BP has made one of its largest renewable energy bets to date, acquiring the largest stake in a vast solar, wind and green hydrogen project in Western Australia that will cost more than $ 30 billion to develop.
The chief energy company said on Wednesday it had agreed to buy 40.5 percent of the Asian renewable energy center, which will also operate. The agreement remains subject to approval in Australia.
Conceived in 2014 and developed by partners Intercontinental Energy, CWP Global and Macquarie, the 6,500-square-kilometer site in the Pilbara mining region has the potential to be one of the largest renewable energy hubs in the world.
It expects to develop 26 GW of solar and wind energy, equivalent to a third of Australia’s total generation capacity, and produce approximately 1.6 million tonnes of green hydrogen per year.
Anja-Isabel Dotzenrath, BP’s executive vice president of gas and low-carbon energy, said the investment could significantly increase BP’s renewable energy capacity and make “a material contribution” to its stated goal of securing a share of 10% of global hydrogen markets. .
BP is committed to building or acquiring 50 GW of renewable energy by 2030, as it aims to reduce net zero emissions by 2050 and become one of the world’s oldest oil producers. integrated energy company. By the end of 2021 it had 1.9 GW of renewable capacity installed.
“We believe that AREH can be a key project for us in helping our local and global customers and partners meet their net energy and zero commitments,” Dotzenrath said in a statement. “It will also serve as a contributor to long-term clean energy security in Asia Pacific, helping countries like South Korea and Japan to decarbonize.” BP did not disclose how much it paid for participation.
The project faces obstacles. Despite the attraction of using solar energy from Australia’s vast hot interior to convert water to carbon-free hydrogen for export, the costly technology needed to produce green hydrogen is still being perfected and the Australian government support has been limited.
The consortium’s application for environmental approval was also rejected last year by the Australian federal government, which called the proposal “clearly unacceptable” because it threatened wildlife and local wetlands.
Dean Bialek, chief policy officer and international strategist at CWP Global Green Hydrogen Developer, said he was confident the proposal could be reworked to meet environmental standards. The issue had been “paused” while the agreement was being negotiated with BP.
The world currently produces about 90 million tons of hydrogen a year, mostly from natural gas and mainly for use in industrial and refining processes. About 10% of this is considered “low carbon hydrogen”, including hydrogen produced from natural gas but using carbon capture technology to capture emissions. Only 0.1% of current production is “green hydrogen”, which is produced from water by electrolysis powered by renewable energy.
The International Energy Agency’s zero net route to 2050 requires low-carbon hydrogen production to grow to 150 million tonnes a year by 2030 and 520 million tonnes a year by 2050, when it says 60 percent will be green hydrogen.
In addition to exporting green hydrogen to East Asia, the Western Australian site expects to supply renewable energy to the region’s mining projects, which include large iron ore mines managed by Rio Tinto and BHP Billiton.
Alex Hewitt, CEO of CWP Global, said BP’s record in carrying out major infrastructure projects would help the consortium secure the more than $ 30 billion in funding needed to fully develop the site.
“Since the inception of the Asian Renewable Energy Hub project, we have always referred to it as ‘renewable energy on an oil and gas scale,'” he said.
The colors of the hydrogen rainbow
© Christopher Furlong / Getty Images
Green Hydrogen It is obtained by using clean electricity from renewable energy technologies to electrolyze water (H2O), separating the existing hydrogen atom from its twin molecular oxygen. Currently very expensive.
Blue Hydrogen Produced with natural gas but with carbon emissions captured and stored or reused. Insignificant quantities in production due to lack of capture projects.
Pink / Purple Hydrogen Made with nuclear power to power electrolysis.
Gray Hydrogen This is the most common form of hydrogen production. It comes from natural gas through the reform of methane with steam but without capturing emissions.
Brown Hydrogen The cheapest way to make hydrogen but also the most harmful to the environment due to the use of thermal coal in the production process.
Hydrogen Turquoise Uses a process called methane pyrolysis to produce hydrogen and solid carbon. Not tested on scale. Concern about methane leaks.
Climate capital
Where climate change meets business, markets and politics. Explore FT coverage here.
Are you curious about FT’s environmental sustainability commitments? Learn more about our science-based goals here