US Business

Germany on Wednesday inaugurated a railway line powered entirely by hydrogen, a “world premiere” and a major step forward for green train transport despite nagging supply challenges.

A fleet of 14 trains provided by French industrial giant Alstom to the German state Lower Saxony has replaced diesel locomotives on the 100 kilometres (60 miles) of track connecting the cities of Cuxhaven, Bremerhaven, Bremervoerde and Buxtehude near Hamburg.

“We are very proud to put this technology into operation together with our strong partners as a world premiere,” Alstom CEO Henri Poupart-Lafarge said in a statement.

Hydrogen trains have become a promising way to decarbonise the rail sector and replace climate-warming diesel, which still powers 20 percent of journeys in Germany.

Billed as a “zero emission” mode of transport, the trains mix hydrogen on board with oxygen present in the ambient air, thanks to a fuel cell installed in the roof. This produces the electricity needed to pull the train.

Regional rail operator LNVG said the fleet, which cost 93 million euros (dollars), would prevent 4,400 tonnes of CO2 being released into the atmosphere each year.

– Run for its money –

Designed in the southern French town of Tarbes and assembled in Salzgitter in central Germany, Alstom’s trains — called Coradia iLint — are trailblazers in the sector.

The project created jobs for up to 80 employees in the two countries, according to Alstom. 

Commercial trials have been carried out since 2018 on the line with two hydrogen trains but now the entire fleet is adopting the groundbreaking technology.

The French group has inked four contracts for several dozen trains between Germany, France and Italy, with no sign of demand waning. 

In Germany alone “between 2,500 and 3,000 diesel trains could be replaced by hydrogen models”, Stefan Schrank, project manager at Alstom, told AFP.

“By 2035, around 15 to 20 percent of the regional European market could run on hydrogen,” according to Alexandre Charpentier, a rail expert at consultancy Roland Berger.

Hydrogen trains are particularly attractive on short regional lines where the cost of a transition to electric outstrips the profitability of the route. 

Currently, around one out of two regional trains in Europe runs on diesel.

But Alstom’s competitors are ready to give it a run for its money. German behemoth Siemens unveiled a prototype hydrogen train with national rail company Deutsche Bahn in May, with a view to a roll-out in 2024.

But, despite the attractive prospects, “there are real barriers” to a big expansion with hydrogen, Charpentier said.

For starters, trains are not the only means of transport hungry for the fuel.

The entire sector, whether it be road vehicles or aircraft, not to mention heavy industry such as steel and chemicals, is eyeing hydrogen to slash CO2 emissions.

– Colossal investment –

Although Germany announced in 2020 an ambitious seven-billion-euro plan to become a leader in hydrogen technologies within a decade, the infrastructure is still lacking in Europe’s top economy.

It is a problem seen across the continent, where colossal investment would be needed for a real shift to hydrogen.

“For this reason, we do not foresee a 100-percent replacement of diesel trains with hydrogen,” Charpentier said.

Furthermore, hydrogen is not necessarily carbon-free: only “green hydrogen”, produced using renewable energy, is considered sustainable by experts. 

Other, more common manufacturing methods exist, but they emit greenhouse gases because they are made from fossil fuels. 

The Lower Saxony line will in the beginning have to use a hydrogen by-product of certain industries such as the chemical sector.

The French research institute IFP specialising in energy issues says that hydrogen is currently “95 percent derived from the transformation of fossil fuels, almost half of which come from natural gas”. 

Europe’s enduring reliance on gas from Russia amid massive tensions over the Kremlin’s invasion of Ukraine poses major challenges for the development of hydrogen in rail transport.

“Political leaders will have to decide which sector to prioritise when determining what the production of hydrogen will or won’t go to,” Charpentier said. 

Germany will also have to import massively to meet its needs. 

Partnerships have recently been signed with India and Morocco, and Chancellor Olaf Scholz sealed a green hydrogen deal with Canada on a visit this week, laying a path for a transatlantic supply chain.

Turkey’s business community confronted growing US pressure on Wednesday to break off its growing ties with Russia or face potentially crippling sanctions linked to the Kremlin’s invasion of Ukraine.

Washington is becoming increasingly alarmed that the Russian government and businesses are using Turkey to evade Western financial and trade restrictions imposed in response to the six-month-old war.

Turkish President Recep Tayyip Erdogan and Russian counterpart Vladimir Putin agreed to step up economic cooperation at a summit in the Black Sea resort of Sochi earlier this month.

