Shell quits Swedish e-SAF plant plan
Shell has exited a planned renewable hydrogen-based sustainable aviation fuel (e-SAF) project in Sweden, and it and utility Vattenfall will not take up an €80.2mn ($87mn) EU Innovation Fund grant.
"Vattenfall and Shell have agreed to pause their collaboration" on the HySkies project that they launched in 2021, the Swedish firm said. It had said in February there was "a different belief in timelines for the project to be realised" and that the companies had "agreed to open up the collaboration for potential other partners to join Vattenfall."
The company reiterated this today, noting it is still reviewing the project and is seeking other partners. Shell sees "a future" in HySkies, "including opportunities for future potential collaborations". It recently paused construction of a biofuels plant in Rotterdam, and said today it expects to write down up to $1bn against that project.
The Swedish collaboration initially also involved US biojet producer Lanzatech, but Vattenfall did not specify whether the firm remains part of the plans.
The companies "have requested for a termination of the grant agreement for financial support via the EU Innovation Fund," Vattenfall said today. The companies are "considering it is infeasible for the project to succeed within the framework of that agreement and [are] aiming to free up funds for others to use in their ambitions to decarbonise," Vattenfall said.
HySkies was selected for the grant in January 2023. The project in Sweden's eastern Forsmark region was envisaged to produce around 82,000 t/yr of e-SAF and 9,000 t/yr of renewable diesel, using hydrogen from a 200MW electrolysis plant, biogenic CO2 captured from a waste-to-energy plant and sustainable ethanol. It was slated to start operations in March 2027 and required capital costs were estimated at close to €780mn.
E-SAF has been touted by some as one of the most promising commercial opportunities for hydrogen derivatives, primarily because of clear EU mandates that will oblige its use from 2030.
Vattenfall said it might pursue different options in the Forsmark region as well, noting "the full potential" for decarbonising heavy industry in the area is "under review".
HySkies is not the first project for which developers have returned EU Innovation Fund grants. German utility Uniper said earlier this year it had to hand back a grant awarded last year after its plans got delayed because it could not secure a power purchase agreement from a wind power developer.
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Q&A: RAG says EU lacks clear hydrogen storage rules
Q&A: RAG says EU lacks clear hydrogen storage rules
Brussels, 4 July (Argus) — RAG Energy Storage has been one of the front-runners in hydrogen storage, and established the first operational commercial underground hydrogen storage (UHS) in a depleted gas field in April 2023. Argus spoke to its managing director Georg Dorfleutner, who is calling for a clear framework. Are you OK with the EU apparently scaling back from 10mn t/yr of hydrogen imports? We base the modeling of the report for HeartforEurope more or less on 2030 projections from the RepowerEU strategy. The assumptions on our modelling to identify an investment gap for hydrogen storage were rather conservative — that the only demand would come from industry, thus a rather flat profile over the year without seasonal-shift needs yet. From our side we have multiple potential hydrogen storage projects throughout Europe, but the hydrogen market development and support regimes for infrastructure investments will define the timely realisation. How might any scaling back affect your report's projected 36 TWh H2 storage gap? Whatever happens infrastructure needs to be in place very soon. Our report really underlines the need for a clear framework for hydrogen storage. And we come with a toolbox of different possible measures to support this. Storage tariffs alone won't solve the issue of market ramp-up. Policymakers may feel relieved that the gas and hydrogen decarbonisation package was finished before the EU elections. But our report is more or less saying that this alone will not do the trick. Could a strict EU definition of low-carbon hydrogen hinder growth? The wider and more pragmatic the definitions of low-carbon hydrogen are, the easier market ramp-up will be. Market ramp-up is enormously important for infrastructure. You don't build infrastructure just for demand over the next two years but for the next 10-15 years. Do we need more tailored financial support for UHS, at EU and state levels? There's simply no tailored financial support right now. There's a little aid for hydrogen storage research projects. Currently, policy-making appears focused on whether or not hydrogen infrastructure has to be unbundled. As for financial support, we're completely out of the picture for now. And there's this idea that regulated tariffs make commercially viable projects. But that's not true. It's only booked capacity based on a cost-covering approach that delivers a financially viable project. You don't build infrastructure just to have nice infrastructure without customers. Do we need EU and member state UHS