South Korean energy firms step up hydrogen investments

Market: Biofuels, Emissions, Hydrogen, Natural gas
11/03/21

South Korean firms are ramping up efforts to develop renewable hydrogen capacity as the country works towards its 2050 carbon neutrality goal.

Major energy firm SK is investing 18.5 trillion South Korean won ($16bn) to construct a 280,000 t/yr hydrogen ecosystem in Incheon by 2025.

The company, South Korea's biggest refiner, will produce 30,000t of liquified hydrogen by 2023 using by-product from its SK Incheon Petrochemical plant for supply to the local metropolitan area.

Phase two will add 250,000 t/yr of blue hydrogen produced from LNG and will use carbon capture and storage facilities to reduce greenhouse gas (GHG) emissions.

Investment is also going into the distribution network through the installation of 100 charging stations nationwide to distribute 80,000 t/yr of liquified hydrogen by 2025, while a pipeline is in the works to transport 200,000 t/yr of blue hydrogen to feed a new 400MW fuel cell power plant.

A $1.6bn partnership has been signed with US manufacturer Plug Power to provide hydrogen fuel cell systems, fuelling stations and electrolysers to South Korea and other Asian markets.

Other South Korean companies are also looking to invest in hydrogen, in their cases through partnerships in the Middle East. GS Energy entered an agreement with Abu Dhabi's state-owned Adnoc last week to develop blue hydrogen in the UAE.

And Hyundai Heavy Industries has signed an initial deal with Saudi Arabian state-controlled company Saudi Aramco to develop renewable hydrogen and ammonia.

The firm's refinery unit Hyundai Oilbank will import LPG from Aramco to convert into blue hydrogen for use at its refinery desulphurisation units and marketed for transport fuel and power generation. It plans to open 300 charging stations across the country by 2040 to strengthen supply chains. The volume of LPG covered by the deal has yet to be determined.

Aramco will also provide blue ammonia for use a fuel for LNG boilers scheduled to come on line by 2024.

Hyundai Heavy's Korea Shipbuilding & Offshore Engineering unit will also develop a vessel that can carry LPG cargoes and capture CO2, as well as pursue ammonia carriers and propulsion ships.

Hyundai Heavy earlier this year announced a W1 trillion investment to develop cleaner ships as part of the International Maritime Organization's drive for vessels to reduce CO2 emissions by 40pc by 2030 and by 70pc by 2050, alongside a 50pc GHG reduction by 2050 from 2008 base levels.

By Amandeep Parmar

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

04/10/24

Global bio-bunker demand to pick up, US left behind

New York, 4 October (Argus) — Tightening vessel carbon intensity indicator (CII) scores and looming 2025 FuelEU marine regulation are expected to raise biodiesel demand for bunkering, but non-competitive US prices should continue to weigh down on US bio-bunker demand. Houston B30, a blend of used cooking methyl ester (Ucome) and very low-sulphur fuel oil (VLSFO), in September averaged at $821/t, a $45/t premium to B30 sold in Amsterdam-Rotterdam-Antwerp, and a $55/t premium to B24 sold in the west Mediterranean hub of Gibraltar and Algeciras (see chart) . Houston B30 was also priced at $115/t and $61/t premium to B24 sold in Singapore and Guangzhou, China, respectively. The price premium would continue to incentivize ship owners with global, ocean-going fleets to pick Asia first for their biodiesel bunker purchases, followed by northwest Europe and western Mediterranean. US demand for biodiesel for bunkering would continue to stagnate unless the US passes a legislation allowing Renewable Identification Number (RIN) credit under the US Renewable Fuel Standard (RFS) program be used by ocean-going vessels fueling with biodiesel in US ports. The legislation could level US' price playing field. Two bipartisan bills were put forward in support of renewable fuel for ocean-going vessels, one in the US Senate this year and one in the US House of Representatives last year, but they are currently dead in the water. Conventional marine fuels are priced cheaper than biodiesel and green varieties of LNG, ammonia, methanol, and hydrogen. But tightening International Maritime Organization (IMO) and EU regulations are forcing the hand of ship operators to consider green fuels to avoid hefty penalties and having their vessels suspended from trading. Ship owners whose vessels are outfitted with LNG-burning engines, are poised to have the lowest marine fuel expense heading into 2025, as fossil LNG is currently ship owners' cheapest low-carbon fuel option. But retrofitting a vessel to burn LNG could range from $5-$35mn, depending on the size of the vessel. Biodiesel, a plug-and-play fuel that does not require a vessel retrofit, is the second cheapest low-carbon fuel option after fossil LNG. IMO's CII regulation came into force in January 2023 and requires vessels over 5,000 gt to report their carbon intensity, which is then scored from A to E. The scoring levels are lowered yearly by about 2pc, so even a vessel with no change in CII could drop from C to D in one year. If a vessel receives a D score three years in a row or E score in the previous year, the vessel owner must submit a corrective actions plan. E scoring vessels could be prohibited from entering some ports' territorial waters, but this penalty is yet to be imposed on any E vessels. In 2023, the IMO reported that 40pc of the vessels scored A or B, 27pc scored C, 19pc scored D or E and 14pc were unresponsive. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. It imposes a penalty of €2,400/t ($2,629/t) of VLSFO equivalent energy for vessel fleets exceeding its GHG limits. By Stefka Wechsler Biodiesel blends* Houston less global ports $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more

