in one bucket rather than another. Only this time, you’re putting people and yourself into pigeonholes. You actually want to be occupying a hole.
What if we can no longer compare. And when everything is just moving around rather than being in neat, tidy drawers? What happens when things or people tries to defy the pigeonhole? Does it cause anxiety? Or creates peace?
As a consultant, we work with businesses on different topics and we charge them based on how much work the project involves. Yet the only way to measure the amount of work was to estimate the time it would take us to complete the work. Of course, the price per unit time of someone more experienced (or higher up in position) is higher. But this inevitably seems as though we are charging people for the process rather than work.
Another way to really charge for the work is to find out how much the problem is costing the client, and charge an amount just below the cost of the problem. The client gains the difference. If it’s not a problem but more benefits flow to the client as a result of the work, it can also be valued based on the incremental value to the client. That’s just harder because the clients are unlikely to really reveal that.
As a result when we overvalue ourselves, the transaction never happens and it only seem to happen when we undervalue ourselves vis-a-vis the client’s own value of the work that we are doing. Along the way though, the client can sometimes try to give us more work. After all, the lump sum price have been decided on. Better to ask more questions and wring more value out of these guys. It’s a delicate balance to strike. But all I can say is that consulting is such a human business we can never escape having to manage these interactions and relationships.
They are all necessarily more valuable than the transactions; but it is after all the job, the work, and the payments that enable these relationship. So do you value the work more or the process to arrive at it?
Some people want to start a conversation putting people on defence – often using controversy. Why did you name your child after an unsavoury character in history? Are you really making your guest wash their feet before entering your house? Why does your company logo look like it is plagiarized from this other firm?
First, why do they do that? It could be a power play; or just banter done poorly. Often you can’t really tell their intention. In fact, you are not responsible for their intention, only themselves. While you might want to read into their intentions and craft some kind of story to set your mind away from the mystery, you never really know. So better to choose a story that favours you and your intended response.
Second, how should you respond? Now this part is on you. Regardless of the other party’s intention, you now have to be concerned about your own intention and the message you are trying to project. Returning it with banter or trying to laugh it off may work – but does it reflect your identity? Maybe you want to be gracious and simply acknowledge your feelings towards it. “That was hurtful, let’s move on to more productive topics.” or “From the sound of your question you’ve an axe to grind; I’d appreciate if you help me get away from that axe”. Just putting it out in the open, gently calling out what the other party is doing can be very powerful.
Finally, don’t dwell on it. Move on and direct your energies and enthusiasm towards something else. Controversy is such because people are unable to look beyond disagreements or to boil it down more to the fundamentals. They are such also because of the distractions around the topics which makes people less willing to confront the issue at hand.
