Jan-2022

Play a leading role in the energy transition

Transformation of the energy system must support the development of renewable electricity and fuels, while progressively reducing the demand for fossil fuel.

Robin Nelson
Decarbonisation Technology

Article Summary

In the lead-up to the 2021 COP 26 meeting in Glasgow, the Intergovernmental Panel on Climate Change (IPCC) Working Group 1 released their latest report on the physical science basis of climate change, as a contribution to the IPCC sixth Assessment Report. The Summary for Policy Makers concludes that it is “unequivocal that human influence has warmed the atmosphere, ocean and land. Widespread and rapid changes in the atmosphere, ocean cryosphere and biosphere have occurred”.¹

The United Nations Environmental Programme (UNEP) Emissions Gap Report provides a yearly review of the difference between where greenhouse emissions are predicted to be in 2030 and where they should be to avoid the worst impacts of climate change. The 2020 Emissions Gap Report found that, despite a brief dip in carbon dioxide (CO2) emissions caused by the COVID-19 pandemic, the world is still heading for a temperature rise in excess of 3ºC this century, far beyond the Paris Agreements goals of limiting global warming to well below 2ºC and pursuing 1.5ºC.²

IPCC and UNEP conclude that it is highly probable that we will pass the 1.5ºC limit before 2030. Unless all sectors of society including governments, cities, local authorities, and businesses act decisively there is little chance of changing the trajectory to remain below 2ºC by 2050.

Time to transform
The World Business Council for Sustainable Business Development (WBCSD), in its updated Vision 2050,³ stresses that now is the “Time to Transform” to deliver both the Climate Action and the UN Sustainable Development Goals. The WBCSD vision describes nine pathways for businesses to play a leading role in this transformation, one of which is the transformation of the energy system.

Whilst we must recognise the interconnections between energy and the other Sustainable Development Goals, the focus of Decarbonisation Technology is on what the oil and gas sector can and is doing to bring about the energy transition.

The International Energy Agency (IEA), in their World Energy Outlook 2020, highlights that while the energy transition has made progress over the last decade, a full implementation of their IEA Sustainable Recovery Plan is necessary to change the longer term trajectory and meet the targets of the Paris Agreement.⁴

The IPCC states that to stay within the world’s remaining carbon budget we must stop exploiting fossil fuels (coal, oil and gas). The need to ensure we deliver the energy for heating/cooling homes and workplace, for cooking, for the movement of goods and people shows that this is currently impractical and so even with the best will from the forthcoming COP it is likely to remain a longer term target. The energy transition must be a managed transition that supports the development of renewable electricity and fuels, and progressively reduces the demand for fossil fuels.

Renewable electricity
In developing countries, energy demand is growing. More investment in renewable electricity generation is needed both for burgeoning cities and for more rural areas which lack an electricity supply. In mature economies the focus is on renewable electricity production along with measures to increase the penetration of electric vehicles. Even the most ambitious targets for electric vehicle roll-out are only likely to achieve a measurable reduction in global carbon emissions in the latter half of this century.

The reality is that the majority of the world’s cars, trucks, aeroplanes, and ships will continue to require liquid or gaseous fuels. In many northern hemisphere countries, gas is the main means of heating homes in the colder winter months. The IEA’s Sustainable Development Scenario includes a much faster deployment of clean energy technologies but also envisages the operation of existing carbon-intensive assets in a very different way.⁵ Technologies which can reduce emissions now and over the next 2-3 decades will buy the time needed to develop and deploy longer term solutions on a global scale.

The oil and gas industry understands this and is developing lower carbon fuels. Refinery feedstocks increasingly include different biofuel components, recycled waste, and captured carbon. Refiners are also investing to reduce the energy consumed (and therefore carbon emissions generated) during the production of the fuels, lubricants, and chemical feedstocks. At the same time, gas producers are decarbonising gas streams by converting the methane to hydrogen and capturing the CO2. Many of the technologies needed are available now, but of course new innovations designed to further improve efficiency and to bring down costs in the future will be welcome.

Hydrogen production
Hydrogen is used in most of the processes to upgrade refinery oil streams to useful products. Hydroprocessing includes hydrocracking, desulphurisation, dearomatisation, and denitrogenation processes and hence hydrogen production units are present in most refineries. As we look to decarbonisation technologies, hydrogen assumes even more importance.

Some question why hydrogen is needed as renewable electricity powering electric engines is more efficient. Hydrogen can be complementary to pure electric power as it provides an alternative to batteries for renewable energy storage (for instance, in offshore deep water wind installations). Hydrogen can be used as a portable fuel in its own right, to power hydrogen engines or for use in fuel cells. Furthermore, as already mentioned above, hydrogen can be used as a fuel to turn captured CO2 into renewable, hydrocarbon fuels for harder to decarbonise transport systems such as marine and aviation. It is also valuable as a route for the decarbonisation of whole sectors of the chemicals and metals industries. The issue with hydrogen so far has been the scale of production and the economics. Innovations in hydrogen production are therefore of great interest in the production of low carbon liquid and gaseous fuels.

A recent publication from WBCSD on Policy Recommendations to Accelerate Hydrogen Deployment for a 1.5ºC Scenario is a clear example of the importance of progressive decarbonisation.⁶ This paper illustrates how it is possible to grow hydrogen capacity from 70 Mtpa in 2020 to 800 Mtpa by 2050 whilst reducing the carbon intensity for hydrogen production from approximately 6kg CO2 eq/kg H2 today to 1kg CO2 eq/kg H2 by 2050, given the right policy support to encourage investment.

Carbon capture and storage
Carbon capture and storage is too often dismissed. It is a technology proven at scale, initially in several oil and gas production sites and more recently in downstream refining and petrochemical operations. In 2021, Ineos Grangemouth⁷ announced a multi-million dollar investment in carbon capture and storage from its petrochemical operations. Further innovations are extending carbon capture such that the CO2 is not just stored but reused. For example, recently Repsol and Petronor⁸ announced two projects that combine captured CO2 with green hydrogen (hydrogen produced from the electrolysis of water using renewable electricity) to produce net-zero emissions fuels. These examples show that carbon emissions to the atmosphere can be reduced in the near term.