News

US tops expectations with 254,000 jobs in Sep

04/10/24

News

04/10/24

US tops expectations with 254,000 jobs in Sep

Houston, 4 October (Argus) — The US added more jobs than expected in September and the unemployment rate ticked down, signs the labor market is strengthening heading into the US presidential election. US nonfarm payrolls rose by 254,000 workers last month, and the jobless rate fell to 4.1pc, the Labor Department reported Friday. Gains in August were revised up by 17,000 to 159,000 and those in July were revised up by 55,000 to 144,000. September's job gains were much higher than the 140,000 estimated by economists in a Trading Economics survey. Job gains blew past expectations in the same month the Federal Reserve began cutting interest rates for the first time since 2020, citing concerns that a weakening labor market might pull down the overall economy. Odds of a quarter point rate cut at the next Fed meeting in November rose to 91pc today from about 68pc Thursday, according to fed funds futures markets, while odds of a half-point cut fell to 9pc. The Fed last month penciled in 50 basis points of cuts in the remainder of this year. Job gains were higher than the average monthly gains of 203,000 over the prior 12 months, the Labor Department reported. Employment continued to move higher in food services and drinking establishments, health care, government, social assistance and construction. The labor market was little affected by Hurricane Francine, which made landfall in Louisiana on 11 September, during the reference periods for the surveys that contribute to the report. Gains in restaurants and drinking places rose by 69,000 jobs, much higher than the average 14,000 added over the prior 12 months. Health care added 45,000 jobs, below the monthly average of 57,000. Government added 31,000 compared with monthly averages of 45,000. Social assistance added 27,000. Construction added 25,000, near the monthly average. Manufacturing lost 7,000 jobs, most of them in the auto industry. The unemployment rate fell from 4.2pc in August, still higher than the five-decade low of 3.4pc posted in early 2023. Average hourly earnings rose by 4pc in the 12 months through September, up from 3.8pc through August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

