“ It ’ s going to be important for there to be a traded market so that we start to get proper price discovery to ultimately get the right investment decisions ”
Traders await hydrogen boom
With hydrogen entering the energy scene , opportunities abound for traders to grab a slice of an up-and-coming market
By Karolin Schaps
It ’ s the word on everyone ’ s lips these days when discussing clean energy : hydrogen . The use of the world ’ s most common element as a feedstock in industry is decades old but its game-changing application in transport , heating and energy storage and production has caught the world ’ s attention , from politicians to oil majors .
McKinsey and the Hydrogen Council – a global CEO-led initiative – estimate a globally-traded hydrogen market could be worth USD 2.5 trillion by 2050 , including the sale of hydrogen as a commodity and related equipment . Much of the world ’ s pioneering hydrogen projects and existing industrial networks are in Europe , where the EU executive has set a target for the region to become carbon neutral by mid-century . To help get there , the European Commission in July launched a hydrogen strategy that aims to spur development of the technology and create an open hydrogen market by 2030 .
“ It ’ s going to be important for there to be a traded market so that we start to get proper price discovery to ultimately get the right investment decisions ,” Doug Wood , chairman of the gas committee at the European Federation of Energy Traders ( Efet ), tells Montel . “ There ’ s no reason why we wouldn ’ t see brokers , exchanges and all the traditional means of developing a liquid market , emerging .”
Current hydrogen trading is largely based on bilateral deals between industrial producers and consumers , creating an opaque pricing landscape . Commodity pricing agency S & P Global Platts has started assessing hydrogen prices based on production costs and capital expenditure , but insight into the market value of hydrogen remains weak .
An openly traded hydrogen market would benefit from a dedicated exchange to attract liquidity and offer market access to third parties . Officials in the Netherlands – home to TTF , a world-leading benchmark for natural gas – reckon there can be a hydrogen bourse up and running
Montel Magazine 4 – 2020
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