Yahoo Finance TotalEnergies (TTE) Signs Green Hydrogen Deal With Air Products
TotalEnergies SE TTE and Air Products and Chemicals APD have signed a 15-year agreement for the annual supply of 70,000 tons of green hydrogen in Europe, expected to begin in 2030.
TotalEnergies provides long-term contracts with its six refineries and two biorefineries in Europe, demonstrating its ability to aid in the development of a green hydrogen sector and lead the energy transition.
Benefits of the Agreement
Per the terms of the agreement, Air Products will deliver green hydrogen from Air Products’ global supply network to TotalEnergies’ Northern European refineries. Each year, this hydrogen supply is expected to avoid about 700,000 tons of CO2.
This deal is in sync with TotalEnergies' objective of reducing net greenhouse gas emissions from its operated oil and gas operations (Scope 1+2) by 40% within 2030 compared to the 2015 levels.
Focus on Green Hydrogen
TotalEnergies is dedicated to minimizing the environmental impact associated with the generation, transformation and distribution of energy to its customers. The company has pinpointed green or low-carbon hydrogen as a key strategy to decarbonize its European refineries. TotalEnergies' goal of decarbonizing all hydrogen used in its European refineries within 2030 is perfectly in sync with this objective. It aims to replace grey hydrogen with low-carbon hydrogen by 2030, indicating a reduction of 3 million tons of CO2 per year.
TotalEnergies is set to decarbonize all its European refineries by the end of the decade. It floated a tender for supply of 500,000 tons of green hydrogen annually.
In May 2024, TotalEnergies and EREN Groupe’s joint venture TE H2, along with VERBUND, Austria’s leading electricity company, signed a Memorandum of Understanding with Republic of Tunisia to develop a large green hydrogen project, named H2 Notos, for export to Central Europe through pipelines.
Green hydrogen will be produced using electrolysers, powered by large onshore wind and solar projects, and supplied with desalinated seawater. The project is aimed at producing 200,000 tons of green hydrogen annually during its initial phase, with the potential to scale up to 1 million tons per year in South Tunisia.
Growth Prospects
The green hydrogen market is experiencing rapid growth, driven by global efforts to reduce carbon emissions and advancements in electrolysis and renewables. Per a Markets and Markets report, the green hydrogen market was valued at $1.1 billion in 2023 and is projected to reach $30.6 billion by 2030, indicating a CAGR of 61.1% during 2023-2030.
Along with TotalEnergies, other oil and gas companies like BP plc BP and Equinor ASA EQNR are also set to take advantage of the rising green hydrogen demand.
BP’s unit BP Ventures and Templewater invested $10 million in the promising green hydrogen startup, aiming to accelerate the global transition to sustainable energy. Hydrogen is one of BP's key transition growth engines, and this investment marks a significant step in BP’s ambition to lead in low-carbon hydrogen production globally.
BP’s long-term (three- to five-year) earnings growth rate is 4%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 0.4%.
In 2023, EQNR entered into an agreement with Germany-based electricity generation company, RWE, to develop offshore wind farms capable of producing green hydrogen. The companies expect to invest in flexible hydrogen-ready CCGT in Germany, with a total capacity of 3 gigawatts by 2030. The project should contribute to strengthening Europe’s security of supply and boost the production of low-carbon hydrogen.
EQNR’s long-term earnings growth rate is 2.2%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 2.6%.
Price Performance
In the past three months, shares of TotalEnergies have risen 5.5% compared with the industry’s 0.4% growth.
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Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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