HYDROGEN INVESTMENT FOR BRITAIN $1.4 BLN

PLATTS - 22 Sep 2021 - Ineos plans to produce and use up to 190,000 mt/year low-carbon hydrogen at its Grangemouth refinery and petrochemical plant in Scotland, in combination with the Acorn carbon capture and storage facility, as it seeks to reduce its CO2 emissions, the company said Sept. 22.

Ineos will invest over GBP1 billion ($1.4 billion) as part of its plans to cut emissions from the site by 60% by 2030 versus 2005 levels, and zero by 2045, in line with the Scottish government's target, it said in a statement.

The project will construct a "world-scale" hydrogen plant with CCS facility, producing 130,000-150,000 mt/year from natural gas, and will also capture CO2 from existing hydrogen production of 30,000-40,000 mt/year, Ineos Grangemouth Chairman Andrew Gardner told S&P Global Platts.

Ineos plans to "move to the production and use of hydrogen by all businesses at the Grangemouth site" by 2030, along with CCS of at least 1 million mt/year, the company statement said.

Ineos is replacing one of two gas-fired power stations at Grangemouth with a new plant that will run on hydrogen. Gardner told Platts that Ineos aimed to produce enough hydrogen to feed into other local and regional applications, including transport and a future hydrogen grid, in addition to its own consumption needs.

The hydrogen production with CCS would imply around a 10% increase in natural gas consumption at the site, he said.

"Our roadmap builds on the significant reductions we've already made at Grangemouth," Gardner said in the statement. "When Ineos bought the site in 2005 it was emitting around 5 million mt of CO2 per year. We've already reduced that to 3 million mt/year."

"Our next step, to use hydrogen combined with carbon capture via the Acorn project, will reduce this to below 2 million mt/year," Gardner said.

Hydrogen production pathways

The company is still exploring low-carbon hydrogen production pathways, but Gardner said Ineos was likely to use a steam methane reforming process. He said that modern CCS facilities could capture 95%-97% of CO2 emitted.

Ineos is also exploring the possibility of moving to green hydrogen production from electrolysis powered by renewable electricity after 2030. Gardner said that producing and supplying hydrogen provides a way for refineries to remain relevant in the transition to a zero-carbon economy.

On hydrogen production costs, Ineos does not have a price target in mind, but Gardner said a higher carbon price of around Eur150/mt would be needed to be cost-competitive with conventional hydrogen production.

The GBP1 billion investment comes on top of a GBP500 million commitment to CO2 reduction plans already underway at Grangemouth. It includes investment in the company's New Energy Plant, due for completion in 2023, to supply power and steam to the site, with a 150,000 mt/year reduction in CO2 emissions through efficiency measures.

"Low-carbon hydrogen offers the swiftest decarbonization route for our industrial sector and today's commitment by Ineos makes an even stronger case for the UK government to select the Scottish Cluster, which Ineos partnered with in the summer, to be among the first CCS clusters to be awarded funding through its current cluster sequencing process," the Scottish government's Net Zero Secretary Michael Matheson said in the statement.

The Grangemouth refinery is operated by Petroineos, a joint venture between Ineos and PetroChina.

S&P Global Platts assessed the cost of producing hydrogen via steam methane reforming in the UK (including CCS, capex and carbon) at GBP6.96/kg ($9.49/kg) Sept. 21, while autothermal reforming was GBP4.09/kg.

Alkaline electrolysis in the UK (including capex) at GBP10.20/kg, and PEM electrolysis production was assessed at GBP12.16/kg.

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