Arild Selvig : “ZEG is currently in the process of building the world’s first clean hydrogen* plant based on natural gas"

Leaders League: Tell us about your background in the energy sector?

Arild Selvig: I’m an oil and gas man, by education and for most of my professional career. I started on the E&P side, planning and producing oil and gas projects for 10 years before switching to the main contractor side. These experiences gave me a deep understanding of how the oil and gas markets work, but also a great deal of insight into the state of the energy sector more generally. One of the things my career path has helped me do is become more attuned to market drivers and emerging technologies.

After the signing of the Paris agreement, and the energy transition wave that followed, I found myself particularly interested in hydrogen mainly because, like with oil and gas, it is going to be a technology driven industry. I quickly came to the conclusion that the best way to use my years of experience as an engineer, was to dedicate myself to the development of sustainable energy solutions. When the ZEG Power opportunity came along, I jumped at the chance!

What is ZEG Power?

ZEG Power is a deep-tech company, with 20 years of hydrogen-related R&D under its belt, which supports the clean hydrogen solution, in line with the new EU taxonomy requirements. In a nutshell: we ‘split’ the natural gas to retrieve and safely store the CO₂. The remaining gas is hydrogen. What makes our solution so unique is that the CO₂ is captured inside the main reactor where the cracking occurs, and not at the end of the process like with more conventional solutions. This allows us to be a lot more efficient, both from a carbon capture, CAPEX, and a thermal efficiency standpoint. We are currently developing the world’s first clean hydrogen plant based on natural gas on the West coast of Norway, next to the Kollsnes gas terminal and the Northern Lights CO2 injection and storage facility currently in construction. The facility should be operational by Q1 2023 at this sweet-spot location.

How has this year’s surge in gas prices impacted the project?

It is very unlikely to make clean hydrogen a competitive fuel for the market at current energy prices. This is a fact of life for our technology, but also true for all other existing ways of producing clean and sustainable hydrogen, such as by electrolysis, which is at the mercy of electricity prices. However, we must not lose sight of the big picture. I think Europe is finally waking up to the issue of the widening gap between energy supply and energy demand. Solving this, while also meeting energy transition targets, is a conundrum whose answer must involve clean hydrogen from natural gas. And what’s the cleanest use of gas? To produce clean hydrogen or hydrogen-containing fuels like clean ammonia form it. That is what makes ZEG Power so relevant.

In which sectors does hydrogen use make the most sense today?

Today, there is a big interest in the transportation sector, especially for heavy transport like trucks, ships or trains.In the future this will maybe even include short-haul aviation. Hard-to-abate Industries are also seeing a big focus, as another form of energy is often mandatory when replacing fossil fuels. Another interesting application is combining biogas with hydrogen to create “carbon removal” solutions where CO2 is net extracted from the atmosphere. Eventually, hydrogen can be used anywhere where traditional forms of electricity are not adequate or efficient enough, and hydrogen is predicted to represent around 10% to 20% of the global clean energy mix by 2050.

What are the next steps for ZEG Power?

We recently raised approximately $20M in a Series B capital raise and brought in SLB as the new lead investor. Our strategy moving forward is to increase the capacity of our technology to significantly reduce production unit costs. The goal is to deliver plants with higher capacity, at a lower cost, and with shorter lead time. By achieving this, we will improve our competitiveness and move into profitability.

You’ve said you see yourself as an oil and gas man. Do you see this industry pivoting towards clean energy?

All the big oil majors now have a renewable energy roadmap. They know that shifting towards renewables is the only way they can keep thriving in the future. They are, however, big organizations, slowly transforming, but they will get there. The main obstacles for E&P companies remain economic: the return on capital is much lower for renewables projects than for projects in the E&P business. Although it will take time for them to let go of oil and gas, it is no surprise that most of these companies have a strong hydrogen strategy.

[*] Clean in this context means meeting the EU taxonomy requirements of 3kg CO2 emitted/kg H2 produced - implemented in January 2022.