Chemicals and fertiliser giant OCI Global has signed its first offtake agreement for green hydrogen in the US with New York-based developer New Fortress Energy for all volumes of H2 from the latter's up-to-200MW ZeroPark 1 project in Texas, aiming to leverage favourable prices due to subsidies set out by the Inflation Reduction Act.

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Given the project has an expected capacity of more than 46 tonnes of hydrogen per day (more than 16,790 tonnes a year assuming full annual utilisation), this deal is one of the largest firm offtake agreements for green H2 signed in the US to date.

OCI, which contracted New Fortress Energy following a competitive bidding process, will use the hydrogen to produce 80,000 tonnes a year of green ammonia at its Beaumont complex, also in Texas, which will double to 160,000 tonnes a year from 2026.

New Fortress Energy, primarily a liquefied natural gas (LNG) specialist, announced last week that it would purchase the up-to-200MW project’s first 100MW of electrolyser capacity from Bill Gates-backed startup Electric Hydrogen.

OCI has not disclosed the terms of the agreement, including price and how long the offtake will last, although the firm’s director of sustainability for Europe, Sjoerd Jenneskens, tells Hydrogen Insight that “it’s not a short-term contract, so this is something around for years”.

And the chemicals producer expects to leverage incentives from the up-to-$3/kg tax credit for clean hydrogen production, introduced in the Inflation Reduction Act passed last year, on the price of hydrogen agreed with New Fortress Energy.

However, the Treasury’s guidance for how projects will be able to qualify for the top rate is yet to be published — which raises questions as to what will happen to the cost of hydrogen produced by New Fortress Energy if it is unable to meet these guidelines.

Jennesken confirmed that New Fortress Energy is already advanced in developing ZeroPark 1, including locking down the power supply.

“It’s far [in project development], actually, as... in OCI, we don’t take these onboard, any risks,” he said.

However, OCI’s bullishness could be due to its plans to export some volumes of green ammonia from its Beaumont complex to Europe.

In order to meet demand for so-called renewable fuels of non-biological origin (RFNBOs), for which the EU has set a 42.5% industrial use target by 2030, the H2 feedstock for exported ammonia would have to meet the criteria set out by the EU’s Delegated Acts, ie, additionality, geographical correlation, and temporal matching.

And while Treasury guidance is yet to be published, a joint declaration by G20 leaders this week hinted that rules and regulations would be harmonised between countries, suggesting that if it can be exported to Europe as an RFNBO, it will qualify for $3/kg (if it also has lifecycle emissions of less than 0.45kg of CO2-equivalent per kilo of H2.)

“It is likely we will export but there is also some local offtake, so I think it will be a nice combination,” Jennesken added, although he declined to comment on the likely split of volumes between the two.

OCI is also developing the first greenfield blue ammonia project in the US at Beaumont with industrial gases firm Linde.

This plant, capable of producing one million tonnes a year of NH3, is due to start up in 2025, supplying both domestic customers and export markets, although these are likely to be in Asia due to Europe’s lack of incentives to use non-RFNBOs.

Updated to clarify comments from Sjoerd Jenneskens.