Through its bold and proactive infrastructure investments, forward-looking policy measures and leadership in setting up of standards, the country can become a hub for the fuel of the future.
By Sharad Somani, Partner, Head of Infrastructure Advisory, KPMG in Singapore
The confluence of recent developments – geopolitical, economic and environmental – has put energy transition at an inflection point. The sudden rebound in energy demand and the Russian-Ukraine conflict have led to an increasing volatility of energy prices, and concerns relating to energy security. The broader decarbonisation agenda is currently under threat of being relegated to the back burner as countries return to the activation of fossil fuel plants and reconsider their net-zero climate pledges amid economic tensions. In the short term, what stands as reality is these economic and security considerations could triumph longer-term climate objectives.
Singapore has remained steadfast in its climate goals in the face of these developments and is focusing on power sector decarbonisation given the sector’s significant contribution to its overall carbon emissions. The Energy Market Authority recently published its Energy 2050 Committee report, laying down three possible net-zero pathways for the sector. One of the probable pathways stated envisages low-carbon hydrogen becoming the main energy source by 2050, accounting for up to 60 per cent of Singapore’s energy supply mix. Singapore’s Deputy Prime Minister Heng Swee Keat has also just announced that the country will establish an ESG Impact Hub to strengthen collaboration and fuel the fast-growing sustainability ecosystem.
These are all steps in the right direction and afford opportunities for Singapore to bring alternative fuels to the mainstream. Given the importance of green hydrogen as a possible zero-carbon solution, we have an opportunity to take regional leadership in this space. The use of hydrogen as an energy and storage alternative is being researched even as related technologies are evolving. While it is anybody’s guess when the large-scale use of green hydrogen can become commercially viable, there is little dispute that it remains the most suitable alternative to replace fossil fuels in the medium- to long-term. Multiple pilot projects initiated by governments, multilateral agencies and the private sector are already laying the foundation for potential technological disruption.
This opens a huge opportunity for Singapore to make early investments into developing the needed infrastructure and capabilities and position itself as a regional green hydrogen hub. To meet that goal, Singapore should look to: (1) develop itself into an import and export hub for low-carbon hydrogen; (2) lead regional efforts in hydrogen standards; and (3) distinguish itself as a living lab for green hydrogen solutions.
Strategic import and export hub for green hydrogen
Singapore has made strong efforts towards adopting renewables, such as solar, into its energy mix. But its land constraints mean that large-scale renewable energy projects will not be feasible long-term, making it challenging to produce green hydrogen at scale domestically. While the envisaged green energy import from neighbouring countries can be critical in decarbonising our grid, it may not be able to sustain green hydrogen production in Singapore.
Singapore can, however, leverage its strategic geographical position and established logistics hub status to become a storage, trading and transportation hub for low-carbon hydrogen. This will require large-scale hydrogen infrastructure to be set up here akin to what we have done for Liquefied Natural Gas (LNG) by way of setting up of a Singapore LNG terminal. We could leverage our expertise and capabilities in bringing together various partners of an ecosystem towards a common goal, as well as the role it plays in the region’s energy ecosystem connecting logistics, pipelines, and grid infrastructure.
Leading regional cooperation and alliances to uplift hydrogen standards
Furthermore, Singapore can play a leadership role in shaping hydrogen standards and certifications for an efficient market across the Asia Pacific. Currently, there are no established global or regional technical and regulatory frameworks to facilitate the large-scale adoption of hydrogen or its trade. Transporting hydrogen also comes with safety and risk issues, given its highly flammable molecules can leak, its large volume at room temperatures and its high-pressure requirements during transport.
As hydrogen technology matures and begins to penetrate economies, new standards will also have to be put in place to ensure the safety considerations and viability associated with it. Singapore can fill this gap by leading regional cooperation in this area, which will be critical in ensuring that standards develop in parallel with technological developments. Singapore has already inked a cooperation arrangement with New Zealand last year which includes a commitment to chart hydrogen standards. With the ESG Impact Hub to be established, the government can work closely with private sector experts to drive developments for global climate targets set for 2050. This can include creating more regional alliances on hydrogen to pave a clear, comprehensive and cross-border way for hydrogen industries to take off.
A living lab for breakthrough hydrogen solutions
At present, more than 90 per cent of the world's hydrogen is ‘grey hydrogen’, which emits significant carbon. As countries look to 2050, there will be common threads in the problems they face in reaching a low-carbon future. Some countries may first rely on blue hydrogen, where carbon is captured and stored, before making the transition to green. The demand for sustainable energy solutions is bound to grow and Singapore is in the best position to act as a testbed for emerging innovations.
Singapore already has strong advantages as a testbed for innovations, including its unique dense urban grid and its strong R&D ecosystem. The Government has invested S$55 million to support 12 research projects on low-carbon energy solutions. Partnerships with the government or private sector players to commercialise innovations can offer a pipeline to take ideas to market quickly. Collaborations with multilateral agencies can also connect regional blocks to innovate or commercialise green hydrogen or related technologies and infrastructure more effectively. Essentially, the aim is to have greater resources invested regionally, with pilot projects and sandbox trials taking place more vigorously so that developments can be fast-tracked across countries.
Indeed, current conditions are ripe to make a green future a reality and Singapore is well positioned to take decisive steps towards this. Hydrogen is clearly the most promising energy source for the next generation and can help us chart our net-zero journey effectively. Singapore, through its bold and proactive infrastructure investments, forward-looking policy measures and leadership in setting up of standards, can become a hub for the fuel of the future.
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