From the 30th floor office of NautaDutilh in Rotterdam virtually the entire harbour area of the city can be seen: from the iconic Hotel New York, situated in the former head office building of Holland America Line, to the cruise liner’s current ships moored nearby, to the industrial facilities further west. From there, chemicals, oil and gas, and more than 8 million shipping containers per year are unloaded for transfer across Europe. It’s the world’s busiest port outside of Asia.
When NautaDutilh partner and co-head of the firm’s Private Equity team Gaike Dalenoord looks down on the port from his office, he sees not the port as it exists today, but instead the future. “A lot of oil and gas and hydrocarbons moves through that harbour, but that economic model will not last,” Gaike says. “We need to accelerate the change.” The Port of Rotterdam is fortunate to have Gaike and his team within view, because, he says, “We believe in helping industries and companies to adapt to the coming energy transition.”
Gaike has a vision of a future in which instead of oil and gas moving through the harbour, pure hydrogen and hydrogen carriers are imported to the Netherlands and moved up the value chain. “This little country has the infrastructure, the technical know-how, and the skills to make this happen,” he says. “But it’s going to be very complicated.”
Greening the economy with hydrogen
Creating hydrogen is a relatively simple chemical process, and Gaike has been working closely over the past years with major chemical companies trying to get them involved in the energy transition. “Hydrogen is very clean, it’s an ideal way to store energy, and you can make it with green energy,” he says. Working with chemical companies wasn’t an obvious fit for someone who grew up deeply attached to nature. Gaike was raised on the Caribbean island of Curaçao, living, as he puts it, “with a constant warm breeze and one foot in the sand. It’s probably where the seed of my love for kitesurfing and other watersports got planted.” Back in the 1970s and ’80s, he says, “the chemical companies were the dirtiest bunch of people on Earth.” A shortage of regulation in nearly all jurisdictions allowed them to pollute natural resources virtually at will. Only as the environmental movement grew did the full scope of the damage they had wrought become clear.
'The key to the energy transition is chemicals, and those chemicals are brought onshore right here in Rotterdam'
In the decades since, the chemicals industry has proven adaptive, frequently creating new solutions to meet the ever-shifting demands of the market. “Clearly, its current focus is on delivering products and materials with a lower environmental impact, such as through plastics recycling,” Gaike says. He sees an important role for the industry in advancing the economy to net-zero emissions. “Chemicals will prove to be key to Europe’s shift from its current addictions to coal, oil, and gas as its main energy sources to an electrified society. And recent events in Ukraine will only speed things up.”
Through NautaDutilh’s work helping financial industry clients prepare for the EU Taxonomy Regulation – and, since its implementation at the start of 2022, adhere to it – Gaike saw an opportunity to bring ESG to the chemical sector from a legal perspective. Banks, insurance companies, pension funds, and other investors now need to show the degree to which they are aligned with defined environmental objectives. It’s a tremendous undertaking that has kept the Banking & Finance group at NautaDutilh busy for years (see interview with Frans van der Eerden, p. 30). While working alongside the other team, Gaike recalls, “Suddenly I thought, ‘Wait a minute, what about the companies these banks are invested in?’ They will need to show their suitability for these ESG-minded investments.” He was already working with the chemical industry, so he tried to advocate with them first, telling them, “‘You really need to gear up,’” he recalls. It’s an illustration of Gaike’s commercially-oriented thinking, and ability to initiate specific projects by narrowing the focus from broad concepts.
'We believe in helping industries and companies to adapt to the coming energy transition'
An opportunity to develop the ESG potential of a chemicals company presented itself through Gaike’s private equity work. During the process of spinning the company out of a large industrial conglomerate, he recalls, “I noted that when it comes to the energy transition, we’re going from hydrocarbons to electrification – and the key to that is chemicals. These chemicals are brought onshore right here in Rotterdam.”
The Netherlands announced in April 2022 that it would more than double its commitment to electricity generation by offshore wind turbines by an additional 10.7 gigawatts. Yet even that won’t be enough to supply all the country’s homes and industry. “We’re a very busy bunch of people,” Gaike says. “I don’t believe we will ever get sufficient green energy to supply the entire country ourselves even if we could cover the entire land and the North Sea with solar panels and windmills.” Jokingly, he adds, “That would clearly spoil my kitesurfing hobby.”
As long as there is insufficient clean energy supply in the country itself, hydrogen will need to be imported to the Netherlands, either contained in liquid ammonia or as pure hydrogen. In its gas form, hydrogen can be sent through pipelines – originally built to distribute the country’s natural gas supplies – to be used as feedstock for power generation in the manufacturing of steel and cement and other energy-intensive processes. “It is also well-suited for storage in depleted gas fields or salt caverns in the north-eastern part of the country,” Gaike points out. It so happens that the chemicals company he and his team support made its business mining such caverns. He just helped set up a major joint venture between a Dutch chemicals company and a global green infrastructure financier that will build large-scale electrolysers to make it all come together.
Coordination is key
But getting all the players to work together is a major undertaking. “NautaDutilh has the power to meld this into the hydrocarbon practice that we have had for a long time,” he says. “But the energy transition is so complex, it cannot be just the companies involved. It should be the banks, the government, and the technical universities – everybody needs to speak to each other.” To support such collaboration, the firm recently participated in the public consultation by the Dutch Ministry of Economic Affairs on the Dutch hydrogen market.
It’s work well-suited to Gaike’s experience and expertise. “The traditional type of management of a complex and often cross-border file is something that I do easily, because I know the firm quite well,” he says. “It’s key to carefully tie the knots together between the full-service spectrum of
legal expertise we have in-house.”
While Gaike works to accelerate the energy transition, he is also actively supporting the LifeLine to the Ukraine humanitarian programme. An initiative in which he also makes sure to involve colleagues throughout the firm. Together with Stichting Mara, an aid group originally set up in response to the Balkans wars of the 1990’s, “we are transporting truckloads of humanitarian goods to the war zone,” he reports. “As this war shows, also in our part of the world we are not there yet when it comes to human rights. Here, too, Brussels is taking the helm,” says Gaike. The European Commission is preparing rules for companies concerning human rights and the environment in their global supply chains. “So, the European environmental taxonomy is just the start of a completely new era humanity is stepping into, and companies better get used to it,” Gaike is convinced.
Noting that investors are risk-averse and that polluting activity represents potentially stranded assets, he believes that “the next step the chemical companies need to take is to figure out how to use less energy for their chemical production and so avoid exhaust of greenhouse gases.” Which would no doubt make Gaike’s view of the Rotterdam harbour even clearer.
- Interview with Marieke Faber: ESG advice in a new context
- Interview with Frans van Eerden: An evolving landscape
- Interview with Jens Mosselmans: Getting technical
- Interview with Petra Zijp: Making waves