Energy transition

Tracking the Energy Transition: BP Boosts Emissions Goals, CCS Projects Planned for the Mediterranean, Wind Blows Hot in US

Supermajors continue to align their goals with a net-zero future while strides are made across the globe to add CCS, solar, and wind projects to help achieve ambitious green energy goals.

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The US is targeting several offshore wind lease sales following a successful auction for parcels off New York.

Not to be outdone by US rival ExxonMobil, BP has upped its energy transition targets for the years ahead with 40% of capital spending being earmarked to energy transition projects by 2025, a 50% cut in operational emissions by 2030, and net-zero emissions by 2050. The supermajor originally targeted a 30–35% reduction in operational emissions by 2030, and net-zero full-life-cycle emissions from the products it sells by 2050, as opposed to a 50% reduction in the emissions intensity of those products by that point.

“Over the past 2 years we have set a new purpose, direction, and strategy ... and completed the largest reorganization in our history,” Chief Executive Bernard Looney told investors in February. “We enter 2022 with growing confidence. The past 2 years have reinforced our belief in the opportunities that the energy transition presents.”

BP aims to generate as much as $10 billion from energy transition businesses by 2030, driven by five transition growth engines—bioenergy, convenience, electric vehicle charging, renewables, and hydrogen. The operator has quadrupled its renewables development pipeline since the end of 2019, from 6 GW to 24.5 GW. This includes its entry into offshore wind, now with a project pipeline of 5.2 GW net, including its recent success in the ScotWind leasing round.

With its renewables pipeline and 4.4 GW developed to final investment decision at the end of the year, it is on track for its target of having developed 20 GW renewable power capacity by 2025 and its aim for 50 GW by 2030. The operator remains confident of achieving 8–10% levered returns for these investments.

In hydrogen, BP has built a significant portfolio of options in markets worldwide with potential capacity of 0.7–1.3 mtpa. Additional value creation is possible through integration with renewables and carbon capture and sequestration (CCS).

Speaking of CCS
Canada's Alberta province selected six proposals to move forward with developing the country's first carbon storage hubs. The Alberta Energy Ministry chose projects proposed by Enbridge, Shell, Wolf Carbons Solutions, Bison Low Carbon Ventures, Enhance Energy, and a joint venture of TC Energy and Pembina Pipeline.

The hubs would store emissions from high-polluting facilities in the Alberta Industrial Heartland zone, home to a cluster of refineries and petrochemical and fertilizer plants around the city of Edmonton.

If the companies’ proposed locations are deemed suitable for the permanent sequestration of carbon, the provincial government will award them pore space rights to inject captured CO2 underground.

Alberta did not provide details on the cost or capacity of the projects.

Across the ocean, Italian producer Eni and Air Liquide of France have entered into a collaboration agreement to assess decarbonization solutions in the Mediterranean region of Europe, focused on carbon-intensive industrial sectors. The two companies will combine their knowledge base to enable CO2 capture, aggregation, transport, and permanent storage.

Within the framework of the agreement, Eni and Air Liquide will identify clusters of industries in this area and will define the optimal configuration to develop a large-scale CCS program.

Air Liquide will develop CO2 abatement solutions, leveraging its ongoing CCS initiatives in Northern Europe and its proprietary technology Cryocap, which it said can capture up to 95% of CO2 emissions from industrial facilities.

Eni, leveraging its experience in gas fields exploitation and management, will identify the permanent CO2 storage locations in the Mediterranean Sea.

Back in the US, Summit Carbon Solutions received a $250 million strategic investment from producer Continental Resources to create the largest CCS project of its kind in the world. Continental Resources will commit the funds over the next 2 years to help the development and construction of the project’s capture, transportation, and sequestration infrastructure, and apply its operational and geologic expertise to help ensure the safe and secure storage of CO2.

Summit Carbon Solutions will primarily capture CO2 from ethanol plants and other industrial sources in Iowa, Nebraska, Minnesota, North Dakota, and South Dakota. The CO2 will be aggregated and transported to North Dakota via pipeline, where it will be sequestered in subsurface geologic formations.

The project has commitments from 31 partner ethanol facilities to deliver more than 8 mtpa of CO2, with initial pipeline capacity of 12 mtpa and expansion capabilities to handle up to 20 mtpa.

Summit, launched in early 2021, began developing plans for the project and its partnerships with ethanol producers in 2019. It is on track being operational in the first half of 2024.

The Answer, My Friend
The US Bureau of Ocean Energy Management (BOEM) held a competitive auction in February for six lease areas in the New York Bight area off the coast of New York and New Jersey. After the first day of the auction, it was already the biggest offshore wind lease sale in the US with more than $1.51 billion in bids and 13 bidders remaining. After day two, more than $3.35 billion in bids were tallied with 12 bidders remaining. The auction concluded on the third and final day with 64 rounds totaling $4.37 billion in high bids.

BOEM announced the provisional auction winners for each of the lease areas including Mid-Atlantic Offshore Wind, Ocean Winds East, Attentive Energy, Bight Wind Holdings, Atlantic Shores Offshore Wind Bight, and Invenergy Wind Offshore.

The agency announced a new sale coming later this spring for a pair of parcels offshore the Carolinas. Lease sales offshore California and Oregon, the Central Atlantic, Gulf of Maine, and the Gulf of Mexico are expected to follow.

Meanwhile, the Italian government has given the green light to the construction of six wind farms with a capacity of 418 MW as it steps up efforts to reduce its dependence on fossil fuels and, specifically, Russian natural gas.

