H2H Saltend: Equinor bids for Government funding for major hydrogen project in Hull

Pictured: A look across Saltend Chemicals Park, the proposed location for the project. Image: Equinor

The energy major announced the bid, which is being made through the Government’s Net-Zero Hydrogen Fund, this morning (22 June). The £240m fund is operated by UKRI and was launched in a bid to help accelerate the commercial development of low-carbon hydrogen production projects in the UK this decade. The UK Government recently updated its 2030 ‘low-carbon’ hydrogen production target from 5GW to 10GW in the Energy Security Strategy.

Should Equinor’s bid be successful, Equinor and the other businesses involved in the H2H Saltend Production 2 project could receive up to £8.4m of Government funding. This would be matched by the private sector.

The project is based out of Saltend Chemicals Park, which is owned and operated by px Group, and intends to produce hydrogen to enable fuel switching for the Park’s gas-fired power plant in the first instance.

Plans for the project were first submitted through the Government’s Cluster Sequencing Process in January 2021. At that point, Equinor stated that it is intending to develop 600MW of hydrogen production capacity in the first instance. It has now stated that an expansion, bringing total production capacity to 1.2GW, could be possible in the longer term.

The first 600MW could come online by 2028, Equinor stated in submitting its bid to the Net-Zero Hydrogen Fund. This production will be for blue hydrogen. Blue hydrogen is produced using natural gas, with process emissions captured using man-made technologies. This approach is in its relative infancy in the UK at present, but the UK Government is aiming for up to 5GW of blue hydrogen generation capacity to come online this decade.

In time, the H2H Saltend project could also be expanded to include green hydrogen generation. Green hydrogen is produced by running water through electrolysers powered by renewable electricity.

Equinor’s vice-president for low-carbon solutions in the UK, Dan Sadler, said: “This co-funded bid helps to maintain and unlock private investment in low carbon hydrogen projects in the Humber. It will underpin the creation of a world-first hydrogen economy in an end-to-end value chain. This scheme will position the UK at the forefront of the race to a hydrogen economy helping transition major local industries towards greener technologies whilst creating opportunities for both local and national businesses.”

Readers keen to find out more about H2H Saltend are encouraged to listen to edie’s recent Sustainable Business Podcast episode including a tour of Saltend Chemicals Park and an interview with experts at px Group. Click here to access that episode. 

Equinor updated its climate targets in late 2020. Having previously committed to reaching ‘near-zero’ emissions for North Sea operations by 2050, it set a net-zero target with the same deadline, covering both upstream production and final consumption. The business clearly sees hydrogen playing a significant role in the energy transition and is targeting the development of 1.8GW of blue and green hydrogen generation capacity in the UK alone this decade.

Blue hydrogen concerns

It bears noting that the UK Government is being asked to scale up its support for green hydrogen and scale back its blue hydrogen plans. The Institute for Energy Economics and Financial Analysis (IEEFA) think-tank highlighted last month that the Government’s economic calculations around blue hydrogen had been undertaken before global gas prices began to rise exponentially, with costs of production now likely to be far higher.

Environmental groups also continue to raise questions about the likely climate impact of blue hydrogen, given that man-made carbon capture technologies are in their relative infancy at a commercial scale. The UK Government is developing a low-carbon hydrogen standard that would need to be met by all publicly funded projects to help tackle this challenge.