Hydrogen law, regulations & strategy in Singapore

Singapore has traditionally been one of the key global players in the downstream oil and gas industry and energy sectors. Despite its relatively small size, it was ranked as the world’s fourth-biggest exporter of refined petroleum in 2019. 1 https://www.bloomberg.com/news/articles/2021-07-18/singapore-prepares-to-swap-its-oil-hub-status-for-greener-future

As the world undergoes an energy transition towards net zero, Singapore is implementing its whole-of-nation Green Plan 2030 and aims to become a leading regional hub and enabler of energy transition and development (including carbon trading, green financing, consulting and risk management and other services). 2 Ibid.  In 2016, Singapore ratified the Paris Agreement, committing to tackle climate change through reducing its emissions intensity by 36% below 2005 levels by 2030. 3 https://www.todayonline.com/commentary/hydrogen-more-sustainable-bet-spores-energy-future; https://www.nccs.gov.sg/media/press-release/singapore-s-submission-to-the-united-nations-framework-convention-on-climate-change-(unfccc)

While the hydrogen market is nascent in Singapore, there is a growing expectation that the use of green hydrogen will play a substantial role in enabling Singapore to reduce its carbon footprint and achieve its long-term environmental goals. To achieve this, the Singapore government is actively pursuing hydrogen as one of the emerging low-carbon alternative energy solutions which it is looking into. 4 https://www.ema.gov.sg/ourenergystory; https://govinsider.asia/inclusive-gov/singapore-hydrogen-energy-market-authority-ema-ntu/

Hydrogen as an Alternative Energy Solution

In 2021, the Singapore government, through a multi-ministry effort comprising the National Climate Change Secretariat (“NCCS”), Singapore Economic Development Board (“EDB”) and the Energy Market Authority (“EMA”), commissioned consultancy firm Kellogg Brown & Root Asia Pacific Pte Ltd (“KBR”) to conduct a “Study of Hydrogen Imports and Downstream Applications for Singapore”. 5 https://www.nccs.gov.sg/media/press-release/singapore-looks-to-develop-and-deploy-lc-technological-solution

On 23 June 2021, the ministries released a joint press release on the preliminary findings of the study, which can be summarised as follows: 6 Ibid. See also, https://www.nccs.gov.sg/docs/default-source/news-documents/hc_ccus_press_release_230621.pdf

1. Hydrogen can serve as an energy carrier to store and transport renewable energy and has the potential to diversify Singapore’s fuel mix towards low-carbon options for electricity generation and heavy transportation.
2. Given Singapore’s limited renewable energy resources, it is challenging for Singapore to produce green hydrogen at scale using only domestic green electricity.
3. As such, Singapore would also need to explore various supply pathways for price-competitive low-carbon hydrogen (including importing hydrogen via shipping, piping from neighbouring countries etc.).

The above press release sheds much light on Singapore’s views and approach towards the hydrogen as a potential alternative energy solution in the coming years. To further develop and assess the viability of hydrogen, the Singapore government (including government linked organisations) have partnered up with several multinationals and research institutions on a host of hydrogen projects, some of which are listed in Section 6 below.

Transportation

In April 2021, in a first of its kind initiative, the Royal Dutch Shell company announced that it will be collaborating with the Singapore government on a feasibility study to use hydrogen fuel cells for ships, which involves inter alia the development and installation of a fuel cell power unit on an existing vessel used for the transportation of goods. 7 https://www.shell.com.sg/media/2021-media-releases/shell-to-trial-first-Hydrogen-fuel-cell-for-ships-in-singapore.html

