S&P Global Platts Launches Price Assessments for Carbon Neutral Hydrogen
Energy and commodities markets information, benchmark and analytics provider S&P Global Platts announced today the launch of a suite of Carbon Neutral Hydrogen (CNH) price assessments, aiming to enhance transparency for the commodity likely to take an increasingly important role in the energy transition.
The new assessments reflect the carbon neutral value of hydrogen as it leaves the production facility at key hubs in Northwest Europe, the Middle East, Far East Asia, Australia, California and the US Gulf Coast.
Hydrogen is viewed as one of the key building blocks of the transition to a cleaner energy future, particularly for sectors with difficult to abate emissions, in which renewable energy solutions such as wind or solar are less practical. According to S&P Global Platts Analytics, the pipeline of new low carbon hydrogen production is estimated at approximately 12.5 million tonnes by 2030, driven largely by demand from power, industrial, chemicals, and mobility sectors.
Various low-carbon methods of extracting hydrogen from other materials have emerged in recent years, green hydrogen, which uses a renewable energy-powered electrolysis process to extract hydrogen from water, or blue hydrogen, which converts natural gas into hydrogen and CO₂, which is then captured and permanently stored.
According to Platts, its new assessments views hydrogen as a commodity without such classifications, considering carbon neutral trading activity, in which emissions have been avoided through the use of low emissions generation, removed through carbon capture and storage, and offset using carbon credits or equivalent instruments.
Alan Hayes, Head of Energy Transition Pricing at S&P Global Platts, said:
“Our new Carbon Neutral Hydrogen assessments will first and foremost reflect the value of the hydrogen molecule, irrespective of production pathway or color. As the energy transition gains momentum, market participants, governments, industry and investors need a trusted and independently assessed price that reflects the value of hydrogen as a commodity to make informed trading and investment decisions and manage risk. Extensive feedback from market participants has illustrated that for a nascent global hydrogen market to grow, its price should be determined by a methodology that focuses on hydrogen as a commodity, not one that is based on a rainbow of colors or its production pathway.”
According to the first assessments published by Platts, CNH prices on December 9 ranged from $1.70/kg in the US (Platts USGC CNH) to $8.30/kg for CNH NW Europe.