Hydrogen

Renewable Energy

35 minutes

22/07/2024

Hydrogen Horizons: Market Update

In the concluding article of our latest Hydrogen Horizons series, we provide an overview of the key news driving the market. From large moves by potential off takers to secure RFNBO-compliant products, the launch of very large tenders by TotalEnergies, Thyssenkrupp Steel, Salzgitter steel, and the acceleration in the signing of final offtake contracts.

Executive Summary 

 

The big news within the hydrogen sector in recent months has been the large moves by potential offtakers to secure RFNBO1-compliant product. We have seen the launch of very large tenders by TotalEnergies (500,000 tonnes), Thyssenkrupp Steel (150,000 tonnes), Salzgitter steel (150,000 tonnes), and others. These companies are responding to various obligations placed on them by governments, for instance TotalEnergies is tendering for green hydrogen to replace grey hydrogen in its six European refineries in order to comply with road transport fuel obligation criteria and the German steel industry is responding to a requirement under their decarbonisation subsidies to procure only green hydrogen.

Further than simply launching tenders, we have seen an acceleration in the signing of final offtake contracts. TotalEnergies and Air Products very recently announced the signing of the largest green hydrogen contract we know of to date covering 70,000 tonnes per year for a term of 15 years starting in 2030. H2 Green Steel has signed another green steel offtake contract, in this case with a Swedish building company, and European Energy has signed a contract with Metafuels for offtake of e-methanol for use in SAF production.

“TotalEnergies and Air Products very recently announced the signing of the largest green hydrogen contract we know of to-date.” 

Joe Davis, Foresight Investment Manager 

Behind all of this activity is a continual drumbeat of additional regulation being passed globally. The Japanese and Australian governments have recently announced 15-year hydrogen production support schemes. The Japanese scheme in particular is interesting as it does not require the production project to be based in Japan, meaning that it can be combined with the global locations boasting optimal production conditions so long as they plan to export the hydrogen to Japan. The EU has announced the results of the first hydrogen bank auction (a 10-year fixed price support scheme) and has passed a significant package of technical reforms aimed at supporting the hydrogen market.

On the mandate side, Singapore and the UK have announced further details on their SAF mandates, with a view emerging in the industry that supports Foresight’s approach of targeting regions with mandates to incentivise offtakers. The UK is also progressing work on blending hydrogen into the natural gas grid. This is seen as an enormous practical benefit as it allows the production projects to benefit from existing infrastructure and offtakers.

Early support for blending is generally considered to have helped Germany to pull ahead in the race for a developed hydrogen economy.
Together, the developments on offtake and regulation are driving continued growth in the market and investment activity. A number of large projects and partnerships have been announced recently including a €1.3bn green fertiliser plant in France, the development of ammonia vessels by a consortium of Japanese shipping firms, and further activity in the European steel sector.

Across the sector and globally we are seeing significant financial commitments from large industrial players. Interestingly, we are yet to see material activity from the financial investment sector but believe this starting to change as investors understand the scale and pace of activity that is developing. Overall, the market is maturing in line with Foresight’s expectations. The introduction of subsidies and mandates globally are now driving activity and, with the big-picture policy largely settled, offtakers and investors are starting to make big commitments. This is stimulating project development activity, creating significant opportunity for investment, albeit with most financial investors lagging behind the industrial sector.

Foresight is currently pre-marketing Foresight Hydrogen Infrastructure Fund (“FHIF”) – a value-add, greenfield infrastructure fund, focused on the hydrogen market at this pivotal time. Please get in touch if you would like to learn more.

Offtake

 

ThyssenKrupp Tender for 151,000 tonnes of green hydrogen – 14th February 2024

  • Hydrogen Tender: ThyssenKrupp Steel Europe is seeking ten-year contracts for hydrogen supply starting with 104,000 tonnes in 2028, increasing to 151,000 tonnes by 2037.
  • Decarbonization Project: The hydrogen is intended for the direct-iron reduction facilities at Germany’s largest steel mill as part of the tkH2Steel decarbonization project.
  • Operational Timeline: Hydrogen use will commence in 2028, aiming for 100% hydrogen operation by 2029.
  • Tender Process: The tender process will occur in three phases, requiring a total of 143,000 metric tons of hydrogen. It is organized in coordination with the German Federal Ministry for Economic Affairs and Climate Protection (BMWK) and the state of North Rhine-Westphalia, which are funding the project with around two billion euros. This funding aims to cease the use of natural gas early and initiate the hydrogen ramp-up in Germany.

 

TotalEnergies signs major offtake deal for green hydrogen from Air Products for use in its European refineries – 7th June 2024

  • Major Offtake Deal: TotalEnergies has signed a 15-year agreement with Air Products for the annual supply of 70,000 tonnes of green hydrogen starting in 2030. The green hydrogen will be used in TotalEnergies' Northern European refineries.
  • Significant Impact on Emissions: This supply of green hydrogen will help avoid around 700,000 tonnes of CO₂ emissions each year. The initiative supports TotalEnergies' goal to reduce net greenhouse gas emissions from its operations by 40% by 2030 compared to 2015 levels.
  • Large-Scale Energy Transition: Air Products has committed over $15 billion to large-scale energy transition projects, positioning itself as a leading and reliable supplier of hydrogen. The deal is a response to TotalEnergies’ tender for 500,000 tonnes of green hydrogen annually to decarbonize its European refineries in September 2023.
  • The French energy giant is seeking to secure medium and long-term contracts for green hydrogen supply, and it is estimated that around 5GW of electrolysers would be required to produce this amount of hydrogen.
  • Renewable Power Collaboration: TotalEnergies and Air Products have also signed a memorandum of understanding for the supply of renewable power. This includes a Power Purchase Agreement (PPA) for 150 MW from a solar project in Texas, with plans for further PPAs in the UK, Poland, and France.
  • Decarbonization Goals: TotalEnergies is dedicated to reducing the carbon footprint of its energy production and supply. The company aims to cut its CO₂ emissions by approximately five million tonnes annually by 2030 through the use of green or low carbon hydrogen in its refineries.


