The magazine for oil and gas professionals in the energy transition
September 2021 – open access articles The following articles are taken from Petroleum Review magazine’s September 2021 edition for promotional purposes. For full access to the magazine, become a member of the Energy Institute by visiting www.energyinst.org/join
Skill sets
ENERGY TRANSITION
W
ithout hearts and minds, the pressing and global quest for low carbon energy security will fail. While the equation is simple, the intensifying drivers shaping the future of work – notably decarbonisation, digitalisation and the COVID-19 pandemic – are not. Instead, they are inextricably multifaceted and interlinked, at a time when the global economy is recovering from its worst squeeze since the 1930s, according to the International Monetary Fund (IMF). Meanwhile, the International Energy Agency (IEA) warns that achieving net zero emissions by 2050 will require nothing short of a complete transformation of the global energy system – and that means a complete transformation of the minds curating it. Against this backdrop of the greatest change to the talent market since the first Industrial Revolution in the 1700s, nimbleness is emerging as a golden currency – for both talent and employers. ‘It is really about learning agility. But it is not possible to “crystal ball” what the key skill sets will be on a granular level in 10 years’ time,’ explains Daniel Doe, Vice President for Talent Strategy and Excellence, Shell. ‘Hiring your way out of this will not be the only solution in the intensifying “war on talent”; reskilling will also be a key part.’ Squeeze intensifies Filling the talent coffers is particularly tricky for those prematurely dubbed ‘sunset industries’, notably oil and gas. This is the first time such a barrage of potentially negative disruptors has challenged traditional energy markets since the discovery of modern-day oil in the mid-1800s. Compare the surge in net zero pledges over the last year – 21% of the world’s 2,000 largest public companies have committed, representing annual sales of nearly $14tn, reported the Energy & Climate Intelligence Unit (ECIU) in March 2021 – against the fact that oil demand is forecast by the IEA to plummet by 75% to 24mn b/d by 2050. Clearly, the historical powerhouse of modern-day civilisation must work harder to capture talent, which in turn is vital to sustaining short and near-term energy security. The traditional energy roadmap must reshape portfolios in line with low carbon, promoting flexibility,
14 Petroleum Review | September 2021
Next chapter for talent
The new talent landscape is really about ‘learning agility’ – but it is not possible to ‘crystal ball’ what the key skill sets will be on a granular level in 10 years’ time Source: Shutterstock
Working norms are being rewritten across the energy market, reports Michelle Meineke. increasing reskilling and upskilling – a demanding but non-negotiable list. ‘The historical norm in the oil and gas world of one month on shift followed by one month off, for example, simply will not fly anymore,’ comments Dr Ibilola Amao, Principal Consultant, Lonadek Global Services. ‘Human resources (HR) must be super creative. For example, if there is a
facility in the South Pacific, energy companies and HR teams must think about upskilling locally for that facility. I doubt talent from Europe or the US will now take their families so far from home, especially for such work patterns.’ The argument for green is strengthening. Global employment in renewable energy was estimated to be 11.5mn in 2019, up from 11mn in 2018, according to the
Let’s talk Increased mentoring and reverse mentoring will be paramount to ensure the generational gap in talent – in some cases a chasm – narrows to enable both talent and industry to thrive. Launched in March, the Energy Institute’s (EI) Mentoring Platform, EI Connect (see p17), aims to act as an intellectual and generational bridge for a growing number of participants, which currently stands at over 200 mentors and mentees. ‘We can learn so much from younger generations who are diving into the worlds of sustainability and digital with both feet, while older generations can offer youngsters an invaluable “been there and done that” perspective on the energy markets,’ comments Emily Brown, EI Professional Development Manager. ●
‘Digital is changing the way work is done and the shelf life of skills. It was about 30 years in the 1980s versus five years now – and it is still dropping. In the digital workplace, it can be less than two years.’ Daniel Doe, Vice President for Talent Strategy & Excellence, Shell
Skill sets
International Renewable Energy Agency (IRENA)’s 2020 Renewable energy and jobs report, and the historically niche market of solar photovoltaics (PV) now accounts for 3.8mn jobs. The broader socioeconomic benefits also help attract talent into what employees see as a ‘career of the future’. The growth of the environmental, social and governance (ESG) market adds to the narrative that green is booming with potential, with such global assets on track to exceed $53tn by 2025, according to Bloomberg Intelligence in February 2021. Improvements to gender equality are also being welcomed; an area the traditional energy markets have struggled with for decades. Already, more than 20% of the 1.2mn people employed worldwide in the relatively new industry of wind power are women, reports IRENA. But there is still an obvious lag between talent and employers’ ideals of a green-savvy workforce and the reality of ready-togo talent. Nearly one-fifth of companies cited a lack of expertise and/or experience when asked by packaging company Smurfit Kappa about the biggest barrier to the implementation of sustainability practices in their organisation. Yet 83% saw sustainability as an
