The insurance giant sees the importance H2 will play in decarbonization but also recommends risk management.
Hydrogen fuel storage, production and transportation have made their way into spotlights worldwide as governments fund massive programs for greener fuels and energy sources. While Allianz understands that alternatives to fossil fuels such as coal and oil are necessary, it has also issued a reminder of the importance of recognizing and managing potential risks surrounding those processes.
Allianz specifically points to fire and explosion risks, but also business interruption.
According to the insurance company production, transportation and hydrogen fuel storage should involve careful consideration of potential risks associated with them. Allianz recommends the proactive management of fire, explosion, technical failure and business interruption risks.
“Hydrogen (produced from low-carbon or even renewable energies) is of growing importance for the substitution of fossil fuels in the fields of energy, supply, mobility and industry,” said AGCS Global Head of Energy and Construction Chris van Gend in a media release. “It has the potential to morph from a niche power source into big business, with countries committing billions to scale up their infrastructure and with projects being introduced around the globe. Despite these successes, there are challenges to overcome for hydrogen to become a major part of the energy transition, such as the cost of production, supply chain complexity and a need for new safety standards.”
More than 30 countries include hydrogen fuel storage in their decarbonization strategies.
This global shift is rapidly gaining strength as the world not only moves to meet climate change targets, but as many governments view this change as an opportunity to kickstart post-pandemic economies. Hydrogen is not new to the scene but is only just starting to take off in earnest, as prices of its production start to come down and as emission-free renewable fuels become a higher priority in a growing number of industries.
In this vein, there is a powerful governmental commitment settling in for hydrogen fuel storage, production and transportation initiatives. As of the start of this year, the thirty countries with H2 in their decarbonization strategies have committed over $70 billion total in public funding. Moreover, there are currently over 200 large-scale production projects in the works.
As projects and investments into hydrogen fuel storage size-up, so should the efforts made to identify and manage risk, said Allianz. “Today the vast majority of hydrogen is produced and used on site in industry. What is new is that the type and scale of its adaption is changing fundamentally, with the expected rapid growth of plants in future. We see the advent of giga-scale projects in many countries with various new players entering the market and established players sizing up – and risk management has to keep pace,” said Allianz Center for Technology AGCS risk consultant and expert Thomas Gellerman.