December 20, 2021 • Paul Rodden • Season: 2021 • Episode: 74
Welcome to The Hydrogen Podcast!
In episode 074, Sinopec continues to invest in hydrogen, s&p global Platts officially launches their global carbon neutral hydrogen price assessments. And Forbes has an interesting take on hydrogen and the net zero energy future. All of this on today’s hydrogen podcast.
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Sinopec continues to invest in hydrogen, s&p global Platts officially launches their global carbon neutral hydrogen price assessments. And Forbes has an interesting take on hydrogen and the net zero energy future. All of this on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden. And welcome to the hydrogen podcast.
In report out of Reuters, China’s Sinopec sets up hydrogen subsidiary Sinopec Corp has set up a new subsidiary in Xiong’an near Beijing to specialize in hydrogen fuel business. China’s second largest oil and gas company said on Friday Sinopec’s Xiong’an New Energy Company Limited, a unit fully owned by Sinopec Corp has registered capital of 100 million yuan. This is according to the company, the new entity will engage primarily in building hydrogen infrastructure, managing hydrogen refueling stations, as well as storage and pipeline transportation of a low carbon fuel. The state giant has pledged to spend some $4.6 billion on hydrogen industry by 2025, as it pivots to producing natural gas and hydrogen, as part of becoming a more carbon neutral energy provider by 2050 Sinopec, which owns one of the world’s largest fuel retailing networks, aims to build 1000 hydrogen refueling stations by 2025. The Xiong’an in heavy province was approved by Beijing as a new economic zone that focuses on building clusters of high tech and innovative businesses and takes over some quote non capital functions from Chinese capital.
So some interesting news to come out of China. And I would advise a good bit of skepticism in this. And while I do believe that China is pushing forward with hydrogen and natural gas, I am concerned about the safety measures that they would or would not be employing, as well as the carbon intensity of these projects. Next, Platts launches global carbon neutral hydrogen price assessments. In an article from James Burgess on December 10, s&p global Platts has launched a carbon neutral hydrogen price assessments at six locations around the globe, reflecting carbon accounted market value of the energy carrier in key hubs impartially between production pathways, the assessments consider carbon neutral trading activity, which avoid, remove or offset co2 emissions in the production of hydrogen.
Our carbon neutral hydrogen assessments will first and foremost reflect the value of the hydrogen molecule, irrespective of production pathway or color is according to Platts, head of energy transition pricing. Alan Hayes, as he said in a statement on December 10, the first assessments of Platts carbon neutral hydrogen were published December 9, with regional differentials already evident cnh prices in the US were the lowest across the selection, with Platts USGC CNH, priced at $1.70 per kilogram, and In the Asia-Pacific Region Platts CNH was assessed at $3.45/kg on an ex-works basis Australia, versus the Middle East CNH assessment of $4.05/kg., the Far East cnh price was much higher with a carbon neutral hydrogen price of $7.95 a kilogram while the assessment for cnh in northwest Europe was $8.30 a kilogram.
The price is built on plants cost reduction assessments for various hydrogen production pathways, such as electrolysis and methane reforming combined with carbon capture and storage. As the energy transition gains momentum market participants, governments industry and investors need a trusted and independently assessed price that reflects the value of hydrogen as a commodity to make informed trading and investment decisions and manage risk this again according to Hayes, extensive feedback from market participants is illustrated that for a nascent global hydrogen market to grow, its price should be determined by a methodology that focus on hydrogen as a commodity, not one that is based on a rainbow of colors or its production pathway.
The assessments reflect the carbon neutral value of hydrogen as it leaves the production facility at key hubs in northwest Europe, the Middle East for East Asia, Australia, California and the US Gulf Coast. They incorporate renewable energy certificates the cost of carbon capture and carbon offsets using Platt CNC nature-based carbon credits. power purchase agreements and hydrogen offtake agreements will also inform the assessments are available. The assessments will take account of market data including bids, offers and reported trades as these become available according to Platts. Also, they reflect 99.99% purity and a minimum lot sizes of 20,000 kilograms for prompt delivery during the calendar month following the trade date. s&p Global Platts analytics hydrogen production Asset Database shows a pipeline of around 20 million metric tons of renewable and low carbon hydrogen production coming online by 2030 Should all announce projects be realized. Okay, so if you’re looking to invest in hydrogen, this is big news out of Platts that you now have a market based assessment for hub pricing around the world.
And the big news to catch my eye is their price assessment in the US at $1.70 A kilogram, and the fact that that price reflects a carbon neutral hydrogen is even better. And not only that, but it was half the cost of the second best in Australia at $3.45 A kilogram. And I can only believe that with economies of scale, that price will only continue to drop. And lastly, an article from Forbes Ken Silverstein writes why hydrogen will likely be the gateway to net zero. He writes when Plug Power Inc hosted its grand opening of a fuel cell, an electrolyzer manufacturing plant in Rochester, New York this year, it explicitly said that hydrogen produced from clean energy would be the next big thing and something just around the corner.
