Decarbonisation Technology - February 2023

February 2023 Decarbonisati n Technolo gy Powering the Transition to Sustainable Fuels & Energy

INNOVATIONS IN CARBON CAPTURE & USAGE HYDROGEN & ROUTES TO SAF

REFINERIES IN TRANSITION

PLASTICS RECYCLING

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Contents

February 2023

Refining – what is the path of future growth? Alan Gelder Wood Mackenzie

Advanced plastics recycling Marc Yagoub Honeywell UOP

Raffinerie Heide: a refinery reinvents itself Sandra Niebler Raffinerie Heide GmbH

Insights from Shell Rheinland’s transition to net zero Jörg Dehmel Shell Energy and Chemicals Park Rheinland

Advances in carbon capture and hydrogen technologies Mei Chia Honeywell UOP

The techno-economic metrics of carbon utilisation – Part 2 Joris Mertens, Mark Krawec and Ritik Attwal KBC (a Yokogawa company)

Decarbonisation with CO2 utilisation: review of the GtL route Haralambos Panagopoulos Hellenic Petroleum, Part of HelleniQ Energy Holdings S.A.

47 Mineralisation to capture and use CO2 from steam methane reforming Stephen Harrison sbh4

Innovative technological paths for carbon dioxide capture Himmat Singh Formerly Scientist ‘G’ CSIR-Indian Institute of Petroleum

Take-off for cleaner skies starts now with SAF Milica Folic Topsoe

Stability and durability of water electrolysers Sakthivel. S TATA Consulting Engineers Limited

Decarbonisation of industrial process heating – electric heaters Brian Stubenbort Armstrong Chemtec Group

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THE JET FUEL OF THE FUTURE WAS INVENTED MORE THAN 10 YEARS AGO

Refiners are facing a new world and new markets as the drive toward sustainability accelerates. The endgame is to produce low-carbon, sustainable fuels while maximizing available resources and reducing waste. At Honeywell UOP, we have shaped the refining process since it began. As a global leader in sustainable fuel technologies, we helped pioneer the production of renewable fuels over a decade ago. Our continuous R&D investment and expertise is proven by recent innovations in ethanol to jet technology, expanding our portfolio of SAF solutions. We’ve reinvented the renewable diesel and jet fuel process to help you reduce carbon emissions. Our reimagined Ecofining™ process offers a fast, cost-effective roadmap to help turn underutilized assets into profit centers and make your business brand new again.

Learn more at uop.honeywell.com

Welcome to the February 2023 issue of Decarbonisation Technology . We open with an article on the outlook for 2023, which stresses the benefits of integrated refining and petrochemical operations, even as refiners adapt to produce low-carbon products from a diverse range of renewable feedstocks. The articles from Heide and Rheinland refineries show that while each refinery is developing its own strategy for the transition, themes common to all refineries are emerging. Efficiency is a win-win for the climate, the refiner, and the consumer. The production of hydrogen (low carbon intensity, blue, and green) and carbon capture from refinery (and industrial) processes are ongoing themes. For plastics, the waste hierarchy prioritises recycling over conversion. Processes for recycling plastics are mature and available at scale now. Reducing the amount of plastic entering the environment can only be done through partnerships between refining and petrochemical companies, local authorities, and waste management companies. Waste management systems that encourage a change in consumer behaviour will also be vital. This is true too for the management of end-of-life wastes, such as non-recyclable plastics and municipal solid waste, as well as agricultural and forestry residues. The recycling of plastics and utilisation of waste is another theme common for many refiners. 2023 could well prove to be a milestone year for carbon capture, storage and usage (CCUS). We are likely to see progress with government initiatives throughout Asia, including, for example, Malaysia and Indonesia, which are preparing to introduce regulatory incentives for CCUS. Process innovations giving rise to higher carbon capture efficiencies are emerging. In some regions of the world, the lack of suitable sites for permanently storing carbon dioxide is a barrier. Uses for CO 2 include options that require low carbon intensity hydrogen to produce gas- to-liquids, or e-fuels, as a means to decarbonise marine and aviation transport. Alternative options not requiring hydrogen are also discussed, such as mineralisation to form carbonates and bicarbonates with commercial value. Capturing carbon dioxide emissions from industrial flue gases is but a step in the drive to net zero. Net zero is but a step towards climate stabilisation. During COP27, the IPCC announced something that had become evident to most observers: we will overshoot the 1.5ºC target associated with net zero. Carbon removals from the atmosphere via natural processes, direct air capture (of carbon dioxide) technologies, and indirectly via carbon capture from oceans are now essential, both for short- term mitigation and, over a longer duration, reversal of the overshoot.