The wind farms will be developed in the central and southern regions of Puglia, Basilica, and Sardinia, a government statement said.

The projects are in addition to a pair previously cleared by the government in February with a capacity of 65.5 MW.

Italy’s approval process has slowed down the rollout of green energy projects, threatening the achievement of climate targets.

Rome, which has introduced measures to spur the development of renewables, counts on gas to generate some 40% of its electricity. Russian gas accounts for around 40% of total imports.

Here Comes the Sun
Greenbacker Capital Management has made an equity investment through an affiliated fund in Noria Energy, a California-based solar developer. The investment will enable Noria to scale its platform, while expanding its existing pipeline of solar projects, both ground-mounted arrays and floating solar installations. With this investment, Greenbacker enters the floating solar space, or floatovoltaics.

Floating solar projects do not require land area, instead making use of space otherwise left idle, like the surfaces of hydroelectric dam reservoirs, wastewater treatment ponds, or other calm bodies of water. They can also reduce algae growth and slow evaporation in those bodies of water. The cooling effect on the floatovoltaic panels from the water beneath lead to greater and more-efficient energy generation.

The National Renewable Energy Laboratory estimated that installing floating solar on the 24,000-plus manmade reservoirs in the US could meet about 10% of the country’s annual electricity needs. Noria has already designed, engineered, and co-developed the nation’s largest floating solar array, a 4.8 MW installation at the water reclamation facility in Healdsburg, California.

And the Sun Is Making Hydrogen
Fusion Fuel Green has entered into an agreement with KEME Energy to install a green hydrogen production facility in Sines, Portugal, using its HEVO-Solar technology. The project, which is expected to require a capital investment of around $2.8 million, would have an equivalent electrolysis capacity of 1.22 MW and produce an estimated 77 mtpa of green hydrogen. The output from the facility will be used by the Sines Renewable Energy Community.

Already approved for $2.63 million of grant funding from Portugal’s POSEUR program, the project will be developed in the Sines Industrial and Logistics Zone, where KEME Energy has leased 4.8 hectares from AICEP Globalparques. The project is expected to be a net contributor to the decarbonization targets laid out by the Portuguese government for the industrial and heavy-transport sectors.

It will be a basis for the expansion and mobilization of the Portuguese National Hydrogen Strategy adopted in 2020. The partners believe the project could make the city of Sines “one of the most important hydrogen production and transaction centers in Europe.”

And Hydrogen Gets a Database
The US Department of Energy (DOE) has taken its first step toward creating a national database of hydrogen projects designed to help hydrogen companies attract federal dollars from within the $1 trillion infrastructure bill.

Originally announced in December, the H2 Matchmaker was designed by the DOE's Hydrogen and Fuel Cell Technology Office to gather information on planned or existing hydrogen-related projects, then present that information on an interactive map. Users will be able to see the hydrogen activities occurring around them, as well as the contact information of their hydrogen neighbors.

The database is intended to drive team building between hydrogen companies—on both the demand and supply sides—so that co-located projects can collectively apply for hydrogen hub funding.

It will rely on hydrogen producers, users, or other stakeholders to self-identify and volunteer information about their operations. The DOE released the H2 Matchmaker Self-Identification Form on its website in January.

It's not the first effort to build a comprehensive picture of hydrogen activity in the US. Last year, the clean hydrogen advocacy coalition Hydrogen Forward released its own tool that records hydrogen deployments, research projects, and other hydrogen-related activities across the country.

Its database pulls project information from publicly available sources and encourages companies to share project information through an online contact form. It lists more than 330 hydrogen deployments, research projects, or other opportunities.

The Biden administration's infrastructure bill dedicated $8 billion to help fund the creation of at least four regional hydrogen hubs. Signed by the president in November, the bill gives the DOE 180 days to issue a request for proposals, which would initiate an application process through which regional groups would compete for a slice of that funding.

According to the bill, proposals will be judged based on the opportunities they create for skill training and long-term employment, their ability to help reduce the cost of hydrogen, and preexisting natural gas resources.

Last year, the department issued a request for information from local groups interested in facilitating hydrogen hubs and received more than 200 responses. Many groups in major US cities have already indicated they plan to apply, including in the Gulf Coast, Los Angeles, New York, Washington, the Pacific Northwest, North Carolina, and South Carolina.

While China Gets a Plan
Chinese authorities in March released a plan for the 2021–2035 period that sees a complete hydrogen energy industry development system in place by 2025. According to the plan jointly released by the National Development and Reform Commission and the National Energy Administration, the system will have significantly improved innovation with the core technologies and manufacturing processes basically mastered. China views hydrogen as a “frontier” area and one of the industries chosen for advancement.

Annual hydrogen production from renewable energy is expected to reach 100,000 tons to 200,000 tons to become an important part of new hydrogen energy consumption by 2025 and enable carbon dioxide emission reduction of 1 mtpa to 2 mtpa.

By 2030, China is seeking a “reasonable and orderly industrial layout” and wide use of hydrogen production from renewable energy to support the carbon peaking goal. The plan sees the proportion of hydrogen produced from renewable energy in energy consumption significantly increasing by 2035.

China is the largest producer of hydrogen at about 33 mtpa; however most of the volume is produced from fossil fuels as feedstocks in refineries or chemical facilities. The China Hydrogen Alliance has suggested that China’s hydrogen demand would reach 35 mtpa in 2030 and 60 mtpa in 2050.