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BASF, RWE eye €4-billion North Sea wind farm, electrolyzer project

24 May 2021 IHS Markit Chemical Expert

BASF and RWE plan to develop a 2-GW offshore wind farm in the North Sea to provide the former's Ludwigshafen, Germany, complex with electricity, meeting an estimated 25% of the site's power needs. The wind farm would be integrated with a 300-MW electrolyzer to enable CO2-free production of hydrogen.

At a signing ceremony on 20 May, BASF Chairman Martin Brudermüller and RWE Chairman Markus Krebber spoke about the timeline and significance of the estimated €4.0 billion ($4.9 billion) projects.

Krebber said BASF and RWE believe the project must be completed by 2030 to contribute to meeting Germany's climate goals and replace coal- and nuclear-based electricity that is being phased out. Given that the project could take five to seven years to develop, Krebber said, "there is no time to lose. We need key political decisions to make the investments attractive."

However, they each acknowledged that the plan cannot be realized without major changes to the legal and regulatory framework in Germany and the rest of the EU, as well as German government investments in infrastructure, to enable the supply of renewable energy at competitive prices.

Also at the signing event was Michael Vassiliadis, chairman of Germany's mining, chemical, and energy industries trade union IG BCE, who spoke about the significance of September elections in setting clean-energy policy. "The new government will have to dedicate itself to this," he said. "The chemical industry needs to know where we want to be and that we have the regulatory framework to do it."

BASF and RWE each are contributing about 50% of the investment, and BASF will own up to 49% of the facilities. No public subsidies will be needed to construct the wind farm, the companies said.

The companies also signed a letter of intent covering cooperation for the creation of additional renewable electricity capacity and the use of innovative technologies for climate protection.

Emissions pledge

On 5 May, Finance Minister Olaf Scholz and Environment Minister Svenja Schulze announced a new Federal Climate Act target of net-zero emissions by 2045, plus 65% GHG reductions by 2030 and 88% by 2040 (from a 1990 baseline). The prior net-zero target year was 2050.

The targets are laid out in a draft law that is yet to be approved by the cabinet and parliament.

Those announcements came a week after a court ruling on 29 April that found that the government lacks a plan for emissions reductions after 2031. The court ruled that this violates civil protection rights under Article 20a of Germany's constitution, the Basic Law, for five youths living on German islands at risk of becoming uninhabitable due to a rise in sea levels.

To meet the new climate goals, renewables installations will have to be accelerated. "It's time to shift from talk to action," Brudermüller said.

"It's paramount to act quickly and expand and accelerate the energy transition," Krebber added. "The decisions we take today will determine what happens in the second half of the 2020s."

Brudermüller and Krebber also said that green electricity should not be subject to surcharges under Germany's Renewable Energy Sources Act, and they called for a regulatory framework for CO2-free hydrogen production.

Meanwhile, the proposed wind farm and electrolyzer require government investments to connect the facilities to Germany's national grid and transport the renewable electricity smoothly to Ludwigshafen. The electrolyzer would likely be built near the site of an RWE power station in northwestern Germany, said Krebber. "We will explore how this will be done," he said.

About 80% of the wind farm's electricity output will go to Ludwigshafen, said Brudermüller. He added that the aim is to electrify the production processes for basic chemicals at the site that are currently based on fossil fuels. This will involve utilizing CO2-free technologies such as electrically heated steam cracker furnaces, which BASF is working with partners to develop. Ludwigshafen accounts for 8 million mt of BASF's total annual emissions of 21 million mt, Brudermüller said. Electrifying crackers and using renewable energy could cut BASF's emissions by 3 million mt/year worldwide, he said.

Reporting by Ian Young, "ChemicalWeek."

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