US oil giant Chevron, one of the fossil-fuel industry’s energy-transition laggards, will spend about $2.5bn in the next five-and-a-half years on green and blue hydrogen, a senior executive revealed yesterday.
The California-headquartered company announced in September last year that it would invest $10bn by 2028 in low-carbon technologies, renewable fuels, hydrogen, carbon capture and storage, offsetting and reducing the greenhouse gas emissions from its own operations. But it did not provide a breakdown of how this money would be spent.
Austin Knight, vice-president of hydrogen at Chevron New Energies, told the Financial Times Hydrogen Summit yesterday that the company would invest about $2.5bn on building up its H2 business.
“What you see right now is a shift to broader energy solutions with hydrogen and moving into clean hydrogen,” Knight said. “We want to be part of that ramp-up.”
To date, Chevron has invested in liquid-organic hydrogen carrier company Hydrogenious and waste-to-hydrogen firm Raven SR, and has a range of memoranda of understanding and collaboration agreements with organisations such as Toyota, Cummins and Caterpillar regarding clean H2 development, but has not announced any specific projects.
In September last year, Chevron said it has “agreed on a framework to acquire a stake” in the joint venture developing the US’s largest green hydrogen development, the Advanced Clean Energy Storage project, but does not seem to have sealed the deal.
The oil company says wants to produce 150,000 tonnes of hydrogen annually by 2030, but this includes grey hydrogen produced from unabated methane. It currently produces about one million tonnes of grey H2 a year.
Knight also told the conference: “We should set the rules very clearly around what low carbon actually means, and then let the markets work to deliver real carbon reduction.”
In the US, the Infrastructure Investment and Jobs Act — which was signed into law last year — defined “clean hydrogen” as H2 that is manufactured in any manner that emits 2kg or less of carbon-dioxide equivalent for every kilogram of hydrogen produced on site.
Achieving such low carbon emissions will be difficult for blue hydrogen, requiring more than 90% of carbon emitted in the steam methane reformation process to be captured, but Chevron has not come close to that with its Gorgon CCS project in Australia — capturing and burying only 32% of the CO2 produced in its first five years of operation.
Green hydrogen advocates had hoped that the “clean hydrogen” definition would be amended to include lifecycle emissions — which would rule out the use of blue H2 derived from natural gas with carbon capture and storage, as upstream methane emissions would make it impossible for suppliers to reach that target and therefore be ineligible for government support.
But according to draft proposals released by the US Department of Energy (DOE) earlier this month, only emissions produced on-site will be taken into account when calculating what constitutes “clean hydrogen”.
So although the US natural gas industry has among the highest upstream methane emissions in the world, this leaves the door open for blue hydrogen projects to be eligible for up to $8bn of federal government funding under its H2Hubs initiative, which aims to set up at least four regional hydrogen hubs in the US. This scheme, which was set out in the bipartisan infrastructure law, aims for at least one hub to produce green hydrogen, one to make blue hydrogen, and another to manufacture pink H2 from nuclear power.
However, the DOE has stated that lifecycle emissions would be considered for each application for this funding.
Methane is 86 times more powerful a greenhouse gas than CO2 over a 20-year period, leading to accusations that blue H2 — particularly in the US — would be more harmful than simply burning the natural gas in the first place.
The US is the third-largest emitter of methane in the world, leaking 17 million tonnes of it in 2021, nearly a third of which came from the oil & gas sector, according to the US Energy Information Administration.