The Great Unfunded Green-Hydrogen Dream of Europe’s Oil Refiners

Europe’s oil refiners have big plans to boost the use of green hydrogen to help them make fuel, an important component of the petroleum industry’s plans to cut its operational carbon emissions.

But with the clock ticking in the battle against climate change, the reality of what the industry has committed to remains modest. Green hydrogen comes from water and renewable electricity, while the vast majority of hydrogen made today comes from fossil fuels.

While using green hydrogen will help to clean up a refinery’s operations, it won’t have a big impact on the world’s overall carbon emissions because most of those occur when fuels are consumed rather than when they’re made. The gas is an essential part of oil refining, being used to take impurities out of fuels.

The first European plant to bring a so-called green hydrogen project online looks set to be Royal Dutch Shell Plc’s Rheinland refinery in Germany, with a small electrolyzer scheduled to start production in July. It will make about 1,300 metric tons a year. The International Energy Agency estimates global hydrogen usage is about 70 million tons annually, with consumption dominated by oil refineries and chemical makers.

With capacity of 10 megawatts, Rheinland is on a similar scale to pilot projects being developed across Europe by peers including Austria’s OMV AG and Spain’s Repsol SA. Over the course of a year, an electrolyzer of that size would produce enough hydrogen for less than a week at a complex like Rheinland. There are far bigger developments in the wings -- up to a few hundred megawatts -- but none of those have so far been funded.

“The problem is that the technology is still being developed, expensive to build and will need to increase in scale to make a significant difference,” said Jonathan Leitch, a director at Turner, Mason & Company.

While green hydrogen delivers higher carbon savings, refiners are also looking at so-called blue hydrogen, where projects tend to be bigger, at around 1,000 megawatts. Those rely on more-established carbon capture technology.

Carbon Capture

Refiners are more at home with blue hydrogen, described by Leitch as being pretty much the same as making hydrogen in a conventional refinery, except the carbon is captured and stored. The U.K., the Netherlands and Norway have the advantage here of being able to use caverns left over from the production of oil and gas to store carbon.

Companies across Europe are looking at using green or blue hydrogen, and most plan to use it in the production of fuels, rather than as a source of power. A refinery would need to make considerable modifications to run on hydrogen, with furnaces only able to tolerate a limited amount of hydrogen in the gas mix, according to Zoran Milosevic, a specialist with Eurotek Refining Services, a U.K.-based consultancy.

“Burning higher volumes of hydrogen in furnaces as fuel will be technically challenging and hardly economical,” Milosevic said.

Below is a list of hydrogen projects at European refineries. It includes projects where a developer mentions refiners among possible customers. It will be updated as developments take place.

  • Germany, Austria
  • Shell Rheinland
    • Green hydrogen, 10 megawatt electrolyzer
    • Due to start in July
    • Hydrogen for use by refinery to make fuel, and in local transport
    • Capacity could be expanded to 100MW, but depends on securing funding
  • Klesch Heide
    • Green hydrogen, 30MW electrolyzer in first phase
    • FID due later this year; construction to start in 2H 2022
    • Hydrogen initially for use in the refinery
    • Will also be tested in natural gas network
    • Working with Orsted
    • Possible expansion to 700MW
  • OMV Schwechat
    • Green hydrogen, 10MW electrolyzer
    • FID is in place
    • Project to complete in second half of 2023
  • BP Lingen
    • Green hydrogen, 50MW electrolyzer
    • FID is due in early 2022
    • Working with Orsted
  • BP Gelsenkirchen
    • Part of group that applied for EU funding in late 2020
    • Gelsenkirchen would consume green hydrogen made in a facility owned by RWE
The Netherlands, Belgium
  • Shell Pernis

    • Green hydrogen, 200 megawatt electrolyzer
    • Production start is 2023 pending FID
  • BP Rotterdam

    • Green hydrogen
    • Working with Nouryon on project connected to refinery
    • Looking at 250MW electrolysis facility; see related page on BP website
  • Total/Lukoil Zeeland
    • Partner in 1GW project led by Orsted
    • Funding not yet in place
  • NOTE: Separately, Pernis is among facilities in Rotterdam which will receive state funding for carbon capture; that will be from the refinery’s normal operation and isn’t linked to hydrogen
U.K.
  • Essar Stanlow
    • Blue hydrogen
    • First of two facilities to start operating in 2025
    • Essar is working on a new furnace for the existing crude unit that will allow it to run on hydrogen
  • Phillips 66 Humber
    • Part of Humber Zero, which is looking at blue and green hydrogen production
    • Funding in place up to FID, which is due in 2023
  • Phillips 66 Humber
    • Part of Gigastack project
    • Partners are Orsted and ITM Power
  • Valero Pembroke
France
  • Total La Mede (biofuels plant), in cooperation with Engie
    • Green hydrogen, 40MW electrolyzer
    • Project depends on securing subsidies
  • Engie/Air Liquide Fos
    • Refineries and chemicals companies to use the green hydrogen, according to developers
    • Funds to be secured
  • H2V Normandy
    • Green hydrogen
    • Air Liquide among partners
  • NOTE: Exxon said it would consider buying green hydrogen if a project is launched near Gravenchon, provided it doesn’t hurt its profitability
Scandinavia
  • Sweden, Preem Lysekil, in cooperation with Vattenfall
    • Green hydrogen
    • Project to build 200-500 megawatt electrolyzer being considered
  • Denmark, Everfuel, adjacent to Fredericia

    • Green hydrogen, 20MW electrolyzer, which is funded
    • Expansion to 300MW subject to financing
    • NOTE: Fredericia recently sold by Shell to Postlane Partners
  • Norway, Equinor, adjacent to Mongstad
    • FID still pending
    • Green hydrogen for use in shipping, not in the refinery
Spain, Italy, Greece
  • Spain, Repsol Bilbao

    • 10MW electrolyzer
    • Green hydrogen project isn’t affected by furlough of workers
  • Spain, BP Castellon
    • Green hydrogen, 20MW electrolyzer in first stage
    • Working on feasibility with Iberdrola and Enagas
  • Italy, Saras Sarroch, in partnership with Enel
    • Green hydrogen, 20MW electrolyzer
  • Italy, Eni 2 pilot projects in partnership with Enel

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