As the world continues to seek affordable, clean and reliable energy solutions, hydrogen has emerged as one of the potential replacements for traditional hydrocarbons to provide zero-to-low carbon energy. In addition to renewables and natural gas, hydrogen has an important role in the energy transition in the coming years.
Vinson & Elkins’ multidisciplinary team of lawyers has been advising clients on transactions involving the production and marketing of hydrogen for many years, including in the refining, petrochemicals, and mobility sectors. As a result, our lawyers have extensive knowledge on how hydrogen is produced, used, stored, transported, marketed and sold. V&E also has significant experience advising on hydrogen development related matters such as carbon capture, utilization and storage operations. Many of the legal issues involved in the emerging hydrogen industry reflect those encountered in the wider energy sector, from increasing M&A activity, to project development matters and the potential for future project financing as hydrogen becomes more established. As market leaders in the energy industry across the world, these are areas where V&E has comprehensive and wide-ranging existing experience ready to leverage.
Hydrogen, as a versatile energy carrier and chemical feedstock, offers advantages that unite all of our nation’s energy resources – renewables, nuclear and fossil fuels – and enables innovations in energy production and end uses that can help decarbonize three of the most energy intensive sectors of our economy: transportation, electricity generation and manufacturing. Companies are beginning to make serious headway in growing a “hydrogen economy”, establishing hydrogen as an exciting and viable component of the future energy mix.
Hydrogen’s potential contribution to carbon neutrality is reliant on how it is produced. Used as a key industrial gas in the refining and chemical sectors, including ammonia production, most hydrogen today, commonly referred to as “gray” hydrogen, is produced from fossil fuels through coal gasification or steam methane reformation processes, which emit CO2 into the atmosphere.
Driven by an expansion of the range of applications for hydrogen in the energy sector (including power generation, heating, transport, energy storage and the decarbonization of industrial sectors such as steelmaking and iron smelting), the current wave of interest in the hydrogen industry is focused on “blue” and “green” hydrogen production. “Blue” hydrogen is produced in a similar manner to gray hydrogen, but carbon-capture technologies are incorporated in the process to prevent CO2 from being released. The cleanest variety, known as “green” hydrogen, is produced through the electrolysis of water powered by renewable energy sources, resulting in zero-carbon emissions and a clean and sustainable fuel source.
As hydrogen develops as a cleaner fuel and energy source, Vinson & Elkins continues to assist clients in delivering on the evolving energy mix. Our lawyers advise on a full range of hydrogen related matters, including:
Full suite of project development matters
Project and other financing structures
Carbon Capture, Utilization and Storage (CCUS) infrastructure supporting large-scale hydrogen production
Investments in hydrogen companies and related joint ventures
Mergers and acquisitions
Regulatory advice and counseling
Environmental permits, wildlife impact, and land use advice
Purchase and sale of environmental attributes, including renewable energy credits
International alternative dispute resolution
Environmental, social and governance (ESG) advice and counseling
Representing issuers and underwriters in a variety of capital-raising transactions, including IPOs and combinations with SPACs
Gulf Coast Ammonia as project counsel and borrower’s counsel in all aspects of the development and financing of a world-scale, hydrogen-based ammonia project in Texas (Proximo’s 2019 North American Petrochemicals Deal of the Year)
Decarbonization Plus Acquisition Corp. in a SPAC sponsored by an affiliate of Riverstone Holdings in its $2.1 billion business combination with Hyzon Motors, a global supplier of zero-emissions hydrogen fuel cell powered commercial vehicles
Buckeye Partners in an equity investment in OneH2, a hydrogen fuel and hydrogen infrastructure supplier (ongoing)
Representation of various entities, including an international investment bank and a large renewable natural gas developer, in separate transactions to develop renewable natural gas to hydrogen projects to supply the California mobility market (ongoing)
Energy Growth Momentum, a UK-based private equity fund that invests in equipment and services companies improving the performance of energy assets, in its investment in H2scan Corporation, a provider of hydrogen leak detection sensors
The developer in relation to the development and financing of the Hydrogen Power Abu Dhabi project, which is the first of its kind globally, involving the splitting of a natural gas stream into hydrogen and carbon dioxide
Private developer as project counsel in all aspects of the development and project financing of a renewable diesel production facility with a nameplate capacity of 100 million gallons annually to be located on the Texas Gulf Coast, including the negotiation of hydrogen supply agreements
Construction, development and financing of a multi-billion dollar gas-to-liquids project, including in relation to the sale of the hydrogen production unit and other industrial gases units of the facility and long-term supply of syngas and hydrogen
STAR Rafineri A.Ş., a subsidiary of the State Oil Company of the Azerbaijan Republic (SOCAR), and its sponsors on the development and financing of a $6.3 billion greenfield oil refinery in Turkey on the Aegean Sea, including all processing units, hydrogen production units and related facilities. This is the largest project financing in Turkey and involves the largest and most diverse group of ECAs for any multi-source financing in Turkey to date. The Project won 10 awards including Infrastructure Journal’s “European Oil and Gas Deal of the Year 2014”
International Financial Institution in the structuring, development and financing of a 500 MW PV solar-based green hydrogen project in the United States
Advising lead investors in capital raise for growth investment in hydrogen fuel and infrastructure supplier (ongoing)
Providing regulatory and commercial advice to a distribution company regarding blending green hydrogen into an existing natural gas distribution system (ongoing)
Huntsman International in a breach of contract dispute with Praxair, its hydrogen raw materials supplier (ongoing)