MOL Group embarks on green hydrogen journey

As an initial step, MOL is launching pilot projects in its three core countries: Hungary, Croatia, and Slovakia. These pilot projects will provide valuable operational experience ahead of the significant industrial-scale investment. From a decarbonisation perspective, green hydrogen will be a critical technology that will play an essential role in the future energy mix of transportation.

MOL's approach is to thoroughly understand and master the technology before embarking on large-scale industrial investments in electrolysers, recognising its importance for the long-term sustainability and transformation of the energy and transportation sectors.

The journey starts

In April, the company inaugurated a state-of-the-art 10 MW electrolyser plant at its Százhalombatta refinery near Budapest. This innovative facility aims to partially replace the refinery's existing grey hydrogen consumption with green hydrogen, marking a crucial step in MOL's commitment to reducing its carbon footprint and advancing clean energy solutions in the region.

This cutting-edge plant will reduce the Danube Refinery's carbon dioxide emissions by 25 000 tpy, contributing to a cleaner environment. With the capacity to produce 1600 tpy of clean, carbon-neutral green hydrogen using electricity from renewable sources, the project heralds a new era in the hydrogen economy of the region. This initiative aligns seamlessly with MOL Group's SHAPE TOMORROW corporate strategy, which focuses on making the region more sustainable, competitive, and self-sufficient.

The new 10 MW electrolysis unit, developed by US company Plug Power, will progressively replace the refinery's current natural gas-based hydrogen production process, accounting for one-sixth of MOL Group's total carbon dioxide emissions. The facility has commenced operations, and MOL plans to use green hydrogen primarily within its network for fuel production.

Plug Power's electrolysis equipment leverages renewable electricity to split water into hydrogen and oxygen, generating no polluting by-products. It produces 8 – 9 t of pure oxygen for every tonne of hydrogen. With nearly 50 years of experience, Plug Power's innovative and reliable technology, embodied in its hydrogen generators, is optimised for the efficient production of pure hydrogen, marking a significant advancement in sustainable energy solutions.

The plant represents the first new greenfield production unit at the Százhalombatta refinery in two decades. Despite being a pilot project, it is the largest operating electrolyser in Central Eastern Europe. MOL Group financed the entire investment, exceeding €20 million, without any EU or state subsidies.

While the plant will initially supply only about five% of the refinery's overall hydrogen demand, it marks a significant milestone in the company's pursuit of green hydrogen. This investment lays the foundation for MOL Group's commitment to a sustainable and environmentally friendly future.

Meeting local demand with local production

MOL Group's downstream operations emit approximately 6.1 million tpy of CO2, with hydrogen production alone contributing 1 million t, making it the most significant emission source in the company's processing portfolio. With the ongoing commissioning of the Százhalombatta electrolyser, MOL is already planning future projects at other downstream assets.

A second 10 MW plant is being developed at the Rijeka refinery on Croatia's northern Adriatic coast, operated by MOL's Croatian subsidiary INA. Scheduled to commence operations in the second quarter of 2026, this project will include 11 MW of solar power generation and the necessary logistics to supply green hydrogen to the mobility market.

A third pilot plant of similar scale is planned for the Bratislava refinery in Slovakia, operated by MOL subsidiary Slovnaft. These projects are part of MOL's broader strategy to gain operational experience and advance its commitment to green hydrogen production. These initiatives will benefit MOL's extensive network of nearly 2400 service stations across 10 Central and Southeastern Europe countries.

While considerable discussion and preliminary plans exist to import North African-produced green hydrogen to Europe via pipelines, companies like MOL cannot depend on industrial developments that may not meet the 2030 deadlines. Consequently, MOL has chosen to pursue its hydrogen development pathway. Should a reliable and economical solution, such as a connection to a European hydrogen backbone, emerge, MOL would be eager to participate as an off-taker and potentially as a producer.

Like all oil and gas companies, MOL faces pressure to intensify its climate commitments, driven by social and economic factors. With rising carbon prices under the EU's emissions trading scheme (ETS), MOL aims to reduce its CO2 emissions by 25% by 2030. A few years ago, the company's ETS bill ranged between US$10 million and US$20 million. However, with the increasing price per tonne of CO2 emitted, this bill has already exceeded US$100 million. If no action is taken in the coming years, costs could escalate further, making inaction an impractical option.

While the long-term vision includes Europe's hydrogen backbone infrastructure delivering energy to various refineries, local production will be crucial in the near term. Green hydrogen is indispensable for refineries, and given the importance of supply security, local production will be essential for ensuring a stable and sustainable hydrogen supply.

The start of a journey

Although MOL has taken the initial steps on its green hydrogen journey, there is still an urgent need for national targets and subsidies. At the Union level, Europe has adopted its revised Renewable Energy Directive (RED III) targets, mandating that RFNBOs (Renewable Fuels of Non-Biological Origin, like hydrogen, e-fuel, etc.) should constitute 42% of hydrogen used in industrial processes and 1% in the energy supplied to the transport sector by 2030. However, EU member states have until May 2025 to implement these targets at the national level. Establishing a viable business case for large-scale investments is challenging amid uncertainties around local regulations.

Moreover, it is crucial to consider the varying renewable energy prices across Europe. The pilot European Hydrogen Bank (EHB) auction subsidies projects in Spain, Portugal, and Norway, three countries with some of the lowest renewable energy costs. However, there must be options for nations like Hungary. Significant regional imbalances exist, and current EU regulations do not account for these disparities. The renewable energy costs in Andalusia, Spain, differ significantly from those in Hungary.

Despite these challenges, MOL is already working on scaling up the 10 MW electrolyser installation at the Százhalombatta refinery. The company aims to boost the plant's capacity to around 100 MW by 2030, though this plan is still in the preparatory phase and has not yet been sanctioned.

Creating demand for green hydrogen is crucial

Building demand for green hydrogen in the broader market presents a unique challenge. MOL is exploring the development of logistics and retail outlets to supply hydrogen to the mobility market in Hungary and the wider region. However, the lack of firm demand creates a chicken-and-egg dilemma for green hydrogen producers.

Currently, there is no significant demand, only initial interest from freight and rail companies, which are small-scale, early initiatives. Collaboration with the transport sector will be crucial in fostering demand. The only way to overcome this chicken-and-egg situation is through market collaboration. To this end, MOL has signed strategic agreements with the three most extensive Hungarian public transport and freight companies. These partnerships stimulate the green hydrogen market and pave the way for broader adoption.

By-lined by Adam Horvath, Vice President of New and Sustainable Businesses, MOL Group.

Read the article online at: https://www.globalhydrogenreview.com/special-reports/25102024/mol-group-embarks-on-green-hydrogen-journey/