Decarbonization of European Refineries: A first agreement signed between TotalEnergies and Air Products for the delivery of Green Hydrogen

Rhea-AI Summary

TotalEnergies and Air Products have entered a 15-year agreement for the annual supply of 70,000 tons of green hydrogen starting in 2030. This deal is part of TotalEnergies' initiative to reduce CO2 emissions by 700,000 tons per year and achieve a 40% reduction in net greenhouse gas emissions by 2030. Air Products will provide green hydrogen to TotalEnergies’ Northern European refineries.

Air Products has invested over $15 billion in energy transition projects, making it a leader in low-carbon hydrogen production. Additionally, the companies have signed a memorandum of understanding for renewable power supply, including a 150 MW solar project in Texas and potential PPAs in the UK, Poland, and France.

Positive

• TotalEnergies and Air Products signed a 15-year agreement for 70,000 tons of green hydrogen annually starting in 2030.
• This agreement will help avoid 700,000 tons of CO2 emissions per year.
• TotalEnergies aims to achieve a 40% reduction in net greenhouse gas emissions by 2030.
• Air Products has committed more than $15 billion to energy transition projects.
• TotalEnergies launched a call for tenders for 500,000 tons of green hydrogen to decarbonize its refineries.
• A memorandum of understanding was signed for the supply of renewable power, including a 150 MW solar project in Texas.
• Potential PPAs in the UK, Poland, and France will be explored by both companies.

Negative

• The green hydrogen supply will start only in 2030, which may delay immediate decarbonization efforts.
• No specific financial details of the agreement were provided, making it hard to assess its economic impact on Air Products and TotalEnergies.
• The feasibility and cost-effectiveness of the projects mentioned, such as the 150 MW solar project, are not discussed.
• Long-term agreements may expose companies to future market and regulatory risks.

Insights

Energy Market Analyst

The agreement between TotalEnergies and Air Products is a significant stride towards the decarbonization of European refineries, which is a critical objective in the energy sector's transition to sustainability. The supply of 70,000 tons of green hydrogen annually from 2030 is notable as it directly addresses the carbon footprint associated with refinery operations. By displacing fossil-based hydrogen, this deal is projected to avoid around 700,000 tons of CO₂ emissions each year, contributing substantially to TotalEnergies' goal of reducing net greenhouse gas emissions by 40% by 2030 compared to 2015 levels.

From a broader market perspective, this development highlights a burgeoning trend of integrating green hydrogen into industrial processes, which could set a precedent for other energy companies. It underscores the growing commercial viability and demand for green hydrogen, which has often been viewed with skepticism due to cost and scalability challenges. The involvement of Air Products, recognized for its early adoption and substantial investments in hydrogen, also reinforces the credibility and feasibility of such large-scale green hydrogen projects.

Short-term, this agreement may not immediately impact TotalEnergies' financials since the actual supply begins in 2030. However, the long-term benefits include potentially lower carbon taxes and enhanced market positioning as a leader in sustainable energy, which could translate into financial gains and investor confidence over time.

Environmental Policy Expert

This partnership between TotalEnergies and Air Products is a pivotal move within the framework of environmental policy and corporate responsibility. The deployment of green hydrogen is a critical step to decarbonize key industrial sectors such as refining, which are traditionally high emitters of CO₂. Green hydrogen, produced using renewable energy, offers a sustainable alternative to conventional hydrogen production, which relies on natural gas and emits significant amounts of CO₂.

Importantly, this agreement aligns with European Union climate policies that aim to reduce greenhouse gas emissions and promote renewable energy sources. TotalEnergies' proactive approach in securing long-term green hydrogen supply positions it favorably regarding regulatory compliance and future-proofing against stricter environmental regulations. The agreement could also inspire similar initiatives across the industry, contributing to an overall reduction in industrial carbon footprints.

Moreover, the memorandum of understanding for renewable power supply further strengthens the environmental impact of this collaboration. The 150 MW solar project in Texas and additional PPA opportunities in the UK, Poland and France, represent tangible steps towards achieving a more integrated and sustainable energy system.

PARIS, June 7, 2024 /PRNewswire/ -- TotalEnergies and Air Products have signed a 15-year agreement for the annual supply in Europe of 70,000 tons of green hydrogen starting in 2030. This first long-term deal follows TotalEnergies' call for tenders for the supply of 500,000 tons per year of green hydrogen to decarbonize TotalEnergies' European refineries.

Under the agreement, Air Products will deliver at TotalEnergies' Northern European refineries' doorstep, green hydrogen from Air Products' global supply network. This hydrogen will avoid around 700,000 tons of CO₂ each year. The contract awarded to Air Products is a first step towards achieving TotalEnergies' objective of reducing net greenhouse gas emissions from its operated oil and gas operations (Scope 1+2) by 40% by 2030 compared to 2015 levels.

Air Products, worldwide leader in terms of hydrogen supply, has been a first mover, committing more than $15 billion dollars to real, large-scale energy transition projects and launching several large low carbon hydrogen projects in the world, making it a leading and reliable supplier.

"This deal with Air Products, the first signed following the call for tenders launched last year, is a steppingstone towards our goal of decarbonizing the hydrogen used in TotalEnergies' refineries in Northern Europe by the end of the decade. We are proud to partner with Air Products, a pioneer in low carbon hydrogen production, under the leadership of Seifi Ghasemi. Once again, we demonstrate our capacity to pioneer the energy transition and contribute to the emergence of a green hydrogen industry by offering long-term contracts with our six refineries and two biorefineries in Europe. We are also happy to extend our partnership with Air Products by becoming ourselves a supplier of green power to Air Products and contributing to Air Products' own decarbonization roadmap," said Patrick Pouyanné, Chairman and CEO of TotalEnergies.