UK confirms $28.5bn funding for two CCS, H2 clusters

04/10/24

News

04/10/24

UK confirms $28.5bn funding for two CCS, H2 clusters

Hamburg, 4 October (Argus) — The UK government has finalised a commitment to provide £21.7bn ($28.5bn) over the next 25 years to two planned clusters for carbon capture and storage (CCS) and connected projects, including for hydrogen production. The government has reached "commercial agreement with industry" for development of the clusters, it said today. The funding will go to the HyNet cluster in northwest England and the East Coast cluster in England's northeastern Humber and Teesside regions. The two projects were selected as "Track 1" priority clusters in 2021 and could together store some 650mn t of CO2. They could attract £8bn of private investment, the government said today. "The allocation of funding marks the launch of the UK's CCS industry," according to Italy's integrated Eni, which leads the development of HyNet's CO2 transport and storage system. Eni in February gave a start date of 2027 for HyNet. The East Coast cluster is led by the Northern Endurance Partnership, a joint venture between BP, TotalEnergies and Norwegian state-controlled Equinor. A range of projects will connect to the two hubs to transport and permanently sequester the carbon. These will include hydrogen production projects and supporting infrastructure. HyNet will involve projects developed by EET Hydrogen , a subsidiary of Indian conglomerate Essar, which is planning to bring a 350MW plant for hydrogen production from natural gas with CCS online by 2027 and another 700MW facility by 2028. The hydrogen will be partly used at EET Hydrogen's sister company EET Fuels at its 195,000 b/d Stanlow refinery but some will also be delivered to industrial consumers in the area. The HyNet cluster includes plans for 125km of new pipelines to transport hydrogen. The East Coast cluster involves Equinor's [600MW H2H Saltend] project and BP's 160,000 t/yr H2Teesside venture . German utility Uniper's 720MW Humber H2ub (Blue) project, UK-based Kellas Midstream's 1GW H2NorthEast plant and a retrofit facility from BOC , which is part of industrial gas firm Linde, could also connect to the cluster for CO2 storage. All the projects are due to enter into operation before the end of this decade. The funding confirmation for the CCS hubs "is a vital step forward, catapulting hydrogen towards long-term certainty we need in the UK", industry body the Hydrogen Energy Association's chief executive Celia Greaves said. The previous government last year picked two "Track 2" carbon capture clusters that are scheduled to start operations by 2030 — the Acorn facility in Scotland and the Viking project in northeast England. By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US light vehicle sales surged in September

03/10/24

News

03/10/24

US light vehicle sales surged in September

Houston, 3 October (Argus) — Domestic sales of light vehicles rebounded in September, increasing to a seasonally adjusted rate of 15.8mn on the strength of greater truck purchases. Sales of light vehicles — trucks and cars — rose from a seasonally adjusted annual of rate 15.3mn in August, the Bureau of Economic Analysis reported today. Sales have whipsawed the previous four months, but September's rate largely was in line with the 15.7mn unit rate in September 2023. The US Federal Reserve last month cut its target rate for the first time since 2020, bringing it down by 50 basis points from its 23-year highs as inflation has been easing. Lower inflation and Fed easing, which ripples across credit markets, make it more affordable for people to purchase new vehicles. Fed policymakers have penciled in another 150 basis points worth of cuts through 2025, as they hope to head off any weakening in the labor market that could scuttle the wider economy. Higher overall sentiment about the US economy, fueled by a robust 3pc growth in gross domestic product (GDP) in the second quarter, healthy labor conditions and consumer spending also have encouraged consumers to spend. Sequentially, light truck sales increased by 3.1pc to a 12.8mn unit rate in September, while sales of cars rose by 4.4pc to a 3mn unit rate in the same time period. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Australia’s Origin to exit Hunter Valley Hydrogen Hub

03/10/24

News

03/10/24

Australia’s Origin to exit Hunter Valley Hydrogen Hub

Sydney, 3 October (Argus) — Australian utility and upstream firm Origin Energy has decided not to proceed with its planned hydrogen development project, the Hunter Valley Hydrogen Hub (HVHH), in Australia's New South Wales. The decision to withdraw from the proposed 55MW HVHH and halt all hydrogen opportunities was made because of continuing uncertainty about the pace and timing of hydrogen market development, Origin said. The firm said the capital-intensive project, intended to progressively replace gas as a feedstock in a nearby ammonia manufacturing plant, carried substantial risks. Origin Energy had an initial agreement with Australian chemicals and explosives company Orica to take 80pc of the green hydrogen produced from the hub for Orica's 360,000 t/yr ammonia facility on Kooragang Island, near the city of Newcastle. Origin Energy and Orica in 2022 said they will study plans to develop the HHVH in Hunter Valley region of NSW, which is Australia's largest thermal coal-producing area. "It has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome. The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project," said chief executive Frank Calabria on 3 October. Origin had planned to make a final investment decision on the project by late 2024. The hub, which was estimated to cost A$207.6mn ($143mn), had been allocated A$115mn in state and federal funding and was shortlisted for production credits under Canberra's Hydrogen Headstart programme. In July, Origin described the pace of development in the hydrogen industry as "slower than it had anticipated 12 months ago", said. The company expressed hopes that improved electrolysis efficiency would reduce the rising costs of production. The decision is a significant setback for Australia's green hydrogen ambitions, following the July decision by Australian miner and energy company Fortescue to postpone its target of 15mn t/yr green hydrogen output by 2030. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more