Engie, Equinor offer blue hydrogen in Western Europe
France's Engie and Norway's Equinor have put out a sign to announce they are selling low-carbon, or blue, hydrogen to industrial operators in Western Europe, with the release of a partnership statement on 18 February.
The potential customers are in Belgium, France, and the Netherlands, home to Europe's largest port, Rotterdam, and parts of the Rhine industrial areas. For example, customers could be companies that use hydrogen as low-carbon fuel or as a feedstock in the refining, steel, glass, and chemicals sectors, as well as power generation.
"Engie wants to support its customers in their energy transition, by offering them low-carbon hydrogen to replace their current fuels," Engie's press representative told IHS Markit in an email.
Aiming to support these customer needs, Engie said its partnership should further the hydrogen aims of its global decarbonization services subsidiary, Engie Global Energy Management, which seeks to offer companies different types of hydrogen, including blue and green options, to assist with their energy transition. The business unit was unveiled in 2019 and provides demand management and renewable energy sourcing services.
Engie and Equinor will consider building blue hydrogen production sites near the North Sea or English Channel coasts in one or more of the three countries following a feasibility study, Engie's representative said. Equinor would supply the production venture with natural gas feedstock.
State-backed oil and gas company Equinor is already producing low-carbon hydrogen at its British Zero Carbon Humber project and will soon be capturing carbon at its Norwegian Northern Lights carbon capture and storage project, set to launch in 2024 and capture 5 million metric tons (or 5.5 million short tons) of carbon dioxide per year.
Norway's Minister of Petroleum and Energy Tina Bru told Davos Energy Week attendees in January that the Northern Lights project could capture emissions generated in blue hydrogen production processes around the world. Equinor's executives have also recently said the company may study building a pipeline to transport blue hydrogen from Norway to elsewhere in Europe.
Engie is a French energy and services company operating vast stretches of European gas infrastructure as well as gas-fired power plants, some of which it gained as utility GDF Suez prior to a transition-related rebranding. Engie has previously researched the use of green hydrogen on gas grids in France as well as the potential to use hydrogen with gas power plant turbines. In January 2021, it agreed to help French major Total develop France's largest green hydrogen plant, which would convert electricity generated by solar farms into hydrogen.
The offer comes two years after Equinor started studying whether blue hydrogen produced in Norway could play a role in lowering carbon for industry in Germany, with Thyssenkrupp Steel Europe as an anchor customer in the H2morrow project. Thyssenkrupp's other business areas also include building electrolysis and ammonia plants. In January, the partners on the concluded project pledged to continue working together, having identified hydrogen production sites in Germany.
European industrial players are facing heightened pressure to emit less carbon. They have been forced to cut back on their emissions amid a tightening in the supply of free allowances they use to comply with air pollution limits under the EU's Industrial Emissions Directive.
Companies that produce emissions must buy allowances under the Emissions Trading System (ETS). Not only have carbon allowance prices soared to record highs this month, reaching €40.19/mt ($48.87/mt) in an auction on 16 February, but more sectors might be required to compete for them under the EU's Green Deal reform proposals targeting a 55% decrease in emissions across the bloc.
The EU plans to expand legislation so that it aligns with the aims of its 2020 Hydrogen Strategy, for example by including certification requirements for low-carbon hydrogen, following consultations in 2021. The regulatory reforms are geared toward reaching economies of scale for the emerging hydrogen market through creating demand, reworking previous transition policies, choosing which sectors to target for hydrogen, and clearing up the debate over green and blue hydrogen, according to a recent IHS Markit strategic report on hydrogen.
Blue versus green hydrogen
The debate over whether markets should be encouraged to use blue hydrogen or renewable electricity-sourced green hydrogen to decarbonize is reaching a new pitch.
"Blue hydrogen is generally seen as a cheaper, short-term transition option […] until green hydrogen production is mature enough to sustain the majority of hydrogen demand," Josh Williamson, a consultant at UK firm HyEnergy Consultancy told IHS Markit. "However, for the Northern European countries including the UK, blue hydrogen is seen to be a much more economic long-term solution to their hydrogen decarbonization by utilizing the depleted gas fields they have access to for carbon dioxide sequestering under the North Sea."
Much of the hydrogen used today, known as grey hydrogen, is used by refineries and chemical companies, and ammonia and methanol producers also use it as a feedstock, according a paper published by Italian think tank Fondazione Eni Enrico Mattei (FEEM). Steel producers use it in processes covering about 10% of global production.
For refineries, the choice between using blue and green hydrogen is a no-brainer, as they could be not only hydrogen consumers but also blue hydrogen producers. For example, Essar Oil UK's refinery at Ellesmere Port received funding from the UK government to develop a linked low carbon hydrogen plant. Already, refinery processes that create grey hydrogen as a byproduct cover a third of global hydrogen demand, and current hydrogen suppliers are likely to remain the main suppliers of hydrogen, according to FEEM.
Several European refinery operators, including Shell, BP and Repsol, have invested in blue hydrogen to date.
Producers of ammonia may appreciate the chance to consume hydrogen for similar knock-on benefits, as hydrogen is not only made from but can be converted into ammonia or other liquid organic hydrogen carriers to make it easier to transport, the researchers wrote.
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