BP has talked for several years of generating green hydrogen at its refinery in Lingen in north western Germany. In 2016, the utility Uniper announced that it was cooperating with the oil company to build an electrolysis plant that would supply H2 to the site. Nothing seems to have happened.

This week BP made a similar announcement. This time it has paired with Orsted to develop a plan to build a 50 MW electrolysis plant, using electricity sourced from offshore wind in the North Sea. The scale of the scheme has increased from 25 MW, and several other features make this plan more likely to go ahead. Indeed BP talks of eventually extending the size of the plant to 500 MW, ten times the initial capacity.

The Lingen refinery uses about 45,000 tonnes of hydrogen to make some the hydrocarbons it produces from oil. To put this number into context, global production of pure hydrogen is about 70 million tonnes and the refinery processes about 0.1% of world oil.

According to BP and Orsted, the 50 MW electrolyser will produce about 9,000 tonnes a year of hydrogen, 20% of the refinery’s needs. If we assume that the electrolyser works 8000 hours a year, the wind energy used will be about 400 GWh. 9,000 tonnes of hydrogen has a lower heating value (LHV) of around 75% of this, or around 300 GWh.

According to BP, the CO2 emissions from the refinery will fall by about 80,000 tonnes as a result of using electrolysis. That’s approximately 9 tonnes of CO2 for each tonne of hydrogen. At today’s price of €26 per tonne, the carbon tax reduction from producing a tonne green hydrogen is around €235, or 23.5 Euro cents per kilogramme, equivalent to 31 US cents per kilogramme.

Hydrogen made from wind in the North Sea will probably cost around €2.25-2.50 a kilo, perhaps a bit more ($2.66-$2.95+). This compares to a raw cost of hydrogen made from natural gas in Germany of probably no more than about $1.60. So green hydrogen will be more expensive, even after taking carbon taxes into account. But it is worth noting that pulling the CO2 price up to $50 a tonne would probably come reasonably close to equalising the cost of green and grey hydrogen.

Perhaps the most interesting part of the BP/Orsted announcement is the future possibility of expanding the electrolyser capacity ten times. As the press release makes clear, this would take the amount of hydrogen produced to well over the refinery’s current need. The surplus will be used, the partners say, to perhaps begin the process of making synthetic fuels. (By ‘synthetic’ in this particular case, I imagine that BP envisages making petrol or diesel replacements using hydrogen and captured CO2 from the refinery’s other operations).

This is, I think, the first time that BP has publicly announced an intention to make replacements for fossil fuels. (No commentators or journalists have made this point, so please treat this assertion as tentative). Of course this is a long way off; BP says that the smaller electrolyser won’t begin operation until 2024, even if it can rapidly agree a subsidy scheme with the German government.

Nevertheless this announcement seems very important. It is a curious fact that oil refineries, which symbolise the fossil fuel economy, may become the first industrial sector to shift towards to 100% green hydrogen for their own operations. How much wind capacity will be needed to fully decarbonise hydrogen production for refineries? Based on this example, full replacement of methane for making hydrogen will require at least 500 GW of electrolysers and probably well over 1 TW of offshore wind, 50% more than current worldwide wind capacity.