China Hydrogen Alliance seeks 100GW renewable capacity
China's state-backed industry group the China Hydrogen Alliance has unveiled an initiative calling for the building of 100GW of renewable hydrogen production capacity by 2030, in a country where only 4pc of its output was previously considered "green".
The Renewable Hydrogen 100 Initiative is short of firm details and the likely costs of such a large-scale undertaking, but calls on China to support the installation of 100GW of electrolysers to produce hydrogen, along with the renewable energy projects required to power them.
The initiative also urges China's industry sector to carry out research projects for the future use of hydrogen, creation of a "unified renewable hydrogen market", development of a renewable hydrogen policy partnering upstream and downstream enterprises, as well as the creation of global standards to "unblock" international renewable hydrogen investment and trade.
China is the world's largest producer of hydrogen, but most of it is brown hydrogen produced from fossil fuels, with coal accounting for 62pc of feedstock compared with 18pc globally. Only 4pc of China's hydrogen uses renewable-based electricity to convert water into oxygen and hydrogen by electrolysis. The country produced more than 21mn t of hydrogen in 2019, out of 70mn t produced globally.
While coal remains the cheapest source of hydrogen it is also the most polluting, which is hardly in line with President Xi Jinping's previous pledge that Chinese emissions will peak "before 2030" and 2060 carbon neutrality target.
Projects are already under way in the country to clean up its hydrogen production profile. China's coal-focused Inner Mongolia region has laid out plans to develop seven wind and solar power projects that could produce almost 67,000 t/yr of hydrogen, as part of a push to raise output to 500,000 t/yr by 2025.
Chinese state-controlled oil firm Sinopec plans to build its first green hydrogen project in Inner Mongolia by next year, using renewables to produce 10,000 t/yr of green hydrogen. It produces 3.5mn t/yr of hydrogen, 14pc of China's total, mostly as a refinery by-product. Sinopec has already set a goal to become the largest hydrogen producer in China, with initial planned investment of about 30bn yuan ($4.6bn) in the sector in the next five years.
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US southbound barge demand falls off earlier than usual
US southbound barge demand falls off earlier than usual
Houston, 1 May (Argus) — Southbound barge rates in the US have fallen on unseasonably low demand because of increased competition in the international grain market. Rates for voyages down river have deteriorated to "unsustainable" levels, said American Commercial Barge Line. Southbound rates declined in April to an average tariff of 284pc across all rivers this April, according to the US Department of Agriculture (USDA), which is below breakeven levels for many barge carriers. Rates typically do not fall below a 300pc tariff until May or June. Southbound freight values for May are expected to hold steady or move lower, said sources this week. Southbound activity has increased recently because of the low rates, but not enough to push prices up. The US has already sold 84pc of its forecast corn exports and 89pc of forecast soybean exports with only five months left until the end of the corn and soybean marketing year, according to the USDA. US corn and soybean prices have come down since the beginning of the year in order to stay competitive with other origins. The USDA lowered its forecast for US soybean exports by 545,000t in its April report as soybeans from Brazil and Argentina were more competitively priced. US farmers are holding onto more of their harvest from last year because of low crop prices, curbing exports. Prompt CBOT corn futures averaged $435/bushel in April, down 34pc from April 2023. Weak southbound demand could last until fall when the US enters harvest season and exports ramp up southbound barge demand. Major agriculture-producing countries such as Argentina and Brazil are expected to export their grain harvest before the US. Brazil has finished planting corn on time . unlike last year. The US may face less competition from Brazil in the fall as a result. Carriers are tying up barges earlier than usual to avoid losses on southbound barge voyages. Carriers that have already parked their barges will take their time re-entering the market unless tariffs become profitable again. The carriers who remain on the river will gain more southbound market share and possibly more northbound spot interest. By Meghan Yoyotte and Eduardo Gonzalez Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
G7 coal exit goal puts focus on Germany, Japan and US
G7 coal exit goal puts focus on Germany, Japan and US
