Green hydrogen and green ammonia are fast becoming the energy choice in the transition to fossil fuel free energy system. Investment from Carlyle and GIC says it’s not a pipedream.
Investments by Carlyle and GIC highlight the interest from institutional investors in pushing green ammonia as a solution to hydrogen storage and transportation.
Investments in hydrogen could side track efforts to reduce dependence on fossil fuels, which should occur simultaneously with the development of transition fuels.
Many of the projects announced have ambitious timelines, which should provide an indication of whether hydrogen can first be successfully used as a low-carbon transition fuel, and eventually as true green replacement to coal, oil and gas.
The Carlyle Group and Singapore’s sovereign wealth fund, GIC, are betting on the green hydrogen market by investing in Eneus Energy’s 14GW project pipeline in green ammonia. For green hydrogen to be a fossil fuel alternative it needs renewable power infrastructure to scale near the end use location or an effective means of storage and transportation.
According to Carlyle, Eneus is amongst a small cohort of first movers for industrial scale production plants in a global market for green ammonia and/or green hydrogen that is forecast to grow strongly to 2050, as the world’s leading nations execute their net zero carbon strategies. The investment group says that green ammonia is a zero-carbon fuel in its own right, as well as an important, cost-effective storage and transport energy vector for green hydrogen.
Hydrogen projects have been gaining funding and approval at a rapid rate, after featuring heavily at COP 26, with grey and blue hydrogen (where hydrogen is generated by reforming natural gas and where it is generated through reforming but emissions are captured respectively) seen as valid transition stages to green hydrogen.
Deal rationale
As the sovereign wealth fund of Singapore, GIC is focused on investments that are strategically relevant in the region. The best uses cases for green hydrogen are in hard-to-abate industries, which dominate in the Asia Pacific region. Such investments will play a part in Singapore’s focus on the importance of transition finance.
For Carlyle, this leverages over 15 years of investment in infrastructure and energy across all forms, and the investment follows the establishment of its new energy transition focused investment platform.
Chris Bronsdon, CEO of Eneus Energy, said: “Eneus is on a mission to support the development of the green hydrogen economy. Green ammonia can be used as a low-cost storage and transportation vector for the supply of green hydrogen and can also be supplied into direct-use markets, for example the shipping and fertilizer industries. The potential global market demand for green ammonia is huge as decarbonization strategies are being implemented to reduce the emission of greenhouse gases from fossil fuels.”
Hydrogen hype has achieved lift-off
Replacing fossil fuels with green hydrogen, even in the most suitable use cases, is probably going to take well into the middle of the century, and substantial investment. The Breakthrough Agenda at COP26 endorsed by 42 countries includes a hydrogen breakthrough goal, aiming to ensure affordable low-carbon hydrogen globally by 2030.
Green hydrogen has been touted by proponents as a viable alternative to fossil fuels for use-cases in hard to abate industries (like steel and heavy transport), where high energy density molecules are needed. Green hydrogen requires electricity generated entirely from renewable sources to scale near the point of use or it would need to be transported, which is where ammonia comes into play as a transport medium. Ports have been suggested as a good place to locate hydrogen valleys.
Green hydrogen investments on the rise
In 2021, 10 countries had developed hydrogen development strategies, with nine more in development. Activity was predominantly in the US, China, South Korea and Europe, with the UK announcing its own hydrogen plans in 2021.
Latin America is getting in on the act, as Brazil is planning its first hydrogen plant, and the world’s largest integrated green hydrogen and ammonia plant at a cost of $120 million. It’s expected to be in operation by 2023, with a planned fourfold expansion in capacity by 2025. Meanwhile Uruguay’s Green Hydrogen Roadmap, announced in July 2022, shows its ambitious decarbonisation goals, with domestic market of around $300 million forecast for green ammonia by 2040, and export opportunities of up to $220 million for green ammonia.
