HELLENIC PETROLEUM Group has set as a goal the reduction of emissions from their processes by 50% and is currently reviewing its strategic plan and considering the investment projects to be implemented by 2030. Numerous opportunities linked to energy transition towards low–carbon fuels and energy portfolio diversification will be evaluated in that context.
The EU refining industry has developed a comprehensive potential pathway for the development of Low Carbon Liquid Fuels/ LCLF for all sectors of transport, titled “Clean Fuels for All”, which was represented on June, 15th 2020.
This pathway has been designed step by step, based on the belief that to achieve the 2050 climate neutrality goal, European consumers need a plan where low carbon liquid fuels –LCLF (clean fuels) and e-mobility coexist as solutions for road transport.
Starting with the production of LCLF for road transport, the conditions will be created for the reduction of emissions from aviation and shipping fuels, as well as trucks, and the replacement of raw materials for the petrochemical industry, sectors for which there are currently no alternative technologies.
According to the Industry proposal, by 2050 at the latest, every liter of liquid fuel for transport could be climate neutral, enabling the groundwork for the sector’s energy transition and cutting up to 50% of CO2 emissions in aviation and maritime fuels.
At the EU level, and based on current costs and available technologies, the level of investment needs for the production of sufficiently low-carbon liquid fuels for all transport is estimated at €40 billion by 2035, and €400 billion and €650 billion by 2050. Given the level of investment needs, it is important today to develop the appropriate policy framework to mobilize the first investments.
Low –Carbon Liquid Fuels (LCLF) will play a strategic role in the transition to a climate-neutral economy until 2050.
The pathway of Refining towards the production of LCLF has started with the first investments in biofuel and synthetic fuel production units. Utilizing our technological know-how and flexible infrastructure, we will increasingly turn to new raw materials (such as biomass), renewables, hydrogen, and waste to gradually reduce carbon emissions from liquid fuels. With the right policy framework, the production of low carbon liquid fuels could reduce CO2 emissions from European transport by up to 100Mt by 2035, reductions equivalent to the CO2 savings of 50 million electric cars on EU roads.
Given the level of investment needs, it is important today to develop the appropriate policy framework to mobilize the first investment.
About Low –Carbon Liquid Fuels (LCLF) -clean fuels
What are low–carbon liquid fuels (LCLF) /clean fuels?
Low-carbon liquid fuels (LCLF) or “Clean Fuels” are sustainable liquid fuels of non-petroleum origin, with no or very limited net CO2 emissions during their production and use compared to fossil-based fuels.
Clean Fuels are currently blended with fossil fuels and their share in the fuel sold at the pump will progressively increase. The carbon intensity of the fuels will depend on the share of LCLF blended in the product. It will only be once the fossil component in the fuels sold at the pump is completely replaced by green fuels, that these fuels will be carbon neutral.
How LCLF are produced?
LCLF are produced through sustainable biofuel technologies, hydrogenation of vegetable oils, waste recycling, synthetic fuels, and pure hydrogen.
Capitalising on our technological know-how and flexible infrastructures, we will increasingly switch to new feedstock, such as biomass, renewables, waste, and captured CO2 to progressively reduce net carbon emissions of liquid hydrocarbons.
What are the benefits of LCLF?
LCLF are essential in the transition to a low carbon economy by 2050 and beyond.
They will continue to feed the European transport sector while maintaining the advantages of liquid fuels and providing significant socio-economic benefits:
- Enable the decarbonisation of sectors where no other technological alternatives currently exist –aviation, shipping, and to a large portion, the heavy-duty sectors.
- Provide strategic security of supply, while reducing energy dependency on third countries.
- Give customers a choice between low–carbon technologies.
- Smooth deployment cost of electric energy distribution and fast charging as well as reduce pressure and cost of achieving complete fleet turnover.
- Contribute to the maintenance of industrial production and jobs in Greece and Europe.
What is the difference between traditional fuels and LCLF?
LCLF are not produced with petroleum–based feedstock, as is the case for traditional fuels.
Instead, biomass, RES, waste, and captured CO2, are among the feedstock that will be used to generate LCLF. They are sustainable liquid fuels from non –petroleum origin, with no or very limited CO2 emissions during their production and use compared to fossil-based fuels.
How can LCLF reduce emissions from ships and airplanes?
When it comes to road transport, green fuels will play a complementary role to electricity. However, to reduce emissions from ships and aircraft, the role of LCLF becomes a protagonist.
This is because for these sectors there is currently no alternative technology other than liquid fuels, despite the significant achievements of new technologies such as electrification in passenger cars and light trucks. The energy transition and the reduction of CO2 emissions in sectors such as aviation, shipping, heavy transport, can only be based on the products of the Refining Sector, on the Clean Fuels of the future.
Today, we estimate that our products will be able to help aviation and shipping reduce their emissions by 50% by 2050. The pace of transition for air and shipping will not be the same for road transport, as the alternatives available for these sectors are limited. We must also keep in mind that for these sectors the demand for energy will increase significantly by 2050.
