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BP’s investment shows tide is turning on hydrogen: WoodMac

BP’s purchase of a big stake in the massive Asian Renewable Energy Hub project in the Pilbara shows the tide is turning on hydrogen investments in Asia, according to global research company Wood Mackenzie.

The oil and gas giant revealed on Wednesday it had bought a 40.5 per cent operating stake in sprawling project that will harness wind and solar energy over a 6500sqkm site and use it to produce green hydrogen to be exported in the form of green ammonia.

AREH will generate 26 gigawatts of energy, representing about a third of all the electricity generated in Australia in 2020, as well as about 1.6 million tonnes of green hydrogen or 9 million tonnes of green ammonia a year once it is fully developed.

Wood Mackenzie vice president Prakash Sharma said after a 100-fold jump in low-carbon hydrogen project announcements over the past three years, major energy players now seemed willing to raise the game on green investments.

He also noted TotalEnergies and Adani had announced this week a $US5 billion investment into the development of a hydrogen and derivatives business in India.

“The investments committed by BP and TotalEnergies confirm the industry’s confidence in hydrogen technology,” Mr Sharma said.

“Australia is home to nearly a quarter of all the announced projects and more capital will flow into low-carbon hydrogen projects in the future if they are backed by a firm off-taker.”

Mr Sharma described hydrogen as a wonder-fuel that could decarbonise all sectors of economy.

In Wood Mackenzie’s 1.5-degree scenario analysis, low carbon hydrogen demand reaches more than 600 million tonnes in 2050 from under 1Mt today.

“We estimate US$3.5 trillion is needed to build renewable electricity supply and electrolyser capacity by 2050,” Mr Sharma said.

“The demand growth will be mainly driven by China, India, Japan, Korea, Europe, and the US.

“Hydrogen also offers significant export opportunities to countries blessed with renewable energy resources and we expect Australia, Middle East and North America to emerge as dominant players in the traded market for hydrogen and ammonia longer term.”

Meanwhile green groups remained cautious on BP’s investment in AREH.

WA Conservation Council executive director Maggie Wood said while the company’s move to commit to large-scale renewable energy production was encouraging, BP showed no signs of reversing its existing operations which contributed significantly to the world’s fossil fuel gas emissions.

“For BP – and other companies which dabble in renewable energy while continuing to invest in carbon intensive fossil fuels – only a strong and consistent pattern of divestment from oil, petroleum and gas will support their supposed commitments to a cleaner and greener energy supply,” she said.

A spokeswoman for Extinction Rebellion WA said an urgent move towards green hydrogen and renewable energy projects was a positive change in direction.

But she said a reduction in carbon emissions could not outweigh the conservation of biodiversity, noting the Federal Government’s rejection of the plan because of its potential impact on the wetland habitat of migratory birds at nearby Eighty Mile Beach.

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