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bp plans UK’s largest hydrogen project

Monday, 22 March 2021

  • Proposed project in Teesside would be the largest in the UK, producing up to 1GW of ‘blue’ hydrogen – 20% of the UK’s hydrogen target – by 2030. Project would aid development of an industrial hydrogen cluster and enable decarbonization of industries in the region
  • bp has also signed agreements to work with Venator, Northern Gas Networks and Tees Valley Combined Authority  

bp on 18th March announced that it is developing plans for the UK’s largest blue hydrogen production facility, targeting 1GW of hydrogen production by 2030. The project would capture and send for storage up to two million tonnes of carbon dioxide (CO₂) per year, equivalent to capturing the emissions from the heating of one million UK households.  It is worth noting that the EU ETS carbon prices are currently trading at a historically high level of above €40.  

However, the UK is currently no longer part of the EU ETS scheme. The new post-Brexit UK ETS scheme came into force on Jan 2021 and it follows many of the design features of the EU scheme and applies to energy-intensive industries, the power generation sector, and aviation.  The UK government is targeting May 21, 2021 for first such auction. The auction reserve price had been set at £15 but was revised to £22 in Auctioning Regulations published on 11 February, possibly to reflect the increased EU ETS price. 

The proposed development, H2Teesside, would be a significant step in developing ‎bp’s hydrogen business and make a major contribution to the UK Government’s target of developing 5GW of hydrogen production by 2030. With close proximity to North Sea storage sites, pipe corridors, and existing operational hydrogen storage and distribution capabilities, the area is uniquely placed for H2Teesside to help lead a low carbon transformation, supporting jobs, regeneration, and the revitalization of the surrounding area. Industries in Teesside account for over 5% of the UK’s industrial emissions and the region is home to five of the country’s top 25 emitters.  

The project would be located in Teesside in north-east England and, with a final investment decision (FID) in early 2024, could begin production in 2027 or earlier. bp has begun a feasibility study into the project to explore technologies that could capture up to 98% of carbon emissions from the hydrogen production process.   With large-scale low-cost production of clean hydrogen, H2Teesside could support the conversion of surrounding industries to use hydrogen in place of natural gas, playing an important role in decarbonizing a cluster of industries in Teesside.

Blue hydrogen is produced by converting natural gas into hydrogen and CO₂, which is then captured and permanently stored. H2Teesside would be integrated with the region’s already-planned Net Zero Teesside (NZT) and Northern Endurance Partnership (NEP) carbon capture use and storage (CCUS) projects, both of which are led by bp as operator.  

The project’s hydrogen output could provide clean energy to industry and residential homes, be used as a fuel for heavy transport, and support the creation of sustainable fuels, including bio and e-fuels.  The project would be developed in stages, with an initial 500MW of blue hydrogen capacity in production by 2027 or earlier and additional capacity to be deployed by 2030 as decarbonisation of the industrial cluster and hydrogen demand gathers pace. bp sees potential for further hydrogen demand in Teesside beyond 2030. 

Dev Sanyal, bp’s Executive Vice President of gas and low carbon energy said “Clean hydrogen is an essential complement to electrification on the path to net zero. Blue hydrogen, integrated with carbon capture and storage, can provide the scale and reliability needed by industrial processes. It can also play an essential role in decarbonising hard-to-electrify industries and driving down the cost of the energy transition.  H2Teesside, together with NZT and NEP, has the potential to transform the area into one of the first carbon-neutral clusters in the UK, supporting thousands of jobs and enabling the UK’s Ten Point Plan.”

UK Energy Minister Anne-Marie Trevelyan, said: “Driving the growth of low carbon hydrogen is a key part of the Prime Minister’s Ten Point Plan and our Energy White Paper and can play an important part in helping us end our contribution to climate change by 2050. Clean hydrogen has huge potential to help us fully decarbonise across the UK and it is great to see bp exploring its full potential on Teesside.”

Aiming to accelerate the development of the hydrogen cluster, bp has made a number of agreements with possible partners. 

  • bp has agreed on a memorandum of understanding (MoU) with Venator, one of the largest global producers of titanium dioxide pigments and performance additives, to scope the supply of clean hydrogen to its flagship Teesside plant. 
  • bp has also agreed on an MoU with Northern Gas Networks (NGN), the gas distributor for the North of England, to work together to initiate decarbonisation of the gas networks in the UK, helping to further decarbonise both industrial customers and residential homes through its gas network. 

Source: bp plans UK’s largest hydrogen project 

Participating in the UK ETS - GOV.UK (www.gov.uk)

Intercontinental Exchange - ICE publishes auction calendar for UK’s new Emissions Trading Scheme (theice.com)

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