US' Boeing to ramp up SAF purchases – 16th April 2024

  • Boeing plans to buy 7.5 million US gallons of blended sustainable aviation fuel (SAF) and certificates from Neste and partners. EPIC Fuels and AvFuel will supply parts, with the rest from Neste. The purchase includes SAF certificates corresponding to conventional jet fuel emissions. Boeing has already procured 9.4 million US gallons of blended SAF, supporting its ecoDemonstrator program and commercial flights until 2024. This purchase continues Boeing's commitment to SAF development, alongside previous purchases, and industry investments.

 

Japan’s largest power company to invest more than $6bn to secure seven million tonnes of hydrogen supply by 2035 – 17th May 2024

  • Japan’s largest power company, JERA, will invest more than $6bn to secure seven million tonnes of hydrogen supply by 2035.
  • JERA emphasizes that hydrogen and ammonia co-firing are essential for decarbonizing Japan's grid, addressing limited land and renewable intermittency issues.
  • The investment aims to handle both green and blue hydrogen and ammonia, enhancing JERA’s role in the global hydrogen and ammonia value chain.
  • JERA plans to use ammonia for power generation in Japan and sell hydrogen or ammonia to companies in Germany and Singapore.
  • The strategy includes co-firing 40% hydrogen at JERA’s Linden gas-fired power plant in the US.


H2 Green Steel secures another seven-year offtake, as lenders hint at what makes these shortterm deals bankable – 22nd May 2024

  • Offtake Agreement: H2 Green Steel, a Swedish start-up, has secured another seven-year offtake agreement for renewable hydrogen-based steel with Lindab, a Swedish building ventilation supplier.
  • Renewable Hydrogen-based Steel: The steel supplied to Lindab will be produced using renewable hydrogen, highlighting the potential of hydrogen as a clean energy source for industrial processes.
  • Large Quantity: Lindab has committed to purchasing 159,000 tonnes of steel annually from 2026, indicating significant demand for renewable hydrogen-based steel products.
  • Flagship Factory: H2 Green Steel's flagship factory in Boden, Sweden, which is under construction, will have an annual production capacity of 2.5 million tonnes, demonstrating the scalability of hydrogen-based steel production.
  • Long-Term Partnership: The seven-year offtake agreement signifies a long-term commitment between H2 Green Steel and Lindab, providing stability and fostering confidence in the hydrogen-based steel market.


European Energy and Metafuels sign Danish e-methanol offtake – 22nd May 2024

  • European Energy has signed an agreement with Swiss aviation technology company Metafuels to supply e-methanol for Metafuels' new synthetic sustainable aviation fuel (eSAF) facility in Padborg, Denmark. The e-methanol will come from European Energy's Power-to-X (PtX) facility, which is under development and expected to produce significantly more than its current 60MW facility in Denmark. Metafuels' eSAF facility, also in early development, aims to produce 12,000 tonnes of eSAF annually. This initiative supports Denmark's aviation climate targets and aligns with the EU's RefuelEU aviation initiative and international carbon reduction schemes.

 

EPS to register six ammonia-powered newbuilds with SRS – 17th April 2024

  • Eastern Pacific Shipping (EPS) will register six dual-fuel ammonia-powered vessels, scheduled for delivery from 2026, with the Singapore Registry of Ships (SRS). This commitment stems from an initial agreement with Singapore's Maritime and Port Authority (MPA), the American Bureau of Shipping (ABS), and Lloyd's Register. EPS will collaborate with the MPA to support crew training, pilot trials, and infrastructure development for ammonia bunkering.

 

Japan’s J-Power steps up coal-fired power phase-out – 10th May 2024

  • Decommissioning Coal-Fired Units: J-Power plans to halt operations of inefficient coal-fired power plants, including scrapping and decommissioning several units by 2030 and beyond. This demonstrates a shift away from coal and towards cleaner energy sources.
  • Transition to Clean Fuels: J-Power aims to decarbonize its existing plants by utilizing clean fuels and technology. This includes co-firing with fuel ammonia, increasing biomass mixture, and deploying carbon capture and storage (CCS) technology, indicating a commitment to cleaner energy alternatives.
  • Hydrogen and Renewable Integration: J-Power plans to use hydrogen at certain plants and expand domestic renewable output, aligning with efforts to transition towards low-carbon energy sources.
  • Emissions Reduction Targets: J-Power aims to significantly reduce carbon dioxide emissions from its power generation operations, in line with Tokyo's emissions reduction targets. This underscores the importance of cleaner energy solutions in meeting environmental goals.
  • Global Pressure and Regulatory Trends: The text highlights global pressure against coal-fired power generation, with pledges from G7 countries to phase out unabated coal power generation. This indicates a broader trend towards cleaner energy practices and reinforces the demand for clean fuels.


