The hydrogen sector’s “collective efforts should be initially focused” on replacing grey hydrogen consumed in industry with low-carbon alternatives, rather than starting with using hydrogen for domestic heating, according to BP’s senior vice-president for hydrogen and CCS, Felipe Arbelaez, during a speech at the World Hydrogen Summit in Rotterdam.

Part of this is due to the relative simplicity of such projects compared with other use cases. “Just two to three willing companies can launch a project, make it investable, and then execute it,” he says.

“Hydrogen will go from local to regional to global” Arbelaez, BP

He compares this to the sheer complexity involved in “using hydrogen to heat homes”, which “may require the approval of hundreds of thousands of households”.

“You may need construction sites in densely populated areas, and the retrofitting of existing distribution networks… [and] that is far more challenging in the short term,” he adds.

Arbelaez anticipates that hydrogen will be required in “sectors like cement, steelmaking and chemicals”, as well as heavy transport such as aviation and shipping, which all require fuel to supply sufficient energy and, in the case of transport, additionally need a relatively small amount of space to store it onboard.

BP announced at the end of February plans to construct an initial 200MW of electrolyser capacity by 2027 to supply green hydrogen for its Castellon refinery in Spain’s Valencia region. The major also plans to leverage its existing refinery capacity in Rotterdam for offtake of its planned blue and green hydrogen projects near the port.

Local to regional to global

Hydrogen shipping costs are also expected to be a major hurdle. “The transportation costs potentially outweigh the cost of production,” Arbelaez says, noting that shipping represents a fraction of the cost for barrels of oil and tanks of LNG.

“Hydrogen will go from local to regional to global,” he says, with hubs of existing industrial hydrogen consumers likely to represent the main offtakers in the short to medium term. However, in the medium term, he expects greater penetration of hydrogen in sectors including steelmaking, which face high capex requirements for switching.

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Author: Polly Martin