London, 1 May (Argus) — A G7 countries commitment to phase out "unabated coal power generation" by 2035 focuses attention on Germany, Japan and the US for charting a concrete coal-exit path, but provides some flexibility on timelines. The G7 commitment does not mark a departure from the previous course and provides a caveat by stating the unabated coal exit will take place by 2035 or "in a timeline consistent with keeping a limit of 1.5°C temperature rise within reach, in line with countries' net-zero pathways". The G7 countries are Italy — this year's host — Canada, France, Germany, Japan, the UK and the US. The EU is a non-enumerated member. The announcement calls for accelerating "efforts towards the phase-out of unabated coal power generation", but does not suggest policy action. It calls for reducing "as much as possible", providing room for manoeuvre to Germany, Japan and the US. Coal exports are not mentioned in the communique. Canada and the US are net coal exporters. France, which predominantly uses nuclear power in its generation mix is already scheduled to close its two remaining coal plants by the end of this year. The UK will shut its last coal-fired plant Ratcliffe in September . Italy has ended its emergency "coal maximisation plan" and has been less reliant on coal-fired generation, except in Sardinia . The country has 6GW of installed coal-fired power capacity, with state-controlled utility Enel operating 4.7GW of this. The operator said it wanted to shut all its coal-fired plants by 2027. Canada announced a coal exit by 2030 in 2016 and currently has 4.7GW of operational coal-fired capacity. In 2021-23, the country imported an average of 5.7mn t of coal each year, mainly from the US. Germany Germany has a legal obligation to shut down all its coal plants by 2038, but the country's nuclear fleet retirement in 2023, coupled with LNG shortages after Russia's invasion of Ukraine, led to an increase in coal use. Germany pushed for an informal target to phase out coal by 2030, but the grid regulator Bnetza's timeline still anticipates the last units going offline in 2038. The G7 agreement puts into questions how the country will treat its current reliance on coal as a backup fuel. The grid regulator requires "systematically relevant" coal plants to remain available as emergency power sources until the end of March 2031 . Germany generated 9.5TWh of electricity from hard-coal fired generation so far this year, according to European grid operator association Entso-E. Extending the current rate of generation, Germany's theoretical coal burn could reach about 8.8mn t. Japan Japan's operational coal capacity has increased since 2022, with over 3GW of new units connected to the grid, according to the latest analysis by Global Energy Monitor (GEM). Less than 5pc of Japan's operational coal fleet has a planned retirement year, and these comprise the oldest and least efficient plants. Coal capacity built in the last decade, following the Fukushima disaster, is unlikely to receive a retirement date without a country-wide policy that calls for a coal exit. Returning nuclear fleet capacity is curtailing any additional coal-fired generation in Japan , but it will have to build equivalent capacity to replace its 53GW of coal generation. And, according to IEA figures, Japan will only boost renewables up to 24pc until 2030. The US The US operates the third-largest coal-power generation fleet in the world, with 212GW operational capacity. Only 37pc of this capacity has a known retirement date before 2031. After 2031, the US will have to retire coal-fired capacity at a rate of 33GW/yr for four years to be able to meet the 2035 phase-out deadline. By Ashima Sharma Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Larger EU H2 bank auction could still clear below €1/kg
Larger EU H2 bank auction could still clear below €1/kg
Hamburg, 1 May (Argus) — The EU will launch a second European hydrogen bank auction later this year, ramping up the budget from a pilot for which results were published on 30 April. A bigger budget will allow more projects to win subsidies, but developers might still have to bid at or below €1/kg to stand a chance of being successful. As a result of the pilot, the EU will subsidise seven renewable hydrogen projects in Spain, Portugal, Norway and Finland with a total €720mn ($768mn), to be disbursed as a fixed premium per kg produced over a 10-year period. The European Commission picked the projects that requested the least support and the auction cleared at €0.48/kg, far below the bid ceiling of €4.50/kg . A second auction later this year is slated to have a much larger budget of around €2.2bn. This could open the door for projects with less competitive bids, but developers may still have to bid for less than €1/kg, data released by the commission suggest. If another €2.2bn had been available to the "next best projects" in the pilot, bringing the total budget to nearly €3bn, the auction would have cleared at around €1/kg, the data indicate. Spanish projects would have been the main beneficiaries of the larger budget. But it would have also unlocked subsidies for projects that did not field any winners in the pilot, including Germany, France, Austria and the Netherlands. This suggests that projects in these countries might be able to get subsidies in the second auction. That said, some German projects that participated in the pilot are bound to get funds from a separate €350mn budget set aside by Berlin , meaning they could not take part in the next round. In any case, the second round could clear even far below €1/kg, if developers revise their bidding strategies now they have indications from the