Interview with Roeland Baan, CEO, Topsoe

28 Nov Interview with Roeland Baan, CEO, Topsoe

An engineering powerhouse, Topsoe has been leading the global charge in energy-efficient technologies since 1940. Recognized for decades of pioneering research, Topsoe is a linchpin in Denmark’s economy and the global energy landscape and a catalyst for sustainable and carbon-neutral solutions. As CEO, could you provide an overview of your strategic vision and goals for Topsoe, the company’s main priorities going into 2024, and the crucial growth areas for Topsoe’s trajectory?

When we were founded by Dr. Haldor Topsoe, he was driven by science and not entrepreneurialism. However, as he delved into the catalysis business, where he saw significant potential for progress, we reached a point where catalyst advancements outpaced technology. Consequently, we began developing technologies specifically for petrochemicals and refining. The initial focus was on scientific advancements.

The second aspect is our commitment to society. Our endeavors have consistently aimed at societal betterment. We hold the top position globally in delivering technology for ammonia production. In the 1950s, addressing significant global food insecurity, our founder assisted in finding solutions for artificial fertilizer production through ammonia. Even today, we command a majority of that technology market.

A similar dedication is evident in addressing acid rain. Many children today may be unfamiliar with it, partly due to Topsoe’s role in developing technology to remove sulfur from diesel production and refining. Our historical and ongoing focus remains grounded in scientific pursuits.

Today, amid discussions about green hydrogen and electrolysis, it is noteworthy that we initiated research in 1984, long before these concepts gained widespread attention.

In this context, when I assumed leadership, we pondered the future. Undoubtedly, the future does not lie in fossil fuels alone. While fossil fuels will persist for some time, our role is crucial in accelerating decarbonization. The future lies in e-fuels and low-carbon alternatives across industrial sectors. Since 2020, Topsoe’s focus has been on the energy transition and decarbonization. Specifically, we are exploring technologies such as bio-to-fuels and the longer-term prospects of Power-to-X and Power-to-Fuels.

Currently, a vital component for rapid decarbonization is what we term “low-carbon fuels”. This involves utilizing natural gas, extracting carbon, permanently sequestering it in the ground or circulating it as a valuable asset, and utilizing low-carbon hydrogen as a foundation for producing clean fuels. This is a focus area for us.

Denmark has been a steadfast green leader in the EU, securing top positions in esteemed rankings such as the Climate Change Performance Index (CCPI) and Yale’s Environmental Performance Index. How would you evaluate the state of Denmark’s green economy, and what would you highlight as the main flashpoints, policies, and critical factors influencing the country’s transition toward cleaner industries?

Denmark stands out as the most sustainable energy country I have encountered. Its remarkable success is attributed not only to having undergone a transition – reducing consumption of coal by 80% and consumption of gas by 50% – but also to achieving nearly 80% renewable energy integration into the grid. Additionally, Denmark boasts a clear history of robust economic growth, challenging the misconception that transitioning to sustainability comes at the expense of economic prosperity. Contrary to such beliefs, Denmark has demonstrated that this shift not only preserves jobs but also generates more employment opportunities and adds substantial value. The country has successfully cultivated an entire industry centered around sustainability and clean energy.

There are obviously many reasons why Denmark has taken a strong position in renewable energy and energy efficiency. An early adoption of wind energy, and widespread implementation of district heating infrastructure are some. More recently, offshore wind gained momentum based on initiatives spearheaded by former Minister of Climate and Energy, Connie Hedegaard (2007-2009), alongside commercial initiatives by the partly state-owned company Orsted. This marked a pivotal move from fossil to offshore wind energy, supported by innovative approaches such as clever contracts and power purchase agreements (PPAs). These strategies provided investors with the necessary certainty for future investments, propelling the entire transition forward.

Shifting the focus to Topsoe’s distinctive and innovative value offering, the company spans integrated solutions, blue ammonia, blue and green hydrogen, circular plastics, sustainable aviation fuel (SAF), research and development (R&D) activities related to battery material and more. The influence of innovation on Topsoe’s portfolio is evident in the company’s commitment to investing on average 8-10% of its revenue in R&D. Despite its long history, Topsoe operates with the agility of an 80-year-old startup, tackling complex challenges rather than opting for simpler endeavors.

Among Topsoe’s forefront technologies, the bio-to-fuels solution stands out. This process efficiently transforms edible oils, fats, and waste oils into biodiesel or bio-jet fuel, with the majority of production flowing through Topsoe’s solutions. In areas such as blue ammonia and blue hydrogen, together with carbon capture technologies, Topsoe’s solutions can secure an impressive 99.3% capture of carbon emissions, surpassing competitors by 5%.