opportunity to exploit. Academia plays a critical bridging role in minimising this gap. ‘As I see it, the link between universities, research and development (R&D) and industry is well established, even if it is skewed to the London, Oxford, Cambridge triangle and the south-east of England,’ comments Dr Stuart Addy, Vice Chair of the Continuous Professional Development Panel at the Energy Institute. ‘The development of specific academic offerings to meet the need for graduates to operate in new areas of energy markets seems less well established. However, there is evidence that universities are now working more in partnership with local government and hopefully with professional bodies to help plan for the future.’ Digital drivers The future may be green, but it is also digital. Approximately 90% of jobs worldwide in the future will require such skills, according to the European Commission (EC). And as with sustainability, there are looming gaps in skill sets. The EC reported in March 2021 that in Europe, 170mn people – nearly three times the size of the UK’s entire population
– between 16 and 74 years of age lack basic digital skills. A study of six European countries – France, Germany, Ireland, Poland, Spain and the UK (pre-Brexit) – revealed a current shortage of 477,000 information and communication technology (ICT) specialists at different skills levels. Amid the global push for digitalisation, this figure could soar to 1.26mn in 2020 and 1.67mn in 2025, according to Empirica/JP Morgan research. Plus, energy companies need to work harder to divert digitally agile talent’s attention away from tech companies; competitors perceived as innovative, flexible and progreen. ‘Right now, digitalisation is the most important factor in the talent markets, as it can act as a primary enabler to other pressing global goals, such as sustainability,’ states Steve Griffiths, Senior Vice President, Research and Development, Khalifa University, UAE. ‘There are two sides of the coin that need attention. One is developing digital engineers; those who can truly understand how the hardware and processes for storing, accessing and using data works. The other is a need for more digital scientists; those who can make sense of data and increase its value to an organisation. There
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‘There are so many anti “dirty” energy groups who have the voice of the press and the following of the millennials. Oil and gas companies are truly walking on eggshells to produce energy at an affordable level while still making a profit and ticking social and environmental boxes.’ Dr Ibilola Amao, Principal Consultant, Lonadek Global Services
Skill sets
is no doubt that we need both along with those well-versed in cybersecurity.’ However, a warning accompanies the vast potential of digitalisation. It can accelerate the gulf between the haves and have nots – half the world’s population are still offline, according to United Nations’ (UN) figures – when the UN’s Sustainable Development Goals (SDGs) are trying to achieve the opposite. Energy companies must play a proactive role in supporting those offline as part of their ESG efforts. Effectively doing so would not only boost the breadth of their potential hiring pool in the late 2020s onwards, but it would also help plug weaknesses in energy security; over 1bn people worldwide live without reliable access to power. The pandemic effect The COVID-19 pandemic has sparked a rethink in how talent – and subsequently companies – view the world of work. Indeed, momentum for a four-day week – long discussed, rarely instigated – is mounting as employees enjoy the health and lifestyle benefits of both remote and reduced
working. A successful trial in Iceland with 2,500-plus workers has gained global attention and Spain has launched a modest pilot for interested companies. Environmental benefits feed the argument for a four-day week, especially amongst younger talent. Achieving this set-up by 2025 would shrink the UK’s emissions by 127mn tonnes – equivalent to taking the country’s entire private car fleet off the road, according to a May 2021 study from Platform London, a UK-based environmental and social justice campaign group. But one size does not fit all. Working from home ‘is not a new normal’, it is ‘an aberration that we are going to correct as quickly as possible’, argues David Solomon, CEO, Goldman Sachs, speaking to the BBC earlier this year. Solomon is not alone. Jared Spataro, Corporate Vice President at Microsoft 365, says: ‘Those impromptu encounters at the office help keep leaders honest. With remote work, there are fewer chances to ask employees: “Hey, how are you?” and then pick up on important cues as they respond.’ But Spataro adds a red flag for all corporates: ‘The data is clear: our
The future may be green, but it is also digital – approximately 90% of jobs worldwide in the future will require such skills, according to the European Commission Source: Shutterstock
