European refiners may hold the key to scaling green hydrogen, says Wood Mackenzie
High costs have kept green hydrogen projects from taking off, but new regulations in the European Union’s (EU) refining sector offers a solution to launching this carbon friendly technology at scale, according to a new Horizons report from Wood Mackenzie.
• Globally, refining currently accounts for 36% of all hydrogen demand
• EU regulations favor green over blue hydrogen
• Strong policy is needed to reach targets and costs must come down
• Marine and aviation sectors offer significant growth potential
According to the report, “Isn’t it ironic? How Europe’s oil refiners could offer a route to scale up green hydrogen”, European refiners are set to require ~0.5 million tonnes of green hydrogen annually by 2030 to comply with EU regulations, replacing about 30% of current CO2-emitting hydrogen production. Refining represents one of the largest hydrogen opportunities globally, which, alongside ammonia and methanol production, accounts for 98% of current demand.
The latest revision of the EU’s Renewable Energy Directive (known as RED III), favors green hydrogen over blue hydrogen, helping to minimise the delays and cancellations now all too common when it comes to green hydrogen globally.
“European refiners are set to become significant producers or buyers of green hydrogen, initially to decarbonise the refining sector and its derivatives as fuel for marine and aviation,” said Alan Gelder. “Numerous green hydrogen projects have already targeted the sector.”
The report finds that of the 6 Mtpa of low-carbon hydrogen capacity that has taken a final investment decision (FID), European refineries have already committed more than US$5 billion of capital.
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