Many oil majors and several governments around the world are betting big on the future of green hydrogen, viewing it as a major new replacement for fossil fuels. Numerous European countries, as well as international energy firms, have already invested heavily in the development of green hydrogen projects, with more looking to follow over the next decade as an energy shift takes place.
Energy firms around the globe have been producing hydrogen to use as fuel for years but have often avoided eco-friendly green hydrogen projects due to the high costs involved. As opposed to blue or grey hydrogen, which is produced from natural gas, green hydrogen relies on using renewable energy to split water into hydrogen and oxygen. At present, the technology required for this process is much more expensive than the costs involved with other types of energy production.
However, following the COP26 climate summit, as governments worldwide put pressure on energy firms to develop their renewable energy capacities, green hydrogen is looking increasingly attractive. And experts believe that developing more large-scale green hydrogen projects will lead to more innovations in technology, helping to reduce costs.
This month, BP announced the purchase of a 40.5 percent stake in the Asian Renewable Energy Hub, a major renewable energy and green hydrogen project to be developed in Australia over 6000km2. BP plans to be the project operator, stating that it has “the potential to be one of the largest renewables and green hydrogen hubs in the world.”
Once up and running, the project is expected to produce 26 GW of combined solar and wind power. The energy output will provide power in the Pilbara region of Western Australia and deliver hydrogen and ammonia for national use as well as export. The development will eventually have an output of around 1.6 million tonnes of green hydrogen annually. This investment will contribute to BP’s aim of becoming carbon-neutral by 2050.
TotalEnergies has also announced an investment in Indian renewable specialist Adani Enterprises Limited (AEL) to acquire a 25 percent interest in Adani New Industries Limited (ANIL). Total aims to develop its green hydrogen capabilities in the region. In 2021, the Indian government launched a green hydrogen strategy, which aims to develop the renewable energy source as successfully as it has done with solar power over the last decade. India hopes to produce 5 million tonnes of hydrogen fuel by 2030, with both the government and private energy firms investing heavily in the sector.
ANIL expects to be producing 1 million metric tonnes of green hydrogen a year by the end of the decade, supported by 30 GW of new renewable power generation capacity. Patrick Pouyanne, CEO of TotalEnergies, believes the company’s entry into ANIL “is a major milestone in implementing our low-carbon hydrogen strategy.”
And it appears that other major international oil firms will soon follow in the footsteps of pioneers like BP and TotalEnergies. Shell is one of the oil majors set to develop its own megaproject, currently researching the best areas to develop a green hydrogen project by looking for a region with the wind and solar power needed to fuel operations. Paul Bogers, vice president for hydrogen at Shell Plc, stated “the size of these projects isn’t something done by a small startup”. “It requires deep pockets”, he added.
In addition, U.S. oil and gas major Chevron Corp. is prepared to spend billions of dollars on the development of large-scale green and blue hydrogen projects, using carbon capture and storage (CCS) technologies to split natural gas and capture CO2 in the production of hydrogen.
And it’s not just oil majors investing in the renewable fuel, with several European countries already trying to establish themselves as green hydrogen hubs in a growing global industry. A $158.7 million green hydrogen plant is currently under development in the southern Puertollano municipality of Spain. It is expected to reach a capacity of 800 MW by 2027, and eventually produce 3,000 tonnes of green hydrogen.
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The development is being funded by a public-private investment, supported by the $70 billion Covid recovery plan. However, the project has still not received EU certification as an Important Project of Common European Interest, meaning that it is not yet economically viable and, therefore, is not operating at present. Spain believes it offers the ideal location for a large-scale green hydrogen project thanks to its already strong renewable energy sector, which contributed to 47 percent of its electricity production last year.
Recent concerns over energy security, following the Russian invasion of Ukraine and consequent sanctions imposed on Russia, have led the EU to reconsider its energy ambitions for the coming decades, as it transitions away from fossil fuels to renewable alternatives. The EU hopes to develop its green hydrogen capacity at a faster rate to reduce its energy dependence on Russia and other countries.
The EU’s 2020 strategy originally called for nearly $500 billion in investment in green hydrogen by 2050, intending to produce 10 million tonnes annually by 2030. RepowerEU has now increased this figure by 5 million tonnes a year, expecting to import an additional 10 million tonnes. Felicia Mester, director for public affairs at the industry association Hydrogen Europe, stated “The political reality has shifted in the past month tremendously. It’s rather sad that this is the reason creating a boost for hydrogen, but if we look at RepowerEU we see a very clear push for hydrogen, for production, for infrastructure, for imports, for greater use.”
As Big Oil, regional organizations, and several state governments invest heavily in the development of large-scale green hydrogen projects, renewable fuel is likely to become a major green energy source within the next decade.
By Felicity Bradstock for Oilprice.com
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