‘Our customers can afford to pay a premium for green hydrogen-based steel today’, says billionaire steel magnate – 17th May 2024

  • Billionaire steel magnate Sanjeev Gupta suggests that customers are willing to pay a premium for green hydrogen based steel.
  • He believes deep-pocketed buyers, not subsidies, will drive the adoption of green steel.
  • Major steel purchasers, particularly in automotive and wind turbine manufacturing, prioritize environmentally friendly products.

 

German cabinet has approved ‘Hydrogen Acceleration’ law to enable rapid expansion of hydrogen production and infrastructure – 31st May 2024

  • The Hydrogen Acceleration law has been put together with the aim of facilitating a rapid expansion of Germany’s hydrogen infrastructure. The Hydrogen Acceleration Law will give infrastructure an "overriding public interest" status, meaning authorities will prioritize it in the approval process. It will also streamline and digitalise planning processes, shorten or introduce deadlines for planning decisions, and improve access to water, amongst other things.
  • The acceleration will primarily benefit electrolysers, the devices that use energy to separate hydrogen from water, provided they can prove that they will use at least 80 percent renewable energy in the period up to the end of 2029.

 

Japan passes act promising 15-year support via a CfD subsidy scheme for locally produced and imported low-carbon hydrogen – 17th May 2024

  • Japan is implementing a series of measures to promote clean hydrogen through significant financial subsidies and legislative support.
  • Hydrogen Society Promotion Act: Passed on May 17, this act introduces a 15-year subsidy for low-carbon hydrogen, both domestically produced and imported. Details of the subsidy are not fully defined, but importers can combine it with subsidies from the hydrogen's country of origin.
  • Subsidy Allocation: Japan will allocate ¥3 trillion (£15.3 bn) via a Contract for Difference (CfD) subsidy to reduce the cost disparity between clean hydrogen and fossil fuels. These subsidies will offset the difference between fluctuating reference prices and guaranteed strike prices for hydrogen production.
  • Reference Prices: Two reference prices will be proposed for hydrogen and ammonia, likely set to the prices of coal and natural gas, respectively. This strategy might encourage the co-firing of ammonia with fossil fuels for power generation
  • Hydrogen Supply Goals: The act aims to increase Japan's hydrogen supply to 12 million tonnes by 2040. It supports hydrogen infrastructure and carbon capture and storage (CCS) to help decarbonize the economy.
  • Subsidy Details: The Ministry of Economy, Trade, and Industry (METI) will provide these subsidies through its Agency for Natural Resources and Energy to certified low-carbon hydrogen suppliers. The subsidy targets industries such as power generation, iron production, and chemical production.
  • Carbon Intensity: Low-carbon hydrogen is defined as having a carbon intensity of 3.4kg CO2/kg or lower in the Act.
  • Long-term Vision: A 2023 Hydrogen Council report suggests that Japan needs to replace LNG and coal imports with hydrogen and renewables to decarbonize. It predicts over 16% of Japan's electricity could come from imported hydrogen and ammonia by 2050.
  • These measures reflect Japan's commitment to advancing low-carbon hydrogen production and integrating it into its energy mix to achieve decarbonization goals.

 

EU Hydrogen Bank Auction Results – 30th April 2024

  • The recent European Hydrogen Bank fixed-premium support auction in April 2024 saw 132 bids received, resulting in 7 winners at a €0.48/kg subsidy price, with €720m of support being allocated for a total electrolyser capacity of 1,502 MW. Winners were predominantly from Iberian or Nordic regions, with Spain leading.
  • Around half of the hydrogen volumes were bid for less than €1/kg. Projects typically opted for EU electrolysers, with some choosing non-EU or Chinese equipment. Most projects target industrial offtakers (62%), followed by mobility (28%) and grid injection (11%). Following the low bids from the Danish auction (between €0.80-€1.33/kg), these EU bids continued the trend lower, suggesting an ability among offtakers to pay a premium or strategic underbidding by projects.
  • Given the winning country weightings Iberian and Nordic regions are poised to emerge as Europe's primary hydrogen hubs.

 

Australia unveils new green hydrogen subsidy for every kilo of H2 produced over a ten-year period – 14th May 2024

  • Australia introduces Hydrogen Production Tax Incentive (HPTI), offering A$2 per kilogram of green hydrogen produced over ten years starting from 2027.
  • Despite being less generous than the US credit, the HPTI demonstrates the government's commitment to green hydrogen production.
  • The incentive aims to stimulate investment and innovation in Australia's hydrogen sector.
  • The HPTI represents a significant financial commitment from the Australian government, totalling A$6.7 billion in
    the medium term.

 

European Council signs off gas and hydrogen market package – 21st May 2024

  • The European Council, consisting of government ministers from the 27 member states, has approved a comprehensive gas and hydrogen market package to advance the EU's clean energy transition, which will become law after final adoption. It consists of a directive and a regulation establishing common rules for the internal markets of hydrogen, renewable gas, and natural gas.
  • Regulatory Framework: Updates regulations for hydrogen transport, supply, and storage to align with EU climate goals.
  • New Governing Body (ENNOH): Establishes the European Network for Network Operators of Hydrogen to manage the development of the hydrogen network.
  • Ownership and Access: Recommends full ownership unbundling for hydrogen network operators by 2030. Ensures regulated third-party access to the hydrogen network.
  • Consumer Protections: Implements protections similar to those in the electricity sector, including faster provider switching and improved billing access.
  • Incentives and Blending Limits: Sets a 5% limit for hydrogen blending into natural gas at interconnection points and offers tariff discounts for renewable gases.
  • Integration and Support: Aims to integrate hydrogen into the EU energy system to support decarbonization and sustainability goals.
  • Legislative Approval: The package includes proposals for regulating the trade of clean hydrogen and its derivatives and the development of related infrastructure.

