Decarbonisation gains momentum: Key insights from ERTC 2022

I have attended many conferences over my 12-plus years in the refining and petrochemicals businesses, but this one was special. The world is so different from what it was, not just since last year, but even several months before, owing to the unprecedented times in which we find ourselves, coming out of the pandemic and in the current political and market situation.

It was great to see how many interesting sessions and panel discussions the organisers managed to fit into just three days! As we were having a pre-conference briefing with the team, one of my colleagues noted that it is not a “refining” conference anymore – it is now a “decarbonisation” conference, and he was spot on! One of my main discoveries was that there is probably no longer much room left for conventional refining technologies only, as we look hopefully to a future with net-zero emissions of carbon dioxide (CO₂). But is it too early to give up on a business that generates such high margins, especially this year? Or is it already too late?

My general observation is that we are in a fast-paced process of switching from “talking about it” to “starting to act”, followed by some degree of pressure from both society and, less straightforwardly, governments. Our response depends on the context, and there is a whole spectrum of variables. I, therefore, want to highlight some fundamental questions, captured from the panel discussions and sessions, that, I hope, will help shed light on our colourful (green or blue) future:

• Do we really believe in the energy transition, and what are our key enablers of success?
• How can we prepare for a net-zero future, and do we have road maps that can lead us to that final destination?
• Who is going to drive the energy transition, and how can we attract the young, talented individuals who want to be part of it? 

The need for the energy transition is fact-based and undeniable. We cannot ignore the announcement that came while we were attending the conference, that the population of our planet reached 8 billion people and is expected to reach almost 10 billion by 2050. In line with that growth, energy demand is expected to increase by at least a third.

So, what is going to happen with CO₂ emissions? The answer would be “no change”, unless – as mentioned by Henrik Hololei, Director-General for Mobility and Transport at the European Commission, and some panel members – we act now.

Different companies have various sets of measures within the “act now” framework, but there is a consensus on key elements required to reduce CO₂ emissions by about half by 2030 and achieve net-zero by 2050: this includes transforming the existing businesses (switching from traditional activities to new technologies and processes), modernisation of existing assets, building in operational flexibility and scaling up production of: a) green hydrogen, as it is a potential key enabler for road transportation; and b) renewable and low-carbon fuels for aviation and waterborne transport.

McKinsey shared its four energy transition scenarios forming the basis of our Global Energy Perspective. An interesting observation was that, of the four main factors shaping today’s big picture (the war in Ukraine, COVID-19, high inflation, and China’s slowing economy), three were completely unpredicted. Therefore, there is a chance that the scenarios of the future may look different; however, the good thing is that the future of refineries looks more certain and the road maps robust.

According to McKinsey’s report, the funnel of major decarbonisation projects has doubled since last year and now stands at 272. This unprecedented acceleration of the pace of transformation makes me feel optimistic about our future! To give a flavour of the technologies involved and how prepared we are for the future, consider the following perspectives shared by executives from Shell Energy and Chemicals Park Rheinland, Heide refinery and Bayernoil.

Dr Jörg Dehmel, Shell Energy and Chemicals Park Rheinland’s Transformation Manager, outlined the most relevant dilemma for the industry: people like our products and could not have a comfortable life without us; but society does not like the consequences of our products (e.g., CO₂ emissions or plastic waste). Our main task, he said, is to discover how to combine these aspects and make our production work for both parties.

He also gave an overview of the many decarbonisation investments underway at his facility, which include green hydrogen (produced from water using renewable sources of energy), bioLNG, biofuels and plastics circularity projects.

Jürgen Wollschläger, Managing Director, Heide refinery explained how his site is “building a house with green hydrogen as the foundation and e-chemicals as the roof”. This also involves green hydrogen projects and one that will see “clean” jet fuel derived from hydrogen produced from electrolysis.

In addition, Claus Schunk, Head of Technology and Renewables at Bayernoil, outlined his site’s green hydrogen, gasification, pyrolysis and plastic waste projects.

This is probably the most interesting question. We talk a lot about the technologies, regulations and so on, but tend to forget about the main driving force – people who have the passion and the capabilities to make the energy transition happen.

Research from Universum reveals that there are not many energy companies in the top 50 global employers for engineering students.² Shell (ranked 22), Schneider Electric (24), and ExxonMobil (47) are the only traditional energy companies, which is insightful about the current attractiveness of our industry and the challenges we are facing when it comes to attracting young, talented people.

There were some ideas about ways of attracting talented young individuals during the panel discussion. Some companies, including Shell, represented by Elise Nowee, President, Shell Catalysts & Technologies, are using the power of their brands to attract people or forming “sustainability hubs” for people who want to be part of a better and cleaner future.

Some leaders do not see this as a challenge at all, but all agree that, for young STEM professionals to want to work in our industry, it is important to show them a clear road map to a circular economy and outline the areas where they could make an impact.

It was also nice for the conference organisers to initiate a “Rising star” session in which representatives of Bayernoil, Equinor, BP Gelsenkirchen and HELLENiQ shared their perspectives on what the refining engineer’s role will be in 2030. I picked up three key qualities of an ideal 2030 engineer: adaptability, innovative approach and partnership. Whether because of government regulations or a desire to contribute to society, just as with technology, each refinery has its own unique approach when it comes to talent attraction, but what unites us all is that “together we can make the best contribution to tackle climate crisis”.

We are at the beginning of a new era with unique challenges and ambitions, and many exciting initiatives are underway. Having listened intently to the various speakers at the European Refining Technology Conference (ERTC) 2022, I believe it is critical for our industry to act with urgency and “make every molecule matter”, embrace the role of partnerships and transform its ways of working. This includes taking a different view on competitiveness by focusing mainly on the collaborative work we need to do for the benefit of our planet.

My final takeaway from ERTC 2022 is the need for us to be resilient, both as businesses and as individuals. I hope that along with driving the energy transition and concentrating on the future, we can start taking care of ourselves today and, in view of the complexity of the current world and the challenges we face, our mental health as well. After all, it’s never too late.

_{¹Song “The Future Has Arrived” by The All-American Rejects}

_{²Universum, “World’s most attractive employers 2021,” global engineering ranking}