Wrestling with the future of hydrogen development in the US

Intro: Welcome to The Energy Shift, a podcast series focusing on the rapidly evolving energy landscape with hosts Luisa Fuentes and James Wright.

Luisa Fuentes: Good morning, James. How are you today?

James Wright: Morning, Luisa. Great. How are you? Happy Tuesday.

Luisa Fuentes: Happy Tuesday to you as well. We’re recording this on February 18th, which means there’s 30 plus days left until springtime and it cannot come quickly enough.

James Wright: Exactly, I’m with you. A chilly negative four here in Chicago this morning, so the coffee is flowing thick and fast.

Luisa Fuentes: That always helps. All right, well, let’s get into it. Today’s topic is hydrogen. On today’s episode, we’re going to discuss hydrogen. And with this new administration, we continue to digest the potential impact on both blue and green hydrogen. Some few trends seem to have coalesced over the past year, even prior to Trump 2.0 that have caused uncertainty in the sector. Firstly, there is the regulatory and policy uncertainty of the last year as we waited for the 45B guidance to come out. As always, there’s the ongoing inflationary environment, which impacts capex estimates and economics for our clients, on top of which questions around supply chain and availability of key equipment, including electrolyzers, have always hung over the sector. So the result has really been a bit of a flattish vibe, if I may say, with some cancellation of projects, extended development timelines on others and really slower spend as sponsors try to figure out the landscape. There’s also within the sector, just something I’ve noticed is pivoting on products even within the hydrogen sector itself with SAF and methanol becoming kind of more popular outlets as people look to develop a commercialization of their projects. So with all of this, we’re wondering what does the guidance do to impel production for either blue or green hydrogen? How relevant is that guidance? And what do we think of the incoming administration and what they will do to support or hinder development in the hydrogen space? Our guest today is Melany Vargas, VP, Head of Hydrogen at Wood Mackenzie, a global provider of data and analytics for the energy transition. Melany is going to help us sift through some of the noise surrounding the sector and maybe help us look for the silver linings on the hydrogen economy. Welcome, Melany. It’s nice to have you on. Thank you.

Melany Vargas: Thank you so much for having me. I’m excited to be here.

Luisa Fuentes: A quick intro, Melany, for you. Let’s give the listeners maybe some context to understand who you are and how your path to being the VP head of hydrogen came about. Maybe tell us briefly about your experience in the LNG space and some background as to why you’re in Washington.

Melany Vargas: Sure, happy to do it. So, as you mentioned, Wood Mackenzie, we’re a natural resources intelligence firm. And I’m part of our commercial and market consultancy group sitting under our low carbon fuels and emissions team. I lead up hydrogen and derivatives, and that includes SAP and some of the other fuels you mentioned earlier. I come from a traditional fossil fuels background. Most of my time prior to working in low carbon fuels and spent supporting gas and LNG clients. I really focus on raising debt and equity capital and support of access to international markets. It’s given me a lot of context for how market development could occur for hydrogen and my first clients, for hydrogen gas clients that were looking to diversify their portfolios and some of their investments to get some exposure to low carbon fuels in 2022 through 2024. I had the pleasure of supporting the National Petroleum Council, playing a role, preparing a report called Harnessing Hydrogen. I lit up the techno economic modeling in partnership with MIT, and developed the chapter on integrated supply chain economics as well as carbon intensity. That was really a partnership across many really important players in the energy industry, including ExxonMobil and Chevron. And the results of that analysis were very sobering. It really showed that the policy support in place is really not going to be enough. We need some stronger policy signals, but likely not going to be able to meet the D.o.e. targets if that doesn’t happen. But the other really great part about that was bringing a lot of the gas and LNG experience that I had in my previous life forward to help tell a story around how the supply chains and the markets for low carbon hydrogen and derivatives could occur in the US and globally.

Luisa Fuentes: That is quite a background, Melany. Thank you again for joining us.

