Johnson Matthey Plc (LON:JMAT)

Status Update

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Sep 18, 2020

Good morning, and welcome to the Johnson Matti TFi Hydrogen Call. Today's conference call will be hosted by Johnson Matti Chief Executive Robert McLoyt followed by a Q And A I will now turn the conference over to Martin Danwood, the Director of Investor Relations. Please go ahead. Thanks, Sheila. Good morning, everyone. I'm Martin Dunwoody, Director of Investor Relations at Johnson Murphy. I'm very pleased to today to welcome our Chief Executive Robert cloud. We'll be hosting today's call on hydrogen. In this call, we're going to be providing an insight into the role that hydrogen will play in tackling climate change. Our Hydrogen business and its competitive positioning and the attractive growth opportunities that we see in this area. As usual, we will not be giving a trading update as part of this call. With that, I'll turn it over to Robert. Thank you, Martin, and thanks everyone for joining the call today. With me today, I have Joe Godden, who runs our fuel cells business. Joe has actually 25 years in JM, well, ICI and JM today is a 25 year anniversary today. And she's wide commercial and operations experience across the group initially in our Catalyst Technologies business. And I'm joined also by Eugene McKenna, who joined JAM nearly 4 years ago from Shell. Eugene is one of our experts and responsible for helping to commercialize our blue and green hydrogen technology. He has deep experience in technology and business development. But let's start with what I hope is a familiar statement, JM's vision. Everything we do is about creating a world that cleaner and healthier, not just today, but for future generations. This drives our strategy. And one of the themes that is really shaping our strategy today is climate change and the move to net 0. And our role in hydrogen to help solve this challenge is the focus of today's session. You look at the world around us, it's clear that action around climate change has increased and there is growing momentum around net 0 commitments. By achieving net 0 together, we can all limit global warming to 1.5 degrees above pre industrial levels. And today, 23 countries and regions have put commitments in place to limit their impact on climate change. And that level of commitment is really accelerating. Just 12 months ago, 16% of global GDP derived from nations and regions with net 0 commitments. This figure is now at 53%. And importantly, the recent uncertainty caused by COVID-nineteen has not slowed this trend. It's a trend that will only get stronger, and it's going to require significant change. Net 0 means we need to change our entire energy ecosystem, how we supply it, and how we use it. Firstly, we will need to switch from fossil fuels to using renewable energy sources to generate electricity for use in many applications. For instance, heating homes and businesses, light duty vehicles such as cars and vans, and many lighter industrial processes. But using renewable electricity doesn't work for all applications, and it's also necessary to have another energy source for electricity and heating during peak periods. And that is where hydrogen comes in. The use of hydrogen will allow us to decarbonize those applications that require higher energy density, such as heavy duty trucks and long distance buses, more energy intense industrial processes, such as steel making of cement, and in submarine and rail applications. And of course, in generating hydrogen, in some times, you're going to need carbon capture storage to decarbonize this process. So where does JM fit into all of this? We have a strong position in hydrogen production. And Eugene will come on to the methods by which hydrogen could be produced and explain our offerings in clean hydrogen production. Being blue with carbon capture and storage and green hydrogen as well. We'll talk about that a little later. We also helped to decarbonize transport through hydrogen powered fuel cells for heavy duty trucks, buses and cars, as well as trains and marine. That Joe will talk through shortly. So what we're seeing is the transition of hydrogen from its position today as a critical feedstock for chemical processes. To its future position in energy, where it will also be a fuel and energy carrier. This move to hydrogen is already happening today and gathering pace. We're seeing that across the globe led by Europe with the recent EU hydrogen strategy and the German and French National hydrogen strategy. And in Asia, was an announcement earlier in the year from South Korea with their hydrogen strategy. And this slide shows some of those commitments. And it's not just the policy makers that are driving this, we're also seeing bold statements from OEMs, confirming that Hyushin Power Truck will be part of their mix. So before I hand over to Joe and Eugene, I want to summarize what you're going to hear from and why I'm very excited about the hydrogen opportunity. We've been a leader in hydrogen for many years, and I'm proud to be a board member of the Hygiene Council, which is the largest industry led effort focused on developing the Hygiene economy. Behindly, it's going to be really significant opportunity for JN. The addressable markets are substantial. And we're really well placed because of our existing positions and our integrated offering. And both of these are backed up by our leading technology. These are our differentiators all expertise from across the group, and we wouldn't be in such a good position today without it. So where are we today? We already have an established and profitable hydrogen business with current sales of around GBP 100,000,000 across both hydrogen production and fuel cells. And we have strong segment shares. Our businesses are selling into highly complementary customer base that we know well. For example, our customers for fuel cells are largely the same as for our existing heavy duty diesel businesses. In hydrogen production, many are the same today as they will be in the future. And our ability to move quickly with relatively low capital intensity makes it especially attractive. The hydrogen economy is already taking shape and looking forward, the opportunity for JM is significant. But more importantly, this opportunity is completely aligned to our vision. The world has to move to net 0, and we have a key role to play in this with our hydrogen based technology. And with that, I'll now hand over to Cho who will talk to you about fuel cells. And after that, Eugene, who will talk about our hydrogen production technologies, in both blue and green. Over to you, Joe. Great. Thanks, Robert. Before we get into the detail of fuel cells, let me start with where we play in the value chain because this is really important in understanding why we have a competitive advantage. As we do across JM, we play in the complex part of fuel cells, this is making the components, and I'll come to on the next slide. This is where the clever chemistry lies and it's the key to delivering a high performance fuel cell. Although the value chain is still developing, it's similar to what you see today in clean air and battery materials, We're a tier 2 supplier, but we have a very close relationship with the OEM. So a fuel cell converts hydrogen and oxygen into electricity and water. Therefore, a key technology in a transition to a clean low carbon economy and the decarbonization of transportation. You can see from the right hand side that there are a number of components but the fuel cell itself is made up of 3 main layers, and anode and a cathode, which are both platinum based catalysts, separated by a proton exchange membrane or with layers. The catalyst coated membrane on CCM is then cut to the customer specific size and seals. The size of the CCM will depend on the application, but generally, it's around the size of a piece of A 4 or A5 paper. A gas diffusion layer is added to the sealed CCM to create the membrane electrode assembly or the MEA. Many of these are then added together to form the fuel cell stack. Producing a fuel cell is essentially applying a catalyst to a substrate and this is something that JN deeply understands, it's our bread and butter, a clever chemistry and the piece which gives the best appliances in the membrane. And at the anode and cathode layers the CCM. This is where the smarts are. We know exactly how to layer the catalyst onto the membrane. But we're not restricted to the CCM, we have a strong position throughout by controlling all of the elements in the value chain. We can influence the performance of the fuel cell, we can tailor exactly to our customers requirements. So looking now at our competitive advantage in fuel cells. Firstly, there's the science. It seems that the way that we manufacture a number of parts in the fuel cell. And this is key to making sure that different components in the system work together in the best way. We're unique because we can optimize the catalyst as well as the membrane, no one else can together to optimize the whole system. Conductivity and for delivering enhanced power. Not only this, but producing in house ensures we have total control over the technical steps and importantly the cost. And it's this holistic understanding of the fuel cell that means we can offer a customized high performance solution specific applications. What really matters to customers in terms of performance is durability or really maintaining that performance over kilometers driven and our sites expertise means we can deliver on that. For a truck, this means achieving over 40000 hours, and we know how to make improvements that will need to exceed this. Secondly, we're a world leader in PGMs. If fuel cells have PGMs in them, with our legacy expertise in this space, then who better to win than Johnson Mathew. We can also recycle these PGMs so there is potential to have a closed loop offering And this process has a lower carbon footprint. The carbon footprint of primary metal is significantly higher than secondary metal. And we're already seeing from our conversations with customers that our ability to offer sustainable sourcing and our lower carbon supply chain is really important to them. As well as this for years now, we've been optimizing the use of precious metals by drifting