people are struggling. And we need to find new ways to help them.’ Whatever companies’ postpandemic route – at home, at work, a hybrid – happiness, satisfaction and wellbeing will be far higher on talent’s totem pole of ‘must haves’ than pre-pandemic. Energy companies that respond accordingly will be rewarded with a sharpened competitive edge when it comes to locking in intellectual capital – a game they cannot afford to ignore. ●
New skills for a new world
‘What skills are required for the energy transition?’ asks Sinead Obeng, Regulatory Affairs Advisor, Gazprom Marketing & Trading and EI Trustee. When we are asked to think about ‘green skills’ or the skills needed for the energy transition, what comes to mind? Usually this dialogue focuses on the promotion of STEM (science, technology, engineering and mathematics) subjects, which was particularly apparent when I was invited to meet the UK government’s Green Jobs Taskforce alongside my fellow Trustees at the EI. Now don’t get me wrong, STEM allows us to find technical/technological and nature-based solutions that are critical for carbon sequestration and decarbonisation. However, there are other important aspects that must marry up. Project economics and regulatory policy frameworks must be complimentary to these initiatives, whilst ensuring that the end-consumer still has affordable Sinead Obeng access to energy. Clearly there is no single skillset that outweighs the other for the energy sector to succeed. Skills selection should be at the forefront of discussions on how to equip the future workforce for net zero. Generation 2050 understands this. Out of 1,000+ EI Young Professionals surveyed, the majority believe T-shaped skills will be crucial to achieving net zero. This does not mean an individual needs to know everything, but simply need to demonstrate the value of having a broad and holistic view of the energy system. I recently spoke with a fellow Young Professional, Albert Boohene, a Mechanical Engineer at Subsea 7, about the challenges that might lie ahead for young professionals that have developed skills in oil and gas but may have concerns about their role in the energy transition. He wasn’t anxious about the issue. ‘The only thing that’s changing is the commodity. The nature of the work and skillset required is similar from an engineering perspective,’ he said. ‘One of the strongest drivers will be the responsiveness of companies to implement rapid change to meet net zero, and their willingness to empower new and existing staff to work on green projects. For example, Subsea 7 has recently acquired a wind infrastructure business, which will present opportunities for us to utilise current skills for renewable projects.’ It is vital that companies and their employees work together to develop the talent pipeline required to help achieve net zero. Businesses need to move on from traditional job requirements with a more flexible, transferable skills-based approach rather than relying on direct experience. At the same time, we as young professionals and new entrants to the industry should be bold when applying for jobs and new opportunities; demonstrating a commitment to learning whilst showing prospective employers that we can create value through this energy transition. ●
16 Petroleum Review | September 2021
1.2bn employees worldwide will be affected by the adaptation of automation technologies and artificial intelligence (AI) over the next decade. This equates to 50% of the global economy and disrupts $14.6tn in wages, according to the World Economic Forum (WEF).
66% rise in number of people working on documents and 62% of calls and meetings unscheduled or conducted ad hoc, according to Microsoft. Companies must be alert to the risk of employees’ burnout.
Energy transition
DECARBONISATION
UK industrial decarbonisation gains momentum W orld-leading initiatives are being established in industrial clusters around the UK to capture carbon dioxide (CO2) and store it offshore, along with innovative hydrogen projects and new infrastructure. Indeed, the UK government is scheduled to announce at least two multi-billion pound carbon capture and storage (CCS) projects in October in the run-up to the COP26 UN climate conference in Glasgow in November 2021. Prime Minister Boris Johnson has pledged to invest at least £1bn to support four CCS industrial clusters by 2030, with the first two planned to begin operations in mid-2020. Under Phase 1 of the Cluster Sequencing Process, the government has received submissions from five industrial clusters. DelpHYnus project – involves CO2 transport and storage for the South Humber industrial area, alongside hydrogen production facilities at the former Theddlethorpe gas terminal site. Led by Neptune Energy, the project aims to develop an ‘end-to-end value chain’ combining CCS together with blue hydrogen (from natural gas) production. Suitable offshore storage locations have been located in the southern North Sea. Neptune is also a partner in the PosHYdon project in the Dutch North Sea, to generate electricity 20 Petroleum Review | September 2021
Ambitious plans for decarbonisation of significant UK industrial clusters are gaining momentum. But there are concerns about a North-South divide. Brian Davis reports. using offshore wind turbines for electrolysis of seawater to produce hydrogen.
