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Mexican hydrogen regulatory efforts gain ground

  • Market: Hydrogen, Natural gas
  • 01/11/24

The Mexican hydrogen association (AMH2) has made significant strides in recent discussions with regulators and officials, unveiling a comprehensive roadmap for industrial hydrogen adoption.

The group's report estimates there will be demand for about 392,189 tonnes (t) of hydrogen per year across seven major industries during Mexico's pilot hydrogen development phase. This includes sector-specific hydrogen demands of 148,350 t/yr from oil refining through 10 potential applications; 107,325 t/yr for mining; 55,877 t/yr for hydrogen blending in natural gas; 23,932 t/yr in the metals industry; 35,040 t/yr tied to ammonia production; 15,265 t/yr for public transport; and 6,400 t/yr for methanol production.

AMH2's strategy urges the administration of President Claudia Sheinbaum to designate a lead ministry for hydrogen development, prioritize green hydrogen production and introduce incentives for project financing, technology development and energy transition initiatives. Additionally, it calls for regulatory adaptations to facilitate hydrogen's integration into Mexico's natural gas infrastructure, including quality, transportation, distribution and safety standards, especially for industrial equipment.

Legal reforms to support hydrogen development will also be needed, according to the report, targeting laws governing mining, water, hydrocarbons, nuclear energy, energy transition, environmental protection, electric power, bioenergy and geothermal power. For green hydrogen — generated with renewable energy — the focus would be on the latter five areas.

These efforts align with Mexico's long-term energy plan (Prodesen 2023-2037), which envisions converting 12 combined cycle power plants, totaling 1.024GW, to operate on a 70pc natural gas and 30pc hydrogen blend between 2033 and 2036. AMH2 president Israel Hurtado said although Mexico's pipeline infrastructure could handle up to a 15pc green hydrogen blend, achieving a 30pc blend would require further technological advances expected over the next decade.

Prodesen also identifies regions for hydrogen injection into pipeline networks, including Sonora, Sinaloa, Tamaulipas, Oaxaca, Veracruz, Baja California and the Yucatan peninsula. Yet new regulations will be crucial to establish a robust framework for hydrogen blending in existing infrastructure.

The Sheinbaum's administration has committed to reducing carbon emissions and promoting clean energy, Hurtado said, with a $13.5bn investment pledge in renewables over six years and a target for 45pc of national power from renewables by 2030. AMH2 has built early connections with Sheinbaum's team, including Jorge Islas, her energy and climate advisor during the campaign, who now heads the energy ministry's (Sener) energy transition unit and supports green hydrogen initiatives.

AMH2 leaders also recently met with energy regulator (CRE) president Leopoldo Melchi and commissioner Walter Jimenez, who expressed strong interest in hydrogen regulation. The association and CRE agreed to form a technical workgroup to develop clean hydrogen regulations collaboratively.

Looking ahead, AMH2 plans to meet with energy minister Luz Elena Gonzalez and Mexico's economy ministry to further discuss the hydrogen strategy. But CRE's workgroup is on hold pending potential legislative reforms that could reorganize Mexico's energy regulators under Sener's supervision.

Projects in development

AMH2 has identified 16 hydrogen projects in Mexico, with eight in various development stages and eight announced. Primarily focused on green hydrogen, these projects represent an estimated $19bn investment.

The largest, Helax, is a $10bn green hydrogen production facility in Oaxaca, connected to the Interoceanic Trans-Isthmus Corridor. AMH2 anticipates production to start within two years following initial permitting.

The roadmap suggests that, even if only six projects are operational by 2030, the sector could generate 3.351GW and attract $1.8bn in investments. These projects are projected to bring in $2.5bn in revenue over six years and yield $1.9bn in tax contributions.


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Cop: EU, four countries commit to 1.5°C climate plans

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU countries urged to align green H2 rules for refining


