Equinor and RWE to build hydrogen supply chain for German power plants

Equinor's flag in Stavanger, Norway December 5, 2019. REUTERS/Ints Kalnins/File Photo

OSLO, Jan 5 (Reuters) - Equinor (EQNR.OL) and RWE (RWEG.DE) said on Thursday they plan to develop a supply chain for low-carbon hydrogen, allowing Germany to cut its reliance on coal power and thus its CO2 emissions.

The two companies plan to build power plants in Germany that will initially be fuelled by natural gas, and later with hydrogen made in Norway at jointly constructed production facilities.

The joint investments are contingent on a hydrogen pipeline - currently under consideration by Equinor, Norwegian gas system operator Gassco and other partners - that is aimed at connecting Norway and Germany and is expected to start deliveries in 2030.

The companies did not provide details about their financial commitments, though RWE, Germany's top power producer, said the partnership would cover investments worth several billions of euros.

"But it is too early to go into detail. First of all, the infrastructure needs to be built and a suitable political framework needs to be established," the company said.

Equinor CEO Anders Opedal told Reuters the cost of the total supply chain could run into the "tens of billion euros". The pipeline, if it went ahead, would cost 3 billion euros alone and would be the first of its kind worldwide, he said.

It could transport 4 million tonnes of hydrogen per year, he said, equivalent to 135 terawatt hours of energy, similar to total Norwegian hydropower production. "So it's a massive amount of energy that can go through this pipeline," he said.

"That also creates the infrastructure between Norway and Germany, where hydrogen from renewables can be added over time because this kind of infrastructure has a long lifetime."

The project will initially supply so-called "blue" hydrogen made from gas. This will be subject to carbon capture and storage, which Equinor and RWE said in a joint statement would bury more than 95% of the associated emissions.

Longer term, the companies aim to produce "green" hydrogen from renewable sources, such as offshore wind turbines, thus cutting emissions further.

The partnership reflects Germany's efforts to diversify away from Russian gas, supplies of which have stopped in the wake of the Ukraine war, something that has proved tricky as gas-producing nations have limited scope to ramp up production.

Norway has since last year overtaken Russia as Europe's biggest gas supplier, with state-controlled Equinor the top exporter.

During a visit to Norway by German Chancellor Olaf Scholz last August aimed at extracting more commitments, Norway's Prime Minister Jonas Gahr Stoere said the country's deliveries were at a maximum.

"There is an urgent need for a rapid ramp-up of the hydrogen economy," RWE Chief Executive Markus Krebber said in the statement.

"Blue hydrogen in large quantities can make a start, with subsequent conversion into green hydrogen supply," he said.

Germany is planning multiple hydrogen import projects, with several of the country's new import terminals for liquefied natural gas (LNG) also readying to receive hydrogen at a later stage.

(This story has been corrected to specify that the hydrogen pipeline is under consideration by Equinor, Gassco and other partners, in paragraph 3.)

Reporting by Nerijus Adomaitis in Oslo and Christoph Steitz in Frankfurt; Editing by Terje Solsvik, Gwladys Fouche and Jan Harvey

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