In terms of land transportation, unlike some of its counterparts in Asia (such as China, Japan and South Korea), Singapore is not yet considering hydrogen fuel cell vehicles as a mainstream option. In 2013, Singapore had previously conducted trials on a small fleet of fuel cell and diesel hybrid buses for use in public transportation, but this was not eventually implemented. 8 https://www.google.com/search?q=singapore+fuel+call+buses&oq=singapore+fuel+call+buses&aqs=edge..69i57.3126j0j1&sourceid=chrome&ie=UTF-8 Instead in its 2018 Budget, Singapore placed its emphasis on electric vehicles (including electric buses for public transportation) as an alternative to internal combustion engine (“ICE”) vehicles. 9 https://www.todayonline.com/singapore/mps-concerned-govts-plan-put-all-eggs-electric-vehicle-basket. However, this decision was queried in the February 2020 session in parliament partly because several other countries appear to be favouring hydrogen fuel cell vehicles as one of the preferred alternatives to ICE vehicles. 10 Ibid.

It remains to be seen whether the Singapore government will continue to “put its eggs in one basket” or consider a shift in policy to explore hydrogen fuel cell vehicles as a complement to its push for alternative greener means of transportation.

The hydrogen market in Singapore is still in its infancy and has significant prospects for growth. It is anticipated that the opportunities in the near future will come mainly in the form of pilot projects by the Singapore government / Singapore companies in collaboration with some of the global frontrunners in hydrogen technology or research institutions, as Singapore continues to assess the viability and scalability of hydrogen as a low-carbon alternative energy solution which is capable of fulfilling a significant portion of Singapore’s energy needs. 

Singapore does not currently possess the large-scale facilities for mass hydrogen production, nor the tough, high-pressure, insulated fuel tanks that are required for large scale hydrogen storage. 11 https://www.todayonline.com/commentary/hydrogen-more-sustainable-bet-spores-energy-future. Indeed, the Singapore government has indicated that it will be challenging for Singapore to rely solely on the development of such infrastructure and facilities locally, and therefore Singapore will also actively pursue options for the import of green hydrogen as an alternative. The key driver in this space will continue to be Singapore’s environmental goals under the Green Plan 2030, and the import of hydrogen and the development of associated infrastructure and facilities will lead to growth of the hydrogen economy in the coming years

As the hydrogen market is relatively new and still developing, there has been little M&A or project financing activity to-date in this area in Singapore. Market players continue to observe this area with anticipation as the hydrogen market continues to mature and develop in Singapore. 

Costs and Commercial Viability

One of the key challenges faced in the hydrogen market today (not just in Singapore, but also in Asia and the rest of the world) is the issue of high costs and the creation of a sufficiently large marketplace to achieve economies of scale. While electrolysis using electricity from renewable energy sources is the most environmentally sustainable method of producing hydrogen, it is two to three times as expensive compared to hydrogen produced with natural gas or fossil fuels. 12 Ibid.  Analysts are of the view that Asia needs to quickly find ways to cut hydrogen production costs, draw in investors, and diversify its usage beyond oil refining, fertilisers, and petrochemicals. 13 https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/042020-asia-may-draw-lessons-from-singapores-swift-move-on-hydrogen.

As research and development in hydrogen infrastructure, production, and storage advance (both in Singapore and globally) it is hoped that hydrogen will become more viable in the near future and form part of Singapore’s energy sustainability. For instance, there are several companies globally that are developing the capability to produce ‘Turquoise Hydrogen’ (a mixture of green and blue hydrogen) which produces solid carbon rather than carbon dioxide.

Some market participants in Singapore have indicated that a key part of their strategy to sustain increased hydrogen production is through the use of hydrogen sale contracts. With an increase in long-term stable demand for hydrogen locally, producers anticipate that they will be able to enjoy certain economies of scale in hydrogen production which could eventually lead to reductions in costs. 

Health and Safety

The issue of health and safety has always been a key consideration in the use of hydrogen. Hydrogen is a light gas that is colourless and odourless (even when it burns), and is highly flammable, and its large-scale use has commonly been perceived as risky because of how easy it may leak and ignite in relatively low temperatures. 14 https://www.todayonline.com/commentary/hydrogen-more-sustainable-bet-spores-energy-future  This difficulty is accentuated in Singapore due to its relatively small size, which imposes geographical limitations on where large-scale hydrogen plants and infrastructure can be located.

