Neste drops plan to invest in renewable hydrogen electrolyser in Porvoo Refinery
Photo courtesy of Neste

Neste drops plan to invest in renewable hydrogen electrolyser in Porvoo Refinery

Neste, a global leader in renewable fuels and circular economy solutions, has announced its decision to withdraw from the planned investment in a 120 MW electrolyser at its Porvoo refinery in Finland. The electrolyser was intended to produce renewable hydrogen, supporting Neste’s transition towards sustainable fuel production.  

The decision follows the completion of the project’s basic engineering phase, which began in May 2023. Neste cited challenging market conditions and financial performance assessments as key reasons for the decision. Additionally, regulatory limitations surrounding the use of renewable hydrogen within refinery operations further influenced the company’s choice to halt the project.  

Finland’s national distribution obligations require fuel distributors to incorporate a certain percentage of renewable fuels into the transport sector. These obligations are aimed at reducing carbon emissions by promoting alternatives to fossil fuels, such as biofuels, biogas, and synthetic fuels (RFNBOs). The target is to reach 34% renewable fuel content by 2030, increased from the earlier target of 30% to further align with Finland’s climate goals.

A key challenge for projects like Neste’s electrolyzer is that these distribution obligations currently focus more on biofuels and synthetic fuels than on hydrogen. While hydrogen is essential for long-term decarbonisation, its current market development and infrastructure readiness in Finland are not sufficient to provide immediate commercial returns. This creates uncertainty around whether hydrogen-based products, such as e-fuels, will be effectively integrated under the existing regulatory framework.

Neste’s cancellation of the electrolyzer project reflects this regulatory and market complexity. The distribution obligation does not yet strongly incentivise renewable hydrogen, limiting the refinery’s ability to fully utilise hydrogen within its operations and meet the required thresholds for renewable content efficiently.

Marika Koroivanen, executive vice president for Oil Products at Neste, elaborated on the decision: “While we are discontinuing the initial renewable hydrogen project, we remain committed to exploring alternative paths to secure renewable hydrogen for the Porvoo refinery. This includes continued utilisation of renewable hydrogen produced on-site, contributing to our biofuels production.”  

Koroivanen emphasised that Neste is actively developing partnerships to expand the hydrogen ecosystem linked to the Porvoo refinery, exploring collaborative opportunities with industry stakeholders to drive forward sustainable fuel innovations.  

Neste aims to make the Porvoo refinery the most sustainable in Europe by 2035. The company is committed to achieving carbon-neutral production by 2050 and reducing the carbon intensity of its products by 50% by 2040. As the world’s leading producer of sustainable aviation fuel (SAF) and a frontrunner in circular economy solutions, Neste remains dedicated to reducing greenhouse gas emissions across its operations.