Dutch €1bn green H2 subsidy scheme to open in October
The Netherlands will accept bids for its €998mn ($1.07bn) scheme to support large-scale renewable hydrogen production plants on 15-31 October.
This round aims to support construction of "at least 200MW of electrolysis capacity" and has a budget more than four times larger than a previous subsidy round held last year, for which the successful bidders were announced in April.
It was initially announced by Dutch enterprise agency RVO in March and approved by the European Commission in July.
A single project can apply to receive a maximum subsidy of up to 50pc of the total amount. The subsidy scheme entails support for up to 80pc of a project's investment costs. It will also cover operating costs, with the latter to be granted for 5-10 years — depending on a project's specific requirements — through a contracts-for-difference mechanism.
For the operating subsidies, project developers have to provide their expected renewable hydrogen production costs up to a maximum of €9/kg. The subsidy is then calculated as the difference between this renewable hydrogen cost and the cost of making "grey" hydrogen from natural gas through steam methane reforming. The "grey" production cost will be determined on annual basis by the government. For 2024, it has been provisionally set at €3.8131/kg and the final cost cannot be lower than €1.7997/kg.
A final "grey" production cost will be determined by 1 April for each preceding year based on actual costs and market conditions. The cost calculations also take into account the value of guarantees of origin for renewable hydrogen and any revenues or cost savings from greenhouse gas emission allowances from which the project might benefit.
Projects will be selected based on their requested investment and operational subsidies, which will be expressed as € per MW of electrolysis capacity.
Projects must be completed and start production within five years of receiving the subsidy, although there is a possibility of extending this deadline by up to two years in certain cases.
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Equinor halts Norway-Germany H2 pipeline planning
Equinor halts Norway-Germany H2 pipeline planning
London, 20 September (Argus) — Norway's state-controlled Equinor said it has halted the development of a planned €4bn-6bn pipeline that would have exported hydrogen from Norway to Germany due to the lack of a viable business case. "There was no clarity on the regulatory side, there were no customers and there was no supply," an Equinor spokesperson told Argus . Equinor had said earlier this year that the pipeline was likely to follow in a later stage of development after its hydrogen production had started in mainland Europe, and that building the pipeline would be contingent on strong demand. "You don't invest in a pipeline €4bn-6bn just for transporting a few molecules," the company's director of hydrogen in northwest Europe, Henrik Solgaard Andersen, said at the time. "You need to believe in the market." Equinor announced a plan in early 2023 to supply hydrogen from Norway to German utility RWE for use in power plants. Equinor had envisaged making "significant quantities" of hydrogen from Norwegian gas with CO2 storage and eventually transitioning to renewable hydrogen. But Germany has shifted its plans for hydrogen power a couple of times since then. It also has ambitions to use hydrogen in sectors like steel, but companies have not yet taken firm investment decisions, meaning there is uncertainty about how much hydrogen demand will materialise and when. A joint study commissioned by the German and Norwegian governments last year and carried out by Norwegian state-owned offshore pipeline operator Gassco and the Germany Energy Agency (Dena) found the pipeline to be technically viable. Gassco was not immediately available to comment on whether it would continue developing the pipeline without Equinor. The loss of the pipeline from a current energy trading partner and close ally looks to have choked off one of the most plausible import corridors envisaged to meet Europe's expected demand. The pipeline capacity would have been 10GW by 2038, RWE and Equinor said previously, equating to 2.6mn t/yr of hydrogen based on its lower heating value. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Hoekstra to face 'tough' EU parliamentary hearings
Hoekstra to face 'tough' EU parliamentary hearings
Brussels, 18 September (Argus) — EU climate commissioner Wopke Hoekstra, who has been nominated again for the role, is expected to face "tough" hearings in the European Parliament, according to a senior European official. The official told Argus that Hoekstra might have a "slight" advantage, as he underwent parliamentary hearings in 2023 when he took over fellow Dutchman Frans Timmermans' climate portfolio. At the time, Hoekstra was questioned extensively about past work with Shell and on climate issues. European Commission president Ursula von der Leyen put forward new commissioner candidates on 17 September, assigning Hoekstra the climate, net-zero, and clean growth portfolio. All candidates will undergo hearings before the EU parliament votes on the new commission line-up. Hoekstra has said he is "honoured and humbled", but formal appointment depends on how he performs during the hearings before the European Parliament's energy, environment and