Official data show the value of Turkish exports to Russia between May and July growing by nearly 50 percent from last year’s figure.

Turkey’s imports of Russian oil are ballooning and the two sides have agreed to transition to ruble payments for the natural gas exported by the Kremlin-tied giant Gazprom.

US Deputy Secretary of the Treasury Wally Adeyemo paid a rare visit to Ankara and Istanbul in June to express Washington’s worries that Russian oligarchs and big businesses were using Turkish entities to evade Western sanctions.

NATO member Turkey — on good terms with both Moscow and Kyiv — has tried to stay neutral in the conflict and refused to join the international sanctions regime.

– ‘Risk of US sanctions’ –

Adeyemo followed that up with a letter to Turkey’s TUSIAD business association and the American Chamber of Commerce in Turkey warning that companies and banks were in danger of being sanctioned themselves.

TUSIAD said in a statement late Tuesday that it had passed on the letter to Turkey’s foreign ministry as well as finance and trade officials.

The letter’s contents were first reported by The Wall Street Journal this week.

“Any individuals or entities providing material support to US-designated persons are themselves at risk of US sanctions,” Adeyemo wrote.

“Turkish banks cannot expect to establish corresponding relationships with sanctioned Russian banks and retain their corresponding relationships with major global banks as well as access to the US dollar and other major currencies.”

The economic cooperation agreement sealed by Erdogan and Putin includes a deal for more Turkish banks to start processing Russia’s Mir payments system.

Broader cooperation with Russia could help support Turkey’s ailing economy in the run-up to next year’s general election.

Adeyemo raised US concerns again in a phone call to Turkey’s Deputy Finance Minister Yunus Elitas last Friday.

“Underlining that it has deep economic and political relations with Ukraine and Russia, Elitas said that Turkey’s position (on joining) the sanctions has not changed,” Turkey’s finance ministry said in a statement about the call.

The finance ministry added that “it will not allow any institution or individual” to use Turkey to evade the sanctions regime.

Erdogan has previously argued that Ankara cannot join Western sanctions on Moscow because of Turkey’s heavy dependence on Russian oil and natural gas imports.

Some analysts believe that TUSIAD and the American Chamber of Commerce in Turkey — largely made up of big business with a global reach — are unlikely to violate the regime because they place more value on open access to US financial markets.

Timothy Ash of BlueBay Asset Management in London told AFP “smaller, domestically focused” companies were more likely to strike deals with sanctioned Russian entities that opened the way to two-way trade.

“It worries me though that the message from the top in Turkey seems to be that it’s fine to do more business with Russia, and it’s important to try and exploit opportunities to counterbalance costs from sanctions, even prosper from them.”

Orders for big-ticket US-manufactured goods were flat in July after four straight monthly increases due to a plunge in the volatile military aircraft category, according to government data released Wednesday.

New orders for durable goods held steady at $273.5 billion, after the nearly 50 percent drop in demand for defense aircraft and parts — a segment that surged more than 80 percent in June, the Commerce Department reported.

The result was far worse than economists had projected, but excluding the defense sector, orders rose 1.2 percent, the data showed.

Economists say businesses are likely to pull back on investments, fearing Americans will become more cautious about spending amid the highest inflation in 40 years, even though families are buoyed by a stockpile of savings.

Despite high prices and rising interest rates, there were nonetheless signs of continued demand, although some categories hinted at a slowdown, including appliances, which fell, and autos, where orders increased but by much less than in recent months, as did computers and electronics.

Ian Shepherdson of Pantheon Macroeconomics said the data show orders are “holding up” despite business surveys pointing to weaker investment plans.

And while auto orders undershot, “they are trending strongly higher as chip supply improves,” he said in an analysis.

“People report to surveys that they are miserable and anxious about the state of the economy, but they keep spending anyway because the huge pile of pandemic savings allows them to cushion the hit to their real incomes from high inflation.”

The drop in military aircraft orders was offset by the 14.5 percent jump in non-defense planes, the report said.

Google is breaking EU law by sending users of its email service Gmail direct advertising messages, activists said in a complaint sent to French regulators on Wednesday.

It is the latest in a long line of complaints filed by the activist group NOYB (None of Your Business), which has fought the tech giant for years on data privacy.

The French data regulator CNIL has been among the most active in Europe, doling out huge fines against Google and Facebook in particular.