out metal from our catalysts in our Clean Air business, skills we are applying to fuel cells today. We use our science and know how to reduce the number of MEAs required without impacting the performance of the fuel cell stack. Ultimately reduces cost for the customer. And then thirdly, we are a trusted partner and this has been built over many years makes it hard to replicate. We have a commercial product today and our customers come to us because we know they know that we can deliver the solution that they want. And finally, we have established manufacturing at scale, both in the UK and China. We've been manufacturing fuel cell components for over 20 years, this started as a very manual intensive process, been developed and automated over time. Achieving a high yield is not easy. This is really complex chemistry, the ability to do this without defects is hard if there is one defect within 1 MEA, then the whole stack may be compromised. We've also proven that when volumes ramp up, we can manufacture efficiently at a high yield. In fact, we've managed to increase our yield twofold in the last few years, and we want to go further when we're currently expanding to meet future demand. So let's turn now to our Fuel Sales business today. We're a leader in this market with a strong position in material handling market as well as the emerging transportation sector. Our business is profitable and we're seeing very strong growth, 30% compound annual growth rates over the last 4 years. Our customers are across the main segments, auto truck, non rodent stationery, and we're working with big names including major truck and also OEMs. And in China, we're working with the 2 main governments to improve system integrators. Indeed, China is a huge growth market, and we're already on a significant number of buses and commercial vehicle platforms. In autos, we've had strong success. 25% of our sales are now into auto applications. This is an area where we've seen a real shift in momentum over the last 18 months. And now we're working with low double digit number of major truck and auto OEMs. On platforms planned to launch over the next few years. And this includes the largest truck brand, so we're working with the players that you'd want us to work with. With the strong increase in demand that we're seeing, we've invested GBP 15,000,000 to double our manufacturing footprint, which will be complete by March next year. We're able to quickly add capacity as this business is relatively capitalized. So as the world pushes towards MET 0, there is a huge role that fuel cells can play in the decarbonization of transportation. And the major opportunity in the near term is trucks and buses. So why is this? So firstly, costs Fuel cell technology is expected to become the lowest cost option for heavy duty trucks compared to diesel and battery from the latter half of this decade. Also, the weight of a fuel cell is significantly lower than that, as the size of a battery needed for the kind of ranges required. And due to the relatively low energy density of batteries, the range offered by a fuel cell truck is much greater than that of a battery truck. And the refueling time is much lower. So even if the energy density of a battery improves by 2 to 3 times, it will still take in the order hours to refuel and a fuel cell truck can refuel in minutes. So fuel cells in these applications make sense and we're seeing evidence of this today. On the truck side, numerous companies have announced substantial investments in this area. One example is the Cummins acquisition of Hydrogenics for just over a quarter of $1,000,000,000. In terms of buses and commercial vehicles, already talked about our presence in China, but this is just the start. The Chinese government is targeting 1,000,000 to 2,000,000 fuel cell vehicles by 2030. And over 1000 hydrogen refueling stations. So beyond trucking buses, there will of course be further in autos as costs come down through increasing sales volume as well as drifting out metal and improving efficiencies. But also as hydrogen infrastructure develops and hydrogen prices come down. So as we move out perhaps 2030 battery electric vehicles will make up the majority 0 emissions passenger car vehicles on our roads, but fuel cells will also have a significant presence. We see this as a good opportunity, particularly for larger TVs and vehicles that regularly travel long distances with high utilization, where the rapid fueling and long range affects just a fuel cells will add value. Beyond this, there will be rail and marine applications. There are already fuel cell trains in commercial operation in Europe today, rising to around 60 trains later next year. And we've also seen momentum with your cell trade trains, trains in China. So it is clear that the momentum is gathering in the fuel cells market. We feel this momentum, and we really have a significant So the biggest opportunity is in the automotive market. Trucks, buses and cars. We already have a leading market share today in emissions controlled and fuel cell technology, We know the customers and we have the solutions. So the potential revenue in this area is significant. Around 5% of trucks are forecast to be fuel cell powered by 2030. We provided the estimated value of the CCM and the numbers you see there our expected costs in 2030, which include the cost downs. And as I mentioned earlier, we are playing our part in these cost downs. The main areas of focus in PGMs whisking, which is a core competency for us, and something we've been doing in Clean Air for years. Improving yields through manufacturing efficiencies such as automation and improving power density, using our skills in PGA Chemistry, We can improve where we place the metals and without coating expertise, we can create better catalyst layers. It is the coated layer structure that determines performance. So the CCM value to us will be around GBP 2,500,000 per truck an 800 per car is a big number, multiples of what we supply in a clean air heavy duty diesel catalyst system today. So putting this all together, you get an opportunity in the region of GBP 1,000,000,000 per annum in 2000 and 30, and then more than GBP 10,000,000,000 per annum in 2040 So hopefully, you can see that we have a really strong position in this market, and we're really excited by the opportunity that lies ahead. I'll now hand over to Eugene to talk about hydrogen Production. Thanks, Joe. So we've talked about one of the key uses of hydrogen in fuel cells. And now I want to spend some time taking you through how hydrogen is actually produced. So Johnson Mathew is a global leader in hydrogen and has been for many years. So from 19 36, for example. Today, we mainly focus on new technologies in blue and green hydrogen given that these are the technologies that will become increasingly important as we transition to a low carbon world. As you can see, there are a number of routes to make hydrogen. And these have been given different colors to differentiate them. So for example, we have brown, which uses coal as a feedstock, gray and blue, which use natural gas, and green, which uses renewable energy. To electrolyze water. Now today, the vast majority of hydrogen is manufactured by steam methane reforming, This is gray hydrogen where natural gas is converted at high temperatures into hydrogen and carbon dioxide, which is then allowed to escape into the atmosphere. The largest markets today for hydrogen are for manufacturing clean fuels in refineries and as a feedstock for methanol and ammonia. Johnton Mathew has leading catalyst technology in Grey Hydrogen. We have 40% segment share and our involvement is selling the catalyst for the process. So now moving on to those clinker technologies, both, blue and green hydrogen, the process can be decarbonized or indeed made carbon free. So you can capture the carbon dioxide from advanced gas reforming technology and store it in a process called carbon capture and storage. This is blue hydrogen. Carbon capture and storage is a process for storing the vast quantities of carbon dioxide produced in geological formations off Northshore using existing assets. It has been demonstrated at multiple sites globally, particularly in the North Sea over decades, and it's widely recognized as an essential technology if the world is to de carbonize. And as the market evolves with the energy transition, we are well positioned as technology advances towards Blue hydrogen production, We know this market well as we have an existing business, understand the customer base, we have strong relationships and the technology expertise to succeed. So finally, you can also of water, and this is green hydrogen. Now the estimated cost of production today are higher for blue and green hydrogen, But over time, as these processes scale further and volumes increase, costs will be driven out quickly and along with the implementation of carbon taxes, economics will improve. As we transition towards net 0, the demand for energy across the world will not decline. If it's not hydrocarbons such as oil sub find that need, then it will need to be something else carrying the required energy hydrogen. So when we look at the move away from grade hydrogen, it's not really a move from gray hydrogen we should be talking about, but all the new applications that will require blue and green hydrogen. Of course, those applications that are currently using Grey Hydrogen today will transition to using blue and green, and this will take some time most likely incentivized by carbon taxes. For example, BP's energy outlook is assuming carbon taxes rise from around $40 carbon dioxide emitted today to $100 a tonne by $20.30 $2.50 a tonne by 2050. For developed countries on a path to net 0. So on this chart, you can see a projection of how hydrogen volumes from the different production methods are likely to evolve over time. And importantly, we can see blue and green hydrogen are both playing key roles. Given the levels of greenhouse gas emissions, brown and gray hydrogen will not be viable solutions in the longer term for their existing applications with structural increases in the cost of these processes as they will likely be subject to carbon taxes. And there are no use of course at all for the new clean applications. Blue hydrogen will enable the