Trend Reports

Guide to Green Hydrogen in Southeast Asia

Guide to Green Hydrogen in Southeast Asia Key Players and Emerging Opportunities 2024

Hydrogen in SEA Still Led by Grey Hydrogen from Fossil Fuels Though Green Hydrogen is Making Ways

Southeast Asia (SEA) is at a critical juncture in its transition to cleaner energy systems, with hydrogen emerging as a key component of its energy strategy. The region’s current hydrogen landscape is predominantly dominated by grey hydrogen, derived from fossil fuels, which accounts for the bulk of industrial hydrogen use. This includes applications in refining, fertiliser production, and steel manufacturing.

Looking forward, SEA aims to pivot towards cleaner forms of hydrogen, with green hydrogen (produced via electrolysis using renewable energy) seen as the ultimate goal. By 2050, green hydrogen is expected to make up a significant portion of the hydrogen mix, driven by advancements in renewable energy infrastructure and policy frameworks. The region is projected to become a major player in the global hydrogen economy, leveraging its renewable energy potential, particularly in solar, hydropower, and wind, to support large-scale hydrogen production.

SEA’s demand for hydrogen is also forecasted to grow significantly, fuelled by decarbonisation commitments and the expansion of hydrogen applications across transport, power generation, and industrial processes. Strategic partnerships, both regional and international, are vital to overcoming current challenges such as high production costs, underdeveloped infrastructure, and policy gaps.

Green Hydrogen as Catalyst in SEA’s Sustainable Energy Goals

Green hydrogen is poised to play a transformative role in achieving SEA’s decarbonisation targets. Its production through renewable energy sources ensures zero carbon emissions, aligning seamlessly with the region’s sustainability ambitions. Key industrial sectors, including refining, ammonia, and methanol production, are set to benefit from the integration of green hydrogen, replacing carbon-intensive grey hydrogen processes.

Additionally, green hydrogen facilitates the decarbonisation of hard-to-abate sectors such as steel and chemicals and holds potential for exporting to energy-deficient markets like Japan and South Korea. Emerging hydrogen strategies across nations such as Singapore, Indonesia, and Malaysia underscore the region’s commitment to this transition. These plans not only focus on domestic energy needs but also aim to position SEA as a global leader in hydrogen exports, with a focus on derivatives such as green ammonia and e-methanol.

International collaborations and regional cooperation, through platforms like the ASEAN Hydrogen Task Force and initiatives like the ASEAN Action Plan for Energy Cooperation, are critical for scaling the green hydrogen economy. Such partnerships can address challenges related to infrastructure development and financing while aligning SEA’s efforts with global decarbonisation goals.

Key Drivers

SEA is rapidly emerging as a pivotal player in the global green hydrogen economy, leveraging its abundant renewable energy resources, supportive regulatory frameworks, and cross-border collaborations. The region’s unique position offers significant opportunities to develop large-scale green hydrogen projects, driven by its commitment to sustainability and international partnerships. This section explores the key drivers behind SEA’s potential as a hub for green hydrogen innovation, shedding light on the region’s renewable energy availability, regulatory advancements, and collaborative initiatives. [2]

| Renewable Energy Availability

SEA possesses vast renewable energy resources critical to green hydrogen production:

Hydropower in Laos and Malaysia.
Geothermal in Indonesia.
Solar and Wind potential across the region.

These resources position SEA as a hub for renewable-driven hydrogen production, with promising opportunities to integrate these sources into large-scale green hydrogen projects.

| Regulatory Support

Many SEA countries are beginning to adopt hydrogen-specific policies, providing momentum for the industry’s growth. Nations like Singapore, Malaysia, and Indonesia have outlined strategies to incentivise green hydrogen adoption. These include subsidies for renewable energy integration, investment in pilot projects, and partnerships with global stakeholders.

| Cross-Border Collaboration

Regional platforms, such as the ASEAN Hydrogen Task Force, are fostering collaboration among SEA nations to streamline hydrogen development. International partnerships, including Japan’s involvement in SEA’s hydrogen projects, amplify technical expertise, financial investments, and export potential. For instance, projects like Brunei’s hydrogen export to Japan demonstrate the value of such alliances.

Key Challenges

Despite its vast potential, SEA faces several critical challenges in establishing itself as a leader in green hydrogen production. High production costs, infrastructure limitations, and regulatory barriers continue to slow progress, posing significant hurdles to the region’s aspirations. This section delves into these key challenges, examining the economic, structural, and policy-related obstacles that must be addressed to unlock SEA’s green hydrogen potential and foster a competitive hydrogen economy. [3]

| High Production Costs

The production cost of green hydrogen in SEA significantly exceeds that of global competitors such as the US, Middle East, and Australia. While hydrogen production in these regions can fall below USD 2.5 per kg, SEA’s levelized cost of hydrogen (LCOH) is projected to range between USD 3.5 and USD 4.3 per kg by 2030. This disparity arises from a combination of underutilised renewable energy resources and slower economic scalability of green hydrogen infrastructure.

| Infrastructure Gaps

SEA faces critical infrastructure deficiencies, including insufficient electrolysers, carbon capture facilities, and transport mechanisms. These gaps hinder the scaling of hydrogen production and distribution. For example, despite several high-profile project announcements, the pace of infrastructure development remains slow, further delaying the transition to a mature hydrogen economy.

| Policy and Regulatory Barriers

The absence of cohesive regulatory frameworks across SEA countries obstructs the creation of a unified hydrogen market. Divergent policies and limited governmental clarity impede private investment and regional collaboration, both essential for advancing hydrogen as a competitive energy solution.