James Wright: Yeah, exactly. Fantastic. Thanks, Melany. Great to have you on. Just as a quick side note, I was thinking when Luisa and I start talking about hydrogen, I start getting horrible high school chemistry flashback. So let’s try and keep this to kind of banker level chemistry today. There’s a lot to get through. So with that, I think let’s kick off by maybe addressing, I guess you could phrase it as the elephant in the room, which is the question marks around the new executive orders that have been issued from the Trump administration. Everything from traditional renewables to CCS to hydrogen potentially impacted by those. So maybe a bit of a two-parter here, Melany, to kick off. Firstly, what’s your view of the new administration’s potential impact on these decarbonization sectors? And perhaps with your crystal ball, what’s the potential tax credit implications specifically around some of those policies? So I’m thinking here about 45V for hydrogen, 45Q for carbon capture, and 45Z for the clean fuel standard.

Melany Vargas: If you think about it, on the surface, Trump’s policy positions to support the development of U.S. energy, the development of renewable CCS, hydrogen, and other low carbon fuels really don’t conflict with that. In fact, low carbon fuels are really supportive of the US energy position. They could support the strengthening of mineral supply chain. Again, that’s long lead. But it’s very critical for the development of our energy system, particularly the grid solar batteries, EVs, electrolyzer supply chains. In order for the US to have access to reliable energy, renewables are really going to be a key part of that story, because not every state has fossil fuel resources in the ground. That would also create some opportunities for other fuels like nuclear or gas fired facilities. Of course, some of the things that may not necessarily be supportive eliminating EV adoption mandates and subsidies, that could really be a big setback. Consumers still do need incentives to adopt the more expensive technologies, and US EV adoption was pretty strong. It had reached about 10% sales penetration, but it wasn’t nearly as strong as what we saw in other parts of the world, like China and Europe last year. I think we are just starting to scratch the surface there. And fundamentally, lower carbon technologies still do require subsidies. And a lot of cases, in particular the tax credits, those are really important for the deployment of these technologies to support their development to support investments. The tax credits are really key. I can’t predict what’s going to happen with those, but the benefits are really broad. They’re bipartisan. Red states get a lot of value from these low carbon fuels projects, and the potential subsidies that could flow in into the states.

James Wright: So what I’m hearing there Melany is maybe to summarize it sounds like your view at the moment with your best crystal ball is it’s going to be a kind of all of the above type of strategy, maybe with the exception of the EV mandate.

Melany Vargas: Yeah, that’s right. The EVs are probably out, but everything else really needs to stay on. And something I didn’t mention before that I think is important is around the tax credits, is that I really don’t think that those will be easy to eliminate without significant legislative challenges. Those do create benefits across blue and red states, and they were passed along bipartisan lines. I don’t think it will be easy to eliminate, even if that’s the intention.

James Wright: Okay, great. Alright, Luisa, back to you.

Luisa Fuentes: Yeah, no, I think that what Melany said generally aligns with our view, the CIBC House view. So we’re hopeful that that’s the case and we can continue progressing these different sectors. Now that we’ve talked about the tax credits, Melany, maybe talk to us a little bit about the DOE grants and the LPO program that have supported sectors like hydrogen. What are your thoughts on this? What’s hanging in the balance?

