S&P Global Commodity Insights Weekly ET News Highlights – May 7, 2024

EU’s Hydrogen Bank auction clears below 50 euro cent/kg, funding 1.5 GW

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 auction under the European Hydrogen Bank mechanism has cleared well below expectations, with the seven winning projects bidding at 37-48 euro cent/kg (40-51 cents/kg) for a total 1.5 GW of electrolysis.

The EU will provide Eur720 million to the projects, which will produce 1.58 million mt of green hydrogen over 10 years, the European Commission said.

The subsidy amounts range from Eur8 million to Eur245 million, with two 500-MW projects -- Renato Ptx's Catalina project in Spain and MadoquaPower2X's project in Portugal -- taking the bulk. The EC had set a price ceiling for the inaugural auction of Eur4.50/kg.

"The results of our first EU-wide auction for renewable hydrogen production are very encouraging," European Commissioner for Climate Action Wopke Hoekstra said in the statement. "These innovative auctions, funded by the revenues from emissions trading, are a game-changer when it comes to producing renewable hydrogen in Europe."

Price of the week: 48 euro cent/kg

The clearing price for the EU’s inaugural European Hydrogen Bank auction, well below the Eur4.50/kg ceiling, leaving a substantial green premium for offtakers to pick up.

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Japan set for world's first transport of liquefied CO2

Japan is set to start what will be the world's first CO2 transport on a low-temperature and low-pressure liquefied carrier over 1,000 km in a series of trial voyages, expected to play a key role in the country achieving its carbon neutrality goal by 2050. The trial voyage of the EXCOOL, operated by Nippon Gas Line, is due in early October from Kansai Electric's 1.8-GW Maizuru coal-fired power plant in Kyoto prefecture to a Tomakomai terminal in Hokkaido.

Biden administration unveils updated SAF tax credit model, provides ethanol clarity

The Biden administration released updated modeling for sustainable aviation fuel subsidies April 30, giving corn ethanol producers a chance of qualifying for an Inflation Reduction Act tax credit provided they can adopt three agricultural practices to reduce emissions. The updated guidance gave ethanol producers "important clarity" on the requirements to qualify for the IRA's 40B tax credit, senior White House advisor John Podesta said.

Platts Connect

Green premium remains for renewable hydrogen after EU's 1.5-GW auction result

The low clearing price for the EU's inaugural European Hydrogen Bank auction, with funding for 1.5 GW of electrolysis across seven successful projects, shows a willingness to pay a "green premium" by offtakers, industry representatives said.

South Korea to provide subsidies to hydrogen refueling stations

South Korea will provide Won 8.2 billion ($6 million) in subsidies to hydrogen refueling stations where 152 private stations will receive an average of Won 54 million each for fuel purchases. The move is designed to help improve hydrogen refueling stations’ operating conditions and encourage the private sector to join the hydrogen ecosystem.

California hydrogen pump price for mobility sector declines, still highest globally

Platts California hydrogen pump price was assessed 1% lower on the month at $32.38/kg May 1, maintaining its position as the highest hydrogen pump price across the globe. As an early adopter of low-carbon hydrogen for transport, the hydrogen fuel cell vehicle market in California has faced challenges with elevated hydrogen fuel prices at the pump and availability of reliable fueling infrastructure.

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S&P Global Commodity Insights Weekly ET News Highlights – June 17, 2024