East Coast Cluster (CO2 AST) – unites the Humber and Teesside regions aiming to remove nearly half of UK industrial cluster CO2 emissions to achieve net zero by 2050, as well as kick-starting the UK’s hydrogen economy by 2030. The East Coast Cluster is facilitated by the Northern Endurance Partnership (NEP) and is bidding to develop infrastructure to transport CO2 from emitters across Humber and Teesside, while securing offshore storage in the Endurance aquifer in the southern North Sea. The partnership includes BP, Eni, Equinor, National Grid, Shell and Total, with BP leading as operator. Hynet North West – aims to reduce carbon emissions across Northwest England (serving Liverpool, Manchester and Cheshire) and North Wales, including upgrades to existing facilities and development of new infrastructure. HyNet is considered to be a leader in the creation of the UK’s low carbon economy, with the potential to create about 75,000 jobs by 2035 as well as protecting tens of
thousands of jobs as part of the government’s ‘levelling up’ strategy. Scottish Cluster – is led by a crosssection of Scottish industrial CO2 emitters and the Acorn CCS and hydrogen project partners. Developers of the Acorn CCS project are Storegga (through its whollyowned subsidiary Pale Blue Dot Energy), Shell and Harbour Energy. The Scottish Cluster is expected to support over 15,000 jobs up to 2050. Hydrogen production capacity is forecast to reach 3.7 GW by the mid-2030s. Repurposing of oil and gas infrastructure will reduce the cost and time involved in establishing a CO2 transport and storage system. Acorn will serve multiple emitters around Scotland, the UK and Europe, with at least 5mn t/y of CO2 storage by 2030 – half of the target set out in the UK government’s 10-point plan for a ‘green industrial revolution’. It can be scaled up to at least 20mn t/y of CO2 emissions storage within the first decade of operations. NECCUS, the Scottish industrial decarbonisation group, received £1.23mn from the UK government in January 2021 (as did each of the other UK cluster facilitators) to create plans to decarbonise large
Selection of the first two UK industrial decarbonisation clusters is expected in October 2021 Source: Shutterstock
Energy transition
sections of Scotland’s industry. Government support is matched by industry players including Cairn Energy, Harbour Energy, Petroineos, SGN, Shell and SSE Thermal. Some 30 industrial sites are being assessed, aimed at cutting about 80% of Scotland’s industrial emissions before 2045. By 2030 the Scottish Cluster could include nine different UK CO2 sources, spanning major industrial sites and power generation plants, as well as hydrogen production and direct air capture (DAC). Eight of these CO2 sources should be operational by 2027, including two gas terminals at the St Fergus gas complex and SSE and Equinor’s Peterhead carbon capture power station; with 1mn t/y CO2 from the Ineos and Petroineos sites at Grangemouth and a large-scale DAC facility. There are also likely to be green hydrogen projects coupled to offshore wind, with projects such as the ERM Dolphyn project and the Cromarty Firth energy hub. New Peterhead port facilities will receive about 3mn t/y of domestic CO2 shipping by 2030, potentially rising to 9mn t/y. V Net Zero – led by Harbour Energy, this cluster aims to store and transport CO2 from the Immingham cluster on Humberside, with capture, compression and conditioning of the CO2 by the Humber Zero project. This cluster will be complemented by Zero Carbon Humber (ZCH), the Gigastack Project and the Northern Endurance Partnership (NEP). Decarbonisation will require deployment of CCS, fuel switching (hydrogen, electricity and biomass) and bioenergy with CCS (BECCS). There are also two clusters for second phase consideration.
The Stanlow refinery at Ellesmere Port, part of the HyNet North West decarbonisation cluster project Source: Net Zero NW
South Wales Industrial Cluster – the second largest industrial emitter in the UK, the region accounts for 16mn t/y CO2 across industry and power generation. This project is led by CR Plus and will last until
2024 under the government’s UK Research and Innovation Industrial Decarbonisation Challenge, which aims to establish at least one UK industrial cluster by 2030, and the world’s first net zero industrial cluster by 2040. Repowering the Black Country – a cluster led by the Black Country Consortium. The six largest industrial clusters were mapped by the Department for Business, Energy & Industrial Strategy (BEIS) and reported in the Industrial Clusters Mission. Under the Industrial Decarbonisation Challenge, the UK government invested £132mn for initial deployment planning of the above clusters to submit proposals. An £8mn cluster plan investment produced a blueprint to achieve net zero emissions for each industrial cluster. Phase 2 will be launched in parallel or soon after Phase 1 and will allow potential applicants to consider update of power and industrial CCUS business models. In addition, the government has invested £20mn in the Industrial Decarbonisation Research and Innovation Centre (IDRC) at Heriot Watt University, to advance cutting edge decarbonisation research. Considering these highly ambitious projects, how are these decarbonisation initiatives progressing? Scotland’s Net Zero (SNZR) industrial roadmap The SNZR industrial roadmap plans aim to define a net zero industrial cluster and pathway to cut 80% of the nation’s industrial CO2 emissions by 2045. NECCUS Chief Executive Officer Ronnie Quinn admits: ‘This is ambitious but achievable. For the first time we have big players and credibility. Different sectors and blue-chip investors are involved. However, we need some regulatory certainty going forward. There are parallels to the offshore wind sector 20 years ago which had the benefit of ROCs [renewable obligation certificates] and more recently the CFD [contracts for difference] system that catapulted projects forward.’ Technologically, he maintains: ‘Scotland is well placed with shovel-ready projects ready to deliver by the mid-2020s and build scale thereafter. It’s a very exciting opportunity, our oil and gas industry has relevant skills and experience and there’s momentum now. The cluster sequencing bid results are due soon and the winners should be announced just before COP26.