Melany Vargas: So, the executive orders and the appropriation of funds from the IJA and the IRA, that is a significant setback. And the biggest impact really, as you mentioned, is to the hydrogen hubs and the R&D and the demand side investments that were going to be made. But those investments are actually quite small relative to the overall spend that’s been announced from credible projects. I looked at our tracker before we met, and I saw about $85 billion worth of planned investments from credible projects announced in the US. There’s also some hubs that have advantages that could allow them to continue making progress without the Doe Hub funding in the US Gulf Coast. There are a lot of characteristics that make it in a region where projects could still move ahead. There’s abundant renewable and natural gas available there. There’s significant access to industrial activity and other energy demand, both domestic and global. There’s strong technical capabilities, both from the companies operating there and in the workforce. There’s also midstream infrastructure available and there’s development experience around new infrastructure that might be needed really in terms of those characteristics, it’s quite strong. There’s also other things happening from a market perspective. Texas is right behind Virginia in terms of new data center developments. That creates power for clean, firm power demand that could lead to a role for hydrogen. These are all really important things that make the Gulf an advantageous place to develop hydrogen projects, even without delay funding. The other region that I think we should keep our eye on is California. That’s another major industrial and logistics hubs. There’s solutions needed to decarbonize, particularly the heavy duty transportation sector, which is a really hard to decarbonize sector. And we run the economics for for many of our projects at Wood Mac. And when you look at the total cost of ownership for heavy duty fuel cell electric vehicles, we see those working relative to EVs or battery electric vehicles and also relative to Ice vehicles. Long term, when you stack the GFS and the 45 be given the higher diesel prices in the area, we think there could be some momentum for the EVs there. And more broadly, I think that some of these setbacks that we’re seeing now for hydrogen, they really started before the new administration. But there’s a lot of significant momentum and goodwill that we’re seeing for hydrogen developments. And I’ve heard at least two. And oil and gas majors confirm that they’re going to remain committed during the Trump administration. And it’s a four year window. And we’re talking about projects that are going to take 3 to 5 years to develop and will operate for 20 to 30 years. So while I do think the appropriation of funds is a pretty big setback, it’s not going to end all of the investments that were in the pipeline, especially those that are further along.

James Wright: I think that’s a great point, and it’s something we think about more broadly, Melany, in infrastructure space, right? I mean, when we look at infrastructure investing, you know, across the gambit, these things span multiple presidencies and multiple administrations, as you said. So, yeah, we have to think through a longer horizon in four years. So with that, I mean, we’ve obviously all been spending, as we’ve been discussing now, quite a bit of time thinking about the new energy policies of the new administration and what may or may not happen. But I mean, as you mentioned just now, it felt like the hydrogen market here in the US was stalling a bit even before January of this year. Some of that may have been the fact that the IRA had only been around for a couple of years. That doesn’t really give a lot of lead time for developers to frame multi-billion dollar projects around. There’s quite an immature supply chain, particularly on the demand side. And we’ve also all been grappling with the inflationary pressures in the broader market. So with that, can you maybe dissect some of those issues for our listeners? What are you seeing as being the main choke points and things that really caused issues even before January of this year?

Melany Vargas: This is a really important question. We’ve seen the trends. It’s important to talk about the fact that the new administration isn’t really the biggest challenge that hydrogen has run into. So if we think back to 2022, we saw tremendous momentum for hydrogen plan project announcements and pretty large scale capacity for projects. But by the time we got to last year, we had seen a pretty significant slowdown, both in terms of new projects being announced as well as existing projects progressing through the development lifecycle. We’ve kind of alluded to that throughout this conversation. Part of the setback was waiting for the US guidance, which made it super hard for developers to plan their power sourcing and their gas sourcing strategies. Any financial modeling was going to be speculative at best, without really understanding what the guidance was going to be. And there are other challenges that have come up across the board. Supply chain constraints much higher than expected costs for both electrolyzers and actors. We’ve seen significant challenges with performance and guarantees, particularly for electrolyzers, where degradation isn’t really well understood yet. And the biggest and most important challenge was with securing off takers, really establishing the demand side supply chain is going to be probably the biggest hurdle to overcome, so that hydrogen can become a market at the scale that’s required for decarbonization goals. There really are not enough characteristics to create the connection that’s needed between supply economics and adoption economics, outside of probably 1 or 2 use cases right now. Hydrogen is really much more expensive than the incumbent fuels that it’s trying to displace. And what that means is that from a domestic operator perspective, it’s really challenging to secure those off takers willing to pay so much more. Developers have had a little bit more luck. Looking to the international markets. But even then, it’s pretty hard to secure a creditworthy off taker that can take the supply needed to help a project move ahead.

