Hydrocarbon Processing - April 2022 - 65

Sustainability
R. BECK, Aspen Technology, Bedford, Massachusetts
The EPC executive's challenge and opportunity:
Navigating the sustainability shift in capital projects
According to an industry report published
by McKinsey and Co., accelerating
the decarbonization of the U.S. economy
to achieve net-zero targets by 2050 will require
approximately $275 T of cumulative
capital spending over the next 30 yr.1
This
reallocation of capital could, according to
an analysis by Deloitte2
, deliver net economic
gains by the late 2040s and add $3
T to the U.S. economy over the next 50 yr.
To spur this activity from a financial viewpoint,
leading capital funding institutions
such as BlackRock, JPMorgan Chase and
Barclays have signaled to the industrial
community that they will be preferentially
funneling their funding sources to
those companies that demonstrate commitment
to accelerated decarbonization.
Energy and chemical companies are
reacting to reposition themselves. The
past year has seen a significant shift in the
strategy, planning and initiatives among
the leading players in the process industries.
In a survey the author's company
completed in June 2021, 77% of companies
believe that carbon dioxide (CO2
)
mitigation leadership is perceived to
provide a competitive advantage.3
At the
same time, 21% of the more than 200
companies surveyed predict a shift in
capital spending of more than 20% over
the next 5 yr, while another 48% of companies
forecast that shift to be at least 5%.
Will the traditional engineering, procurement
and construction (EPC) organizations-whose
experience and
corporate memory are around large energy,
chemical and infrastructure projects-effectively
pivot to take advantage
of the new sustainable economy capital
opportunities? Or will it be a new generation
of innovative sustainable engineering
companies that drive the future? Nearly
all EPC organizations are taking up the
challenge, and it is up to their leaders and
key subject matter experts to successfully
navigate the change. It is a tricky balancing
act, requiring that the leadership of
EPC firms not only execute tactics to
pivot in the short term in which areas
like energy efficiency, bio feedstocks and
carbon capture are top of mind, but also
prioritize a long-term strategy where areas
like broader electrification, hydrogen
economy value chain and advanced recycling
become increasingly important.
Insight into EPC sustainability opportunities.
The author's company wanted
to learn more about how sustainability initiatives
are translating into capital projects,
and how EPCs and their clients-the asset
owners-view the next 18 mos. In what
sustainability areas are projects expected
to be concentrated? How are companies
organizing to react? What are the challenges?
What are the opportunities? To do
this, AspenTech and Hydrocarbon Processing
conducted a global survey of process
industry decision-makers. More than 185
companies responded to the survey. Respondents
represented a cross section of
the process industries: 10% represented
integrated energy companies, 27% upstream
and downstream, 17% chemicals
and 25% engineering services. The rest
were mining, pulp and paper, and power.
Responses were global, with 27% of the
respondents from North America, 18%
from Europe, 28% from Asia, 10% from
the Middle East, and the remainder from
South America and Africa. Insights were
indicative of where EPCs see the most opportunities
with their sustainability initiatives.
Those initiatives are the focus here.
Pivoting of capital project work toward
sustainability has accelerated.
EPC projects have pivoted substantially
towards sustainability over the past 6
mos. Will they shift even more dramatically
over the next 5 yr? Presently, 17% of
respondents indicate that more than 40%
of their project work is in the sustainability
area. Within the next 5 yr, 57% of
respondents believe that more than 40%
of their work will be in the sustainability
area. Work seems evenly split between
new plant construction and modification
of existing plants.
Similar questions were asked in the
survey AspenTech conducted in June
2021 and the discrepancy is astounding.
The perception of how much process
industry capital project work will be in
sustainability in the next 5 yr has roughly
tripled! That is a significant perspective
shift in less than a year.
Energy efficiency projects lead the
pack, but hydrogen is not far behind.
What specific initiatives are driving capital
spending momentum? According to
AspenTech and Hydrocarbon Processing's
survey, energy optimization projects and
hydrogen economy projects are cited as
driving project awards by 50%. Sixty-one
percent of EPCs say that they are offering,
or ramping up to offer, energy efficiency
project services, with 52% offering
hydrogen asset design and EPC services,
and 43% planning to offer carbon capture
design services. The top six types of projects
that survey respondents are seeing
are hydrogen, carbon capture and storage
and utilization, energy optimization, solar/wind
generation assets, materials recycling,
and bio feedstocks. Interestingly,
bio-feedstocks and biofuels projects are
further down the list.
Europe is leading the way in terms of
investments in energy efficiency. Carbon
taxes and government incentives in Europe
are driving refiners and chemical
manufacturers to invest in a systematic
and broad scale-up in energy efficiency
initiative deployments. Depending on the
Hydrocarbon Processing | APRIL 2022 65
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