The downstream oil sector can reinvent itself and be critical in the future supply of new energy carriers and technologies, such as hydrogen, a report has said.
On 19 October, the UK Petroleum Industry Association (UKPIA) published a report, Transition, Transformation and Innovation, in which it set out the opportunity the downstream sector has to be “at the heart” of the transition to a net zero economy. It drew three main findings, including that low carbon liquid fuels (LCLF) can play a key role in the UK’s decarbonisation, and are already doing so, as well as recognising hydrogen as a “critical component” of meeting the 2050 target. With the downstream sector already the largest producer of hydrogen in the world, the report said it can maintain and grow its role in producing and delivering zero carbon emitting hydrogen.
It also stressed the importance of a systems-based approach and enabling framework, stating they are “key” to producing low carbon and, eventually net zero, liquid fuels.
The report sought to examine credible scenarios for the sector to reach the 2050 net zero goal, all of which modelled a need for liquid fuels. Lubricants and other products currently obtained from crude oil ae also important enablers of decarbonisation across the economy and will likely be needed to meet net zero. It added that the sector, along with delivering LCLFs that decarbonise transport, has the potential to play a role in the decarbonisation of many other sectors. This would be through industrial clustering, making better use of waste industrial heat for domestic heating, and also contributing its 70 years of experience of managing hydrogen to drive the establishment of the UK’s hydrogen economy.
With companies in the sector ready to meet the challenge, the report stressed the need for a joined-up UK government to work hand-in-hand with the sector, to deliver the policy framework which enables businesses to transform and deliver a “just transition”. UKPIA set out a series of policy options that it, along with its members, is ready to work with governments on, including stimulating early demand for LCLFs and hydrogen for transport and ensuring consumers are informed on the role of LCLFs for decarbonisation.
It also proposed CO2 standards and emissions labels for vehicles are revised to show lifecycle emissions; for industries and the UK government to develop sector-specific plans to decarbonise sectors with limited decarbonisation options, such as aviation; for the UK business environment to be improved to position it as a first choice for decarbonisation investment and enable companies to compete globally; to continue to promote industrial clusters with the downstream oil sector at their centre; to prepare the workforce to deliver net zero in a just transition; to deliver a regulatory framework allowing for innovation; and to ensure government support for UK research, development and deployment of all manufacturing and transport decarbonisation technologies aligns with company needs.
It also called for a hydrogen strategy to be delivered that sets out policy, regulatory and preferred business frameworks and gives clarity about how supply and demand can be grown together.