other committees. Hoekstra's mandate would include drafting legislation to enshrine a 90pc cut in greenhouse gas (GHG) emissions by 2040, from 1990 levels, into European law. The commission's 2040 target, revealed in February, referred to a "net GHG emissions reduction of 90pc". Hoekstra last year made a "personal" commitment to defend a "minimum target of at least 90pc" net GHG cuts. Von der Leyen has tasked Hoekstra with designing climate policies for the post-2030 period and developing an Industrial Decarbonisation Accelerator Act. Other key objectives include channelling investment toward net-zero infrastructure and ensuring revenues from the EU's emissions trading system (ETS) are used "effectively" to drive decarbonisation. Hoekstra's responsibilities extend to advancing a single market for CO2, boosting carbon removals for hard-to-abate sectors, and phasing out fossil fuel subsidies. Hoekstra would work closely with former Danish climate minister Dan Jorgensen, who is nominated for the energy and housing portfolio, if both are appointed. Jorgensen will be responsible for advancing the Electrification Action Plan for industrial transition and overseeing a roadmap to phase out Russian energy imports. He is tasked with ensuring the "full use" of joint procurement mechanisms, with a mandate to extend the current aggregated demand system from gas to include hydrogen and potentially other commodities. Supervising both Hoekstra and Jorgensen, in addition to von der Leyen, will be Teresa Ribera, Spain's former climate minister. Ribera has been nominated as executive vice-president for a clean, just and competitive transition. European Parliament officials expect to receive financial declarations and other procedural documents in the coming days. That will allow parliamentary committees to send written questions to Hoekstra and other nominated commissioners, officially kicking off the hearing process. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Asia-Pacific faces $815bn/yr green financing shortfall
Asia-Pacific faces $815bn/yr green financing shortfall
Singapore, 18 September (Argus) — Asia-Pacific holds significant investment opportunities in the energy transition, but obstacles such as insufficient public funding, lack of regulation and investment risks have resulted in a financing shortfall in the region. The Asia-Pacific region needs at least $1.1 trillion/yr in climate financing, but actual investment falls short by at least $815bn/yr, said Singapore's ambassador for climate action Ravi Menon at a conference in Singapore last week, referencing data from the International Monetary Fund (IMF). There is existing green funding in the region such as from the Asian Development Bank (ADB), which estimated its investments amounted to $10.7bn in 2023, and bilateral arrangements like the $600mn India-Japan fund, established by India's National Investment and Infrastructure Fund and Japan Bank for International Co-operation in October 2023. But this is insufficient, especially as the region's energy demand is only set to rise further. Energy demand in Asia is growing by 2.9pc/yr, the highest of any region in the world, said Menon. Renewables such as solar and wind are now more cost-competitive than fossil fuels, but the region needs more grid connectivity and capacity to make renewable energy a viable option. Building transmission lines and energy storage in the region alone will cost about $2.4 trillion over the next 10 years, added Menon. Obstacles to capital flows Total energy investment worldwide is expected to exceed $3 trillion in 2024, with about $2 trillion going to clean technologies and slightly over $1 trillion toward fossil fuels, according to the IEA's World Energy Investment 2024 report. Fossil fuel financing by the world's 60 largest banks rose to $705bn in 2023 , up by 4.8pc from $673bn in 2022, with the rise largely driven by LNG financing. The continued investments in fossil fuels and fossil fuel-based technologies will lead to more carbon-intensive infrastructure, divert capital from clean energy alternatives and undermine climate targets, derailing Asia-Pacific from its energy transition goals. Emerging economies typically have "many developmental needs" to take care of, hence public financing in these countries cannot shoulder the overall trajectory of growth of energy transition financing, said the Institute for Energy Economics and Financial Analysis' (IEEFA) sustainable finance and climate risk research lead Shantanu Srivastava at the IEEFA Energy Finance 2024 conference earlier this month. Many smaller economies rely on financing from multilateral development banks (MDBs), but this comes in "bits and pieces" and with many strings attached, he added. It is hence essential to bring in private capital, but the region faces challenges in attracting private investments. The lack of a sound climate information architecture hampers accurate assessment and tracking of climate risks, which impedes investors' ability to make decisions and prevents the scale-up of climate finance, according to the IMF. Other measurable risks — such as political risk, credit risk, and foreign exchange risk — often significantly raise the risk premium of investments into the region. Investors tend to expect higher returns on investments with higher risk premiums, but there are limited investment opportunities available which would