EC announces Eur1.2 billion for second hydrogen bank auction 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. The European Commission has announced a Eur1.2 billion ($1.3 billion) budget for the second auction under the European Hydrogen Bank mechanism, expected in the autumn. The news came at a stakeholder workshop on the European Hydrogen Bank organized by the EC's Directorate-General for Climate Action, trade association Hydrogen Europe said. The budget is substantially less than the Eur2.2 billion previously expected for the second round, though some funding will also go to support hydrogen imports, the EC told S&P Global Commodity Insights. The first round awarded a total of Eur720 million to fund 1.5 GW of electrolysis across seven projects at 37-48 euro cent/kg at the end of April. Price of the week : 48 euro cent/kg The clearing price for the EU’s inaugural European Hydrogen Bank auction in April, well below the Eur4.50/kg ceiling, leaving a substantial green premium for offtakers to pick up. Editor’s pick: Premium and free content SPGlobal.com China's push to start emissions trading for steel industry this year faces critical challenges The Chinese government and the country's iron and steel industry association have been pushing for the sector's adoption of the national compliance emissions trading system in 2024, but critical challenges remain as most producers are unfamiliar with carbon asset management and cannot afford a high carbon price given thin profit margins. China launched its ETS in July 2021, which currently only covers the power sector though there has been calls to include other emissions-intensive sectors, especially those liable under the EU's Carbon Border Adjustment Mechanism, like cement, aluminum, iron and steel. Equinor pushes back target FID on UK blue hydrogen plans amid funding uncertainty Norway's Equinor has pushed back a target final investment decision date for its 600-MW H2H Saltend blue hydrogen plant in the UK to around 2027 after failing to be selected under the government's Track 1 carbon capture, use and storage cluster sequencing program in 2023, a company official told S&P Global Commodity Insights. The Norwegian oil and gas firm's vice president for Low Carbon Solutions, Dan Sadler, said an investment decision hinged on getting the go-ahead for the CO2 pipeline system for Humberside, part of the East Coast Cluster. Hydrogen producers mull renewables sourcing for electrolysis projects amid new US regulations US-based hydrogen sector developers are considering which renewable procurement strategies will align with both domestic and international standards for electricity sourcing amid proposed Inflation Reduction Act rules by the US government. Producers in the hydrogen sector have highlighted the increasing popularity of integrated projects to facilitate adherence to a stronger global regulatory environment. Platts Connect Washington state carbon auction stops short of selling out ahead of repeal vote Washington state’s carbon market failed to sell all of its advance 2027 emission allowances, state Department of Ecology data showed, as the program faces repeal in the upcoming November elections. The current vintage auction settlement price for Auction No. 6 on June 5 cleared at $29.92/mt, a 16% increase from the all-time low settlement price in Auction No. 5. The advance 2027 vintage auction settlement price cleared at the price floor of $24.02/mt. India invites bids for 539,000 mt/year renewable ammonia for fertilizer projects Solar Energy Corp of India has invited bids for procuring 539,000 mt/year renewable ammonia to be used in fertilizer projects for 10 years, under its strategic interventions subsidy scheme for renewable hydrogen, following similar tenders issued and awarded earlier for renewable hydrogen and electrolyzers production. The bids are a part of the Rupee 197.44 billion ($2.36 billion) National Green Hydrogen Mission up to 2029-30, to support domestic manufacturers, aimed at enabling fast scale-up, technology development and cost reductions.

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S&P Global Commodity Insights Weekly ET News Highlights – June 10, 2024

RGGI prices jump 31% in first 2024 auction without cost containment reserves 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. Carbon allowance prices in the Regional Greenhouse Gas Initiative's latest Auction 64 rose to $21.03/mt, the highest clearing price in the program's history by far, according to a June 7 report. RGGI's Auction 64 represented a 31% increase in clearing price quarter on quarter, beating Auction 63's record-high clearing price of $16/mt. A total of 16.1 million allowances were sold, a 33% decrease quarter on quarter. Additional allowances were not provided in this auction due to the cost containment reserve allowances being fully depleted in the first quarter. The Auction 63 settlement price of $16/mt cleared the 2024 cost containment reserve trigger price of $15.92/mt, causing the release of all 8.4 million reserve allowances. The CCR trigger price increases each year. This latest auction's clearing price of $21.03/mt represents a value "above the expected CCR trigger price for 2028," S&P Global Commodity Insights analysts said in the North American Emissions Bulletin June 7. "Overall allowance demand for the auction was 43.3 million allowances, down from last quarter's 47.7 million." Price of the week : The latest Regional Greenhouse Gas Initiative carbon auction cleared at $21.03/mt, an over 30% hike from the previous auction settlement price. Editor’s pick: Premium and free content Spglobal.com Chinese official urges government bodies to coordinate, safeguard carbon market integrity Chinese government bodies should improve coordination to address concerns that some renewable projects are eligible for both domestic carbon credits and renewable energy certificates, Zhang Xin, chief economist at the National Center for Climate Change Strategy and International Cooperation, or NCSC, said late June 4. Neste conducts first 100% SAF in-flight study exhibiting significant emission reductions The world's first in-flight study of commercial aircraft using 100% sustainable aviation fuel registered significant non-carbon dioxide emission reductions, leading Finnish renewable fuel supplier Neste said. The green aviation fuel usage in engines of a commercial aircraft showed reduction in soot particles and the formation of contrail ice crystals compared to using conventional Jet A-1 fuel, Neste said. There was estimated reduction of at least 26% of non-carbon dioxide emission compared to jet fuel. Carbon credits with high-quality tag emerge on VCM in bid to rebuild trust After a long delay, the first batch of carbon credits with a high-integrity label finally emerged on the voluntary carbon market, with market participants hoping this will bring much-needed credibility and clarity. A total of 27 million carbon credits were tagged with the Core Carbon Principles marker after the approval of seven carbon crediting methodologies, the Integrity Council for the Voluntary Carbon Market (ICVCM) said June 6. Platts Connect: EU, Japan agree to cooperate on hydrogen standards, regulatory requirements Japan and the EU have agreed to cooperate on standardization and regulatory requirements for the secure and rules-based international trade of renewable and low carbon hydrogen, they said in a joint statement June 3. Hydrogen and CCUS investment to soar in 2024, risks remain: IEA Investment in the emergent low-carbon hydrogen and carbon capture and storage sectors is set to soar in 2024, though the outlook for project implementation remains uncertain, the International Energy Agency said. Investment in electrolyzers for green hydrogen production is expected to more than double in 2024 to $5 billion, driven by new capacity deployment but also by rising costs , which have hit the sector hard in recent years.

