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‘No commercial case for green hydrogen’ yet: Siemens Energy CEO

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The CEO of Siemens Energy has spoken of the challenges facing the green hydrogen sector, telling CNBC that there was “no commercial case” for it at this moment in time.

In comments made during a discussion at CNBC’s Sustainable Future Forum on Tuesday, Christian Bruch outlined several areas that would need attention in order for green hydrogen to gain momentum.

“We need to define boundary conditions which make this technology and these cases commercially viable,” Bruch, who was speaking to CNBC’s Steve Sedgwick, said.

“And we need an environment, obviously, of cheap electricity and in this regard, abundant renewable energy available to do this.” This was not there yet, he argued.

Hydrogen can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.

If the electricity used in this process comes from a renewable source such as wind or solar then some call it green or renewable hydrogen.

Read more about clean energy from CNBC Pro

While there is excitement about the potential of green hydrogen in some quarters, it’s currently expensive to produce. Indeed, National Grid describes grey hydrogen as being the “most common form of hydrogen production” today.

This grey hydrogen, it says, “is created from natural gas, or methane, using steam methane reformation but without capturing the greenhouse gases made in the process.”

In his remarks, Bruch also stressed the importance of building up an industry to support the commercialization of green hydrogen.

Technical systems and an operational knowledge built up over 10 to 15 years were crucial, he explained, noting that this was what one normally saw in the power industry.     

“This is all still to come to make it … a commercial system,” Bruch said. “So the biggest problem is [that] under the current boundary conditions there is not yet a commercial case for green hydrogen.”

Another participant in Tuesday’s discussion was Marco Alverà, the CEO of Italian energy infrastructure giant Snam.

Among other things, he talked about the importance of establishing a framework to encourage the development of more sustainable industry.

“You need the fine print and the policies to incentivize or make it mandatory: to switch from grey to green, to switch from gas to hydrogen, to switch from coal to hydrogen,” he said. “And then it will happen very fast.”

Described by the International Energy Agency as a “versatile energy carrier,” hydrogen has a diverse range of applications and can be deployed in sectors such as industry and transport.

One area that has generated a significant amount of debate in recent years is the use of hydrogen fuel cells in cars.

“On private cars, or passenger cars, it’s a very, very difficult use case,” Siemens Energy’s Bruch said. “It’s not the use case I would go to first.”

“I think it’s much more reasonable to talk about hydrogen use either in … heavy duty mobility or in certain industrial applications,” he went on to add.

“We talk about green steel or green refining processes, which are much more reasonable, much more CO2 effective, and offer a much more beneficial cost environment to make green hydrogen possible.”

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IMF could cut forecasts for the euro area, Kristalina Georgieva says

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Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva.

Pool | Getty Images News | Getty Images

BRUSSELS — The International Monetary Fund could be about to cut growth forecasts for the euro area as concerns over the omicron Covid variant and persistently higher inflation grow.

The Fund said in October that it expected the euro zone economy to grow by 4.3% in 2022. Now, the institution has warned about the “possibility of modest revisions” when it presents new estimates next month.

“We may have a very modest downgrade in the cards for the euro zone,” IMF Managing Director Kristalina Georgieva told CNBC on Monday.

Growing supply pressures, high energy prices and the reintroduction of new social restrictions in some euro area countries are among the top concerns for the Fund. It comes as the newly identified omicron Covid variant is reported in an increasing number of countries around the world.

The pandemic remains the number one risk to economic growth, according to the IMF.

“We have been screaming from the top of a mountain that [the] pandemic is the greatest risk to global economy. And we have been advocating very strongly to vaccinate the world. Progress is made, not enough,” Georgieva said.

In light of surging Covid cases and the new variant, a number of euro area countries have imposed social restrictions targeting the unvaccinated. Germany and Austria, for example, imposed lockdowns for those who have not yet been vaccinated and Greece announced fines for those aged 60 and over who have not been inoculated.

These measures, the governments argue, are an attempt to protect the countries’ health systems. In practice, these steps also prevent a full shutdown — and the accompanying economic ramifications.

When asked if targeting the unvaccinated was the best approach to prevent economic damage, Georgieva said: “What we see is definitely [a] correlation between [the] level of vaccinations and speed of recovery. So in this sense, we do support priority on vaccinations. The only message we have is vaccinate everybody, everywhere.”

Inflation under ECB’s target

In addition to the pandemic, there are also concerns about whether higher inflation is here to stay. Euro zone inflation hit its highest level ever in November, according to preliminary data.

The Fund said last week that the U.S. Federal Reserve should speed up its tightening of monetary policy given higher inflation readings. However, its message for the European Central Bank is slightly different.

“Simply the conditions are not there,” Georgieva said. “We expect, in 2022, [euro area] inflation to weaken below 2%. So, unless something changes and … we may have the Chinese economy shrinking or real estate market undoing … If that happens, the ECB has the tools to respond, but short of these wage pressures or other factors, [the] ECB is right to be accommodative.”

According to IMF’s projections, euro zone inflation is projected to decline through 2022 and to remain below the ECB’s 2% target in the medium term.

Nonetheless, the IMF said wage negotiations were an area to watch. It said in a report on Monday that “upcoming wage negotiations, which are expected to be more frequent than in previous years after many contract renewals were put on hold during the pandemic, will need close monitoring.”

Wage growth is a key component of the impact of inflation on households, as if wages grow below inflation, consumers will have less purchasing power which could influence the rate at which central banks tighten.