transition towards a carbon free gas system and remain established in certain geographies where it is the lowest cost option, and we'll go to more of that on our next slide. But ultimately, blue and green adoption will be driven by geology, infrastructure and the cost of renewable energy. And we're also likely to see incentives, particularly for green hydrogen, where significant cost downs are needed Looking at this chart, you can see the extent of the required cost downs Additionally, the adoption of blue and green will vary depending on region. For example, blue hydrogen is likely to be a long term solution We place this with the right geology and infrastructure, such as the UK and the U. S, where there is an existing natural gas infrastructure for the transport hydrogen as well as depleted oil and gas fields and locations for carbon storage. Green hydrogen will be favored in some regions more than others, for example, Australia, for wide scale adoption, renewable energy and capital costs will need to decline. So now looking at our blue hydrogen technology, as you can see from this schematic, are we use 2 processes with a gas heated reformer and then also thermal reformer linked The process is used in our existing methanol solution at scale, and we've been able to apply the technology to enable rapid deployment of a unique process that produces low carbon hydrogen from natural gas. Our blue technology differentiates us from our existing competitors in a number of ways and a number of important ways. It's the most energy efficient It uses, for example, 9% less natural gas compared to steamedmethian reforming plus carbon capture to produce a kilogram of hydrogen. For the project the size of phase 1 of high net, which I will introduce in a moment, this would mean a saving per annum of around 6 £7,000,000, and that's a project that intends to scale up by an order of magnitude from there. We also have the lowest capital costs, 40% lower than conventional steam metheon reforming technology with carbon capture. Our greater efficiency and lower capital intensity comes from clever proof comes from clever process engineering where we use heat as efficiently as possible and keep carbon dioxide in the process stream we don't have to capture from the air. This all means that our process is easier and cheaper to decarbonize through carbon capture and storage and indeed more than 95% of the carbon dioxide produced can be captured for use or storage. So our existing capabilities, having vitally important in supporting the development of this leading technology, and I'll give some more color around this in the next slide. In Gray Hydrogen, we supply range of catalysts and today, this business generates sales of around 1,000,000 a year. This is recurring business and the catalysts we sell are generally in service for around 3 to 4 years before replacement. We have many years of experience in Grey Hydrogen, a 40% segment share and over 400 customers, including oil and gas majors and industrial gas companies, This underpins exactly why we can be successful in Blue Hydrogen. In Blue Hydrogen, our offering is much more comprehensive than in gray, We will supply the catalyst, some equipment, engineering expertise, and we'll also license the technology, which means the opportunity is larger for us. Something I'll talk to you shortly. Our experience in this area is hard to replicate, and we've built on our expertise in gray hydrogen and in methanol develop the best technology for Blue hydrogen. When people spend 100 of 1,000,000 of dollars or indeed 1,000,000,000 on new plants, This is at a massive scale when people want to have the confidence that the technology will work. Customers get that confidence with us. They have known us in hydrogen for years. They've seen our commitment to developing blue and hydrogen and seeing similar processes in metal, working at huge scales. They also know that we will give them the support all the way through the process and guarantees on performance once the plant is rolling. This means that we expect to achieve a leading segment share. Customers will choose the best process But that, I mean, not only that with the lowest technology risk that I've mentioned, but also the most efficient and lowest capital cost. For example, one of the largest operating costs in the process is natural gas, so using 9% less than the equivalent process is a huge saving. On the customer side, we're making good progress with both existing and new customers. Our technology is already starting to commercialize is currently being used in a number of projects, including the high net project and the Acorn Hydrogen project, which I'll come to in the next slide. So high net is a hydrogen energy and carbon capture utilization and storage project in the northwest of England, and its establishment should create a low carbon cluster in that region. High Net's aim is to reduce carbon emissions from industry homes and transport, and we're delighted to be involved in this high profile project, which will use our blue technology for the first time. This first deployment is an important milestone in demonstrating our leading technology at scale, and the initial plant is the first of multiple plants planned on that side. FIES 1 will produce 80,000 tons of low carbon hydrogen for industrial and domestic customers, which is already equivalent to a world scale hydrogen plant, and there are 3 more phases to follow, to give you an idea of the scale of this project, by the time all of these phases are complete, to produce the same amount of green hydrogen, it would require 6 times the energy of the world's largest offshore wind farm. So these are massive projects So high net shows us for 3 main reasons. Firstly, the technology risk is minimal. We use similar process technology and methanol it's already proven at scale. And we continue to invest in R&D to ensure we stay market leading. Secondly, the economics are attractive our technology requires the lowest OpEx and is least capital intensive. And finally, we are a trusted partner to our customers We have decades of experience and a strong reputation in this space. We're also involved in a slightly smaller project in Scotland, the Acorn project for Blue Hydrogen, production from North Sea Gas, and that will also be based on our low carbon hydrogen technology. And of course, we're working with a number of customers globally, and we have a strong pipeline of future projects. So looking towards this low carbon future, there will need there will be a need for blue hydrogen and we see significant opportunity here If we assume around 30 percent of the global hydrogen demand in 2030 comes from blue hydrogen, then the total market size accessible to J. M, would be around 1,000,000,000 to 1,000,000,000 per annum. Our opportunity is primarily through lists. To give you a few more details, an average 1 off fee per plant could be in the region of 1,000,000 to 1,000,000 And this will of course vary depending on projects and the size of those projects. Beyond that, a typical changeover period for catalysts is every 3 to 4 years. And this could be around £5,000,000 per refill. So it's a very significant opportunity for us in 2030. And accelerates in the years beyond. Moving on now to green hydrogen. What is it? Put simply it involves splitting water into oxygen and hydrogen using electrolysis So it's very similar to fuel cell technology, effectively the reverse of fuel cell technology in the process And there are several types of electrolyzers that can be used to make green hydrogen. The main ones being alkaline electrolyzers and protein exchange membranes, or PEM electrolyzers, which use precious metal catalysts. Alkaline electrolyzers are more mature. The technology is more mature They're typically used in larger continuous applications and the technology is more commoditized, which isn't really where JM competes. The particular advantage for PEM electrolyzers is that they can be scaled to the required size, their very robust and non continuous use applications For example, when coupled to renewables such as wind turbines, Penn will also be more cost competitive at scale. It's a new technology today and there's plenty of scope for cost downs through, for example, drifting our PGM content and scaling up manufacturing something which JM can do very well. PEM electrolyzers are a particularly good match for JM as they use precious metal catalysts in a similar way to fuel cell technology. And so given the economics, This opportunity is slightly further off than Blue Hydrogen, but we are confident that we will be successful. PEM Technology matches to our core sands, it plays exactly to our strengths. Joe has just talked about our long heritage, and expertise in fuel cells and given the strong similarities between fuel cells and pem electrolysis, we're able to apply our expertise in this space. We have a competitive advantage in PGN Catalysis, in particular, platinum and iridium chemistries are important for green hydrogen and our ability to optimize the yield of hydrogen per gram of noble metal and a core competence for J. M. We also know how to scale up this business. We've got experience of this from fuel cells and our PGM recycling expertise is also part of J. M. D. A. Which means there is the potential to offer a closed loop service to our customers, where we would design solutions from the outset that take into account end of life options. More importantly, we are experienced in enabling new technologies that have already started testing and have already started testing with bleeding electrolyzer players, including a major global industrial company. The market for green hydrogen is big, We're already starting to see progress with a number of targets. For example, as part of the recently announced EU hydrogen strategy, Germany alone has committed to invest 1,000,000,000 in hydrogen related businesses and research. And we think the estimated addressable pen market is in the range of $2,000,000,000 to $4,000,000,000 per annum in 2030. Given the strong overlap of fuel cells and our core science capabilities, We know we have the ability to succeed. We are well positioned to bring new solutions to the hydrogen space and look forward to playing an important role in this energy transition. Thank you, Robert. Thank