BP has been widely reported to be taking the lead role in the US$36bn ($52.2bn) Asian Renewable Energy Hub in Western Australia’s Pilbara region, though the supermajor has been predictably tight-lipped about its involvement.
While BP has not confirmed whether it is taking a stake in the project or not, a decision to participate will put the company in the lead role of a world-leading green hydrogen project.
But rather than talk about the size of the 26 gigawatt project, or how its arrays of solar panels and wind turbines will stretch out over an area 10 times bigger than Singapore, let’s have a look at what BP’s entry would mean for the hydrogen sector.
The energy giant in green hydrogen’s corner
First off, BP is better known for being one of the world’s largest oil and gas companies.
It also has big ambitions when it comes to renewable energy with its chief executive Bernard Looney telling investors earlier this year that by 2025, the company planned to dedicate 40% of its budget to parts of its business that would aid the energy transition.
Given that BP spent $84bn on oil and gas exploration and development since 2016 (compared to just $3.2bn on clean energy in the same time frame), 40% of its budget is a big spend on renewables.
Bringing such a powerhouse to bear on the Asian Renewable Energy Hub would imply that green hydrogen is finally worthy of being considered by the big players as a replacement for oil and gas.
That hydrogen – or any of its carriers such as liquid ammonia – can be bought and sold just like oil or gas must only add to the appeal, if only for the sense of familiarity.
There are still many challenges ahead for green hydrogen to really take its place as one of pillars of the net zero energy transition but having BP, its resources and development activities would certainly go a long way towards addressing them.
Regardless of its involvement in the ambitious Pilbara project, BP is already considering the production of hydrogen from its recently shut-down Kwinana oil refinery, a move for which it received a $300,000 grant from the Western Australian state government.
Not just BP
BP is not the only big player looking at green hydrogen.
Fellow supermajor Shell is also making inroads into the sector with CEO Ben van Beurden saying recently that the company could quadruple the scale of its hydrogen interests within months.
Australian billionaire Andrew Forrest has made his opinions about green hydrogen very clear, having committed the green arm of his iron ore business – Fortescue Future Industries (FFI) – towards making his green dream a reality.
FFI is gunning to be a big player in the sector and seeks to establish a portfolio of domestic and international projects with an ambitious target to supply 15Mt of green hydrogen by 2030.
While some green pundits may bemoan the involvement of such major players, the scale of the transition to net zero means that for any progress to be made on the green hydrogen front, it would take the combined efforts of people, companies and governments to make it a reality.