Neste pulls back on green hydrogen project at Porvoo refinery

Finnish biofuel producer Neste has announced it will no longer pursue its planned 120 MW electrolyzer project to produce renewable hydrogen at its Porvoo refinery in southern Finland, citing challenging market conditions and financial performance as key factors.

In a statement on Thursday October 24, Neste explained that tight constraints in Finland on renewable hydrogen use for refineries – specifically, meeting the renewable fuels of non-biological origin (RFNBO) distribution obligation – limit the project’s economic feasibility, as renewable hydrogen cannot be fully integrated at Porvoo’s refinery processes as originally planned.

The Finnish biofuel producer had intended for the electrolyzer to replace fossil-based hydrogen with green hydrogen at Porvoo, aligning with its broader strategy to decarbonize its operations.

Fastmarkets reached out to Neste for further details on how this may impact its biofuel strategy but did not receive a response prior to publication.

Neste has previously stated its commitment to achieving carbon-neutral production by 2035 and aims to reduce carbon intensity of its sold products by 50% by 2040.

Neste’s decision aligns with recent moves by other energy companies scaling back on renewable fuel investments.

UK energy major BP announced earlier this year it would scale back investments in sustainable aviation fuel (SAF) and renewable diesel production, citing difficult economic conditions.

Similarly, oil major Shell paused the construction of its 820,000-tonne-per-year biofuels facility at Rotterdam Energy and Chemicals Park in the Netherlands to address market and project delivery challenges.

Despite such adjustments, renewable hydrogen remains a key component in producing synthetic aviation fuel (eSAF).

The eSAF process typically relies on renewable electricity to produce hydrogen through electrolysis, which then combines with captured carbon dioxide to form carbon monoxide.

This compound is further processed with hydrogen to produce synthetic crude, which can ultimately be refined into renewable fuels.

The International Renewable Energy Agency (IRENA) projects that, by 2050, hydrogen demand will rise to 613 million tonnes from 87.1 million tonnes in 2020.

To meet this demand, two thirds of the hydrogen must be green hydrogen – that is, produced with clean electricity.