Energy Security and Decarbonisation: Sustainability vs. Transition

For those outside the energy sector, in particular the refining and petrochemicals industries, understanding the delicate balance required to sustainably support modern day life may not be clear. Leveraging the four energy pillars - security, sustainability, transition, and decarbonization targets - while providing affordable products and essential commodities is no easy task. Despite numerous challenges throughout the supply chain, technological advancements are maintaining pace. We can now confidently say that solutions for achieving set targets, while leveraging these pillars in a non-disruptive manner, are already available. These solutions will continue to evolve and optimize costs in terms of initial investment and CAPEX.?

The refining and petrochemicals market is experiencing increased volatility, operating under more disruptive and dynamic conditions, alongside long-term decarbonization targets and associated costs. The golden age of refining margins is expected to end in 2025, with a slight boost projected until 2030 due to further closures. Margin recovery for basic chemicals is anticipated to be delayed until later in the decade due to oversupply and weaker-than-historical growth. Future expectations remain unchanged, with major takeaways from significant global events, production cuts, and regulations continuing to impact industry. Government policy-driven carbon credits and/or green-product premiums will likely be necessary to offset the decline and accelerate the transition.?

Maintaining a delicate balance between fossil and renewable resources is crucial for the entire ecosystem to sustainably utilize and optimize existing assets. Hydrogen plays a vital role in various processes such as hydroprocessing, electrification (fuel cells), and Power-to-X technologies. In certain regions, processing lower carbon fossil feedstock may be more practical than higher carbon renewable feedstocks. For example, in the Middle East, transporting palm oil or biomass from Asia to be processed locally and then exported to the EU for example, would be energy-intensive, even with a carbon-neutral cargo supply chain. Pyrolysis oil, derived from waste plastics, is emerging as a promising feedstock, offering a solution to revert already produced materials back into liquid hydrocarbon form. Experimental trials suggest blending 20% pyrolysis oil with crude oil is feasible in Fluid Catalytic Cracking (FCC) units, with breakthroughs expected to enable refineries to process higher percentages of pyrolysis oil.?

How do we measure and leverage energy security while prioritizing sustainability during the transition period??

The idiom "The stone age did not end because we ran out of stones" can be applied to the current reality of the refining industry. Liquid fuels continue to power the world and generate profits, and the end of the era of Internal Combustion Engines (ICE) and turbine-fired engines is not imminent. Global consumers have expressed a clear preference, indicating that neither they nor the market, infrastructure, electricity producers, or Enterprise Resource Planning (ERP) systems are currently capable of meeting net-zero targets if the responsibility falls solely on their shoulders.?

However, the market has responded with a variety of alternatives to maintain current mobility flows and reduce the risk of disruptions. These alternatives include:?

PASSENGER CARS?- Amidst the significant push towards electric vehicles (EVs) by companies like Tesla and BYD, it appears that some legacy manufacturers such as Toyota, Subaru, and Hyundai have taken a more cautious approach to electrification. However, electrification remains a viable powertrain option, with many carmakers opting for hybrid vehicles, particularly plug-in versions offering extended fully electric range. A notable hybrid solution involves an arrangement similar to that of train locomotives, where the Internal Combustion Engine (ICE) powers an alternator, which in turn powers an electric motor and charges batteries instead of directly transmitting power to the drivetrain. Interestingly, there is a trend towards hybrid cars running on diesel, leveraging its natural higher torque specifications. Further sustainability enhancements can be achieved by fueling these vehicles with renewable diesel, known for producing fewer emissions during combustion.?

TRUCKS AND BUSSES?- Drop-in renewable diesel, conversion to gas-diesel configurations, or 100% gas-powered solutions offer viable alternatives for modern semi-trucks and other moving machinery. These vehicles typically employ highly efficient high-pressure common-rail turbo-diesel engines, making them suitable for emissions reduction strategies while maintaining security and sustainability during the transition period. Synthetic renewable diesel fuels, particularly the 2nd and 3rd generation variants, enable large displacement engines to operate on various alternative fuel mixtures. Additionally, the gas-to-diesel fuelling scheme is available and often allows legacy assets and machinery to remain functional while complying with current emissions regulations.?

SHIPPING - Methanol & Ammonia, produced via green methods, are poised to become the shipping fuels of the future. Currently, a limited number of ships are running on these fuels. The implementation of the IMO2020 regulation disrupted the marine fuel markets just four years ago, but the industry responded promptly to ensure compliance. However, the market is still recovering from the surplus fuel produced during the COVID-19 pandemic. Despite the potential for renewable liquid fuels to power cargo ships, the high production costs and ethical considerations regarding food versus energy pose significant challenges.?

AVIATION?- SAF emerges as the prime choice for commercial and cargo aviation due to its promising benefits. With typical fuel consumption and CO2 emissions of common aircraft to be confirmed, the significance of SAF becomes evident. Recently, Virgin Atlantic conducted a successful test flight using 100% renewable jet fuel, highlighting its seamless integration. Moreover, SAF produced through cutting-edge technologies ensures superior properties, ensuring excellent Cold Flow Plugging Point (CFPP), vital for aircraft engines' optimal performance amidst challenging sky conditions.?

Success in producing and providing sustainable, clean, and affordable energy and chemical building blocks hinges on leveraging optimal production practices, maximizing the potential of existing assets, and strategically implementing new technologies. This wide-spectrum approach ensures not only environmental sustainability but also economic viability, paving the way for a greener and more prosperous future for the human population.?

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