Tête-à-Tête mit Gunnar Stiesch - vom Verbrennungsmotor zur grünen Transformation

Thank you.

I'm in my office in Augsburg today and I see beautiful weather, a late summer day, and in the distance also a power plant.

Yes, I think from our perspective that's not a very sharp categorization. The task for industry is to enable climate neutrality and decarbonization. We at MAN Energy Solutions have made that our strategy and set ourselves the goal of offering solutions to our customers in so-called hard-to-abate industries, applications that are difficult to decarbonize and hard to electrify directly. And it works through the use of technology that already exists and that we offer and have already demonstrated. We have set ourselves ambitious growth plans. Just one example: By 2030, we want 70% of our sold products to come from the climate-neutral, green area. So the upcoming growth will be strongly in these hard-to-abate technologies, and we offer the products for that.

Yes, let me break it down a bit. First, what does it mean? Which applications? We've chosen five lighthouses we are active in. That starts with direct electrification where possible, e.g., in heat supply. A large part of primary energy consumption goes into heat, both for buildings and industrial processes, mostly fossil-fueled today. Large heat pumps can be used there, similar technology to private households but much larger, in the two- and three-digit megawatt range. And thus create climate-neutral heat for district heating networks. We are involved in several projects. For example, in the Danish city of Esbjerg, we are currently commissioning such a large heat pump for 25,000 households, connected to the district heating network. Heat is extracted from the North Sea and raised to a higher temperature level using wind power to feed into the district heating network. The second topic is that in industry, there will continue to be processes that inevitably emit CO2, such as cement production, which accounts for 7-8% of global CO2 emissions. You cannot make cement without CO2, but this CO2 can be captured and compressed with large compressors up to 200 bar, liquified, and either stored permanently, e.g., in depleted oil and gas reservoirs under the sea. We are involved in a project in Norway where that happens. But it can also be recycled. And that brings us to the third aspect: to produce synthetic fuels. We see that not every application can be electrified and run on base power. There are applications that, due to high energy density, will continue to rely on liquid fuels. Typical examples are aviation for long-haul flights, but also ocean shipping. You need such high energy density to propel a ship over long distances. That only works with liquid fuels, not with hydrogen because of its volume. So you need power-to-X fuels. We are active there too. We have a subsidiary that produces electrolyzers to produce green hydrogen as a first step, and we can provide entire plants that combine this hydrogen with recycled CO2 to produce synthetic methane, methanol, or ammonia. And the fourth area is where we apply this? For example, in shipping to ensure goods transport over long distances, and also to ensure energy flows in the future. In the future, an oil tanker may not come from Saudi Arabia, but perhaps a methane or ammonia tanker from South America or Australia bringing energy to us. And we power those engines. The core remains an internal combustion engine, but running on methanol or ammonia. These ships already exist. Where we need to speed up as an industry is to make these fuels available in sufficient quantities. And part five is that we offer not just new engines but also retrofitting for the existing fleet. A seagoing ship lasts 30 years or more, so we can convert them from diesel to, e.g., methanol engines.

Yes, let's look at the engineering behind it. Many basic skills are already available and we can continue to draw on them. It may become a bit more complex because new fuels and new operating materials are added, but the core machinery, whether a compressor or an engine, remains very similar. However, it will be integrated into a completely different system in the future: into large heat pumps, carbon capture, or engines running on different fuels. So complexity increases somewhat, but that is a positive trend from our perspective. Ultimately, it's an opportunity for highly developed locations like Germany and Europe to remain competitive. Of course, retraining and further development are necessary to some extent, but the basic prerequisites are there. When thinking about production workers, the core machines are relatively similar and are already being built and used in applications. So much of the know-how can be carried over. However, with the growth we expect, the ratio of engineering hours to production hours will shift, with relatively more engineering hours needed. But it is our task, and that of industry and politics, to ensure that we can grow with these new technologies so that the absolute number of production jobs at least remains. The share of engineering hours will certainly increase.

Well, to say it, there are also projects in Germany where we are active with heat pumps, although it's true that Scandinavian countries are somewhat ahead. It is already economical where district heating networks already exist, and it's about replacing the existing fossil-fired heat source with heat pumps. That can be operated economically. However, there are challenges regarding long-term planning certainty for investments, or the predictability of conditions on which investments can be made. We will need a reliable CO2 price. Especially for applications that either capture CO2 from exhaust or convert it further, that costs money. Also for propelling ships with synthetic fuels, those are more expensive than fossil fuels today. The technology is not the bottleneck; it's the availability of green fuels in sufficient quantities. To build power-to-X plants that provide these fuels at scale, long-term planning security is needed so that such investments can be refinanced. That requires CO2 prices. Fossil fuels must become more expensive, and investors must be assured that this will apply for the long term, not just a couple of years, so that the plant can be amortized. That is something we must work on together with politics, which sets the framework, to accelerate this. The technology is there, it's demonstrated, it runs in plants, but now it needs to scale and grow, and for that we need the right conditions.

