Morocco ramps up efforts to attract green H2 projects

Spanish Market: Hydrogen
21/09/23

Morocco is intensifying its efforts to attract developers of renewable hydrogen projects, but still has to overcome major hurdles to realise its ambitions, delegates heard at the World Power-to-X Summit in Marrakech this week.

Government agencies are in the process of finalising the so-called 'Moroccan Offer', which is "to provide a stable and clear framework for investors" looking to develop hydrogen projects, said Moroccan Agency for Investment and Export Development (Amdie) head of the energy and infrastructure Nahla Benslama.

Government officials were hesitant to reveal specifics on the programme, saying details will be published in the coming weeks. But Benslama indicated the Moroccan Offer will cover aspects such as land allocation and infrastructure development, and will make the Moroccan Agency for Solar Energy (Masen) the single point of contact for project developers.

Masen's acting chief executive Tarik Hamane said the programme will "fast-track" development of renewable hydrogen in Morocco.

But delegates told Argus on the sidelines of the event that they do not expect the Moroccan Offer to entail specific financial incentives, beyond those already in the country's revised 'Investment Charter' that was published earlier this year. That said domestic and foreign investors can receive up to 30pc of funding support towards capital expenditures for projects in a wide range of areas, including renewable energy, provided projects meet criteria around job creation, sustainability and gender equality.

The charter's main incentive scheme states that support for renewable energy projects is capped at 30mn Moroccan dirhams ($2.91mn). But the document also includes a separate provision for "strategic projects" for which "tailored and specific support measures" would be drawn up. These projects need an overall investment of over MD2bn and must fulfil one of five criteria, such as improving energy security, creating a large number of jobs or "having a significant impact on the economic influence and strategic positioning of Morocco at the regional, continental or international level". Large renewable hydrogen projects are likely to tick the required boxes for this.

Morocco hopes to capitalise on its ample renewable power potential to become a leading exporter of renewable hydrogen and its derivatives. Based on its roadmap from 2021 — which is due to be updated next year — the country is targeting 3-5GW of installed electrolyser capacity by 2030, rising to 31-53GW by 2050. Major projects are in planning, including by domestic fertiliser producer OCP and companies considering large exports, such as CWP Global.

Challenges ahead

But Morocco needs a gigantic scale-up of renewable power capacity and other infrastructure to fulfil its potential, delegates heard at the Marrakech event.

Minister of energy transition and sustainability Leila Benali said Morocco possesses key advantages, including existing bidirectional gas pipeline and electricity transmission infrastructure connecting the country to Europe. But she said much work lies ahead to fully capitalise on these. There needs to be a tripling of annual investments in renewable energy, larger ports, new pipelines, more modern power grids and storage facilities, Benali said. Global issues such as potential electrolyser and supply chain bottlenecks will also need to be solved.

Local production of equipment needed along the hydrogen value chain will have to be turned into an "additional advantage" rather than into a cost premium for the final products.

When selecting renewable hydrogen projects to be built in Morocco, competitiveness and technological and financial risks will be key factors, according to Benali.

"The last thing we want is to subsidise stranded assets in a stagflationary environment," she said. "Some of us, in many parts of the world, did exactly that in the solar space right after the 2008 financial crisis."

Potential project developers pointed to challenges, especially the required build out of renewable power generation capacity. To produce 9mn t/yr of hydrogen via electrolysis — the government's most ambitious target for 2050 — Morocco will need to increase renewable power generation capacity to 150GW from the existing 11GW, said renewables firm Taqa Morocco's business development and financial planning director Hicham Chad.

By Stefan Krumpelmann

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01/11/24

Mexican hydrogen regulatory efforts gain ground

Mexico City, 1 November (Argus) — 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. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: EU-GCC eye alliance anchored in energy, security