provide such returns and this prevents foreign capital from scaling, according to Srivastava. Insufficient regulatory and government measures in the region as well as the inconsistency of existing ones also deter private investors, as these increase project execution risks. Policy continuity and long-term visibility of what the country is going to do is essential as a "policy flip-flop" deters investor confidence, Srivastava said. Tools to attract more climate finance Blended finance is necessary to mobilise private capital for Asia's energy transition, according to Menon. Governments and development finance institutions could provide concessional or risk capital in the form of grants and limited guarantees, while MDBs can provide technical assistance in the form of development expertise, capacity building and institutional support, he said. Finance can also be encouraged through sovereign sustainable bonds, which can stimulate local sustainable bond markets by setting long-term price benchmarks, boosting liquidity, and serving as models for private issuers, according to IEEFA. The issuance of these bonds also signal a dedicated government commitment to sustainability goals and can drive the development of a robust and transparent regulatory environment, IEEFA added. This is crucial for the long-term growth and stability of the region's sustainable bond markets, which is essential for boosting investors' confidence. Another method is through revenue generation tools, such as carbon pricing and carbon taxes, according to the Financing Just Transition Through Emission Trading Systems report released earlier this month by think-tank Asia Society Policy Institute (ASPI). Carbon pricing sends a strong signal to reduce greenhouse gas emissions and indicates the government's intent to intensify efforts related to energy transition, which encourages private capital flow, stated the ASPI report. Carbon pricing also has the potential to generate substantial revenue, which can be allocated to climate funds to support low-carbon technology innovation and aid enterprises in making green investments, to aid low-carbon transition efforts, the ASPI report added. By Joey Chan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
German CCS debate heats up as government advances
German CCS debate heats up as government advances
Berlin, 17 September (Argus) — The debate on carbon capture and storage (CCS) is heating up in Germany, as the federal government finalises its carbon management strategy and environmental groups reiterate their warnings on the associated risks. Environmental group Greenpeace today slammed Berlin's plan to support CCS technology as part of its nascent carbon management strategy. Greenpeace pointed to the technical risks and high costs, and that Europe's only larger CCS sites — Norway's Sleipner and Snohvit — have already encountered "unexpected" problems. Germany's federal ministry of economic affairs and climate action stressed in a strategy paper last week that CCS is categorised as safe and "not a high-risk technology". The ministry started consultations last week on its strategy with other relevant ministries, with a draft to be sent to parliament in the next few weeks. The paper stresses that funding will be available only for dealing with technically unavoidable and "hard-to-abate" emissions, based on a "scoring model" developed by the economy ministry that analyses CCS use based on costs, technological availability, avoidance potential, emission source and lock-in risk. The cement, lime and thermal waste treatment sectors have been given an "A" score, as their emissions are deemed "technically unavoidable", with steam crackers scoring a "B", allowing these sectors to be considered eligible for support. Blue hydrogen, the glass industry and gas-based direct reduced iron (DRI) technology in the steel industry are rated "C", and aluminium, gas-fired power plants, combined-heat-and power (CHP) plants, and blast furnace technology in the steel industry are rated "D". The development of CO2 infrastructure should be "private-sector and market-driven" and "as competitive as possible", the paper said, but some "hedging mechanisms" for investors may be necessary in the "ramp-up" phase to mitigate the risks for first movers and leverage the long-term potential for economies of scale. Support would go beyond Germany's carbon contracts for difference (CCfDs), and possibly imply some kind of state backing via public bank KfW. CCfDs are among the existing funding instruments planned for certain CCS applications for larger industry firms, along with decarbonisation aid for medium-sized companies presented last month . The ministry plans to set up a CO2 infrastructure working group to co-ordinate planning, possibly alongside other working groups on areas such as CO2 use or storage. The annual quantities of CO2 to be sequestered in Germany are estimated at 34mn-73mn t of CO2 in 2045. Germany's amended draft carbon storage bill, which forms the legal framework for the pipeline-based transport and storage of CO2, is now under parliamentary scrutiny. And Germany will deal with carbon removal and the targets for "technical sinks" in its long-term strategy on negative emissions, which the government aims to present by the end of this year. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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