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Hydrogen Economy (13-17.02.2023): Weekly summary

Vitalie Ciobanu's picture
Market Intelligence Analyst, Borealis

Competitive & Market Intelligence | Analytics | Strategy | Financial Insights Energy | Gas: European gas market news | Green Economy | Green Hydrogen | Clean Ammonia *Working for Borealis but...

  • Member since 2023
  • 16 items added with 3,690 views
  • Feb 17, 2023

Below some interesting news you can find in the space of hydrogen, green hydrogen and green ammonia (or clean ammonia).

  • The European Commission (EC) proposed on Monday detailed rules to define what constitutes renewable (green) hydrogen in the EU, underlining the necessity of connecting electrolysers to newly added renewable power generation only. The EU's executive arm has adopted two inter-related Delegated Acts under the Renewable Energy Directive in a bid to make sure that all renewable fuels of non-biological origin (RFNBOs) are produced from renewable electricity. They are expected to provide regulatory certainty to investors. The first Act defines the conditions under which hydrogen can be deemed an RFNBO and clarifies the principle of "additionality". It stipulates that renewable hydrogen must be produced exclusively with power from additional renewable energy plants and during the same period they generate electricity. Moreover, hydrogen production should only take place in the associated renewable powerplant. The regulation envisages a transitional phase for hydrogen projects that will begin operations before January 1, 2028year, essentially granting first movers an exemption from additionality until 2038year. Meanwhile, the second Delegated Act establishes a methodology for calculating life cycle greenhouse gas (GHG) emissions for RFNBOs. These Acts are part of the EU's broader regulatory framework for hydrogen, including energy infrastructure investments and state aid rules, and legislative targets for renewable hydrogen for the industry and transport sectors. The European Parliament and the Council will now have two months to review and decide on the proposed regulation. It is possible for the scrutiny period to be extended by two months. The announcement of the rules on additionality was welcomed by Hydrogen Europe, but the industry body’s CEO Jorgo Chatzimarkakis still referred to the new regulation as "far from perfect". Hydrogen Europe is positive that, while strict, the newly announced rules can be met. However, it expects these rules to inevitably make green hydrogen projects more expensive and limit the growth potential. Under the REPowerEU Plan released last year, the EU aims to achieve 10 million tons of domestic renewable hydrogen production in addition to 10 million tons of imports by 2030year. The Commission estimates that around 500 TWh of renewable electricity will be required to achieve the green hydrogen production ambition.
  • Belgium: INEOS secured finance to build Europe ’s greenest "cracker" powered by hydrogen. The Belgian chemical arm of INEOS has raised GBP 3.1bn (EUR 3.5bn) to build the most environmentally sustainable "cracker" powerplant in Europe. INEOS Olefins & Polymers Europe in Belgium is overseeing Project ONE – a new ethane cracker, which is the largest investment in the European chemical sector for a generation. The cracker will be located in Antwerp (Belgium) and have the lowest carbon footprint in Europe, three times lower than the average European steam cracker, and less than half that of the 10% best performers in Europe. Cracking is the industrial process through which molecules are split under the influence of heat, catalysts, and solvent – with the new cracker powered by low-carbon hydrogen to produce ethylene from ethane. Ethylene is a vital raw material for a wide range of products essential for insulation, lightweight vehicles, plastics for medical, healthcare and food hygiene, alongside technology for renewable energy.
  • Spain: Utility Iberdrola generated 74,525 GWh of electricity from its renewables worldwide in 2022year, increasing production by 1.1% year-on-year, according to the company's preliminary figures. The smaller growth in production was mainly the result of lower hydroelectric output in Spain, where generation levels plunged by a third compared to 2021year. Production from offshore wind farms fell by 2.6% year-on-year to 4,497 GWh. Solar photovoltaic (PV) farms produced 3,837 GWh of electricity, up by 43.6%, thanks to a boost in installed capacity. In Spain, the overall production from renewables declined by 16.2% compared to 2021. Except for a drop in offshore wind output in the UK and Germany, production levels from assorted renewables increased in all other markets - the UK (+16.5%), the US (4.1%), Mexico (+6.7%), Brazil (+23.5%) and markets grouped together under the Rest of the World label (+11.5).
  • Germany: Energy major RWE on Monday said it had signed a memorandum of understanding (MoU) with Hamburg-based logistics company VTG to jointly work out delivery routes for the transport of green ammonia by rail. RWE is planning to build a terminal in Brunsbuettel, northern Germany, to receive imports of green ammonia, expecting shipments totalling 300,000 tons per year from 2026year. From there, ammonia will be transported in tank wagons to industrial customers in Germany and neighbouring countries.
