S&P Global Commodity Insights Weekly ET News Highlights – Apr 2, 2024

Japan's largest power producer tests ammonia as new fuel

Energy transition highlights: Our editors and analysts bring together everything you need to know about the industry this week, from renewables to storage to carbon prices.

JERA -- Japan's largest power generation company and one of the world’s largest power utilities --started testing ammonia cofiring at one of its largest thermal power plants this week.

The project paves the way for the use of ammonia in the power sector on a commercial scale that has never been done before. Currently, ammonia is a largely a feedstock for fertilizer production with some of it going into chemicals.

However, ammonia can be combusted with zero carbon emissions and it is one of the pathways being explored for the transportation of hydrogen as it has existing trade flows that can be expanded. These factors allow ammonia to become as an energy transition fuel.

JERA started testing ammonia cofiring at its 1 GW No. 4 coal-fired unit at Hekinan thermal power plant in central Japan from April 1, to be carried out through June using about 40,000 mt of ammonia.

The 20% cofiring of ammonia is expected to be the world's first at a large commercial coal-fired power plant and is part of a four-year long pilot project. JERA has pledged to commercialize its ammonia cofiring power generation by 2030 and use 100% ammonia as fuel in the 2040s for its 2050 carbon neutrality target.

Japan sees great potential in ammonia as a CO2 zero-emission fuel as the country targets to cut its greenhouse gas emissions by 46% by FY 2030-31 from FY 2013-14 levels and achieve carbon neutrality by 2050.

Price of the week: Meanwhile, the price of emission allowances in China’s national compliance carbon market hit a new record on March 29 of Yuan 90.66/mtCO2e ($12.78/mtCO2e), increasing 8.1% week on week, according to Shanghai Environment and Energy Exchange. The steady increase in Chinese carbon prices has been attributed to bullish sentiment and looming deadlines for meeting emissions obligations.

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Germany’s SHS launches green hydrogen tender for Saarland steel plants

German steel producer Stahl-Holding-Saar has launched a tender to buy up to 50,000 mt of locally produced renewable hydrogen for its Dillinger and Saarstahl plants in Saarland, the company said March 26. SHS and its subsidiaries are due to produce up to 3.5 million mt/year of green steel from 2027/28. The move follows a tender from Thyssenkrupp for large volumes of clean hydrogen for its Duisburg plant in Germany from 2028.

Platts Connect

New open-source tool aims to inform on environmental impact of hydrogen

The Open Hydrogen Initiative released March 25 an open-source tool for determining the carbon intensity of hydrogen as some industry members work to harmonize measurement methodologies. This new tool allows for the calculation of the carbon intensity of hydrogen production at the facility level based on the operational parameters of the facility and its supply chains, "capturing the nuances" of a project’s emissions, OHI Executive Director Zane McDonald

Manchin, oil and gas groups urge flexibility, better coordination on methane fee

Delays in implementing a fee on oil and gas system methane emissions and new greenhouse gas reporting rules are unfair to regulated companies and run counter to congressional intent, Senate Energy and Natural Resources Chairman Joe Manchin, Democrat-West Virginia, told the Environmental Protection Agency March 26.

TES gets tariff, third-party exemption for German LNG, e-natural gas terminal

Tree Energy Solutions has secured an exemption from tariff and third-party access regulation for its planned "e-LNG" import terminal at the Green Energy Hub in Wilhelmshaven from the German network regulator BNetzA. BNetzA has exempted the 15-Bcm/year terminal, which will import LNG before switching to green hydrogen-based "electric natural gas" (e-NG), for 20 years from the start of the operations.


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S&P Global Commodity Insights Weekly ET News Highlights – May 28, 2024

First UK electrolytic hydrogen allocation round contracts to be signed soon: LCCC Energy transition highlights: Our editors and analysts bring you the biggest stories from the industry this week, from renewables to storage to carbon prices. The first contracts under the UK’s electrolytic hydrogen production support scheme will be signed “soon,” the company issuing the contracts told S&P Global Commodity Insights. The UK government awarded funding to 11 successful electrolytic hydrogen projects in December under its first hydrogen allocation round (HAR1), totaling 125 MW, just half of the total capacity submitted. Dan Hulbert, lead contract manager for hydrogen at the Low Carbon Contracts Company -- the counterparty for the hydrogen production support contracts -- said companies were getting close to finalizing agreements. “I'm hopeful that we will see something soon,” Hulbert told Commodity Insights in an interview May 23. “It's getting close, but it's outside of our control as we do not manage the allocation process. I'm hopeful that it will be happening in the near future.” Price of the week: GBP8.03/kg - the weighted average strike price for the first UK electrolytic hydrogen allocation round, with first contracts due to be signed soon. SPGlobal.com US power sector gas demand to peak in 2024 on renewables buildout: Commodity Insights Power sector gas demand in the US is expected to peak in 2024 thanks to a massive buildout of renewables, offsetting rising demand from data centers, according to S&P Global Commodity Insights analysts in their latest short-term natural gas outlook. Vietnam expedites domestic carbon market development to tackle CBAM, Article 6 Vietnam has accelerated development of a carbon market, assigning emission quotas to power, iron and steel, and cement industries from 2025, facilitating these industries to tackle the EU's Carbon Border Adjustment Mechanism (CBAM), and fine-tuning rules around Article 6 implementations. Platts Connect South Korea opens world’s first auction for clean hydrogen power South Korea has launched an auction to trade power produced by clean hydrogen with 6,500 GWh to be offered this year under 15-year contracts. The auction is being conducted by state-run Korea Power Exchange, in which Korea Electric Power and other companies that have joined the RE100 initiative will bid. LSB sets likely 2025 milestone for US-based, CCS-derived low-carbon ammonia derivative LSB Industries will supply up to 150,000 st/year of low-carbon ammonium nitrate solution to Freeport Minerals Corp. under a new five-year deal that challenges skepticism of market demand and the willingness to pay for differentiated product. "We're pretty sure that this is the first low-carbon ammonia offtake signed in the US where a large portion of the associated carbon emissions have been captured and sequestered," Jakob Krummenacher, vice president of clean energy at LSB Industries, told S&P Global Commodity Insights.


