Justin Nash is head of integrated solutions in bp's regions, cities and solutions business– a division focused on providing integrated and decarbonized energy solutions to corporations, cities, regions and bp’s own businesses in support of bp’s net zero commitments. . This speech was delivered at the Pilbara Summit in Western Australia.
I would like to acknowledge the Traditional Owners of the land on which we meet - the Ngarluma and Yindjibarndi people.
Great to be here. And while we’ve been supplying liquid energy to the Pilbara for decades – billions of litres of diesel each year – as well as exploring off the coast and being part of the fantastic North-West Shelf Joint Venture, we now look at the Pilbara through new eyes – those of a ‘soon-to-be’ clean energy hub operator.
In case you missed it, two weeks ago bp announced it was taking a 40.5% stake in the Asian Renewable Energy Hub and will assume operatorship of this mammoth project – supporting the development of up to 26 GW of combined solar and wind power generating capacity, producing ca 1.6 million tons of green hydrogen, or 9 million tons of ammonia, per annumfor domestic and export markets.
It is a huge undertaking, and we have much to wrap our heads around, but we are incredibly excited at the prospect.
Going forward, we have a real opportunity, with our Asian Renewable Energy Hub partners, to help power the Pilbara with renewable electrons and green hydrogen – with the first tranche of those green electrons from 2029.
I’d like to take the opportunity to acknowledge those AREH partners who have done such a great job to get the project to where it is today – InterContinental Energy, CWP Global and Macquarie Capital and Green Investment Group.
And I’d also like to acknowledge the Nyangumarta People, the Traditional Owners of the land on which we hope to develop the project. And indeed, all of the First Nations people who remain custodians of the Pilbara.
We all know what a fantastic region this is and having the chance to develop one of the largest renewable and green hydrogen energy hubs in the world, right here in the Pilbara, is a tremendous privilege. Of course, we’re not alone in the pursuit of a clean energy transition – communities, governments, customers and corporates are all looking for decarbonization solutions to get to net zero – and that’s fantastic, because it will take a team effort to succeed.
The recent election clearly showed that Australians expect a meaningful pathway to net zero emissions, and bp believes there is far more to gain than lose by embracing and accelerating a low carbon future.
As a company, we’re proud to be aiming for triple net zero by 2050 or sooner – and by that I mean net zero across scope 1, 2 and most importantly scope 3 emissions. And we want to help the world get there too.
As a result, we’re making big investments in projects, technology and partnerships, here and abroad, that we believe can help unlock a clean energy future.
We understand the enormous challenges involved, but we also see the imperatives to act – the world’s carbon budget is finite, and delaying action will likely lead to significant economic, environmental and social costs.
Recent events have also underscored the importance of energy security, and many nations are looking to stable, safe, dependable countries like Australia to help firm up energy supply, with an accelerated focus on low carbon energy options.
Renewables are one thing, and we’re lucky to have the fantastic wind and solar resources that we do. But we also know that hydrogen is a critically important part of the energy transition, and that’s what I’ll focus on today.
Hydrogen gives us a way to provide low carbon energy to heavy industry – mining, manufacturing and chemicals production. It also provides a decarbonization pathway for long-distance transportation in marine and heavy-duty transport such as trucking both on and off-road. That’s why we’re getting after it.
And when you add some of the cheapest green electrons on the planet (thanks to that wind and solar), it’s no wonder people are talking about Australia becoming a global clean energy powerhouse in the decades ahead.
The cards are all there, but how we play our hand over the next 12 – 24 months will be critical. No single company, government, or region will be able to solve all the chicken and egg problems.
When it comes to hydrogen, we’ll need a 'Team Australia' approach:
bp wants to play its part and has big plans to reach a 10% share in core markets by the end of this decade. We believe that making a significant contribution to the hydrogen market plays to our strengths:
So, bp is on a global hydrogen journey, and dealing with the chicken and egg problems along the way. We’re thinking through the options – where should we play, and how, what color hydrogen, what size electrolyser, what technology, what price can we assume, what demand can we realistically aggregate?
