How digital solutions help energy companies achieve short and long-term sustainability.
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The energy transition, inextricably linked with a global drive for sustainability in energy, chemical and related industries, is already impacting the European economy and all players across the energy value chain. These geopolitical forces were put into sharp focus in the final months of 2021.
First, at COP26 and latterly at the major international energy event held in November, ADIPEC 21, where representatives of the capital-intensive industries discussed how their businesses are focusing strongly on increasing efforts to improve sustainability and reach zero-carbon targets, and at the same time satisfy the world’s ongoing needs for energy from all sources.
Such events, together with the pressing countdown to 2030, and the culmination of the EU’s climate target plan, are focusing minds; acting as a catalyst for change and increasing the urgent need for technology that enables sustainability and environmentally efficient operations. Additionally, alongside the reduction in carbon emissions, there’s a greater focus around commitments towards the reduction in plastic waste and single-use materials.
An additional thrust is a soaring demand for energy as we emerge from the impacts of the pandemic and as Asian economies continue to grow, also underscoring the need for more sustainable solutions, which includes the responsibility to meet the needs of affordable energy to a growing middle class in emerging economies.
Industry has been implicitly granted the opportunity to demonstrate a leadership role, given that the world’s governments at COP26 fell short of reaching the kinds of agreements that climate change activists and much of the global public have been calling for. There is growing evidence that energy companies are taking this mantle of responsibility very seriously.
ARC Advisory Group’s recent report, “The Sustainability Future for Energy and Chemicals” revealed that 90% of global energy and chemical companies have sustainability initiatives in place. A recent AspenTech survey of over 300 companies globally indicates that 78% of executives believe that effective carbon reduction provides their company an opportunity for competitive advantage. It’s little surprise therefore that increasing numbers of oil and gas companies, such as BP and Shell, have committed to their own net zero carbon emission targets.
But what solutions are most suitable to meet the needs of the energy transition and help energy companies achieve their sustainability goals? Renewable energy sources such as wind, solar, and geothermal power generation are of unequal potential geographically. Many parts of Asia are challenged by limited access to locations that can generate substantial solar or wind power.
Whereas advantaged locations such as Indonesia and Iceland have abundant geothermal potential (as well as the mineralogy to support permanent fixing of CO2 as carbonates). Biofuels have regulatory advantages for adoption in Europe, but sourcing the land and growers for the needed volumes of biomaterials is going to be an increasing bottleneck.
In addition, some industrial applications, such as air and ocean transport and steel manufacture, are hard to decarbonise, which is counter-productive towards growing efforts to reduce the carbon footprint of a process or energy source. What’s more, electrification of vehicles and other applications will create a large future demand for metals processing, especially the so-called rare earths, which has an uncertain lifecycle carbon impact as well as a concentrated supply chain.
Enter hydrogen which offers the opportunity to fill a significant fraction of the world’s need for energy and can be generated carbon-free. Tayba Al Hashemi, CEO of ADNOC Sour Gas and chairman of ADIPEC, referenced its importance when he said, in the lead-in to the important international gathering:
“If the world is going to manage a secure and successful energy transition the role of traditional energy companies, with their expertise, resources and capabilities will be critical. ADIPEC 2021 will provide a much-needed platform for industry leaders and innovators to explore the impact of shifts in government policy and changing demand dynamics, as well as to progress the decarbonisation potential of technologies like CCUS and hydrogen.”
Indeed, on day one of the ADIPEC event Abu Dhabi National Oil Company (ADNOC) and ADQ announced that Japan’s Mitsui & Co., Ltd (Mitsui) and the Republic of Korea’s (Korea) GS Energy Corporation (GS Energy) have agreed to partner with TA’ZIZ and Fertiglobe to develop the world-scale low-carbon blue ammonia facility at the TA’ZIZ Industrial Chemicals Zone in Ruwais. The partnerships are expected to accelerate Abu Dhabi’s position as a leader in low-carbon fuels, capitalising on the growing demand for blue ammonia as a carrier fuel for clean hydrogen.
However, for all its undoubted potential, hydrogen also presents several challenges, especially with respect to safety and infrastructure challenges of storage, transport, cost of electrolysis generation, sources and availability of renewable electricity for electrolysis, cost and efficiency of carbon capture (in the case of blue hydrogen) and end-use safety.
Despite these challenges, the hydrogen economy is seeing strong momentum, reflected in a continuing wave of announced capital projects that aim to deliver hydrogen generation and storage at scale. In fact, several regions are investigating the feasibility of a hydrogen economy as a significant zero-carbon alternative.
Figure 1. The hydrogen economy: Key digital solutions.
Digital technology will be an essential component in delivering the hydrogen economy, accelerating and de-risking innovation, de-risking adoption and enabling faster and better scale-up and optimisation of the hydrogen value chain. It will require significant investment in new infrastructure to scale this technology up, and a concerted effort by government and the private sector to support the process. But digital technology will ultimately be fundamental in overcoming many value chain obstacles, maximising commercialisation, design and supply chains, and boosting production and economics
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