Managing Editor Rachel Storry

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Cover Story Distillation columns

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Refining – what is the path of future growth?

A look at the key risks and uncertainties for the oil and refining industry in 2023, and what it should invest in to become more resilient to the energy transition

Alan Gelder Wood Mackenzie

Refiners now have cash in the bank In hindsight, 2022 was a truly unprecedented year. Oil demand growth was forecast to be strong as the economy continued its recovery from the global pandemic. Russia’s invasion of Ukraine introduced huge geopolitical uncertainties, as Russia weaponised its energy exports in response to EU and G7 sanctions, causing energy prices to soar. The shadow of Covid-19 loomed large over China, with sizable parts of its petrochemical and manufacturing sector locked down for many months in the first half of the year. Central banks abruptly switched tack as rocketing energy prices stoked inflation. Recession fears started to loom large in the second half of the year. The EU’s crude import ban and G7 price caps on Russian crude oil came into force on 5 December 2022, with the refined product import ban scheduled for 5 February 2023. Looking back, global oil demand in 2022 was 99.0 million b/d, growing over 2 million b/d from 2021 but remaining just under 2 million b/d below pre-pandemic levels. Russian crude oil exports largely continued to flow but were diverted away from Europe to India, China, and Turkey. As we had been forecasting, global oil supply growth outpaced demand growth by almost 2.5 million b/d on a year-on-year basis, so oil prices weakened towards year end. Pandemic-driven refinery closures, self- sanctioning by many European companies, and low product export quotas from China tightened the refined product markets, with refining margins hitting record highs during the summer months. Consumers suddenly appreciated that

refining is another step in the value chain which links crude oil to retail fuels. The global refining system is still running in max distillate mode, with cracks for light distillates, such as naphtha and gasoline, very weak, particularly as over- supply and poor profitability now haunt the petrochemical sector. In our latest economic outlook, Wood Mackenzie expects some key economies to enter recession and the global economy to slump in 2023 before recovering in 2024. Global GDP growth is downgraded to 2.1% for 2023 – the weakest global expansion, outside of the Covid and global financial crisis contractions, since 2001. Europe is likely already in recession or will enter a downturn over the winter. In the US, we expect the Federal Reserve to continue the tightening cycle, with interest rates reaching a peak of 5-6% in Q1 2023. However, this is not a synchronised global recession. China’s economic growth will improve in 2023, although the growth path is likely to be bumpy and dependent upon the handling of the new Covid cases. The cessation of its zero-Covid policy will kickstart the domestic economy – we expect this will happen towards Q2 2023. Despite this economic uncertainty, 2023 oil demand is to grow by just over 2 million b/d, reaching over 101 million b/d and exceeding 2019 levels in the second half of 2023. Refining sector tightness should ease during 2023 as new sources of supply become available to the global market. Over 1.4 million b/d of additional refining capacity is scheduled to become fully operational over the course of 2023, enabling crude runs to increase to satisfy

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5-yr range

2023 2024

5-yr avg

2022

-5

Jan

Feb

Mar

Apr

May

Jun

July

Aug Sept

Oct

Nov

Dec

Figure 1 Global composite gross refining margin – historical and forecast, US$/bbl

diesel/gas oil demand, so easing the pressure the sector is facing. Our forecast is for refining margins to remain elevated during the first half of 2023 and then decline back to the top of the historical five-year range, as shown in Figure 1 . There are, however, several uncertainties, beyond the typical challenges of project completion and commissioning, that could disrupt this outlook: • China’s product export policies. This is a relatively new risk to the global refining market as China’s export quotas did not previously constrain the operations of its domestic refining sector. In 2022, China restricted exports, initially to both drive the rationalisation of the independent teapot sector and reduce its overall carbon emissions, as refining is considered a low value-added sector. In 2023, we are expecting exports to grow as China attempts to stimulate economic growth, particularly in the first half of the year. • The EU refined product import ban from Russia and price cap, to be implemented on 5 February. Given that very little of current Russian diesel/gas oil exports go much beyond Europe, the diversion of these flows could be disruptive. We expect Russian distillate exports to fall in Q1 2023 and this loss to then decline over time as global distillate flows re-establish themselves. The refining system returns to being heavily distorted if significant volumes of Russian exports are lost to the global market. • Russian exports of natural gas to Europe fell dramatically during 2022. Despite currently high gas inventories, the risk of high

