May-2025

Economically viable refinery decarbonisation scenario

How the integration of a synthetic fuels unit inside an existing fuels complex can be financially viable while reducing carbon footprints.

Juan Carlos Latasa López
IDOM Consulting

Article Summary

The article analyses a technically feasible, economically viable alternative configuration for refineries, which integrates synthetic fuels units with existing fossil fuels units by installing carbon capture and using the captured carbon dioxide (CCU) in combination with low carbon intensity hydrogen (blue and green) for the production of synthetic fuels.

The future of the fuels industry cannot rely, in the short or even medium term, on electrification and green or blue fuels alone. The transition is possible, but the planned fast transition or the theoretical disruption of fuels supply, as reported by some authorities and other sources, is not only an impossible dream but a mistake that is provoking the most absolute inability to meet published plans for the energy transition,

Many governments around the world continue to fall short of delivering their commitments made in existing nationally determined contributions (NDCs) even though they have the ability to increase such commitments in successive revisions of their NDCs. In general, these plans include unachievable targets in terms of timescale and the level of decarbonisation of both industry and broader society. Many are overly reliant on electrification and the shift to renewable sources of electricity generation. Renewable electricity should be considered one of the measures required for decarbonisation, but not the sole target.

The evolution of national energy transition plans can be clearly assessed using the emissions register and how the energy environment has changed in recent years. New ‘players’ in the energy environment need to be considered, such as society’s increasing reliance on data centres and the emergence of artificial intelligence. Another unfortunate factor that has a real impact on global emissions is the escalation of conflicts.

Furthermore, energy transition plans in regions such as the European Union are inducing reduced competitiveness and an economic and technical ‘cul-de-sac’. This is caused, among several additional considerations, by unrealistically disruptive fuel and mobility strategies and not driven by practicable efficiency and techno-economical parameters.

Evolution of global emissions – existing trends and the need for change
EDGAR is an open-access database developed by the Joint Research Centre (JRC) of the European Commission to monitor trends in global anthropogenic emissions of greenhouse gases and air pollution under the United Nations Framework on Climate Change (UNFCC). The EDGAR database uses a consistent methodology to collect and analyse data provided by more than 220 countries. Figure 1 shows a steady increase in carbon dioxide (CO2) emissions from 1970 through 2023, despite the combined efforts of all signatories to the Paris Agreement.

It is widely recognised that there is a gap between the announced measures in the NDCs from each country and the level of reductions needed to curtail global emissions. Additionally, the implementation of these plans is both slow and inadequate. One analysis by Bloomberg NE shows there to be an investment gap of 168% due to a combination of regulatory, market, and financial uncertainties (see Figure 2).

The situation is even more complicated as some new and existing ‘players’ (large emission sources) were not accounted for when the Net Zero Plans were first prepared. These additional sources significantly increase energy demand and consequential GHG emissions.

Energy demand from the rapid growth of data centres and the emergence of AI data centres was not fully anticipated in earlier datasets. Such demand is sizeable and increasing and is estimated to reach more than 1,000 TWh/year by 2050 (see Figure 3).

In the work to achieve the global consensus needed at the Paris Agreement in 2015, it was agreed that reporting emissions from military activities should be voluntary. Even during peacetime, emissions from military activities may constitute as much as 7% of global emissions (Scientists for Global Responsibility, 2022). An additional, though less predictable, source of emissions is from armed conflicts, with current examples including the Russian invasion of Ukraine, the Israeli/Gaza conflict, and civil wars in Sudan and Myanmar. Just one act of sabotage, the rupture of the Nord Stream pipelines in 2022, was estimated to have released 150 thousand tonnes of methane (Wikipedia, 2024).

Although the world’s leaders are most unlikely to agree to stop future armed conflicts, other actions should be considered to reduce the investment gap. A smart combination of decarbonised downstream, natural gas generation, and renewable sources can increase energy security resilience. The EU should set technology-agnostic targets for the decarbonisation of the European automotive and fuels industries.

Synthetic fuels should be considered complementary to electrification, allowing a more rapid and affordable reduction in the carbon footprint of road transport while also reducing crude oil imports. The effective integration of synthetic fuels within an existing refinery represents a realistic, feasible, non-disruptive fuels strategy.

This article describes how the integration of a synthetic fuels unit inside an existing fuels complex can be financially viable while allowing the reduction of carbon footprints, both during production (Scope 1 and 2 emissions) in the fuels complex or refinery, as well as Scope 3 emissions from the use of fuels in road, air, and marine transport.

The reconfiguration of the refineries for the integration with new synthetic fuels units and a carbon capture scheme is analysed considering the following cases:
•    Base case: operation of an existing modern, high-conversion refinery.
•    Hybrid case: Introduction of e-fuel production units.
•    Comparison of cases to explore the optimum balance, which maximises emissions reductions while meeting demand.
A techno-economic analysis was used to explore the optimum reconfiguration; considerations included:
•    Conservation of most of the existing assets.
•    Introduction of some new units while avoiding mega investments.
•    Reducing the Scope 1 and 2 carbon emissions or carbon footprint of the refinery.
•    Reducing the crude oil intake so that it becomes a feedstock to improve financials.
•    Providing a combination of low-carbon and sustainable fuels that reduce the emissions from transport on a life cycle basis (Scope 3 emissions).
•    Meet future energy demand while also driving decarbonisation.

Refinery configuration for integration of synthetic fuels
General considerations
The development of a feasible, realistic, and fundable synthetic fuels unit, along with the introduction of circular economy concepts, needs to consider the following evolution of feedstocks and products.