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S&P Global Platts (Platts), the world’s premier independent source of commodities and energy market information, analytics, and benchmark pricing, has developed the world’s first suite of Carbon Neutral Hydrogen (CNH) assessments, which went into force on December 9, 2021.
The Platts CNH estimate indicates the carbon-neutral value of hydrogen as it leaves the production facility in important hubs in the Middle East, Northwest Europe, Far East Asia, Australia, the US Gulf Coast and California.
Carbon-neutral trading activity is defined by Platts CNH assessments as activity in which emissions have been avoided where possible by low-emissions generation, removed through carbon capture and storage, and offset through the use of carbon credits or equivalent instruments, in that order.
“Our new Carbon Neutral Hydrogen assessments will first and foremost reflect the value of the hydrogen molecule, irrespective of production pathway or color.”, stated Alan Hayes, S&P Global Platts’ Head of Energy Transition Pricing.
As the energy revolution gains traction, market participants, governments, industry, and investors require reliable and independent pricing that calculates prices using a methodology that focuses on hydrogen as a commodity rather than a rainbow of colors or its manufacturing process in order to make educated trade and investment decisions and manage risk, he added.
The first Platts CNH assessment was issued on December 9, with regional differences clearly obvious. Platts CNH was evaluated at $3.45/kg in the Asia-Pacific Area, on an ex-works basis in Australia, compared to prices in the Middle East, which were slightly higher, $4.05/kg.
The Far East CNH pricing, on the other hand, was substantially higher, with a price of $7.95/kg, while the assessment for CNH NW Europe was Eur 7.35/kg ($8.30/kg). Platts CNH prices in the US, $1.70/kg, were lower than in any other location.
Platts will examine the marginal costs of hydrogen generation for a given region, taking into account renewable power pricing and carbon capture costs, with any residual accounted emissions offset using suitable carbon market instruments.
According to S&P Global Platts Analytics, the pipeline of new low carbon hydrogen production projects is expected to be around 12.5 million tonnes by 2030, supplying mostly to demand from the power, chemicals, industrial, and mobility sectors.
The new CNH evaluations include a purity standard of 99.99% and a minimum lot size of 20,000 kg for quick delivery within one calendar month of the trading date.