As per news, Bernard Looney, CEO of BP, is betting that hydrogen will power low-carbon businesses in the future as major economies invest in the fuel’s development.


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Summary
- Low-carbon hydrogen is growing quickly, according to BP.
- fuel to take advantage of government assistance.
- Targets for hydrogen production will be revealed by CEO Looney.
- At its Whiting, Indiana, refinery, BP has big plans for a hydrogen project.
It is anticipated that low-carbon hydrogen will significantly reduce greenhouse gas emissions from heavy industries and some forms of transportation. Low-carbon hydrogen already has a large fan base.
However, in order to compete with fossil fuels, it often requires government support and costs a lot to produce.
For instance, President Joe Biden’s $430 billion Inflation Reduction Act (IRA) provides substantial incentives for its production.
Tomeka McLeod, BP’s recently appointed head of hydrogen in the United States(U.S.A), told reports that the company has responded quickly and is in the early stages of planning to build a large, low-carbon hydrogen hub around its Whiting, Indiana refinery.
When Looney took over office nearly three years ago, he promised to restructure BP and reduce carbon emissions by increasing renewable energy and reducing oil and gas production.On February 7, he will provide investors with an update on the situation.
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According to sources at the BP company, offshore wind and hydrogen will play major roles.
The structure of BP has been changed to create a 150-person hydrogen division led by Felipe Arbelaez.Additionally, it invested in numerous significant hydrogen projects, including those in Australia, Europe, and Britain.
The company told Reuters that it is also looking into projects in Mauritania and the possibility of developing green hydrogen in Oman.
According to company sources, BP’s spending on low-carbon hydrogen remains moderate but is anticipated to rise into the millions by the decade’s end as projects begin.
According to calculations made by Reuters, BP spent approximately a quarter of its $15.5 billion budget in year 2022 on low-carbon businesses, which included the $4.1 billion acquisition of U.S.A biogas producer Archaea.
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According to company sources, Looney and BP’s renewables head, Anja-Isabel Dotzenrath, will announce a clean hydrogen production target for the first in February. The goal is to capture 10% of hydrogen in “core markets” by 2030.
“Hydrogen will be a major concentration and it is moving a lot quicker than we at any point figured it will,” CFO Murray Auchincloss told Reuters last month.
The majority of hydrogen used in the fertilizer and oil refining industry is typically produced through the highly polluting heating of natural gas, which is called “grey hydrogen.”
However, the capture of the polluting emissions transforms grey hydrogen into “blue hydrogen.”Additionally, there is “green hydrogen,” which is made by splitting water through electrolysis powered by renewable resources.
BP plans to have carbon capture and facilities where carbon is injected into depleted reservoirs in order to expand its blue hydrogen business. It also plans to increase its renewable power generation capacity to 50 gigawatts by 2030, some of which will be used to power electrolysers.
BP did not say if it would set a target for the production of hydrogen or how much it would spend on hydrogen.
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According to McLeod, BP’s project at its Whiting refinery will initially substitute blue hydrogen for approximately 200,000 tonnes of grey hydrogen that the refinery uses annually.Green hydrogen could be added to the project by 2026-2027, when it could begin operating.
She stated, “Our focus in the United States, and it’s nearly similar around the world, is how can be decarbonize and re-imagine our own assets.”
In a second phase, other heavy industries in the region will use the low-carbon fuel to reduce the 36 million tonnes of CO2 that are released annually there.
Subsidies will be used for the project, highlighting the difficulty of competing with cheaper fossil fuels.
Analysts claim that the cost of green hydrogen is comparable to or even lower than that of grey and blue hydrogen thanks to the IRA’s $3 per kilogram tax credit.
McLeod stated, “Green hydrogen has been a lot more competitive with the hydrogen production tax credit benefits that are now in place.”
According to McLeod, subsidies will initially enable green, blue, and grey hydrogen to compete with grey hydrogen, enabling customers to switch to cleaner fuel.
Andy Brogan, Gas Leader and Global Oil Leader at EY, stated, “Demand growth for new hydrogen applications is going to be a function of cost competitiveness.”
“There are material parts of energy request where hydrogen is the main clear mechanically reasonable option in contrast to carbon serious choices,” Brogan said. “However, due to the fact that these are frequently price-sensitive, the rapid acceleration will depend on costs.”
According to Globaldata, a data provider, BP is already one of the largest investors in hydrogen projects among the world’s leading oil and gas companies, along with Shell (SHEL.L), TotalEnergies (TTEF.PA), Repsol, and Italy’s Eni (ENI.MI).
In June, BP bought a 40.5% stake in an Australia-based 26-gigawatt renewables project that could make green hydrogen. By 2030, it intends to produce 1.5 gigawatts of blue and green hydrogen through two British projects.