Visions are often difficult to explain, so Bayernoil boss Michael Raue brought three sheets of paper with him. The first one shows black – Raues Raffinerie processes crude oil into gasoline and other climate-damaging products. On the second sheet, the portfolio has changed, green and black symbols are roughly in balance. On the last sheet: almost only green. If things get rough, this color should soon replace the old black. “The refinery has to go green,” he says.
Bayernoil, Bavaria’s largest refinery company, wants to radically change its business model. Instead of kerosene, liquefied gases or heating oil, more and more climate-friendly products should flow through the pipes. The element that is currently inspiring sustainability fantasies up and down the country is supposed to help: hydrogen. Only: when is green actually green?
The Bayernoil plans can still only be seen on paper, in a conference room in Neustadt an der Donau, in the Kelheim district. If the room were on the other side of the company headquarters, a labyrinth of pipes, systems and tanks would open up to the horizon behind the window. You rarely see people in it, and when on the bike, on the go, checking a valve. The refinery is controlled centrally, and sensors monitor the processes. Bayernoil processes twelve billion liters of crude oil annually in Neustadt and in neighboring Vohburg. According to Raue’s vision, this should end as possible by 2045; from that year on, Germany wants to be climate neutral. Raue therefore speaks of converting the refinery: towards alternatives such as green methanol or e-fuels.
Sustainably produced hydrogen plays a central role here; the element is required for many chemical processes and products. In simplified terms, a 125 megawatt electrolysis plant is to be built on the refinery site. Later on, capacities will gradually increase to up to 800 megawatts. The energy required for hydrogen production is to be covered on the one hand by solar and wind systems that are still to be built. On the other hand, among other things, residual wood is to be gasified – i.e. branches and other material that sawmills do not process. Raue calculates with up to four million tons of wood per year in the final stage, he wants to start with half a million tons. The hydrogen currently produced in the refinery using natural gas could be dispensed with as soon as wood and other biogenic sources such as sewage sludge can be exploited in addition to solar and wind.
A cracker in the refinery in Neustadt: In simple terms, what is known as cracking breaks down crude oil. The products can then be processed into gasoline, for example.
(Photo: Bayernoil / oh)
The first part of the renovation is in preparation. The electrolyser is listed as “BayH2” on a funding list from the Free State and the federal government. Vattenfall is the project partner. The EU Commission has yet to agree. Recently there was public talk of funding of up to 100 million euros.
But where sustainability begins and where it ends is sometimes difficult to determine. The second part of the conversion, i.e. the use of biogenic raw materials for new products, is therefore more difficult and uncertain. In the case of hydrogen, this is not only due to, but also unclear definitions. For example, if it is generated from wind and solar energy, it is considered green. If it comes from biomass, it becomes ambiguous. Companies are allowed to include biogenic hydrogen in their energy consumption as renewable if they use it in road vehicles. If it occurs as an intermediate product in refineries, that is not possible. The federal government should examine whether the promotion of biogenic hydrogen in refineries is not possible after all, according to a motion for a resolution of the Environment Committee in the Bundestag: but only “from 2026”.
Business leaders can usually do little with such statements. You love predictability. Seen in this way, Raue is in a quandary: He would have to start his renovation plans now in order to be finished by 2045. Under the current conditions, however, he would run the risk of still missing the climate targets in the end – and the state subsidies. Without them, Raue admits, the whole thing cannot be achieved. And wind turbines alone will not be able to generate enough green electricity for hydrogen production in the foreseeable future. Raue therefore pleads, among other things, for the additional recognition of biogenic hydrogen as green, preferably soon.
Indeed, the lack of green electricity is another problem. Hydrogen production swallows a lot of that. Last week, the Greens in the Landtag warned the state government once again to remove obstacles to the expansion of renewable energies, including the 10 H distance rule for wind turbines.
Experts largely agree that the climate-friendly restructuring of industry can only be achieved with hydrogen. It is controversial which sources would otherwise come into question in view of the limited solar and wind capacities. In a study, the Bioenergy Research Network of the Federal Ministry of Economics named the use of biological residues and waste materials as a way of closing supply gaps. For the Federal Environment Agency, however, hydrogen from sun and wind remains the best choice, since biomass is “a versatile raw material”. Some experts therefore assess the use of hydrogen from biomass as a transitional solution – with transitional solutions always asking the question of how quickly you can get out of them as soon as they are established. Others even find the extraction from natural gas justifiable, provided that the resulting CO2 is not blown into the atmosphere. The result is called blue hydrogen and therefore doesn’t have much in common with green.
Managing Director Michael Raue has been with Bayernoil since 2005. In Neustadt an der Donau and Vohburg, the company operates what it claims to be the largest refinery in the Bavarian region.
(Photo: Bayernoil / oh)
What makes it even more complicated is that there is likely to be a lack of hydrogen in one way or another. This is suggested by a study by the Agora Energiewende think tank. According to this, Germany will need around 422 terawatt hours of hydrogen and other synthetic fuels in 2045 – 326 terawatt hours of which would have to be imported. The state government also apparently considers such a scenario to be realistic: Only on Thursday did Prime Minister Markus Söder (CSU) think aloud about hydrogen pipelines that could bring the element from Norway and southern Europe. The plans are officially no further.
So where does it come from, Bavaria’s hydrogen? Which and how many compromises are allowed in the industry when it comes to going green? And how much planning uncertainty should or must it withstand? Such questions are likely to arise more frequently in the near future, not only in Neustadt with its refinery chimneys. In view of climate change, says Raue, a company can only choose one of three paths into the future. “The first way you ride the fossil wave as long as you can.” With the second one is preparing to close the business soon. And with the third “you do something new”. They even think a new name for their company is possible at Bayernoil in the long term. One that can do without oil.