BP has cancelled its HyGreen Teesside proposal, a 500-megawatt green hydrogen project once billed as a flagship for the United Kingdom’s industrial heartland. The energy group withdrew its development consent application on Dec. 1 after confirming that the chosen site will host a vast data centre instead.
HyGreen’s demise follows a strategy reset that steers BP toward fewer, “high-graded” low-carbon ventures and concentrates spending on core oil and gas operations. The decision ends hopes of producing up to 500 megawatts of electrolytic hydrogen by 2030 and supplying nearby chemical plants and heavy transport users.
Data centre priority squeezes hydrogen hopes
BP told regulators that co-locating a hydrogen plant with Europe’s largest planned data centre would be “incompatible,” while the closure of a key plastics plant eroded local hydrogen demand. A spokesperson added that BP now targets just five to seven hydrogen or carbon capture projects this decade, saying, “we’re focused on high-graded projects in hydrogen and carbon capture.”
The pivot leaves Teesside’s broader decarbonisation agenda reliant on two surviving BP-led schemes: H2Teesside, a blue hydrogen project that pairs steam-methane reforming with carbon capture, and Net Zero Teesside Power, an 860-megawatt gas plant designed to capture up to two million tonnes of carbon dioxide each year.
Local officials had backed HyGreen for its promised 660 construction jobs and a projected 100 operational roles, but welcomed the data-centre alternative as a quicker route to investment. BP, meanwhile, keeps its equity in the Northern Endurance Partnership pipeline network that would move captured carbon to storage sites beneath the North Sea. The company insists that part of the portfolio remains viable even as renewable ambitions are trimmed.
Mixed signals for carbon capture investors
HyGreen’s cancellation highlights the precarious economics of hydrogen produced solely from renewable electricity. Power prices have stayed high in the United Kingdom, and subsidies remain uncertain beyond pilot volumes. Some developers now see blue hydrogen paired with carbon capture as a lower-risk bridge until electrolyser costs fall.
Yet the broader CCS sector also faces delays. Commercial investment reached a record US $6.4 billion in 2024, but fewer final investment decisions closed in 2025 than the year before, according to industry trackers.
Even so, policymakers continue to stress that carbon capture is essential for heavy industry and net-zero goals. “Deployment of CCS will not be optional in implementing the Paris Agreement,” Fatih Birol said in an International Energy Agency briefing.
Projects in Alberta, the U.S. Gulf Coast and Norway advanced this year, while Japan and South Korea launched subsidy schemes that mirror Canada’s investment tax credit. The United Kingdom still offers contractual revenue support for captured carbon, and BP has signalled it will push H2Teesside and Net Zero Teesside toward investment decisions in 2026.
Some investors interpret BP’s move as a broader retreat from early-stage green hydrogen rather than a verdict on carbon capture itself. The operator continues to study storage reservoirs under the North Sea and bids for related pipeline licences. HyGreen’s exit does, however, shrink the pipeline of European electrolytic hydrogen projects and may slow equipment orders for electrolyser suppliers.
For now, BP is not alone in pruning hydrogen ambitions. Shell paused work on a German electrolyser in August, while Equinor delayed a large blue-hydrogen unit in the Netherlands pending clearer demand signals. Still, more than 40 million tonnes per year of global carbon capture capacity remains under development.
The industry faces a testing period, but decisive policy and stable offtake contracts could yet keep CCS on track, even as some businesses step back from the most capital-intensive hydrogen bets.