Luisa Fuentes: Yeah, supply and demand and I think the infrastructure on the other end is super important. I don’t think something I appreciated when all of the HOA started being signed across Europe and Asia with regard to US hydrogen. I mean, it wasn’t until you drill in a bit and you start noticing that they have nothing to receive the hydrogen with on the other end. I think that’s a good segue into my next question, Melany. You and I met when we were both working in the LNG space. So it’s sensible that we both draw from that framework when we advise clients in the hydrogen space. There’s just a lot of natural similarities, similar commercial structuring requirements, risk allocation, the need for infrastructure at both ends, right? This might be a good time to drill in a bit as to what we think, or more importantly, what you think the salient similarities are between hydrogen and LNG as we think about the future of hydrogen, particularly for export. And maybe you can talk to us a little bit about where the similarities might end as we kind of try to draw those parallels.

Melany Vargas: Absolutely. I really love bringing out the parallels from my past life. Like gas, hydrogen is hard to move. You have to liquefy it or you have to convert it to something else, like ammonia and methanol to move it, particularly over water. That will basically result in significant capital investments above and beyond just the molecule itself. So then that creates a need to find an off taker willing to pay that premium in a way to finance that additional capital. You have to manage a significant amount of risk around the major feedstock demand for hydrogen production as well either power or gas. You have to have a really solid strategy to secure those and to ensure operational and revenue liquidity. That’s even more challenging for green, where you might need more midstream infrastructure to make it reliable. We’re talking about storage or pipelines or electricity transmission lines. We’re seeing a lot where the contracting parallels come in as well. The commodity risk is being passed through to the off taker via indexation to gas for blue hydrogen, similar to what we’ve seen for LNG. Or we’re also seeing fixed prices that cover renewable PPAs or behind the meter capital cost for green hydrogen. Last week, I was at a legal conference where the legal counsel for some of the big developers, they were discussing how they’re establishing tolling arrangements and index based space to manage these risks. So again, the big parallels they were all referencing back to LNG and similar to the point I made earlier. In order to finance these projects, you you really need those long term offtake commitments. The projects just won’t move ahead if you don’t have an end market for the molecule to land. And that’s again a big parallel between LNG and hydrogen. We’ve seen lots of delays for LNG project development when offtake commitments are hard to come by. But where the differences start to come in is really important. On the demand side, you can deliver LNG to a gas facility and we guess if I inject it right into a pipeline and send it to the end user. Hydrogen doesn’t have that downstream infrastructure yet, and that’s really the big gap. So what you see today are the offtake commitments that are getting signed there. Demand side consumers that are accepting ammonia, ammonia to be consumed as ammonia. Once you start having to track that ammonia to get hydrogen out of it, then you see a lot more uncertainty, a lot harder time securing the offtake. And just even being able to model the economics is really, really challenging as well. Just because the tracking technology, it’s very early stage and it creates a lot of hesitancy from the off takers to commit to long term agreements, because the technology is so immature that the value chain could really look very different in ten years relative to what it looks like today.

Luisa Fuentes: Thank you, Melany. All of that makes sense. 

James Wright: Just to segue on that Melany as well, I’m thinking back to what you and Luisa were discussing just now on the LNG side and some of those challenges you were just referring to, feels like, well I remember we all had to deal with in the LNG sector going back a long time now, but the difference being, I think you’ll probably agree, was that back in the, when was it like, kind of 20, 11, 12, 13 type period, there was this big green flashing light from the government with the issue of those export permits saying, you know, we in the US are good to go on LNG. And that was the kind of market signal, I think, that if you like gave the kind of ability for developers and financiers to get through many of those challenges you just highlighted that we’re seeing now in the hydrogen sector, right? Is that a good, does that kind of work from your perspective, that parallel?

Melany Vargas: Yes. It’s a really important parallel, one that we should take and try to learn from, so that we can help bring some of these projects forward.

