BP shelves major hydrogen project in Teesside after approval of data centre site clashes with net zero plans

BP has withdrawn its plans to develop a significant hydrogen project in Teesside after government officials granted approval for the construction of Europe’s largest data centre on an overlapping plot of land. This move has delivered a setback to Ed Miliband’s ambitions for net zero, highlighting the ongoing balancing act between industry, technology, and environmental policy in the UK energy sector.

The oil major withdrew its request for a development consent order following a decision by the Labour-led Redcar and Cleveland council to endorse the data centre initiative. BP cited “material changes in circumstances,” pointing to the granting of local planning permission for the data centre as the critical issue that rendered the H2Teesside project unviable. In correspondence with the Energy Department, representatives for BP reiterated the company’s conviction in hydrogen’s future importance but underlined the challenges posed by the recent planning developments.

The rivalry between the two proposals—one focused on hydrogen production and carbon capture, the other representing a new frontier in artificial intelligence—placed the Energy Secretary and Business Secretary at odds. The data centre site was chosen as the government’s second AI Growth Zone, a flagship investment aimed at spurring economic progress through technology. Confirmation of this project is expected before Christmas, following significant lobbying in Whitehall and legal consultations regarding the competing projects.

BP’s H2Teesside project, first announced in 2021, was expected to supply more than ten percent of Britain’s clean power requirements by 2030. At 1.2 gigawatts, it represented enough capacity to power a million homes, underlining the scale of the decision. However, the project’s commercial foundation was undermined by a range of factors, including limited customer uptake and the closure of partner facilities, such as the Sabic chemical plant earlier this year.

The government has stated that avenues remain for hydrogen investment in Teesside, pointing to projects like Tees Green Hydrogen, which is progressing towards final investment decisions. BP has affirmed its continued commitment to the region via its investments in Net Zero Teesside Power and the Northern Endurance Partnership.

This development exemplifies the tensions inherent in Britain’s net zero strategy, where commitments to clean energy must compete with alternative visions for economic growth. The outcome underscores the necessity for coherent planning and collaboration across the public and private sector as the energy transition accelerates.