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S&P Global Commodity Insights Weekly ET News Highlights – June 4, 2024

Japan strides for decarbonizing 120 GW fossil-fuel power supply 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. Japan has taken a major step towards decarbonizing 120 GW of fossil fuel-based power generation sources accounting for nearly two-thirds of its installed capacity, with the first wave of 9.77 GW of decarbonized power auctions. The long-term decarbonization power supply auction, operated by the Organization for Cross-regional Coordination of Transmission Operators (OCCTO ) which comprises all power companies in Japan, comes in the backdrop of the need to decarbonize power for Japan’s 2050 carbon neutrality. The step is crucial as Japan's power demand is expected to grow at an annual rate of 0.4% from 805.6 TWh in fiscal year 2024-25 (April-March) to 834.5 TWh in FY 2033-34, according to a survey of major power utilities by the OCCTO. To support the use of hydrogen and ammonia in the country, Japan's House of Councilors in the Diet passed a bill May 17, which paves the way for introducing the cost-for-difference subsidy framework for low carbon hydrogen use, part of which is expected to go for power generation. Platts, part of S&P Global Commodity Insights, assessed Qatar hydrogen produced via alkaline electrolysis (including capex) at $4.11/kg May 30, almost steady month on month. Platts assessed Japan hydrogen produced via alkaline electrolysis (including capex) at $4.66/kg May 30, down 3.32% on the month. Editor’s pick: Premium and free content SPGlobal.com Climate debate intertwined with cost-of-living concerns as EU elections loom Shaken by several crises in the past five years, EU citizens voting in the bloc's elections in June will be doing so amid concerns over high inflation, rising energy costs and a war on their doorstep. In such a scenario, climate action could be a harder sell, and polls indicate a shift to the right. Biden administration policy aims to straighten disorderly carbon credit markets The US government has developed guidelines for buyers and sellers of carbon offsets, underscoring the Biden administration's commitment to legitimize the use of carbon credits to fight climate change. The US Treasury, Energy and Agriculture departments have signed on to a set of "principles for responsible participation" in the voluntary carbon market, aimed at ensuring credit issuers are capturing the emissions they claim to be. Platts Connect China launches action plan for industries to decarbonize ahead of 2025 deadline China’s State Council has launched an action plan to help the power and industrial sectors accelerate decarbonization and meet the 2025 targets of cutting energy intensity by 13.5% and carbon intensity by 18% from 2020 levels. The action plan also sets out more detailed targets and guidance for individual sectors to address climate challenges. India’s renewable energy suppliers to hydrogen projects can import components India has lifted an import restriction on components for renewable power plants in special economic zones (SEZ) who are to supply power to renewable hydrogen projects, in a move designed to lower renewable hydrogen costs. Earlier, the regulation required the renewable power plants to procure components only from a government-approved list of locally-made solar PV modules and wind turbines, which, renewable energy producers said, turned out to be more costly than imports.

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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.