Essar Invests $3.6B in UK and India's Energy Shift
Essar Group has created a new entity called Essar Energy Transition (EET) to establish the leading energy transition hub in North West England. The Essar Group has interests in various sectors, including Energy, Metals, Mining, Infrastructure and Technology.
EET has announced plans to invest a total of US$3.6 billion over the next five years to develop a range of low-carbon energy transition projects, with US$2.4 billion being invested in Stanlow (located between Liverpool and Manchester) and US$1.2 billion in India.
EET includes multiple business entities under the Essar Group:
Essar Oil UK is part of EET and is a refining and marketing business located in North West England.
Vertex Hydrogen is also part of EET and is developing 1 gigawatt (GW) of blue hydrogen for the UK market, with plans to expand to 3.8 GW.
EET Future Energy is another entity under EET and is developing 1 GW of green ammonia in India to target UK and international markets.
Stanlow Terminals Ltd is developing storage and pipeline infrastructure to enable the transition to cleaner energy and is also part of EET.
EET Biofuels is investing in the development of 1 MT of low-carbon biofuels and is also included in EET.
EET's investment programme will have a significant impact on expediting the UK's shift to low carbon while also aiding the government's decarbonisation agenda and generating highly specialised job opportunities in the Northern Powerhouse economy.
The investments will be made across various areas, such as hydrogen production technologies, decarbonisation, biofuels for both road and aviation, and infrastructure projects. As a result, North West England will soon become one of the leading post-carbon industrial clusters in Europe. EET is optimistic that these investments will help reduce approximately 3.5 million tonnes of carbon dioxide emissions, accounting for nearly 20% of the overall industrial emissions in North West England.
The launch of EET signifies Essar's resurgence and strategic shift towards growth. Essar is investing in modern and efficient assets with environmentally sustainable and socially responsible technologies that can last for many years. In addition to EET, the Essar Group plans to make other sustainability investments, such as establishing an LNG value chain in India, including LNG truck manufacturing and fuel stations, constructing a pellet plant in Odisha, in eastern India and building a 4-million tonnes per annum green steel complex in Ras-Al-Khair, Saudi Arabia.
EET's strategy is based on the understanding that hydrogen and biofuels are becoming increasingly important fuels globally, and the UK is well-positioned to lead the rapid growth of the European low carbon fuels market. The UK already has advanced regulatory and policy frameworks in place to support low carbon energy production, including the government's target of achieving 10GW of hydrogen production by 2030 while also developing low carbon hydrogen infrastructure, expertise, and meeting significant customer demand. The market growth opportunity is so significant that EET estimates that roughly two-thirds of its aggregate cash flows could come from diversified low carbon sources before the end of the decade.
Essar's Stanlow site, which is an essential part of the HyNet cluster, already holds a significant role in the UK's energy transition planning framework. In 2021, the UK government selected HyNet as one of only two hydrogen clusters in the country to potentially receive full operational support.
As part of EET's decarbonisation plans, the Stanlow refinery will achieve a 75% reduction in carbon emissions by the end of this decade. This initiative will make the refinery, which is a crucial fuel supplier to the UK, one of the most sustainable refineries in Europe.
Apart from investing US$2.4 billion in the UK, EET will also invest US$1.2 billion in developing a cost-efficient global supply hub for low carbon fuels in India. This hub will include green hydrogen and green ammonia, which will be shipped from India to meet the increasing global demand for green hydrogen.
EET's investment in India will help deliver on the country's emerging hydrogen ambition. The Indian government has implemented a supportive regulatory framework that aims to make the country a leading global hub for green hydrogen production and exports, as outlined in its National Green Hydrogen Mission, which was approved on January 4, 2023.
Prashant Ruia, Director, Essar Capital, said:
“The launch of EET is a major milestone in Essar’s long-standing commitment to put the UK at the forefront of low carbon energy. We are excited about the opportunity to drive the UK’s energy transition by producing low carbon future fuels that will help eliminate around 20% of the industrial carbon dioxide in Northwest England. In doing so, it will provide a blueprint for how traditional industries globally can be successfully transformed into hubs for the production of future energies."
Tony Fountain, Managing Partner of Essar Energy Transition, said:
“EET’s ambitious investment plans will not only help deliver the UK’s net zero ambitions and the enormous environmental benefits therein but will also secure the long-term sustainable future for Stanlow, protecting and creating new highly skilled job opportunities at the heart of the Northern Powerhouse economy for generations to come.”