you, Eugene. Thank you, Joe. So to conclude, As legislation tightens and concern over climate change game momentum, we believe that hydrogen will play a significant role in enabling the energy transition. And with such a key role to play across multiple sectors, investments in hydrogen based technologies and associated infrastructure is accelerating. We already have an established and profitable fuel cell hydrogen production business today And with our leading technology, we're uniquely positioned to benefit from what is very significant growth opportunity in a fast growing market. Our opportunity in hydrogen is not an accident. It's founded on decades of experience and underpinned by our science expertise across the group. We're proud of our role in enabling the transition to a global low carbon economy. For us, the opportunities are broad but more importantly, it helps us to deliver on our vision for a cleaner, healthier world. So that's finished what we were going to present for the day. So now it's over to you for questions. So I'll hand over to the moderator first. And then we'll welcome your questions. Your first question comes from the line of Tom Wigglesworth from Citi. Hi, good morning. Thanks very much for the presentation. I'll limit myself to two questions, what I've got a lot of learning to do, clearly. First question is around the alternative technologies. I think other companies have started looking at non PGM based exchange membranes. Could you maybe help, explain why do they have any viability, what is, what might what might change the landscape in that regard? And then secondly, when it comes to Could you unpack a little bit of your addressable market from SEK 2,000,000,000 to SEK 4,000,000,000 in 2030? You've given some assumptions, but What percentage of a cost of, say, a fuel cell for 100 kilowatts vehicle is would be the pen membrane. And similarly, an electrolysis of, let's say, 10 megawatts, what's the of the pen membrane in a 10 megawatt electrolysis system would be very helpful. Thank you. Thanks, Tom. And good morning. So let's go, Eugene with the first one. And then the second one, I'll try and sort of carve that out a bit, but give you a bit of color. But Eugene, the alternative technology is non PGF related, the electronics is free knowledge. Thanks, Tom. So there are alternative technologies being discussed at the moment there at much earlier stages of development of technology readiness, in particular, there's a technology called AEM, ion exchange membranes. And the work at a simple level, they work in a similar way to pin electrolysis, but there's no requirement for platinum group metals. So it is entirely possible as we go decades into the future that a technology may catch up with Penn electrolysis. And I would say if I ever that being expert at Penn electrolysis would position the company very well for, moving through into AEM technology as that develops in the future. Okay. Thank you, Eugene. And on the addressable market, I think, Tom, you were asking a little bit about car trucks and also about green hydrogen. And if I just look at green hydrogen first, because that's, I think, still on the on the slot. And maybe it's maybe it's not on the slide anymore. So the GBP 2,000,000,000 to GBP 4,000,000,000 of addressable market very much linked to the assumptions that we've made previously around the growth in the hardship market. Which we showed, on Slide I'll get the numbers in front of me. And second, on Slide 8, 19, which is the sort of terawatt hours required for hydrogen. And we've assumed as have, the Hydrogen Council and BP, pretty much equal split between green and blue. Now you can debate that, but that's the assumption that we've used. And then in coming up with the the GBP 2,000,000,000 to GBP 4,000,000,000 market, we've ranged that between, well, how much does pen share compared to the other types of technology as Eugene referred to the alkaline water technology. So at the lower end of PEM share, as it said on the slide, assuming 30% share, then you end up with a 2,000,000,000 market opportunity. And as a 60% share, you end up with a 4,000,000,000 market too. So that's how we try to frame it on that. And you're talking around about MEA value x metal of conversationally about $50 per kilowatt. On the fuel cell side, Joe, do you want to give a bit of color on the fuel cell side on the kilowatts side, probably focusing on trucks, I guess? Yes, yes, sure. 2030 for trucks, we see that the penetration start to happen with 5% of vehicles with fuel cell platform and the dollar, kind of a dollar per kilowatts And they're in trucks in 2030, their cost downs are getting towards $25 kilowatt. And this translates into And the MEA of the fuel cell storage stack is about 30% of that stack. And you're getting towards £3000 around that level for the EMEA component. And then the CCM, as we've put down there on slide, 16, it's around GBP 2,500. Of course, but, that's what we expect the market size roughly to be. So thanks, Tom. Who's next? Your next question comes from the line of Alex Stewart from Barclays. Please ask your question. Hello, good morning. Can you hear me? Yes, we can. Good morning, Alex. Hi, there. Thank you very much for the presentation and all the information about the industry side. That's really interesting and helpful. And you talked a lot about total addressable market and revenue opportunity, but you haven't talked a huge amount about profitability or relative profitability and returns. Can you give us some sense of, which of the various opportunities you talked about today is the most attractive in terms of the return on capital you can make and whether they all would satisfy at scale your 20 percent aspiration for the group return on invested capital? And then secondly, hopefully a simple question. Your fuel cell component business today, which I appreciate is a small part of the group. Do you have any sense of what sort of share of the market you have think you're a minority player? Do you think you have a sort of decent proportion of the new orders that come through or the new business will come through? Any sense of that would be really useful. Of course. I have to do both well, I'm going to ask Joe to answer the one on the fuel cell share. But on the return on capital and margins. Look, I think both all of these businesses absolutely, we believe we can meet our target aspirations of a greater than 20% return on capital. The exact, projection of margins and profit growth will obviously depend on how the market evolves. But there are relatively low capital intent opportunities, particularly on the fuel cell side because the relatively low capital intensity as Joe explained. And on the hydrogen side, particularly on the blue hydrogen side, we already have developed the technology and the process technology. And the catalyst that will go into those parts come off our existing lines that we already have of production capacities that we already have today. So from a return on capital point of view, they should be attractive. I'm not going to give, the relative attractiveness between the different opportunities, but they all are sufficiently attractive. Joe, do you want to talk a little bit about share? Sure, sure. Well, as you know, we've a well established profitable business in fuel cells today. And we've built our reputation over the last years, really in emerging markets of non road, and we have a 25% shed share in the material handling market. And now we're really building significant momentum in automotive. And that's is growing to 25% of our business. And that's primarily, been in China, which is very much the early adopters of of MEAs that we're supplying onto buses and commercial vehicles, logistics vehicles in China. So that's where we're We are positioning and we're securing more business in that sense all the time, which is why we've invested, in our manufacturing facility in China. But it is an emerging market, so it is quite fragmented with different components in different parts of the value chain. I think, Alex, it's hard to give an absolute number to share. I mean, I think we can give a number to share for the the the forklift truck market because that's more established. I think it's quite hard, particularly in China, to be clear about the exact share that we have. But it does feel like we have a meaningful share. So, what is meaningful north of 20% probably but it's really hard to be precise about it. That's really helpful. Thank you. Perhaps if I could just answer that. I'll ask it another way. You feel like there's a lot of competition for the parts of the fuel cell, the MEO that you're manufacturing or will this be a pretty consolidated market Sorry, do you have a few others? Yes, well, there's not that many players in the MEA at this time. And actually, we're we're really well positioned as we're in lots of points at the value chain. As you saw in the slides, we're in PGM, we're in the catalyst. We're able to, cope and supply the membrane as well through to the EMEA. So that's a real opportunity to be working and collaborating as the market develops with our customers. And tailor the performance of our products to that fuel cell systems. Thanks for the question. So, next, please. Your next question from the line of Adam Collins from Liberum. Please ask your question. Yes, good morning. Thanks again. It's been very interesting. I had 3 questions please at this stage. Firstly, on the blue hydrogen opportunity, thanks for the details on the average value per project. I think you said 1,000,000 to 1,000,000 for licenses and 1,000,000 for catalyst refill values. Could you perhaps give us a sense on what the value opportunity then might be for high net if it scales to phase 5. You suggest it's a very big project, but just to give us a sense for what it might mean on what looks like is going to be one of your first and biggest opportunities. On the MEA side then for Pem electrolysis, I know that's kind of quite long term. Olysis is similar to fuel cell. Essentially, is it the same value proposition? I've heard it said that the value proposition is slightly less electrolysis, despite the fact that sort of technology plays the same. And then finally, on PEM, fuel cell, Could you discuss what the likely role of captives is going to be in this