EMA to study laws, policies for S’pore to adopt low-carbon hydrogen when it becomes viable

Singapore is laying the groundwork to tap low-carbon hydrogen as a cleaner fuel source more quickly when it becomes viable.

The Energy Market Authority (EMA) on Aug 6 called for a study to develop a framework of laws and policies, which could cover areas such as hydrogen imports, the ownership and operation of hydrogen infrastructure, as well as incentive and financing schemes.

“The consultancy study aims to pave the way for our potential adoption of hydrogen, by providing inputs to future policy, legislation and regulatory development in this area,” EMA told The Straits Times.

Currently, the use of hydrogen – considered a more climate-friendly fuel than fossil fuels – is still in the research and testing phase here.

Low-carbon hydrogen could supply up to 50 per cent of Singapore’s power needs by 2050, depending on technological advancements and the development of other energy sources. The Republic currently relies on natural gas for around 95 per cent of its electricity generation.

By 2030, there will be at least nine hydrogen-compatible power plants in Singapore.

However, experts and industry players told ST that while hydrogen-ready infrastructure is being developed, there are still barriers to the fuel’s adoption, with cost the key one.

Currently, the cost of green hydrogen is three to five times higher than that of natural gas. 

A spokesman for the Hydrogen and Fuel Cell Association of Singapore (HFCAS) said achieving cost parity between imported natural gas and green hydrogen by 2030 will require “substantial reductions” in the costs of green hydrogen production, storage and transportation.  

In the meantime, government subsidies and policy support will play a crucial role in this transition, the spokesman noted.

Aside from subsidies, a combination of measures will likely be needed, said Mr Are Kaspersen, associate partner at global management consultancy Bain & Company. These include a requirement to switch to lower-carbon fuels for power production, and to support infrastructure development to reduce barriers and upfront costs.

Hydrogen can be considered a clean fuel as it does not produce any planet-warming carbon dioxide (CO2) when burned. But in order to be considered low-carbon, the fuel must be produced in a way that does not emit any CO2 – for example, by using solar energy. 

“While hydrogen technology for power generation remains nascent and the economics of low-carbon hydrogen is estimated to be commercially challenging today, hydrogen is expected to play an increasingly important role in Singapore’s transition to a low-carbon economy as technologies continue to advance, supply chains scale, and costs decrease,” said EMA in a tender document seen by ST.

Dr David Broadstock, energy transition research lead at the National University of Singapore’s Sustainable and Green Finance Institute, said Singapore would have to rely on hydrogen imports, given its space limitations, and therefore would benefit from a more developed global supply chain, which could help to drive prices down.

EMA has not yet announced any import deals or provided a timeline on when this is likely to begin.

But the Government has been investing in advancing the technology readiness of hydrogen, for instance through the Direct Hydrogen Programme, which has awarded about $43 million to six projects that can help make hydrogen technologies more viable and scalable. 

It is also working closely with industry partners for a pilot project on Jurong Island that will use ammonia – a hydrogen carrier – for power generation and bunkering.

Findings from the Jurong Island project will also be taken into consideration in the development of hydrogen-related policies or legislation, EMA said.

The consultant appointed for the Aug 6 tender could recommend policies to support importing hydrogen, while making sure the sources are diversified to ensure reliability.

It could also propose policies to enable the early adoption of hydrogen for power generation, such as through the private development and ownership of hydrogen infrastructure.

The consultant should also suggest the extent to which the Government should own and operate infrastructure to import and distribute hydrogen, taking into consideration the need to ensure energy security, the reliability of power generation, and the efficient use of land.

Recommendations should also be made on low-carbon hydrogen mandates, incentives, financing and support schemes that would drive the adoption of the fuel for the power sector.

Mr Melvin Chen, Wood MacKenzie’s head of power and renewables consulting for the Asia-Pacific, said the tender is a step in the right direction.

However, the cost challenge of green hydrogen is still not yet addressed, he noted.

He said that the US, European Union, Japan and South Korean governments have subsidy schemes in place to help accelerate adoption of the expensive clean fuel. 

In December 2023, the US government announced a hydrogen tax credit scheme that would give companies a tax credit ranging from 60 US cents (80 Singapore cents) to US$3 per kg of hydrogen produced, depending on the level of greenhouse gas emissions from the production process, and the amount of fossil fuels used.

In South Korea and Japan, a “contract for difference” policy is in place, where the governments cover the difference between the production cost of green hydrogen and the market price, to ensure a stable revenue stream for producers, said the HFCAS spokesman.

Singapore-based PacificLight is building two power generation units that can burn up to 75 per cent hydrogen once the turbines are operational by the second quarter of 2025.

Its spokeswoman said the firm is “technically ready and prepared” to transition to hydrogen. She noted, however, that the cost of producing green hydrogen remains high and infrastructure to support large-scale adoption still needs to be developed.

EMA subsidiary Meranti Power has a hydrogen-ready power plant that will also be operational from June 2025. A spokesman said it will be using natural gas as a primary fuel until a supply network for hydrogen is commercially viable.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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