GPCA ’21: Petchems electrification a reality but hydrocarbons to remain king – SABIC

Jonathan Lopez

07-Dec-2021

DUBAI (ICIS)–Petrochemical producers’ electrification to lower greenhouse gas (GHG) emissions will be a reality in a few decades but hydrocarbons will remain the key feedstock as bio-based alternatives are neither available nor sustainable, an executive at SABIC said on Tuesday.

Bob Maughon, chief technology officer at the Saudi petrochemicals major, added that the use of carbon capture and storage (CCS) technologies, key to lowering the carbon footprint in the petrochemicals sector, only makes sense at a large scale, a reason why implementation so far has been poor.

The conundrum, added Maughon, is the required speed to implement those changes and how far companies can go in implementing technologies that require “massive” investments, ultimately denting producers’ profitability.

Speaking to ICIS on the sidelines of the Gulf Petrochemicals and Chemicals Association (GPCA) annual forum, the executive added that SABIC is committed to bringing in solutions to the unsolved problem of plastic waste, which remains a to-do target for an industry the products of which mostly end up being burnt, placed in landfills or disposed on land or at sea.

CCS: NEVER TOO LATE?
CCS technologies enable GHG emissions to be captured, including carbon dioxide (CO2), which is causing global warming. The Paris Agreement signed in 2015 aimed to limit global warming to an increase of 1.5°C by 2100, compared with pre-industrial levels.

Maughon said the uptake of CCS technologies has so far been poor in most energy-intensive sectors, including petrochemicals, because costs are too high and the value chain is not ready to absorb those costs.

“The wrong solution is to put small CCS in every [petrochemicals] production unit; that’s not a very effective way to manage that. You need large-scale geological capacity to bring the cost down. Now we see a momentum in the market due to the concerns over carbon emissions, and we are also now getting a clear regulatory picture on what the cost of carbon is going to be,” said Maughon.

“Those are the things needed to capitalise on that investment. At the ned of the day, you are investing to store the CO2, so you know you are going to end up with higher costs. CCS is going to be a key piece of the equation [to lower emissions] but there was a lack of regulatory clarity of the carbon cost impact [for companies].”

Carbon pricing is set to be one of the key tools for governments around the world to lower the impact of global warming; by charging for carbon emissions, it is expected that energy-intensive, polluting companies will overhaul their operations trying to reduce the impact of those costs.

“You can’t get people to invest without understanding those [carbon cost] implications,” added Maughon.

ELECTRIFYING PETROCHEMICALS
Maughon said SABIC is committed to speeding up investments in renewable energies so its petrochemicals operations can source clean energy, although the devil would be, as always, in the detail.

The executive added, however, that as industries race to electrify, there will be fierce competition to access the available renewable energy, still a small part in the energy mix that depends on fossil fuels – including coal, the most polluting of all, as well as oil and gas – for electricity generation.

“There is going to be competition [by companies] over the access to renewable energy. You can solve many problems by adding renewable energy capacity, but if you do it in a way that is less efficient that is not the right thing for society,” he said.

“We are looking at it very carefully. Take, for example, a cracker: where does it make sense to bring in hydrogen [as a source of energy]? Where does electrification of the furnace make sense? And where would the localised CCS be the best alternative? Because, again, it’s about cost but it’s also about making the most efficient use of electrons.

SCOPE 3 EMISSIONS AND PLASTICS’ CIRCULARITY
Maughon said Scope 3 emissions – those emitted by assets not owned or controlled by the reporting company, but that impact its value chain – are set to be the next big challenge for petrochemical producers, adding that SABIC is “very focused” on addressing them, but without giving much detail on how it plans to do so.

He linked those emissions to how plastics’ circularity can be managed, adding that SABIC is committed to improving that as far as a producer could be part of the solution.

Recycling systems across the world are deficient and most plastics are currently not circular.

“A large part of Scope 3 emissions [for SABIC] come from feedstock supply, and that needs to be managed by our suppliers. However, a big part would involve the end of life of plastics, and that is why we are focused on circular portfolio,” he said.

“It’s not about stopping producing plastics entirely [to achieve circularity]… It’s our obligation to make plastics sustainable and the end of life of plastics, that’s the issue. This means investing in collection, sortation, and conversion technologies, in enhancing investments in mechanical recycling… These are all critical pieces to make that happen.”

Maughon was asked whether SABIC would be more of a chemical and mechanical recycler than a producer of plastics in a few decades.

“SABIC’s assets are going to be low-carbon assets, obviously, and I think there will be much higher emigration of chemical recycling as part of the feedstock. There will probably be a mixture of bio-based feedstocks as well,” he said.

“You are going to see a much more complex feedstock mixture, and you are going to see a more complex approach towards managing carbon emissions from those assets… But there are limits to it because you are processing those materials and there is a mixture of materials in that mix, and you run the risk to lower their performance. You have to focus on how you can upgrade, or at least maintain, performance.”

MIDDLE EAST AND CRUDE OIL: GAME OVER?
This GPCA meeting in Dubai this week is the first to which the world arrives knowing that fossil fuels will have – or should have – and end date if the planet is to avoid the worst effects of global warming.

Under current pledges made by countries in Paris in 2015 and in Glasgow, UK, earlier this year, the world is still on course for a global warming well above the 1.5°C target.

The Middle East, a region that has became rich since the boom of crude oil extraction and, at a later date, with hydrocarbons production, is at a crossroads economically: treasury reserves in many of the region’s countries entirely depend on income from oil exports.

And that, in a world aiming to stop using fossil fuels, does not bode well for the future. But Maughon – a US national – was adamant, however, that the Middle East’s supply of sunlight may be its own saviour.

“Countries in the region are investing heavily in hydrogen, in CCS, in solar energy… I see a lot of opportunities here, and it’s clear they recognise the energy transition and are making the right investments to start that path and manage that transition,” he said.

“They have access to low-cost renewable sunlight and they are committed to invest in renewables… You have all the right elements here. And the intent publicly, and with dollars, is to invest against those targets.”

The GPCA 15th annual forum takes place in Dubai, the United Arab Emirates (UAE), on 7-9 December.

Front page picture: Delegates at the GPCA annual forum on Tuesday 
Source: GPCA

Interview article by Jonathan Lopez

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