LCLF and Environment
Why talk about low carbon liquid fuels (green fuels) and not zero carbon?
Because the carbon emissions of LCLF will be gradually reduced.
Initially, they will contain to some extent fossil raw materials. When these are completely replaced by new raw materials, such as biomass, RES, bound CO2, liquid fuels can have up to zero carbon emissions.
Do LCLF have an impact on air quality, and is so, which is it?
With the evolution of vehicle technologies, the latest EURO 6d and EURO 7 standards perform exceptionally well in terms of emissions. Recent tests under real driving conditions have shown that EURO 6d vehicles are fully compliant with emissions levels limits (for PMs & NOx) set by the EU.
Studies however show that LCLF will bring significant contributions to the EU’s climate –neutrality objectives, with a positive impact on air quality.
What does a reduction of 100 MT CO2 /year really mean?
In very concrete terms, this is equivalent to 50 millions BEVs (Battery Electric Vehicles) on the road.
According to our estimates, in 2035, emissions from European transport will amount to 500Mt CO2 / year, and could thus be reduced by 100Mt /year to amount to 400Mt CO2 / year.
Climate neutrality & refining sector
What does climate neutrality mean? How will we achieve it?
Climate neutrality is a balance between the carbon emitted into the atmosphere by all the greenhouse gases and the carbon that is either naturally absorbed by the atmosphere (e.g. from forests, wetlands, etc.) or artificially removed.
A way towards climate neutrality would be to offset the emissions by investing in renewable energy, energy efficiency, or other clean, low-carbon technologies.
For example, Refinery technologies - such as carbon bound and storage and green hydrogen - will reduce the carbon footprint of fuel production, which in turn will enable climate-neutral road transport by 2050.
What do EU citizens know about climate-neutral transport?
A 2019 pan –European consumer survey with 10,000 responses shows that EU citizens want more options in the transition to carbon–neutral mobility and that they urge governments to support the development of multiple clean–vehicle technologies.
LCLF will give consumers a choice, making carbon neutrality accessible to all, bringing clear benefits to European society and its economy. It is also important that the use of LCLF can provide immediate CO2 reduction benefits with existing infrastructure, even with the existing fleet of vehicles. At the same time, they are and will remain particularly important in the heavy transport, shipping, and aviation sectors, for which there are currently no other low-carbon alternatives.
Society demands solutions for more energy, provided in new and better ways for a future of low carbon emissions. LCLF can provide safe, reliable and affordable energy, which is technologically advanced and climate-friendly.
What is the role of the EU refining industry in the transition to a climate–neutral economy?
Transport will remain the backbone of the European economy and it must be ensured that the transport system will remain competitive, energy –secure and affordable.
Although we expect the demand for liquid fuels in Europe to gradually decline over time to higher energy efficiency in traditional engines, and higher deployment of electric and hybrid vehicles in road transport, liquid fuels, with their unique characteristics will remain an unbeatable solution for all transports.
The EU refining industry has an important and enduring role to play in the energy choices of the future by providing LCLF to complement electrons, hydrogen and gas as energy carriers. Technology and collaboration across industries will facilitate the production of LCLF.
The pathway of the EU industry is based on research and projections published by DG Research and Innovation and the Commission’s Joint Research Centre, which shows that the required amount of biomass is expected to be available in the EU. Concave, the scientific part of Fuels Europe, is nevertheless undertaking its own study to assess biomass availability, crosscheck all figures and explore other possibilities.
Why are road transport considered before other transport sectors?
Creating a single market for LCLF is essential and road transport is, for now, the only transport mode where this is feasible because the sector is already heavily regulated and price signals already exists. Evolution of current transport policies can be the basis for predictable demand and price signals.
Road transport is also a sector where the risk of tinkering (action of refueling in regions outside the EU where fuel prices are lower)/ carbon leakage is lower than for international aviation and maritime transport.
The development of LCLF for road vehicles will make these technologies competitive and will create the conditions for the deployment of LCLF for aviation and shipping.
What are key technologies that will drive the energy transition in transport?
Electricity and hydrogen will have a significant role in the energy transition in transport. Also, biomass conversion technologies, hydrogenation of vegetable oils /waste and residues, e-fuels and CO2 recycling are essential for the energy transition in transport.
At the same time, the carbon footprint from fuel production will be reduced, through the application of innovative technologies in refineries, such as carbon bound and storage and green hydrogen, i.e. hydrogen that comes from RES.
These new technologies will be developed between now and 2050, as a result of our continued investments in Research & Development (R&D).
LCLF already exist at small industrial scale in pilot plants, well beyond laboratory stage. The Industry is ready to start building its first commercial operating plants at scale as soon as the enabling policy framework is implemented.
Are LCLF compatible with my current car?
Yes, these fuels are compatible with existing engine technology. The Refinery of the Future will become a hub where all these different fuels will be processed in a way that complies with the automotive industry specifications.
