Ineos seeks tenders for ‘world-scale, low-carbon hydrogen plant’ at Grangemouth

Chemicals giant Ineos has unveiled the latest step it is taking to reach net-zero emissions, by sending out invites to tender on its plans to transform its Grangemouth facility into a carbon capturing, low-carbon hydrogen production site.

Ineos seeks tenders for ‘world-scale, low-carbon hydrogen plant’ at Grangemouth

The first £500m will include investment into a new energy plant

Ineos announced today (27 January) that it is inviting engineering and design contractors to tender for the next stage of its plans to produce low-carbon hydrogen at its Grangemouth facility in the UK.

Plans have been in place for some time for Ineos to invest £1bn into blue hydrogen production and use at the site in Grangemouth, near Falkirk.

The new £1bn pot will enable hydrogen to be produced at the site, and for all businesses there to use hydrogen within their processes. It will also be used to fund the development of a commercial-scale carbon capture array. In essence, Ineos is striving to create a blue hydrogen system at the site. The firm has not yet revealed the planned capacity.

Also set to benefit from the fresh funding are electric versions of key pieces of heavy equipment and improved energy efficiency measures including energy optimisation software. Additionally, Ineos has stated that it will scale up investment in sourcing post-consumer-recycled content for use in the plastics production at Grangemouth.

The company had already pledged to reduce emissions at the site by 60% by 2030, before bringing them to net-zero by 2045, and earmarked £500m to achieve this.

The first £500m will include investment into a new energy plant, due for commission in late 2023. The plant will supply energy to all site operations and is expected to reduce emissions by 150,000 tonnes annually. The new plant will then be converted to run hydrogen.

The project will also gain access to the Scottish Cluster carbon capture and storage (CCS) infrastructure. Ineos states that more than one million tonnes of carbon dioxide per year will be sent offshore from the hydrogen plant, through existing gas pipelines, to be permanently stored in rock formations deep below the North Sea.

Ineos’s chief executive Stuart Collings said: “We are progressing at pace with our commitment to deliver our Net Zero plans. This will see the displacement of hydrocarbon fuels used at Grangemouth, like natural gas, with clean, low carbon hydrogen to power our processes and manufacture vital materials used across a wide range of sectors.

“To achieve this, we are inviting bids from the best engineering companies to design both a state-of-the-art carbon capture enabled hydrogen production plant and an extensive suite of related infrastructure projects. The carbon dioxide from this project will be routed to the Scottish Cluster’s Acorn CO2 transport and storage project, resulting in reductions of more than one million tonnes of carbon dioxide emissions each year.”

Last year, Ineos announced that it would invest £1.7bn in green hydrogen production in Europe this decade. The energy and chemicals giant touted the package as the largest ever single investment commitment in green hydrogen from Europe’s private sector.

The first electrolysis unit to be built as part of Ineos’s package will be a 20MW facility at Rafnes, Norway, where the business already produces ethylene, propylene, chlorine, hydrochloric acid, caustic soda and vinyl chloride. Hydrogen will be used to power these production operations and will also be provided to external transport firms.

Also confirmed is a 100MW electrolyser in Koln, Germany, co-located with Ineos’s ammonia and plastics production facilities. Further projects will be announced for Belgium, France and the UK.

Ineos’ overarching climate commitment is to net-zero by 2050. Interim targets for reducing emissions across the business through to 2030 are due to be published in the coming months. Green groups including ClientEarth have been urging the business to provide more detail as soon as possible, given its past record of environmental controversies including fracking, and purchasing divested plastics production capacity from BP.

Hydrogen hopes

The announcement comes as the debate surrounding hydrogen as a viable solution to decarbonise rages on.

Under the Ten Point Plan for the green industrial revolution, the UK Government is targeting 5GW of low-carbon hydrogen production capacity by 2030. The term “low-carbon” covers blue hydrogen and green hydrogen, the latter of which is produced using electrolysis enabled by renewable electricity. Equinor claims that, when the work of its partners on its two major hydrogen projects are added to its own 1.8GW goal, more than half of the 5GW goal could be accounted for.

The Energy Networks Association (ENA), which represents the UK’s energy network operators, confirmed that its member gas firms will be ready to begin using 20% hydrogen, 80% natural gas blends for 2023. In making that announcement, the Association asked for Ministers to make policy changes to support the move, including increasing targets for domestic hydrogen productions and lifting current restrictions on the use of blends in public networks.

However, plans to begin delivering gas blends of 20% hydrogen from next year would be unwise, a scientific study has concluded, as they would increase gas bills and exacerbate the existing price crisis.

The study, published this week in the 238th edition of the journal ‘Energy’, was conducted by researchers at the Fraunhofer Institute for Energy Economics and Energy System Technology (Fraunhofer IEE) in Kassel, Germany.

It assesses how a 20% hydrogen blend in domestic gas supplies, predominantly used for heating, would impact the carbon impact of the gas across its life-cycle. How this blend would impact prices is also considered. All conclusions are based on a scenario taking place within the EU, but the researchers have stated that findings would likely be similar for the UK.

On the former, the conclusion is that a blend of 20% hydrogen and 80% natural gas will deliver a 7% reduction in life-cycle emissions compared to using 100% natural gas, in domestic situations. 

More broadly, by IRENA’s calculations, green hydrogen is likely to become cost-competitive with grey (fossil-fuelled) hydrogen in the mid-2030s, on a global basis. Price parity is likely to happen sooner in markets including China, India and Brazil, as well as in Europe, where private sector players are already working together at scale.

Matt Mace

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