BP and Rio Tinto have formed a new jointly-owned company, Hydrogen Energy, which will develop “decarbonized” energy projects around the world. The venture will initially focus on hydrogen-fueled power generation, using fossil fuels and carbon capture and storage (CCS) technology.
Decarbonized energy projects convert fossil fuel feedstocks such as coal, petroleum coke (a refinery by-product) or natural gas to hydrogen and carbon dioxide gases, with the carbon dioxide being captured and sequestered.
In power projects, the hydrogen will fuel a gas turbine for generation of industrial-scale supplies of electrical power. Full integration with CCS technology would ensure that 90% of the carbon dioxide which would otherwise have been emitted to the atmosphere would be captured and stored, according to the companies.
Hydrogen Energy will benefit from the capabilities of both parent companies: Rio Tinto’s expertise and assets in coal extraction and supply; and BP’s experience and expertise in chemical processing, low-carbon power generation and carbon capture and storage.
Coal is a key part of Rio Tinto’s energy business and we believe it has an essential role in generating clean power in the future. The investment we are making in Hydrogen Energy will allow us to deliver decarbonized energy and carbon capture and storage. Although initial projects may be based on non-coal feedstocks, they will be significant building blocks in the development of coal gasification on an industrial scale. Investing now means we will be well-placed to create value for shareholders from opportunities in the emerging clean power market.—Tom Albanese, Chief Executive, Rio Tinto
Hydrogen Energy, whose final formation will be subject to regulatory approvals, will identify and secure opportunities for decarbonized energy projects worldwide, working with governments to determine appropriate policies and regulatory regimes, and develop and operate the assets, with partners where appropriate. The projects will typically use coal or petroleum coke as feedstock; although in some cases natural gas may be used.
BP’s previously announced hydrogen-fueled power projects in Peterhead, Scotland and Carson, California will become part of Hydrogen Energy. (Earlier post.) As part of the agreement, Rio Tinto will make a cash payment to BP of some $32 million, subject to post-completion adjustments.
Hydrogen Energy will be headquartered in Weybridge in the south-east of England and will initially have a staff of 75 seconded from the parent companies. The chief executive of Hydrogen Energy was today named as Lewis Gillies, formerly head of BP’s hydrogen power business and its chief financial officer as Peter Cunningham, formerly head of business evaluation for Rio Tinto.