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industrial factory

Electrifying Transport Alone Won’t Cut It

Decarbonizing oil refineries is essential — even in an electrified future.
By  TJ Conway,  Joseph Fallurin,  Shannon Hughes

The global electric vehicle (EV) market is growing rapidly, accelerated in the United States by a combination of incentives like the Inflation Reduction Act’s $7,500 EV tax credit and international policy decisions like the European Union’s planned phaseout of gas-powered cars by 2035. Global oil demand may soon peak, but we still have a long way to go in reducing oil use. Passenger vehicles — the easiest segment to electrify — only account for a quarter of total oil demand. Even if we succeed in backing oil out of most transport, including trucking, aviation, and shipping, net-zero scenarios show petrochemical demand continuing to grow. Many petrochemical products are essential for daily life, and a low-carbon energy transition will see growth in new uses.

Taking immediate action to cut emissions from oil refineries and petrochemical plants holds the potential for major climate wins, with a 1 percent reduction equivalent to taking 3 million gasoline-powered cars off the road. RMI’s latest report, Oil Refining Emissions Cut Points, outlines a full value chain approach to decarbonize an industry whose products are expected to play a role in the global economy for the foreseeable future.

Tracking Oil Refining’s Complicated Climate Footprint

The scale of the decarbonization challenge often correlates to the potential size of the win in the global race to cut greenhouse gas (GHG) emissions. Oil refining is a prime example where swift action to implement decarbonization measures could significantly accelerate progress toward the 50 percent cut in global emissions required by 2030 to avoid climate disaster. The refining and petrochemicals sector is a top emitter, with operational (Scope 1 and 2) emissions totaling 3 gigatons (Gt) of CO2 equivalent (CO2e) in 2019, equivalent to almost the entire emissions of the European Union that year. Combined with their products’ end-use, refining and petrochemical production can influence emissions nearly as much as global coal combustion.

Decarbonizing this sector is crucial for long-term climate stability but must be done in a manner that allows refineries to continue meeting near-term societal demand. Petrochemical products are currently completely interwoven with daily life, think clothing, plastic, cosmetics, and even toothpaste. And then there is the complexity of operating requirements to unfurl. The refineries in a single region can vary wildly in configuration, with complex refineries usually generating higher emissions. Sending crude oil to a poorly matched refinery by complexity or unit design can also create excess emissions. Whichever way we approach this challenge, it is clear that cutting refining emissions will require extensive planning and solid implementation.

As with other hard-to-abate sectors, there is no silver bullet. But there are numerous innovative steps that the refining industry can undertake to materially reduce emissions by 2030 — ranging from changing feedstocks to cutting process steam and heat emissions. The best opportunity of all lies within strategic targeting. Refining assets, and thus emissions impacts, are more consolidated than any other segment of the oil and gas value chain. Uniquely, less than 1,000 global refineries are the sole transformer of nearly all combusted oil versus the millions of wells filling thousands of oil tanks for billions of consumers.

Fixing Leaks and Flaring Pollution to Protect Communities and Climate

Stopping methane — with a climate impact 80x higher than CO2 — from entering the atmosphere via leaky gas pipes or flaring is the first (and relatively easy) step that can and should be taken to lower oil refining’s dual climate and local community impacts. Flaring is most common at refineries with low reliability, safety, and environmental standards — compounding climate risk with human health and safety consequences in lower-income communities. Flared material is less processed and less efficiently combusted than other refinery products, emitting pollutants that impact local lungs or worse. For example, during the 2021 restart of the Virgin Islands’ St. Croix refinery, unanticipated flaming liquids from the flare directly spread to the community, resulting in federal regulatory fines and eventual shutdown of the site.

Fortunately, routine maintenance at refineries presents a recurring opportunity to install gas recovery systems and fix operating inefficiencies that result in methane releases. From there, opportunities to reduce oil refining industry emissions become more complex and capital intensive.

Refining Decarbonization Requires a Full Value Chain Approach

The complexity of oil refining and petrochemical decarbonization requires a systems thinking approach that covers the full industrial value chain. During the current decarbonization era, refining must tackle two simultaneous challenges: (1) satisfy oil product and petrochemical demand even as the volume and composition of this demand shift dramatically, and (2) rapidly cut operational emissions, especially by replacing oil- and gas-based inputs and feedstocks with lower-carbon alternatives. In simpler terms, refineries must work backward. They will need to anticipate — and ideally shape — their future outputs in a net-zero world, and then transform their inputs accordingly.

There are three key themes for decarbonization priorities that must be thought about holistically given the limitations of focusing on any singular approach:

  1. Adjusting to changing fuel demand, such as vehicle electrification, as a means of scaling back refining capacity and emissions.
  2. Employing bio-based feedstocks derived from food system waste or forestry residue can be used to produce biofuels such as renewable diesel and sustainable aviation fuel (SAF).
    • Sustainable inputs cut refineries’ indirect (Scope 3) emissions without straying far from existing business models — a powerful incentive for companies looking to avoid a complete overhaul that could cut into profitability.
  3. A circular carbon economy (CCE) approach considers refining within broader priorities of reducing, reusing, recycling, and removing carbon across economic sectors.
    • Though standard mechanical recycling is the preferred option on cost, energy use, and GHG intensity, only about 20 percent of plastics currently meet the financial return threshold to be sustainably recycled mechanically.
    • Producing methanol from the waste gas associated with the Fluid Catalytic Cracking (FCC) process, used to create products like gasoline and diesel, can open the door to new carbon capture and utilization business models.

We are now in code red for our climate and need to accelerate deep decarbonization to reach net-zero emissions by 2050. That means transforming global demand for energy and dramatically cutting the use of oil and gas, which make up over half of human-made emissions on a life-cycle basis. To plan emissions reductions appropriately, we must consider what demand will look like 10 or 20 years from now. Successful decarbonization strategies must address cutting direct emissions in the oil refining system while meeting consumer demand for that time.

Until we find commercially viable alternatives to hydrocarbon use in hard-to-abate sectors, we must seize opportunities to cut oil and gas sector emissions.

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