LCLF will be launched on the market as soon as they become available. All vehicles in circulation can benefit from them, leading to a gradual reduction of the CO2 footprint of the fleet. This reduces the pressure to accelerate vehicle fleet renewal.
What impact will LCLF have on consumers, in terms of price per unit?
Under the current market conditions, LCLF will be more expensive than fossil fuels. Their taxation based on volume and regardless of the intensity of carbon emissions contributes to their increased cost.
Therefore in order to enhance the growth and proliferation of these fuels, a flexible policy framework will be needed that will not only facilitate the development of a market but also provide financial and other incentives comparable to other low CO2 technologies. such as electric propulsion, encouraging consumers to choose LCLF.
What is needed to reduce significantly the cost to produce LCLF on a large scale?
It is necessary to enable the scaling of the production and to ensure proper incentives for those operating the first–of–a–kind facilities.
What will be the proportion of the use of LCLF vs conventional fossil fuels for transport in 2050?
- For road transport, it is almost 100% substitution by LCLF.
- For Aviation and Maritime, the total liquid demand amounts at 100 Mtoe /y and LCLF could represent up to 60 Mtoe /y.
- All together LCLF could represent over 75% of the total demand for liquid fuels.
What will the vehicle park consist of in 2050?
- Extremely efficient ICEs and electric vehicles will populate European roads 30 years from now.
- It is considered that in 2050 all road vehicles should enable road transport to achieve climate neutrality.
- With climate-neutral liquid fuels and a 100% renewable electricity, this mixed technology fleet can all be climate-neutral.
The EU Refining Industry proposal
What are the requirements for the development of LCLF?
Currently, no legislation recognizes the contribution of LCLF to reducing CO2 emissions from vehicles.
Policymakers are therefore called upon to put in place a regulatory framework that will reflect this positive contribution. European CO2 emission standards in vehicles need to be amended by recognizing the contribution of LCLF to improving vehicle emissions.
It is also necessary to facilitate cross-sectoral policy dialogue. Overlapping fuel and transport policies should be simplified, namely the Fuel Quality Directive, which regulates the intensity of market-based fuel emissions, and the Renewable Energy Directive II (RED II), which mandates a share of renewable content for transport fuels.
It also calls for a pioneering market in LCLF, starting with road transport, as it is a highly regulated market that could support a strong and stable CO2 price signal, thus facilitating the start of investment, which will lead to solutions for other transport sectors (aviation and maritime).
Taxation of energy products should be based on carbon emissions and energy content, in order to encourage investment in advanced renewable fuels.
As the production of LCLF is capital intensive, with high capital and operating costs, a predictable and stable regulatory framework will be urgently needed to attract the necessary investment.
How much investment is needed to deliver the LCLD pathway?
At EU level, the investment to start this pathway is estimated between €30 and €40 billion over the first 10 years, while the total investment needed to deliver the pathway by 2050 is estimated between €400 and €650 billion.
The numbers follow scenarios produced by Concawe that will be made published in the form of a report towards the end of 2020.
How will the scaling-up of these technologies be financed?
The role of investors to sustainably support the development of disruptive low–carbon technologies, particularly on a large scale, will be pivotal. However, investors will only commit their resources if there is a prospect of a profitable market.
The future EU Registration Regulation, which will define the criteria for selecting sustainable investments for financing in the coming years, should adopt a realistic approach, which will reflect today’s technological development, available low–carbon solutions that significantly contribute to the energy transition, as well as current energy mixes and existing infrastructure.
Investments considered sustainable today, should not become unsustainable overnight because they are not listed in the EU Registration Regulation.
Where will LCLF production units be developed?
Given the technologies’ characteristics, plants are likely to be built closer to the feedstocks production facilities. Plants could therefore be a relatively smaller size and spread across Europe.
Refineries will play a critical role in these new value chains. The refinery of the future will become a hub where all these different fuels will be processed to comply with industrial specifications, e.g. the automotive industry, or the petrochemical industry.
What is the contribution of the value chain to the Industry’s pathway?
The industry’s pathway contributes not only to transport fuels but also to the feedstock for the petrochemical industry.
In this way, other important industries will be able to reduce CO2 emissions while at the same time new value chains will be developed, such as for biomass, or agricultural production.
The contribution of these value chains to the achievement of the EU CO2 reduction targets is critical, so cooperation with other industrial sectors is very important.
What kind of partnerships the Industry is looking for?
The EU refining industry stands ready to collaborate with multiple industries, as well as with EU policymakers, to take bold climate action together.
Industries such as agriculture, chemicals, waste, and recycling as well as Small and Medium Enterprises (SMEs), will play an important role in building the necessary LCLF value chains and assets.
Policymakers, NGOs and academia, car and truck industries, aviation and maritime, and customer groups will all have a role in developing the LCLF markets.
Civil society at large will have to be engaged through open, transparent, and fact-based dialogue.