Future on the agenda at FETSA

CHANGE IS GONNA COME

CONFERENCE REPORT • EUROPE’S TANK STORAGE SECTOR IS GRAPPLING WITH WHAT THE COMING ENERGY TRANSITION MEANS FOR THEM, AS FETSA’S ANNUAL MEETING HEARD

THE FEDERATION OF European Tank Storage Associations (FETSA) held its 2019 Annual General Meeting in Tarragona, Spain on 12 June. It came at a time of great change, not just for the storage terminal industry and the global economy as a whole, but also for the Federation, as it marked the swansong of the organisation’s executive director, Marc de Witte, who was due to hand over the reins to Ravi Bhatiani two months later.

The Port of Tarragona had arranged a somewhat surreal venue in the congress centre at the PortAventura theme park, just out of season, so proceedings were punctuated by the screams of thrill-seekers riding the roller coaster in Ferrari Land, but it did mean that delegates were able to get to the bar with no trouble and they had the restaurants more or less to themselves. The Port had also laid on a wonderful opening dinner in the tunnels of the Roman circus.

The AGM featured a one-day conference, chaired by HCB’s editor-in-chief, Peter Mackay. It was opened by Eduardo Sañudo Sánchez, FETSA’s president, who explained the choice of his home town as the venue for the event: Tarragona is home to the main chemical cluster in southern Europe and, through its ChemMed initiative, is seeking to establish the same sort of position in the chemical supply chain as enjoyed by Antwerp and its neighbours in northern Europe.

More broadly, though, Europe has to be more efficient and flexible, and invest in human capital. Sañudo was pleased to see the petrochemical industry showing its confidence in Europe, with recent projects announced in Antwerp, Hamburg and Tarragona, and he noted that Europe is leading the way in developing the sustainable economy, an economy in which storage terminals will play an important role.

More local detail was provided by Josep Maria Cruset, president of the Port of Tarragona and of ChemMed, who said the port is “ready for the future”.

BRUSSELS CALLING But it was Blanca Andrés Ordax who really got the conversation going. Andrés, policy officer at the European Commission’s (EC) DG Energy, spoke about the ‘Energy Union’, the EC’s ambitious plan to accelerate the energy transition. The EC’s fourth report on the State of the Energy Union had been published on 9 April 2019, giving an update and overview of the Commission’s work on energy and climate and including the adoption of the Clean Energy for All Europeans (CE4AE) legislative package.

More significantly for industry, EC has agreed the 2030 targets for greenhouse gas »

THE PORT OF TARRAGONA IS ENERGETICALLY DEVELOPING

ITS POSITION AS A HUB FOR THE CHEMICAL INDUSTRY IN

(GHG) emissions reductions, use of renewable energy, impact of energy efficiency and reduction in carbon dioxide emissions from road transport. The GHG emissions reduction target of 20 per cent by 2020 tightens to 40 per cent by 2030, and may yet be revised upwards. Carbon dioxide emissions from cars are expected to be reduced by 37.5 per cent, which implies widespread use of electric vehicles – with a potentially very significant impact on the volume of petroleum products to be handled at storage terminal facilities.

Andrés laid out the legislative process to implement the CE4AE package, which has already led to directives on energy performance in buildings, the use of renewable energy, energy efficiency, and the governance of the Energy Union. Still to come, although expected this year, were directives on electricity generation and use, risk preparedness and the role of the Agency for Cooperation of Energy Regulators (ACER).

The governance mechanism of the Energy Union is based on integrated ten-year plans in all EU member states to ensure that all national and EU-wide trajectories are aligned. The plans cover all dimensions of the Energy Union, including energy security, the internal market, inter-connections, and research, innovation and competitiveness.

