Clean fuel storage attracts big business amid energy shift
July 27, 2023
With Europe's deepening commitment to decarbonizing the energy it uses — and to weaning itself off Russian imports — comes a desperate need to replace its fossil fuel habit with green alternatives.
As 70% of the EU's energy use is still met by fossil fuels, industrial users are switching to cleaner substitutes. These include biofuels or sustainable aviation fuels, but increasingly also clean hydrogen, green ammonia and methanol.
Just like their dirty predecessors, much of this clean fuel will also have to be imported into the continent. The need to transport, store and distribute low-carbon fuels has opened a new line of business for companies involved across the downstream energy market.
Clean fuels arrive at Dutch ports
In no other country is this shift more noticeable than in the Netherlands, whose Rotterdam and Amsterdam ports are part of Europe's largest fuel cluster, the ARA (Amsterdam-Rotterdam-Antwerp) hub, which also supplies Germany's western industrial heartland.
"Plans [for low-carbon fuels] are getting more concrete these days," said Eric Warners, strategic project developer at the Port of Amsterdam. "There's a big change — from general press releases about what kind of future we will see to concrete investments and construction activities happening on the ground."
The port has attracted investment from University of Erlangen spin-off Hydrogenious, which, jointly with tank storage company Evos and the Amsterdam port authority, wants to build a hydrogen import facility in the harbor. In March, hydrogen specialist Electriq Global and storage company Zenith Energy Terminals announced plans to locate a green hydrogen power plant in the port.
EU counts on green hydrogen imports
The use of clean hydrogen as a substitute for fossil fuels is one of the most popular options for decarbonizing Europe's energy-intensive industries. Clean hydrogen, also known as green or blue hydrogen, has significantly lower carbon emission levels than traditional hydrogen, also called grey hydrogen. As part of its REPowerEU plans announced a year ago, the European Commission said it wants to import 10 million tons of renewable hydrogen and produce just as much domestically by 2030.
As Europe's largest port, Rotterdam has already started building hydrogen infrastructure that it hopes will help it become Europe's future hydrogen hub. The port has promised that by 2030 it will be able to import 4 million tons of hydrogen. It also plans to produce another 0.6 million tons locally. Various energy companies, including Shell, BP, E.ON and Engie, have announced as many as nine projects to import, store and distribute hydrogen via Rotterdam.
The Dutch port's hydrogen import capacity will also serve the German market, which wants to pump €2.5 billion ($2.8 billion) into its own hydrogen economy.
"Germany is tremendously important. Most of the energy imported into Rotterdam will be exported again and most of that goes to Germany. Nowadays, that's all fossil fuel-based but in future that needs to be renewable," said Mark Stoelinga, business manager for hydrogen at the Port of Rotterdam.
Hydrogen transport requires conversion
Importing hydrogen comes with challenges, as it is highly flammable and requires substantial space for storing. Therefore, hydrogen is often compressed into a gas, or liquefied in order to enable safer and more efficient transport. Another option is to retrieve hydrogen from ammonia, a fuel which is much easier to transport and which has been traded for decades in the fertilizer industry.
The only company currently importing ammonia into Rotterdam is Dutch-listed OCI Global, and because the ammonia market is set to triple by 2050, it has already started construction work to increase throughput at its Rotterdam terminal to 1.2 million tons per year.
"Ammonia has an even more dynamic future as a shipping fuel, with exponential growth potential," said Ahmed El-Hoshy, CEO of OCI. "The typical VC pitch deck often addresses changes by 2050, but 2050 is a long way off. We want to move from that to the more practical and immediate."
Hydrogen to be stored in converted salt caverns
Further north in the Netherlands, Dutch gas operator Gasunie wants to reuse other existing infrastructure for clean fuel storage: underground salt caverns. The HyStock project in the province of Groningen plans to offer the first of four caverns for hydrogen storage from 2028. A first round testing market interest in storing hydrogen showed "sufficient interest", a Gasunie spokesman said.
A large part of decarbonizing Europe's industry also relies on carbon capture. Once retrieved, the carbon molecules will have to find a new home, making carbon storage another attractive business opportunity.
Dutch commodity storage firm Vopak is involved in the CO2Next project, a terminal which wants to enable the transport of liquid CO2 through the port of Rotterdam into depleted North Sea gas fields.
"Vopak is experienced in storing LNG and LPG, and this terminal concerns liquefied CO2, so it fits quite well,” said Fulco van Geuns, Vopak's project director for the CO2Next terminal.
The Netherlands is quickly establishing its pivotal role in storing and distributing energy transition fuels, and commodity storage operators are acting fast in order not to miss out on this growing market.
Terminal storage operator Advario in April purchased a site in the port of Rotterdam without yet having specific plans for what services it will house.
"The concepts range from storage and logistics, ammonia cracking and hydrogen delivery, co-siting for processing and so on," said Douglas van der Wiel, Advario's chief growth officer. "We are currently engaging with the market and there is a lot of interest."
Edited by: Kristie Pladson