Reduced hydrogen demand from oil refineries now processing lighter varieties of crude is being offset by the growth in demand from biorefineries, according to industrial gases firm Air Liquide.

Refineries use hydrogen in the desulphurisation of crude oil to make petrol, diesel and other chemicals.

Sanctions on Russian fossil fuels mean many refineries, especially those in Europe, have been processing lighter crudes, according to Air Liquide CEO Francois Jackow.

“The impact of lighter crude means they need less hydrogen to process,” he said on a call presenting the firm’s H1 2022 results, without providing any concrete figures for Air Liquide’s hydrogen sales.

“However, we are seeing this being fully compensated if not surpassed by hydrogen demand for biorefineries.”

“In Europe our customers are telling us there is an opportunity to move forward and address the decarbonisation of their processes” Jackow, Air Liquide

Biorefineries use renewable sources such as waste or biomass to produce renewable fuels that can be used in conventional engines. They also use hydrogen in the fuel manufacturing process.

Jackow says the growth in the hydrogen demand from biorefineries “is a huge trend we are seeing all over the world”.

In the EU, the trend is being driven particularly by the updated Renewable Energy Directive revisions, which mandate increasing levels of renewable fuels in the EU energy mix. A study funded by the European Commission, titled the Biorefinery Outlook to 2030, found that over 40 new biorefinieries could be operational by 2030.

No slowing

Air Liquide’s operations fall into two broad divisions: the energy transition, of which hydrogen forms the major part, and electronics.

The firm has seen no slowing of activity in either division, despite the macroeconomic threats posed by high commodity prices and inflation across many regions. Growth remains strong in Asia, the US and Europe in the energy transition division, according to Jackow.

“In Europe… our customers are telling us there is an opportunity to move forward and address the decarbonisation of their processes, get energy independence and reduce costs. We are ticking all the boxes with what we can bring… be it oxygen for oxycombustion, hydrogen or carbon capture,” he says.

Project advancement

Air Liquide’s hydrogen projects include the 200MW Normand’Hy project to supply refineries in the area and the 200MW Elygator project in the Netherlands, which was recently selected for funding from the EU’s Innovation Fund and will produce 15,500t/yr of green hydrogen.

The firm has also created a joint venture with South Korean chemicals firm Lotte Chemical to develop the hydrogen supply chain for mobility markets in South Korea. In addition, it has signed a memorandum of understanding with aerospace company Airbus, airline Korean Air and Incheon International Airport to study the use of hydrogen at the airport.

Also in the aviation sector, the firm has created a joint venture with airport operator Groupe ADP to help airports integrate hydrogen into their infrastructure. The firm also expects to invest more than $150mn to build a liquid hydrogen plant in the western US.

Jackow notes particularly high levels of demand for hydrogen in the US driven by the energy transition.

Asked about the costs of hydrogen production, he says the firm is to some extent protected against rising blue hydrogen production costs by its gas-purchasing strategies, while noting that offgrid renewables are protected from price rises, meaning green hydrogen costs are likely to continue to fall.

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Author: Tom Young