Tightening natural gas supplies and soaring prices will encourage green hydrogen schemes and use in Europe, while making blue hydrogen less attractive, according to the chief executive of UK oil major Shell.
Ben van Beurden said that current high prices are making blue hydrogen — made from methane with most of the carbon captured and stored — “a little bit difficult”.
“I think for some while Europe will focus very much on making green hydrogen,” Van Beurden told analysts last week during a call to discuss the company’s bumper second-quarter results. “And maybe over time, indeed, we’ll also look at importing hydrogen — which can then be also blue hydrogen, for instance, if it comes out of gas-rich countries”.
But he pointed out that Shell will be “driven in the long run by the value of hydrogen in the transportation system”.
“Of course, at the moment there is no hydrogen-based transportation system. It has to be built,” Van Beurden added. “Ultimately, the value uplift needs to come from building out a transportation hydrogen infrastructure through Europe.”
This will be driven by how competitive hydrogen becomes against middle distillates — such as diesel, jet fuels and heating oil — and how fast transportation companies or their customers want to decarbonise, he said.
“We believe there's a tremendous potential there and, of course, also a tremendous driver from governments to make these things happen.
“And that I think is much more [the] determinant for how the hydrogen business will develop in Europe than what might happen with natural gas.”
Last month Shell reached a final investment decision to build a 200MW green hydrogen project at the Port of Rotterdam in the Netherlands.
Holland Hydrogen 1 — which Shell says will be the largest renewable H2 project in Europe upon completion in 2025 — will use a 200MW alkaline electrolyser supplied by Thyssenkrupp and be powered by the yet-to-be-built 759MW Hollandse Kust Noord offshore wind farm in the Dutch North Sea.
The 60 tonnes of hydrogen produced each day will be transported about 40 kilometres via pipeline to the company’s oil refinery at the Shell Energy and Chemicals Park Rotterdam, where it will replace some of the grey H2 used to remove sulphur from crude oil, although some of the supply might also be used to power hydrogen trucks.
The project has been given the green light before EU regulations have been finalised, meaning there is a risk that the H2 produced might not be allowed to be labelled as “green hydrogen” due to proposed rules on “additionality”. But that could be a moot point if Shell is not selling this H2 on the open market.
Rob Watts is a reporter at Recharge's sister newspaper, Upstream.