equation? To what extent do you think that the OEMs themselves will be producing part of the value chain. Ana, nice to speak to you again. Thank you very much. For your question. And I think you get the price of being able to make it very easy for me to share the questions out three questions and I'll take one. You two so surprise for that. But we'll start off using the high net. Maybe you can give an answer there. Yes. I mean, I'm quite comfortable with giving numbers for general plans. So the first behind that phase 1 is about half the size of the plant that we give you, an example, a size of 50,000,000 dollars, $60,000,000 for and the refill size And, it's kind of public information how big that plants go. And clearly, there'll be commercial discussions about the exact size of that opportunity between us and high net. So I think we'd help me to give too much of that. May I just ask, just upon a clarification, we know how big that project is in terms of production volume, but we don't know when you talk about a typical project, and the sales values. What is a typical project then in terms of blue hydrogen volume? So So high net, about 80,000 tons a year, one of the technical projects we've scaled to is about twice that size 160. Through the year, which we think will be heading towards a typical world steel plant whenever this gets off at scale. Yes. So your numbers are based on 160? So if you look at the if you look at the when you do get the slides, Adam, if you look at Slide 24, which is where we have the data, there's a little superscript 1. And under superscript 1, it gets bases on an average plus size of 100 and kiloton. So those are what our numbers are based on. Okay. That helps. Okay. Now on the so the second question about the sort relative values per kilowatt. I think we see or we base the numbers at least on slightly more value per kilowatt on the electrolysis MEA versus the vehicle MEA. And that's principally because the it's a slightly thicker and more durable needs to be more durable NEA in some respects. And so therefore, the membrane will be thicker than Cote. Probably the catheter layers will be a bit thicker too. And as a result, the sort of the absolute value per, EVA might be greater. So we're talking about something like $50 per kilowatt for Green hydrogen NEA in 20.35 going down to say $40 per kilowatt. And Joe's already said that we would expect $25 per kilowatts in, in 2030 for a truck. So those are rough sort of numbers. Great. And that's how we've based so that's how we've based our the numbers that we've presented to you So we're not warranting that those are going to be the absolute right numbers, but that's the sort of pathway that we expect to be going on from there. And Joe, your question, on the likely role of captive in the fuel cell market. Thank you. The earlier doctor OEMs that have been leading on fuel cell vehicles have certainly been doing a lot of their deep research, their learning and developing of the fuel cells this in house. And that's been at a time when the supply chain is just becoming established. So it's always difficult to say what will over time in an emerging market, but we're certainly in a great position to start to work with those where we are working with those OEMs for business as the market starts to scale. So for example, if we are able to supply something that has better performance improved durability, high quality for a competitive cost. And that's something they would really want to evaluate as they scale their business and require a broader supplier base. So what we do now is working with improving this to them. And, it's the reason why OEMs and Tier 1 customers want to work with JM because they recognize the need for continual improvements and believe that we're well positioned to do this. So there's lots of opportunity to collaborate and supply some or indeed all of our components. My last quick follow-up. Is there a strategic or technical value in the fact that you do both the electrode and the membrane as opposed to just doing CCMs? Yes, there is. And as we we keep our experts really in this in these aspects from the catalysis, the ability to cope the membrane, placing those molecules where we exactly want them. So this this, we can really optimize those key elements that really give the durability and performance, as I mentioned in the presentation. So that structure of membrane, together with how we, cope the catalyst layers and it all interacts, really determining the performance. And that's where our capabilities really are and delivers that competitive advantage. We absolutely think we have substantial advantage of the CCM, the catalyst coated membrane. When you then go on to the MEA, which is where you're putting a seal and the gas diffusion layer, that's more about, what's the point I'm looking for? It's more about assembly, which is not where our competitors are. So there might be more value in supplying an NDA, the real competitive advantage we believe is in the catalyst coated membrane. Thank you very much. Okay. Thanks, Adam, for your questions. So next please. Your next question comes from the line of Charlie Webb from Morgan Stanley. Please ask your question. Hello, Charlie. Good morning, everyone. Thank you very much for presentation. I'm definitely some insight in there. A few from me, Just first off on Blue Hydrogen, just wanting to be clear, is this all about new opportunities as in there isn't really a retro opportunity for the Grey Hygiene, where you already, I guess, kind of traditional catalysts, do you see, is there any way you can upgrade or scale? Is this very much for new, blue hydrogen plants? Just to clarify that. Then just on green, kind of circling back to kind of obviously this is nascent. You guys kind of mentioned it and the technologies continue to evolve. How do you ensure, I mean, is this an area where you need to have partnerships with some of those other leading, electrolyzer producers, I guess, Hydrogenics, ITM, Is that where you need to form some sort of technology development partnership to ensure that your technology has a good chance? I mean, how do you kind of ensure that it does feel like there's a lot of different paths being taken right now, in terms of moving towards green hydrogen, how to scale it up? Just how are you thinking about kind of developing your product offering? And then lastly, kind of tying it together, just thinking about the capital cost, the CapEx, I mean, you clearly see growth opportunities across all three of these kind of production and on the fuel cell side, How much CapEx do you need to put to work to continue to support the growth? Is that kind of captured in your already planning today or are there changes here where you need to invest more, to make sure you're positioned for this growth? Sorry, thank you for the question. So, start off, Eugene, on blue hydrogen, the new versus retro Yeah. So, these are new applications for hydrogen that we're interested in, where it's being used as an energy that at really high volumes, which is quite difficult to high grade hybrids and it's being used. So there are benefits of doing this at large scale where you're close to carbon capture and storage, a lot of gray hydrogen in small inland, close to end markets. So we think the hydrogen infrastructure will evolve in a different way over the next 20 years. And indeed, the gray hydrogen market is already transforming where traditional small plants are being replaced by larger, more efficient plants that then distribute their hybrids and done a pipeline network rather than building them like that. So I think that, gray hydrogen will be replaced, but it won't be as simple as simply replacing an existing gray hydrogen plant with a new blue hydrogen plant. Sorry, just a quick follow-up on that. Does that mean that when you think about these large hydrogen opportunities, therefore, you're kind of more steered towards, I guess, opportunities in methanol, ammonia, which traditionally, I guess, have been the larger World Scale type, type hydrogen, France? Or is it, as you say, these are the more the energy exercise? Just trying to get a sense, is it more industrial use or think it's more energy use? Well, it's for production of hydrogen at scale, a very, very large scale even for distribution into, for example, in high net, hydrogen will go into the gas distribution network for domestic years. It'll also go into large industrial users. It'll also go into transport. There are advantages in producing the hydrogen at very large scales typically that 160,000 ton a year size would be a good world of skill to think about to get the efficiencies of scale there, but it'll go into all of those applications, which are very different to what Grey Hydrogen is used today. Okay. Thank you. Okay. So on the green hydrogen, you're absolutely right, Charlie, it is Nations, and we are working with a number of of, of the suppliers of, electrolysis at the moment. And how we exactly move this forward, I don't think we'll be doing it all ourselves. We will be working in some development partnerships and stuff like that. But exactly how this moves forward will navigate our way through. But absolutely, I suspect it will be very much like the way we work in our existing businesses, which are working in partnership with our customers, because this is a technology solution people want their different, they want to work with us on the technology to develop it together. And lastly on CapEx, there are all three Well, I've mentioned that, it's relatively low capital intensity in these, in these areas. And in particularly in hydrogen, we have the capacity at the moment for the catalyst production. And once you've developed the technology, you don't need to put the licensing. You don't need to invest. That's not that's a very, very capital life business, because it's a technology and people engineering business. On the fuel cell side, the doubling of our capacity that we've just we are close to finishing, we'll finish by the end of this year costs us about $15,000,000, I think it was, Joe. To double our capacity from where it was before. And so I think the ability to scale up, we can do that. We did that project within less than a year. And so therefore, the ability to scale up rapidly, and relatively low capital cost is there