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Tariq Siddiqui's picture
COO, Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

  • Member since 2021
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  • Jan 13, 2023
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European oil majors’ big bet on hydrogen as the transport fuel for the future is not so big in reality

KEY INSIGHTS

Where Europe’s oil giants Shell, BP, Total, Eni, and Repsol are investing in hydrogen, but only part of this is truly ‘green’. Most of their investments are going towards decreasing the carbon intensity of their refinery operations, not for developing green transport fuels, the study shows.

1-Industries investments in green hydrogen are pitiful.

2-They are focusing their new refining capacity on biofuels which cannot sustainably supply the world’s transport needs.

3-This is not an industry pushing the boundaries of clean technology.

4-Of the refining sector’s $42 billion in planned investments for alternative fuels up until 2030, almost 75 percent will go towards increasing

5-Companies are investing around $7 billion in so-called ‘low carbon’ blue hydrogen to clean up their production processes.

BOTTOMLINE

The study believes; Where oil producers are investing in hydrogen, most is going towards replacing dirty grey hydrogen operations with blue hydrogen, which still uses polluting fossil gas. Instead of wasting their time on easy, short-term solutions, oil refiners should switch to producing green hydrogen and e-fuels for ships and planes biofuel production

Discussions
Julian Silk's picture
Julian Silk on Jan 13, 2023

This is a useful article.  There are 2 obvious questions.

1) Carbon taxes in Europe are detailed in 

Oil Refineries in Europe are shown in 

So the carbon taxes, by and large, are where the refineries are not.  Britain and Germany do not have a carbon tax, nor does Italy, and the one in Spain is low.  The one in France is higher, but there are relatively few refineries there.  Aside from planning for the future, and goodwill, do the refineries have an economic incentive to start developing green hydrogen now?

2) There is still likely to be very extensive import of Russian natural gas by European countries.  Statista shows this for 2021 in 

and it is not reassuring.  Could the effort the European majors are making be considered an alternative to the heavy dependence, assuming they can get LNG from elsewhere?

Roger Arnold's picture
Roger Arnold on Jan 15, 2023

There is a good reason why the investment in "green hydrogen" by the oil majors is so tiny: as things stand, it's very difficult -- and very uneconomic -- to produce any significant amount of green hydrogen.

Oh, you can pretend to be producing green hydrogen. You can show off a factory floor with ranks of electrolyzers busy splitting water into hydrogen and oxygen. You can even point to a solar or wind farm somewhere and claim "that's where the electricity powering our electrolyzers is coming from. We paid for the clean energy credits it's generating."  But if the state of the power grid is such that marginal load is being served by fossil-fueled generation, then you are not producing green hydrogen.

What you're producing is "fools' green" hydrogen. The electricity you're using to power your electrolyzers has to be replaced by electricity from fossil-fueled generation. And because you need so much electricity, the carbon footprint for your fools' green hydrogen is more than double what it would be if you were producing unmitigated gray hydrogen from natural gas.

The oil majors are not fools.

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