Notwithstanding, various technological advancements in recent years, which have rendered handling hydrogen safer, its safety and handling risks make it more difficult to transport and handle than methane gas. That said, it is assuring that Singapore has a strong safety track record as regards energy production and storage and often applies an incremental approach to assessment of long-term risk. For instance, the Singapore government will use a series of pilot projects (such as the self-contained power grid on Semakau Island), to assess the safety and sustainability of hydrogen as an energy solution before it is implemented in Singapore on a larger scale.  

Legislative framework

As with many jurisdictions exploring the use of hydrogen as a new and emerging technology, Singapore does not have a well-defined legislative framework which specifically applies to hydrogen (please see more detail below). This gap in legislation may create some degree of legal uncertainty as the hydrogen market develops and matures, which will need to be addressed in due course.

That said, the Singapore government is typically capable of enacting new and appropriate laws within a relatively short time frame when needed, and it is expected that legislative reforms will eventually take place as hydrogen’s role as a low-carbon alternative energy solution becomes increasingly significant in Singapore.  

As highlighted above, Singapore does not have a specific or well-defined legislative framework for hydrogen. As such, there is a need to consider the applicability of existing laws relating to such hazardous gaseous materials in Singapore more generally, as different legislation will apply at the various stages of importation, transport, production, and storage of hydrogen.

Hydrogen is regulated as a flammable material under the Fire Safety Act (Cap. 109A) (“FS Act”) and its subsidiary Fire Safety (Petroleum and Flammable Materials) Regulations (“FS Regulations”) in Singapore. In particular, the FS Act is the key legislation which stipulates that the following activities are licensable in Singapore in respect of hydrogen:

• Storage;
• Import;
• Transportation;
• Dispensation; and 
• Conveyance over Pipelines. 

An importer of hydrogen also needs to be cognisant of the provisions in the Maritime and Port Authority of Singapore Act (Cap 170A) (“MPA Act”) and its subsidiary Maritime and Port Authority of Singapore (Dangerous Goods, Petroleum and Explosives) Regulations 2005 (“MPA Regulations”). Compressed hydrogen is defined as a “First Schedule dangerous good” under the MPA Regulations, and therefore vessels carrying compressed hydrogen are subject to certain restrictions on inter alia, movement, proceeding into certain prescribed areas of a port in Singapore, anchoring, and mooring, as well as discharging and loading of compressed hydrogen. 

Lastly, persons in the business of processing, manufacturing or bulk storage of hydrogen should be aware of the provisions in the Workplace Safety and Health Act (Cap 354A) (“WSH Act”) and its subsidiary Workplace Safety and Health (Major Hazard Installations) Regulations 2017 (“WSH Regulations”). Under the WSH Regulations, hydrogen is named as a “dangerous substance”, and any premises where processing, manufacturing or bulk storage by way of trade or for the purpose of gain is carried on in respect of hydrogen is deemed to be a “major hazard installation”. 

Occupiers of a major hazard installation are required under the WSH Regulations to, amongst others:

• take all measures necessary to reduce the risk of major accidents to as low as is reasonably practicable and to limit the consequences of major accidents;
• keep and maintain a safety case in respect of the major hazard installation, and review, and if necessary, revise the safety case at least once every 5 years;
• comply with registration requirements of the major hazard installation; and
• notify and report any process-related incident to the Commissioner for Workplace Safety and Health.