  • Canada ’s EverWind Fuels has received environmental approval for the initial phase of its US 6bn green hydrogen and green ammonia project in Point Tupper, Nova Scotia. EverWind said it will deliver green ammonia to German off-takers, E.ON and Uniper, by 2025year. The environmental approval allows construction to commence in the first half of 2023year. The company said the project is the first independent green hydrogen and green ammonia project in North America to receive an environmental approval, and amongst the first in the world. EverWind plans to develop a 2GW onshore windfarm to power the second phase of its green hydrogen production facility by 2026year.
  • USA: Topsoe, a global leader in carbon-emission reduction technologies, and ExxonMobil, one of the world’s largest energy and petrochemical companies, have signed an agreement under which Topsoe will deliver its industry leading hydrogen SynCOR™ technology to ExxonMobil ’s planned low-carbon hydrogen production facility in Baytown, Texas. Topsoe’s SynCOR™ hydrogen technology will enable ExxonMobil to produce hydrogen at mega scale as well as capture and store more than 98% of its associated CO2 emissions, or around 7 million metric tons per year. The facility’s carbon capture process will be delivered by Honeywell UOP. ExxonMobil’s planned low carbon hydrogen facility will be built at their integrated refining and petrochemical complex in Baytown at Houston, Texas. The facility has a targeted production of 1 billion cubic feet of hydrogen per day, making it the largest low-carbon hydrogen project in the world, at planned start-up in 2027-2028.
  • Australia’s natural renewable energy advantage in the race to create a green hydrogen industry is at risk of being overwhelmed by "huge and aggressive" policy support in the US and the Middle East, according to Fortescue Future Industries’ Guy Debelle. Debelle, formerly FFI’s chief financial officer and now serving as a director, said the Biden administration’s Inflation Reduction Act (IRA) was mostly aimed at accelerating decarbonization and was "one of the largest pieces of industrial policy we’ve ever seen". Without a formal spending cap, it could eventually top USD 430bn. Many nations are investing heavily in hydrogen as an alternative fuel to oil, gas and coal. Debelle said the US spending had the potential to lower the cost of making hydrogen from 6 USD/kg to 2.50 USD/kg. That would be comparable to fossil fuels.
  • Merger & Acquisition: JERA Co., Inc. has decided to acquire approximately 27% of the outstanding shares of Aboitiz Power, a major power utility in the Philippines, for approximately USD 1,580mnand has executed a share purchase agreement with Aboitiz Equity Ventures Inc. and Aboitiz & Company. Completion of the transaction, subject to necessary approvals, will further enhance JERA 's presence in the Philippines’ energy sector. Working in conjunction with Aboitiz Power, JERA hopes to significantly advance the expansion of clean energy and renewable energy in the country. Aboitiz Power, listed on the Philippines Stock Exchange, is the holding company for the Aboitiz Group’s investments in power generation, distribution, and retail electricity services. The Company is one of the largest power producers in the Philippines with a balanced portfolio of assets located across the country and owns distribution utilities that operate in high-growth areas in Luzon, Visayas, and Mindanao, including the second and third largest private utilities in the country. Aboitiz Power aims to expand power generation capacity to 9.2 GW and achieve a 50:50 clean energy and thermal capacity mix by 2030 to meet the increasing demand for electricity in the future while promoting renewable energy in the Philippines. JERA and Aboitiz Power are exploring a number of areas of collaboration including the potential joint development of power projects (including LNG-to-Power), collaboration on new generation technologies.
  • Spain: Naturgy and Enagás Renovable announced late 14 February that the two companies were set to construct a renewable hydrogen production plant located in La Robla, northern Spain. The development of the plant will be associated with the start-up of solar energy assets located in neighbouring municipalities around the renewable hydrogen plant, with solar generation capacity set to be 450MW. The plant itself will use the electricity generated by the local solar farms and will initially have a maximum capacity of 60MW before increasing to 280MW of electrolysis capacity with demand from local industry and the proximity of hydrogen pipelines. The plant will represent a EUR 485mn investment and is scheduled for commissioning in 2026year, Enagás said in a press release.