Singapore flights to require SAF, impose levy from 2026 – 19th February 2024

  • These regulations and measures aim to incentivize and facilitate the adoption of sustainable aviation fuel while managing costs and ensuring a smooth transition for the aviation sector in Singapore.
  • SAF Mandate and Levy: Singapore will mandate the use of sustainable aviation fuel (SAF) for flights departing from 2026, alongside imposing a SAF levy. The levy will be set based on projected SAF needs and prices in 2026, providing cost certainty to airlines and travellers.
  • SAF Uplift Adjustment: The SAF levy will remain constant regardless of actual SAF prices, with adjustments made to the amount of SAF uplifted instead. This measure aims to ensure stability in costs for airlines and travellers.
  • Variable Levy: The SAF levy will vary based on factors like distance travelled and class of travel. This means passengers in premium classes will pay higher levies.
  • Consultation and Implementation: The Civil Aviation Authority of Singapore (CAAS) will continue consultations with stakeholders on the levy's implementation and announce more details in 2025.

 

UK HAR2 and blending consultation update – 19th April 2024

  • On 19 April 2024, the UK Government’s Department for Energy Security and Net Zero (DESNZ) closed its submission window for its second Hydrogen Allocation Round (HAR2) for projects to apply for price support via the Hydrogen Production Business Model a Contracts for Difference (CfD) mechanism.
  • HAR2 hopes to support up to 875MW of low carbon hydrogen. For context, in December 2023 the first round (HAR1) resulted in £2bn of support allocated over 15 years for 11 projects with a total capacity of 125MW, falling short of the initial 250MW target, underscoring the even greater desire to support further projects.
  • The support mechanisms are being formulated in parallel with other frameworks for the hydrogen market. In September 2023, the UK Government engaged with industry to understand support levels for hydrogen blending into GB gas distribution networks to decarbonise the GB energy system.
  • This was confirmed as a strategic policy decision in December 2023 with the government deciding to support blending of up to 20% hydrogen by volume into the GB gas distribution networks, under certain strategic circumstances.
  • Ongoing industry trials aim to gather evidence on the safety and feasibility of blending and after completing safety assessments. The government is expected to decide whether to enable blending formally after considering its feasibility and economic implications later this year.

 

UK e-SAF mandates, Consultation outcome and regulation analysis – 25th April 2024

These points illustrate the growth opportunities and incentives driving the sustainable aviation fuel market in the UK:

  • Mandates: The UK has set mandates for e-SAF, starting with 0.2% of jet fuel in 2028, increasing to 3.5% by 2040. Non compliance incurs a £5/litre buy-out penalty, providing a financial incentive for companies to meet the mandates.
  • Technology Pathway: Fischer-Tropsch pathway is the primary technology for e-SAF production. Each litre of eSAF requires 20 kWh of hydrogen and 3.5 kg of CO2 as feedstocks.
  • Hydrogen Production: Meeting e-SAF mandates requires significant green hydrogen capacity, with estimates suggesting the need for 100 MW by 2028 and nearly 2 GW by 2040.
  • Market Dynamics: The buy-out price of non-compliance serves as a driver for investment in domestic e-SAF production. The viability of meeting mandates through domestic supply or resorting to the buy-out option will likely become clearer in the near future, influencing market dynamics and investment decisions.

Electronic auction for biomethane and hydrogen – 28th May 2024

  • The Portuguese government has introduced a new policy supporting green hydrogen and biomethane through an electronic auction system for their centralised purchase to achieve the lowest market price from bidders. This policy aims to promote the use of low carbon gases and fuels by creating a structured and competitive market-based procurement process.
  • Legislative Background: Decree-Law No. 62/2020 allows the government to establish specific acquisition regimes for renewable or low carbon gases.
  • Ordinance No. 15/2023 sets up the centralized purchasing system for biomethane and hydrogen produced by electrolysis from water using renewable energy.
  • Competitive Procedure: An electronic auction will be held for the centralized purchase of biomethane and hydrogen. The procedure follows the guidelines of Decree-Law No. 84/2022 and is directed by the Directorate General for Energy and Geology (DGEG) in coordination with CURg (Transgás, SA).
  • Eligibility and Participation: The auction will use a "descending clock" format with multiple sequential rounds. The price decreases incrementally, with bidders exiting when they are no longer willing to sell at that price.
  • Bidding proposals are accepted up to a maximum price of €62/MWh for biomethane and €127/MWh for hydrogen.
  • Contracting Limits: The maximum quantities for contracting are 150 GWh/year for biomethane and 120 GWh/year for hydrogen.
  • Application Submission: Applications must be submitted through the specified links provided on the relevant page.

 

US targets massive cost reduction in transport and industry – 13th May 2024

  • Cost Reduction Targets: The US government's Hydrogen and Fuel Cell Technologies Office (HFTO) aims to significantly reduce the cost of clean hydrogen for transportation and industrial applications.
  • Interim Targets: The HFTO has outlined a series of interim targets in its Multi-Year Program Plan, demonstrating a
    strategic approach to driving down hydrogen costs over the coming years.
  • Affordable Pricing: The goal is to make hydrogen more affordable, with a target for hydrogen to cost less than $7
    per kilogram at the pump for heavy vehicles within the next four years.
  • Investment in Research and Development: With a budget of $301 million allocated for this year, the HFTO is actively funding research, development, and demonstration projects to advance hydrogen technologies and achieve cost reductions.