A significant highlight is Topsoe’s electrolysis process, featuring Solid Oxide Electrolyzer Cell (SOEC) technology. This newer technology boasts a remarkable 30% increase in efficiency, providing 30% more hydrogen output with the same power input. This innovation addresses the challenge of expensive power and the anticipated scarcity of green power, offering a more efficient pathway into green fields.

Through Topsoe’s SOEC electrolysis testing center and partnership with the US-based First Ammonia to produce the world’s largest reservation of electrolyzer capacity, what can you tell our readers about the progress on this project and its ambitious impact on the green hydrogen market?

At this moment, we are constructing a 500MW manufacturing facility for electrolyzers here in Denmark, delivering on SOEC technology. When completed, it will be the first industrial scale production facility of its kind in the world. We have established a partnership with First Ammonia, our launch customer, who has committed to a specific capacity that they will procure from us. In turn, we will deliver the entire technology solution for them as they pursue the production of green ammonia. Our solution involves capturing electrons and incorporating them into ammonia, and then delivering the final product. This initiative is just the beginning, as we are considering a second plant in the US.

What prospects for growth does this venture business mean for the US market through its 5GW gigawatt offtake of electrolyzers?

The potential of this market is enormous. Currently, the world consumes approximately 90 million tons/year of hydrogen, all derived from fossil sources. In the new era, it is anticipated that this demand will surge to a range of 500 to 600 million tons/year. To produce a million tons/year of green hydrogen, a 10GW electrolyzer capacity is required. To put this into perspective, the world currently operates with only a 200MW electrolyzer capacity, making even the 5GW capacity in the US seem like a drop in the ocean.

The possibilities are vast because once green hydrogen is obtained, it can be synthesized into various products such as ammonia, green petrol, or green aviation fuels. Regarding electrolyzer technology, we have a project in collaboration with the Gates Foundation, where the electrolysis process is utilized to create proteins out of air, essentially generating food from air. This groundbreaking project involves collaboration with Novozymes and the Gates Foundation, showcasing the rapid and pioneering potential of electrolysis and green hydrogen.

Topsoe has an impressive global contract win rate. Notably, you are making significant strides in the US market, with plans to invest a further $300 million in a hydrogen electrolyzer factory and to develop a project with Santa Maria focusing on producing renewable fuels from various renewable feedstocks. How pivotal is the US market to your expansion strategy?

While our roots are in Europe, the US is a rapidly growing market and is approaching nearly 50% of our total revenue, with sustained growth expected. The Inflation Reduction Act (IRA) is a significant enabler in the US. While effective incentive schemes exist in Europe, the IRA represents a step up in terms of facilitating our expansion strategy. Another strong argument for stepping up our business in the US is the multitude of private sector partners with courage to make investments.

Regarding the green investment of forging partners with the US counterparts, are there any other future collaborations you care to mention?

Given our position, we are in contact with numerous partners and are at various stages of progress with hundreds of collaborators. We are actively exploring 200 distinct projects in the US, engaging with various companies and partners.

In pursuing its 2024 goal to lead global carbon emission reduction, Topsoe secured a €45 million European Investment Bank (EIB) loan for R&D in 2022. Concurrently, the company is constructing Europe’s largest electrolyzer plant and shared insights at COP28 on utilizing frontier technologies for transformative change in energy-intensive industries. How is the company strategically positioning itself as a thought leader on the global stage for sustainable transformation and aligning its brand offering with the EU Green Deal?

We are passionate about the energy transition and dedicated to finding solutions. We firmly believe that, ultimately, achieving success in this transition is a matter of political will and commitment. The solutions for decarbonization already exist. Anyone claiming it is too early is misinformed. While we cover a substantial portion of these solutions, there are many more available. Our approach involves engaging in ongoing dialogue with policymakers. We are actively involved in a group of 20 CEOs that convenes periodically, initiated by the European Commission President and led by the European Commission.

This group engages in discussions about what is happening in the energy transition, exploring ways to accelerate its progress – it is a think tank. In our recent inaugural meeting, a substantial exchange of ideas took place, exemplifying our commitment.

We routinely meet with key stakeholders in the US. Our focus is on fostering an understanding of the energy transition – its opportunities, challenges, and what policymakers can do to overcome those challenges. There is often a lack of awareness regarding the necessary steps. While it may sound somewhat professorial, our goal is to educate as much as possible. What I observe is a significant openness to learning. While it does not guarantee uniform acceptance or understanding, we contribute to refining the overall dialogue. This proactive educational stance is a crucial aspect of our involvement.

How much did you enjoy your role in driving conversations at the recent COP28 event in the Middle East?

