Cedigaz has just released its thematic report “CLEAN HYDROGEN: Building Large-scale Supply Chains”, which assesses progress in the development of large-scale clean hydrogen supply chains worldwide and looks at industry efforts to produce clean hydrogen.
THE NEW WORLD HYDROGEN ECONOMY
Since 2017, governments from 18 countries have adopted national hydrogen strategies for deploying clean (low and zero carbon) hydrogen energy solutions. Leading companies around the world are proactively investing in clean hydrogen and related technologies. The transition to clean hydrogen would create a significant step-change in hydrogen production technology in terms of scale and costs, making clean hydrogen solutions more attractive not only for industry, but also in all other sectors. Clean hydrogen is an emerging market. It is a key lever for achieving deep decarbonisation, specifically in hard-to-abate sectors like transport. It can tackle various critical energy challenges, including facilitating the large-scale integration of intermittent renewables, enabling grid balancing and seasonal storage. It can also help to improve air quality and strengthen energy security. Its potential is immense and future developments depend on energy and environmental policies, cost reductions and competition with other low-carbon options.
Global LNG import decline accelerated in June. Preliminary data point to an 8% drop (-2.3 Mt) compared to May and a 4.2% decline (-1.2 Mt) year-on-year. Global net imports stood at an estimated 26.3 Mt, which is equivalent to only 72% of global liquefaction capacity, a level significantly below the 5 year capacity utilization range in June for the 2015-2019 period (81-89%). This signals a growing oversupply in the first semester as capacity utilization had remained within the 5 year range until May and shows that the LNG market flexibility needed to absorb the surplus is being stretched to its limits.
The strong decline in June is due to Europe where imports nosedived in several major importing countries : France (- 1.4 Mt), Netherlands (-0.7 Mt), UK (-0.6 Mt), Belgium (-0.6 Mt) and Turkey (-0.5 Mt). Overall European imports (including Turkey) were down 40% in June compared to May (-3.5 Mt). All other regions registered modest growths. In particular imports grew by 0.8 Mt in Asia essentially thanks to Japan (+0.6 Mt) and India (+0.4 Mt) while they declined in South Korea (-0.3 Mt) and remained almost stable in China. The year-on-year picture is less dramatic with imports down by 1.5 Mt (-23%) in Europe, essentially due to France and the Netherlands and up 0.5 Mt in Asia essentially because of China (+0.7 Mt) while South Korean imports declined by 0.5 Mt.
India aims to raise the share of natural gas in the energy mix from 6.5% currently to 15% in 2030. This would lead to a huge growth in LNG imports. But India is one of the most sensitive price markets and needs infrastructure development for natural gas to fulfil its development potential. To address these challenges energy majors are moving downstream to get closer to the final users. COVID-19 has introduced an additional uncertainty to natural gas demand growth but the Indian gas market fundamentals remain robust.
The Indian natural gas market presents a substantial growth perspective. The Indian Government is actively promoting natural gas to diversify its energy mix towards cleaner fuels, reduce oil dependency and tackle air pollution in big cities. The aim is to move towards a gas-based economy and raise the share of natural gas in the energy mix to 15% by 2030 from around 6.5% now. Over the past two years, there has been growing attention on rapidly building out gas infrastructure, including inter- and intra-state pipelines, LNG import terminals, city gas distribution networks to cover over 70% of the population, and CNG/LNG stations across the country. Domestic and foreign investments in the natural sector are likely to amount to $60 billion over the next five years.
Outlook for Indian LNG imports
Source: CEDIGAZ, IEA WEO2019