The activist group provided screenshots to CNIL that showed marketing messages at the top of a user’s inbox.

The messages were marked with a green box and the word “annonce”, French for advert.

The group said under EU law, that kind of marketing was allowed only if users had consented.

“Spam is a commercial email sent without consent. And it is illegal,” said NOYB lawyer Romain Robert in a statement.

“Spam does not become legal just because it is generated by the email provider.” 

CNIL confirmed to AFP it had received the complaint. 

Google told AFP it had no comment as yet.

Google and Facebook’s parent company Meta are at the centre of a long-running battle over their data-collection practices in Europe.

The French regulator fined Google 150 million euros ($150 million) and Meta 60 million euros last December over their failure to provide users with an easy opt-out for cookies, files that track users around the web.

The two firms also face scrutiny over their practice of sending the personal data of EU residents to servers in the United States.

NOYB has filed dozens of cases with regulators across the bloc arguing that the practice is illegal.

Asian and European equities fell Wednesday as investors awaited news on the next US interest rate hikes.

With the Jackson Hole meeting of central bankers this week, focus is on what US Federal Reserve chief Jerome Powell will say about plans to tackle high prices — with many fearing higher borrowing costs could send the world’s biggest economy into recession in its battle to rein in inflation.

The euro held close to a two-decade low against the dollar, and the greenback struck a two-year peak against China’s yuan.

Oil extended gains on hopes of an OPEC output cut, while gas prices remain elevated on Russian supply tensions.

– Losing momentum –

“Markets seem to have lost their momentum,” noted AJ Bell investment director Russ Mould.

“Investors have become nervous once again, with all eyes on Powell and what he says this coming Friday.” 

Central banks face a delicate balancing act between battling inflation, with Russia’s war in Ukraine sending energy prices soaring, and avoiding recession.

Yet concerns are growing that spiking energy costs could still prompt a worldwide downturn.

“Investor anxiety is growing that a combination of central banks raising rates and higher energy prices will tip the global economy into a long recession,” said CMC Markets analyst Michael Hewson.

Wall Street ended mostly lower Tuesday, and key markets in Asia followed suit Wednesday.

– Rollercoaster ride –

The foreign exchange market has faced a rollercoaster ride so far this week.

The euro tumbled on Tuesday to $0.9901 — a new two-decade low — but later clawed back losses as the greenback was hit by poor US economic data.

The dollar had strengthened this week ahead Powell’s speech, as markets speculate that the Fed will continue to tighten its monetary policy.

Higher interest rates boost the American currency as they make dollar-denominated debt more attractive to investors.

But the euro also has been weighed down by a gloomy outlook for the eurozone economy amid fears of a halt to Russia’s gas deliveries.

– Key figures at around 1030 GMT –

London – FTSE 100: DOWN 0.3 percent at 7,463.45 points

Frankfurt – DAX: DOWN 0.2 percent at 13,168.54 

Paris – CAC 40: DOWN 0.1 percent at 6,358.94

EURO STOXX 50: FLAT at 3,652.24

Tokyo – Nikkei 225: DOWN 0.5 percent at 28,313.47 (close)

Hong Kong – Hang Seng Index: DOWN 1.2 percent at 19,268.74 (close)

Shanghai – Composite: DOWN 1.9 percent at 3,215.20 (close)

New York – Dow: DOWN 0.5 percent at 32,909.59 points (close)

Euro/dollar: DOWN at 0.9940 from 0.9970 on Tuesday

Pound/dollar: DOWN at 1.1784 from 1.1836

Euro/pound: UP at 84.37 pence from 84.23 pence

Dollar/yen: UP at 136.58 yen from 136.36 yen

West Texas Intermediate: UP 0.8 percent at $94.45 per barrel

Brent North Sea crude: UP 0.6 percent at $100.80

Germany on Wednesday inaugurated a railway line powered entirely by hydrogen, a “world premiere” and a major step forward for green train transport despite nagging supply challenges.

A fleet of 14 trains provided by French industrial giant Alstom to the German state Lower Saxony has replaced diesel locomotives on the 100 kilometres (60 miles) of track connecting the cities of Cuxhaven, Bremerhaven, Bremervoerde and Buxtehude near Hamburg.

“We are very proud to put this technology into operation together with our strong partners as a world premiere,” Alstom CEO Henri Poupart-Lafarge said in a statement.

