INTERVIEW: Hydrogen, carbon capture critical to decarbonising the chemical industry – Dow CEO

NEW YORK (ICIS)–Hydrogen and carbon capture and storage (CCS) will be critical for the chemical industry and other energy-intensive sectors to fully decarbonise, the CEO of Dow said.

“Carbon capture is critical. You won’t get to any net-zero targets without hydrogen and carbon capture, especially in energy-intensive industries,” said Dow CEO Jim Fitterling in an interview with ICIS.

Fitterling is the 2022 ICIS CEO of the Year, based on a vote among his peers in the ICIS Top 40 Power Players, a global ranking of the leaders driving the greatest positive impact on their companies and the chemical industry.

More energy-intensive materials will also be needed in the transition to net-zero carbon emissions, he pointed out.

“CCS is critical for all material industries to decarbonise – steel, aluminum, glass, any transformative process to make materials we use,” said Fitterling.

“If you want to make polysilicon for solar panels, batteries for the EV [electric vehicle] industry, you use a lot of energy to make those products and people are not going to want to make those and just create more CO2 [carbon dioxide] emissions – they’re going to want zero carbon,” he added.

ZERO-CARBON CRACKER IN CANADA
Dow will employ hydrogen and CCS at its planned zero-carbon cracker project in Fort Saskatchewan, Canada, which could start up in 2027. When the project was announced in October 2021, it also included 1.65m tonnes/year of downstream polyethylene (PE) capacity.

At Fort Saskatchewan, Canada, where Dow already has a 1.5m tonne/year cracker, it would build the new 1.8m tonne/year zero-carbon cracker in the first phase and then retrofit the existing cracker to achieve net-zero carbon emissions at the entire site by 2030.

“We’ll build that cracker and the hydrogen production unit, and off the back end of that cracker we’ll take the byproducts and convert them to pure hydrogen. And then we’ll capture the carbon off that hydrogen unit, sequester it and use the hydrogen to fuel the cracker,” Fitterling explained, calling the system “circular hydrogen”.

The same system would be applied to the existing cracker in the retrofit.

“When we’re done, about 20% of our global ethylene and PE capacity will be zero carbon. So the entire site will go to zero carbon for Scope 1 and 2 emissions. That is a big undertaking,” said Fitterling.

Canada was selected for several reasons, including decades-long availability of ethane feedstock and existing CCS infrastructure in the form of the Alberta Carbon Trunk Line about 10km away from the Fort Saskatchewan site.

“They’re capturing carbon up there in saline aquifers in granite. It’s available technology that’s in practice right now, so we have high confidence in the carbon-capture capability,” said Fitterling.

“There’s also policy that supports it. There’s a price on carbon in Canada and there’s an available carbon market so we get a bit of return on the project [from that],” he added.

US IRA AND POTENTIAL FOR ZERO-CARBON CRACKERS
The US Inflation Reduction Act (IRA), which was signed into law in August 2022, will further enable the development of carbon-capture infrastructure, paving the way for the decarbonisation of the chemical and other industrial sectors, said the Dow CEO.

“What we start to see, with the IRA, is an increase in the price on CO2. That’s been raised to $85/tonne for the CO2,” said Fitterling.

The IRA increases the 45Q tax credits from up to $35/tonne for captured CO2 used in enhanced oil recovery (EOR) or in certain industrial applications, and up to $50/tonne for CO2 in secure geological storage, to $60/tonne and $85/tonne, respectively, according to US law firm Gibson Dunn.

“That actually helps quite a lot as an incentive to capture the CO2, but what we have to do now is build the carbon-capture hubs and the hydrogen hubs to make that happen,” he added.

Dow, as a large user of hydrogen would build hydrogen units at its sites, but smaller chemical producers and producers in other industries may need access to hydrogen hubs as well as carbon-capture trunk lines, he pointed out.

Houston, Texas, is making the case to become one of the key regional hydrogen hubs in the US. A number of oil and gas producers, some working with partners, are working to create these hubs, the Dow CEO noted.

ExxonMobil in March announced plans to build a hydrogen production plant and CCS project at its site in Baytown, Texas, which would be an initial contribution to a cross-industry supported Houston CCS hub which could capture and store 50m tonnes/year of CO2 by 2030 and 100m tonnes by 2040.

“We did a lot of work with the American Chemistry Council (ACC) to take a look at the entire industry across the US, and we estimated that with between 6-8 hydrogen/carbon capture hubs in strategic locations, we could decarbonise as much as 85% of the entire chemical industry in the US,” said Fitterling.

“And in the IRA, both the funding and the price on carbon help us get there,” he added.

ADDRESSING SCEPTICISM ON CAPBON CAPTURE
Even as there has been scepticism from a number of environmental groups on how practical and sustainable CCS is, the Dow CEO maintains that it has been safe and well managed thus far, including in Canada and Europe.

Chief among the criticisms are that CCS is an unproven technology, that it would simply extend the production and use of fossil fuels and that it diverts government funds away from renewable energy.

“There are always going to be people who don’t want to see more of anything, that are going to push back against it, and you’re always going to have to manage the operations in an environmentally safe fashion. But we know how to do that, we can do that, and the technology is available today,” said Fitterling.

“That’s the reason why in this phase, you’ve got to have a lot of support and policy behind hydrogen and carbon capture”, especially as other carbon-mitigation technologies such as advanced nuclear through small modular reactors (SMRs) and electric cracking could take a decade or longer to make an impact, he argued.

“I don’t think the public is going to be patient for a decade or two decades for those technologies when we can be making a real impact now,” said Fitterling.

Replicating the Canada zero-carbon cracker project in the US by retrofitting existing cracker sites to use circular hydrogen and capturing and storing the CO2 would go a long way for Dow to achieve its net-zero carbon emissions target.

“Think about [what we’re doing in] Canada. You’re talking about reducing close to 2m tonnes/year of CO2 emissions and the new cracker that’s built will have zero to begin with. If you can replicate that in the US Gulf Coast a couple times, pretty quickly you’re on your way to the net-zero target by 2050 or sooner,” he added.

Dow’s newest cracker – its Texas-9 cracker in Freeport, Texas, US, is the lowest carbon emissions project on the US Gulf Coast with 60% lower emissions than the average in Dow’s fleet, even without employing hydrogen and CCS, according to the company.

“We will build off of that and go to Canada, and take the emissions to zero. And I think that tells us there is a possibility beyond Canada, to come to the US,” said Fitterling.

In the meantime, Dow also plans to use the same circular hydrogen technology to retrofit one of its crackers in Terneuzen, the Netherlands, he added.

The hydrogen plant in Terneuzen is expected to start up in 2026 and allow Dow to reduce CO2 emissions by around 1.4m tonnes/year – the equivalent emissions of more than 300,000 cars, according to the company.

“With some of the technologies and coming technologies that are being supported, we put together a very definitive path to 2050 to get our Scope 1 and 2 emissions to zero while still growing the company. That’s the driving force behind what we’re doing, and you see the consumer pull around the world – the fact that many people are concerned about what’s happening with the climate and wanting to see CO2 reduction,” said Fitterling.

“It’s been very motivating for the team. Here everybody has bought in to the journey that we’re on and I would say if anything, the internal pressure and external pressure is around: Can you go any faster than you’re going today?” he added.

Interview article by Joseph Chang