20/11/24
News
20/11/24

EU countries urged to align green H2 rules for refining

Brussels, 20 November (Argus) — EU member states must harmonise the incentives they offer refineries to switch to renewable hydrogen in order to simplify investment decisions and ensure a level playing field, delegates heard at the European Hydrogen Week event in Brussels. Frontrunner countries have diverged. Germany has proposed simpler and more lucrative incentives for its fuel producers compared with the neighbouring Netherlands, while Belgium has drafted its plans but is yet to cement them until its new government settles, industry participants said at the event. To stimulate demand, these governments are working on versions of a scheme sometimes called "the refinery route" which allows transport fuel producers to generate tradeable credits if they substitute renewable hydrogen into their processes. But implementation of the scheme has been put in the hands of each EU member, which has yielded different designs even between neighbours. Industry groups from Germany, Belgium and the Netherlands argued this week that aligning their hydrogen policies would have an outsized impact and could set a direction for others. The trio account for 30pc of Europe's industry and 40pc of its hydrogen consumption, according to Dutch industry group NLHydrogen's chairman Marcel Galjee. "If we can't find agreement even in these three countries, then it becomes impossible at the European level, so let's take these countries as a start and build from there," Galjee said. Having uniform rules would simplify the calculation of the value of the incentives which is "the only way to drive investment", according to Galjee. "If we would align Germany, Belgium [and] the Netherlands, it would be much easier to determine the value of a refinery route in your business case. That is currently very difficult and it's preventing progress," he said. The Netherlands' recent proposal to deploy a correction factor to curb the value of its credits angered some refiners and industry groups . The Dutch approach to deploy a correction factor to drive more renewable hydrogen use in refineries was good thinking but bad execution, according to Galjee. The Netherlands would be better copying Germany's policies without a correction factor and then increasing the size of the Dutch quota for renewable hydrogen use in transport as a simpler way to get the demand stimulus it wants, he argued. Boosting demand was not the only intention of the correction factor, however, as the Netherlands also wanted to stop the refinery route undermining direct use of hydrogen and derivatives in vehicles. Fully copying Germany may not be a "realistic option in the Dutch environment today", and while Galjee hopes the Netherlands can move closer to Germany's refinery route system, the top priority must be that some form of the Dutch refinery route starts on time in January 2026, he said. Belgian industry also wants its government to replicate the system devised by Germany, according to Belgium Hydrogen Council chair and Port of Antwerp-Bruges chief operations officer Tom Hautekiet. "Don't try to be smart, just copy and don't change anything from the German system. I want it exactly the same, with the same multipliers, the same objectives," he said. Belgium will likely confirm its plans publicly in a matter of months, and Hautekiet is hoping the government will hear the message from industry. There could even more divergence across the rest of the bloc. Industry participants said they have found it impossible to track every country. France has also proposed a version of the refinery route, but it differs from Germany in certain other areas of hydrogen policy, which has meant the other three have found it easier to present cohesive views as a trio. The issue of fragmentation may deepen in coming months as EU member states start to transpose into national law EU mandates relating to hydrogen in industry ahead of the May 2025 deadline. This will mean even more autonomy and room for divergence. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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LNG diversions to Europe reach double digits


19/11/24
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19/11/24

LNG diversions to Europe reach double digits

London, 19 November (Argus) — At least 11 LNG carriers have likely diverted to Europe from Asia and Egypt over the past week, as European delivered prices now offer higher returns than Asian delivered prices, and operational issues delay deliveries in Egypt. Of the 11 cargoes, seven have diverted away from sailing for Asia round the Cape of Good Hope towards Europe, and four have diverted from Egypt, judging by shiptracking data from Vortexa (see table) . This does not include the 173,400m Myrina , which was idling in the mid-Atlantic today. One carrier — 174,000m³ Aristos I — had already passed the Cape of Good Hope, before turning back towards the Atlantic basin. Assuming all carriers are holding full cargoes, this totals around 860,000t, or 13.2TWh of LNG. Northwest European delivered prices rose above corresponding northeast Asian prices last week , prompting diversions from Asia to Europe. The inter-basin arbitrage was already closed, although firms with surplus shipping capacity that they viewed as a sunk cost because of long open vessel lists were still willing to send Atlantic basin cargoes to Asia as the opportunity cost of the longer journey time was limited to the cargo loss through higher boil-off during the voyage. But Europe's discount to Asia has narrowed, and even inverted late last week, with the spread between the two markets less than the boil-off cost difference between US deliveries to Europe and to Asia, incentivising diversions to Europe. The extra boil-off losses amount to around 39¢/mn Btu when shipping a cargo from Sabine Pass to Incheon via the Cape of Good Hope instead of Rotterdam, assuming a northeast Asian delivered price of $14.05/mn Btu, a sailing speed of 17 knots and a 160,000m³ cargo with a 0.1pc daily boil-off rate. The Argus Northeast Asia (ANEA) January delivered price closed at a 49¢/mn Btu premium to the northwest European December des price on 7 November, enough to incentivise deliveries to northeast Asia instead of Europe for firms with sunk shipping capacity as the spread was wider than boil-off losses. But the ANEA January price on 14 November fell to a discount to prompt northwest European des prices, incentivising diversions to Europe. And four carriers have diverted away from Egypt, where delays to a tight delivery schedule have been created by operational issues at the country's 6mn t/yr Ain Sukhna terminal, according to market participants. One of the terminal's two regasification trains has been experiencing operational difficulties, halving the terminal's regasification capacity, they said. The country last imported a cargo on 16 November — nine days after the previous delivery. The terminal's Hoegh Galleon floating storage and regasification unit has a peak regasification rate of 750mn ft³/d (7.7bn m³/yr), equivalent to about 16,500 t/d, meaning that it could regasify a 72,000t standard-sized cargo in 4-5 days when operating at full capacity. By Martin Senior Diversions to Europe m³ Carrier Capacity Diversion date Approx diversion location Diversions from Asia BW Lesmes 174,000 13-Nov West Africa Gaslog Windsor 180,000 14-Nov West Africa Vivirt City LNG 174,000 15-Nov West Africa LNGShips Empress 174,000 18-Nov Carribean Diamond Gas Crystal 174,000 14-Nov Carribean Flex Vigilant 174,000 14-Nov Carribean Aristos I 174,000 18-Nov Madagascar Diversions from Egypt British Listener 173,000 13-Nov Mediterranean LNG Harmony 174,000 14-Nov Mid-Atlantic Axios II 174,000 14-Nov Mid-Atlantic Pacific Success 174,000 16-Nov South of Suez — Vortexa, Argus Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: Countries join fossil fuel subsidy phase-out group


