£125m offtake deal anchors two major electrolyser projects and sets a template for other gas-intensive industries.
Kimberly-Clark, the multinational behind Andrex and Kleenex, has signed long-term hydrogen supply contracts worth £125 million with two UK electrolyser projects, in a move that could halve the tissue maker’s domestic natural gas consumption from 2027.
Under the agreement, the company will take green hydrogen from Carlton Power’s facility in Barrow-in-Furness, Cumbria, and from the HYRO plant in Northfleet, Kent – a joint venture between Octopus Energy Generation and RES. Between them, the sites are expected to deliver around 147 GWh of hydrogen energy each year, displacing a similar amount of natural gas at Kimberly-Clark’s UK operations.
The company estimates this shift will cut 28,500 tonnes of CO₂ emissions annually, while also providing a long-term hedge against the volatility of global gas markets.
Why Hydrogen, and Why Now?
On a pure fuel-cost basis, hydrogen still commands a steep premium over natural gas. At current assumptions, green hydrogen at around £5 to £10 /kg equates to 15 pence per kilowatt-hour, compared with 3–6 pence for industrial gas. Replacing 147 GWh of gas with hydrogen could therefore increase annual fuel costs by £13–18 million, translating to an abatement cost of £450–£630 per tonne of CO₂ avoided.
But the economics are shifting. The UK Government’s Hydrogen Production Business Model (HPBM) offers long-term revenue support to hydrogen producers through Low-Carbon Hydrogen Agreements (LCHAs). These contracts for difference-style mechanisms narrow the cost gap for industrial users, making hydrogen a commercially viable option for early movers.
For Kimberly-Clark, the decision goes beyond arithmetic. Securing low-carbon hydrogen ensures compliance with tightening UK ETS rules and the looming Carbon Border Adjustment Mechanism. It also strengthens the company’s green credentials with retailers and consumers, where Scope 1 emissions cuts are increasingly scrutinised. And crucially, the projects involve dual-fuel boilers, retaining flexibility to switch back to natural gas if required.
Anchor Demand for UK Hydrogen Projects
The timing of the Windcat Rotterdam’s entry into service is no coincidence. The offshore wind market is entering a phase of unprecedented expansion in Eur
The Carlton Power and HYRO projects are both slated to begin operations in 2027, with electrolysers powered by renewable electricity. Kimberly-Clark’s commitment provides them with a critical anchor demand, strengthening bankability and attracting additional investment.
This model – major energy users locking in long-term hydrogen offtake – is precisely what policymakers envisaged when launching the HPBM support scheme. With more allocation rounds due in 2025 and beyond, similar partnerships are expected to proliferate.
Who Might Follow?
Kimberly-Clark’s move is likely to resonate across several energy-intensive industries where natural gas is a core input:
- Paper and pulp – other mills are facing high and volatile energy costs.
- Glass – companies such as Pilkington have already trialled hydrogen-fired furnaces.
- Ceramics and bricks – high-temperature kilns are well-suited to hydrogen burners.
- Cement and lime – some UK plants are piloting hydrogen co-firing alongside alternative fuels.
- Chemicals and metals – large continuous steam and process-heat users, particularly near hydrogen hubs.
These sectors share three characteristics: steady, high-temperature heat demand; proximity to hydrogen production; and strong pressure to decarbonise under both regulation and supply chain expectations.
The Road Ahead
Hydrogen is not a silver bullet. Project timelines remain tight, electrolyser costs must continue to fall, and operational challenges such as NOx emissions from hydrogen combustion require careful engineering. Yet Kimberly-Clark’s contracts underline that major corporates are prepared to pay a premium today to secure long-term decarbonisation pathways.
As government support mechanisms mature and hydrogen costs decline, more companies are expected to follow this lead. For the UK hydrogen industry, Kimberly-Clark’s £125 million commitment is more than a procurement deal: it is a vote of confidence in the sector’s future.
The post Kimberly-Clark Bets on Green Hydrogen to Decarbonise UK Mills first appeared on Haush.