31/10/24

Q&A: EU-GCC eye alliance anchored in energy, security

Dubai, 31 October (Argus) — Russia's invasion of Ukraine in 2022, and the start of the war in Gaza last year hastened the strengthening of relations between the EU and the Gulf Co-operation Council (GCC) ꟷ something both blocs had long been striving for. Argus sat down with the EU's special representative for the Gulf region and former Italian foreign minister Luigi di Maio at the Future Investment Initiative in Riyadh this week to discuss his hopes for the future of the relationship. You spoke at the conference about a comprehensive EU-GCC trade agreement. Such a thing has been on the table for a while without really moving forward. Could the first ever EU-GCC summit two weeks ago in Brussels provide the push needed for it to happen? The final statement of the summit clearly emphasised the importance of finalising the negotiation in a positive way, and reaching the free trade agreement at a regional level as soon as possible. Then we can start tailor-made negotiations on trade and investments. This can work in complementarity with the free trade agreement, for instance, on investments and energy co-operation bilaterally. This doesn't mean we are going to kill the free trade agreement at the regional level, but there are some sectorial co-operations that we can implement. This is a very good starting point. I would say the summit was ‘the message' because although our co-operation agreement dates back to the late 1980s, it was the first ever summit. Of course, that also testifies to the gap that we have to fill. This is why the EU approved the new strategy and why there is a special representative to implement this strategy. And why we are working with the Gulf countries to negotiate and implement [it] as soon as possible. Riyadh is where we opened the first ever European Chamber of Commerce in the GCC. The EU and Saudi Arabia are going to sign an energy co-operation MoU by the end of the year. The text has been discussed, and now we will work for the signature. What are the elements of this energy agreement with Saudi Arabia? It is a new framework to co-operate, particularly, on renewables, hydrogen, and technologies linked to renewables. This is very important, and currently in the hands of the EU commissioner for energy, Kadri Simson, and Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia. Speaking of hydrogen, Prince Abdulaziz spoke here about Saudi Arabia being one of the lowest-cost producers of hydrogen. We also know that hydrogen is a major element of the India-Middle East-Europe Economic Corridor [IMEC] agreement signed at the G20 summit in New Delhi. Is the IMEC project still on the table? And is this growing hydrogen relationship between the EU and the GCC part of it? First, the lesson we, the EU, learned is diversification. So, it's very important to implement our diversification policy on any kind of energy source. It is not only linked to oil, gas or hydrogen, or in general, technologies, raw materials and production. Then there is the issue of how much we can count on the suppliers. The Gulf countries like Saudi Arabia, the UAE, Qatar and others have always been reliable partners. This is why we see the energy co-operation as a pillar of our partnership. On hydrogen, there is a mutual interest to meet our ambitions. Our ambition, according to the European Commission's REPowerEU proposal, is for the EU to produce 10mn t of hydrogen on its soil by 2030, and import another 10 mn t. Saudi Arabia, the UAE and Oman are working with our companies and member states to export hydrogen to Europe. And I think the development of technologies and new projects around that will be at the core of our future co-operation. If you look at Vision 2030, here in Saudi Arabia, but even in the UAE and in the other countries, many of the goals are in line with our REPowerEU, NextGenerationEU, or the European Green Deal proposals. So there is momentum, and we are taking it. We are trying to fill the gap of the past. And the very important thing, not only about hydrogen, but even about the climate co-operation that is in our final statement [of the EU-GCC summit], is that it's not an "Una tantum" [one-off] event. We are working to have the ministerial foreign ministers' meeting in Kuwait next year and the next EU-GCC summit in Saudi Arabia in 2026. We have a long road ahead to implement the deliverables of the last summit, but also to improve our co-operation on renewables. There was a significant breakthrough at Cop 28 with the mention of fossil fuels in the final declaration. Do you see the growing EU-GCC relationship as a leverage to push GCC countries on their climate agendas and goals? The approach should not be that we push them on their climate agendas. We are working together. And thanks to the multilateral relations, ambitions and policies that we have, we can, even in view of Cop 29, co-ordinate in the same way we did at Cop 28. This is very important, because thanks to their influential foreign policy, on Africa, on central Asia, even sometimes on Latin America, and our ambitions and partners around the world, we can merge our relations to take another step forward on climate policy. But as you said, Cop 28 was historic, as consensus was the most ambitious result of the UN climate Cops, and I think we have to continue on this path together. It is not a matter of pushing someone. It's a matter of co-operation. Our level of partnership with GCC has to switch at a strategic level. We want to create a strategic partnership on peace and prosperity. This is our agreed ambition on both sides. Speaking of peace and prosperity, Iran is involved indirectly in the Russia-Ukraine conflict, and its direct confrontation with Israel leaves the GCC sandwiched in the middle. How do you see the EU working with the GCC to attain peace and prosperity, given the increased insecurity in the region? We share with the GCC the interest of peace, prosperity and stability of the region. Because if you look at these countries, what are they doing on Ukraine, like returning children and prisoner exchanges… They are very active, and we appreciate their efforts. So my perception is that the more we work with the GCC on regional stability, the more we will achieve results, because we have a common agenda. They will be very important for the future of the two-state solution, but also for the stability of Lebanon. Even for conveying messages of de-escalation to Iran. The channels with Iran have to be open… to convey messages about nuclear, ballistic missiles, about weapons to Russia for use against Ukraine, and the ‘Axis of Resistance' policy in the region, about the Red Sea and the freedom of navigation. We have to use all the channels we have and the channels the GCC have are precious because of the normalisation processes in the region, just like the Iran-Saudi Arabia one. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cepsa rebrands to Moeve to reflect sustainability shift

