T&E: Oil majors invest eight times more in biofuels than hydrogen

According to a recent study conducted on behalf of Transport & Environment (T&E), investments in the refining of biofuels are eight times larger. This suggests that the “big bet” made by Europe’s oil majors on hydrogen as the future’s transportation fuel is not as large as it appears in theory.

T&E charges oil producers with picking the convenient, unsustainable biofuels option instead of being serious about investing in genuinely clean fuels.

Only a portion of the hydrogen investments being made by Europe’s largest oil companies, Shell, BP, Total, Eni, and Repsol are truly “green.” According to the study, the majority of their investments are being used to reduce the carbon intensity of their refinery operations rather than to provide environmentally friendly transportation fuels.

According to the analysis, as more vehicles switch to electric power, the need for oil for road transport in the EU will decrease by over a third by 2035. Petrol demand will continue to decline by 5% year starting in 2035. A large portion of the current refining capacity will need to be shut down or changed to processing alternative fuels in order to prevent becoming stranded assets.

Up until 2030, the refining industry plans to invest €39 billion in alternative fuels, roughly 75% of which would be used to boost biofuel output. By 2030, production capacity for advanced biofuels (HVO) will double to 10 megatonnes thanks to investments totaling €2 to €3 billion. According to T&E’s calculations, this is four times more than what can be sourced sustainably in the EU. This will probably result in mass importation of questionable used cooking oil from overseas as well as limited “waste” items like animal fats being taken from other businesses.

One of the largest consumers of hydrogen today is the oil refining industry, with the majority using carbon-intensive grey hydrogen derived from fossil fuels. The study claims that in order to improve the efficiency of their manufacturing processes, oil corporations are spending about €6.5 billion on so-called “low carbon” blue hydrogen. This is twice as much as they currently spend on making environmentally friendly hydrogen and e-fuels, which might be used to clean up shipping and aviation.

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