Importantly, what policies should we advocate for? Are sectoral targets, concessional funding and infrastructure support the way to go? Should we pursue demand-side targets to drive demand – like mandates and emission standards in heavy industry and transport sectors? Is it best to go with carrot or stick while we wait for the technology that will help us get to net zero?
Recently in the US we advocated for legislation that incentivises the build out of hydrogen infrastructure and supports a comprehensive hydrogen research program. Is that the way to go, including contracts for difference for blue and green hydrogen, along with auctions for the green variety?
What about hydrogen blended into the natural gas grid? Perhaps not as effective in terms of CO2 abatement as end-user strategies, but what about its role in decarbonizing the gas network and locking in steady demand? And how do we tackle the regulatory barriers?
When it comes to repurposing existing gas infrastructure, what price is the right price to make the switch? And where new kit is planned, what’s the best way to ensure CCS or hydrogen readiness to avoid locking in unabated gas?
When should we commit to dedicated CCS, CO2 and hydrogen infrastructure for transport and storage, as well as for refuelling heavy duty transport, and even long-duration energy storage?
We know hydrogen is ideal for high temperature applications like production of iron and steel – so has green steel’s time finally come in Australia?
How much support should we expect from government for first-of-a-kind projects in the activation and scale-up phases, and how best do we incorporate both capital and operating costs?
Cross-border cooperation and trade will also be key. What markets should we target, and what window do we have?
So many questions, so many variables, but one thing we know for sure is that nothing will be achievable without collaboration. Whether its LOIs, MOUs, EOIs, SOIs – whatever acronym you choose to describe working together, this is a challenge that is too big for any of us to tackle alone – we all need to sign up and move forward.
Where bp has landed on its hydrogen journey, after taking out as many variables as possible, mitigating as many risks as possible, and making as effective a decarbonization contribution as possible, is at phased and integrated hubs. Places where demand and know-how exist, and collaboration is possible.
We’re focusing on hubs in key locations around the world – in places like the UK, in the Netherlands, in Spain, and of course, here in Australia.
In fact, we have a clean energy hub developing right before our eyes down at bp Kwinana where we are moving from 65 years of refining oil to a world class import terminal, with production of renewable fuels, and plans for green hydrogen to help decarbonize not just our products but the Kwinana industrial strip, and far beyond.
Along with our brownfields work at Kwinana, our feasibility work into another hub – this time in the mid-west – has demonstrated the enormous potential of staged, greenfield domestic and export-scale green hydrogen and ammonia. Could this mean that Oakajee’s time has finally come? We hope so.
We believe collaboration with the government and like-minded industrial partners in a strategic industrial area, like Oakajee, gives us the best chance to deliver the benefits of renewables and green hydrogen, both locally and for export.
And then, of course, there’s the Asian Renewable Energy Hub, which takes renewables and green hydrogen to the next level.
Our global energy modelling shows that hydrogen could be up to 8% of total final energy consumption in 2050. It could actually be double if you factor in additional demand to generate electricity and produce products like ammonia, methanol and synthetic fuels – which is about the same percentage as natural gas today.
Of course, the investment required for a global-scale energy transition is also mind-blowing – Bloomberg estimates it will take over $2T/year to 2025 and then $4T/year from 2026-2030. And this investment needs to be directed into complex projects, with technology that is constantly evolving, and economics that is often really challenging. Nonetheless, the world needs to get there, and Australia, particularly Western Australia, has a huge role to play.
For us to make the most of this opportunity, however, requires more than just world class renewables; commercial and industrial capability; international trading relationships; supportive policy; and new technology – it requires communities that back us.
We know we need to help deliver a ‘just’ energy transition – where we collaborate, we upskill and train people, provide opportunities, partner with communities, invest in the future, and lay the groundwork for sustainability in the long-term.
And if it can be done anywhere, we reckon it can be done in the Pilbara. The 'Pilbara pioneering spirit' here has delivered a world class iron ore and LNG for decades, and now it’s shaping up for the next challenge – to deliver world class clean energy for a changing world.
We look forward to working with you.