EC announces Eur1.2 billion for second hydrogen bank auction

The European Commission has announced a Eur1.2 billion (USD1.3 billion) budget for the second auction under the European Hydrogen Bank mechanism, expected in the autumn, said Chemweek.

The news came at a stakeholder workshop on the European Hydrogen Bank organized by the EC’s Directorate-General for Climate Action, trade association Hydrogen Europe said late June 12.

The budget is substantially less than the Eur2.2 billion previously expected for the second round, though some funding will also go to support hydrogen imports, the EC told S&P Global Commodity Insights June 13.

"We are glad to see the next auction moving forward with a higher budget than the pilot, though it is still short of the Eur3 billion budget announced back in September 2022," Hydrogen Europe CEO Jorgo Chatzimarkakis said in a statement. "We expect the remaining Eur1 billion to be allocated to the next auction to ensure projects continue to receive this much-needed support to be operational by 2030 and help reach the 2030 climate and energy targets."

An EC official confirmed the budget announcement on June 13 and said the Eur3 billion announced by Commission President Ursula von der Leyen in November also covers the international leg of the hydrogen bank, for which an announcement will be coming "in due course."

The first round awarded a total of Eur720 million to fund 1.5 GW of electrolysis across seven projects at 37-48 euro cent/kg at the end of April.

All of the successful bidders have projects in Nordics or Iberia, with access to low-cost renewable power. Platts, part of Commodity Insights, last assessed the cost of green hydrogen production via alkaline electrolysis in Spain, backed by renewable power purchase agreements, at Eur7.12/kg ($7.70/kg) on June 12, up from Eur5.60/kg a month before.

The assessment reflects one possible pathway for producing EU Renewable Energy Directive-compliant green hydrogen. The fixed premium subsidy helps bridge some of the price gap between production costs and the market price for renewable hydrogen, over 10-year contracts.

The first auction cleared below expectations and well below the ceiling price of Eur4.50/kg. EC data showed bid prices ramping up steadily, with over 2 million mt more green hydrogen over 10 years bid at below Eur1/kg. The vast majority of bids came in below Eur2.50/kg.

The EC has indicated it plans to lower the price ceiling to Eur3.50/kg and reduced the time frame for project startup to three years following subsidy grant, according to draft terms and conditions published by the EC on April 30.

The commission is also proposing a budget flexibility rule for an additional 20% of the total budget, based on the pipeline of projects received.

Hydrogen Europe said the EC should keep a five-year commissioning period from the first auction and should become “more flexible on aid cumulation to speed up the decarbonization of the economy.”

Analysts at Commodity Insights noted that projects that bid under the first round on average had a commissioning time of 2.9 years, showing a commitment from developers to commission. Support at the same level from the first round in the second auction would fund 2.5 GW of electrolysis over 10 years, they said.

The budget for the second auction comes from the EU Innovation Fund’s 2024 budget, accounting for 25% of expenditure, Hydrogen Europe said.

The remainder is going to batteries (Eur1 billion) and conventional grants (Eur2.6 billion), which also support hydrogen projects, it said.

We remind, 24% of the world's ethylene production capacity is under threat of closure, Wood Mackenzie analysts came to this conclusion. According to their assessment, 114 of the 330 operating pyrolysis plants are at risk. This is equivalent to a capacity of 55 million tons per year (with a total capacity of operating plants of almost 225 million tons), the report "Global Threat of Steam Cracker Closure" said.

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Hyosung TNC (Seoul) said that it has partnered with Ambercycle (Los Angeles, California) to become the first manufacturer in South Korea to introduce a textile-to-textile, circular polyester into supply chains, said the company.

The partnership will tap Hyosung’s fiber manufacturing capabilities to support the integration of Ambercycle’s circular polyester material, Cycora, into brand supply chains.

Cycora has the “potential to divert tons of textile waste from landfills and incinerators and reduce the extraction of raw materials used in the production of virgin polyester,” said Chi Hyung Kim, CEO, Hyosung TNC.

We remind, Hyosung Chemical will expand its polyamide (nylon) film production capacity this year with the launch of a second Bruckner extrusion line using LiNear Motors Ultimate (LISIM) technology. LISIM technology reveals such properties in polyamide films as low oxygen permeability, high frost resistance and heat resistance.

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Indian Oil Minister Hardeep Singh Puri has announced that state-run Bharat Petroleum Corp. plans to build a new refinery and the nation is looking at signing more oil import deals with countries (including Russia) at discounted rates, said Hydrocarbonprocessing.

Puri, who took charge of the ministry for a second time on Tuesday, said Prime Minister Narendra Modi wants to provide energy at affordable rates to customers to cushion them from the volatile oil markets. India, the world's third biggest oil importer and consumer, has emerged as the biggest buyer of Russian sea-borne oil, snapping up barrels sold at a discount as Western companies halted purchases after Moscow's invasion of Ukraine in 2022.