30/10/24

Cepsa rebrands to Moeve to reflect sustainability shift

Madrid, 30 October (Argus) — Spain-based integrated energy company Cepsa has changed its name for the first time in its 95 years of existence, to Moeve (pronounced Moo-eh-vey). The change reflects Cepsa's transition "in which the majority of profits will come from sustainable activities by the end of this decade," said chief executive Maarten Wetselaar. Cepsa has sold nearly 70pc of its oil and gas production over the past two years, including its stakes in upstream assets in Abu Dhabi , in Peru and in Colombia . It has retained stakes in light crude and gas production in Algeria, which has a significantly lower carbon footprint. The company reported provisional working interest crude production of 36,000 b/d in July-September, down from 80,000 b/d in the same period of 2021. Since then it has announced an €8bn ($8.65bn) investment strategy to decarbonise much of its business through ventures such at the planned 2GW Andalusian Hydrogen Valley , announced at the end of 2022, together with second-generation biofuels, biomethane and renewables development. Cepsa, or Compañia Espanola de Petroleos SA, was founded in 1929. It has been been majority controlled by Abu Dhabi sovereign wealth investors IPIC and Mubadala Investment Company since 2011. US investment fund Carlyle acquired 37pc of the firm in 2019. By Jonathan Gleave Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

European firms get ‘Moroccan Offer’ for green NH3

29/10/24

European firms get ‘Moroccan Offer’ for green NH3

London, 29 October (Argus) — A group of three European companies has been selected for the first land allocation under the "Moroccan Offer" and intends to produce 200,000 t/yr of renewable ammonia for the European market in a first stage. France's TE H2, a joint venture between TotalEnergies and renewables developer Eren, has joined forces with Danish firms Copenhagen Infrastructure Partners (CIP) and A P Moller to develop the so-called Chbika project in the Guelmim-Oued Noun region on Morocco's Atlantic coast. They are planning to use 1GW of combined solar photovoltaic and wind power in the first phase for electrolysis of desalinated seawater to make hydrogen that will then be converted into ammonia. Production of 200,000 t/yr of ammonia could require some 35,000 t/yr of hydrogen. CIP and TE H2 will oversee development of power generation assets, hydrogen and ammonia plants, and A P Moller will develop a port in the area and associated logistics infrastructure. "This project will constitute the first phase of a development program aimed at creating a world-scale green hydrogen production hub," CIP said, suggesting that the companies could scale up operations at a later stage. The partners have signed a "preliminary contract for land reservation" with the government, CIP said, adding that this is "the first green hydrogen project" selected under the framework of the Moroccan Offer through which Rabat seeks to allocate land rights to project developers and to offer streamlined permitting procedures. The companies have not outlined a timeline for their project, but under the Moroccan Offer's framework they would have around two years to complete front-end engineering design (FEED) studies, before then signing a long-term land agreement. Through this first phase of the Moroccan Offer, Rabat is planning to make 300,000 hectares (ha) of government land available to 10-30 projects. As of early this month, the Moroccan Agency for Solar Energy (Masen), which is leading the process, had received some 40 applications for review. Masen was initially due to announce the first selections by the end of the third quarter. TotalEnergies previously already announced plans for renewable hydrogen production in Morocco, but it was not immediately clear if this joint project with CIP and A P Moller is related to these earlier ventures. Many large renewable hydrogen and ammonia projects are planned across Morocco as developers are hoping to capitalise on favourable renewable power conditions, but all are still in early planning stages. By Pamela Machado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Consensus grows for green gas policy in Germany