for us. That's good. Thank you very much. You're welcome, Charlie. Thank you. Your next question comes from the line of Sebastian Bray from Berenberg Bank. Please ask your question. My first one would be on the cost structure for blue hydrogen. Rob, you mentioned earlier a figure of about $40 per kilowatt for this, if I take your market share assumptions and accessible market sizes, is it fair to say we're talking about roughly a figure of half of that on a per unit hydrogen or per kilowatt basis for blues of roughly $20. And as a second question on that, Is there any precedent for licenses being quite as big or as valuable as the GBP 50,000,000 to GBP 60,000,000? I do have a third question on green electrolysis, but I'll pause there. Sorry, Sebastian. Thank you for your questions. I think I'm not sure if I got your first question. Could you repeat it again, please? Because I think there were puzzled faces in this room. For a unit, let's say that if Is all things being equal, Johnson Matty providing the catalyst of a technology to make 1 kilogram of annual capacity of blue hydrogen worth roughly half of what it would get for the equivalent amount of green hydrogen capacity in an electrolyzer? Criety. I don't, can we come back to you on that one? I think we've looked at it in a slightly different way. And I don't know if I have all the detail per kilowatt. So I guess I would say there's a slightly different way in which the revenue flows. Because there are upfront, lump sum payments to us in blue hydrogen at the start followed by refill, once every 3 to 4 years as things progress forward, which is a slightly different way things go in green hydrogen. However, just based freight trans, if you want a straight translation over, the kilotons per year of hydrogen production will have a translation directly across into kilowatts. And we can get that to you immediately after. Yes. I think the translation we've used is roughly 40 kilowatts per kilogram of hydrogen. So, and that's the sort of sort of well used sort of rough range of value. So I guess I'd have to get my calculator out and work about 160 kilotons and then turn that into terawatt hours, gigawatts, and then compare that with the value, for the green hydrogen. But hopefully, your calculation will be better than mine, Sebastian. I just was wondering perhaps in principle, from revenue or profitability terms or maybe both, would you prefer one unit of green or one unit of blue hydrogen? I don't think I look at it like that. I look at the opportunity, and I think the opportunities are good in both. The return on capital should be good for both. And I think that, with the offering that J. M. Has, I think we be competitive and both of them could be attractive for us. I mean, if you think about JMs, the way we operate, we operate in niches. Our strategy is very much to operate in issues which require a technology solution. And the technology solution required for green hydrogen is around an NEA that works with, drifting the PGM content on that, in that system, which allows us to capture value. And the same thing is true in Blue Hodge and around the technology and the catalyst. If you can make a better catalyst, you can attract more value. And in both of them, I think they're potentially into the attractive markets. That's On the licensing question, Eugene, 50 to 60 per plant, do you want to answer that one? It was around, as we've seen, are we seeing something of that scale before? In methanol, So yes, we've seen data plan for this year of methanol. So no blue hydrogen plants exist at the moment. So, the hybrid plants using this scale of technology, our scale of technology do exist where the final application is methanol. We're quite confident of the scale. Does that help answer your questions Sebastian? Because as you just said, we don't have a lease the hydrogen plants at this scale that exist at the moment. Understood. That is helpful. Thank you. My last question was on the electrolysis area. What exactly is it that Johnson Matty can sell to the electrolyzer providers that they themselves in doing at the moment? And if you were to say, let's say on a 5 year view, is it likely that there will be any commercial sales to this area by 20 25, not as a matter of guidance, but just what does your gut feeling say? So I think the opportunity in green hydrogen is here coming very rapidly. And it's incredible how it's evolved in the last 12 to 18 months and probably even arguably even 6 months. And there are a relatively small number of players here in the Penn market, what they will be looking for is an NEA. So the membrane and electrode has said, we're exactly like they'll be looking for the truck manufacturer and the auto manufacturers are looking for in, for their fuel cell stack. So what we would be looking to offer is either the catalyst coated membrane, or if some people wanted it, they'd go further down to the MEA. But we think where we have competitive advantage would be the catalyst coated membrane. And we are talking to, at the moment, not all, but certainly some of the existing, main players. And obviously, what we think we can offer is, and while they'll be attracted to us, is our deep PGM chemistry expertise And the fact that we've got proven track record in fuel cells, because actually the fuel cell for a truck is not that different from a fuel cell for a green hydrogen plant. You're welcome Sebastian. Do you have another question? We do. Next, please. Your next question comes from the line of Andrew Scott from UBS. Please ask your question. Yes, thanks. Good morning, Andre. Yes, good morning, Robert, and thank you for the presentation and also to Joe and Eugene. I had a couple of couple of questions. And first of all, I just want to check the methodology, in the numbers. So very, very useful getting that overall view of your addressable markets in each of the three segments. Just checking that, that is a revenue number as is normal with J Matts. So it's, X substrate, X PGM content. So it's the revenue number that then you apply on margin 2. So I just wanted to check that first of all. And sorry, just while we're on that margin, application, I sort of got a sense from what you were saying through the presentation that the margin might be a bit above the average of the group. I just wanted to check if that's right. So I guess the question is, So in the medium term or let's say longer term, the answer to that absolutely yes, but clearly in the scale up phase, it will be, but there's no reason why it shouldn't be higher than the current average margins for the group, yes. Yes, great. Thank you. Second question was entirely different. It was around the slide on autos and trucks. I'm just trying to work out the trade off between your existing HDD franchise and the opportunity of fuel cells. I just want to check this math with you, basically. Are we looking at a similar margin on the CCM business? To HDD. And therefore, I just applied the multiple difference on the revenue line to get to my EBIT. In other words, about I think I'm right in saying about three times the opportunity in trucks, but wanted to check that maths, please. So, I think you're absolutely right. At the moment, we sell, I mean, it all depends on the size of the truck, of course. This number is based on the 2,500,000 is based on a sort of 160 type kilowatt trucks. So that's a midsize truck rather than a large one. But if you look at our existing clean air business, the Catalyst content is about a £1000, and this is going up to £2,500,000. Vehicle. So yes, so tripling. Exactly, the margin structure, as you know, in clean air, you've got, obviously, quite a significant substrate costs that we then coat in there. And so I would hope that the margins in fuel cells should be better than the margins in cleaner. When you get to scale, Yes, sure. Perfect. Thank you. And sorry, I'm going to steal another one if I can. Just really a question around the development so far of electrolyzer it seems to be the common view, consensus thinking that, PEM is just the better model for the green hydrogen market, because of some of the comments that you mentioned actually, which was obviously the variability of the grid and also the footprint And yet, the last 2 major contracts, the Nell contract with Nicola, the, the Saudi JV with Air Products and Neon, they're both used alkaline technology. I wondered if you can reconcile that, please. Well, the good news is, I've got UTU, who hopefully can. So, there's a great demand move forward with decarbonization and to produce green hydrogen. The alkaline technology is currently the most advanced. So if you want to get a project on the Go Nye, you can play to the strengths of alkaline. So you can do scale where footprint isn't a problem. You can connect it to a source of electricity, which doesn't suffer from variability. For example, hydroelectric example, where you get a standard, flow of electricity or just connecting to the grid. So these will not be the mass deployment. So green electricity, but you can find examples which will play to the strength of alkaline. And given that it's more advanced than PEM at the moment, natural choice for a demonstration plant at the moment to get you going. Okay. So you think effectively you think it's a scaling thing and a CapEx per kilowatt hour thing at the moment. On technology readiness. Yes. And technology readiness. Okay. Brilliant. Appreciate your thoughts, everybody. Thanks a lot. Thanks, Andrew. So next, do you have another question? Yes, your next question comes from the line of Lucy Hancock from Bernstein. Hi, hello everyone and thank you for the presentation. Very insightful, very useful. A lot of the questions I had have already been asked, but there's a couple of clarifying points are still sort of outstanding from my side. And so it clear then from the ME and the MEA versus the CCM you think that the EMEA is not exactly where your capabilities are. It's a less valuable part of the value chain. Just going forward, because obviously the million will be EMEA and CCM, are we to assume that the EMEA is a much smaller part of that revenue of 33. And then therefore going forward, you've shared this estimate of 1,000,000,000 for just CCM. Is there an incremental revenue opportunity for Meeya that's missing there or is it is it much