BP cancels UK green hydrogen project; moving away from clean energy

UK oil company BP has cancelled the HyGreen Teeside project, its first green hydrogen venture in the UK, in line with the realignment of its investment strategy to reduce capital expenditure on transition businesses and increase investments in oil and gas production.

Touted as “one of the biggest green hydrogen production facilities in the UK” with 500 megawatts of electrolyser capacity by 2030, HyGreen’s first 80 MW phase was scheduled to start up in Teesside, northern England, this year.

The facility, located at the Teesworks site, aimed to support low-carbon industry and power projects across the region, promising to create significant job opportunities, including 600 construction jobs and an additional 100 operational jobs.

Despite these ambitious plans, BP has now redirected its focus to prioritize other projects within Teesside — specifically NZT Power, a gas-fired power station; Northern Endurance Partnership (NEP), a joint venture aimed at developing carbon capture and storage infrastructure; and H2Teesside, a blue hydrogen project. These projects align with BP’s revised strategy to concentrate on fewer, larger projects that promise higher returns and strategic relevance.

The decision to abandon HyGreen Teesside followed the expiry of its planning application just days after BP announced cutbacks in renewable energy investments. This decision marks a significant pivot in BP’s approach to its energy transition strategy, emphasising a more concentrated investment in traditional energy sectors and selected low-carbon projects.

This development reflects the ongoing challenges within the green hydrogen sector, particularly in terms of costs and market readiness. Despite the UK government’s ambitious targets to double low-carbon hydrogen production by 2030, the economic viability and market demand for green hydrogen continue to pose significant hurdles.

The cancellation of HyGreen has stirred responses from various stakeholders, with local government and energy authorities withholding comment on the decision.

BP’s move highlights the delicate balance energy companies must navigate between pursuing green energy initiatives and maintaining financial discipline amidst shifting market and regulatory environments.