Hydrocarbon Processing - March 2022 - 77

Carbon/
CO2
S. DUBEY, AVEVA, Singapore
Mitigation
Digitally uncover profitable pathways to net-zero
Many view COP26-the 2021 United
Nations Climate Change Conference
in Glasgow, Scotland-as a missed opportunity.
However, it did score a few
achievements, one of which is draft guidance
on Article 6 of the Paris Agreement
that is expected to pave the way for operationalizing
effective carbon markets.
Energy executives should take notice,
as this signifies the role economics and
market mechanisms will play as industry
decarbonizes. As many leading energy
companies commit to net-zero targets, it
is important to reaffirm that good planning,
execution and the capability to
demonstrate additionality in abatement
measures can lead to an economically
viable transition to net-zero. This article
builds on the following themes:
* The need for energy companies to
prioritize their emissions-related
initiatives based on detailed analysis
of technology options, market
conditions and regulations
* The digital capabilities and solutions
needed by organizations to uncover
this profitable path to net-zero
* A recommended framework and
next steps for organizations that
wish to build this capability.
Net-zero or net profit? A survey of
plans across energy companies and a review
of abatement measures reveal the
following broad phases or categories of
initiatives companies are adopting.
Beginning with unlocking efficiencies,
the focus is on increasing efficiencies either
through better planning, optimization,
control, operations or maintenance.
This step is expected to be net-positive
for the operators, with the measures often
paying for themselves.
The next category is the progressive
introduction of low-emissions components
into the value chain. These could be
new low-emissions feedstocks, intermediates
and blend components, equipment
replacements, upgrades and additions
that reduce emissions without changing
the basic process configuration.
The final category of initiatives might
require significant capital expenditure
(CAPEX) and operating model changes,
where today's operators become a hub for
the distribution of low- or zero-emissions
energy products. In the process, they also
capture and sequester carbon produced
for themselves and the surrounding industrial
cluster.
While these phases serve to reiterate
organizations' strategic intent, it is
also evident that this is a simplistic and
sometimes misleading view of how organizations
will practically achieve their
net-zero targets. Take energy efficiency
as an example: its contribution towards
decarbonization is often underestimated
by executives and relegated to a few initiatives
in the first phase. A 2019 report by
the International Energy Agency (IEA)1
estimates the cumulative impact from
a range of digital technologies and advanced
software applications could mean
energy savings of up to 30% across the industry
globally. These are significant savings
in terms of greenhouse gas (GHG)
emissions abated. Therefore, energy efficiency
must be the focus throughout the
net-zero journey as new feeds, equipment
or units are introduced into the value
chain, and new digital technologies become
available.
In general, such simplistic net-zero
plans fail to address the challenges from
a complex interplay of technology, regulatory
and market environments, and
how these will evolve in the future. At
present, the technology space for netzero
is extremely dynamic, with multiple
ogy perspectives, " 2
options being researched. This is a function
of the investments being made as
well as the demand.
A 2020 IEA report, " Energy technolstates
that more than
33% of the cumulative emissions reductions
in the Sustainable Development
Scenario (SDS) stem from technologies
that are not commercially available today.
At the same time, policy and regulatory
frameworks continue to evolve. The draft
guidance on Article 6 of the Paris Agreement,
mentioned earlier, talks of a centralized
accounting and reporting platform.
This will drive a more rigorous GHG
reporting regime globally and encourage
more comprehensive carbon pricing
initiatives. Such developments will affect
the market environment, incentivizing
specific initiatives differently depending
on how these scenarios play out. This also
provides an opportunity for companies
that can navigate this better than competitors
and leverage market mechanism.
OPTIMIZE THE CARBON CHAIN
WITH THE VALUE CHAIN
As energy companies embark on select
initiatives and projects on their journey
to net-zero, they must develop solutions
and capabilities that will guide them in
a profitable fashion. Increasingly, GHG
mitigations will be incentivized, or emissions
penalized through market and nonmarket
mechanisms. These solutions and
capabilities will help organizations prioritize
their initiatives based on existing and
emerging technologies and, more importantly,
evaluate them as various regulatory
and market scenarios unfold. Energy companies
must develop these forward-looking
capabilities proactively rather than
reactively, always considering the time
needed to scale effectively. The winners
Hydrocarbon Processing | MARCH 2022 77
Hydrocarbon Processing - March 2022

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