There is no one specific regulatory body which is specifically responsible for the regulation of hydrogen in Singapore. Instead, the various pieces of legislation mentioned above which apply to hydrogen are each administered by a specific regulatory body as prescribed under such legislation: 

In 2017, Engie SA began building a small, self-contained power grid on Semakau Island (off the southern coast of Singapore) to demonstrate the usefulness of hydrogen gas in converting power from solar panels and wind turbines (which are intermittent by nature) into fuel which can be stored for extended periods of time and can generate electricity as required. 15 https://www.businesstimes.com.sg/energy-commodities/a-tiny-island-off-singapore-may-hold-keys-to-energys-future.  The “Site Acceptance Test” of the hydrogen-based energy storage system in Semakau Island was completed in November 2020. 16 https://engie-eps.com/corporate/engie-eps-hydrogen-technology-records-a-new-achievement-in-singapore/

In March 2020, five Singapore companies (most of which are government-linked) and two Japanese companies entered into a Memorandum of Understanding (“MoU”) to develop ways to utilise hydrogen as a green energy source. The participants are PSA Corporation Limited, Jurong Port Pte Ltd, City Gas Pte Ltd, Sembcorp Industries Ltd, Singapore LNG Corporation Pte Ltd (“SLNG”), Chiyoda Corporation and Mitsubishi Corporation, and involves the research and development of technologies related to the importation, transportation, and storage of hydrogen. 17 https://www.citygas.com.sg/press-release/companies-collaborate-to-explore-hydrogen-as-a-low-carbon-alternative-for-singapore/.

Keppel Data Centres Holding (“Keppel Data”) has been actively looking into hydrogen for use in data centres:

1. In 2019, Keppel Data entered into a consortium with SLNG and the National University of Singapore to develop new energy-efficient cooling technology for data centres. 
2. In June 2020, Keppel Data and Mitsubishi Heavy Industries Asia Pacific signed an MoU to explore the implementation of a hydrogen-powered, tri-generation plant concept for data centres in Singapore. Keppel Data also signed an MoU with Royal Vopak to study the commercial viability of establishing LNG (liquefied natural gas) and hydrogen infrastructure for power and cooling plants, which may form part of the development of a near-shore floating data centre park project. 
3. On 12 May 2021, it was announced that Keppel Data, Linde Gas Singapore Pte Ltd, Kawasaki Keavy Industries Ltd, Mitsui O.S.K Lines Ltd, and Vopak LNG Holding B.V signed an MOU to study the technical and commercial viability of a liquefied hydrogen supply chain, which includes “the feasibility of having a production and liquefaction plant and export terminal at the exporting country, transportation via ocean-going tankers, as well as an import terminal, storage units and regasification facilities in Singapore”. 18 https://www.reuters.com/article/singapore-hydrogen-linde-pu-idUSL1N2MZ0F9

On 17 June 2021, a new alliance was announced between DNV and Keppel Offshore and Marines (“Keppel Offshore”) with an aim to accelerate the adoption of hydrogen as an energy source in Singapore. 19 https://www.dnv.com/news/dnv-and-keppel-offshore-marine-sign-collaboration-agreement-to-develop-hydrogen-projects-in-singapore-202250  The parties intend to work together (with Keppel Offshore providing an R&D Facility where safety studies and pilot activities will be conducted) on the following areas:

1. safety requirements for hydrogen as a fuel source;
2. infrastructure requirements for hydrogen storage and local transportation; and
3. offshore applications for hydrogen technology.

On 15 July 2021, the Ministry of Trade and Industry of Singapore (“MTI”) announced that Singapore and New Zealand signed an agreement regarding cooperation on low-carbon hydrogen. The arrangement between the two countries aims to foster closer cooperation by facilitating opportunities to: 20 https://www.mti.gov.sg/Newsroom/Press-Releases/2021/07/Singapore-and-New-Zealand-Sign-Arrangement-Regarding-Cooperation-on-Low-Carbon-Hydrogen

1. chart standards and certifications and scale up each countries’ respective hydrogen economies;
2. establish supply chains for low-carbon hydrogen and its derivatives;
3. conduct joint research, development, and deployment studies; and
4. strengthen networks and partnerships.