Digging into the energy roadmaps for clues

Digging into the details of the global energy roadmaps, what can we extract that can be linked to the chemical industry decarbonisation roadmap?

In the previous blog, we highlighted that at a global level, leading institutions are publishing their own roadmaps in order to raise the necessary awareness; in this blog, we are exploring the Net Zero by 2050. A roadmap for the Global Energy Sector to extract key insights that can be relevant for the chemical industry decarbonisation roadmap.

The IEA uses different scenarios to analyse emissions reductions pathways, in order to highlight gaps and to provide policymakers with the priority actions that are needed today to ensure the opportunity of net zero by 2050. In this report, chemicals are embedded within the heavy industries, as usual. A similar scenario approach can be found in their dedicated report “the Future of Petrochemicals. Towards more sustainable plastics and fertilizers”.

The bullet points below describe the overarching remarks that can be applied to both sectors, energy and chemicals:

·       In terms of innovation requirements over the next years, the necessary support to roll out R&D, demonstration and deployment projects must go hand in hand with infrastructure construction. Moreover, R&D needs to be reprioritised and focus on critical, less stablished areas, like electrification, hydrogen, bioenergy and carbon capture, utilization and storage (CCUS).

·       Rapid electrification will play a key role across all sectors, global electricity demand will double. Energy security will be focal, with potential vulnerabilities including the variability of supply and cybersecurity risks. The share of renewables in energy generation needs to increase, although the approach differs per sector. Whereas the share of renewables will increase up to 90% for electricity generation, for industry it varies per sector and relies on bioenergy.

·       Hydrogen is meant to substitute fossil energy; this low-carbon hydrogen is also blend able with natural gas in gas network and will be produced from electrolysis and coal and natural gas with CCUS.

·       Bioenergy can provide flexible low-emissions power generation and high temperature heat using existing infrastructure, but ensuring a sustainable supply of bioenergy adds a degree of uncertainty

·       Emissions from existing assets are a problem. For industry, 30% of emissions come from existing assets, with a 30-40 typical life span.

·       Regarding investments: a total annual capital investment in energy is expected to rise (from 2.5% of global GPD to about 4.5% in 2030) before falling back by 2050. Financial constraints and inertia can inhibit the investment required to deliver the energy transition.

·       And something to pay attention to as one of the key uncertainties is the failure to deploy fossil fuel-based CCUS that would significantly increase electricity demand and require much more solar, wind and electrolyser capacity.

The electricity sector is expected to be the first to achieve net‐zero emissions mainly because of the rapid decline in costs, widespread policy support and the increased maturity of renewable energy technologies. What stroke my attention is the impact the consumer choices have in the cumulative emissions reductions with a stunning 55% association. In addition, the behavioural changes that account for 4% of the cumulative emissions reductions. More specifically again, the behavioural changes account for a global average plastics collection improvement from 17% in 2020 to 54% in 2050.

Let’s see now from these common prospects what is key for the petrochemical industry and why:

What the net zero scenario envisions for the energy intensive industries is a world where CCUS (and hydrogen-based) technologies are fundamental in terms of energy supply, use and emissions reduction. The biggest uncertainty lies in basing the tipping point to success beyond 2030 in technologies that are not commercially available yet.

Oil will remain the largest fuel used in primary chemicals production by 2050, along with smaller quantities of gas and coal. The fossil fuel that remains in 2050 is to be used as feedstock where the carbon is embodied and the production facilities incorporate CCUS. On the innovation area, by 2030 most new clean technologies in the energy intensive industries are demonstrated at scale and just 5 years later all capacity additions should come from innovative low-emissions routes. Coming back to the R&D, the reprioritization is explained by the expansion expectation of CCUS and hydrogen-based technologies. It is also important to recognize that the residual emissions are expected to be offset with applications of BECCS and DACCS.

BECCS = bioenergy with carbon capture and storage.

DACCS = direct air capture with carbon capture and storage.

The report highlights the continuous effort the industry puts in energy efficiency. The process energy intensity of primary chemicals is expected to globally reduce from 17 (GJ per tonne) in 2020 to 15 (GJ per tonne) in 2050. Although, two factors explain the slower pace of emissions reductions, the global markets (meaning high competitiveness and low margins) and the capital-intensive and long-lived equipment. There is a need to develop global cooperation to leverage risks and transfer technology. Alliances of all types are highly important to this respect, and the coordination for sectors coupling will demand an even more intricate system of public and private collaboration.

The year 2050 is just one investment cycle away! After 25 year of operation, plants usually undergo a major refurbishment to extend lifetime. Intervening at the end of the next 25-year investment cycle could help unlock 40% of projected emissions from existing assets, question is what would be the incentive used to drive such proactive intervention?