James Wright: Right, I guess the difference being that even back in 2011, 2012, the LNG technology was still very mature, very developed versus the newer green technology we’re talking about here.

Melany Vargas: Absolutely. I mean, it’s even more challenging. Hence why I think they’re taking the lessons and adding some additional support will be really important.

Luisa Fuentes: Just to add onto that, James, it’s the explosive nature of hydrogen to kind of not beat around the bush here. It’s just a much more difficult commodity to move, I imagine, than gas, Melany. There’s expertise that sits in a few centers of excellence. And yeah, I guess maybe a follow up question to this one, which I think segues into another topic we’re going to go on about was, with regard to the parties that are best placed to take the risk on hydrogen, which are kind of the big three companies, what do you see as their role in the space?

Melany Vargas: They’re going to be crucial to the development of the industry. Nobody knows better than how to build the production, how to build a midstream, who the best customers are. They’re connected all the way from supply to demand. And so they’re going to be really critical in terms of the development of this market. They’re going to be valuable partners to developers. They’re going to be critical for helping bring capital to projects, as well as bringing credibility to projects that is needed to attract that capital, and also to attract off takers, really getting the participation. A lot of these, these big three is going to be critical, especially for the first mover projects.

Luisa Fuentes: Yeah, agreed, agreed. Moving on to blue hydrogen, which I think obviously is intrinsically associated with carbon capture. Putting the kind of uncertainty aside, I think this is an interesting intersection of skills of revenue streams of regulation. What at Wood Mack are you focused on with regards to some of that expertise that is required in the blue hydrogen space? So it’s a marriage of kind of old economy and new economy. Just curious to see how you’re thinking about that.

Melany Vargas: Well, look, the success of blue hydrogen depends 100% on that CO2 capture. The fundamental value of blue hydrogen lies in the success of capturing that CO2 and the capture rates we’re talking about. So the greenfield projects are pretty high north of 95%. So that CSS skillset and understanding of the technology, it’s going to be really, really key for the success of blue hydrogen. And that’s why we’re seeing more and more entry into blue hydrogen from companies like ExxonMobil, who has a history with CCS for your purposes. Who understands the geology well enough for the sequestration? And they’re doing things like acquiring debris to make sure they have all the capabilities they need to be successful in the midstream. And then from a downstream perspective as well. A lot of the consumers of blue hydrogen, they’re also consumers of gas or oil and refining and petrochemical. So there’s a lot of synergies there from a traditional fossil fuel value chain perspective to bring together that can help make blue hydrogen successful.

Luisa Fuentes: Yeah, it’s additional siting considerations too. So now you’re not just looking for kind of the confluence of, you know, getting power, making sure you have the right midstream, but you also have to make sure that pore space is adequate and nearby, like economically, obviously that’s better. And then if you’re a green hydrogen developer, I don’t even think we touch upon the fact that you need abundant water, right? So the siting for all of these projects, it becomes a, you know, kind of finding that Goldilocks site for development is critical with, I’m sure, a huge first mover advantage to the folks that are able to get there.

Melany Vargas: That’s right. And so that piece of geographical location, that there’s only a couple of places where you have kind of all the elements coming together and projects able to be successful. The Gulf Coast again, it has that force space. It has gas, it has a demand nearby. There’s renewables, there’s water in other parts of the countries. We see some of the pieces of that, but they may not have the demand or they don’t have the space. But there are a couple areas where we think blue hydrogen could be successful, particularly in the mid con and the Midwest as well, where we think some of these things come together, just not at that same scale as the Gulf Coast.

James Wright: Staying on some of those themes as well, Melany, it feels like the market generally is very kind of fragmented in terms on the development side, but at the same time, you’ve really got traditional expertise and only a handful of industry players really kind of understand these technologies and these potential markets. So what do you, from a Wood Mack perspective, what are you seeing in terms of the developing investment thesis around blue hydrogen then? And are these evolving business models more integrated or are we still seeing blue hydrogen developers, for example, paying third parties to take and sequester their CO2 versus a fully integrated project? What are you seeing there?

