BP Steps Up Green Drive With Hydrogen Deal
By Sarah McFarlane
LONDON -- BP PLC is partnering with renewable energy giant
Ørsted A/S to produce hydrogen from wind power, the oil major's
first big project in a sector that it -- and the wider industry --
believe will play a key role in the transition to low-carbon
Using renewable power such as wind and solar to produce
hydrogen, instead of fossil fuels such as gas or coal, is expected
to be important for reducing global carbon emissions -- although it
remains a more expensive option. While hydrogen only makes up a
small amount of the world's energy use -- mostly for refining and
chemical production -- it is responsible for significant
Under the deal announced Tuesday, BP said it would use wind
energy from Ørsted's North Sea wind farm to produce hydrogen for
its Lingen refinery in northwest Germany. The two companies intend
to build a 50 megawatt electrolyser, powered by wind, to split
water into hydrogen and oxygen gases without generating carbon
The partnership is part of a broader plan BP detailed in
September to cut its oil and gas production by 40%, while
increasing spending in low-carbon energy, including green hydrogen.
It is targeting a 10% market share of hydrogen produced using
renewables -- or natural gas in cases where the emissions have been
captured and stored -- within the next decade.
Other oil companies also have plans to reduce emissions from
hydrogen. Royal Dutch Shell PLC plans to increase its green
hydrogen production 10-fold at its Rhineland refinery in Germany by
2030. Earlier this year, Repsol SA said it would build a fuel
plant, which uses green hydrogen in Northern Spain.
Advocates say that as well as reducing emissions, green hydrogen
could help address the storage issues facing renewable energy,
which is typically generated when the wind blows or the sun shines,
regardless of whether there is demand for the power. By using
excess renewable power to produce hydrogen, the energy could be
stored for later use.
One challenge remains, however, cost. Producing hydrogen using
renewable energy is more expensive than that using fossil fuels,
and analysts say government support will be key to its adoption.
While the costs of electrolysers and renewable electricity have
been coming down, green hydrogen still doesn't compete with
natural-gas based hydrogen.
To support the project in Germany, BP and Ørsted have applied
for funding from a European Union innovation fund that focuses on
projects aimed at reducing emissions.
The companies said they plan to make a final investment decision
in early 2022, and anticipate the project could be operational by
2024. BP didn't disclose financial details of the project.
"Renewable hydrogen has to become cost competitive with
fossil-based hydrogen, and for that we need projects such as this,"
said Dev Sanyal, BP's executive vice president for gas and low
carbon energy, adding that the project would demonstrate the
technology at a large scale.
Write to Sarah McFarlane at email@example.com
(END) Dow Jones Newswires
November 10, 2020 07:13 ET (12:13 GMT)
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