19/11/24
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19/11/24

Cop: Countries join fossil fuel subsidy phase-out group

Baku, 19 November (Argus) — Colombia, New Zealand and the UK today joined a Netherlands-led international coalition focused on phasing out incentives and subsidies for fossil fuels. They made the announcement at the UN Cop 29 climate summit in Baku, Azerbaijan. The coalition was first formed at Cop 28 in December last year. Member countries that sign up to the coalition commit to publish an inventory of their fossil fuel subsidies a year after joining, and to develop a plan to phase them out. Countries agreed at Cop 26, in 2021, to phase out inefficient fossil fuel subsidies, and reaffirmed this a year later at Cop 27. G20 members first pledged in 2009 to do the same. But global fossil fuel consumption subsidies hit over $1.2 trillion in 2022 and more than $600bn in 2023, IEA data show. "We truly feel that this is something we should tackle at a European level as well", EU energy commissioner Wopke Hoekstra said today. "This is something the next Commission will push; this is something I will personally push", he added. New Dutch climate and green growth minister Sophie Hermans admitted that phasing out fossil fuel subsidies is a "sensitive topic", but that the country is working on a plan. The first step is to make transparent which fossil fuels subsidies are in countries' systems, she said. The coalition now has 16 members — Austria, Antigua and Barbuda, Belgium, Canada, Costa Rica, Denmark, Finland, France, Ireland, Luxembourg, the Netherlands, Spain and Switzerland, as well as the three countries that joined today. Four members have made their national inventory of fossil fuel subsidies transparent — Belgium, France, Ireland and the Netherlands. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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G20 mayors call for $800bn/yr to address climate change


19/11/24
News
19/11/24

G20 mayors call for $800bn/yr to address climate change

Rio de Janeiro, 19 November (Argus) — Mayors from G20 countries are asking for at least $800bn/yr in investments by 2030 to tackle the effects of climate change. "We need better and faster access to international financing to ensure infrastructure that supports the socioeconomic security of our communities," Rio de Janeiro's mayor Eduardo Paes said. The joint statement from nearly 60 mayors and urban leaders was drafted during the Urban20, a G20 forum that includes leaders from major cities worldwide, and was delivered to Brazilian president Luiz Inacio Lula da Silva. The statement will also be delivered to other G20 members during the ongoing G20 summit in Rio de Janeiro. Climate change is one of the main topics being debated at the G20 summit. Brazil, which holds the G20 presidency this year, has set the energy transition as one of its goals for the year. The group reaffirmed its support for the Paris Agreement climate goals , saying it "fully subscribes" to the Cop 28 deal struck last year, which included language on transitioning away from fossil fuels. Urban investments such as low-emission transport, clean energy, and climate-resilient infrastructure can "significantly reduce emissions" and boost economic growth, according to the statement. The funding could unlock around $23.9 trillion in returns by 2050, it said. The $800bn/yr would cover around 20pc of urban climate finance needs and "serve as a catalyst for additional private sector funding," according to the Global Covenant of Mayors for Climate and Energy, a non-government organization for climate leadership that comprises over 13,000 cities worldwide. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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