A guide to navigate Commodity Insights LIVE: SAF and Jet Fuel in an age of transition

S&P Global Platts published its first jet fuel prices more than 50 years ago. Even though the aviation industry has changed considerably since then, our real-time news, market reports, analysis, price assessments and fundamental data continue to provide a valuable reference point for jet fuel buyers and sellers. This page helps you navigate the latest news, insights and interactive content from S&P Global Commodity Insights and our partner IATA. News UK SAF policies put uptake targets at risk: aviation leaders INDIA ELECTIONS: Policy incentives in spotlight to drive biofuels transition Fuels of the future: Unpacking the pathway for advanced fuels in Brazil Interactive Interactive: Platts SAF-Jet Fuel blend price The future for SAF with the IATA Aviation Energy Forum on the horizon Jet Fuel considerations with IATA’s Forum on the horizon Harnessing CO2 for Production of Sustainable Fuels Perspectives with Nicholas Flanders Series LIVE Markets and price assessments LIVE Markets Homepage Sustainable Aviation Fuel CIF ARA Platts Global Transportation Fuels Index World Jet Indexes IATA Jet Fuel Price Monitor Meet the Team If you would like more information on SAF/Jet Fuel please do reach out to our S&P Global Commodity Insights experts: Sophie Byron, Global Director of Biofuels Pricing , will be presenting in an afternoon workshop on “How the Price of SAF is Assessed”. Sophie brings extensive expertise in price assessments for SAF and other biofuels, spearheading the application of the Platts methodology in Biofuels pricing, and playing a pivotal role in the development of the Platts eWindow for SAF. Gary Clark, Associate Director of European Clean & Refined Products , will kick off the commercial session on Thursday morning with a discussion “Explaining Jet Fuel Prices – Regional Variations & Medium to Long-Term Forecast” Gary specializes in European middle distillate pricing and offers analysis of diesel, gasoil, and jet fuel markets, among others, while ensuring adherence to Platts pricing methodology. Debnil Chowdhury, Executive Director of Refined Products Market Research , will be hosting a closed breakfast event for industry leaders to discuss “The Security of Future Jet Supply”. Debnil leads a dedicated team focused on research and analysis of global downstream oil markets, with a keen emphasis on evaluating the supply, demand, and transportation of oil products, including jet fuel. In addition to these esteemed speakers, other S&P Global Commodity Insights Market Experts attending include: Adam Probert – Director, eWindow Global Markets , who oversees the Platts eWindow platform and is instrumental in supporting futures contracts against Platts prices for various commodities, including Jet Cargoes and Derivatives, among others. Adam is currently spearheading the development of the Platts eWindow for SAF, slated for launch later this year. Ina Chirita – Associate Director, Biofuel Value Chain Service (BVCS) , specializing in European biofuels regulation and providing invaluable insights into the SAF market through the BVCS's long-term forecasts for biofuels demand, supply, and prices. James Simpson - Senior Aviation Specialist , who focuses on critical aviation issues, including SAF projects, substitutes for SAF, and aviation strategy, bringing extensive knowledge and experience to the table. We look forward to the opportunity to engage with you during the IATA Aviation Energy Forum and exchange ideas that drive innovation and progress in the aviation energy sector.


