Hydrogen’s global conference circuit restarts this month after the summer recess, with the industry’s ongoing struggle to achieve project FIDs once again high on the agenda.

Only about 15% of the green and blue hydrogen projects announced since 2015 have reached FID, according to the latest estimate from management consultants McKinsey & Company. Others put the figure significantly lower.

The switch to green and blue hydrogen is gaining some genuine momentum in the refining sector

“Hydrogen projects are facing bottlenecks, such as the need to build out entire value chains for technology deployment preventing them from reaching FID,” McKinsey said in its latest assessment of the transition’s progress. It warned of a widening “reality gap” between project commitments and realisation, a trend it says threatens the pace of the transition.

There is no doubt that the clean hydrogen sector’s development desperately needs an injection of pace. However, a review of the summer’s project news paints a slightly more positive picture: do not say it too loudly, but the switch to green and blue hydrogen, from grey, is quietly gaining some genuine momentum in the refining and petrochemicals sectors.

Clean cracker

In late August, industrial gases firm Linde unveiled plans to invest more than $2b in a blue hydrogen plant in Alberta. The project, Linde’s largest single investment, will be the biggest of its type in Canada and one of the largest globally. Crucially, the project is backed by a long-term offtake deal with chemicals company Dow, which will feed the low-carbon hydrogen, and nitrogen, into its new net-zero ethylene cracker and derivatives site at Fort Saskatchewan.

Linde’s plant will use autothermal reforming, combined with its proprietary capture technology, to produce clean hydrogen and to recover hydrogen contained in off-gases from Dow’s ethylene cracker. Commissioning is scheduled for 2028. 

Major deals

Linde’s bumper investment comes on the heels of positive moves by three of Europe’s oil and gas majors in July.

TotalEnergies and US industrial gases firm Air Products signed a 15-year deal for the supply in Europe of 70,000t/yr of green hydrogen, starting in 2030. The deal followed TotalEnergies’ call for tenders for the supply of 500,000t/yr of green hydrogen to decarbonise its European refineries.

Elsewhere, Shell took FID on the 100MW REFHYNE II electrolyser project at its Rheinland refining complex near Cologne in Germany. BP took FID on the deployment of an initial 25MW of electrolyser capacity at its Castellon refining complex in the Valencia region of Spain, where it is working with Spanish energy firm Iberdrola. It also said it expects to take FID on a 100MW green hydrogen project adjacent to its Lingen refinery in the Lower Saxony region of Germany by the end of the year.

Broader scope

Investment in green and blue hydrogen supply to meet pre-existing offtake from refineries is less challenging than lining up supply with a new consumer such as a converted steel plant. A new hydrogen user faces price and volume risk, as well as the need for large capital investment in converting industrial processes.

However, this summer’s breakthrough projects are part of an important first step for hydrogen. Linde, BP and Shell each stressed that they have scope to expand supply more broadly to other industries once conditions allow. Before then, they will continue to improve the economics of green and blue hydrogen in a live commercial setting, providing the foundations for wider deployment of one of the transition’s most promising energy carriers.

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Author: Stuart Penson