TotalEnergies and RWE have reached a 15-year agreement for the purchase of green hydrogen, marking the largest deal of its kind in Germany, the companies announced Tuesday.

Under the agreement, TotalEnergies will purchase approximately 30,000 metric tons of green hydrogen annually from RWE, starting in 2030, for its refinery in Leuna, Saxony-Anhalt.

The hydrogen will be produced at RWE’s 300-megawatt electrolysis plant in Lingen, Lower Saxony, which is expected to be operational by 2027. RWE will power the electrolyzers with renewable energy sources.

The deal is seen as a significant step in Germany's efforts to decarbonize its industrial sector, particularly refineries, which are required to reduce greenhouse gas emissions. 

TotalEnergies estimates that using 30,000 metric tons of green hydrogen will reduce CO2 emissions at its Leuna refinery by 300,000 metric tons annually, equivalent to the emissions of 140,000 cars.

“We are proud to have secured the first long-term offtake agreement for green hydrogen of this size with TotalEnergies in Germany,” said Markus Krebber, CEO of RWE AG, in a statement.

Patrick Pouyanné, Chairman and CEO of TotalEnergies, said the agreement “marks an important milestone to reducing our CO2 emissions at our Leuna refinery.”

The supply relationship will be facilitated by Germany’s hydrogen core network, a 9,000-kilometer pipeline network connecting hydrogen production sites with industrial consumers.

Stephan Weil, Prime Minister of Lower Saxony, and Dr. Reiner Haseloff, Minister President of Saxony-Anhalt, both praised the agreement, highlighting its significance for the development of a hydrogen economy in Germany.

TotalEnergies, which has issued tenders for 500,000 metric tons of green hydrogen annually across Europe, aims to decarbonize its refineries.

To ensure a reliable hydrogen supply, RWE Generation will use booked capacities of the hydrogen storage facility in Gronau-Epe, operated by its subsidiary, RWE Gas Storage West, which plans to put the facility into operation in 2027.

Refineries traditionally use hydrogen derived from fossil natural gas, contributing to high CO2 emissions. The use of green hydrogen will help refineries meet Germany’s greenhouse gas emissions reduction targets.