European natural gas prices remains during 2023. This has a direct impact on European refinery operating costs and the cost of diesel production. Higher European operating costs are reflected in its regional product crack spreads, which provides a potential upside to refiners elsewhere. The current refining investment wave, focused on Asia and the Middle East, will be largely operational by 2025. There are limited capacity additions considered firm thereafter. The growth in refined product demand and additional refining capacity and other non-refinery sources of supply is well balanced. The margin environment for the refining sector looks healthy for the rest of this decade. Given that the risk of closure is low, refiners will hence have funds to invest. What do they invest in to become more resilient to the energy transition? What are the investment options to deliver resilience? There are many attributes of resilience, but we have simplified them to two key parameters: site profitability, measured as net cash margin (NCM), as positive cash flow is critical to sustain future investment requirements, and site emissions intensity, as relatively low carbon emissions can be a source of competitive advantage. Figure 2 categorises European refiners into four quadrants (based on their position relative to the regional volume- weighted averages for 2021), along with proposed investment strategies.

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CLOSE / DIVEST

REDUCE EMISSIONS

INVEST

TARGET

-6.0

-4.0

-2.0

2.0

4.0

6.0

NCM, US$/bbl

Figure 2 2021 Emissions intensity vs refining NCM for Europe for European refining sites

Emissions reductions focus on energy efficiency, adoption of low-carbon hydrogen, renewable power, and CCS deployment, along with the use of biomass/biogas for internal fuel and other such initiatives. The investment strategy for margin improvement is largely petrochemical focused, as petrochemical demand is forecast to continue to grow during the energy transition even as transport fuel demand falls. This opportunity is clearly shown in Figure 3 , which depicts the added value to integrated refiners of petrochemicals for 2021. From the middle of 2022, steam cracker and aromatic margins collapsed, driven by lower consumer demand in China and destocking in the petrochemical industry on the fear of recession. Integrated sites were not immune, but the benefits of integration remained. The record refining margins supported crude runs at

the integrated sites, pushing chemical co-products into a weak market environment, making life harder for the stand-alone petrochemical facilities. The 2023 outlook remains challenging for chemicals – despite certain parts of the chemical industry already in survival mode, it is the year of peak capacity additions in China, so margins will continue to weaken. There will still be value uplift from petrochemical integration, but it will be much more modest than in recent years. Major chemical players will focus on capital discipline and accelerate the rationalisation of smaller crackers with higher cost and higher unit energy consumption across Europe and Asia. China’s return to economic growth is a key uncertainty and a critical driver for the recovery of the petrochemical sector. Integrated sites also have a further advantage

8 10 12 14 16 18

-2

Chemicals , wt%

Figure 3 Global NCM uplift vs wt% petrochemicals by asset, US$/bbl, 2021

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100

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wt% non-combustible products

kg COe/bbl crude

60 70 80 90

400

350

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Figure 4 Refinery Scope 3 emissions intensity (each column represents a specific refinery site)

in terms of their resilience, as shown in Figure 4 . Whilst the responsibility for Scope 3 emissions along the hydrocarbon value chain remains unclear, several companies are including such emissions in their net-zero aspirations. We have benchmarked the Scope 3 emissions from over 500 refineries using Wood Mackenzie’s Refinery Evaluation Model - Chemicals. This detailed asset analysis shows that unless the yield of non-combustible products (including petrochemicals) is over half of the product slate, the Scope 3 emissions intensity for the entire site is largely in the range of 300 to 400 kg of CO2 per barrel of crude processed. The key risk associated with the cost of a refinery’s Scope 3 emissions is its location, as that will determine the carbon charge applied. The variation in carbon charges between two sites in different locations is likely to be far greater than the difference in their emissions

intensity. Beyond our usual competitiveness metric of net cash margins, location and the applicable carbon emissions legislation will be key to a site’s longevity. Biofuel circularity could unlock the energy transition for refiners Aside from petrochemicals and decarbonising operations, investment in biofuels can be attractive both commercially and as a means of lowering the Scope 3 carbon intensity of liquid fuels. Refiners in Europe and the US are shifting from fossil-based investments to adapt to the energy transition through hydrotreated vegetable oil (renewable diesel and sustainable aviation fuel), as detailed in Figure 5 . These investments reflect their growing commercial viability, which is regulatory driven. There is, however, a constraint, which is the availability of appropriate feedstocks. Our