 

The EU approach to subsidies will be better than the US for getting green hydrogen projects over the line – 16th May 2024

  • The EU's approach to subsidies for green hydrogen projects is viewed as potentially more effective than the US approach.
  • While the US offers a single tax credit of up to $3 per kilogram of clean hydrogen produced, the EU has faced criticism for overregulation of renewable hydrogen.
  • Industry executives, speaking at the World Hydrogen Summit, suggest that supply-side support, like the US tax credit, needs to be supplemented with mandates or other subsidies to encourage projects to move forward.
  • Contrary to widely held belief, the panel argues that the US is also moving towards increased regulation, similar to the EU.
  • Despite criticism, the EU's approach may be more conducive to securing final investment decisions for green hydrogen projects compared to the US approach.

 

Government-funded hydrogen heating pilot in German homes deemed 'complete success' – 17th May 2024

  • A government-funded hydrogen heating pilot project in German homes is declared a 'complete success'.
  • The H2Direkt project in Hohenwart, Bavaria, converted existing gas networks to supply 100% hydrogen to ten homes and one commercial business.
  • The project, led by Energie Südbayern, Energienetze Bayern, and Thüga, utilized hydrogen boilers from manufacturer Vaillant.
  • The pilot successfully operated throughout the winter without any issues, demonstrating the feasibility of hydrogen heating in residential and commercial settings.

Market Forecast

 

Clean hydrogen production will ramp up by a factor of 30 by 2030, but governments will still miss their targets: BNEF – 13th May 2024

  • BloombergNEF predicts a significant increase in clean hydrogen production by 2030, with production capacity expected to rise by a factor of 30 from current levels.
  • This growth signifies a shift towards cleaner energy sources, with clean hydrogen playing a crucial role in decarbonizing various sectors.
  • North America is projected to lead in hydrogen production capacity by 2030, driven primarily by the deployment of blue hydrogen, which utilizes carbon capture technology.
  • Despite the substantial increase in clean hydrogen production, it would only cover 17% of the current demand for grey hydrogen, highlighting the need for further investment and expansion in the hydrogen sector to meet global decarbonization goals.

 

Shipping sector's demand for green hydrogen 'could require 1,000GW of electrolysers and millions of new jobs' – 13th May 2024

  • Massive Electrolyser Demand: The shipping sector's transition to green hydrogen-based fuels could necessitate the deployment of up to 1,000 gigawatts (GW) of electrolysers, indicating significant demand for hydrogen production infrastructure.
  • Job Creation: The shift towards clean hydrogen-based fuels in the shipping industry has the potential to generate millions of new jobs in the 2030s, primarily in the construction and installation of renewable energy infrastructure for green hydrogen production.
  • Renewable Energy Integration: Meeting the demand for clean fuels in the shipping sector may require the installation of 2,000GW of new wind and solar energy capacity, highlighting the integration of renewable energy sources into hydrogen production processes.
  • Ammonia as Alternative Fuel: The presence of vessels like the Green Pioneer, capable of running on ammonia, during events like the Cop28 summit highlights the growing interest and potential for alternative fuels in the maritime industry, including ammonia produced from green hydrogen.

 

Aviation sector sees greener fuel as crucial to net-zero goals – 16th May 2024

These points illustrate the positive momentum and collaborative efforts driving the adoption and development of sustainable aviation fuel (SAF) in the aviation sector: 

  • High Demand for SAF: Nanna Baldvinsdóttir, CEO of Icelandic start-up IðunnH2, reports significant interest in their plans for a commercial-scale SAF production facility, reflecting the aviation industry's proactive approach to securing low-carbon fuel alternatives.
  • Industry Goals: Airlines, aircraft manufacturers, and stakeholders have committed to achieving net-zero emissions by 2050 using SAF, hydrogen, and more efficient technologies, demonstrating a strong industry-wide commitment to sustainability.
  • Technological Advances: Airbus and Boeing have pledged that their planes will be capable of flying on 100% SAF by 2030, highlighting the industry's progress towards integrating SAF into existing technologies.
  • Successful SAF Flights: Last year, Virgin Atlantic became the first commercial airline to operate a transatlantic flight powered exclusively by SAF, marking a significant milestone in demonstrating SAF's viability.
  • Government and Industry Collaboration: The UK government and the International Air Transport Association are actively supporting SAF through mandates and consultations on pricing schemes, indicating strong policy support for the industry's transition to cleaner fuels.
  • Investment in SAF Production: IðunnH2 plans to produce “e-kerosene” using renewable energy and CO₂, with Icelandair committed to purchasing up to 45,000 tonnes from 2028, highlighting ongoing investments and collaborations in SAF production.
  • Future Potential of SAF: A review by the International Air Transport Association found that SAF is expected to contribute significantly to CO₂ reductions by 2050, underlining its potential as a major tool in the aviation sector's decarbonization strategy.