pilot on how low they might have to go. Such signposts were not available for the first round, other than from a Danish auction last year with similar parameters — which had indicated that winning bids in the hydrogen bank pilot were likely to stay well below €1/kg . The commission plans to tighten some of the eligibility criteria for the second round , which might prevent some projects from participating again. A draft document suggests winners of the second round would have to commission their plants within three years, down from five in the pilot. And developers would have to provide a completion guarantee equivalent to 10pc of the requested subsidies, up from 4pc. The second auction will also have a lower bid ceiling of €3.50/kg based on the draft, although this is highly unlikely to be tested by the successful submissions. Budget uncertainties While previous commission comments suggested a budget of around €2.2bn for the second round, the draft rules leave the exact funds open. The commission initially earmarked €800mn for the pilot and might top up the second round with the unused €80mn. It plans to set an unspecified slice of the budget aside exclusively for projects targeting offtake for maritime transport, adding a degree of complexity. Austria is planning to top up the second auction with €400mn , while others, such as Belgium , could follow suit. Moving the needle? While bids in the pilot auction came in well below the ceiling — and are bound to do so again in the second round — the funds will only be enough to support a fraction of the EU's 10mn t/yr renewable hydrogen production target by 2030. The pilot auction will subsidise 1.58mn t, or 158,000 t/yr, of production from the seven selected projects — assuming the support they secured will be enough to get them built as planned. If the next best projects from the pilot were to repeat their bids in a €2.2bn second round successfully, the round could support close to 300,000 t/yr. While this would lift subsidised output across both auctions to nearly 460,000 t/yr, it would still be less than 5pc of the 10mn t/yr target. Assuming developers that missed out in the first round shoot lower in the second and the volume-weighted average of successful bids is in line with the pilot's €0.45/kg, 480,000 t/yr could be subsidised. Together with the pilot, this would yield 640,000 t/yr, or just over 6pc of the EU's target, although extra funds from Germany, Austria and potentially others could lift this further. The EU hopes this initial operating support, combined with subsidies for capital expenses, infrastructure developments and demand-side initiatives, will be enough to kickstart the sector and other projects will follow even without hydrogen bank support. By Stefan Krumpelmann Renewable H2 projects selected in hydrogen bank pilot auction Project Coordinator Project location H2 output t/yr Electrolyser capacity MW Bid price €/kg Requested funding mn € eNRG Lahti Nordic Ren-Gas Finland 12,200 90 0.37 45.2 El Alamillo H2 Benbros Energy Spain 6,500 60 0.38 24.6 Grey2Green-II Petrogal Portugal 21,600 200 0.39 84.2 Hysencia Angus Spain 1,700 35 0.48 8.1 Skiga Skiga Norway 16,900 117 0.48 81.3 Catalina Renato PtX Spain 48,000 500 0.48 230.5 MP2X Madoqua Power2X Portugal 51,100 500 0.48 245.2 - European Commission Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mitsui makes delayed exit from Paiton power project
Mitsui makes delayed exit from Paiton power project
Tokyo, 1 May (Argus) — Japanese trading house Mitsui completed on 30 April the ¥109bn ($690mn) sale of its stake in Indonesia's 2,045MW Paiton coal-fired power plant in east Java following multiple delays. Mitsui originally tried to complete its exit by the end of March 2022 . It said the procedures with Paiton's offtaker Indonesian state-owned power firm Persero took more time than expected without providing further details. Japanese thermal power producer Jera withdrew from Paiton by selling its 14pc share in 2021. Mitsui sold its 45.515pc share in Paiton Energy, as well as a 45.515pc stake in Netherlands-based subsidiary Minejesa Capital and a 65pc stake in Singapore-based IPM Asia that are related companies of the Paiton project. Mistui sold the stakes to RH International (RHIS), which is a Singapore-based subsidiary of Thai power producer Ratch, and Indonesian power company Medco Daya Abadi Lestari's subsidiary Medco Daya Energi Sentosa (MDES). Paiton Energy is now owned by RHIS, MDES and Qatar-based company Nebras Power. Mitsui did not disclose their ownership ratios. Paiton consists of the 615MW No.7, 615MW No.8 and the 815MW No.3 units, which sell electricity to Persero through an unspecified long-term contract. Mitsui now holds 9.6GW of power capacity assets globally, with 8pc being coal-fired projects. The exit from Paiton cut its coal-fired ratio by 8 percentage points, while raising its renewable ratio by 3 percentage points to 32pc. Growing global pressure against coal-fired power generation likely prompted Mitsui to exit Paiton. Energy ministers from G7 countries this week pledged to accelerate "efforts towards the phase-out of unabated coal power generation". By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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