The intricate nuances that challenge Singapore’s hydrogen strategy

Image Credit: Garry Killian | Freepik

Policy support and research are making Singapore’s hydrogen projects easier to implement, but financiers must cut through the fluff with due diligence on which initiatives to invest in.

Sustainable development consultancy Asia Research and Engagement (ARE) addressed a report to the Singapore government in August 2023, highlighting cost and credibility risks for its current national strategy. The main issue they underscored was the unclear definition of “low-carbon” hydrogen, which includes both renewable energy derivative “green” hydrogen and hydrocarbon-based “blue” hydrogen.

Blue Hydrogen

Hydrocarbon resources are simply fossil fuels given a different name. This means that blue hydrogen might muddle the supply chain but nevertheless sustain the usage of fossil fuels. This would conflict with the current recommended net-zero approaches.

Before cleaner versions of the fuel take over, blue hydrogen may be utilized as a temporary solution to develop supply networks and demand centers. However, they must be acknowledged for what they are—transitional arrangements.

Even though blue hydrogen is now produced at a cost that is several times lower than historical rates, when the price of green hydrogen declines, fossil-based hydrogen infrastructure may someday turn into a liability. In fact, a Deloitte report has predicted that green hydrogen prices may be priced on par with its polluting counterparts by 2035.

ARE advised investors to consider the source of the hydrogen and supply chain emissions and if carbon offsets are employed in calculations when doing risk analysis.

Cost Risk

In industries where decarbonatization solutions are scarce, like aviation, oil refinery and semiconductor production, hydrogen may still be the better solution.

There are alternatives like liquefied natural gas, ammonia, and methanol, which Singapore is already exploring in its maritime industry. However, given the geopolitical resilience that the country would benefit from in employing diverse energy sources, hydrogen still plays a huge role.

Singapore’s sovereign wealth fund GIC and green hydrogen fund Hy24 have correspondingly understood the importance of resource diversity for long-term gain and security, investing $115 million into Singapore-native green project developer InterContinental Energy. This shall bolster the strategic development of large-scale green hydrogen plants in Australia and the Middle East.

National endorsement for a partial switch to green hydrogen energy would of course be favorable in creating market feasibility and research interest. Reassuringly, joint interest is seen as Equinix and the National University of Singapore complete a study investigating the viability of hydrogen as a sustainable electricity source for data centers.

In line with that, the Singapore government recognizes the uncertainties each energy source poses and the flexibility that must remain apparent with the hydrogen strategy in order to keep up with evolving technologies and research.

Much of the private sector may operate with vague provisions mirrored by vague public regulations. Therefore, at present, the goal is to pioneer and popularize green energy manufacturing methods that forgo fossil-based materials and filter out byproducts of greenhouse gases.

Budget incentives and international collaborations are continually expanding to accommodate hydrogen innovation, so understanding the nuances and challenges of these promising infrastructures and processes shall promote the success of companies that support Singapore’s import and export of low-carbon solutions.

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