350

Renewable diesel capacity , kb/d

Sustainable av ia tion fuel capacity , kb/d

300

Existing

Investment

Existing

Investment

250

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100

North America

Greater Europe Asia Pacic

North America

Greater Europe Asia Pacic

Figure 5 Regional hydrotreated vegetable oil capacity, kb/d

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new research offering, “Liquid Renewable Fuel Service”, will enable clients to assess the long-term availability and attractiveness of processing various agricultural feedstocks into biofuels. In the long term, municipal waste (including tyres), agricultural residue, and recycling waste plastics could be game-changers and drive biofuel adoption as part of the transition to a circular economy. Virtually none of this material is used as feedstock today. However, if technology delivers, it could supply an additional 20 million barrels per day (b/d) of low-carbon liquids by 2050, as depicted in Figure 6 . The refining sector will have to adapt to unlock the potential of circular, low-carbon liquids. The economics are challenging, so policy support will be needed to make this happen. This would be in national governments’ interest: biofuels can help achieve net-zero targets by converting fossil fuel-based refineries into sustainable businesses that underpin local employment, deliver circularity, and boost security of supply. The conversion of existing sites and the building of new sites to increase petrochemical integration and produce low-carbon liquids

2.3

8.7

7.5

4.5

Agricultural residue Forestry

Municipal solid waste Recycled plastic waste

Figure 6 Waste to biofuels 2050 global opportunity, million b/d

are the future business growth opportunities for refining.

Alan Gelder alan.gelder@woodmac.com

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Advanced plastics recycling

New chemical recycling technologies will supplement existing mechanical recycling

Marc Yagoub Honeywell UOP

T oday, 6% of oil consumption is used for the production of plastics. The current consumption pattern means that this will grow to 20% by 2040. Ninety per cent of the emissions associated with plastics occur during the production of the plastics, while less than 10% of emissions are associated with end-of- life disposal. Fossil fuels demand for fuel production is declining, with 2050 demand anticipated to be only 30% of 2022 demand. The 30% residual demand is comprised mainly of petrochemicals, but indeed, recycling of plastics will also chip away at that demand. Today the plastics economy is linear. We take crude oil, produce the plastic, then use it, often only once, and then throw it away as waste. Plastic packaging used, for example, as film for food packaging means the life of the plastic is only a few days or months, whereas structural plastics such as PVC tubing can have a usage lifetime of up to 35 years. Plastic packaging is the largest application (30%) but has the shortest life cycle. This means we generate a huge amount of waste, much of which ends up in landfill or incineration. Only 14% is currently collected for recycling, and then only 9% is effectively recycled (OECD, 2022). Ideally, the plastic waste should be collected separately, allowing for efficient re-use. Mechanical recycling Currently, the main way of recycling plastic is mechanical recycling (see Figure 1 ). The plastic has to be high quality and clean before it reaches a processing centre. It then has to be separated and sorted, which further limits the amount that can be recycled. Mechanical recycling, which requires less energy and is more carbon efficient than chemical recycling, is generally the preferred option. Mechanical

recycling works well for items that can be collected separately, such as HDPE and PET. Schemes such as deposit and refund for PET drinks bottles, in place in Germany, are proving to be effective in promoting separate collections for these plastics. However, mechanical recycling has its limitations. Plastic contaminated with organic matter, such as containers used for detergents and other chemicals, cannot be recycled for food contact uses. In Europe, you cannot add more than 5% of non-food recycled material into material for food packaging. As a result, plastic recycled from mixed plastic waste tends to be used in lower-demand applications, such as in school playgrounds and plastic benches. Mechanical recycling is, therefore, not an option Only 14% of plastic waste is currently collected for recycling, and then only 9% is effectively recycled for plastic waste collected as part of mixed municipal solid waste. For these reasons, mechanical recycling will not reduce the demand for virgin plastic on its own. Unfortunately, today, a big part of this waste (22% or 80 million tonnes) is mismanaged, and as many as 22 million tonnes are leaked into the environment. The OECD Global Outlook projects that unless action is taken on plastic waste collection and recycling, the amount of plastic entering the environment will double by 2060 (OECD, 2022). Plastic leakage to the environment, including microplastics, is already a major environmental problem. The Alliance To End Plastic Waste is clear recognition that manufacturers are taking this issue seriously

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Ocean plastic waste

Post-consumer plastic waste

Post-industrial plastic waste

Textile collection & baling

Flex plastic lm collection & baling

Municipal solid waste

Materials recovery facility

Methanol

Syngas

Gasication

Fuels/waxes/ lubricants

Land ll

Hydrogenolysis

Pyrolysis/ liquefaction

Dissolution- based approaches

Mechanical recycling

Waste incineration plant

Pyrolysis oil

Steam cracking

Catalytic upgrading

E x t r u s i o n

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Polymerisation

Resins with degraded prope r ties

Asphalt/ asphalt additives

Pure resins with virgin properties

Figure 1 Materials recovery facility incorporating mechanical and chemical recycling of plastics