First and foremost, we had a booth in the green zone to welcome visitors and help them understand not only what we are doing but also what we believe is essential for the world. Our objective extends beyond promoting our solutions; we are unequivocally convinced that swift action is imperative to remove emissions from the air, and this must occur significantly before 2030, or it will be too late.

While we support any existing efforts, our focus lies in advocating for the right regulatory and legislative frameworks, along with incentive structures that facilitate the development of green energy.

A steadfast commitment to R&D is at the heart of Topsoe’s innovative solutions. Boasting a team of over 300 world-class scientists and forging collaborative partnerships with renowned research institutions worldwide, the company earned the 2023 Honorary Award at the Danish EY Entrepreneur of The Year event for its pioneering work in Power-to-X. Could you provide insights into some of Topsoe’s current and upcoming R&D focus areas, highlighting some of the uses these applications will feature in international projects?

The primary focus is on Power-to-X, where we allocate considerable resources. The most effective means of decarbonization involves fuel without carbon content. Ammonia exemplifies this approach, as it contains no carbon and can be burned in ship engines, utilized for power generation, and employed in processes such as hydrogen production, particularly in the steel industry. Additionally, it serves as a pioneering fuel for green fertilizer, a sector currently reliant on natural gas.

I previously mentioned our collaboration with the Bill and Melinda Gates Foundation, that also includes the Novo Nordisk Foundation, Washington University in St. Louis, Aarhus University in Denmark, Lectrolyst and Novozymes, which is incredibly exciting due to its triple impact. This process allows for local production in regions facing food shortages, utilizing indigenous wind and solar resources. Producing food by extracting carbon from the air addresses hunger and mitigates agricultural emissions, a sector responsible for approximately 20-25% of total emissions, with a significant portion attributed to livestock protein. Adopting alternative methods to create protein, extracting carbon from the air, and avoiding the need for large quantities of meat-producing livestock presents a promising solution.

Another notable initiative involves developing battery materials without cobalt or rare earth elements. Given the challenges associated with cobalt, including conflicts in African regions where minerals are sourced, and the West’s dependence on rare earth materials for the energy transition, eliminating these components offers a significant advantage. Our ongoing development of cobalt-free battery materials holds substantial potential.

How far away do you think you are to come to fruition with this?

Currently, we are constructing a pilot plant, delivering our innovative material to our partner, Morrow, in Norway, where they have already conducted successful battery tests. Following this phase, we are considering scaling-up for early commercial use. If successful, we envision substantial growth in the second half of this decade. Collaboration with multiple automotive original equipment manufacturers (OEMs) underscores the significant market demand for our product.

As the head of Topsoe, and with your extensive experience from top leadership roles at renowned firms such as Arcelor Mittal, Shell, and Aleris, what key accomplishments do you and your team aspire to achieve for the company in its next growth phase?

Our explicit objective, our vision for 2024, is to be recognized as the global leader in carbon emission reduction technologies. I firmly believe that we will achieve this leadership position. Being a leader in decarbonization technologies means that when someone needs to embark on decarbonization of their energy mix, they turn to Topsoe. That is when we step in.

Looking ahead for the remainder of the decade, our focus is on the significant industrial development of our Power-to-X solutions, with an interesting addition being sustainable aviation fuels. In collaboration with Sasol, a South African company, we have initiated a joint venture dedicated to building, operating, and selling sustainable aviation fuels. Our ambitious plan for the decade involves establishing multiple facilities producing sustainable aviation fuels from various sources. We are exploring bio-to-jet fuel, bio-gasification to jet fuel, and green power to jet fuel. Ideally, we aim to materialize three to four of these facilities in the coming years.

 Is there anything else you would like to add for the benefit of our readers?

The imperative for decarbonization is evident. What is frustrating is that people often discuss its difficulty, but the solutions are readily available. The only requirement is to prioritize and ensure the right incentives and capital.

During the COVID-19 pandemic, a clear and immediate global threat, we successfully mobilized $16 trillion in 18 months through incentive schemes, research, and implementation. Global leaders demonstrated the ability to allocate significant resources to address urgent challenges when political will is present. A similar commitment and investment can transform the energy transition to a different stage. The solutions are within reach; what’s needed is the commitment and investment.

The urgency is apparent as temperatures rise, and natural disasters become more frequent and impactful. In climate change, reaching a tipping point, where the melting of glaciers, polar caps, and tundra becomes uncontrollable, is a looming danger. There is an imperative, and solutions exist, but acceptance of the fact that time is running out remains elusive. We are not yet at the point where people universally acknowledge that it is “five minutes to 12,” and action is urgently required.