S&P Global — 28 October 2024
Daily Update: October 28, 2024
Mastering the Practicalities of a Growing Hydrogen Market
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
A global market for low-carbon hydrogen and its derivatives is developing as early adopters sign offtake agreements and suppliers deliver shipments. This has piqued the interest of investors, as offtake agreements and government support indicate an opportunity for growth. Yet challenges remain for this industry: Specifically, the cost of electrolyzers has risen 20%-45% since 2021, according to an analysis from S&P Global Commodity Insights.
In the US, “blue hydrogen,” produced using steam methane reforming with carbon capture and storage, is attracting more investor interest than “green hydrogen,” produced via electrolysis. It is also cheaper to manufacture. The challenge for US developers of green hydrogen is sourcing the renewable energy they need to qualify for federal production tax credits. Power-hungry datacenters, particularly in the Western states, have created competition for renewable electricity. In California, Oregon and Washington, the energy used to electrolyze hydrogen is required to have the low carbon intensity of renewable energy. This leaves US project developers grappling with uncertainty around policy and investor hesitancy.
The European hydrogen market, meanwhile, is experiencing rapid growth due to regulatory clarity. European governments are awarding hydrogen subsidies and developers are securing offtake agreements. The European electrolyzer industry is scaling up, which should begin to yield economies of scale over the medium term.
However, blue hydrogen has not received the same level of government support in Europe. Shell put the Aukra low-carbon hydrogen project in Norway on hold due to a lack of demand for blue hydrogen. The company’s plans for a pipeline that would transport blue hydrogen from the Aukra project to Germany did not obtain regulatory approval.
In India, the Middle East and other regions, hydrogen developers are looking to produce hydrogen and ammonia to export to Europe and East Asia. Energy decarbonization policies in Europe, Japan and South Korea are driving market formation and garnering interest from exporters.
The hydrogen industry has always attracted excitement from early investors. But it must adjust expectations to allow projects to get off the ground, according to industry experts. Building the hydrogen value chain may take some time and investment.
“I think we could say the industry is in a kind of an execution phase,” said Shankari Srinivasan, vice president of energy at S&P Global Commodity Insights, on a recent podcast. “We’re moving out of the theoretical, the conceptual planning, and projects are starting to be executed. But with that, of course, we’re seeing some of the reality: The practicalities that may be a little bit challenging at times and may cause a few delays.”
Today is Monday, October 28, 2024, and here is today’s essential intelligence.
September 2024 — Where Does The World Stand On ISSB Adoption?
The International Sustainability Standards Board (ISSB) launched its first two sustainability-related standards in June 2023, effective for annual reporting periods on or after Jan. 1, 2024. The standards could form the basis of a consistent sustainability disclosure framework for companies and investors around the world. In this quarterly article, we bring you the latest global developments in the uptake of the ISSB’s standards.
—Read the article from S&P Global Sustainable1
US States' Fiscal 2023 Liabilities: Stable Debt, With Pension And OPEB Funding Trending Favorably
US state debt levels remained relatively flat in fiscal 2023 compared with 2022, declining a modest 1.3%. S&P Global Ratings attributes this year-over-year decline to a combination of factors, including elevated borrowing costs and inflation-induced cost pressures, record-high liquidity levels due to large budget surpluses and substantial COVID-19 relief stimulus that could be used for one-time purposes, making pay-as-you-go (paygo) funding of capital expenditures a more attractive alternative to debt financing.
—Read the article from S&P Global Ratings
Understanding The Outperformance Of The S&P 500 ESG Leaders Index Through A Sectoral Lens
The financial landscape has transformed significantly in recent years, with market participants increasingly recognizing the value of sustainability characteristics. One embodiment of this shift is the S&P 500® ESG Leaders Index, launched on Feb. 7, 2022, which is a best-in-class ESG index designed to measure the performance of securities with stronger than average ESG characteristics, while excluding those with controversial business activities that have negative social or environmental impacts.
—Read the article from S&P Dow Jones Indices
Listen: Asia’s Affinity For US Crude: Can Geopolitics, Sanctions And Elections Affect Trade Flows?
The footprint of US crude oil is rapidly expanding, intensifying competition with OPEC and non-OPEC supplies in key Asian markets. As geopolitical tensions in the Middle East escalate, how much US crude can fill potential supply gaps in Asia? Additionally, how could policies under a new US administration, whether led by Trump or Harris, impact oil outflows?
—Listen and subscribe to the podcast from S&P Global Commodity Insights
Russian Gas Flows Favoring Asia Over NWE As LNG Finds Takers In Europe
Russian gas supply to Asia has continued to grow with expectations that it would increase further as Europe diversifies its energy mix away from Russian pipeline supply, however, Russia-Europe LNG exports have climbed to record highs this year so far, S&P Global Commodity Insights data showed. Russia pipeline flows to China via the Power of Siberia line have risen steadily over recent years and are projected to reach 30 Bcm in 2024 before hitting the design capacity of 38 Bcm in 2025, Gazprom previously said.
—Read the article from S&P Global Commodity Insights
Fintech Brief: Cash Won't Be King Much Longer In Europe
Europe might move to more digital payments by 2030. This continues, even though recent surveys by the European Central Bank (ECB) indicate that approximately 60% of the eurozone population still value the ability to pay with cash. Some large European banks are rolling out the European Payments Initiative (EPI) as an alternative payment solution to counter the dominance of US payment giants. With the EPI, these banks aim to protect their relevance in the payment space and to safeguard against technological disruption.
—Read the article from S&P Global Ratings
On-Demand Webinar: US Election: Calculating The Impact On The Automotive Ecosystem
As the 2024 US election approaches, uncertainty looms over the automotive industry. Significant shifts in policy — including regulations, incentives and tariffs — could be coming, depending on election outcomes. So how can businesses prepare for what's next? In this 20-minute webinar, S&P Global Mobility experts will show you how you can assess the potential impact of different election scenarios on your company and the automotive ecosystem.
—Watch the on-demand webinar from S&P Global Mobility