The ultimate aim is to achieve a carbonneutral Europe by 2050, which Andrés said is “challenging but technically feasible”. Indeed, EC has laid out a detailed plan of how to achieve it, based primarily on electrification in all sectors, increasing use of hydrogen as a power source in industry, transport and buildings, “deep energy efficiency” in all sectors, increased resource and material efficiency in a circular economy, and what is being termed ‘Power-to-X’ or P2X. This is the use of electricity to create ‘e-fuels’ based on renewable energy sources that can be applied in such areas as the heating of buildings, transport fuels, and ‘e-gas’ in targeted industrial applications and in the gas distribution grid. Adding in bio-energy with carbon capture and storage (BECCS) and lifestyle changes – which include alternatives to air travel and dietary changes – could deliver a complete removal of GHG emissions by 2050.

EC was at the time of the FETSA event seeking feedback from stakeholders prior to the new Commission taking office in November. “Nothing’s decided yet,” Andrés said. “There’s still time for input.” She was not short of input during the conference, being called on repeatedly to explain the plans in more detail and being offered plenty of advice on how the EC could improve its understanding of the idea of ‘carbon-neutral’.

EMBRACE THE INEVITABLE That energy transition appears to be inevitable, at least in Europe. There is huge political backing behind it and industry – including the oil, gas and petrochemical sectors and their logistics service providers – will have to figure out how to work within this new framework. Some views on the necessary adaptation were given by Jorge Lanza Perea, CEO of CLH. “What are we going to do in 15 to 20 years when everyone is driving electric cars?” he asked.

He also tried to put the EC’s Energy Union into a global perspective, noting that, while it’s great that Europe is taking a lead, Europe only accounts for some 10 per cent of global carbon dioxide emissions. Large parts of the world lack any access to clean energy – “it’s a global challenge,” Lanza said. The energy sector will have to be able to guarantee a supply of affordable energy while maintaining environmental sustainability, he said; in order to resolve this “trilemma”, it will be necessary to develop energy policies with a global perspective.

While it is clear that there will be a shift towards greater use of gas, we still need all available energy sources, Lanza said; that means oil will continue to be an essential part of the energy mix in 2040. And with the developing world catching up, and lower population growth in developed nations, there will be a shift in consumption away from Europe and North America towards South America and Asia. In other words, for those in the European energy business, the opportunities for growth lie in other parts of the world.

CLH is aiming to adapt to the new reality by applying the latest technology in order to make it the most cost-effective and reliable supplier of energy to its customers. It will seek to minimise its environmental impact and reduce externally generated power consumption; it plans to facilitate efficiency access to energy where it is lacking, through investment in new infrastructure and by applying new technologies; and it will seek to diversify into new fuel streams, such as hydrogen.

ROOM FOR REFINERS A broader view of the European fuels sector’s approach to the energy transition was offered by Georgia Manno, senior policy advisor at FuelsEurope. She noted that 65 per cent of refinery output currently goes to the transport sector, with only 10 per cent used in the petrochemicals sector. Any major shift in the use of transport fuels will inevitably have a significant impact on Europe’s refineries but all sectors need to contribute to the energy transition, she said.

There are, Manno added, no silver bullets when it comes to making the transition to low-carbon or carbon-neutral fuels. E-fuels and advanced biofuels will be needed in the transport sector, which means there will still be some demand for bulk liquids storage capacity. Indeed, a study carried out by Ricardo for FuelsEurope indicated that the use of low-carbon fuels can have a similar impact on carbon dioxide emissions as a total switch to electric vehicles by 2050.

FuelsEurope believes that the use of e-fuels, advanced biofuels and other measures, including carbon capture and use (CCU) and improvements in refinery efficiency, can deliver the emissions reductions being demanded. Not all electricity is ‘clean’ and the current use of electric vehicles often just shifts emissions from the tailpipe to the power plant.

Manno offered a future scenario in which the refinery takes the place of an energy hub within an industrial cluster. While continuing to produce fuels (from crude oil, bio-feedstocks, carbon dioxide or wastes), residual heat can be distributed to homes and factories and, through the use of CCS/CCU, sustainable biofuels and low-GHG fuels and other products delivered to industrial users and consumers.

