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Equinor triples low-carbon hydrogen production plans in UK to 1.8 GW

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Equinor triples low-carbon hydrogen production plans in UK to 1.8 GW

Highlights

Adds 1.2 GW to blue hydrogen plant by 2030

Targets over half of UK 5-GW target with partners

FID dependent on strong policy framework

Norway's state-controlled energy company Equinor has upped its plans for developing low-carbon hydrogen in the UK, tripling its target to 1.8 GW of production and aiming to deliver with partners over half of the UK's 5 GW goal by 2030.

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Equinor plans to add 1.2 GW of hydrogen production from natural gas with carbon capture and storage to the 600 MW already planned at the H2H Saltend project in Humberside, it said June 29. The additional production will be principally used to feed the Keadby hydrogen power station which it is developing with utility SSE Thermal, it said in a statement.

Hydrogen from the H2H Saltend facility will also feed industrial consumers in the region, reducing CO2 emissions by almost 1 million mt/year, Equinor said. The Zero Carbon Humber onshore pipeline network will link industrial facilities in the region to transport hydrogen and CO2.

"Without CCS and hydrogen, at scale, there is no viable path to net-zero and realizing the Paris goals," Equinor's President and Chief Executive Officer, Anders Opedal, said. "Our low-carbon projects in the UK build on our own industrial experience and will play a major role in setting the UK's industrial heartlands in a leading position.

"The projects will also contribute to provide hydrogen and low-carbon solutions to three to five industrial clusters by 2035," Opedal added.

Equinor said the Keady power station could come online by 2030 with appropriate policy mechanisms in place. The UK's long-awaited hydrogen strategy is due to be published in July.

Progress on the H2H Saltend hydrogen production plant would follow the project timeline with Keadby Hydrogen Power Station, an Equinor spokesman told S&P Global Platts. A final investment decision would "depend on further maturing of the projects including the development of policy frameworks," he said.

Equinor, along with its partner projects in the Humber region, could deliver over half of the UK's target of 5 GW of low-carbon or renewable hydrogen by 2030, the company said.

The company is also developing infrastructure for the transportation and storage of CO2 from industrial hubs on the UK east coast with others in the Northern Endurance Partnership.

Keadby Hydrogen

Keadby Hydrogen would have a peak demand of 1.8 GW of hydrogen, producing zero emissions at the point of combustion.

"It would be the world's first major 100% hydrogen-fired power station, securing at-scale demand for hydrogen in the region for decades to come," the companies said in April. "With appropriate policy mechanisms in place, Keadby Hydrogen could come online before the end of the decade."

The companies stressed that both projects are in the development stage and that they would continue to engage government, regulators and stakeholders.

S&P Global Platts assessed the cost of producing hydrogen by autothermal reforming with carbon capture and storage at GBP1.98/kg ($2.74/kg) on June 28, including capex and carbon, while renewable hydrogen production via alkaline electrolysis was GBP4.99/kg (including capex).

UK hydrogen strategy

The UK set a target of 5 GW of low-carbon or renewable hydrogen production capacity by 2030 in a 10-point plan for a "green industrial revolution" earlier this year. Further details are expected in a dedicated hydrogen strategy, to be published before July 22, when the parliament breaks for summer, with support for both low-carbon and renewable hydrogen, the Department for Business, Energy and Industrial Strategy (BEIS) said.

The hydrogen strategy will likely include measures for Contracts for Difference as well as incentives for green hydrogen in transport and large-scale industrial processes, ITM Power CEO Graham Cooley said June 10.

Cooley, who sits on the government's hydrogen advisory council, which is compiling the strategy, said he had a positive view of the strategy, and expected to see CFD auctions and a renewable transport fuel obligation for green hydrogen.

"I hope to see incentives for green hydrogen that are contracts for difference auctions to incentivize large-scale industrial installations of electrolyzers, particularly for refineries, but also for ammonia," Cooley said at an ITM Power trading update.

"I would also like to see an RTFO [renewable transport fuel obligation] announced for green hydrogen," he said. "That's what I'm expecting to see."

The publication of the strategy has been pushed back several times already from the start of 2021.

Following the UK government's 10-point plan, which includes Scotland, the Scottish government announced its own 5 GW target of low-carbon and renewable hydrogen production by 2030.

"We will work with the devolved administrations to deliver our 5 GW ambition, while also noting their national plans," BEIS told Platts on June 14.

"We welcome the Scottish government's ambition, which will be important in developing low-carbon hydrogen at scale within the UK, and are committed to working with all of the devolved administrations to help realize the economic and decarbonization benefits that a UK hydrogen economy will bring," it said.