The problem: Companies are struggling to find talent with the skills and experience to scale and commercialize green hydrogen.
Why it matters: Green hydrogen is projected to grow to a $100 billion industry by 2030 as companies transition to renewable energy sources.
The solution: Look for opportunities to source talent from other sectors, retrain people from within, or partner with others who already have them.
Midway between Seattle and Portland, on a plot of land home to a former coal mine, one of the most important experiments in the transition to clean energy is taking place. There, carbon reduction firm First Mode has established a proving ground to demonstrate the next generation of zero emission ultra-class haul trucks, replacing existing diesel engines with hydrogen fuel cell batteries powerplants. Additionally, First Mode is building out the infrastructure for hydrogen production, refueling, and recharging facilities.
“We need to show our customers and vendors that we can commercialize and scale hydrogen production,” says Julian Soles, First Mode’s CEO. “Think of it like building a car and the ecosystem it runs on at the same time.”
Over the last few years, companies both inside and outside the energy sector have accelerated their efforts to decarbonize and support the transition to clean energy. Many have publicly committed to reaching net-zero carbon emissions by 2030, and as the most abundant chemical element on Earth, hydrogen is expected to play a key role in helping achieve those targets. There are several different classifications of hydrogen, but the one currently receiving the most focus is green hydrogen, which is generated from renewable energy sources that do not produce carbon emissions.
Estimates call for the global green hydrogen industry to grow from around $4 billion today to anywhere from $60 billion to $100 billion by 2030. First Mode, for instance, recently completed a $200 million funding round that values the 5-year-old company at $1.5 billion. For the industry to scale to its projected size, however, new value chains, infrastructure and markets will need to be developed. “You’re building a business in an industry that doesn’t yet exist,” says David Joseph, a senior client partner in the global industrial markets practice at Korn Ferry specializing in natural resources. “It takes a lot of faith that it will all come together.”
It also takes a new kind of talent. As a specialty, for instance, there are very few genuine hydrogen experts, says Joseph, which makes the competition for talent intense and expensive. Energy transition leaders interviewed by Korn Ferry also identified a need for techno-commercial and creative dealmaking capabilities to negotiate partnerships, navigate the regulatory landscape, and secure funding and investment capital, among other skills.
That’s why First Mode’s test is so important. Soles believes a successful, large-scale deployment of zero-emission hydrogen-powered mining trucks could build demand and establish credibility with investors, businesses, regulators, and other stakeholders to accelerate the transition to green hydrogen, as well as attract and retain talent. “Having a commercial system in a mine is a proof point for the industry,” he says.
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Hydrogen has long been a critical component in industrial activities. From an energy perspective, however, the problem is that as a molecule chemically bonded to other molecules, extracting and isolating hydrogen is an expensive and emissions-heavy process. Gray hydrogen, which is the most used type, produces energy from natural gas through an emissions-intensive industrial process, for instance.
While still nascent, blue and green hydrogen are much cleaner and efficient sources for decarbonization. Blue hydrogen captures and stores emissions produced with natural gas, making the use of fossil fuels a cleaner and more environmentally friendly process. Think of it as a bridge to make current energy sources more sustainable while the transition to new clean and renewable energy takes place. But green hydrogen is the “holy grail,” particularly as it relates to decarbonizing hard-to-abate industry and heavy transport like trucking, shipping, and aviation that account for about half of global energy use, says Maarten Wetselaar, CEO of Spanish energy company Cepsa.
Wetselaar believes all the pieces are finally in place for green hydrogen to live up to its promise. For one, from the Paris Agreement to the war in Ukraine, the geopolitical push behind the clean energy transition is stronger than ever. In addition, since the use of electricity comprises roughly 80% of the cost to make green hydrogen, the increased use and affordability of solar and wind power for electricity has, in turn, brought down the price to make green hydrogen. The cost for a kilogram of hydrogen has fallen from the double digits to between $3 and $6 depending on geographic location. “The cost has come down enough to make green hydrogen competitive with other alternatives,” says Wetselaar.