Idemitsu, ENEOS, Toyota, MHI eye introducing carbon-neutral fuels in Japan by 2030

Japan's Idemitsu Kosan, ENEOS, Toyota Motor and Mitsubishi Heavy Industries have agreed to jointly consider introducing carbon-neutral fuels in the country around 2030, the companies said in a joint statement May 27. Following the agreements, Idemitsu, ENEOS, Toyota and MHI have commenced a study to introduce and spread carbon-neutral fuels in the country as part of efforts toward carbon neutrality. The study followed a signing of memorandum of understanding Jan. 31, 2024, following a proposal from Toyota in the second half of last year to seek a multi-pathway approach toward carbon neutrality, an ENEOS spokesperson said. As part of the study, the four companies will discuss and study scenarios and roadmaps for the introduction of carbon-neutral fuels including e-fuel produced from CO2 and renewables-derived hydrogen and biofuels made from raw materials such as plants that absorb CO2 via photosynthesis in Japan's automobile market and necessary frameworks. The companies will also investigate the feasibility of domestic production of carbon-neutral fuels, with a view of ensuring the country's energy security. The latest move by Idemitsu and ENEOS comes as Japan aims to establish highly efficient and massive production technology for e-fuels by 2030 in order to commercialize it by 2040 after going through the introduction, expansion and cost reduction phase in the 2030s, according to the Ministry of Economy, Trade and Industry. The collaboration comes as Idemitsu has been working on an early introduction of carbon-neutral fuels such as e-fuel and biofuel through collaborations with companies in Japan and abroad. Most recently, Idemitsu said May 13 that it has taken a minority stake in synthetic fuels producer HIF Global for $114 million under which the company aims to develop an e-methanol supply chain in Japan and abroad with its high multiplicity usage not only as a bunker fuel but also as feedstocks to produce e-gasoline, SAF, e-diesel and synthetic chemicals such as olefin and basic chemicals. Idemitsu has said it aims to establish an e-fuel supply system by 2030, when it aims to develop 500,000 kiloliters (3.14 million barrels) SAF supply from domestic output and imports. Similarly, ENEOS is working to establish its e-fuel, biofuels supply chains, with the company starting 1 b/d e-fuel production at its Central Technical Research Laboratory in fiscal year 2024-25 (April-March), with an eye on boosting its e-fuel production to 300 b/d by FY 2030-31 in the country, the ENEOS spokesperson said. With its multi-pathway approach, Toyota said it is working toward carbon neutrality not just through the spread of electrified vehicles, but also by reducing the CO2 emissions of internal combustion engine vehicles, having introduced flex-fuel vehicles -- vehicles that can run on both biofuels and gasoline -- in Brazil in 2007. Toyota added that it will continue to work on reducing the CO2 emissions of internal combustion engine vehicles, including vehicles in operation, and will also consider the development of engines specifically designed for electrified vehicles that contribute to the spread of carbon-neutral fuels. MHI, meanwhile, is working to build a CO2 solutions ecosystem and a hydrogen solutions ecosystem as part of its efforts toward 2040 carbon neutrality declaration with its group products, technologies and services that help reduce CO2 emissions, as well as new solutions and innovations.


Bright spots for hydrogen project development emerge amid investment delays

Energy transition highlights: Our editors and analysts bring you the biggest stories from the industry this week, from renewables to storage to carbon prices. Clean hydrogen projects are finding a pathway to final investment decisions despite global headwinds , through careful renewable power procurement, matching hydrogen production with anchor offtake agreements and state support, while incumbent producers also have an advantage. Low-carbon and renewable hydrogen project delays are well documented around the world, with policy uncertainty, cost inflation and difficulty securing competitive offtake agreements common barriers. A small minority -- around 7% -- of announced global clean hydrogen projects have taken positive final investment decisions, data from S&P Global Commodity Insights showed. Meanwhile, electrolyzer costs have risen 20%-45% since 2021, according to Commodity Insights analysts. But there are bright spots, and concrete progress is being made around the globe, albeit at a slower pace than originally envisaged and than developers would like to see. Editor’s picks SPGlobal.com INTERVIEW: 'Show your homework', urge lawyers advising corporates on ESG claims Companies need to be more circumspect when making claims about their environmental credentials, especially those based on carbon offsets which are facing a barrage of greenwashing accusations, lawyers from international legal firm Vinson & Elkins told S&P Global Commodity Insights. New Zealand's ETS settings consultation fails to boost carbon market New Zealand's consultation to update carbon auction price settings for its emissions trading scheme failed to provide certainty to the market, with the government's option to lower the auction floor denting market confidence and pushing prices down, sources said. Platts Connect US tariff hike on China's metals, clean energy products to have limited impact in short term: sources China on May 15 firmly opposed a move by the US to hike tariff rates on certain Chinese steel, aluminum and clean energy products, however, industry sources told S&P Global Commodity Insights that the tariffs may not have substantial impact on Chinese exports at least in the near term. ADNOC delivers first bulk shipment of CCS-enabled clean ammonia to Japan’s Mitsui Abu Dhabi’s state-owned oil company ADNOC has delivered the world’s first certified bulk commercial shipment of low carbon ammonia to Japan’s Mitsui for use in clean-power generation. The delivery marks the first shipment of low-carbon ammonia derived from hydrogen with carbon capture and storage (CCS), building on a series of demonstration cargoes shipped by ADNOC to customers in Asia and Germany. Learn more about S&P Global Commodity Insights Energy Transition Services