BP Aggressively Chases Hydrogen Towards An Emission-Free Future

BP Aggressively Chases Hydrogen Towards An Emission-Free Future
  • BP Plc BP CEO Bernard Looney gambled on hydrogen to power future low-carbon businesses to reduce their carbon footprint.
  • BP is in the early stages of developing a large, low-carbon hydrogen hub around its Whiting, Indiana refinery, Tomeka McLeod, BP's newly-appointed head of hydrogen in the U.S., told Reuters.
  • Hydrogen will have a crucial role along with offshore wind.
  • Also Read: BP Clocks 145% YoY Growth In Q3 Profit, Announces Further $2.5B Share Buyback
  • BP revamped its structure to create a dedicated hydrogen division led by Felipe Arbelaez. It also invested in large hydrogen projects in Australia, Europe, and Britain.
  • It also examined Mauritania projects' potential for developing green hydrogen in Oman.
  • BP's spending on low-carbon hydrogen will likely grow into the hundreds of millions by the decade's end.
  • BP spent roughly a quarter of its $15.5 billion budget in 2022 on low-carbon businesses.
  • Looney and BP's head of renewables, Anja-Isabel Dotzenrath, will reveal a clean hydrogen production target for the first time in February, aiming to capture a 10% share of hydrogen in "core markets" by 2030.
  • To expand its blue hydrogen business, BP depended on its oil and gas experience to build carbon capture and storage facilities, where it injected carbon into depleted reservoirs.
  • It also planned to boost its renewable power generation capacity to 50 gigawatts by 2030, which will partly power electrolyzers.
  • BP's project at its Whiting refinery will initially replace around 200,000 tonnes of grey hydrogen used by the refinery every year with blue hydrogen, McLeod said. 
  • The project could start operating by 2026-2027 and be expanded to green hydrogen.
  • In the second phase, the low-carbon fuel will be used by other heavy industries in the area to reduce some 36 million tonnes of CO2 emitted annually.
  • The project will rely on subsidies, highlighting hydrogen's challenge in competing with lower-cost fossil fuels.
  • The IRA offers a $3 per kilogram tax credit for clean hydrogen, which brings green hydrogen to par or even below the cost of grey and blue hydrogen, the report cited analysts.
  • "With the hydrogen production tax credits that are now in place, it has ... allowed green hydrogen to be a lot more competitive," McLeod said.
  • Subsidies will initially allow green and blue hydrogen to compete with grey hydrogen, allowing consumers to switch to cleaner fuel, McLeod said.
  • Price Action: BP shares closed lower by 1.01% at $35.36 on Friday.
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