Distilling the Perspectives On Blue Hydrogen
A Social Cost Benefit Analysis of Using Blue Hydrogen for Decarbonising High Temperature Heat Demand within Refineries in the Port of Rotterdam
S.W.J. van Dongen (TU Delft - Technology, Policy and Management)
M.D.M. Pérez-Fortes – Graduation committee member (TU Delft - Energy and Industry)
S.T.H. Storm – Graduation committee member (TU Delft - Economics of Technology and Innovation)
N. Mouter – Graduation committee member (TU Delft - Transport and Logistics)
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Abstract
Refineries in the Port of Rotterdam (PoR) account for 20% of Dutch industrial and 6% of national CO2 emissions, with high temperature heat emissions representing 70% of this total. Decarbonising these refinery operations is challenging, with the EU and Dutch CO2 reduction targets consisting of 55% reduction by 2030, 90% by 2040 and 100% by 2050.
Blue hydrogen is seen as a promising solution for decarbonising high temperature heat within refineries. However, existing studies have primarily focused on the technical and commercial feasibility from a corporate perspective, lacking a comprehensive, holistic view. This is relevant since the government is obliged to reach the decarbonisation targets. This research aimed to determine the cost and benefits of using blue hydrogen for the decarbonisation of high temperature heat within PoR refineries from the public and corporate perspective, in alignment with Dutch/EU net zero targets in 2050.
The main research question which was answered is: What are the costs and benefits of using blue hydrogen for the decarbonisation of high temperature heat generation within refineries in the Port of Rotterdam considering the Dutch/EU net zero targets in 2050, from the perspective of the corporate versus the public?
A Social Cost Benefit Analysis (SCBA) under EU guidelines was conducted, comparing a business as usual (BAU) reference case, which is not reaching the climate targets, with a blue hydrogen intervention scenario. The intervention scenario resulted in an overall CO2 reduction of 44.4 Mt between 2024 and 2050, needed to reach EU and Dutch decarbonisation targets.
After identifying all effects resulting from the intervention scenario, the cost and benefits of both perspectives could be assessed. This study finds significant differences in valuation between the corporate and public perspective. The corporate Net Present Value (NPV) is 172MEUR, while the public NPV Is 8,834 MEUR. This underscores that societal and environmental benefits are not captured in corporate metrics. This is primarily due to the undervalued Corporate CO2 EU ETS price compared to the Social Cost of Carbon. Addressing this gap may require policy measures such as increasing the EU ETS or the local Dutch CO2 Levy. Further research should assess mechanisms to align CO2 pricing with true external costs.