[3] Source: Agora Energiewende | Arthur D. Little

Opportunities Across the Hydrogen Value Chain in SEA

| Supply Chain Players – Key Players and Contributions

Southeast Asia’s green hydrogen ecosystem features an evolving supply chain, with diverse players contributing to production, storage, transportation, and conversion processes: [4]

Production: National energy companies like Petronas and Pertamina are leading renewable energy integration and hydrogen production initiatives. For example, Petronas plans to produce 1.2 million tonnes of clean hydrogen annually by 2030, while Pertamina targets 7,000 tonnes of clean hydrogen by 2029.
Storage and Transportation: Logistics providers and infrastructure companies play a vital role in transporting hydrogen across SEA. Retrofitting existing LNG facilities for hydrogen is a growing focus.
Conversion and End-Use: Power utilities and industrial users are developing applications for green hydrogen in power generation and industrial processes. Companies like Sembcorp are working to incorporate green hydrogen into their net-zero strategies.

| Leading Industry Players

Several SEA companies are spearheading the green hydrogen transition:

Petronas (Malaysia): Actively collaborating with global partners like ENEOS to export hydrogen to Japan and exploring innovative technologies like methylcyclohexane (MCH) for hydrogen transport.
Pertamina (Indonesia): Partnering with TEPCO to develop hydrogen and ammonia facilities while integrating geothermal and solar energy into its production processes.
PTT Group (Thailand): Leading large-scale hydrogen and green ammonia production through multi-billion-dollar projects with partners like ACWA Power and Siemens Energy.
Sembcorp (Singapore): Engaging in cross-border collaborations to produce and export green hydrogen while aligning with its sustainability goals for 2050.

[4] Source: S & P Global | MiB Media | VIR | PR Newswire | Argus Media | ACWA Power | Columbia Centre on Global Energy Policy | Straits Research | The Observatory of Economic Complexity (OEC)

| Regional and International Collaborations

Collaborations are central to scaling hydrogen production and enabling SEA’s transition to green energy:

Japan-SEA Collaborations: Japan’s role as a significant partner includes projects like the Brunei-Japan Hydrogen Supply Chain and co-firing initiatives in Indonesia, Malaysia, and the Philippines. These partnerships emphasise technology transfer and market access.
ASEAN Hydrogen Task Force: Regional cooperation is facilitated through initiatives like the ASEAN Action Plan for Energy Cooperation, which coordinates hydrogen strategies among member countries.
Global Alliances: Partnerships with multinational companies such as Siemens, ENEOS, and ACWA Power bring technological expertise and funding to SEA hydrogen projects.

| Notable Projects

Sarawak H2biscus Project (Malaysia): A collaboration involving POSCO and Samsung Engineering aims to produce 200,000 tonnes of green hydrogen by 2027, primarily for export to South Korea.
Linde’s Electrolyser Plant (Singapore): This facility, set to be the largest in the region, will supply green hydrogen to industries and contribute to Singapore’s decarbonisation goals.
Garuda Hydrogen Hijau (Indonesia): Supported by ACWA Power, this project will produce 150,000 tonnes of green ammonia annually by 2026, leveraging solar and wind energy.

SEA’s hydrogen value chain presents vast opportunities for companies and governments to collaborate in building a sustainable, globally competitive green hydrogen economy. Strategic partnerships, regional synergies, and robust industry leadership are driving SEA’s ambitions to become a global green hydrogen hub.

Leveraging Market Data for Informed Investment

Southeast Asia’s green hydrogen market represents a transformative opportunity for investors and industry stakeholders. With the region’s abundant renewable energy resources, including hydropower, solar, and geothermal energy, SEA is well-positioned to become a pivotal player in the global hydrogen economy. National strategies, coupled with robust partnerships involving global leaders, underscore the region’s commitment to scaling green hydrogen production and addressing critical decarbonisation goals.

| The Potential of SEA’s Green Hydrogen Market

Market projections highlight SEA’s burgeoning demand for clean hydrogen, with its application spanning key sectors such as energy, transport, refining, and heavy industry. By 2050, hydrogen is expected to contribute 3.6% of the region’s final energy consumption, with the market poised for exponential growth, driven by both domestic consumption and export potential to energy-hungry markets like Japan and South Korea.

SEA’s capability to integrate renewable energy into hydrogen production further bolsters its appeal as a competitive and sustainable hub. Coupled with advancements in hydrogen technology and regional policy alignment, the market offers significant prospects for investors seeking long-term returns in clean energy transitions.

| The Role of Market Data in Strategic Decision-Making

Comprehensive insights into market players, supply chains, and partnerships are indispensable for informed investment in the Southeast Asian hydrogen sector. Understanding leading industry participants, such as Petronas, Pertamina, and PTT, helps investors identify reliable partners and assess the viability of proposed projects. Similarly, analyzing the supply chain infrastructure, from electrolysers to transport systems, sheds light on the scalability and readiness of hydrogen projects in the region. Furthermore, examining international collaborations, like Japan’s extensive involvement in SEA hydrogen ventures, offers clarity on external investment flows and the potential for technology transfer.

Investors and consultants equipped with granular data on SEA’s green hydrogen landscape can strategically navigate this complex market. By leveraging such insights, stakeholders can prioritise high-impact opportunities, mitigate risks, and contribute to shaping SEA’s future as a global leader in sustainable energy solutions. The path forward lies in aligning market intelligence with long-term decarbonisation and energy diversification strategies.

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