Melany Vargas: Look, we’re seeing a little bit of everything, but the bigger, more credible projects are taking that integrated approach. And I think that’s going to be a trend. So the early projects, and for the big ones that are trying to come online more quickly and take that first mover advantage position, but that’s likely to evolve over time. And again, this is just taking learnings from LNG, gas, other industries over time, bringing in partners help to de-risk the value chain. De-risk capital helps de-risk the technology. We’re seeing some partnership, particularly around the Captur. So bringing in the best technologies to ensure that above 95% capture rate. But we’re still seeing the developers owning that transportation and sequestration of the CO2.

Luisa Fuentes: Yeah, so Melany, one topic that CIBC and its clients spend a lot of time on is data center development and really thinking about the knock on effects on gas fire development, transmission, et cetera. We have seen a few handfuls of CCGTs coming to market with hydrogen flexible turbines, for example. And we note that hyperscalers would still prefer to have green electrons servicing their plants. What is your sense of hydrogens near or medium-term role in feeding these quote-unquote responsible molecules to the growing electricity demand.

Melany Vargas: So currently what we’re seeing is it’s not so much hydrogen as much as a CCS and other technologies like geothermal and even gas based fuel cells are starting to come up a lot more. And that helps to speed up the development of projects and get that clean, firm power on lines so that the data centers can come online more quickly. However, I would say in the medium to long term, I do think hydrogen could play a key role helping to balance the grid and helping to decarbonize that dispatchable power in the power market. And the reason why that starts to work is if we wait a little longer, the learning curves hopefully continue to accelerate. And even though there may be a setback for a period of time on that in terms of the deployment and the risks that we’re seeing in the market today, the economics can start to look better once we’ve moved on that learning curve. And you can start to see things like storage come in so that you’re producing hydrogen at a very low renewable cost at night or in lower demand periods when there’s less load on the grid. And then you can store that and deploy it during high demand periods. But as you start to have more integration of renewables on the grid, you start to have more volatility in terms of pricing, because you start to have more of these high demand periods and less dispatchable power available. And that actually works to the advantage of the hydrogen economics, working to how play a role.

James Wright: So Melany, that was great. Thank you. So as we kind of head towards a wrap here, as a time we could talk about, but maybe just bring a quick bit of an international flavor for this. Obviously, as we’ve been talking about, whilst the US has had a couple of road bunks in recent years on the hydrogen development path, the same can’t really be said for Europe, where decarbonization of steel, electrolyzer manufacturing and CCUS all seem to really be taking off. Equally further east in Japan, they’ve been trying to re-support the build out of global supply chains by investing in infrastructure and subsidizing things like hydrogen shipping and some of these supply chains around those. So do those developments provide any silver linings for us here in the US? And how do you think about that in terms of the supply demand pool potential?

Melany Vargas: So the short answer is. Absolutely. These external markets and their movements will create a silver lining for us. Developments while we wait for us policy to strengthen here. Back at home, we can develop projects and target these export markets. And in the US, we’ve taken a similar approach to the gas and LNG story. We’ve created more of a supply push incentive structure, but in places like Europe and Japan, Korea, they’ve created more of a demand pool, policy. And that’s really important because they know they’re not going to be able to supply themselves through their own domestic production. So they’re trying to incentivize global production. And they’ve done things like create some transparency by establishing price signals. We all saw that the H2 global auction, it established a signal of about $1,000 per tonne of ammonia, which many projects they could achieve that and deliver into Europe successfully. And when I say many projects, I really mean green projects that are trying to deliver into Europe in places like the Middle East and the US, in Australia, when we run the numbers on these projects, for example, like in a refinery use case where you have penalties on the gas, penalties on the gasoline or the diesel, all of a sudden paying €70 per kilogram actually makes economic sense. For that use case, the economics start to look reasonable, and that is a strong signal needed to help bring projects forward. And that is a silver lining for the US, where we have low cost renewables, low cost gas, and we have a bit of a cost advantage relative to some of the other regions around the world. And hopefully we’ll still have a pretty generous tax credit scheme to support the economics of our projects.

