By Shell Catalysts & Technologies on Mar 8, 2021
The economic disruptions of 2020 had a tangible impact on the energy sector. Global liquid fuel consumption declined by nine million barrels per day in 2020, the largest decline dating back to 1980, the United States Energy Information Administration reported.1
This decline in demand, although expected to rebound over time, led to rising global inventories with excess supply and falling prices. These macroeconomic factors contribute to a period of uncertainty for many energy producers, but also provides a period of opportunity for transformation. Emphasising sustainability and decarbonisation on the road to recovery offers refiners and energy producers an opportunity to increase their long-term competitiveness throughout the energy transition.
Learn more about what energy transition means to Shell Catalysts & Technologies
Capitalise on legislative decarbonisation initiatives
Governments are taking steps to enable a more rapid and effective energy transition by improving the investment conditions for renewable and low-carbon energy alternatives. Throughout 2020, the energy sector saw progress in this regard. Policymakers recognise that recovery plans will inevitably affect the direction of energy infrastructure and jobs of the future. The Organisation for Economic Cooperation and Development (OECD) points out that there is precedent for decarbonisation policy action in response to global crises. Following the Global Financial Crisis of 2008, the automotive sector bailout included agreements on fuel efficiency standards to improve the competitiveness of vehicle manufacturers and to ensure a decrease in transportation emissions in the long run.2
One modern policy example is Germany’s National Hydrogen Strategy which codifies Germany’s goals and ambitions for establishing hydrogen as an alternative energy source across the European Union. The strategy commits the country to enhancing hydrogen transport and distribution infrastructure, as well as to establish international markets and cooperation.
Natural gas producers in the region might consider adopting blue hydrogen technologies that enable the extraction of hydrogen (H2) fuel from natural gas reserves while safely capturing and sequestering unavoidable carbon emissions. Shell Catalysts & Technologies’ experts can help energy producers evaluate the legislative landscape in the regions they operate in and devise a course of action to excel through the energy transition.
To learn more about Shell’s Blue Hydrogen Process, stream the on-demand webinar detailing how resource holders can diversify their portfolio towards lower-carbon alternatives affordably.
Adopt a phased investment approach
Maintaining short-term competitiveness and preserving cash is a primary focus of Shell Catalysts & Technologies’ recommendations for its energy partners. In a recent article published by Andy Gosse, President, Shell Catalysts & Technologies, he cites the optimisation of existing assets and margin improvement projects as viable options for maintaining competitiveness in the short term.
Another strategy to meet that objective could be adopting a phased investment approach for moving towards low-carbon fuels and clean energy alternatives. For example, co-processing up to 10% renewable feedstock can be an energy producer’s first step towards a dedicated biofeeds processing unit. Co-processing can be achieved with limited capital expenditure and the profits from diversifying into biofuels can then be reinvested into other decarbonisation initiatives as the energy transition continues to take hold.
Improve energy efficiencies using science-based assessments
Improving energy efficiencies can translate to reduced greenhouse gas emissions, cost optimisations and profitability for energy producers. The energy industry saw a resurgence in investments towards efficiency programs in 2020, for good reason. Shell Catalysts & Technologies conducts energy efficiency assessments for its partners that leverage the best-available science to identify key areas where efficiency improvements are possible.
Depending on the unique circumstances and objectives of an operation, Shell Catalysts & Technologies may recommend the installation of high-efficiency Shell Turbo Trays, revamped reactor internals or technologies to support heat integration improvements. By starting with the energy efficiency assessment, energy producers can rest assured that the adopted tactics for improving efficiencies have been informed by a systematic, science-based investigation into operational bottlenecks and potential areas of improvement.
Making Every Molecule Matter on the road to recovery
The road to recovery from economic disruption can take place hand-in-hand with the objectives of the energy transition. As we look forward, our hope is that the road to recovery includes important steps towards decarbonising key industries by powering progress together. Shell Catalysts & Technologies’ commitment to Make Every Molecule Matter challenges our market managers, molecular scientists and engineers to prioritise decarbonisation and sustainability for both Shell and its partners. Stay up to date with our latest energy transition digital events, reports, case studies and publications by subscribing to our energy transition newsletter.
1 “U.S. Energy Information Administration - EIA - Independent Statistics and Analysis.” Short-Term Energy Outlook - U.S. Energy Information Administration (EIA), Jan. 12, 2021, www.eia.gov/outlooks/steo/report/global_oil.php#:~:text=Preliminary%20data%20and%20estimates%20indicate,million%20b%2Fd%20in%202022.
2 “COVID-19 and the Low-Carbon Transition: Impacts and Possible Policy Responses.” OECD, Organisation for Economic Cooperation and Development, 26 June 2020, www.oecd.org/coronavirus/policy-responses/covid-19-and-the-low-carbon-transition-impacts-and-possible-policy-responses-749738fc/.