Now comes the hard part: convincing customers, investors, and regulators of the virtues of green hydrogen in tandem with or instead of other clean or renewable energy alternatives. “The winners in the hydrogen market will be those who can orchestrate the ecosystem,” says Mark Insch, a senior client partner specializing in the energy, utilities, and renewables sectors at Korn Ferry.
Put another way, partnerships will be critical to the development of the market. Cepsa, which is developing one of the largest green hydrogen hubs in Europe, has announced partnerships with several companies on the $3.5 billion project in southern Spain, including with Portuguese electricity company EDP and Spanish fertilizer manufacturer Fertiberia. Cepsa also has an agreement with the Port of Rotterdam to create a green hydrogen corridor between southern and northern Europe, meaning that green hydrogen produced competitively in Spain can be used to decarbonize industry and heavy transport in the North.
Insch notes that energy companies need talent that can bring together production, storage, distribution, generators, and other parts of the value chain all the way to the consumer. “It is a much more co-dependent situation, with more parties involved in more partnerships,” says Insch.
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But the future of green hydrogen doesn’t rest on current demand—it hinges on creating more demand. Doing that requires leaders who can transform not just a business, but an entire industry. It won’t be easy. “Transitioning to a new business model must be balanced with profits and returns to investors, and rare is the leader who can simultaneously perform and transform,” says Raffaello Raimondi, a senior client partner in the global industrial market practice at Korn Ferry specializing in energy and natural resources.
In fact, Korn Ferry studied the profiles of more than 150,000 leaders and interviewed hundreds of investors to identify the traits needed to successfully lead in a constantly changing environment. The research uncovered five key skills: the ability to anticipate, drive, accelerate, partner, and trust. The bad news: only 15% of today’s leaders possess all five qualities of what Korn Ferry coined as the “self-disruptive leader.”
Marco Alvera, author of “The Hydrogen Revolution,” is one of those rare leaders. After more than 20 years working inside big energy companies in Italy, including as CEO of energy infrastructure company Snam, Alvera left last year to co-found renewable energy company Zhero and lead green hydrogen company Tree Energy Solutions as CEO. “If you have transformational ambitions as a leader, you have to pull yourself out of your comfort zone,” says Alvera, whose company is currently building Europe’s largest hydrogen import terminal in Germany. Alvera says the challenge with the energy transition is that historically the industry doesn’t attract many entrepreneurs. “We need a west coast, Silicon Valley mentality to make this work,” he says. “We need more people starting similar companies.”
But the industry’s talent problem isn’t just limited to leaders. As Wetselaar notes, the industry needs technical and commercial talent who can have a sophisticated conversation with a shipping customer that has been using diesel fuel for decades about the efficiency and, more importantly, profitability of transitioning to green hydrogen. Moreover, the energy sector isn’t immune to the labor shortages impacting other industries. Retention rates have been on the decline since the pandemic, as companies poach scarce talent with clean or renewable energy experience from each other. At the same time, engineers and other specialists have more options outside of the energy industry. As a result, energy leaders Korn Ferry spoke with are emphasizing a combination of training and upskilling their current workforce with going outside of the industry to recruit new talent.
The chance to participate in a clean energy future is attracting younger people to the energy industry. According to a study by the Center for Energy Workforce Development, 32% of energy workers are millennials, for instance. Worldwide employment in the clean and renewable energy sector grew by 700,000 positions last year to total just under 13 million. The combination of wide open career opportunities and a clearly articulated purpose to improve the planet position companies involved in the energy transition to bring an entirely new generation into the field. “The best-selling point we have for why people join us is because they believe in what we are doing,” says First Mode’s Soles. “There’s a huge amount of interest in our commercialization journey.”
For more information, contact Mark Insch at mark.insch@kornferry.com, David Joseph at david.joseph@kornferry.com, John Mensah at john.mensah@kornferry.com, or Raffaello Raimondi at raffaello.raimondi@kornferry.com.
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