"Today, one of the largest energy companies in the world has committed to use renewable hydrogen to decarbonize its refineries in Northern Europe, and we at Air Products are honored and proud to be the producer and supplier of the green hydrogen required," said Air Products' Chairman, President and CEO Seifi Ghasemi. Noting that Air Products started on the journey of producing clean hydrogen seven years ago, Seifi Ghasemi added, "We always believed that if we made clean hydrogen available at commercial scale, the demand would be there. This contract validates our long-term strategy. Clearly the demand is here, and it will grow significantly as we move forward, playing an essential role in decarbonizing heavy industry and other sectors. I also want to express my admiration for Mr. Patrick Pouyanné's vision and courage in acting as a first-mover towards creating a cleaner future for the world."

At the same time, TotalEnergies and Air Products have signed a memorandum of understanding for the supply of renewable power, which entails the signing of a first Power Purchase Agreement (PPA) for 150 MW produced at a solar project in Texas. The parties also plan to explore together further PPA opportunities in the UK, Poland and France. This agreement, which strengthens the partnership between TotalEnergies and Air Products, will contribute to Air Products' decarbonization roadmap and is in line with TotalEnergies' integrated electricity strategy along the value chain.

TotalEnergies and the decarbonization of its European refineries

TotalEnergies is committed to reducing the carbon footprint of producing, converting and supplying energy to its customers. One of the levers identified by the Company is to use green or low carbon hydrogen to decarbonize its European refineries, a move that should help reduce its CO₂ emissions by around five million tons a year by 2030.

Aiming to fully decarbonize the hydrogen used in its European refineries, the Company launched in September 2023, a call for tenders for the supply of 500,000 tons per year of green hydrogen.

About TotalEnergies
TotalEnergies is a global integrated energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to provide as many people as possible with energy that is more reliable, more affordable and more sustainable. Active in about 120 countries, TotalEnergies places sustainability at the heart of its strategy, its projects and its operations.

X: @TotalEnergies      LinkedIn: TotalEnergies          Facebook: TotalEnergies           Instagram: TotalEnergies

Cautionary Note

The terms "TotalEnergies", "TotalEnergies company" or "Company" in this document are used to designate TotalEnergies SE and the consolidated entities that are directly or indirectly controlled by TotalEnergies SE. Likewise, the words "we", "us" and "our" may also be used to refer to these entities or to their employees. The entities in which TotalEnergies SE directly or indirectly owns a shareholding are separate legal entities. This document may contain forward-looking information and statements that are based on a number of economic data and assumptions made in a given economic, competitive and regulatory environment. They may prove to be inaccurate in the future and are subject to a number of risk factors. Neither TotalEnergies SE nor any of its subsidiaries assumes any obligation to update publicly any forward-looking information or statement, objectives or trends contained in this document whether as a result of new information, future events or otherwise. Information concerning risk factors, that may affect TotalEnergies' financial results or activities is provided in the most recent Registration Document, the French-language version of which is filed by TotalEnergies SE with the French securities regulator Autorité des Marchés Financiers (AMF), and in the Form 20-F filed with the United States Securities and Exchange Commission (SEC).

About Air Products

Air Products (NYSE:APD) is a world-leading industrial gases company in operation for over 80 years focused on serving energy, environmental, and emerging markets. The Company has two growth pillars driven by sustainability. Air Products' base business provides essential industrial gases, related equipment and applications expertise to customers in dozens of industries, including refining, chemicals, metals, electronics, manufacturing, and food. The Company also develops, engineers, builds, owns and operates some of the world's largest clean hydrogen projects supporting the transition to low- and zero-carbon energy in the heavy-duty transportation and industrial sectors. Additionally, Air Products is the world leader in the supply of liquefied natural gas process technology and equipment, and provides turbomachinery, membrane systems and cryogenic containers globally.

The Company had fiscal 2023 sales of $12.6 billion from operations in approximately 50 countries and has a current market capitalization of over $50 billion. Approximately 23,000 passionate, talented and committed employees from diverse backgrounds are driven by Air Products' higher purpose to create innovative solutions that benefit the environment, enhance sustainability and reimagine what's possible to address the challenges facing customers, communities, and the world. For more information, visit www.airproducts.com or follow us on LinkedIn, X, Facebook or Instagram.

Cautionary Note
This release contains "forward-looking  statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's expectations and assumptions as of the date of this release and are not guarantees of future performance. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including the risk factors described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 and other factors disclosed in our filings with the Securities and Exchange Commission. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in the assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based.

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SOURCE Air Products

FAQ

What is the agreement between TotalEnergies and Air Products about?

TotalEnergies and Air Products signed a 15-year agreement for the annual supply of 70,000 tons of green hydrogen starting in 2030.

How much CO2 emissions is the TotalEnergies and Air Products agreement expected to avoid annually?

The agreement is expected to avoid around 700,000 tons of CO2 emissions annually.

What is TotalEnergies’ goal for greenhouse gas emissions reduction by 2030?

TotalEnergies aims to reduce its net greenhouse gas emissions by 40% by 2030 compared to 2015 levels.

How much has Air Products invested in energy transition projects?

Air Products has committed more than $15 billion to energy transition projects.

What renewable power project will TotalEnergies and Air Products collaborate on?

TotalEnergies and Air Products will collaborate on a 150 MW solar project in Texas and explore further PPA opportunities in the UK, Poland, and France.