EMA looking at helping S’pore adopt use of low-carbon hydrogen when it becomes viable

SINGAPORE - A study is being conducted to help Singapore adopt the use of low-carbon hydrogen more quickly, when it eventually becomes viable, the Energy Market Authority (EMA) told The Straits Times.

Low-carbon hydrogen, a more climate-friendly fuel compared with natural gas, 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.

Singapore currently relies on around 95 per cent natural gas for electricity generation. 

To lay the groundwork for the adoption of low-carbon hydrogen in an efficient and cost-effective way, EMA is hiring a consultant to identify a range of policies – from the ownership and operation of hydrogen infrastructure, to incentive and financing schemes – that need to be in place, ST has learnt.

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 impediments to its adoption, with cost being the key barrier.

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

Singapore-based PacificLight is “technically ready and prepared” to transition to hydrogen, said its spokeswoman. It 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.

“However, currently the costs of producing green hydrogen remain high and the necessary infrastructure to support large-scale adoption still needs to be developed,” the spokeswoman added.

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

A spokesman for the Hydrogen and Fuel Cell Association of Singapore (HFCAS) noted that 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, noted the spokesman.

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 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, if it is produced 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 National University of Singapore’s Sustainable and Green Finance Institute, noted that Singapore would have to rely on hydrogen imports given its space limitations, and would therefore benefit from a more developed global supply chain, which could in turn help to drive prices down.

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

But the Government has been investing in advancing the technology readiness of hydrogen, through the Direct Hydrogen Programme, for example, which has awarded about $43 million to some 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, which 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, among other things, could recommend policies that cater to the procurement of hydrogen imports while ensuring diversification of import sources to ensure energy reliability.

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

This can then be managed and integrated into the overall hydrogen ecosystem when adoption rates scale up, according to the tender document.  

The consultant should also provide recommendations on the extent to which the Government should own and operate the low-carbon hydrogen import and distribution infrastructure, while taking into consideration the need to ensure energy security, power generation reliability, and the efficient and effective use of land and infrastructure. 

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, said the tender.

Mr Melvin Chen, Wood MacKenzie’s head of power and renewables consulting for APAC, noted that the tender indicates a step in the right direction.

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

He noted that the US, European Union, Japan and South Korean governments have similar 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 to US$3 per kg (80 Singapore cents to S$4) 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.

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