(Alliance To End Plastic Waste, 2022). In a perfect world, 90% of all plastics should be recycled. For this to happen, there needs to be collaboration throughout the value chain. This starts with design and includes incentives that drive the right consumer behaviours. It then utilises best practices in waste management More needs to be done to standardise practice, increase consistency, and reduce confusion on what can be recycled and how to recycle with the separation and collection of plastic waste in combination with both mechanical and chemical recycling. Moreover, microplastics from cosmetics, paints, and the use of recycled PET in clothing fabrics are a significant route of plastic leakage to the environment, for which collection to

recover the leaked plastics is difficult. In the case of microplastics, recycling by design, for both the original materials and the way these are handled (such as laundry washing), is essential, i.e. tackling the problem at the source. Recycling by design makes it easier to recycle plastics by reducing the use of mixed plastic components and packaging, considering the colours and dyes used and also using labelling that is easy to remove from the used items. Circularity requires two elements. The first is an effective waste management collection system that eliminates waste leakage. The second is that participants in the value chain invest in new business models that span collection, sorting, and recycling to drive plastic circularity (McKinsey, 2022b). In developing countries, the priority is to introduce more effective waste management systems. However, in countries with well-developed waste management systems already in place, more needs to be done to standardise practice,

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increase consistency, and reduce confusion on what can be recycled and how to recycle. Consumer behaviour can include deposit/ refund schemes such as the scheme in Germany. However, it also covers the availability of separate collection schemes (different bins, recycling centres) to encourage the right behaviours. Advanced plastic recycling However, advanced plastic recycling (or chemical recycling) is the solution. The plastic is taken back to the molecule or monomers and so tackles two problems at the same time. It helps to drive down crude oil consumption, and it reduces the problem of waste plastic. Therefore chemical recycling is the only viable recycling option for plastics that currently go to landfill or incineration. An independent study showed that in comparison with incineration for energy, chemical recycling could reduce carbon emissions by 40% (Sphera, 2022). While mechanical recycling will still always have its role, chemical recycling is able to fill the gap for those plastics that cannot be recycled mechanically, such as mixed plastics multi-layered plastics, heavily coloured plastics, and most films and containers used for household chemicals. The pyrolysis process converts the plastic back to pyrolysis oil or recycled polymer feedstock (RPF) (see Figure 2 ). The Honeywell process technology is designed specifically for advanced plastics recycling. As such, the RPF is mixed with naphtha, which then is fed to a naphtha (or steam) cracker that converts the RPF back

to the monomers (ethylene and propylene). This overcomes the need to manage food-contact and non-food-contact plastics, but it also can be used for coloured plastic. Thus this can be used to manufacture virgin-quality plastic and creates a truly circular ecosystem for plastics. Pyrolysis technology is of great interest to all plastic manufacturers who have committed to increasing the content of recycled plastic in their products. More than 80 global Consumer- Packaged-Goods Companies (CPG) packaging and retail companies have made voluntary commitments to reach recycled content in their packaging between 15-50% by 2025 (McKinsey, 2022a). In October 2022, the Consumer Goods Forum “Coalition of Action on Plastic Waste” published a letter in which they signalled a demand for 800,000 tonnes of chemically recycled material by 2030, in addition to their needs for mechanically recycled materials (The Consumer Goods Forum, 2022). Importance of partnerships Earlier in 2022, Honeywell and TotalEnergies signed a non-binding strategic agreement to promote the development of advanced plastic recycling (TotalEnergies, 2022). This will help TotalEnergies meet its goal of producing 30% recycled and renewable polymers by 2030. Honeywell will supply TotalEnergies with Recycled Polymer Feedstock using Honeywell’s UpCycle process technology (see Figure 3 ). Separately, Honeywell and Sacyr have proposed a joint venture to build a new advanced recycling plant in Andalucia, Spain. The plant will convert 30,000 tonnes of

H oneywell U p C ycle

Mixed plastics waste

Recycled polymer feedstock

Otake & transport

Post-consumer resin

Recycled plastic products

Upgrading & polymerisation

36–43 kmta waste plastic at a 70%–80% yield 30 kmta into pyrolysis process Target mixed rigid or lm plastic bales for pyrolysis feed

Stable transportable recycled polymer feed (RPF)

Post-consumer resins (PCR) produced from polymer oil

Enables post- consumer resin

content in packaging

Figure 2 Honeywell’s UpCycle process technology uses pyrolysis technology to convert waste plastic back to RPF, which is then used to create new plastics