smaller given that you've not included it? That was the first question. Second question was around stationery, stationery, you've stationery applications around 50% of the revenue at the moment, and from the slide that you've shared. And we haven't talked about that, is that to assume that you don't see significant growth opportunities, on that one. And then I'll just sneak in a last third one on green hydrogen. And just is it possible? I again, realize it's nascent technology. Are you able to share any of the equivalents, I guess, economics that you have for Blue Hydrogen, which is around, the upfront CapEx, the refill size, and particularly the replacement cycles, So if you said 3 to 4 years for blue hydrogen, does that sort of apply to green as well? Well, those were different questions. I guess, hopefully, as you say, we answered the rest as well, but, yes, do you want to ask the first 2? First one, I think on EMEA versus CCM and then on stationery. It's just because you just say exactly that question, the first part, again, just so I'd get it precise to answer you, Lucy. Sure. So $33,000,000, if I understand it's CCM and EMEA. That you sold customers. And then you see that CCM is at the higher value in sort of where John Smith has the most value. And you've given a number of market size estimate of 1,000,000,000, which is just CCM. Is there then an incremental market opportunity for EMEA that we're missing. But in the current 3,000,000. Much of that we are going through to the MEA at the moment. Just because most of the customers require that as they're developing, really. And But we projected the CCM value going forward is that, that's where our core capabilities play, but we can we do add value to the MEA also because we've got skills and technology and how we apply the seals which is also complex. But it's more an assembly than the real small and the chemistry that goes into the and the catalysis that goes into producing the CCM. So there is more incremental value on that 1,000,000,000 And the in an MEA, about 80 85 percent of it is at CCM in value. So going on to the second point around Stationery, Stationery was a market that certainly was emerging first. So we've had a longer history there with, the types of catalysts and products that we've sold into that market. But we don't see the trajectory of growth in stationery. We will serve our customer base there and look for opportunities. But the real growth as you see from the vehicle figures that will start to adopt fuel cell technology, particularly in trucks, is where the really exciting place to play is for us. And it plays to our strengths, we're well connected to that market. Okay. Thank you, Joe. And Yousine, do you want to ask the question about, the equivalents, Alex? Yes. I mean, we've in green hydrogen, we've looked at the model of supplying mias and charging for the mias. And we see those a typical value for when we would expect those to be changed out would be about once every 5 years. And that'll be for a variety of reasons performance, but all So there's going to be such quick technology development here that after 5 years, the new fields that are available are going to be so much better than people what it will be time to change the mic to get more performance out of the afterpay equipment. Yes, that's really helpful. Thank you. Thank you very much, all. Thanks very much, Lucy. Do we have any more questions? Your next question comes from the line of Chetan Udeshi from JP Morgan. Please ask your question. Yes, hi, thanks. A couple of questions. Firstly, Hi, just based on my understanding, it seems in clean air catalyst market outside of Toyota, maybe everybody else uses, merchant products from JAM, Umicore, BSF, etcetera. Is that going to be the same you think in the fuel cells market. We hear GM talk a lot about their own proprietary fuel cells technology, which they are now going to license to Nicola. So I mean, do you think the sort of captive involvement could be similar or higher than what we see in the clean air catalyst market? That's the first question. And Second question on the PEM electrolyzer market. I acknowledge that it's a small market. But I'm curious why ACM not involved in with any of the existing whatever small scale projects that might be ongoing on payment electrolyzer side, is it just maybe lack of, maybe you guys did not focus on that market in the recent years just because now it's getting bigger in that that's increasing in focus. And if you can other competitors for pay MCCM similar to what you have in future as well. Thank you. Okay. Thanks, Chetan. Joe, what would you say about the captive market and how that's going to evolve? Yes. Well, we talked a little bit earlier around the captive market and, the early adop us. And it is still an emerging market. And there will those OEMs developing early generation fuel cell systems And as you talk about the clean air catalyst, similar players in that more also are in fuel cell catalysts. Indeed, we have leading fuel cell catalysts. But we're able to optimize catalyst, the anode and cathode layers, the membranes, you get to the CCM, we're also completely in control of that performance. And the costs along that supply chain because we are we're putting those materials together. So we're very well placed to support the roadmap of where our R and D is targeted to get along the path to cost down. We've talked about the thrifting and the efficiency and automation. And these all come together to be more competitive. So it will there will be elements where some stays cap but as this market really scales, the best technology, in working in collaboration in the way that we do with OEMs and Tier 1s will be, will have a really good place. And this is where capabilities are in this. Yes. And I think if you look at the fuel cell market, so the fuel cell market, sorry, the clean air market, I guess, years ago, A lot of people did their initial research in house, but then, as the market develops, they went out to the market, at its scale. And I think we expect similar things to happen. Yes. Eugene, do you want to answer about the why not now? Why aren't we there? For existing customers? Yes. So I think it's probably fair to say that there is no current supply chain for CCNs for green hydrogen and for electrolysis. Interest is absolutely excluded at the moment. And there is a commitment to put a lot of capacity down in the ground in the next 5 years and then in the next 10 years. But that supply chain has not yet developed lots of people, the OEMs, some OEMs are making CCMs artisanally themselves at the moment. It's absolutely not their, something they're actually interested in doing because they're in the business us they're good at other parts of the electrolyzer. So I think this is a market that's forming right now. And think we're very well positioned right now. I think the time is right. I don't think we're live. I think the time is right, for us to increase our efforts in this area right now. Thanks, Eugene. Thanks, Chetzen. Next. Your next question comes from the line of Samagi Stutti from Stifel Please ask your question. Good morning, everybody. I had three quick questions as well, if I may. The first, could you give us an understanding of the PGM modems of a PEM fuel cell stack for an FCEV versus is, for instance, what you would have in a typical catalytic converter with an LDD or HDD? That would be the first to have an understanding of how that plays into PJM services. And my second question was, within CTM, coding is obviously the key. Can you give us a little indicate or some indication of are you using high speed printing or plasma technology to better understand how you can produce this at scale? And then the last question, apologies, is when we talk about the flow sheet for low carbon hydrogen and the capital costs, Does that include the air separator unit as well or is that outside of that, 40% reduction in capital costs? Thank you. Okay. Maggie, those are good questions. That a euphemism for Robert can't answer them. So quite technical. Joe, PTM loadings of of, at NEA versus or CTM versus, say, catalysts. Yes. And well, they've been in the region of 4 4, five, six times depending on the type of vehicle to, and the mission control, catalyst. So that's in aggregate for the vehicle, not on a single MEA, because there are how many MEAs per on a sort of 80 kilowatt car. It's 300 or so MEAs. Yes, exactly. Yes, exactly. That's 5 100 for the vehicle. Okay. Yes. And the second question was about how do we Codes as DCM without telling our competitors how we cope? Yes. Yes. Well, we've learned a lot over the last 20 years be really good at counting, well, and longer really as we cope our substrates, it's core to our technology. In Johnson Matthew and part of our core science. And as I mentioned, that we've got a very clear R and D roadmap of how we're continuing to develop our manufacturing technology and to get to the most efficient processes to be able to to deliver on the target costs, total cost parity, a ownership parity for this market to really establish itself. In the future. Okay. Thanks, Joe. And, Eugene, associated with our carbonizing the extra units? It's 40% cheaper for the total capital cost of, the units acquired reduce the hydrogen. The meter saving is in carbon capture and storage where, because the carbon dioxide is produced at high pressure, you need a much smaller carbon capture and storage unit to capture the carbon. So that's where the real big hit comes in capital costs. Okay, fabulous. Thank you so much. I appreciate the answers. No, that's all, Maggie. Thank you for the questions. Next. Do we have another question? Yes. Your next question comes from the line of Sanjay Jaffray from Panmure Gordon. Please ask your question. Thank you. Thank you for taking my question. Most of my questions have been answered. I just had a couple of questions, if I may. I noticed that some of the bus and truck manufacturers are experimenting with solid oxide fuel cells. Probably more as a rate extender with batteries. Do you have any sort of thought on, how important is that as a technology and does that you see as a threat to your perm based technology. And secondly, on the on PEM, I was wanting to check, is the purity of hydrogen really key? I mean, what I'm just trying