targets? We're not looking for a strict mandatory goal. But if there is a certain goal for hydrogen uptake in the market, then you should ensure that you have the necessary infrastructure in place. That said, targets may be helpful at state level in setting a framework for state aid. But we also have to recognise that Europe is very diversified. Some areas may have very well-functioning hydrogen supply while other landlocked countries might depend on longer supply chains, thus being more dependent on storage. Are markets ready for UHS? Firms are already approaching us. The market is willing, but they need to know what the costs are. The best way forward then is providing clear rules for storage and giving industry a clear pricing idea. There also need to be clear state support mechanisms until we get to cheaper hydrogen and sufficient infrastructure utilisation. In the process of creating UHS capacities we need to keep in mind the SOS for natural gas, which currently is crucial. That's why we focus on new sites — caverns, porous reservoirs and aquifers — rather than repurposing. But at some point, post-2030 with a market ramp-up, decisions on repurposing gas into hydrogen storage will need to be taken. Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU’s centre-right EPP mulls Green Deal tweaks
EU’s centre-right EPP mulls Green Deal tweaks
Brussels, 3 July (Argus) — The European Parliament's largest group, the centre-right EPP, is working to complete the bulk of its strategy programme on 4 July at a meeting in Portugal. Key elements in the party's 2024-29 policy agenda include significant changes to the bloc's climate and energy policy for 2030. A draft of the five-point policy plan lists revising CO2 standards for new cars and vans to "allow for the use of alternative zero-emission fuels beyond 2035". The EPP also calls for a new e-fuel, biofuel and low-carbon fuel strategy "with targeted incentives and funding to accompany the EU hydrogen strategy". Additionally, the EPP wants the incoming European Commission to create a "single market for CO2" with a market-based framework for carbon capture and storage (CCS) and carbon capture and utilisation (CCU), through an accompanying legislative package similar to that adopted for the EU's gas and hydrogen markets. The strategy document discusses a "Green Growth Deal" aiming to achieve the EU's 55pc emission reduction target by 2030 — from 1990 levels — and climate neutrality by 2050, while boosting the EU's competitiveness and ensuring technological neutrality. The draft document emphasises the need to transition "away from fossil fuels towards clean energy", also by ramping up international hydrogen production. And the draft advocates for a "simple, technology-neutral, and pragmatic definition for low-carbon hydrogen" in upcoming technical legislation from the commission. More controversial points include postponing application of the EU's deforestation regulation and addressing problems related to its implementation. The EPP also wants to split the EU's industrial emissions directive into "industrial and agricultural parts", conduct a "full-scale" inquiry into why farmers are not receiving fair prices for their products, and require robust impact assessments for the economic viability of farms for any new animal welfare proposals. The group's members of parliament are meeting until 5 July. Commission president Ursula von der Leyen is also attending. She was [recently nominated](https://direct.argusmedia.com/newsandanalysis/article/25825320 by EU leaders for re-election. The EPP programme will significantly influence policy priorities that von der Leyen would support, if she is approved by an absolute majority of 361 votes at a session in Strasbourg on 15-18 July. But von der Leyen may need to drop more controversial points to secure a majority with liberal, centre-left and green support. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mexico to tap economist for energy minister
Mexico to tap economist for energy minister
Mexico City, 27 June (Argus) — Mexican president-elect Claudia Sheinbaum appointed economist and lawyer Luz Elena Gonzalez to become energy minister in her government that will take office on 1 October. Gonzalez has a long record in public service and served as finance director of the Mexico City government during Sheinbaum's tenure as the capital's mayor from 2018-2024. She has no direct energy industry experience. Sheinbaum won a convincing victory in the 2 June presidential elections and will take office on 1 October when Morena political party founder and current president Andres Manuel Lopez Obrador ends his six-year term. Gonzalez will face a range of challenges as energy minister including completion of the long-delayed Olmeca refinery, development of a plan to tackle state-owned Pemex's enormous debt, expansion of Mexico's electricity generation and grid capacity with a renewed focus on clean energy and the construction of natural gas storage. She will also be in charge of policy decisions that will define the role of private-sector investors in the energy sector. Gonzalez will replace Miguel Angel Maciel, appointed following energy minister Rocio Nahle's resignation in October 2023 to pursue the Veracruz gubernatorial election. Nahle, who took office as energy minister in 2018, led efforts to build the Olmeca refinery and has been a strident supporter of Lopez Obrador's energy sovereignty policy that has sought to restrict private-sector investment. Sheinbaum also appointed Jesus Esteva as transport minister, Raquel Buenrostro as civil service minister, David Kershenobich as health minister and Edna Elena Vega as urban and rural development minister. All of the candidates appointed today have either worked with Sheinbaum during her period as Mexico City mayor or in Lopez Obrador's government. By Rebecca Conan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Eurogas disappointed in hydrogen target scaling back