 

National Infrastructure Commission re-stating again the importance of a core hydrogen network – 16th May 2024

The National Infrastructure Commission (NIC) in its Infrastructure Progress Review emphasized the critical role of a core hydrogen network for Great Britain. Key recommendations include:

  • Hydrogen for Industry and Power: The NIC highlights the importance of hydrogen for various industries and power generation, urging the government to enable multiple hydrogen-fired power projects by 2030.
  • Core Pipeline Networks: The review calls for the establishment of core pipeline networks for transporting carbon dioxide and hydrogen across Great Britain.
  • Energy Security: The NIC acknowledges the ongoing vital role of gas in the UK’s energy security, advocating for the repurposing of the existing gas transmission network to carry green gases.
  • Support for Transition: The NIC supports initiatives to convert existing gas-fired power stations to hydrogen and endorses ongoing projects like Project Union and FutureGrid, which are preparing for a hydrogen-based future.
  • Government and Industry Collaboration: The review praises government efforts, such as the Hydrogen Allocation Rounds and the Hydrogen Delivery Council and calls for continued collaboration to advance hydrogen infrastructure and deployment.
  • Overall, the NIC's recommendations underscore hydrogen's potential in achieving net-zero goals and enhancing energy resilience in the UK.

 

Japan firms study carbon neutral fuels for auto sector – 27th May 2024

  • Carbon Neutral Fuels Initiative: Japanese companies, including Toyota and Mitsubishi Heavy Industries, are exploring the use of synthetic fuels (e-fuels) and biofuels to cut CO2 emissions from internal combustion engine vehicles.
  • Feasibility Study: These companies signed an agreement to conduct a feasibility study on introducing clean fuels by 2030, considering scenarios, roadmaps, and regulations.
  • Domestic Production for Energy Security: The partnership aims for domestic production of e-fuels from CO2 and renewable hydrogen, and biofuels from plants, to enhance energy security, though output capacity and feedstock sources are unclear.
  • Japan's Net Zero and EV Goals: Japan plans to ban sales of gasoline-only cars and shift to electric vehicles (EVs),
    including hybrids, by 2035, to achieve net zero emissions by 2050, requiring cleaner fuels.
  • Toyota's Flex-Fuel Vehicles: Toyota has introduced hybrid, flex-fuel vehicles in Brazil and will invest $2.1 billion there to decarbonize its fleet but has not specified plans for Japan.
  • Government Biofuel Regulations: Japan mandates refiners to use 500,000 kilolitres per year of ETBE or bioethanol. Currently, Brazil is the sole bioethanol supplier to Japan.

 

Argus launches carbon-adjusted ammonia price – 23rd March 2024

  • Key facts on carbon-adjusted ammonia price from global energy and commodity price reporting agency, Argus.
  • Argus Launches CAPA Assessments: Argus has introduced two Carbon-Adjusted Price of Ammonia (CAPA) assessments to reflect the impact of the Carbon Border Adjustment Mechanism (CBAM) on European ammonia prices.
  • CBAM's Role and Goals: CBAM aims to be the first tool in the clean ammonia market combining carbon intensity measurement with a mandatory carbon price, to provide market transparency and facilitate liquidity.
  • Clean Ammonia's Potential: Clean ammonia is attracting attention for its ability to decarbonize traditional uses in
    fertilizers and chemicals, and its potential in transport fuels and power generation.
  • Business Impact and Incentives: The new CAPA prices will help market participants evaluate carbon pricing impacts, incentivize decarbonization efforts, and support investments in new clean ammonia capacity.

 

Phased, multi-marine fuel approach key to net zero: APM – 20th March 2024

  • Need for a Phased Approach: Experts emphasize the necessity of a phased approach and the use of a combination of alternative marine fuels for decarbonizing the global fleet.
  • Fuel Synergies and Flexibility: No single alternative fuel can fully substitute current fossil fuels, highlighting the importance of synergies between different fuels and the flexibility of fuel usage by vessel operators.
  • Rapid Development of Ammonia: Ammonia is seen as a promising fuel due to its low emissions profile and potential scalability. Investments in ammonia production are expected to increase in the next few years, with significant supplies projected by 2030.
  • Ammonia's Advantages: Ammonia is highlighted for its lack of carbon content and less stringent storage requirements compared to LNG or hydrogen, making it an attractive option for shipping.
  • Transition to Green Fuels: Vessels currently using LNG could transition to bio-LNG with minimal modifications. Hydrogen fuel cells are deemed suitable for short voyages, and the industry may progress towards green methanol despite its current carbon footprint.
  • Mitigating Price Gap: Redistributing investment risks across the value chain could help narrow the price gap between fossil fuels and transition fuels, encouraging uptake of low-carbon alternatives.
  • Regulatory Influence: The extension of the EU's Emissions Trading System to the maritime sector and the implementation of market-based measures like FuelEU Maritime are expected to influence fuel choices and accelerate the adoption of low-carbon fuels in the industry.

 

US Gulf lowest-cost green ammonia in 2030: Report – 16th April 2024

  • Cost Competitiveness: The US Gulf coast is projected to be the lowest-cost source of green ammonia for top global bunkering ports like Singapore and Rotterdam by 2030, making it an attractive option for procurement.
  • Demand Projections: The study forecasts significant demand for green ammonia in both Singapore and Rotterdam, with substantial volumes expected to be sourced from the US Gulf coast due to cost advantages.
  • Importance of Renewable Energy Potential: Rotterdam is noted for its good renewable energy potential, which could facilitate the production and import of green ammonia, supporting its demand in the region.
  • Incentives and Regulatory Environment: Rotterdam can benefit from EU incentives for hydrogen imports and lower-emission fuel demand created by regulatory frameworks like the EU emissions trading system and FuelEU Maritime. However, potential limitations from the EU's draft Renewable Energy Directive could affect the import window for US green fuels, impacting the demand dynamics for green ammonia.