That is certainly true. Looking back at the maritime sector, the International Maritime Organization, a UN sub-organization responsible for international shipping regulations, has agreed on significantly more ambitious emission reduction targets. These need to be broken down into detailed measures over the next two years. Additionally, at the EU level, there are approaches that will increase the cost of CO2 emissions, and shipping emissions are to be included in the emissions trading scheme. These are very positive steps. However, what is also needed is investment. As you said, in countries like South America, Africa, Australia, where green power is cheap and available, which is unfortunately not the case in Germany. That's where these power-to-X plants will have to be built, and then the energy will have to be transported to Europe very efficiently by ship.

Power-to-X means converting green electricity into chemically bound energy, which can be either gaseous or liquid fuels. It works in several steps. The first step is to split water into hydrogen and oxygen using an electrolyzer powered by green electricity. Where hydrogen can be transported by pipeline, it can be used directly as an energy carrier. But for shipping, its volume is too large. So in a second chemical step, it is combined with CO2 to produce a synthetic fuel. This could be methane, which is essentially natural gas but climate-neutral since it's the same molecule. It could be methanol, which has the advantage of being liquid. Or in the future, ammonia as an energy carrier. So you use electricity to produce hydrogen, capture CO2, and combine both to create artificially manufactured fuels that, when burned, emit only the CO2 that was captured during their production.

The goal is to have shipping at net zero by 2050. Today, there are only individual pilot projects. Three years ago, we operated a container ship on synthetic methane for one voyage, which was completely climate-neutral. There are ships running on biofuels, like biomethane or biomethanol, also climate-neutral, but compared to the total fuel used, it's still very little. Looking at how ships are ordered and built today, in the last two years about 60% of all new ships are prepared for climate-neutral fuels. So 60% of the ships coming into the fleet can do it, but they don't yet have the fuel in quantity. That means the biggest effort needed now is to produce green fuels in sufficient quantities.

Exactly. And there are large customers, especially container shipping companies, that are leading the way, but also cruise ships that already run on methanol. That methanol can be either conventionally produced or green. For the engine and ship, it makes no difference; the molecule is the same. But for the overall climate effect, it makes a big difference. So the technology is there. If you fill it with the fuel, they are climate-neutral today. But due to fuel availability, the number of applications is still small. There are applications, but relatively few that are actually operating climate-neutrally.

Well, there are various measures. On the one hand, we rely on good universities to provide us with well-trained employees. We strengthen that by cooperating with university institutes in various projects, which also gives us contact with potential employees. Internally, when employees are with us, there are training programs, but a lot is learned on the job because we have set ourselves the goal of growing strongly in the green areas. A large part of our R&D resources goes into this area to drive further developments. Many employees are already working in these projects and learn something new every day, as do we all, including the CTO. So it's happening. But we also want to use opportunities like today to show that climate neutrality can be achieved through technology. There is a choice between renunciation and technology; we clearly prefer technology. We need to advertise that and show what is already possible. And it works quite well. In the last five to six years, since we sharpened our strategy and consistently aligned it, it has become known and is appreciated by graduates and applicants, so we are doing relatively well in the recruitment market. However, looking at Germany as a whole, we need to remain technology-friendly, believe in technology, and motivate more young people to take up such fields of study.

I think we need to distinguish. When I think about individual mobility on the road, things like acceleration and torque are important, and electric mobility can certainly offer that. In the applications we work in, the internal combustion engine will continue to exist, but with climate-neutral fuels. For me personally, that is incredibly motivating and I find it very meaningful to work in areas with a big lever. Global shipping emits about as much CO2 as Germany does, a tiny bit more. That's a huge lever. It's a great responsibility, but also a huge opportunity to drive something better. I find that incredibly exciting. As for sailing, I still enjoy it very much. For international shipping, I don't see wind as the sole propulsion; that was in the past. It's too irregular, unpredictable, expensive, and ultimately dangerous. As a supplement to engine propulsion, it can and will be used, for example Flettner rotors, which are like large rotating cylinders, can save 5-8% fuel when the wind is right. Such supplementary aids will be interesting.

Thank you, Nicola. With this beautiful summer weather, sailing is certainly a good option. Thank you.