bp has said that it has withdrawn its plans to develop H2Teesside, a large scale hydrogen production and carbon capture facility in Teesside in north-east England, citing deteriorating demand for hydrogen by industrial consumers, and alternative plans to build a new data center at the site.

The company said that the decision to end its plans for the blue hydrogen facility “has not been taken lightly,” and was “based on material and significant changes in circumstances in respect to options for the development of the Teesworks site.”

bp initially announced its plans to build H2Teesside in 2021, with a production capacity targeted at 1 GW by 2030, making the proposed facility the largest hydrogen project in the UK. The new announcement follows the establishment of a new strategy by bp in February 2025, reallocating capital to increase oil and gas investment and reducing low carbon energy to less than 5% of the company’s capex allocation.

Blue hydrogen is produced by converting natural gas into hydrogen and CO2, which is then captured and permanently stored. When initially announcing the project, bp stated that it had begun a feasibility study into the project to explore technologies that could capture up to 98% of carbon emissions from the hydrogen production process.

In a letter to the UK’s Department for Energy Security and Net Zero, bp said that plans to develop a data center at the site, which have been approved by local authorities, “has resulted in a conflict over the same land as H2T,” adding that “the two proposals are incompatible on the same piece of land.”

The company added that “the hydrogen demand situation in Teesside has also deteriorated as some major industrial consumers have either scaled back operations or postponed decarbonisation plans, significantly increasing the Applicant’s risk in developing the H2 Teesside project.”