Manno urged EC to ensure that the role of refineries in producing low-carbon fuels is recognised in its industrial and technology strategies and to provide a policy framework that will give investors long-term confidence in the sector. She suggested to Andrés that EC amend its current strategy by adopting carbon dioxide credits for new fuel technologies and CCS in the period to 2030 and, in the longer term, to set a standard price for carbon across the economy, taking a lifecycle approach.

A WAY FORWARD Further thoughts on the topic were provided by Matthias Plötzke, director general of the Mittelständische Energiewirtschaft Deutschland eV (MEW), a German trade association representing independent fuel importers, distributors, traders, suppliers and tank storage operators. He noted one problem with the current outlook on the energy transition: current electricity storage capacity in Germany is equivalent to only 41 minutes of demand. Despite this, the current conversation on future energies is skewed very heavily to electric vehicles.

In addition, Plötzke said, it would be a “tremendous effort” to produce enough synthetic fuel to meet domestic demand. It would take a lot of investment and international cooperation, plus a sound business case.

Where his argument was heading was for greater use of synthetic fuels: the replacement of fossil hydrocarbons with renewably produced hydrocarbons, using electrolysis and synthesis to combine hydrogen with waste carbon dioxide to produce methanol, methane, ammonia and synthetic jet fuel, gasoline and diesel.

Such synthetic fuels would allow the use of the existing supply chain infrastructure and existing vehicle fleet – with some modification – and avoid the need for investment in largescale automotive battery manufacturing. He echoed Manno’s comments about the need for a global approach and a consistent price for carbon credits. »

PORTAVENTURA’S FERRARI LAND PROVIDED A

Later in the conference, Marcel van de Kar, director of new energies at Vopak, brought the argument closer to home with a presentation on adapting the terminal business model to fit the new energy environment. “The link to society is crucial,” he began. Vopak sees its role as providing a conduit for vital products by connecting sources of supply and demand. But the world is changing – the global population is growing and people have new demands. Vopak has to change with the times.

Furthermore, the world is embracing the energy transition: there is a global transformation underway, although it is not clear exactly how that will happen and how fast the change will take place. It will be different in various regions of the world: there is a need to end energy poverty and to provide access to electricity or clean cooking facilities to the 40 per cent of the world’s population that currently lacks them. At the same time, energy suppliers need to provide clean air by curbing emissions and to combat climate change. For Vopak, those changes mean that all its terminals around the world stand to be affected. MAKING LIQUIDS One major hurdle in the energy transition is the lack of adequate infrastructure to distribute energy to the right location at the right price. That is where terminal operators such as Vopak can facilitate the energy transition, van de Kar said. In order to be able to do that, Vopak has to look at itself and reduce its own environmental footprint. Its current terminal portfolio will need to shift to be able to handle the right products in the right places, and that includes the new, lighter fuels that will be part of the solution.

Hydrogen will be a vital element in the new energy picture, van de Kar said, but he was not sure how this would be handled. If it is to be a completely new solution, it will take time to get the infrastructure in place; but there are alternatives, such as the use of a carrier liquid, that could help accelerate the change. Vopak has to be prepared for any eventuality.

Carbon capture and storage or use will be vital too. Plötzke had already brought ideas of electrolysis and synthesis to the meeting and van de Kar offered some illustrations of how that might happen, for instance by cracking methane to generate hydrogen, while capturing the resulting carbon dioxide. He also addressed the shortage of electricity storage capacity, suggesting that this could be done through the use of charged liquids. Overall, though, it makes sense to electrolyse hydrogen where there is cheap electricity and ship it in some form to where it is needed.

These ideas gave a strong impression that there will still be a need for tank storage companies, though they will need to reinvent themselves to cope with future fuels. It is noticeable, for example, that Vopak has lately put much of its effort into areas such as LNG and in hub facilities that are closely linked to industrial consumers.

FETSA’s conference also featured presentations on the role of strategic storage, bunkering, digitisation and the role of automotive manufacturers in shaping the future of mobility. All these ideas will doubtless be pursued under the leadership of FETSA’s new executive director; it is worth keeping an eye on the Federation’s work at www.fetsa.eu. HCB