to see is green hydrogen Is that a key word, is that an important way to produce high purity hydrogen? Because I understand PEM needs kind of much pure hydrogen. So solid oxide versus pen fuel cells? Yes. Well, certainly, you're right, but range extenders on on buses and trucks in China were a way of demonstrating fuel cell technology. But it really doesn't have the durability in the automotive application to be a long term solution. So as we, we're really starting see the PEM technology take root in automotive. It's a it gets us to the high kilowatt hours of power. It gets us to long, long hours of cycle time on a fuel cell system. It's a and we're get into those levels where you get 1,000,000 miles out of the truck. So, it wouldn't it's not a suitable technology long term for the fuel cell automated market. Okay. Thank you, Joe. And on the PEM and the purity of hydrogen? So PEM dogs produce hydro has to keep only to produce hydrogen at much higher purity levels. And how important also another advantage is it can produce at a pressure, which can be very useful if you're trying to store the hydrogen as well, unlike alkaline water. And how important that purity is depends on how you're getting it to end applications. So for example, at high net, the gas going into the grid, being mixed with all sorts of other things. So typically, hydrogen is brought to the specific purity required for the end application by purification just for that application. And so for example, there will be plans built where the application is right beside the production of hydrogen when the purity may be very useful indeed. However, because in the pipelines, then that final purification step is where things will be adjusted to the needs of the end application. That answered your question. Think we've got 3 more questions. And, next. Your next question comes from the line of Ronald Ho from Redburn. Afternoon. Just one question left from me. And I'm just wondering about potential benefits, in adjacent businesses in E And R. And I'm thinking about the use of ammonia as a sort of transport medium for hydrogen. And I think you have a license business there. So I guess the question is do you see any uplift or benefits to your ammonia license business, from the hydrogen economy as well? Thanks. [SPEAKER PIERRE YVES LESAICHERRE:] Excuse me, Neil, probably answer that one. So we are also global leaders in ammonia, lots of, there's lots of synergies between the technology that we're developing for, blue hydrogen on our ammonia and methanol businesses. It's kind of one of the reasons why we think we'd be good at Blue Hydrogen, why we think we're a good owner for blue hydrogen. And no specific link into our existing ammonia technology from, from blue hydrogen, but we are very interested the fact that ammonia could be a carrier for hydrogen based energy. And I think when we talk about the opportunities for the rest of the group, for green hydrogen as well as fuel cells, etcetera. I mean, we we talked about the catalyst coated membrane, where you have to make the catalyst first and that's part of our so you need to make the catalyst, you need the PGMs. And to make the PGMs, if you've got recycled PGMs, then you can go to your customer and say, not only are we giving you a product, which has zero emissions at the tail pipe, but also, or if you're generating, hydrogen through electrolysis, but also the embedded carbon through the, the PGMs that are going into the manufacturing process are very low. So that integrated capability, the JF offers, not only around the technology associated DGM Catalysis and what we know there, but the recycling and all the other ancillary benefits are being part of the integrated JN group. It's why we think that J. M. Is not only, well placed to, play this era but I would go further and say uniquely play. So I think there are lots of opportunities for the broader group, that this, these opportunities derive. So, thank you for your did you have it on the 1 or is that? No, no, I was just going to say thanks for the answer. You're very welcome. Next, Your next question comes from Nicola Tang from BNP Paribas. Hi, everyone. And actually, Robert, thank you. Just touched on my question a little bit And I wanted to talk a bit more about this closed loop offering that you mentioned a bit, because I'm thinking that could be one area of your competitive advantage versus any new as you were just sort of flagging. I was wondering if this is something that comes up in your discussions today with either existing customers or potential customers. And at what point or at what point should we start thinking about, closed loop in fuel cells, so thinking of actually about the recycling fuel cells? Thanks. Joe, do you want to talk about what actually the customers are saying to us at the moment? Well, certainly, the customers or the major truck OEMs are obviously very, very interested in a sustainable supply chain and where their raw materials are coming from. So the fact that we've got these capabilities and we're developing even further in recycling and being able to provide a secondary metal rather than a primary because there's as I think I mentioned earlier in the presentation, that there's a significantly lower carbon footprint associated with secondary PGMs So it is definitely you're right. This is definitely a differentiator for 'eighteen. And we've got the skills within the organization to really optimize that. I think what we're seeing at the moment, if I contrast this with battery materials, where maybe a couple of years ago, when we were talking to customers about battery materials. Were they really talking about the embedded carbon within the battery materials? Not really. They were talking about Cobalt and where Cobalt came from, I, the artisanal mines in, DRC. But now they really are talking about the whole embedded carbon within the whole supply chain and really driving that down. And that's particularly true with the Western OEMs, the European and the American OEMs, less so for the Chinese OEMs. And Certainly, we would expect that trend to absolutely happen in this space as well. And we would we absolutely believe having that closed loop offering and the ability to offer, low carbon, low embedded carbon PTMs of to a into the generation of a fuel cell and or a MEA to go into green hydrogen production will be a competitive advantage and something that we should be able to extract some value for. Great, thank you. Thanks, Nicola. Next, Our final question comes from the line of Jean Baptiste Vonane from Bank of America. Please ask your question. Jon Baptiste, you get a prize for being patient. Hi, hi, Horbert. Thank you very much for taking my question. A lot has been answered already. And I know I appreciate that the focus today is really on Hydrogen, but I would like to know if you could elaborate a little bit further maybe on where you see in the transportation sector your technology for fuel cell articulating with battery materials, because given your current investment in the LNO. I guess there are probably some synergy that you can extract between the two products for the powertrain and any vision that you have around where this powertrain is going would be really helpful if you could share it. Thank you. So, I think they are very complementary. The capabilities and having both, skills. But to be clear, I don't actually think that the customers are going to come to you because you can do both. I think you have to have the best battery capability in technology. So the cathode material needs to give the right level of energy density at the right level cost at the right level of longevity and performance. The same is absolutely true on the fuel cell technology and the MEA's or catalyst coated membrane is going into that. Because buyers, I don't think being necessarily the one stop shop being able to supply battery materials and fuel cells are necessarily going to help. But understanding the customer demand, understanding what their particular requirements are will allow a degree of complementarity that will help, but you still need to have the best technology. And being the best average is not good enough because you might be you've got to have in each application the best, and that's what the customers buy. But there is a complement parity to it. Having said that, as we talked about, we do expect that in fuel cells, the first push will be in heavy duty applications. So trucks and buses, long distance buses, whereas, obviously, as you know, the first push for battery materials and the battery market is battery electric vehicles, which is a different application. Okay. Makes sense. Thanks very much. Very good. Are there any more questions that have been added at all? We have no further questions. I'll now hand the conference back to Robert for closing remarks. Well, look, thank you very, very much indeed for joining today. I hope you found today helpful and you've got a bit more insight on firstly the hydrogen market itself, but also, J. M. Position in the market and why we are so excited about the opportunity, which has evolved very rapidly over the last few years. For those of you who have followed J. M. For a long time, you know we've been in the hydrogen market for many, many, many years, not just in the hydrogen production side, but Eugene talked about, but also in the fuel cell business. And we've had optimism and encouragement about the fuel cell market for many years, but it does feel very much like its time is coming now, And in many ways, the fact that we're actually starting to see penetration into China now and lots and lots of interest in Europe and America is really exciting. So I think we're very well placed. We're very excited about the opportunity and excited to share it with you. And so with that, thank you very much for this thing. I'm sure we'll see you all again over the coming months. And we'll happily, give more to your questions as I'm sure you'll have them over the next coming months. And please feel free to call Martin or Louise or Jane in the IR team if you've got any further questions. So thank you very much for listening and, see you again soon. That does conclude our conference for today. Thank you for participating. You may all disconnect.

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