Hydrogen trains have become a promising way to decarbonise the rail sector and replace climate-warming diesel, which still powers 20 percent of journeys in Germany.

Billed as a “zero emission” mode of transport, the trains mix hydrogen on board with oxygen present in the ambient air, thanks to a fuel cell installed in the roof. This produces the electricity needed to pull the train.

Regional rail operator LNVG said the fleet, which cost 93 million euros (dollars), would prevent 4,400 tonnes of CO2 being released into the atmosphere each year.

– Run for its money –

Designed in the southern French town of Tarbes and assembled in Salzgitter in central Germany, Alstom’s trains — called Coradia iLint — are trailblazers in the sector.

The project created jobs for up to 80 employees in the two countries, according to Alstom. 

Commercial trials have been carried out since 2018 on the line with two hydrogen trains but now the entire fleet is adopting the groundbreaking technology.

The French group has inked four contracts for several dozen trains between Germany, France and Italy, with no sign of demand waning. 

In Germany alone “between 2,500 and 3,000 diesel trains could be replaced by hydrogen models”, Stefan Schrank, project manager at Alstom, told AFP.

“By 2035, around 15 to 20 percent of the regional European market could run on hydrogen,” according to Alexandre Charpentier, a rail expert at consultancy Roland Berger.

Hydrogen trains are particularly attractive on short regional lines where the cost of a transition to electric outstrips the profitability of the route. 

Currently, around one out of two regional trains in Europe runs on diesel.

But Alstom’s competitors are ready to give it a run for its money. German behemoth Siemens unveiled a prototype hydrogen train with national rail company Deutsche Bahn in May, with a view to a roll-out in 2024.

But, despite the attractive prospects, “there are real barriers” to a big expansion with hydrogen, Charpentier said.

For starters, trains are not the only means of transport hungry for the fuel.

The entire sector, whether it be road vehicles or aircraft, not to mention heavy industry such as steel and chemicals, is eyeing hydrogen to slash CO2 emissions.

– Colossal investment –

Although Germany announced in 2020 an ambitious seven-billion-euro plan to become a leader in hydrogen technologies within a decade, the infrastructure is still lacking in Europe’s top economy.

It is a problem seen across the continent, where colossal investment would be needed for a real shift to hydrogen.

“For this reason, we do not foresee a 100-percent replacement of diesel trains with hydrogen,” Charpentier said.

Furthermore, hydrogen is not necessarily carbon-free: only “green hydrogen”, produced using renewable energy, is considered sustainable by experts. 

Other, more common manufacturing methods exist, but they emit greenhouse gases because they are made from fossil fuels. 

The Lower Saxony line will in the beginning have to use a hydrogen by-product of certain industries such as the chemical sector.

The French research institute IFP specialising in energy issues says that hydrogen is currently “95 percent derived from the transformation of fossil fuels, almost half of which come from natural gas”. 

Europe’s enduring reliance on gas from Russia amid massive tensions over the Kremlin’s invasion of Ukraine poses major challenges for the development of hydrogen in rail transport.

“Political leaders will have to decide which sector to prioritise when determining what the production of hydrogen will or won’t go to,” Charpentier said. 

Germany will also have to import massively to meet its needs. 

Partnerships have recently been signed with India and Morocco, and Chancellor Olaf Scholz sealed a green hydrogen deal with Canada on a visit this week, laying a path for a transatlantic supply chain.

Japan’s prime minister on Wednesday called for a push to revive the country’s nuclear power industry in a bid to tackle soaring imported energy costs linked to the war in Ukraine.

Such a move could prove controversial, after the 2011 Fukushima disaster led to the suspension of many nuclear reactors over safety fears.

Like many countries, Japan — which is aiming to become carbon neutral by 2050 — has faced a squeeze on its energy supplies since Russian forces entered Ukraine six months ago.

The nation has also sweltered through record-breaking temperatures this summer, with residents asked to conserve power wherever possible.

“Russia’s invasion of Ukraine has vastly transformed the world’s energy landscape” and so “Japan needs to bear in mind potential crisis scenarios”, Prime Minister Fumio Kishida said at an energy policy meeting.

Japan should consider building next-generation nuclear reactors, he said, while the government will discuss bringing more nuclear plants online and extending the service life of reactors if safety can be guaranteed.

Kishida called for “concrete conclusions by the end of the year” on the topic, which remains a sensitive one after a deadly tsunami in March 2011 caused a meltdown at the Fukushima plant, the worst nuclear disaster since Chernobyl.

