OCI Partners with NortH2 with the Intent to Develop the First Large-Scale Green Ammonia and Methanol Value Chains in the Netherlands
31 March 2022
- As one of the largest producers and consumers of hydrogen in the Netherlands, OCI is set to play a pivotal role in the launch of the green hydrogen economy in the Netherlands and Europe, leveraging its leading global position in hydrogen products
- Partnership with NortH2, which consists of Equinor, RWE, Shell, Gasunie and new investment partner Eneco, helps decarbonize OCI’s own production processes and the downstream food, fuel and consumer goods value chains, as well as reduce the country’s dependence on natural gas
- Using 1 GW of NortH2’s green hydrogen, OCI can help The Netherlands achieve a significant 4% of the 2030 Climate targets set for the Dutch Industry, equivalent to taking 450,000 cars off the road
- To achieve the Dutch and EU ambitious Climate Targets set for 2030, governmental policies enabling the large-scale production and use of green hydrogen in industry are urgently needed
OCI N.V. (Euronext: OCI), a leading global producer and distributor of hydrogen-based products, today announced a partnership with NortH2 with the intent to develop the first integrated green ammonia and methanol value chains through large-scale green hydrogen supply by NortH2 to OCI’s plants in the Netherlands.
NortH2 is a large-scale offshore wind-to-hydrogen electrolysis project being developed in the Eemshaven area. During its current feasibility phase NortH2 consists of Equinor, RWE, Shell and Gasunie with the support of Groningen Sea Ports.
Eneco, a sustainable energy company, with operations in the Netherlands, Belgium, Germany and the UK, has announced today it will also join the consortium as an investment partner, thereby underpinning the importance of broad cooperation throughout the value chain. Eneco, Shell, Equinor and RWE have the ambition to continue together after the joint study phase and produce a large-scale supply for the industry of up to 4 GW by 2030.
Joining forces with NortH2 will provide OCI stable and large-scale supply of green hydrogen which allows the company to decarbonize its production processes and meet growing demand from its customers in the downstream value chain for renewable hydrogen.
OCI can provide fast-tracked upscaling for hydrogen use in its existing production processes and thus plays a pivotal role in the launch of the green hydrogen economy in the Netherlands and Europe. With ~50% of current global hydrogen production already used as a feedstock in ammonia and methanol production, the switch to green hydrogen at OCI is technologically straightforward and relatively fast when compared to other sectors. In addition, OCI’s production assets are strategically located and ideally positioned to connect to the NortH2 project and the planned hydrogen pipeline backbone of Gasunie in the Netherlands.
The impact can also be significant. Using 1 GW of NortH2’s green hydrogen in OCI’s production processes would correspond to 900,000 tons direct CO2 reduction per year, which would constitute a significant 4% of the 2030 Climate targets set for the Dutch Industry.
Ahmed El-Hoshy, Chief Executive Officer of OCI N.V., describes the collaboration with the NortH2 consortium as: “a critical partnership that helps OCI, as a key enabler of the hydrogen economy, activate sustainable value chains for society and industry, create a positive impact on the environment, and simultaneously help reduce the country’s dependence on natural gas by using green hydrogen.” He added: “Green ammonia and methanol production is a logical starting point to develop a green economy in the Netherlands and Europe as it creates a wide range of green products helping create sustainable value chains of food, fuels and consumer goods.”
Contribution to green sustainable food, fuels and consumer goods
Both methanol and ammonia are used as building blocks in a wide range of sectors and products such as transportation, furniture, clothing, healthcare and cosmetics, automotive and windmill blades. Ammonia is currently also largely used to make agricultural fertilizers, and green hydrogen-based fertilizers are crucial for decarbonizing the food chain. Ammonia and methanol are also emerging as the next generation clean fuel in shipping. Wind-based green hydrogen, used as input for ammonia and methanol production, can enable zero-carbon and fully green value chains.
2030 goals and policies
Both the European Commission and the Dutch government have set ambitious goals to reduce emissions by 2030 through the use of green hydrogen. Large-scale production and use such as planned by both NortH2 and OCI can significantly contribute to reaching those goals.
Domestic production of ammonia and methanol can be preserved and greened, both for environmental reasons, as well as for serving the economic and geopolitical interests of The Netherlands, such as job retention and energy independence.
Investments solely by industry will not be enough to realize these ambitions, as governmental policies enabling the large-scale production and use of green hydrogen are urgently needed. Examples are the swift allocation of offshore wind plots for hydrogen production and the short-term scheduling of an award mechanism allowing for combined offshore wind - hydrogen development. In addition, policies are needed to close the value gap between fossil fuels and green hydrogen and jumpstart the industry, as well as create sustainability certification mechanisms for green end products.
Scaling the transition
The letter of intent on which the partnership is based, is an important development for the hydrogen economy. Ammonia and methanol’s versatility means that they can also be shipped anywhere in the world to power transportation, communities and industry.
“Ammonia and methanol are the most effective green hydrogen carriers,” adds El-Hoshy. “That is why OCI is accelerating the production of green ammonia and methanol to become one of the largest producers of clean hydrogen fuel and feedstock technology in the world. We are scaling the world’s transition to hydrogen and the clean economy.”
A stable, large supply of green hydrogen is a prerequisite for certain, so-called hard-to-abate, industrial sectors to go green. Such a large-scale supply is only possible if the development of all components of the entire green hydrogen to green-product value chain is tackled simultaneously, in an integrated manner.
NortH2 was set up to investigate how an integrated value chain approach – from wind energy and electrolysis to transport, storage and offtake – can be developed realistically. This is why the consortium consists of parties with expertise in production; Shell, Equinor and RWE as well as Gasunie bringing its knowledge on development of the backbone and storage. Groningen Sea Ports and the Province of Groningen are support partners.
The aim is to be able to supply the industry with up to 4GW of green hydrogen by 2030. But the ambition goes further than that. NortH2 wants to upscale to more than 10 gigawatts of green hydrogen production capacity by 2040. By then, green hydrogen output, which will initially be produced in Eemshaven and later offshore as well, would total around 1,000,000 metric tons on an annual basis, enabling the carbon emissions to be cut by 8 to 10 million tons per year. In this way, NortH2 can make a significant contribution towards achieving the goals set under the Dutch Climate Agreement, as well as towards the even more ambitious European hydrogen targets.
The project is in the feasibility stage, conclusion of which depends on sufficient clarity with respect to the relevant offshore wind and hydrogen policies.
For more information, please visit: NortH2 | Kickstarting the green hydrogen economy