UK conglomerate Ineos is investing big in green hydrogen as it looks to decarbonise its own business and potentially capitalise on future third-party demand for the emissions-free fuel.
The company plans to invest more than €2 billion ($2.2 billion) into green hydrogen projects across Europe, with plants initially planned in Norway, Germany and Belgium over the next 10 years.
Ineos already boasts hydrogen production of more than 400,000 tonnes per annum, mostly as a by-product from its ethane crackers as well as from its chloralkali manufacturing process.
It is the latter process — which uses salt, electricity and water to produce chlorine, caustic soda and, as a by-product, hydrogen — that has seen Ineos subsidiary Inovyn become the largest operator of electrolysers in Europe.
Inovyn’s hydrogen business manager Wouter Bleukx told Upstream it is the company's electrolyser expertise that gives it a big advantage in driving Ineos’ expansion into producing green hydrogen via water electrolysis.
“We have that experience and, what is maybe not so well known, we have under the Inovyn umbrella our own technology department,” he said.
This has seen Inovyn sell electrolysis technology across the globe over the past 50 years, albeit related to the company’s salt electrolysis technology utilised in its chloralkali process.
“[The technology] is very comparable to alkaline water electrolysis,” Bleukx told Upstream.
“So the combination of the fact that we are the biggest operator [of electrolysers in Europe] and that we also have this technology knowledge gives us, of course, a big advantage.”
Another advantage Inovyn has in the hydrogen space is that it is already building a customer base through the sale of the hydrogen produced as a by-product of the chloralkali process.
Bleukx explained that not only does this hydrogen benefit from being significantly less emissions intensive to produce than conventional grey hydrogen, but it is also 99.95% pure.
Targeting third parties
With the hydrogen containing essentially no impurities, Bleukx said Inovyn is already making partnerships in the fuel market, which will be a key segment to target with its green hydrogen production.
Bleukx said the initial focus of the green hydrogen business will be to decarbonise Ineos’ own operations. However, it also intends to deliver green hydrogen to third parties.
It will first focus on selling green hydrogen to the transport segment, in particular the heavy transport and maritime industries, as that is where it sees the most near-term market potential.
However, the company is also turning its attention to using “green molecules” to decarbonise other industries.
“We believe very strongly in green molecules, because it's also very close to our chemical DNA and we think that we need green molecules to make more downstream green products in the future,” Bleukx pointed out.
Bleukx also sees opportunities in hard to abate sectors, such as the steel industry, where renewable electricity may not be the solution to emissions reduction, but hydrogen could be.
However, for the emerging hydrogen economy to really take off, Bleukx stressed it needs support from governments, in the form of funding and infrastructure, to help the industry reach scale.
While small volumes can be transported via road, pipeline infrastructure will be needed to transport hydrogen as the industry scales up, just as large volumes of other gases are transported in Europe today, Bleukx said.
With the announced global electrolyser project pipeline standing at more than 260 gigawatts, as of October this year, there will also need to be a significant investment in additional renewable energy to power the electrolysers to produce green hydrogen.
The International Energy Agency estimates that, if fully developed, the current global electrolyser project pipeline could bring an additional 475GW of wind and solar PV capacity, equivalent to one-third of total installed variable renewables today.
Cost competitiveness is also another hurdle facing green hydrogen, with hydrogen created using fossil fuel currently much cheaper to produce than the green alternative.
Blue hydrogen is produced from natural gas feedstocks, with the carbon dioxide by-product from hydrogen production captured and stored. However, the process is not emissions free.
Green hydrogen is made using electrolysis powered by renewable energy to split water molecules into oxygen and hydrogen, creating an emissions-free fuel.
However, as electrolyser technology and production scale up and renewable-energy costs come down, green hydrogen is expected to become more competitive by next decade.
“I think there will be an acceleration beyond 2030, so it is a real long-term project,” Bleukx said.
“What we want to do is to use these years to invest in our own plants, in our own green molecules, where we see it makes sense to get experience and develop. Then, when the market is really taking off, we will have the experience and be a credible partner, and then we can start heavily investing.”
Inovyn’s planned green hydrogen projects are all based in Europe. However, Bleukx noted that renewable-energy capacity bottlenecks in Europe could see the company target projects overseas as it looks to scale up its business.
“You have the typical countries like Chile, Saudi Arabia, Oman, maybe some countries in North Africa, … where you have a good mix of wind and solar, where you then can produce the hydrogen,” he states.
However, moving production further afield also opens up new transport challenges, with Bleukx admitting further study is needed into the best way to transport the green hydrogen from these overseas locations, whether that be in the form of methanol, ammonia or some other carrier.
Even with the logistical challenges, though, Bleukx claimed it could still be cheaper in the future to produce green hydrogen overseas than in some European countries, with the cost of renewable electricity to be the key factor.