Singapore — A move by Singaporean companies to tie-up with Japanese firms to explore the potential for hydrogen in the energy mix may send a strong signal to other Asian energy consumers that it's time to accelerate the process to embrace the fuel as the region prepares itself for energy transition.
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With hydrogen offering an alternative to cut carbon emissions and reduce dependence on fossil fuel imports, the move by Singapore may also prompt other Asian countries to speed up policy formulation that would encourage production and consumption of hydrogen, eventually leading to effective price discovery.
"For Asia, the opportunities can expand to transportation -- a segment where countries such as Korea, China and Japan have set national targets -- as well as industrial heat needs and steelmaking. There can also be some blending of H2 into natural gas grids," said Roman Kramarchuk, Head of Scenarios, Policy and Technology Analytics, at S&P Global Platts.
"In Singapore, some of the key options for decarbonization could be tied to the use of lower-carbon H2 in the refinery and chemicals sector," Kramarchuk added.
"More broadly, Singapore's role in the bunkering world suggests that it can lead in the efforts to introduce hydrogen, ammonia, methanol as a possible solution to the decarbonization of shipping," he said, while adding there was scope in other sectors too.
Five Singapore and two Japanese companies recently signed an agreement to study how hydrogen as a low-carbon alternative can contribute to a clean and sustainable energy future for Singapore.
Under the agreement, PSA Corp. Ltd., Jurong Port Pte. Ltd., City Gas Pte. Ltd., Sembcorp Industries, Singapore LNG Corp. Pte. Ltd., Chiyoda Corp. and Mitsubishi Corp. will develop ways to utilize hydrogen as a green energy source.
This would involve research and development of technologies related to the import, transportation and storage of hydrogen.
"This MOU marks an important first step toward making another sustainable energy option, namely hydrogen, available for Singapore," a joint statement from the companies quoted Tan Soo Koong, CEO of SLNG, as saying.
The companies will identify and demonstrate use cases using Chiyoda's SPERA Hydrogen, Liquid Organic Hydrogen Carrier technology to allow hydrogen to be safely transported in chemical tankers at normal atmospheric temperature and pressure.
The Singapore companies will work with Chiyoda and Mitsubishi to evaluate the technical and commercial feasibility of hydrogen usage, and to develop a business case for hydrogen import and utilization in Singapore, the statement said.
Ong Kim Pong, Regional CEO Southeast Asia for PSA International, said that powering transport with hydrogen was just the beginning as its applications would expand in the future.
"Jurong Port is working with Chiyoda as we believe that the port is well placed to accelerate the development of hydrogen as a viable fuel option for power generation in Singapore's transition to a low-emissions future," said Ooi Boon Hoe, CEO of Jurong Port.
Peter Godfrey, managing director for Asia Pacific at The Energy Institute, said hydrogen is likely to play an increasingly important part in the region's energy mix, but at this stage it remains difficult to visualize how sufficient scale of operations would be built quickly in order to bring down costs.
"The variety of technologies being looked at together with the challenges in building an optimal value chain or chains suggest that we remain at a relatively early stage of large-scale investment," he added.
"This remains true for Singapore, but if the nation wishes to aim for a deeply decarbonized future, transitioning toward hydrogen economy is most definitely one of the few feasible solutions available in the medium to longer term."
Platts has started providing independent hydrogen price assessments based on the value of hydrogen produced at hubs in the US and Europe, and in April, it launched the world's first suite of hydrogen price assessments in an Asian market, for hydrogen produced in Japan.
Hydrogen is produced predominantly through Steam Methane Reforming (SMR), which utilizes fossils fuels such as natural gas or coal, and through Proton Exchange Membrane Electrolysis, which splits water into hydrogen and oxygen using a current of electricity.
Analysts are of the view that Asia needs to quickly find ways to slash hydrogen production costs, drawing in investors and diversifying its usage beyond oil refining, fertilizers and petrochemicals.
Currently, hydrogen is mainly used by refineries, the largest producers and consumers of hydrogen, as well as in ammonia and methanol production.
The International Energy Agency has identified a few ways to create demand for hydrogen: making industrial ports nerve centers for hydrogen use; introducing clean hydrogen to replace a small portion of natural gas supplies; powering high-mileage cars, trucks and buses; and launching trade in hydrogen.
Ravinder Kumar Malhotra, president of the Hydrogen Association of India, told Platts in a recent interview that policymakers would have to push technologies that encourage production of hydrogen from coal in countries like India and China, rather than expanding power output from coal-based power plants to drive electric vehicles.