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S&P Global — 2 Dec, 2022 — Global

Daily Update: December 2, 2022

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By S&P Global

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

Hydrogen Regains Ground in Global Energy Transition

After decades of false starts, the case for a global energy transition driven by hydrogen is coming back stronger, thanks to favorable government policies and increased investments in the technology used for hydrogen production. The rising pressure to reach net-zero carbon emissions targets and growing concerns over energy security are also accelerating the shift away from fossil fuels to renewable energy sources. Unlike fossil fuels, hydrogen emits water rather than carbon when burned, making it a viable alternative energy source with the potential to decarbonize high-polluting industries.

In the U.S., the Inflation Reduction Act offers generous tax credits for clean hydrogen. Green and blue hydrogen are both considered clean hydrogen, as no carbon is leaked into the atmosphere during their production. Green hydrogen is produced through electrolysis, which separates hydrogen from the oxygen in water, and uses electricity from renewable sources such as solar and wind. Blue hydrogen, on the other hand, is produced from fossil fuels through steam methane reforming. Although carbon emissions are produced during this process, the generated carbon is captured and stored underground.

The Inflation Reduction Act tax credits have already prompted electrolyzer companies to expand their production footprints in the U.S. and could propel the country to become an exporter of low-carbon hydrogen and ammonia. Fuel cell company Plug Power is expected to increase its focus on the U.S. side of its business while remaining aggressive on its operations in the European green hydrogen market. A corporate and academic coalition has filed plans with the U.S. Energy Department to develop a clean hydrogen hub in the Midwest.

As a result of the U.S. subsidies, analysts forecast that the cost of green hydrogen will likely drop to below $0 per kilogram by 2030. This is anticipated to fast-track the adoption of green hydrogen in the steel, transportation and power generation markets. However, it remains unclear what will happen to costs when the credits expire in 2033.

Hydrogen also holds promise in Europe’s quest to reduce its reliance on Russian gas. The EU is joining forces with Kazakhstan to develop renewable hydrogen and battery value chains. Germany signed memoranda of understanding with Egypt to work on renewable hydrogen production while strengthening trade in liquefied natural gas. In the Middle East and North Africa region, Fertiglobe is leading a project to develop a 100-MW green hydrogen production plant in Ain Sokhna, Egypt.

In Asia-Pacific, Indonesia plans to produce green and blue hydrogen from underutilized renewable energy to raise the country's 2030 emissions reduction target. A subsidiary of Indonesian oil company Pertamina is rolling out a hydrogen pilot project, with the potential to produce nearly 2 million metric tons of green hydrogen per year.

Singapore also recently launched a national strategy to develop low-carbon hydrogen as a source of fuel for the power and industrial sectors, and to decarbonize the maritime and aviation markets. Hydrogen could supply as much as 50% of the country's power needs by 2050.

"I think it's good for [the world] to embrace hydrogen because it is a fundamental molecule that provides energy," Alan Heng, group CEO of Singapore-based Pavilion Energy, said at a recent conference organized by S&P Global Commodity Insights. The biggest challenge is "how to turn [hydrogen] into a viable material commodity that can be distributed freely," Heng said.

Today is Friday, December 2, 2022, and here is today’s essential intelligence.

Written by Pam Rosacia.


S&P 500 Gains 5.4% In November

The broad U.S. stock market continued to climb in November. The S&P 500 closed the month up 5.4%, while the Dow Jones Industrial Average increased 5.7%. Meanwhile, the smaller-cap-focused Russell 2000 ended the month up 2.2%. Reversing a downturn that began the month, markets picked up on signs that inflation has cooled from its record highs and the Federal Reserve may soon slow its aggressive pace of interest rate hikes.

—Read the article from S&P Global Market Intelligence

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Capital Markets

Global Credit Outlook 2023: No Easy Way Out

As we end a year in which COVID, a war in Europe and an associated energy crisis, and high inflation roiled markets and slowed the global economy, early signs of easing of some of these pressures provide hope that credit conditions could stabilize in the second half of 2023. But finding a way out of the strains weighing on credit leaves little room for error.

—Read the article from S&P Global Ratings

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Global Trade

U.S. Crude Stocks See Largest Draw Since 2019 As Net Imports Reach All-Time Low

U.S. crude stocks saw their largest one-week decline in over three years in the week to Nov. 25 as net imports reached a record low, U.S. Energy Information Administration data showed Nov. 30. U.S. commercial crude stocks plunged 12.58 million barrels in the week ended Nov. 25, EIA data showed, leaving them at a 13-week low 419.08 million barrels and 7.8% behind the five-year average for this time of year. It was the biggest one-week draw in commercial stocks since the week ended June 21, 2019, when inventories drew down 12.79 million barrels.

—Read the article from S&P Global Commodity Insights

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Listen: Private Markets 360° | Episode 1: The Role Of ESG In Private Equity

ESG, a mainstay in the public markets, has also become a key element within the private markets. In this episode, Brandon and Jocelyn discuss the drivers for strong ESG practices within private equity. They also touch on sound frameworks for creating an ESG strategy and how to determine whether your strategy is driving the desired results.

—Listen and subscribe to Private Markets 360°, a podcast from S&P Global Market Intelligence

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Energy & Commodities

Listen: Private Producer Share Of Mexico’s Oil Output Is On The Rise

The development of Mexico's upstream oil sector has slowed since President Lopez Obrador was elected in 2018, as Lopez Obrador halted the upstream auctions put in place by the liberalization process that started in 2013. However, several companies were able to get their foot in the door, and, as a result, production from the private sector is expected to edge higher in coming years. Sheky Espejo, S&P Global Commodity Insights' Mexico energy correspondent, joins Jeff Mower, director of Americas oil news, to discuss this trend.

—Listen and subscribe to Platts Oil Markets, a podcast from S&P Global Commodity Insights

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Technology & Media

Content Most Enjoyed On Hulu, 2022

Hulu users, including paid subscribers and unpaid users, are less likely to turn to the service for viewing network TV shows than they were in previous years, according to data from Kagan's U.S. online Consumer Insights surveys. Results show that the decline of users indicating they most enjoy prior seasons of network TV series on Walt Disney Co.'s Hulu, which fell from 26% in 2020 to 19% in 2021, was not a fluke, as that number dipped further to only 18% in 2022. Users indicating that they most enjoyed current seasons of network TV were also down from 25% in 2021 to 19% in 2022.

—Read the article from S&P Global Market Intelligence

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