Indeed, the plug power Innovation Center will ramp up production of its electrolyzers that are critical to decarbonizing the global economy. What makes this possible is the falling cost of solar and wind energy. And now the hardware is also becoming more affordable. Meanwhile, governments around the globe see hydrogen as a catalyst to net zero and are targeting monies to research and development. According to Andy Marsh, the chief executive of plug power, we have made solar more competitive than coal. So how do you make green hydrogen competitive with natural gas, governments are accelerating it he says noting that the hardware portion is not that problematic. The Department of Energy thinks you can cut the cost of an electrolyzer by two thirds by 2030. The author continues that today. 99% of all hydrogen is produced in reactions involving coal and natural gas and it’s considered gray hydrogen that does nothing to limit co2 emissions. The goal is to produce hydrogen from low carbon energy sources or green hydrogen and expand its use of the transportation and power generating sectors and its hydrogen economy outlook Bloomberg New Energy Finance says that the gas could supply 24% of the world’s energy demand by 2050 while cutting co2 levels by 34%. But that requires proactive policies and new investment.
If all pieces fall into place. Hydrogen produce from wind and solar could cost between 80 cents and $1.60 per kilogram. That’s roughly the cost of natural gas. Again, according to Marsh hydrogen powered cars have advantages over electric vehicles. delivery trucks, for example, offer fast refueling and double the range of a battery. If you move a vehicle 150 kilometers you want to carry packages, not batteries. Besides the giga factory to make electrolyzers Plug Power has more than 165 refueling stations. It is also constructing multiple green hydrogen production plants to make 500 tons of liquid green hydrogen a day by 2025. liquid hydrogen is easier to transport to its customers, including Amazon Home Depot, and Walmart. Marsh continues to say that the company is on track to build out 70 metric tons of green hydrogen per day by the third quarter of next year. That compares to the current global capacity of 300 metric tons that’s produced from hydrocarbons. So almost 20% of hydrogen produced next year will come from clean sources. He says green hydrogen will follow a similar cost reduction trajectory to renewable energy, and ultimately, it will be the lowest cost fuel for transportation, Toyota and Hyundai are betting big on it also, in meantime, FedEx has a delivery truck running on hydrogen in New York State.
It has a range of 240 kilometers on a full tank. Generally, a hydrogen station can service 400 cars a day, with fill ups lasting three minutes. And the advantages of hydrogen are that it’s abundant, renewable and non polluting. Water vapor is the only byproduct of a fuel cell car that runs on hydrogen, but it’s about 30% more expensive to move via pipeline than carrying natural gas. Furthermore, the International Renewable Energy Agency says that when hydrogen is produced, about 70% of the energy content is lost. However, that inefficiency is irrelevant if hydrogen is created from solar power that’s abundant and free, and it would become cheaper than prevailing fuel sources. The agency notes that hydrogen supply costs are now 1.5 times to five times that of natural gas per unit of energy. It adds that the learning curve linked to creating hydrogen is steep but worth it. No matter the fuel that is used.
Pipelines are getting built to carry the fuel to where it’s consumed. That will reduce the need for new infrastructure investment accelerating the transition from gray hydrogen to green hydrogen. The market for hydrogen technology is global. Plug Power’s expected to join a Fortescue Future Industries to build a giga factory in Queensland, Australia to reduce electrolyzers. Meantime, plug power is likely to work with Egypt’s OCINV and the Abu Dhabi national oil company to make green hydrogen with its electrolyzer and plug announced a joint venture to South Korea’s ENS to accelerate the use of hydrogen for power generation in Asian markets. Also the United Arab Emirates and Germany are expected to grow their cooperation on green hydrogen.
The UAE separately announced its quote, hydrogen leadership roadmap and targets a 25% global market share of low carbon hydrogen by 2030. and Japan announced a $100 million investment to convert hydrocarbon plants into ammonia and hydrogen bass plants while South Korea has set aside $40 billion to expand its hydrogen infrastructure by 2040. From production tools to fuel cells to filling stations. So again, more good numbers coming out, showing that this hydrogen revolution really has the legs to stick around. But I also believe it’s important to note that renewables based hydrogen is a very good clean way of making hydrogen.
And even though that technology is in use today, the economics still aren’t there for wide scale application, and that there are still several other technologies readily available that are just as clean if not cleaner than renewables generated hydrogen. But then again, ultimately, it’s like I always say, this is an all hands on deck matter. And those of us in this industry really should embrace all technologies to push the hydrogen market forward.
Alright, that’s it for me, everyone. If you have any questions, comments or concerns about today’s episode, come and visit me at thehydrogenpodcast.com, or you can always feel free to email me at email@example.com. I would really love to hear from you. And as always, take care. Stay safe. I’ll talk to you later.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.