Brake lights for green hydrogen in Europe
Yara and Neste shelve projects in light of low demand, difficult financial environment
by Alex Scott
the Norwegian fertilizer firm Yara and Finland’s Neste are the latest in a string of companies across Europe to postpone the construction of low-carbon hydrogen plants.
Yara has shelved plans to build green hydrogen facilities based on water electrolysis powered by renewable electricity in Porsgrunn, Norway, and in Sluiskil, the Netherlands. In its third-quarter financial results report, the company says that it considers both to be “low-value projects” and that the postponement is part of an ongoing portfolio review.
During a conference call with Yara CEO Svein Tore Holsether, Morgan Stanley analyst Lisa De Neve asked about the cause of the delays. He said the go-ahead depends on availability of renewable energy at “the right price,” electric grid connectivity, and a financial system that doesn’t penalize first movers. “We don’t see that at the moment” for these projects, he said.
Yara is proceeding with plans to build a US facility for blue hydrogen, which is made from natural gas in a process that involves storing or using by-product carbon dioxide. By producing blue hydrogen and using it to make ammonia, Yara expects to take advantage of relatively low US energy prices and gain access to carbon storage capacity while maintaining the option of exporting low-carbon ammonia to Europe.
Meanwhile, Neste has ditched plans to build a green hydrogen facility at its refinery in Porvoo, Finland, featuring a 120 MW electrolyzer array that would have produced about 48 metric tons (t) per day of hydrogen. The company had already completed basic engineering for the project.
Neste cited “challenging market conditions,” as well as Finnish legislation that would have limited the amount of green hydrogen going into the refinery. “These limitations prevent the full economic utilization” of an electrolyzer of this size, the firm says in a press release.
Michael Lewis, CEO of the European energy firm Uniper,recently told a German publication that it is postponing green hydrogen investment. And the share prices of several green hydrogen companies in Europe and the US have dropped in the face of project delays that are partly due to restrictive regulations and uncertainty around demand. Stock prices at Ballard Power Systems, Green Hydrogen Systems, and Plug Power are down by more than 50% since the start of the year.
The European Court of Auditors warned the European Commission in a report published in July that all is not well with the region’s low-carbon hydrogen strategy and that a plan to generate 10 million t per year of green hydrogen by 2030 requires a “reality check.”