Market players are anxiously awaiting the outcome of an ECB meeting next week to understand how the central bank intends to square the news of the omicron Covid variant and higher inflation pressures.

This comes after the Fed said last week it could taper at a faster pace than previously expected. In contrast, the Chinese central bank announced Monday a cut to its reserve requirement ratio (the amount of reserves a bank must hold), in an effort to boost liquidity in the economy.

Georgieva said that in contrast to the start of the pandemic, “today, conditions in countries are very different: different stage of the pandemic, different levels of vaccination, different speed of recovery, different level of debt, different inflation pressures … what we’re saying to our members is calibrate your policies to your specific circumstances.”

‘Great reputation

The IMF announced Friday that it will be looking at its research processes in order to ensure data integrity. The announcement comes about two months after a data rigging scandal emerged at the World Bank that covered the period in which Georgieva was the institution’s CEO.

When asked if the review process at the IMF was an attempt to clean the reputation of the IMF, Georgieva said “we have a great reputation.”

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Wildfires broke emissions records this year in U.S., Turkey

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A Cal Fire firefighter from the Lassen-Modoc Unit watches as an air tanker makes a fire retardant drop on the Dixie Fire as trees burn on a hillside on August 18, 2021 near Janesville, California.

Patrick T. Fallon | AFP | Getty Images

Wildfires worsened by climate change produced a record amount of carbon emissions in parts of Siberia, the U.S. and Turkey this year, scientists with the Copernicus Atmosphere Monitoring Service said on Monday.

Intense and prolonged blazes emitted an estimated total of 1.76 billion tons of carbon — the equivalent of more than a quarter of U.S. annual carbon emissions.

The Sakha Republic in northeastern Siberia, Turkey, and the western U.S. recorded their highest wildfire emissions in 2021, according to Copernicus. Wildfires also devastated Albania, Algeria, Greece, Italy, North Macedonia, Spain and Tunisia.

“As the year draws to a close, we have seen extensive regions experience intense and prolonged wildfire activity, some of which has been at an level not observed in the last couple of decades,” said senior Copernicus scientist Mark Parrington.

Human-caused climate change has fueled hotter temperatures and drier conditions across the world, which have contributed to longer and more intense wildfire seasons. 2020 was one of the hottest years on record, and 2021 is virtually certain to be among the 10 hottest years ever recorded.

In July, the Dixie fire started in Northern California and burned for more than three months. It became the second-largest wildfire in the state’s history. Fires in California, Canada and the U.S. Pacific Northwest this year emitted about 83 million tons of carbon, and plumes of smoke from those blazes traveled across the Atlantic Ocean and reached large swaths of Europe.

Many countries around the eastern and central Mediterranean also suffered several days of intense wildfires over the summer that led to high concentrations of fine particulate matter and degraded air quality. In July, fires in Turkey prompted widespread evacuations and killed thousands of animals.

“Drier and hotter regional conditions caused by global warming increase the risk of flammability and fire risk of vegetation and this has been reflected in the extremely large, fast-developing and persistent fires we have been monitoring,” Parrington said. “It is clear from 2021 that climate change is providing the ideal environments for wildfires.”

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Boeing, travel stocks surge as investors shrug off omicron concerns

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An American Airlines passenger jet approaches to land at LAX during the outbreak of the coronavirus disease (COVID-19) in Los Angeles, California, April 7, 2021.

Mike Blake | Reuters

Boeing, airlines and other travel stocks surged on Monday after health experts shared early signs that the omicron variant of Covid may be causing milder symptoms than previous strains.

The travel sector was hard-hit by the emergence of omicron variant, which Botswana and South Africa first reported late last month. Cases were quickly detected in countries around the world, sparking renewed travel restrictions and outright bans, shortly after rules for international trips were loosened.

Dr. Anthony Fauci, the White House’s chief medical advisor told CNN on Sunday that “although it’s too early to make any definitive statements about it, thus far it does not look like there’s a great degree of severity to it.” A report from the South African Medical Research Council, released Saturday, suggested that the strain could cause a milder infection.

Shares of Boeing were up more than 3% in afternoon trading on Monday, while American Airlines and United Airlines were each up more than 10%, among the highest gainers in the S&P 500, topped by Norwegian Cruise Line and Royal Caribbean were up 12% and 11%, respectively. Online travel agency Expedia was trading more tan 8% higher.

Officials from the World Health Organization on Friday, however, warned against reading too much into data gleaned from the original cases in South Africa, saying it’s still too early to understand the severity of disease caused by omicron. Early reports of mild symptoms in some of the first cases where it was identified were based on a cluster of university students who tend to be younger and experience more mild symptoms than older adults, she said. Americans and Europeans also tend to be older and less healthy than the general population in South Africa, they noted.

“There was initial reports that it tended to be more mild, but it’s really too soon,” Maria Van Kerkhove, WHO’s technical lead on Covid-19, said in a Q&A streamed on the group’s social media channels. “Everybody who is infected with SARS-CoV-2 regardless of what variant will always start out with a mild disease. And so maybe it will stop there with mild, some people are asymptomatic of course, but it may stop with mild disease or it may take some time.”

Air travel jumped over the Thanksgiving holiday week, handing airlines some of their busiest days since the pandemic began, though still shy of 2019 levels. Omicron sent shares spiraling on concerns about a slump in demand.

Large network carriers are particularly dependent on longer-haul international trips, which have been slower to return in the pandemic compared with U.S. domestic travel.

-CNBC’s Holly Ellyatt contributed to this report.

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