 

New technologies aim to boost SAF production – 26th April 2024


These points collectively highlight the growing momentum and diverse efforts in advancing sustainable aviation fuel (SAF) production to meet increasing demand and regulatory requirements: 

  • Rising Global Demand: Anticipated increase in global demand for SAF, driven by mandates for its use, is spurring the development of new production pathways.
  • Regulatory Mandates: The EU-wide SAF mandate, effective from 2025, sets a minimum target of 2% SAF with a sub-target for synthetic SAF from 2030. The UK has also published its domestic SAF mandate targeting a 2% SAF share by 2025.
  • Technological Advancements: Companies like Honeywell and Ineratec are developing new pathways for SAF production, using technologies like hydrocracking and Fischer-Tropsch (FT) synthesis. These technologies enable the production of SAF from biomass and renewable sources.
  • Industry Collaborations: Collaboration between companies such as Honeywell, DG Fuels, Ineratec, Sasol, LanzaJet, and Jet Zero Australia, along with support from organizations like United Airlines Ventures Sustainable Flight Fund and Microsoft's Climate Innovation Fund, are aimed at scaling up SAF production globally.
  • Research and Development: Ongoing research and development efforts, such as the partnership between Polish oil firm Orlen and Japanese company Yakogawa, focus on developing technological processes to synthesize SAF from renewable hydrogen and bio-CO2, in line with EU regulations.

Investment

 

Jera considers joining ExxonMobil’s H2 project in US – 25th March 2024

Key announcements supporting hydrogen production:

  • Jera's Framework Agreement with ExxonMobil: Jera has signed a framework agreement with ExxonMobil to explore the development of blue hydrogen and its derivative of ammonia at ExxonMobil's Baytown complex. This indicates a concrete step towards hydrogen and ammonia production.
  • ExxonMobil's Hydrogen Production Plant and CCS Facility: ExxonMobil is developing a hydrogen production plant and a carbon capture and storage (CCS) facility at its Baytown complex. This facility aims to produce around 900,000 t/yr of hydrogen, which will be used to produce around 1mn t/yr of ammonia. This signifies a significant investment and commitment to hydrogen production.
  • Collaboration with Yara and CF Industries: Jera is working with Norway-based fertilizer producer Yara and US ammonia producer CF Industries to develop blue ammonia production on the US Gulf coast. This partnership targets the production of more than 1mn t/yr of blue ammonia under each partnership. This collaboration expands the scope of hydrogen and ammonia production efforts.
  • Government Support: Jera emphasizes the need for government support for projects related to low-carbon ammonia production and marketing. This indicates an acknowledgment of the role of government support in facilitating the transition to hydrogen-based fuels.
  • US-Japan Clean Energy and Energy Security Initiative: Tokyo and Washington are increasing efforts to strengthen their ties in clean energy technology development, including hydrogen and its derivatives such as ammonia. This initiative aims to accelerate cooperation in developing and deploying clean energy technologies, highlighting the significance of hydrogen in the clean energy transition.
  • These announcements collectively demonstrate a concerted effort from both private and public sectors to support and advance hydrogen production, particularly in the form of blue hydrogen and its derivatives like ammonia.

 

Siemens-backed start-up to build €1.3bn low-carbon hydrogen and fertiliser plant in northern France – 14th May 2024

  • Siemens-backed start-up FertigHy will construct a €1.3 billion low-carbon hydrogen and fertilizer plant in northern France, marking its first facility.
  • The plant, located in the Hauts-de-France region, is scheduled for completion in 2030, with construction commencing in 2027.
  • It will utilize renewable and low-carbon electricity to produce hydrogen, which will then be used to manufacture 500,000 tonnes of low-carbon nitrogen-based fertilizers annually, including ammonia.
  • This initiative demonstrates a commitment to sustainable industrial practices, leveraging hydrogen technology to produce environmentally friendly fertilizers and contribute to carbon reduction efforts.

 

Japanese bank Mizuho boosts support for H2, ammonia – 17th May 2024

  • Mizuho Financial pledges ¥2 trillion by 2030 to support Japan's cleaner fuel initiatives, focusing on hydrogen, ammonia, and e-methane.
  • They aim to accelerate the clean fuel supply chain, offering financing for production, distribution, and carrier development.
  • Japan's goal of net-zero CO2 emissions by 2050 drives this commitment.
  • Mizuho invests in overseas projects to supplement limited domestic production, including efforts to reduce emissions in coal plants.
  • They have already allocated $1bn to cleaner fuel projects and tightened financing policies for biomass and coal.
  • Mizuho plans to halve available credit for coal projects by 2030 and eliminate it by 2040-41.

Japanese firms tie up to build large ammonia carrier – 22nd March 2024

Japanese firms, including Mitsui OSK Lines (MOL), Asahi Tanker, and Ikous, plan to launch a large domestic ammonia carrier by 2028-29, aligning with Japan's increasing demand for cleaner energy. Separately, Itochu and U-Ming Marine Transport are collaborating on ammonia-fuelled carriers. Meanwhile, Astomos and Eneos Globe are already building dual-fuel gas carriers for LPG and ammonia transport.