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Economical viable route for difficult to recycle plastics Convert regionally, near waste collection to a transportable feedstock Process the widest variety of plastic waste Optimisation between waste aggregation, sorting , and conversion Produce a consistent, contamin a nt - free , higher - quality, intermittent plastics feedstock

Recycled polymer feedstock

Melting

Shredding

Otake & transport

Up C ycle process

Upgrading & polmerisation

Creating high-value polymer oil from waste plastics

Sorting

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Post- consumer resin

Baling

Plastic products

Collection

Figure 3 Honeywell’s UpCycle process technology expands the types of plastics that can be recycled to include waste plastic that would otherwise go unrecycled

will mandate more ambitious targets on the minimum amount of recycled content in plastic packaging. Countries that were meeting the previous targets will now have to do more to remain compliant. Moreover, local governments and municipalities play a critical role in setting standards in partnership with waste management companies. Collaboration between plastic producers and recyclers, technology providers, waste management companies, and governments (national and local) is critical. Governments can further incentivise recycling via mandated minimum content of recycled material in products and components and reduce the amount of waste going to landfill by introducing landfill taxes. It is hoped that developments like Honeywell’s UpCycle process technology will serve to improve and increase the viability of plastics recycling and ‘close the loop’ on the problem of currently unrecyclable plastics. With the backing of regulatory and government bodies and with growing consumer understanding, this type of technology may pave the way for all plastic packaging to contain 30% recycled plastics by 2030 (American Chemistry Council, 2021).

mixed plastic waste into RPF, which would otherwise end up in landfill or incineration. TotalEnergies will use the RPF to produce high- quality polymers suitable for a wide range of applications, including food-grade applications, such as flexible and rigid food packaging containers. The proposed JV between Honeywell and Sacyr combines the hydrocarbon process technology and production expertise of Honeywell with Sacyr’s activities in engineering and construction, as well as waste management services. Local governments and municipalities Waste management companies understand mechanical recycling but are not proficient in chemical recycling. Yet, the requirements of the municipalities are changing, which, in turn, is stimulating interest in advanced plastic recycling technologies from waste management companies. Chemical recycling offers a new solution, important in renewing or winning tenders for waste management services with the municipalities. These service agreements can be for up to 10 years. As such, the tenders will need to include an assurance of compliance with recycling targets and new rules on how this is calculated that are likely to emerge over the duration of the agreement. In Europe, the latest review of the Waste Framework Directive has set higher targets for the rate of recycling. Similarly, the latest revision of the Packaging and Packaging Waste Directive

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Raffinerie Heide: a refinery reinvents itself

How Raffinerie Heide is driving innovation and pioneering the development of green hydrogen through its HySCALE100 and Westküste 100 initiatives

Sandra Niebler Raffinerie Heide GmbH

C limate protection and the energy transition are currently the big topics throughout Europe and, therefore, the top political issues in Germany. The challenge is to keep global warming below 2°C while providing sufficient energy to satisfy demand from domestic consumers and industries. Consistent decarbonisation of energy systems and sustainable raw materials are needed to achieve this. Energy-intensive industrial companies, such as Raffinerie Heide, play a key role. Raffinerie Heide: into a green future with innovative ideas Raffinerie Heide GmbH is Germany’s northernmost oil refinery, located in Dithmarschen, Schleswig-Holstein, close to the North Sea. It has an annual processing capacity of 4.5 million tonnes of crude oil, producing traditional petroleum products such as petrol, diesel, and aviation fuel. It also produces light heating oil and base materials for the chemicals industry. Raffinerie Heide is one of the most complex refineries in the world and among the best in terms of utilisation and availability, thanks to its strict standards of care in relation to maintenance. In partnership with others, Raffinerie Heide is one of the German refineries that politicians have entrusted with the task of finding economically viable and industrially feasible answers to the climate and energy security issues. It has been dynamically aligning itself for a new, greener future for several years now and is striving to actively help shape the energy transition in Germany. As in all decarbonisation

projects, the key element in northern Germany is green hydrogen. Multitalented hydrogen Hydrogen is multitalented. The most common element in the universe is not just vital for countless chemical processes but is an ideal and versatile secondary source of energy or energy carrier. As such, hydrogen plays a crucial role in integrated energy for the electricity, mobility, heat, and chemical sectors. Hydrogen can replace fossil energy sources in numerous applications, and experts have long considered it the key element in the energy transition. The German federal government also recognised this when they passed the National Hydrogen Strategy in June 2020. The National Hydrogen Strategy provides an operational framework for the future production, transport, storage, and use of green hydrogen. The strategy aims to establish hydrogen technology as a core element of the energy transition. The German federal government has given clear regulatory signals needed to support the construction of hydrogen plants with a total capacity of 5 GW by 2030. However, so that hydrogen does not have to carry a carbon rucksack during the decarbonisation of the energy system, grey has to become green. Schleswig-Holstein: an ideal location for a green hydrogen economy Along with Bremen, Hamburg, Mecklenburg- West Pomerania and Lower Saxony, Schleswig- Holstein is one of the Northern German states to have joined forces in the HY-5 green hydrogen