  • The European Commission announced its approval, under EU State aid rules, of a EUR 170mn scheme in Denmark to support Power-to-X projects to produce renewable hydrogen. Through this measure, the Danish government plans to support the construction of 100 MW to 200 MW of electrolysis capacity to produce green hydrogen and derivatives such as ammonia, methanol, and e-Kerosene. For awarding the aid in the form of a 10-year direct grant, the state will open a competitive bidding process later this year. The Commission has determined that this measure "is necessary and appropriate" for the purpose of facilitating renewable hydrogen production and has an "incentive effect". At the same time, Denmark has made sure that the scheme has a limited impact on competition and trade within the EU by introducing sufficient safeguards.
  • France: Air Liquide in 2022year: sales reached EUR 29.9bn, up +7% on a comparable basis, the operating margin increased by +70 basis points excluding the energy impact, and recurring net profit rose +17% at constant exchange rates. In terms of green economy, the company has reported several achievements. In industry decarbonization were done the following: financial support by the European Innovation Fund of the Air Liquide and EQIOM, A CRH Company project in Dunkirk, France (one of the first carbon neutral cement plants in Europe); financial support by the European Innovation Fund of the Kairos@C project, developed by Air Liquide and BASF (developing the world’s largest cross-border carbon capture and storage (CCS) value chain project around the port of Antwerp); financial support from the European Commission for the Antwerp@C CO2 Export Hub backed by Air Liquide, Fluxys Belgium and the Port of Antwerp-Bruges (CO2 transport and export infrastructure at the Antwerp port platform); signature with Sasol (two long-term renewable Power Purchase Agreements with Enel Green Power for a total capacity of 220 MW to supply the Secunda site in South Africa); launch by Air Liquide of its biomethane business in China. In the United States, construction of Air Liquide’s largest biomethane production plant in the world. In the area of low carbon hydrogen, Air Liquide has reported: support of the French government to the Air Liquide Normand’Hy project (production of renewable hydrogen on a large scale - initial capacity of 200 MW and will contribute to the creation of a French and European low carbon hydrogen industry); joint venture (JV) with Siemens Energy (production of industrial scale renewable hydrogen electrolysers in Europe); Dutch government support for two Air Liquide renewable hydrogen projects (ELYgator and CurtHyl - each with a capacity of 200 MW); start-up in the State of Nevada, of the largest hydrogen liquefier in the world, in particular to supply the mobility market on the West Coast of the United States; JV between Air Liquide and Total Energies to develop a network of hydrogen charging stations for trucks in Europe (France, Benelux, Germany); Memorandum of Understanding (MoU) with CaetanoBus and Toyota Motor Europe (integrated solutions for hydrogen mobility); MoU signed with Airbus, Incheon International Airport Corporation and Korean Air to study the use of hydrogen at Incheon International Airport; plan with Groupe ADP to create the first engineering joint venture to accompany airports in their projects to integrate hydrogen in their infrastructure; investment of EUR 200mn by SCIPIG, an Air Liquide subsidiary, in the construction of two hydrogen production units with CO2 capture and recycling in Shanghai Chemical Industry Park Development.
  • Central European Gas Hub AG (CEGH) launched the CEGH Green Gas Platform for marketing of Green Gases, such as biogas and hydrogen, in Austria. Around 0.1 TWh of biomethane – processed biogas – are currently being fed into the natural gas network in Austria. By 2030year, 5 TWh of Green Gases should be available. CEGH Green Hydrogen Spot Index was traded on Friday at 249.2 EUR/MWh (-3.1 w.o.w.). CEGH Green Hydrogen Forward Index for March was recorded at 228.8 EUR/MWh (-0.8 w.o.w.).
  • The ICIS Northwest Europe ammonia-to-hydrogen assessment posted solid losses in the middle of February with muted demand for ammonia spot purchasing continuing to pull pricing lower with domestic European supplies boosted by firmer production. The ammonia2hydrogen northwest Europe assessment fell by almost 0.40 EUR/kg week on week to 6.83 EUR/kg on 16 February, the lowest value since the second half of October 2021 and close to half the record-high value recorded in April 2022. Natural gas-based hydrogen production methods also posted losses, but the drop in valuations was less pronounced, allowing for the discount that gas-based methods have shrunk as a result. Both front-month based unabated SMR, and low carbon ATR hydrogen production held discounts of 2.63-2.98 EUR/kg below imported ammonia-for-hydrogen. The ammonia market was said to be quiet during week 7 with some of the large buyers confirming that they are now fully covered through March.

Should you have any thoughts and/or insights related to renewable hydrogen, hydrogen, green hydrogen, hydrogen economy, green economy, green ammonia, hydrogen2ammonia, biomethane feel free to leave it in the comments. Have a great weekend!

*Working for Borealis but reporting/sharing my personal opinions only


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