I would be very disappointed if we were not mentioned in the first cluster to share in the £1bn CCS infrastructure fund.’ The Roadmap projects are fully funded. And Quinn says it is encouraging to see strong support from institutional investors as demonstrated by investments in the Acorn project lead partner Storegga from GIC (Singapore’s sovereign wealth fund), Mitsui and Macquarie, one of the world’s largest financial services companies. Although it is difficult to gauge how much is needed to fund these UK industrial cluster decarbonisation projects, the Carbon Capture and Storage Association (CCSA) and BEIS have concluded that expenditure on CCUS (including hydrogen production and greenhouse gas removal) could reach £41bn by 2035 for the UK as a whole. Numerous pilot projects are underway across Scotland, from hydrogen pilot programmes in the Orkneys with EMEC, hydrogen fuelling stations in Aberdeen and hydrogen home heating testing at SGN’s H100 site in Fife. Zero Carbon Humber (ZCH) ZCH leads a plan to decarbonise the UK’s largest emitting industrial region, the Humber, and includes ABP, British Steel, Drax, Equinor, Centrica Storage, Mitsubishi Power, National Grid, SSE Thermal, University of Sheffield and others. ‘Use of shared trans-regional pipelines for low carbon hydrogen and captured CO2 emissions aims to create the world’s largest net zero industrial cluster by 2040,’ says Ian Livingston, Project Engineer, Equinor Low Carbon Solutions. Captured CO2 will be compressed at Centrica Storage’s Easington site and stored under the southern North Sea using offshore infrastructure shared with the Teesside industrial cluster. Other ZCH partners will connect their infrastructure to the pipelines. For example, use of BECCS (bioenergy with CCS) at Drax power station will operate from 2027 for scale-up to become the world’s first carbon negative power station by 2030. SSE Thermal’s Keadby 3 gas-fired power station will be equipped with CCS by the mid2020s. There are also proposals to develop Keadby Hydrogen, a venture by SSE and Equinor, for the world’s first at-scale 100% hydrogen power station. Uniper’s Killinghome site in Immingham aims to produce clean hydrogen by 2035. While ZCH partners Equinor and National Grid, as part of the Northern Endurance Petroleum Review | September 2021 21
Energy transition
Partnership, will develop offshore pipeline and storage infrastructure in the southern North Sea for CO2 captured by ZCH and Net Zero Teesside.
Looking at the BEIS Industrial Cluster Mission map, South Wales is aiming to cut 10mn t/y of CO2 emissions, Humberside 12.4mn t/y, Teesside 3.1mn t/y, Grangemouth 4.3mn t/y, Merseyside 2.6mn t/y and Southampton 2.6mn t/y. But that is industrial CO2 emissions, and when you add blue hydrogen (from natural gas) production over the next 10 years, this will also emit CO2, until green hydrogen from electrolysis using renewables is available at scale. However, Williams suggests there is capability to use floating offshore wind energy in the Celtic Sea. While Milford Haven, which already handles LNG imports, could support South Wales and the south-west of England for blue hydrogen supply initially and later green hydrogen with tidal energy. ‘We are currently focused on individual industries to understand their decarbonisation options, to share outputs with infrastructure providers for electricity, gas and hydrogen, and also exploring options for CCS and CO2 export,’ says Williams.