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Oshore wind

Business Park

Renewable energy

O heat

Electrolysis

Cement production O: Oxyfuel CO: Capture

H-pipeline

Cavern operation

Gas grid

Syn-gas

Renery Synthetic fuels (hydrocarbon)

Methanol synthesis

Syn-petrol

MeOH

Syn-kerosene

Westküste 100: industrial-scale green hydrogen and decarbonisation Source: www.westkueste100.de

initiative at the start of 2020. The goals of the initiative are to make Northern Germany the strongest region for green hydrogen in central Europe and to complete the value chain for green hydrogen. Together, the federal states want to build synergies for communication between the locations. The current ‘OECD-Bericht zur Regionalentwicklung: Metropolregion Hamburg, Deutschland’ started in the autumn of 2020 and confirms that Northern Germany is particularly well suited to developing a green hydrogen economy. The region has unique advantages as a location for producing renewables and a large potential market for purchasing green hydrogen, especially with the local industrial companies. The five federal states share a high level of experience and expertise in sustainable technologies and energies, as well as a high- performance infrastructure. In Germany, pioneers in wind energy have played a major role in shaping technical progress in this area. The expertise gained will be incorporated into the production and commercial use of green hydrogen in close collaboration with partners from industry, science, associations, and politics. Research on hydrogen technologies has been

carried out in the region for 30 years, and initiatives at state level have long established important networks that advance the topic economically, scientifically, and politically. Whether and how the use of this green hydrogen can succeed on an industrial – and economically viable – scale is currently being researched by Raffinerie Heide together with other partners in two innovative, high-profile projects: Westküste 100 and HySCALE100. Westküste 100 With Westküste 100, Raffinerie Heide – in a consortium of 10 partners – launched the first hydrogen project of the Reallabore der Energiewende (real-world laboratories for the energy transition) programme from the Federal Ministry for Economic Affairs and Energy in August 2020. The five-year project aims to use renewable energy from photovoltaics, onshore, and offshore wind in Northern Germany to produce green hydrogen to decarbonise heat, transport, and industry, avoiding around one million tonnes of carbon emissions per year. The project will receive funding of €36.5 million from the German Federal Ministry for Economic Affairs and Energy.

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The conditions for the initiative are unique, especially on the west coast of Schleswig- Holstein, a region with strong wind energy and excellent geological storage conditions and home to innovative companies. These storage conditions are a special feature of the Westküste 100 project. There are a number of underground caverns close to Raffinerie Heide. Salt caverns appear in the form of underground cavities as a result of a leaching process. Deep drilling is used to reach underground salt domes, which are extracted by adding water in controlled conditions and will be used to store green hydrogen. The aim is to convert the available but intermittent renewable energy sources (RES) into a continuous supply of energy for industrial use. Green hydrogen will be available even in times of ‘dark doldrums’. Westküste 100 real-world laboratory Once the electrolyser is operational with the subsequent use of green hydrogen, the real- world laboratory project will obtain fundamental economic, technological, and scientific findings. This will provide sound knowledge on the energy and material cycles, as well as their feasibility, necessary for future scaling up of the project. Cross-sector closed value-creation chains in the region should emerge in this way. The electrolyser will be integrated into the existing refinery process to demonstrate the production and direct industrial use of hydrogen. A cavern storage system nearby will be re-purposed as interim storage for