"We are a longstanding partner of Russian federation. We have had discussion with the Russians on long-term deals," Puri said. "I am confident that both our private and public sector players will sign long-term deals with countries where they see benefit in doing so," he said when asked if Indian state-run companies are looking at signing such deals with Russia.

While private refiners Reliance Industries and Nayara Energy have signed an annual import deal with Russia, state refiner Indian Oil Corp. has not yet renewed its deal.

Nayara Energy, majority owned by Russian entities, has also signed an annual crude supply deal with a trader to buy about 8 MMbbl-10 MMbbl each month at a discount of USD3/bbl to USD3.50/bbl linked to the Dubai marker in 2024.

Indian state refiners BPCL and Hindustan Petroleum Corp. are also looking at signing term deals with Russia. Puri said the location and capacity of a new refinery planned by BPCL have not yet been finalized.

He said India wants to raise its oil output, which has been stagnant for years. State-run Oil and Natural Gas Corp. has floated a tender seeking technical tie-ups with global oil majors to boost output from its western offshore Mumbai High Field, he said.

Output from the Mumbai High Field has been declining since 2018. Having hit a peak of 471,000 bpd in 1984-85, it produced an average 134,000 bpd in the fiscal year to March 2024.

Demand for petrochemical products in India will grow by 8% in 2024, outpacing the country's economic growth rate of 6-7.1% per year from 2024 to 2026. However, despite strong demand, Indian companies are experiencing margin pressure due to low prices for basic chemical products in bulk. It is expected that there will be even more problems due to the coming oversupply of capacity, and therefore supply in the market.

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U.S. oil refiners and West Coast traders are flagging concerns about the quality of crude shipped on the newly completed Trans Mountain pipeline expansion (TMX), warning that high vapor pressure and acidity limits could deter purchases of Canadian heavy barrels, said Hydrocarbonprocessing.

The $24.84-B (C$34 B) expansion started operations last month and has nearly tripled shipping capacity to Canada's Pacific Coast to 890,000 bpd. The roughly 2.5-MMbpd U.S. West Coast refining market is expected to be a major outlet for Canadian heavy oil shipped via Trans Mountain, but questions over crude quality could dampen demand for the barrels. That could weigh on prices or push more oil onto rival Canadian export pipelines with lower vapor pressure and acidity limits.

Several West Coast refiners have raised concerns in recent weeks about the initial volumes' high sulfur content, acidity and vapor pressure, conditions that could damage refining equipment or increase air pollution, according to regulatory complaints and three people familiar with the matter, though thus far it has not affected demand.

The Trans Mountain pipeline historically has had higher vapor pressure limits than other export pipelines because it shipped refined products as well as crude oil. Although the expanded line mainly ships heavy crude, it carried over the same limits.

Ten companies and industry associations including Canadian Natural Resources Ltd., U.S. oil major Chevron and refiner Valero Energy have written to the Canada Energy Regulator (CER) to complain about high vapor pressure limits and have asked for the pipeline's technical specifications to be narrowed.

Trans Mountain said its current vapor pressure and acidity specifications were developed though a shipper consultation process and have been in place since March 2023.

"Prior to the filing of the current complaint, Trans Mountain was aware of newly raised shipper concerns and had engaged in an updated consultation process with shippers which is ongoing," the company told Reuters in an email.

Vapor pressure limits, which measure the volatility of crude, are "wholly inappropriate" for West Coast refining markets, Valero wrote to the CER last month. It and other West Coast refiners are expected to be top buyers of TMX barrels.

Chevron separately told the CER the vapor pressure limit exceeds the regulatory limit set for storage tanks at both its California refineries. High pressures cause more vapors to leak from tanks into the atmosphere.

The higher vapor limit also means more lower-value light oil could be blended into Trans Mountain crude, reducing its value, wrote oil producer Canadian Natural, a major shipper on the pipeline. The TMX crudes are more acidic, Chevron wrote, a trait that can corrode processing equipment and cause damage.

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Sika AG announced the opening of a new plant in Liaoning province, China. The new plant will produce mortars, tile adhesives and waterproofing solutions, said the company.

The new facility also provides office spaces, laboratories, warehousing and logistics. The plant will produce a range of mortar products that incorporate up to 20% recycled raw materials during the manufacturing process, such as waste dust and mineral waste residues. In addition, Sika has launched an initiative to transition from natural to alternative sands.

In 2023, Sika in China had already reached a 13% alternative sand ratio in its mortar production, with half of the plants contributing to this initiative. Sika in China plans to replace 50% of its overall sand consumption with alternative options by 2028, it added.

The company said that the new plant will cater to customers in three provinces in northeastern China, with a population of more than 98 million, as well as in east-central Mongolia. Currently, Sika has 34 manufacturing sites in China.

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