South Wales Cluster Dr Chris Williams, Head of Industrial Decarbonisation for Industry Wales (seconded from Tata Steel), expresses some concerns about the UK government’s industrial decarbonisation goal to reach net zero by 2040, ‘although we are trying to meet that target with our cluster plan under the UK Research and Innovation Industrial Decarbonisation Challenge’. The South Wales Deployment Project is funded by a £1.5mn grant for planning and a £20mn grant from the UK government matched by £18.6mn from industry partners including Shell, Tata, Tarmac, RWE and Lanzatech. Williams says individual industrial sites can find it difficult to decide how to get to net zero. ‘All you can do is come up with options. However, even the utilities can’t second guess what industry are going to do, in order to update Black Country anxiety their networks.’ Matthew Rhodes, Programme Surprisingly, there’s no overDirector of the Black Country riding body currently. ‘Though Cluster project is also anxious BEIS gives some direction along about the Industrial Cluster with Treasury input, the cluster programme. Having received groupings will have to take £1.6mn to develop cluster plans, he a leadership role with local believes the differentials between government and councils maybe. electricity prices for UK industry We expect to get to the detail and EU and non-EU competitors in four or five years’ time, as ‘makes it challenging to attract everybody has different time lines and retain competitive energyfor converting gas to electricity or intense manufacturing in the Black introducing hydrogen and carbon Country’. He suggests that the capture’, he says. recently published UK Industrial Williams believes: ‘Coordinating Decarbonisation Strategy describes each individual region and a path to industrial decarbonisation different industries around a capex which will make it even harder to planning process, with different attract and retain such businesses networks and supply chains, will in inland regions in the UK. be horrendously complicated.’ ‘The essence of the strategy is But the big challenge for to invest significantly during the clusters is the North-South Divide. 2020s in large-scale infrastructure ‘The South Wales cluster hasn’t got decarbonisation projects in the local geological storage and will north and on the coast, focusing have to rely on CO2 shipping,’ notes on the top 100 or so industrial Williams. Point 8 of Boris Johnson’s emitters and hoping that the innovations developed will at 10-point plan talks of having two some stage in the future support CCS projects up and running by decarbonisation of the remaining 2030. ‘So, the north of the country will be able to make things in a net 295,000 smaller manufacturing zero way, supplied with CO2 storage businesses distributed across the UK. In parallel, demand-side and blue hydrogen by 2030. But policies (such as taxing carbon in we’re stuck in the south without intermediate products) will start CO2 shipping to the north. London to incentivise smaller companies and factories on the Thames to invest in decarbonisation. corridor have a similar problem, which puts net zero manufacturing Although the UK government is unlikely to introduce such policies in the south at risk. There are before the 2030s, there are a lot of many challenges, but immediate outstanding questions about how advantages for industry in the to do this efficiently.’ north,’ he remarks. 22 Petroleum Review | September 2021
He continues: ‘From a Black Country industrial perspective, this strategy means we are being asked to contribute towards £10–20bn of investment to make northern coastal regions into attractive areas for low carbon manufacturing investment, while being held back at the pace necessary to compete globally or nationally.’ Rhodes argues that ‘any rational investor will want to locate energy intense manufacturing businesses where clean power is cheapest and infrastructure is already in place’. The assumption that decarbonisation infrastructure suitable for heavy industrial sites on the coast will be adaptable to inland distributed clusters is wrong on two grounds, he says. ‘First, large-scale CCS and hydrogen technologies and infrastructure cannot simply be down-scaled to meet the needs of smaller businesses economically. An entirely different approach is needed to facilitate decarbonisation of tens of thousands of small businesses. Secondly, investors won’t wait. By the time UK government strategy has played out and the zero carbon energy investments made in the north are accessible to the Midlands and south, industry will already have migrated abroad or to the north.’ ‘This strategy is holding us back because we don’t need to wait for technical innovation to deploy zero carbon energy technologies economically in the Black Country,’ concludes Rhodes. ‘What we need is targeted local infrastructure. For example, distributing clean energy around industrial parks and local areas. We can fund this privately, but we need access to public guarantees for infrastructure investment so that private companies will invest in the necessary projects and we don’t accidentally hollow-out the UK and lose the bulk of UK manufacturing jobs in the transition to net zero.’ ● Part 2 of the industrial cluster decarbonisation story will follow in the October issue of Petroleum Review.
Visualisation of SSE Thermal’s Keadby 3 power station, which will be equipped with CCS by the mid-2020s Source: SSE Thermal
Energy transition
DIRECT AIR CAPTURE
Silver bullet or red herring? Direct air capture technologies have the potential to help achieve net zero. Simon Crowther of Frazer-Nash Consultancy*examines the opportunities they offer and the challenges they face.
