Syngas – A Synthetic Fuel Gas
The Global Syngas Market was valued at 215.179 GW in 2020 and will increase to 398.307 GW by 2027. Over the forecast period, this market is estimated to increase at a compound yearly growth rate of 9.19%.
Synthetic Gas, simply Syngas, is a gaseous mixture that primarily comprises carbon monoxide, hydrogen, and minute proportions of carbon dioxide, methane, and other hydrocarbons. Syngas is predominantly being used to generate electricity and us a by-product of gasification. Gasification of coal emissions, steam reforming of coke, and waste emissions are few other instances of syngas generation. Syngas gets its name from its use as an intermediary in the production of synthetic natural gas and ammonia or methanol. Syngas can also be used to make other chemicals. Syngas is also a step in the production of synthetic petroleum, which can be used as a lubricant or fuel. The rising demand for power and fuel is expected to add impetus to the market. The Synthetic Gas market is segmented by feedstock, technology, type of gasifier, application, and geographical region.
According to the Analysts, the demand for Syngas is expected to increase in Chemical Industry predominantly during the projected period.
Syngas plays a vital role in the production of Compressed Natural Gas, Syntenic Natural Gases, and Liquefied Natural Gases. These gases are further extensively utilized in marine, rail, and road transportation. The rapid penetration of automobiles and electric vehicles is further expected to boost the market. For instance, according to US Energy Information Administration, in 2020 United States consumed over 30.5 trillion cubic feet of natural gas. Moreover, according to the NITI Aayog'e energy policy report, the demand for energy is anticipated to double by the year 2040, while the electricity demand is expected to triple owing to the increased penetration of electric appliances and automobiles. The report further estimates that due to the increase in EVs, the demand for electricity is expected to increase up to 640 TWh by 2030.
Furthermore, the increasing number of Hydrogen projects globally is expected to augment the market growth further. For instance, in January 2022, Reliance Industries Limited signed an MoU (Memorandum of Understanding) with the Government of Gujarat in India. The company invested about Rs 5,955 lakh crores as a part of Vibrant Gujarat Summit 2022's Investment Promotion Activity. The investment will be spanned over the upcoming 10-15 years, wherein a 100 GW Renewable Energy plant will be set up along with the development of the Green Hydrogen Eco-system. While in September 2021, BP Australia partnered up with Macquarie Group to undertake a study on the feasibility of green hydrogen production at its Kwinana site. This project reflects BP's future plans of repurposing the Kwinana plant as an integrated site that could generate and supply renewable fuel for the future. Further, in April 2022, BP received US$ 52 million from the Western Australian government to fund its Green Hydrogen Hub. This facility will be incorporated with at least a 75 MW electrolyzer, compression, hydrogen storage, and truck loading facilities. The firm's existing on-plant hydrogen pipeline will also undergo upgrades for further optimization.
At the same time, growing investments in refineries are expected further boost the demand for global Syngas. For instance, in March 2020, Aramco JV announced its investment plans and developed a major integrated petrochemical and refinery complex in China. This Greenfield Project is said to have about 300,000 bdp of refinery capacity and petrochemical units. This complex is a joint venture of North Huajin Chemical Industries Group Corporation, Panjin Xincheng Industrial Group, and Aramco under the name Huajin Aramco Petrochemical Company and is set to commence its operation in 2024.
Nevertheless, several factors, like high investments, the requirement for the installation of sophisticated equipment, the long duration of time taken to set up facilities, and the need for geographical regions with adequate feedstock accessibility are expected to serve as constraints for the market growth and act as a high barrier for new entrants.
During the forecast period, the syngas market in the Asia Pacific region is expected to have a dominant share.
Based on geography, the Global Syngas market is segmented into five regions: North America, South America, Europe, the Middle East, and Africa, and the Asia Pacific. With the increasing demand for refineries and chemical industry in the regions and the consumption of Syngas associated with it is expected to drive the market onward in the Asia Pacific region, with India and China being the main players. The increasing oil consumption in the region could be one of the growth factors, as the increase in demand for oil is also expected to boost the demand for fuel in oil refining. China, India, and Japan rank top five in the global oil consumption globally, according to International Energy Agency (IEA). While, China is touted as a powerhouse for chemical processing and producer of a wide range of chemicals. According to the European Chemical Industry Council, of the €1,547 billion global chemicals sales generated in 2020, China emerged as the largest chemical producer globally, contributing about 44.6% of sales. Furthermore, according to statistics presented by World in Data, 70% of electricity is produced by fossil fuels, while about 30% was produced from renewables in Australia in 2021.
Furthermore, the increasing number of investments in refineries in the regions is another factor impacting the growth, as cited above. The aforementioned factors are adding impetus to the growth of the syngas market in the region. Following the Asia Pacific are North America and Europe.
COVID-19's impact on Global Syngas Market is negative. The end-users of Syngas are predominantly being used in the chemical industry. The outbreak of the pandemic and mandated lockdown have led to the closure of many chemical factories, either partially or completely. The increased infection rates had further affected the staffing in the industries, thereby reducing productivity. Subsequently, a number of projects were also put on hold and were postponed to a later time. The disruptions in demand and supply chains and volatile prices had negatively affected the market. The Oil and Gas industry, for instance, had taken a huge toll due to the pandemic. Additionally, according to CEFIC, the chemical sales in the US went down by 6.4% in 2020 compared to the former year. Consequently, due to the reason mentioned above year, 2020 saw a decrease in demand for Syngas. Nevertheless, with the economy's recovery and initiatives taken by several governments towards sustainable development, the industry is expected to recover and grow in upcoming years.
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