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ExxonMobil, Shell, Neste take different paths to sustainability

Solutions such as renewable diesel can be much better for the environment than large-scale biofuels

By John Royall, President & CEO, Gulf Energy Information

It seems that the multinational oil companies are falling all over themselves to declare the decarbonization of their businesses. Just this week, Repsol announced its goal of net-zero CO2 emissions by 2050, even taking the unusual step of saying that net-zero covers emissions from not only its own operations but emissions by its customers.

Gulf Energy Information’s Sustainability Leadership Conference in Energy, which will take place May 7 and 8 in Houston, will explore various corporate strategies and initiatives around sustainability.

I’ve written before about the survey that we conducted regarding sustainability leadership among operating companies. Again, here are the results of our survey:

 

Shell Invests In Gas and Renewables

Shell has pledged to cut its carbon footprint in half by 2050 from 2016 levels. Over the last several years, Shell has divested oil assets while acquiring natural gas holdings, most notably BG. The net result is that Shell is now the dominant player in global LNG with 22% of the market, and gas making up 60% of its current production.

Shell also has begun to acquire renewables businesses in wind and solar, and has entered the electric utility business in the UK. Its strategy to halve its net carbon footprint is summed up well in this chart from Barclays:


Image: Barclays Equity Research: Global Energy Rewarding Low Carbon, 7 November, 2019


ExxonMobil’s heavy research investment makes oil and gas a more competitive option

While every other large IOC has invested in renewables of some type, ExxonMobil has concentrated on biofuels and making oil and gas more competitive in the future, rightly calculating that the world will need fossil fuels for the foreseeable future and that improvements can be made to reduce carbon and emissions from operations, including refineries and petrochemical plants.

In its 2018, annual report released earlier this year, ExxonMobil stated, “Oil will continue to play a leading role in the world’s energy mix, with growing demand driven by commercial transportation needs, particularly from heavy-duty vehicles and airplanes. The chemical industry will also increase the demand for oil feedstocks, which are used to make plastics.”

So far, ExxonMobil’s research focus has been on carbon capture and sequestration, biofuels, cleaner hydrocarbon fuels, and improvements in efficiencies. The company is also expanding its presence in global LNG and entering the power market. Its research includes fuel cells to capture carbon from natural gas power plants, which can be reused for power or other purposes.

Last month, ExxonMobil announced that it and FuelCell Energy, Inc. have signed a new, two-year expanded joint-development agreement to further enhance carbonate fuel cell technology for the purpose of capturing carbon dioxide from industrial facilities. Earlier in the year, the Irving-based company released its 2019 Energy & Carbon Summary, which details some of its efforts to protect the environment and address the risks of climate change, including “taking significant steps to minimize the greenhouse gas (GHG) emissions from our own operations.”

Neste: Pushing Innovation for Fuels and Plastics

This past summer, we held Hydrocarbon Processing’s International Refining & Petrochemical Conference in Helsinki, Finland, with Neste as the host of the event. The innovative solutions that Neste presented at the conference, and later at a tour of their plant, were truly impressive. And even with its small relative size, Neste is developing solutions that will have a big future impact on the oil and gas industry.

Neste is, by far, the largest supplier of renewable fuels, with capacity of 3 million tonnes (Mt) and a market share in renewable diesel of over 60% today. Renewable diesel is not biodiesel. Rather, the feedstocks are from cooking oil and other wastes.

Renewable diesel is much better for the environment, in my opinion, than large-scale biofuels. I remember when the ethanol mandate came in, and the price of corn soared with increased demand, which, of course, caused corn-based food products in the U.S. and Mexico to increase in price. (The cost of tortillas, a Mexican staple, went up by over 15%, which is significant for poor and low-income families.)

Similarly, when the European Union introduced its 20% renewable fuels mandate, it caused demand for palm oil to skyrocket, with corresponding dislocations in Indonesia and Malaysia, which supply most palm oil. Palm trees were planted, where crops were once raised, and burning of fields increased, to the consternation of many.

Additionally, Neste is investing more than $1.6 billion in Singapore to boost biofuels production, creating bio-based plastics, and exploring ways to utilize liquified plastic waste as a feedstock for refining/petrochemical operations. Lastly, the company is pioneering Circular Economy efforts. For example, the Porvoo refinery plans to reverse the steam pipes that flow to the ocean and divert them to the city of Helsinki to be used as a heating source.

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