N
umerous studies on the future energy mix highlight the need for carbon removal technologies to meet the Paris Agreement targets. The International Energy Agency (IEA), for example, believes reaching net zero emissions is ‘virtually impossible’ without carbon capture, use and storage (CCUS), noting that ‘stronger investment incentives and climate targets are building new momentum’ and that although the technologies are in their infancy, the world of carbon capture is on the ‘cusp of a new dawn’ (see Petroleum Review, July 2021). Innovations in this field include the development of negative emission technologies (NETs) such as direct air carbon capture (DAC), which removes carbon dioxide (CO2) from ambient air, acting as an ‘artificial tree’. However, while some of the CO2 captured by a tree can be released into the atmosphere when it dies, all of the CO2 captured by DAC can be permanently sequestered
within geological formations such as saline aquifers or depleted reservoirs, or regenerated for re-use in other processes such as creating plastics, chemicals, refrigerants, fizzy drinks, or as a feedstock for synthetic fuels. It is also worth noting that while afforestation is a complementary greenhouse gas reduction option, trees can end up competing for land space with food production, potentially resulting in increased global food prices. ‘Artificial’ trees, aka manufactured DAC systems, have the advantage that they are less limited by location and require less land than other NETs – the biomass required for BECCS (bioenergy with carbon capture and storage) has the same land issue as afforestation. A DAC plant that captures 1mn tCO2/y is equivalent to the work of approximately 40mn trees requiring approximately 800,000 acres of space, according to a tentree blog. DAC also requires far less water. According to the Innovation for Cool Earth Forum (ICEF), BECCS
Company
Location
Carbon Engineering
British Columbia, Pilot (fuel Canada production)
Climeworks
Hinwil, Switzerland
Global Thermostat
Scale
Key players Table 1 lists the main companies currently developing DAC technologies. Carbon Engineering (CE) is the only liquid solvent-based solution in Table 1, enabling a continuous process operating at steady state and reportedly needing less water than other solutions. The regeneration process uses both renewable electricity and natural gas as heat sources. CE is looking to develop a purely electrical calcination process and is currently developing synthesised fuels from CO2. The company plans to begin construction of a commercial plant in 2022, located in the US Permian Basin, capable of capturing 1mn tCO2/y. It has also partnered with Storegga to deploy a largescale site in north-east Scotland by 2026.
Size (m2)
Capture Rate (tCO2/y)
Current cost** ($/tCO2)
Future predicted cost**($/tCO2)
5,000
365
600
94–232
Pilot (reuse of 90 CO2 in a nearby greenhouse)
900
n/a Hellishi, Iceland Pilot (CarbFix project) (sequestration linked to a geothermal station)
50
Italy (Store & Go Demonstration n/a Project) (renewable methane production)
150
California
1,000
Demonstration
requires around 600 m3 of water for each tonne of CO2 removed (largely due to biomass cultivation) whilst, depending on the concept, the DAC water requirement could be negligible up to a maximum 25 m3/tCO2. Most current DAC projects are focused on the chemical separation of CO2 from air, as opposed to cryogenic (freezing CO2 out of the air) or membrane technology (using ionic exchange and reverse osmosis membranes).
600
50
Table 1 Current status of active DAC facilities **Costs for carbon capture only; excludes compression, transportation, injection and storage costs Source: Frazer-Nash Consultancy*
24 Petroleum Review | September 2021
100
15–50
Energy transition
All the CO2 captured by direct air capture technologies can be permanently sequestered within geological formations such as saline aquifers or depleted reservoirs, or regenerated for re-use in other processes such as creating plastics, chemicals, refrigerants, fizzy drinks, or as a feedstock for synthetic fuels Source: Shutterstock
Climeworks’ solution is modular, enabling scalability and reducing costs. It has a current capacity of 50 tonnes of CO2 per ‘collector’ module. Whilst CE’s design requires natural gas to power the system (coupled with industrial CCS), Climework’s concept is powered by renewable energy and/or low-grade waste heat. Its Icelandic pilot plant is powered by geothermal energy, the Italian demonstrator uses solar power, and the Swiss plant a local incinerator. Meanwhile, Global Thermostat claims its patented technology can be retrofitted into an existing facility and can be used for both capture from ambient air and flue gas. It has been planning a pilot plant in Alabama to capture 4,000 tCO2/y, for re-use purposes at a global food and beverage company. This site will use residual low-temperature heat as an energy source. Other companies entering the DAC market include Infinitree, which is looking to utilise an ion exchange sorbent to generate CO2 for reuse within greenhouses; whilst Skytree proposes using a humidity swing to regenerate captured CO2. Skytree’s applications include methanol production and scrubbing the air within a car to decrease the power needed for heating and air conditioning. Dublin-based Carbon Collect is working to commercialise the passive direct air capture technology developed by Arizona State University’s