the hydrogen generated and, if required, provide it for industrial use. A hydrogen grid between the refinery, the cavern, and Heide Municipal Utilities (called Stadtwerke Heide) will be created in parallel. Innovative pipeline technology in the grid section between Raffinerie Heide and Heide Municipal Utilities will be put into operation for the first time. In this phase of the project, the partners will investigate how hydrogen can be integrated into the existing gas infrastructure in the long term. The admixing of green hydrogen in one section of an existing gas grid will enable the decarbonisation of the gas supply for heating. Two feasibility studies will also examine how the oxygen, co-produced via electrolysis, can be fed by a so-called ‘oxyfuel process’ into the firing process of the cement works in Lägerdorf and the carbon dioxide (CO 2 ) subsequently separated off. The CO 2 from the cement works and the hydrogen from the electrolyser may be used as feedstocks to a plant for the synthesis of methyl alcohol in the future. Following this, the exhaust gas can be treated to give high-purity CO 2 for use as a feedstock for the chemical industry and other business sectors. The studies provide fundamental data on the technical and economic feasibility of downstream CO 2 extraction and treatment for methanol synthesis. The methyl alcohol synthesis process can, in a step downstream from the Westküste 100 project, be a basis for producing synthetic fuels, such as aviation fuel. In addition, recovery and use of waste heat from the electrolysis

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Raffinerie Heide

Credit: Raffinerie Heide and Ingo Barenschee

process will be examined within the scope of Westküste 100. The various sub-projects of the Westküste 100 real-world laboratory ultimately provide integrated technical, scientific, and economic findings. These fundamental insights are the prerequisite for implementing the decarbonisation of the industry, the supply of heat, chemistry and mobility with an electrolysis output capacity of several hundred megawatts planned by the Westküste 100 partners following the conclusion of the project in the year 2025. Main work programme for Raffinerie Heide The Westküste 100 real-world laboratory is subdivided into seven main work packages (MWPs). Raffinerie Heide is leading two of these: MWP 1 and 3. In MWP 1, H2 Westküste GmbH, a joint venture between Hynamics Deutschland, Ørsted Deutschland, and Raffinerie Heide, was established for this purpose. The JV is responsible for selecting the technology, planning, construction, and commissioning of a 30 MW electrolysis facility using energy from RES. The JV partners will also observe and process all associated approval aspects. The electrolysis facility will be installed at the Raffinerie Heide site. The facility will be integrated with the existing processes in the refinery for a large-scale demonstration of the generation and use of green hydrogen. From the

operation of the electrolyser, insights into the maintenance, control, and operational concepts will be gathered for the Westküste 100 real- world laboratory project. Within MWP 3, work will be carried out on re-purposing and upgrading a cavern, near Raffinerie Heide, for storing the green hydrogen. The cavern will provide long-term storage and serve as a buffer tank in the overall system of Westküste 100. By storing the hydrogen, it will be possible to convert the available RES, such as wind power, into a continuous stream of material for industrial use, as the hydrogen will also be available in times of insufficient wind or sun (the dark doldrums). Once the cavern is in operation, the aim is to obtain additional insights into the control performance, response speeds, and data on the optimum integration of the cavern into a fluctuating system and formulate the scale-up to an electrolysis output of several hundred megawatts. In addition, the MWP 3 will manage the design and implementation of the upgrading of the cavern for hydrogen storage, as well as the construction of a hydrogen transfer route and manage the permitting process to obtain the necessary legal approvals. The vision: the 2025+ scenario At the Westküste 100 real-world laboratory, by 2025 an electrolysis facility with an output of 30 MW should provide insights into its operation, maintenance, and control before

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moving to the next scaling stage. This would require an electrolyser with several hundred megawatts, for which the electricity could be supplied via a direct connection to an offshore wind farm. HySCALE100 In 2021, Raffinerie Heide and other industry partners applied for the European IPCEI programme (Important Projects of Common European Interest) with the HySCALE100 project. The European Union (EU) launched the IPCEI programme in 2018 to build European value chains in this key technology, as many European countries recognised the potential for hydrogen and its derivatives. With the adoption of the National Hydrogen Strategy, Germany has taken a significant step towards positioning German industry within this development. The EU aims to network and promote these European hydrogen projects via the IPCEI programme. HySCALE100 has now been proposed for further consideration at the European level by the Federal Ministry for Economic Affairs and Energy (BMWK). The aim of the project is to use green hydrogen to decarbonise the two primary industries of cement and petrochemicals for the production of hydrogen and derivatives (methanol and olefins). It is hoped that the electrolysis plants required for this will go online in 2027. A refinery shaping the energy transition in Schleswig-Holstein With these two projects, HySCALE100 and Westküste 100, Raffinerie Heide aims to become a player in the energy transition in Schleswig- Holstein. With these initiatives and partners from industry, energy production, and science, it is driving innovation and pioneering the development of green hydrogen. It is a pacesetter for the energy transition in Northern Germany. Via the extension of traditional production processes to incorporate carbon-neutral energy sources and the production of synthetic chemicals, it is transforming into a utility company involved in achieving climate goals.

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Sandra Niebler presse@heiderefinery.com

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