 

Renewables investor launches multi-billion-dollar green hydrogen-based iron project in Australia – 21st May 2024

  • Renewable Energy Integration: The project is associated with renewable energy, highlighting the role of hydrogen in advancing renewable energy initiatives and reducing carbon emissions.
  • Large-scale Investment: The substantial investment of A$3.5bn ($2.3bn) indicates significant financial commitment and confidence in hydrogen as a viable energy source.
  • Strategic Partnerships: The involvement of major players like Quinbrook Infrastructure Partners, Stanwell, Keppel
  • Infrastructure, and Japanese firms (Iwatani, Kansai Electric Power Company, and Marubeni) underscores the global collaboration and interest in hydrogen.
  • Export Potential: The plan to export hydrogen as ammonia and as a liquid to offtakers in Asia demonstrates hydrogen’s potential for international trade and its role in the global energy market.
  • Future-readiness: The timeline for the CQ-H2 plant, set to be operational by 2028, shows forward-looking planning and the potential for hydrogen to be a key energy source in the near future.
  • Economic Development: The project represents economic opportunities, including job creation and industrial growth, especially in Queensland, Australia.
  • Sustainability Goals: The focus on green hydrogen aligns with broader sustainability and environmental goals, contributing to the reduction of greenhouse gas emissions and promoting cleaner industrial processes.

 

Tata Steel signs deal to build Dutch green steel units – 27th May 2024

  • Green Steel Production Initiatives: Tata Steel Netherlands is setting up green steel production units, which indicates a shift towards more sustainable steelmaking processes. This move aligns with the broader adoption of hydrogen as a cleaner alternative in industrial processes.
  • Collaboration with Leading Equipment Suppliers: The involvement of Danieli and Tenova, well-known for their steelmaking equipment, in setting up a direct-reduced iron (DRI) plant and an electric arc furnace (EAF) highlights the industry's commitment to advanced, low-carbon technologies, where hydrogen can play a crucial role.
  • Direct-Reduced Iron (DRI) Plant: The establishment of a DRI plant is significant as DRI technology can utilize hydrogen as a reducing agent instead of traditional carbon-intensive methods, thereby supporting the hydrogen market.
  • Carbon Neutrality Goal: Tata Steel Netherlands' goal to achieve carbon neutrality by 2045 and reduce CO2 emissions by 40% by 2030 demonstrates a strong commitment to reducing carbon emissions. This transition often involves the adoption of hydrogen-based solutions.
  • Regulatory and Permitting Process: The company’s proactive approach in applying for the necessary permits to implement the first phase of their carbon reduction plan by the end of 2024 reflects a structured and serious commitment to their sustainability goals, potentially accelerating the demand for hydrogen technologies.
  • Reduction in Carbon Emissions Intensity: By aiming to replace traditional blast furnaces and coke-making plants with DRI and EAF technologies, which can be powered by hydrogen, Tata Steel Netherlands is contributing to a market shift towards cleaner energy sources, thereby supporting the hydrogen economy.

Supply Chain

 

Cepsa selects preferred electrolyser suppliers for first phase of 1GW green hydrogen project at Spanish refinery – 13th May 2024

  • Cepsa, a Spanish oil & gas company, is advancing a 1GW green hydrogen project at the La Rabida refinery in Huelva, Spain.
  • Thyssenkrupp Nucera and Siemens Energy have been selected as preferred suppliers for 400MW of electrolysers for the project, marking one of the largest orders in Southern Europe.
  • Siemens Energy will provide 100MW of PEM electrolysers, while Thyssenkrupp Nucera will deliver a basic engineering package based on 15 of its 20MW alkaline electrolysers, with a firm order expected for the remaining 300MW pending a final investment decision.
  • This project highlights the growing interest and investment in green hydrogen technology, highlighting its potential to play a significant role in decarbonizing industrial processes and reducing carbon emissions.

 

Thyssenkrupp Nucera sees 69% increase in hydrogen electrolyser sales 'despite difficult market conditions – 15th May 2024

  • Thyssenkrupp Nucera experienced a significant 69% increase in sales of its alkaline electrolysers in the first half of its 2023-24 financial year compared to the same period last year.
  • This increase in sales reflects growing demand for alkaline
  • electrolysers, indicating potential market expansion or increased adoption of hydrogen technologies.
  • Despite facing difficult market conditions, such as low margins and a decrease in sales of chlor-alkali electrolysers, Thyssenkrupp Nucera managed to achieve notable growth in its hydrogen electrolyser sales.
  • The company's strong performance in alkaline-electrolyser sales demonstrates its capability to capitalize on opportunities within the hydrogen industry, positioning itself as a key player in the market.

 

World first' as ADNOC ships 'thousands of tonnes' of blue hydrogen-based ammonia from UAE to Japan – 16th May 2024

  • ADNOC, the Emirati national oil company, has successfully shipped "thousands of tonnes" of blue hydrogen-based ammonia from the UAE to Japan.
  • This shipment is a significant milestone, being the world's first certified bulk commercial shipment of blue ammonia on such a large scale.
  • The ammonia is intended for use in power generation in Japan, indicating the potential for blue hydrogen as a viable energy source in international markets.
  • Thomas Parsfield, ADNOC’s head of business development for blue hydrogen and its derivatives, confirmed the successful delivery of the commercial cargo during the World Hydrogen Summit, highlighting the achievement in global hydrogen trade.

Latest News & Insights

    Find out how you can be part of our journey

    Foresight Group Holdings; investing to build a sustainable future and grow thriving economies.

    Visit Foresight Group Holdings