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Spinning Gold from Low-carbon Commodities

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Spinning Gold from Low-carbon Commodities

Roll-over Rumplestiltskin: In this comprehensive article by Robin Duquette and Charlie Gascon, the value of low-carbon commodities is explored. 

Executive summary

Low-carbon commodities closely mirror fixed-income securities as each commodity has its unique characteristics, and liquidity is not always readily available to facilitate trading. With producers globally developing infrastructure with technology pathways favoring local market conditions with varying prices and “greenness” levels, low-carbon commodities offer lucrative opportunities and frauds, which are anticipated to influence trading patterns for years to come. Through the lens of hydrogen, this article presents specific commercial opportunities and market arbitrages arising from those, discusses challenges in monetizing them, and proposes a solution for producers to become the first movers in seizing them.

Clean hydrogen is pivotal in facilitating the transition of the industrial complex toward achieving its climate objectives. While much attention is given to its utility as a clean transportation fuel or to address renewable energy intermittency, its most significant current impact lies in its role as an industrial feedstock. We can produce greener materials and chemical compounds or indirectly through derivatives like ammonia and methanol. These intermediary products offer the added benefit of being easier to transport and store, enhancing their utility in various applications. Furthermore, clean hydrogen offers a transformative pathway for decarbonizing industrial processes like cement and steel production.

As part of the overarching shift toward net-zero solutions, global industries are exploring hydrogen through diverse technology pathways that leverage the value of local market conditions to price their products competitively:

Brazil: Abiclor plans to commercialize hydrogen derived from chlorine-alkali production

India: Reliance Industries intends to produce hydrogen through biomass gasification

USA: Air Product aims to establish a hydrogen hub using steam methane reforming and carbon capture technologies

China: Sinochem opened the world’s largest clean coal-to-hydrogen project

Saudi: NEOM is building a hydrogen facility powered by 4GW solar energy

 

Key points include:

  • Advancing growth and trustworthiness in exchanges
  • Building trust to unlock new markets
  • Global market arbitrage

 

Read the full article, Finding Gold in Low-Carbon Commodities, on Medium.