BP Launches Green Hydrogen Initiative to Promote Decarbonization

BP plc BP, the British energy major, has announced a final investment decision for the construction of a green hydrogen project at its Castellón refinery, in partnership with the Spanish utility firm Iberdrola IBDRY. The company stated that the capacity of the green hydrogen project would be 25 MW and the facility is expected to come online in the second half of 2026. This hydrogen project is the first initiative of its kind, set to be developed by BP and Iberdrola through their 50-50 joint venture Castellón Green Hydrogen S.L.The initiative has received a funding of 15 million euros from NextGenerationEU, which is a part of the European Union. The project also involves the contribution of the Technology Institute of Energy. Iberdrola has highlighted that the green hydrogen initiative, in collaboration with BP, marks a significant step toward its commitment to endorse green hydrogen for decarbonizing the industry.As part of the project, the hydrogen plant will convert 200GWh of renewable energy per year from Iberdrola into green hydrogen to support BP’s decarbonization targets. Iberdrola further stated that it will leverage its knowledge and expertise of its existing green hydrogen plants to contribute to the advancement of the project.Details of the ProjectFor this project, the 25MW electrolyzer will utilize renewable electricity provided by Iberdrola’s photovoltaic and wind projects. The project will receive 200GWh of electricity per year through a power purchase agreement with the Spanish firm. The electrolyzer will consist of five units of a 5 MW module utilizing containerized proton exchange membrane technology. The technology is being provided by Plug Power, a prominent green hydrogen solution developer.The green hydrogen will be produced by electrolyzing water using the renewable electricity from Iberdrola. Subsequently, the green hydrogen produced should meet the European standards for green hydrogen i.e., Renewable Fuels of Non-Biological Origin. This should enable energy major BP’s Castellón refinery to eventually become an integrated energy hub.BP’s Decarbonization StrategyThe project is expected to produce approximately 2,800 tons of green hydrogen per year. This production should replace a part of the grey hydrogen that is produced using natural gas and used at BP’s refinery. This project is a significant part of the company’s decarbonization strategy, as it is anticipated to reduce nearly 23,000 tons carbon dioxide emissions per year. Furthermore, the construction of the project might also contribute to generating employment by opening up 500 new jobs.Expansion Plans and Future ApplicationBP is also exploring opportunities that should help expand the initial 25MW green hydrogen project. It believes that the green hydrogen produced from this project can aid in the decarbonization of other industries with particularly high emissions in Valencia. The green hydrogen produced can help replace natural gas used in the ceramic industry. It can also contribute to reducing the carbon footprint of other hard-to-abate industries such as chemicals and heavy transport.Iberdrola has entered into many long-term partnerships to accelerate the decarbonization of the economy. It has partnered with BP to promote electric mobility in Spain and Portugal. The company has also developed partnerships with Norges Bank Investment Management, Masdar, Mapfre and Energy Infrastructure Partners to proceed with many renewable energy projects.IBDRY has also collaborated with the GIC to support the growth of transmission networks in Brazil. Iberdrola believes that the green hydrogen sector represents a true energy transition. This is because its production relies on electricity and is emission-free. Further, this sector draws significant attention from investors and contributes to the creation of employment.BP mentioned that this strategic initiative shall not only contribute to the upgradation of the Castellón refinery but also toward developing industrial capacity and supporting the economy in the Valencia region.Zacks Rank and Key PicksCurrently, BP has a Zacks Rank #5 (Strong Sell), while IBDRY carries a Zacks Rank #2 (Buy).Investors interested in the energy sector might want to look at some better-ranked stocks such as PEDEVCO Corp. PED and MPLX LP MPLX, presently sporting a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. The company stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations. Combined with bullish oil prices, this is expected to boost PEDEVCO's production and overall profitability.MPLX LP owns and operates a wide range of midstream assets. The partnership's midstream assets include oil and natural gas gathering systems and transportation pipelines for crude, natural gas and refined petroleum products. MPLX is least exposed to commodity price fluctuations as it generates stable fee-based revenues. Furthermore, it surpasses its industry peers in terms of distribution yield, reflecting its commitment to returning capital to its unitholders.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP): Free Stock Analysis Report MPLX LP (MPLX): Free Stock Analysis Report Pedevco Corp. (PED): Free Stock Analysis Report Iberdrola S.A. 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