Eleven years on, 10 of Japan’s 33 nuclear reactors are back in action, although not all are operational year-round, and the country is heavily dependent on imported fossil fuels.

The national nuclear safety watchdog has approved in principle the restart of seven more reactors, but those moves often face opposition from local communities.

– ‘All it takes’ –

“In addition to securing the operations of the 10 reactors that are already back online, the government will spearhead an effort to do all it takes to realise the restart” of the others whose safety has been approved, Kishida said.

The prime minister, who joined the meeting remotely after testing positive for Covid-19, also urged policymakers to consider “constructing next-generation nuclear reactors equipped with new safety mechanisms”.

Before the Fukushima disaster, around a third of Japan’s power generation came from nuclear sources, but in 2020 the figure was less than five percent.

Japan’s government has overhauled and strengthened nuclear safety standards, and wants nuclear power to account for 20 to 22 percent of electricity production by 2030, as part of efforts to reach carbon neutrality.

Tom O’Sullivan, a Tokyo-based energy consultant at Mathyos Advisory, said building next-generation reactors in Japan would be a “major step”, because “all the current reactors are conventional ones”.

Bringing more existing nuclear plants online will need to be approved by local governors, which could prove “politically challenging”, O’Sullivan told AFP.

“But again, there’s a different environment now after the Ukraine war,” he said. Polls in recent months also show that public opinion may be softening towards the use of nuclear power.

“I don’t think it’s just the electricity costs. It’s the reliance on Russia, for natural gas, oil and coal… the Japanese public have really woken up to that,” O’Sullivan said.

Japan has imposed sanctions on Russia over the war in Ukraine along with other G7 countries, and the government has pledged to try and reduce its energy dependence on Moscow.

The price of Japanese shares related to nuclear power surged in afternoon trade as local media reported the possible plans, with Tokyo Electric Power ending up 9.96 percent and Mitsubishi Heavy Industries jumping 6.85 percent.

Turkey’s top business association has confirmed receiving a letter from the US Treasury warning of possible sanctions if it continues doing business with Russia.

Washington is growing increasingly alarmed that the Russian government and businesses are using Turkey to evade Western financial and trading restrictions imposed in response to the Kremlin’s invasion of Ukraine six months ago.

Turkish President Recep Tayyip Erdogan and Russian counterpart Vladimir Putin agreed to step up economic cooperation at a summit in the Black Sea resort of Sochi earlier this month.

Official data show the value of Turkish exports to Russia between May and July growing by nearly 50 percent from last year’s figure.

Turkey’s imports of Russian oil are ballooning and the two sides have agreed to transition to ruble payments for the natural gas exported by the Kremlin-tied giant Gazprom.

US Deputy Secretary of the Treasury Wally Adeyemo paid a rare visit to Ankara and Istanbul in June to express Washington’s worries that Russian oligarchs and big businesses were using Turkish entities to avoid Western sanctions.

NATO member Turkey — on good terms with both Moscow and Kyiv — has tried to stay neutral in the conflict and refused to join the international sanctions regime.

Adeyemo followed that up with a letter to Turkey’s TUSIAD business association and the American Chamber of Commerce in Turkey warning that companies and banks were in danger of being sanctioned themselves.

TUSIAD said in a statement on Tuesday that is has passed on the letter to Turkey’s foreign and finance ministries.

The letter’s contents were first reported by The Wall Street Journal this week.

– ‘Risk of US sanctions’ –

“Any individuals or entities providing material support to US-designated persons are themselves at risk of US sanctions,” Adeyemo wrote.

“Turkish banks cannot expect to establish corresponding relationships with sanctioned Russian banks and retain their corresponding relationships with major global banks as well as access to the US dollar and other major currencies.”

The economic cooperation agreement sealed by Erdogan and Putin includes a deal for more Turkish banks to start processing Russia’s Mir payments system.

Turkish officials have not formally responded to Adeyemo’s letter.

Broader cooperation with Russia could help support Turkey’s ailing economy in the runup to next-year’s general election.

Erdogan has previously argued that Ankara cannot join Western sanctions on Moscow because of Turkey’s heavy dependence on Russian oil and natural gas imports.

“Our economy is such that imposing sanctions on Russia would harm Turkey the most,” Erdogan’s foreign policy adviser Ibrahim Kalin said in June.

“We have taken a clear approach. Right now, the Westerners have accepted this.”