James Wright: Right, right. And also hearing you say that Melany, it feels like another great parallel to what happened in the historical development of the LNG sector as well.

Melany Vargas: That’s right. These nations really needed to attract that gas and LNG. And then and they knew that maybe they’d have to pay a premium for projects to move ahead. And now there’s more of a market, there’s more market transparency so they can negotiate. And hopefully we will see that same evolution for hydrogen and ammonia.

James Wright: Fantastic, thank you. All right so, Luisa, that feels like a bit of a wrap, right? We’ve got a lot of ground we covered there and I think we could probably have kept drilling Melany for more and more on this. It’s fantastic topics and I think really, really kind of got the kind of brain cells moving thinking about some of those LNG parallels you talked about as well.

Luisa Fuentes: I agree. It was an excellent episode. Thank you so much for your time, Melany.

James Wright: Melany, before we let you go, what we love to do at the end is just do a bit of a wrap on what shifted your week. So can be something, you know, related to what we’ve just been talking about or something completely separate. So, Luisa, do you want to kick us off? What shifted your week?

Luisa Fuentes: I am shifting to find the silver linings in every conversation we have on this podcast to try to kind of stay alive through these uncertain times and stay positive. So one of the things I’m focusing on is a conversation we just had with Melany and reinforced by what you said, James, which is developer timelines are long, administrations are short relative to that. So the extent there is a silver lining here is the fact that developers are going to develop through a lot of this risk. They’re going to be focused on the economics and what makes sense and the rationale for offtakers. And so I think with things like hydrogen and carbon capture, there is a path. They may be winding, but we will get to the mountaintop one way or the other.

James Wright: Yeah, absolutely well said. Melany, what about you?

Melany Vargas: Luisa, you stole my idea. I’m also shifting to the silver linings and making those a bigger part of the story. And making sure I’m seeing those everywhere I look. And I’ll give a little stat something positive that I saw today. The Spanish network operator. And a gas is going to invest $3 billion by 2030 to make hydrogen the dominant molecule in its portfolio. So again, that’s an example of the continuance of investments and interest in and these low carbon fuels. It’s not an easy area to be in by any means. There’s definitely going to be ups and downs and there’s always going to be uncertainty. But I do think we’re still on track for decarbonization. The energy transition, and that there will continue to be capital flowing even if it slows down in the next couple of years.

James Wright: Excellent. You’re both on brand, on theme. I love it. So I will finish them with my shift. And actually this will have a kind of segue to what Luisa, you were talking about on data centers earlier in the podcast. So I think I’m going to touch on the AI debate just briefly. And this is something I was thinking a bit about this week and quick context here. I’m an avid cyclist and one of my cycling heroes. It’s Chris Hoy, who is a very famous Scottish, seven times Olympian and sadly, he’s fighting a very public battle with late stage prostate cancer at the moment at the age of just 48 years old. What’s the link with AI here? You could be saying, well, just this past week, I was really struck by the announcement from a UK biotech company called EDX Medical on an AI algorithm they’ve developed, which is showing a 96 to 99% accuracy for prostate cancer screening, which is just remarkable. It’s kind of sci-fi fans out there who fear that AI is going to bring the downfall of all of us and it’s kind of the end of everything. But I think this is just another really great example of what’s been maybe a little bit overlooked in the public AI narrative on the huge potential medical use cases that we’ve probably barely scratched the surface on with these technologies. And, you know, that’s obviously part of what’s driving this massive infrastructure build out we’re seeing on the data center side at the moment that we should touch on earlier on the podcast. So that’s my small nugget for this week. Excellent, that’s wrap. Well, thank you so much, Melany. Great to have you and appreciate all the time and we’ll talk soon.

Melany Vargas: Thank you. Talk soon.

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