Eurogas disappointed in hydrogen target scaling back
Brussels, 25 June (Argus) — New Eurogas president and Eni's director for global gas and LNG Cristian Signoretto told Argus of his disappointment in an apparent scaling back in EU renewable hydrogen production targets, but said that he remains confident that a cheaper pathway exists for the fuel. He called for a technologically neutral approach while demand shifts to decarbonised gas over the long term. Do you see decarbonisation shifting to a slower pace over the next few years? We have clear decarbonisation targets for 2050. This continues to be a challenge that the gas industry wants to meet. And if you look at delivering security of supply and affordable energy, then you end up with a system that needs molecules. Gas is obviously part of that solution. What do you think about the apparent scaling back in the EU's 2040 impact assessment of the EU's 10mn t/yr of renewable hydrogen imports by 2030? We are a little disappointed, but there is still a lot of work to be done on the EU's 2040 targets. We are working on our own analysis and study setting out the best way to get to the 2040 overall decarbonisation targets. We are confident it will show a cheaper and more resilient pathway to reach those targets with the help of gas molecules. What are your key asks when the EU implements revised gas and hydrogen laws? For the gas and hydrogen package, we are focusing on several themes such as the implementation of the methane regulation. Methane has a major impact for climate change. We need to cover methane in exporting and producing countries and also in transmission and distribution. Another theme is ensuring definitions of low carbon gases and green gases are standardised as much as possible. We believe in a technology neutral approach to decarbonisation. It is not for policymakers to choose winners. Can the EU do more to help wean central and eastern European countries off Russian gas? Flows have to change to phase-out Russian gas. Transmission system operators (TSOs) have already done a lot, but there are still bottlenecks on networks. Flows will change further if Ukrainian transit is phased out at the end of this year. But Europe needs to avoid regulatory barriers, such as the German storage tariffs on gas moving through to other EU countries. On the whole, energy markets and systems have been fairly successful in overcoming the Russian crisis, in particular revising the European gas grid over 18 months to ensure gas flows are now no longer going only east to west. Another positive sign is that gas prices are very much aligned within Europe in a clear sign that the single market for gas is functioning, apparently more so than the European power market, as evidenced by the strong differentials among national markets. Is imposing an EU methane intensity limit in 2030 not a risk for energy security? Gas is a global business. We need to import gas. But Europe also wants gas imports that follow certain standards. There has to be correct timing and proper engagement between the EU and producing countries and we need to make sure other countries follow suit with Europe's decarbonisation target. We cannot solve all the issues on our own early on while we wait for climate leadership to possibly become a competitive advantage for Europe in the future. Are 2030 climate and energy goals set in stone if China, India, and others do not make equivalent efforts? European competitiveness is a very important issue, up there with defence, energy and climate change. It is not about backing down. But all other polluting countries need to be tackling climate change. Otherwise Europe runs the risk of finding itself isolated and not solving the climate issue alone. Would a more flexible approach to CO2-neutral fuels used in internal combustion engines maintain a pathway for gas in transport? An electric vehicle or an internal combustion engine vehicle with low carbon gas or low carbon fuel should be treated in the same way. We should take a technologically neutral approach as long as CO2 emissions are equivalent. Major shipowners are investing heavily in dual-fuel engines to also run on LNG. From a technology perspective, LNG is a route to decarbonisation in the short term. It is also a cheaper option today and will become decarbonised gas in the long term. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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