S&P Global Platts (Platts) has launched the world’s first suite of Carbon Neutral Hydrogen (CNH) analyses, which will be available beginning December 9, 2021.
Platts CNH assessments, which are based on Platts’ first-to-market cost of hydrogen production valuations, reflect the carbon neutral value of hydrogen as it exits production facilities in Northwest Europe, the Middle East, Far East Asia, Australia, California, and the US Gulf Coast.
Platts CNH assessments take into account carbon neutral trade activity in which emissions have been avoided where possible by low-emission generation, eliminated through the use of carbon capture and storage, and compensated through the use of 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.”
On December 9, the first assessment of Platts Carbon Neutral Hydrogen (CNH) was published, revealing regional disparities. In the Asia-Pacific region, Platts CNH was assessed at $3.45/kg ex-works in Australia, compared to $4.05/kg in the Middle East. However, the Far East CNH pricing was significantly higher, at $7.95/kg for carbon neutral hydrogen, whereas the evaluation for CNH in Northwest Europe was Eur7.35/kg ($8.30/kg). In comparison, Platts CNH prices in the US were the lowest of any area, at $1.70/kg for Platts USGC CNH.
Daily Platts Carbon Neutral Hydrogen (CNH) evaluations will be issued at 4:30 p.m. Singapore for Far East Asia, Australia, and the Middle East markets, 1:30 p.m. Houston for California and the US Gulf Coast markets, and 4:30 p.m. UK time for Northwest Europe markets.
The new CNH assessments will be based on Platts’ existing cost of production factors, which will serve as a reference point in the absence of market activity. Platts will assess marginal costs of hydrogen production for a given area, taking into consideration renewable energy prices and carbon capture costs, with any remaining emissions being offset using appropriate carbon market instruments.
According to S&P Global Platts Analytics, the pipeline of new low carbon hydrogen production projects will total approximately 12.5 million tonnes by 2030, primarily to meet demand from the power, industrial, chemical, and transportation sectors.
The revised CNH evaluations reflect a purity level of 99.99 percent and a minimum lot size of 20,000 kg for fast delivery within a calendar month of the trade date.
Platts launched the world’s first hydrogen cost of production analyses in North America and Europe in December 2019 and has since expanded its coverage to Asia-Pacific and the Middle East. These estimates take into account the value of hydrogen produced at global hubs via various production pathways, as well as the expenses associated with carbon capture and storage.
