Energy Transition: Solving A Global Problem Requires A Holistic Pursuit

Energy Transition: Solving A Global Problem Requires A Holistic Pursuit

The COVID-19 pandemic has sparked a renewed focus on planning for sustainability and achieving the goals of the Paris Climate Agreement (PCA). These fundamental shifts are strongly evident in the European Union. EU capitals have been put under pressure to agree to reducing greenhouse gas emissions by 60% by 2030 compared with 1990, after the European parliament voted in favor of an “ambitious” climate law that would also oblige each member state to be carbon neutral by 2050. Source

It is important to provide a holistic view, specifics and clarity to the PCA as the limiting of global temperature increase to 2°C is focused on atmospheric CO2 emissions reductions within this century. The two basic pathways to achieve the PCA goals are: 1) Carbon Capture and Sequestration (CCS) or 2) Energy production and consumption without any fossil source. Given the fact that the timeline to reach the goal is increasingly being shortened from this century to 2050 and that by any historical measure a complete energy transition occurring in just 30 years is incredibly unlikely, the solutions will simply not be one or the other. In fact, if the world is to accomplish this goal it will take cooperative effort involving all energy sources, technology, innovation, governance and capital to achieve secure, accessible, affordable and sustainable energy on a world scale.

Public opinion is clear that climate change is at the forefront of thinking and concern. The lockdown across the globe has had a short-term impact on noticeably cleaner air and water pollution in rivers “disappearing”. The lockdowns have also instigated a social shift from commuting into a central congested area to an office, to working from home. This has resulted in less travel overall and a shift from mass transportation to more individual cars in regional areas. These changes along with a dramatic decrease in commercial aviation traffic and others are yet to be determined as what the new “normal” will be. Regardless, the social contribution will have to be significant as well if we are to accomplish these climate goals.

An energy transition to 2050 is a very ambitious goal and will require participation from all traditional sectors including fossil fuels and nuclear to new alternative forms in wind, solar, hydrogen, and other emerging and innovative sources. The energy transition should be in harmony with a holistic “well to wheel” analysis. This technique has been applied to fossil fuels and must be applied to “green” technologies equally to ensure that we avoid unintended environmental and social consequences by singularly considering greenhouse gas (GHG) emissions.

Adding another global challenge to achieving climate goals will be the dramatically changing world we live in the next thirty years. Global population growth, with the expected addition of 1.9 billion people, and economic migration to a larger middle class with a substantial GDP growth dramatically increases total energy demand in all forms. It is easy to see and promote “green” energy in the electric energy space with easily understood pictures of windmills and solar panels. However, moving to a greater share of total energy being electric power generation and more “electrified” transportation system has other implications as well.

Energy production and storage impacts for these systems include a 10-fold increase in mineral extraction compared to fossil fuel electricity. Similarly, replacing just 50 million of the world’s estimated 1.3 billion cars with electric vehicles would require more than doubling the world’s annual production of cobalt, neodymium, and lithium, and using more than half the world’s current annual copper production. The mining techniques, water consumption/contamination, fossil fuels use for heavy equipment and that many of these sites are sensitive protected locations also must be considered regarding to total environmental impact. The energy transition will also have to account for recycling, reuse, and general carbon use reduction both corporately and individually if we are to be successful.

The EU has nominated hydrogen as the preferred source as it can be used as a feedstock, a fuel or an energy carrier. Each of these uses include challenges in production, distribution/logistics and final source use within the context of both individual consumer and industrial users.
Norway has considered hydrogen production with carbon capture and sequestration, while Denmark is considering using “excess” wind energy with water electrolysis to produce hydrogen and oxygen. Using wind as the electrical input will produce green hydrogen, however there are no large commercial scale plants currently in operation.
Specifically considering hydrogen one of the quickest and least cost pathways is blue hydrogen where the CO2 emitted from the production of hydrogen from natural gas or light hydrocarbons is captured. The CO2 then can be collected, compressed, and injected into the ground (offshore or on shore).
Fundamentally the energy transition will shift emissions from millions of points (tailpipes) with varied efficiencies to fewer single points where economy of scale solutions improves the economic viability.

There are several critical challenges for each region. There are substantive infrastructure differences between postmodern EU vs emerging markets of Africa or South America. There is the clash between free market (shareholder return) and government (subsidies, carbon tax, cap and trade) initiatives. The “free market” will consider rate of return on investment, while governments only have taxation or regulation as the mode to incentivize.

Even with post vaccine considerations, there is less likelihood to a return to pre-COVID work habits. Mass transit will decline consistent with “social” distancing increasing the surge in individual modes of transportation. If the trend continues without subsidies, consumers will be more likely to accept a primary or secondary electric vehicle or hybrid. There are some hidden costs such as home charging installations, increasing the number of recharging or in the case of hydrogen refueling stations.

The pressure to be green is increasing from the consumer, boardroom, and lending institutions. Due to demand, just because a major oil company divests of a refinery doesn’t mean that refinery ceases to operate, rather it simply shifts the burden of compliance and viability to the new owner.

The reality is fossil fuels will be necessary for decades to come albeit at a different percentage of demand. Mapping out the transition for a given site, country, region will include environmental impact, economic parameters, and technology initiatives.

The key steps now are to reduce CO2 emissions through site energy efficiency, CCS, consider replacing hydrogen production with electrolysis hydrogen and utilize the oxygen for other purposes.
A second step consideration is optimizing the site infrastructure and staff with biofuels production, plastics recycling or ammonia production as fuel replacements. Finally, under the basis of replacing coal, incremental power generation to the grid is also a viable consideration.

The landscape is changing globally and regionally in refinery rationalization, repurposing and domestic fuel security. Now is the time to chart a course for the future. Becht has the staff with global experience and local attention to collaborate to develop and implement these strategic plans for your success.

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About The Author

Darren York has 23 years of Supply Chain Optimization and Industrial Engineering experience in the Refining and Chemical industry. Darren’s experience includes roles with KBC Advanced Technologies as a Principal Consultant and Global Product Manager for Strategic and Supply Chain Services working with international clients in all regions including the US, Canada, Mexico, Ecuador, Brazil, Uruguay, Germany, France, Italy, Greece, Russia, EAU, Oman, South Africa, India, Thailand, Malaysia, Philippines, China and Japan. Prior to KBC, Darren held multiple positions, including management roles, at Flint Hills Resources Corpus Christi refinery in business development, economics and planning, production accounting, compliance and performance management. Mel Larson has 40 years of domestic and international operations experience managing various projects and specialty consulting on Fluid Catalyst Cracking processes. His project management experience includes strategy analysis and due diligence of refinery and system wide modifications taking into account local and international market projections. His consulting services specialize in process troubleshooting and profit improvement analysis in the FCC, Unsaturates Gas Plant, Alkylation, and Naphtha Reformer areas.

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Energy Transition: Solving A Global Problem Requires A Holistic Pursuit

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