Carbon-Free Energy and the Future of Fossil Fuels
2 September 2021
The petrochemical industry continues to offer potential in spite of decarbonization
2020 was a fairly difficult year for a great number of industries. However, a number of <...> areas remain on a firm footing. These are areas with a global reach, and are related to decarbonization. Across the globe, the number of such projects has only continued to grow. And from the point of view of industries, the petrochemical industry should be considered in the broad sense of the term. By this I also mean polymeric petrochemicals and gas chemistry, <...> which have proven to be pretty robust. Indeed, across several segments, there has even been growth on the whole. These areas <...> offer a great deal of potential. They will continue to grow in spite of decarbonization — Dmitriy Akishin, Director, Gas and Chemicals, VYGON Consulting.
Regulatory requirements to use low-carbon fuel are being drafted both in Russia, and in other countries
There is no getting away from it – we need to boost production of low-carbon fuel. First of all, we have our own requirements, which are set out in reference manuals for the best available technologies. The first 300 enterprises must fairly rapidly undergo ecological modernization from the point of view of environmental requirements. Secondly, in terms of primary industries, we are net exporters – we supply other countries more than we consume ourselves. <...> And our products have appeared in the list of goods which are today being reviewed in the European Union’s document on carbon tax. This specifically affects the chemical industry, metallurgy, and cement — Viktor Evtukhov, State Secretary – Deputy Minister of Industry and Trade of the Russian Federation.
The Russian budget remains reliant on hydrocarbon sales
Today, more than ever before, the future of hydrocarbons is a major issue. Given that they account for up to a quarter of Russia’s GDP and up to half of the federal budget, depending on prices, this is a critical question for the whole of our country. As the Ministry of Energy, we have set ourselves <...> the objective of fully capitalizing on the long-term opportunities that present themselves to us — Pavel Sorokin, Deputy Minister of Energy of the Russian Federation.
The move towards decarbonization is leading to significantly increased costs in the production chain
Overall, if we do not go too deeply into the climate agenda, the energy transition agenda, what implications are there for the sector? <...> Overall, there will be additional costs. <...> Somewhere in the supply curve <...> we will see changes. These may take the form of transnational carbon taxes, various environmental duties, or a change in consumer preferences. It will simply mean that an enterprise will incur additional expenses in order to sell a tonne of their product. This is true of oil, gas, and more complex polymers. It is crucial to maintain a competitive advantage in this area, so that if some producers drop out of this supply curve and lose their competitiveness, our enterprises maintain theirs — Pavel Sorokin, Deputy Minister of Energy of the Russian Federation.
Producers of low-carbon fuels have a chance to replace a product that has a harmful impact on the environment
We are currently working on a project to construct a methanol production plant in the town of Skovorodino in Amur Region. In the last few years, we have also carved out a niche in relation to the fossil fuels segment. <...> The global marine fuel market is worth an enormous USD 200 billion per year, according to assessments conducted by every agency. Currently, 100% of that market consists of fuel made from oil, which has a major negative impact on the environment. In 2020 the UN and <...> the International Maritime Organization launched a range of important initiatives aimed at reducing marine fuel emissions. Put simply, we could see the environmental screws being tightened. And this gives all producers of low-carbon fuels the opportunity to contest this enormous niche and take a place in it. According to numerous agencies, as well as our partners, methanol offers great potential here — Vadim Medvedev, Vice President, ESN Group.
Cooperation between industries is helping companies remain competitive while adhering to high environmental standards
The global climate agenda is creating specific rules of the game – not only with regard to our industry, but also primarily with regard to the extractive industries. Here, we are in effect playing the role of a highly skilled assistant. You did indeed cite examples of cooperation – the result of the work done in Tobolsk. Overall, this involves <...> inter-industry cooperation between oil and gas companies working together on associated gas, on processing by-products created in the process of oil extraction, of condensate stabilization. Now the situation is changing somewhat. <...> It seems to me that <...> with the help of the petrochemical industry, the future of fossil fuels is bright indeed — Mikhail Karisalov, Chairman of the Management Board, Chief Executive Officer, SIBUR.