Air Liquide's $69.2m Breakthrough: Blue Hydrogen Plants to Overhaul China's Coal-Based H2

China: A 500-million-yuan ($69.2 million) loan from the French bank BNP Paribas has been obtained by the French industrial gases company Air Liquide for the development of two blue Hydrogen facilities at the Shanghai Chemical Industry Park in China.

The units, which will have a total H2 production capacity of 70,000 standard cubic meters (about 6.2 tonnes per hour), The subsidiary of Air Liquide, Shanghai Chemical Industry Park Industrial Gases, is set to complete the construction by the end of this year. The project will replace a third-party coal gasification plant that now serves the park while using fossil gas to make Hydrogen through steam methane reforming (SMR) and collecting an undisclosed fraction of the carbon produced.

The most carbon-intensive way of producing Hydrogen, coal gasification, which emits 22–26 kg of CO2-equivalent every kilogram of H2 generated, accounts for around 70% of China's current H2 output. The Carbon Dioxide will be converted to Carbon Monoxide at the Shanghai facilities for use in industry.

With other businesses in the industry park, Covestro and Shanghai Lianheng Isocyanate Company (a joint venture run by Western chemical giants BASF and Huntsman), Air Liquide already has offtake agreements in place for both Hydrogen and Carbon Monoxide that last more than 15 years. The project is expected to cost more than €200 million ($224 million) to develop and will reduce 350,000 tonnes of annual CO2 emissions.

According to the EU-China Common Ground Taxonomy, which establishes a lifetime emissions threshold of three tonnes of CO2-equivalent per tonne of produced Hydrogen, the financing from BNP was offered as a green loan. The units will need to catch at least two-thirds of the Carbon Dioxide that unabated SMR directly generates (9kgCO2/kgH2), and the overall quantity of greenhouse gases will likely be greater due to upstream emissions from Methane supplies.

Air Liquide has been contacted by Hydrogen Insight to confirm the anticipated capture rate of the SMR units that will be constructed in Shanghai. The SCIPIG is obligated to annually report back to the bank on saved greenhouse gas emissions and H2 production and to routinely assess the plant's environmental impact.

According to Jerome Pelletan, chief financial officer of the firm, this green loan is a recognition of Air Liquide's ability to uphold projects adhering to the highest environmental standards. This being the inaugural green loan aimed at fostering low-carbon Hydrogen production, in line with the newly established China-EU Common Ground Taxonomy, also stands as a historic testament to the pioneering spirit in sustainable financing.