By Ron Bousso and Shadia Nasralla
LONDON (Reuters) - BP (LON:BP) said on Tuesday it plans to invest up to 2 billion euro ($2.12 billion) by 2030 in its refinery in Spain to produce low-carbon hydrogen and biofuels.
The British company aims to develop a large plant to produce 2 gigawatts (GW) of green hydrogen, which is produced by splitting water using renewable energy, in order to replace polluting hydrogen used to produce fuels at the Castellon refinery.
The project, HyVal, will also increase the refinery's biofuels production three-fold to 650,000 tonnes a year 2030, BP said in a statement.
The green hydrogen will also be used as a feedstock in biofuel production, including sustainable aviation fuel (SAF).
The clean hydrogen, a nascent technology whose production remains limited due to high costs, will also be used in nearby industries such as ceramics and chemicals.
A first hydrogen electrolyser unit of 200 megawatt is expected to be operational in 2027 and produce up to 31,200 tonnes of green hydrogen per year.
Under Chief Executive Officer Bernard Looney, BP aims to reduce its oil and gas output by 25% while sharply increasing its renewable power generation and low-carbon fuel production by 2030 in order to slash green house gas emissions.
BP set a target to produce 0.5 million to 0.7 million tonnes a year of low-carbon hydrogen by 2030.
Spain aims to become a major player in the production of low-carbon hydrogen and biofuels thanks to its ample solar and wind power and proximity to sea.
Spanish oil company Cepsa plans to invest 3 billion euros ($3.2 billion) in one of the largest green hydrogen projects in Europe.
($1 = 0.9425 euros)