Daily Update: Hydrogen Searches for Scale
Today is?Monday, October 23, 2023, and here’s your?curated selection of essential intelligence on financial markets and the global economy?from?S&P Global .?Subscribe?to be notified of each new?Daily?Update.?
If you were looking to invent a fuel source, you would likely create something very much like hydrogen: colorless, odorless, tasteless, nontoxic and highly combustible. When burned, hydrogen reacts with the oxygen in the air to form water and emits no greenhouse gases. However, like all combustible elements, hydrogen must be handled delicately, and — due to its low density in a gaseous state — it needs to be compressed or liquefied for storage or transportation. In addition, the biggest reason fossil fuels continue to outstrip hydrogen as our preferred energy source is that our energy system is built for the former. Replacing basic infrastructure is expensive, and hydrogen can’t benefit from economies of scale without infrastructure and customers to buy at scale.
Governments and private industry around the world are searching for ways to bootstrap hydrogen over the hump from small-scale projects to large-scale adoption. Under the terms of the Inflation Reduction Act, the US Energy Department recently announced that seven regional hydrogen hubs would be given $7 billion in grants. Environmental groups received the news with a marked lack of enthusiasm. Producing hydrogen in a pure form takes a lot of energy as hydrogen molecules bond readily with other elements. This has created a fear among environmentalists that ramping up hydrogen production could increase emissions in the short term. The DOE has been reticent in defining “clean hydrogen.” Among the seven projects covered by the grants, some use blue hydrogen (produced from natural gas with carbon capture and sequestration) and others use green hydrogen (produced from water using renewable energy).?
Offtake from these projects remains a challenge. When people in the energy sector ask about offtake for hydrogen, they are asking whether there will be customers for the hydrogen produced and whether the infrastructure exists or can be built to accommodate it. In the US, several gas utilities stand ready to offtake the hydrogen produced in these new hubs. Many gas utilities have already started blending hydrogen with their natural gas supply to test the ability of existing gas lines to handle hydrogen.?
Australia’s Hydrogen Headstart subsidy program aims to kick-start the commercial viability of hydrogen by helping to temporarily bridge the gap between production costs and market price. While the US focuses on hydrogen production, Australia’s program centers on using government funding to help build a self-sustaining market.
One way to scale hydrogen adoption quickly would be to find a low-cost, carbon-free source of hydrogen vast enough to meet projected demand. This might sound like a pipe dream, but advocates of geologic hydrogen believe that it could come true. Geologic hydrogen is produced naturally underground through a range of processes . Once produced, some of that hydrogen remains trapped underground, from where it could presumably be extracted — much like methane. The advocates suggest that even if we could only extract 2%-3% of all existing geologic hydrogen, we might still satisfy the world’s energy demand for hundreds of years. ?
Today is Monday, October 23, 2023, and here is today’s essential intelligence.
Written by Nathan Hunt.
Economy
Listen: Take Notes — Back In The Office? Uneven Global Sector Recovery
In this episode, analyst Ana Lai and co-host Jim Manzi discuss the global office sector’s uneven recovery post-pandemic. They dive into the vacancy rates in different regions around the world, pricing trends for the office sector in a higher-for-longer" interest rate environment and office performance in relation to the CMBS market. They also discuss distributions of North American REIT debt maturities across commercial real estate sectors, especially for the office sector, and what that means for the market. Finally, they touch on the S&P Global Ratings outlook for the US office market going forward.
—Listen and subscribe to Take Notes, a podcast from S&P Global Ratings
Capital Markets
Private Equity Investments In Asia-Pacific Sans Japan Decline In Q3
Private equity and venture capital investments in the Asia-Pacific region, excluding Japan, declined 20% year on year in the third quarter, according to S&P Global Market Intelligence data. Investments stood at $4.96 billion in the third quarter against $6.21 billion recorded a year ago. The number of deals grew 19% year over year to 56 transactions from 47, the data shows.
—Read the article from S&P Global Market Intelligence
Global Trade
领英推荐
China's Independent Refineries To Face Competition As Venezuela Gets Partial Sanctions Relief
China's independent refineries are bracing for intense competition for limited Venezuelan crude supplies as the partial easing of sanctions on oil and mining sectors by Washington is expected to whet the appetite of importers across the globe, trading and refining sources told S&P Global Commodity Insights on Oct. 19. In addition, China's state-run oil giant PetroChina is expected to return to the market to supply the barrels to China on the back of its joint venture's investment in the Latin American country.
—Read the article from S&P Global Commodity Insights
Sustainability
Geologic Hydrogen Attracts Interest As A Clean Energy Source
Geologic hydrogen's potential as a decarbonization fuel has spurred millions in investment and no fewer than 10 exploration companies looking to monetize its tantalizing prospects, but significant challenges remain before the prospective low carbon fuel can achieve widespread use, according to an analysis by S&P Global Commodity Insights.
—Read the article from S&P Global Commodity Insights
Energy & Commodities
Fresh Delays To Oil Pipeline Irk Energy-Starved Uganda
A contentious pipeline that would allow Uganda to become an oil exporter at long last is facing a further delay to its final investment decision, with Chinese insurance company Sinosure unable to sign off on the project until July, the emerging producer's minister of energy and mineral development Ruth Nankabirwa told S&P Global Commodity Insights. The 1,445 km, 210,000 b/d East African Crude Oil Pipeline connects Uganda's Albertine Graben fields with Tanzania's Tanga port but has become a key target for Western environmental activists and officials. To Uganda's chagrin, Western banks have shunned the project, leaving it reliant on Chinese financing.
—Read the article from S&P Global Commodity Insights
Technology & Media
Smaller Banks Are Using AI Too
The largest US banks mention AI frequently during conference calls and company presentations, often emphasizing how it has improved internal efficiency and delivery systems for customers. But they are not the only ones. Several community banks have discussed using AI as well, based on S&P Global Market Intelligence’s review of transcripts since the start of 2022, and it expects more to follow.
—Read the article from S&P Global Market Intelligence
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