28/10/24

Consensus grows for green gas policy in Germany

London, 28 October (Argus) — Germany's two main political parties are beginning to back a national green gas sales quota, increasing the likelihood of its development after the 2025 general election. The German government is yet to put forward a green gas quota proposal, unlike several European neighbours such as Denmark , the Netherlands and Austria . Economy and climate ministry BMWK — led by the Greens — has opted for more active industrial policy to ensure the ramp-up of hydrogen production, rather than a broader green gas policy that would let market prices have more decisive influence over whether hydrogen or alternative green gases prevail. But politicians from the centre-left SPD and centre-right CDU are increasingly referring to a green gas quota as an attractive policy option. The SPD is in government but not in charge of BMWK, while the centre-right CDU is leading the polls for the general election. SPD politicians Bengt Bergt and Andreas Rimkus last year put forward the most concrete proposal yet for such a policy, and it has since found some resonance among politicians and industry. Bergt, the SPD's energy spokesperson, told Argus that he had heard "from a well-placed and high-up source in BMWK that there was ongoing work on a quota solution". BMWK declined to comment on this. CDU politicians too have repeatedly voiced interest for some form of green gas quota. A green gas quota is one option for creating a "lead market" to ensure the most cost efficient delivery of the energy transition, the CDU's deputy head Jens Spahn said in an energy policy paper seen by Argus . The green gas quota is "clearly in the CDU's programme" as a solution, the SPD's Bergt told Argus . With the CDU, SPD and the green-led ministry working towards the plans, Berg said he is looking "quite positively into the future even if it does not come to fruition within this legislative period". The proposal itself Bergt proposes to mandate any supplier of gas to end consumers to evidence a certain proportion of carbon-free or low-carbon gas in its portfolio. This is different to the green gas blending model proposed in other countries. The required proportion of green gas would rise slowly at first to allow for the ramp-up of the hydrogen economy, and takes into account expectations of falling demand later in the next decade, Bergt told delegates at the Handelsblatt Jahrestagung Gas in Berlin earlier this month ( see graph ). The policy foresees that only renewable gases can be used in German gas grids from 2045. Any low-carbon gases could also be used to fulfil this quota, as long as the CO2 savings are equivalent to what they would be if the quota were fulfilled completely with climate-neutral gases. Gases that have lower CO2 emissions per kWh than methane derived from fossil fuels could be used to fulfil the quota for a certain period, including blue hydrogen. But when the CO2-savings targets are high enough, only carbon-neutral renewable gases such as hydrogen or biomethane could be used to meet the quota. In case of non-compliance, utilities would be penalised according to the amount of surplus CO2 emitted compared with the legal pathway, at a minimum cost of €1,200/t CO2. This policy approach would allow Germany to meet its climate goals, ensure security of supply and low energy prices, all while avoiding carbon lock-in effects, at no extra cost to the German state, Bergt said. Gas industry welcomes planning security Several gas industry members agreed with the basic points of the proposal, welcoming the long-term security it could provide for planning horizons. The proposal would answer the hydrogen industry's calls for a policy that supports demand in Germany, panellists at the conference said. But the policy would at the same time allow for price-driven competition between hydrogen and biogas, ensuring the lowest societal cost for decarbonisation, panellists said. Panellists warned against overcomplicating the policy, in light of the general bureaucratic burden. Swiss trading firm MET chief strategy and business development officer Joerg Selbach-Roentgen told Argus in February that the firm was in favour of a green gas blending obligation as it provided a more reliable regulatory framework. A green gas quota is a "valuable instrument to reach the market ramp-up for new gases of all kinds", gas and hydrogen association Zukunft Gas executive director Timm Kehler said at a parliamentary committee hearing late last month. Zukunft Gas praised Bergt's proposal in a position paper in March but asked for further freedoms in compliance, whether through trading of quotas or taking into account uncertain weather-dependent aspects of demand each year. By Till Stehr Percentage of green gas in suppliers' portfolio by year % Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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