BP has abandoned its H2Teesside blue hydrogen project in the northeast of England in a significant setback for the UK’s strategy to ramp up production of the clean energy vector by 2030.

The oil major has withdrawn its development consent application for the 1.2GW project, which formed a key element of the UK’s East Coast Cluster and had been expected to contribute more than 10% of the government’s 2030 production target.

The decision to drop H2Teesside is BP’s second exit from a hydrogen project in the industrial Teesside region in less than a year. In March 2025 it pulled the plug on Hygreen Teesside, a 500MW green hydrogen project.

The decision to drop H2Teesside is BP’s second exit from a hydrogen project in the industrial Teesside region in less than a year.

The retreat in the UK has coincided with BP’s broader pivot back to its core oil and gas business as renewables have failed to deliver the returns demanded by shareholders.

The decision to drop H2Teesside was ostensibly forced on BP by a local planning decision. H2Teesside was competing for a site that was also wanted by a datacentre developer. The local council eventually favoured the datacentre, to which it granted primary planning consent, according to BP. This was despite BP’s earlier contention that the datacentre and H2Teesside could have shared the site.

Dwindling demand

However, BP’s rationale for dropping H2Teesside was also based on its view that demand for clean hydrogen in the Teesside region has faltered since it initially applied for consent to develop the project in March 2024.

“While we believe that hydrogen could have an important role to play in the future energy market, since the submission of the H2T DCO application and the end of the examination, the hydrogen demand situation in Teesside has also deteriorated as some major industrial consumers have either scaled back operations or postponed decarbonisation plans, significantly increasing the applicant’s risk in developing the H2 Teesside project,” BP told the government.

This is a worrying admission from the key player in the UK’s low carbon East Coast Cluster, in which H2 Teesside was to have played a pivotal role. Clusters are at the heart of the UK’s industrial decarbonisation strategy, and they make a lot of sense, on paper at least. The thinking is that clean hydrogen production at scale can feed into a region’s industries, with shared CCS infrastructure transporting the CO₂ from blue hydrogen production and various other emitting industries to permanent storage.

The UK government is firmly behind this strategy, which has drawn praise internationally. In March 2023, the previous conservative government selected three East Coast Cluster projects: Net Zero Teesside Power/CCS project, H2Teesside and Teesside Hydrogen CO2 Capture, with a view to them connecting up to the cluster from 2027.

In December 2024, the shared CCS element of the cluster, the Northern Endurance Partnership, reached financial close, paving the way for the cluster’s CO₂ to be stored under the North Sea. So far so good.

However, BP’s H2Teesside withdrawal, and its claims about faltering clean hydrogen demand in the region, and by extension lower demand for CCS, will be of concern to the government and other investors.  The East Coast cluster is highly exposed to BP, which is also developing the Net Zero Teesside power project and is one of the three shareholders in the Northern Endurance Partnership, alongside Norway’s Equinor and TotalEnergies of France.

BP insists its commitment to these projects, which have both reached financial close, is intact, despite the blue hydrogen cancellation and its broader retreat from energy transition projects. “We continue to move forward with other projects on Teesside, including our investments in Net Zero Teesside Power and the Northern Endurance Partnership, and remain an active partner in the region,” a spokesperson said.  

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Author: Stuart Penson