Get ready for the energy transition

START PLANNING

ALTERNATIVE FUELS • AS THE WORLD MOVES TOWARDS A CARBON-NEUTRAL FUTURE, GOVERNMENTS WILL HAVE TO TALK TO INDUSTRY TO ENSURE A VIABLE SUPPLY CHAIN

THE MUCH-VAUNTED ENERGY transition now seems inevitable – but the details remain sketchy. It is also not a little scary, particularly for those operators in the supply chain that have made a decent living in moving and storing the liquid hydrocarbons that the world relies on at the present for heat and power.

This is especially true for operators of capital-intensive bulk liquids storage terminals, who need some level of clarity over the future demand for their services if they are to be able to plan properly to have the right type of storage capacity in the right places to meet future needs.

But the energy transition is unlikely to be smooth: there are many different routes towards decarbonising the fuel chain and, while governments seem keen to push forward the idea of electrification, there are problems with this. Not only will it require substantial additional generating capacity, which will have to be based on renewable sources, but there are also concerns over distribution capacity in power grids. Therefore, many industry bodies are pressing for a mixed solution that will involve net-zero carbon fuels, including biofuels and ‘e-fuels’ as well as hydrogen and other alternatives.

To help its members navigate a path through this unknown future, the UK Tank Storage Association (TSA) has published a pamphlet, Enabling the energy transition: The role of the bulk liquid storage sector. In his introduction to the document, Peter Davidson, TSA’s executive director, says: “As essential energy partners, we are determined to up the ante and ensure that our sector can support and facilitate access to the broad mix of energy solutions that will be necessary to succeed. The bulk liquid storage sector already has some insight into what a changing landscape might mean for its infrastructure and is already active in many of the areas of growth that will drive success going forward.

“Ultimately, significant investment in enabling infrastructure, along with collaboration and partnership, will be key to seize opportunities and enable solutions for change,” he adds. “To that end, we conclude our report with a number of recommendations setting out our sector’s essential considerations as we move towards the next phase of the transition and continue to generate economic benefits for all.”

PLANNING FOR THE UK Focusing on its home market in the UK and Ireland, TSA notes that there are ambitious emission reduction targets in place under the UK’s Climate Change Act 2008 and the fifth carbon budget, which covers the critical phase from 2028 to 2032. The UK government is aiming for a 57 per cent reduction in greenhouse gas (GHG) emissions by 2030 compared to 1990, and a net zero position for GHG emissions by 2050. “In practical terms, this means changes in energy generation, industrial processes, transport, buildings and heat,” TSA notes.

The transport sector currently accounts for some 40 per cent of the UK’s final energy consumption – not including aviation fuel and marine bunkers for international transport, which count as exports. Supplying this need is strategically essential and calls on flexibility within the supply chain,

which is heavily supported by bulk liquids storage facilities, not least since around half the UK’s diesel demand and more than 60 per cent of its aviation fuel requirements are imported.

The UK government has put forward a number of initiatives to decarbonise transport operations. These include a plan to end the sale of conventionally fuelled cars and vans by 2040 – or 2035, if a recent announcement is to be believed. “Meeting the UK’s future ambitions will require the support and contribution of a wide range of players and a broad mix of solutions,” the TSA document says. “Most crucially, the bulk liquid storage sector will be pivotal in supporting access to traditional and suitable energy alternatives as well as in providing the flexibility needed to integrate these alternatives. That means careful advance planning and management to ensure the supply chain can be maintained in the interim and to minimise change in the consumer experience.”

SIZE OF THE TRANSITION Initiatives such as the UK’s Renewable Transport Fuels Obligation (RTFO) will require an increasing share of biofuels in road transport fuels during the transition period. This will place a shifting burden on terminals’ storage capacity and blending capabilities. Substantial investment will be needed to provide these new blends, TSA notes. Similarly, decarbonisation of home heating will, for off-grid consumers, mean the use of blends including biofuels, which will require considerable infrastructure upgrades such as new tankage, loading arms and blending facilities.

Looking more globally, and further ahead, it is widely forecast that demand for liquid fuels will continue to increase through to the late 2020s, followed by a decline as the transition phase really kicks in; overall oil demand will, though, be supported by growth in the petrochemical sector.

“In this context, the challenges faced by the bulk liquid storage sector will be manifold,” TSA says. “The sector will have to both help balance strains on demand for legacy liquids in a declining market while addressing the availability of current infrastructure against a growing demand for alternatives. This will require conversion of existing assets, space and significant investment at a time of great pressure on margins. Furthermore, with demand for petrochemicals expected to rise, maintaining the sustainability of hydrocarbon derivative supply chains, feeding the general manufacturing and chemical industries, will also require a responsive, flexible and robust bulk liquid supply sector at a time of great change.”

CALL FOR ACTION TSA’s document concludes with some recommendations to governments currently implementing climate change legislation. They are urged to: - Work together in partnership with

industry to seize the opportunity to support a responsive, flexible and robust bulk liquids supply sector - Ensure the energy transition advances in parallel with the require changes in bulk liquids supply infrastructure by safeguarding the benefits of a safe and resilient bulk liquids storage sector and associated supply chain - Set clearly defined transition paths and realistic timelines so as to enable a stable landscape for long-term investment and to avoid delays caused by the lack of new infrastructure to handle the transition - Ensure that policies are coherent and supportive of the broad range of solutions that will be needed to success, while adopting a technologyneutral approach - Empower industry by facilitating dialogue, cooperation and knowledge transfer in the area of safety in the context of alternative energy solutions. The full document is available from download from the TSA website at www.tankstorage.org. uk/news-press/tsa-unveils-new-report-on-therole-of-the-bulk-liquid-storage-sector-in-theenergy-transition/.

THE ENERGY TRANSITION HAS ALREADY BEGUN AND

IS SHOWING THAT EXISTING INFRASTRUCTURE NEEDS