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BP plans to turn Teesside into first green hydrogen hub

Bernard Looney, BP’s chief executive, with the Tees Valley mayor Ben Houchen at the Teesworks freeport site where the company plans a major investment in carbon capture. Image source: The Sunday Times

BP plans to build Britain’s biggest “green hydrogen” facility on Teesside to produce the clean fuel for use in new hydrogen-powered lorries and other transport.

The oil giant said its HyGreen Teesside project aimed initially to develop 60 megawatts of electrolyser capacity to produce zero-carbon hydrogen by 2025 at an estimated cost of about £100 million. This would produce enough hydrogen for 1,300 new lorries to run on the green fuel, replacing ones that burn polluting diesel.

BP then aims to expand the electrolyser capacity to as much as 500 megawatts by 2030 under plans to turn Teesside into the “UK’s first major hydrogen transport hub”.

Matthew Williamson, the BP executive leading its hydrogen projects in the UK, said: “We are talking about a broad range of transport applications: it’s trucks, trains, buses, boats, cars and planes.”

Green hydrogen is made by using renewable electricity to split water into hydrogen and oxygen by electrolysis. The biggest electrolyser planned in the UK to date is believed to be Scottish Power’s 20 megawatt project near Glasgow.

BP is already planning to develop a 1 gigawatt facility on Teesside to produce “blue hydrogen”, which is produced by processing natural gas and capturing most of the waste carbon dioxide, in a process that’s low-carbon but still has some emissions. The so-called “H2Teesside” plant could cost £1 billion, excluding the offshore carbon storage infrastructure.

Combined, BP’s blue and green hydrogen facilities could provide about 30 per cent of the UK’s target of developing 5 gigawatts of low-carbon hydrogen production capacity this decade. However, the development of all the projects will be dependent on the government confirming subsidies or other support to make them economically viable.

BP is one of the world’s biggest oil and gas companies but is undergoing a radical strategic shift towards low-carbon energy, with targets to cut its oil and gas output by 40 per cent this decade while ploughing billions into wind and solar power, electric vehicle charging and hydrogen.

It aims to have a 10 per cent market share of low-carbon hydrogen supply in core markets, and is developing projects in Germany, Spain and the Netherlands. Last month it was named as preferred bidder for a much smaller green hydrogen project in Aberdeen, and also signed a partnership with Daimler Truck in which it will develop a new network of up to 25 hydrogen refuelling stations around Britain this decade. “We would expect to produce hydrogen at a number of places around the UK,” Williamson said.

BP is still battling to convince investors that it can make targeted 8 to 10 per cent returns in such new ventures. Williamson said he expected the HyGreen project to be “in line with our stated return goals” subject to confirmation of the financial support on offer through the government’s Renewable Transport Fuel Obligation scheme.

BP hopes to take a final investment decision on HyGreen by 2023 and expects the costs for later phases will come down. “Scale will lead to reduced costs and as renewable power costs come down so will hydrogen costs,” Williamson said.



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