Dr Klaus Lackner. Its mechanical tree, unlike the three companies in Table 1, will let wind direct ambient air towards the sorbent (no fans are proposed). Once the sorbent tiles are saturated with CO2, the mechanical trees are lowered and CO2 is released from the sorbent. The pilot farm is due to be made up of 24 mechanical trees each capable of capturing 33 tCO2/y. Carbon Collect’s longterm plan is to deploy large-scale farms globally comprising of 120,000 trees, capturing up to 4mn tCO2/y per farm, and the company believes it can bring the cost of capture well below $100/tCO2. All the companies in Table 1 are aiming for active megatonne capacity DAC plants (capturing 1mn tCO2/y) with a 30-year lifetime, at a cost of about $100/tCO2 within the next 10–15 years. As of July 2021, no plants of this scale were in operation. Future deployment A PESTLE (political, economic, sociological, technological, legal
and environmental) analysis highlights some of the challenges DAC needs to overcome before the technology can be deployed at scale. Political: Government policy will be a key enabler or blocker to the success of DAC. Funding is likely to be staggered as the technology matures (with increased subsidies as concepts go from research to active deployment). Policy levers available to government include subsidising research and development, providing tax incentives to advancing DAC, taxing carbon/carbon pricing, carbon credits, and/or adapting regulation/standards to support low carbon fuels and re-use of CO2. In the UK, the Department for Business, Energy & Industrial Strategy (BEIS) has committed £70mn of funding for Stage 1 of its innovation programme, with further funded stages planned to achieve commercial scale demonstrations in the mid-2020s. UK Research and Innovation is also funding £31.5mn for greenhouse gas reduction demonstrators. In the US, Rhodium Group has recommended that the Department of Energy spend $240mn/y during the next decade on DAC R&D.
Environmental: There are minute location and seasonal variations in the concentration of CO2 found in air that may affect the quantity of CO2 captured by a plant. This appears to be an area that could benefit from further research. However, from a cost and practicality perspective, the logical locations for a DAC facility would either be close to a geological storage site, near to a process requiring the use of CO2 (eg a food and beverage facility), or near to an accessible low-cost heat source.
Looking ahead Focusing on energy efficiency, developing renewables/ nuclear power, and investing in ‘traditional’ CCUS remain the most viable options in reducing global warming. However, with the development of CCUS infrastructure, DAC plants could feed into transportation and storage infrastructure. If the global carbon budget is exceeded, NETs such as DAC become a necessity. In the UK, the aim of the government’s net zero cluster approach is for areas to exist that either produce no CO2 or offset the CO2 that is produced by NETs. The current technologies being developed to capture carbon at source are aiming for efficiencies Economic: The cost of DAC systems of approximately 95% – could DAC is not currently seen as viable be used to capture the residual 5% without incentives. CO2 in air is and enable net zero to be achieved within a cluster? This is already much more dilute than in flue gas being considered by Pale Blue (300 times greater compared to a coal-fired power plant, according to Dot Energy (part of the Storegga the National Academies of Sciences, Group), which is working with CE to develop a commercial-scale Engineering and Medicine). The DAC plant potentially linked more dilute a stream is, the harder to the Acorn project’s planned it is to separate, the more energy it cluster in the north-east of requires to separate, which in turn Scotland. Alternatively, could makes it more expensive. DAC be employed in more rural areas where the concentration Social: As with any new of industrial CO2 sources is more infrastructure, public acceptance is not guaranteed. However, DAC sparse and traditional CCS is not an facilities can be situated almost option? As the UK looks to become anywhere, meaning they do not a global leader in renewables, could need to be near population centres DAC be used flexibly within the or industrial sources. wider energy system (eg using surplus clean energy for desorption Technical: Other greenhouse gas when demand is lower)? reduction options provide benefits The main driver in whether DAC in addition to removal of CO2, will be a noteworthy contributor in the greenhouse gas reduction DAC does not. Due to the energy intensity of the current technology, arena will be cost. It is for investors to judge whether this technology DAC must be powered by low will be commercially viable in the carbon sources to be classified as future, based on their assessment a NET. of technology cost reduction and market conditions. Ultimately, DAC Legal: There is a risk in prioritising could be a piece of the puzzle in the deployment of DAC at scale at the expense of other developments. enabling the energy transition. ● If these technologies were unable *This article is based on a White Paper, Direct to deliver the desired reduction in air capture: silver bullet or red herring?, CO2, the Paris Agreement targets published by Frazer-Nash Consultancy in November 2020. might not be met. Petroleum Review | September 2021 25
