Decarbonisation Technology - May 2024 Issue

May 2024 Decarbonisati n Technolo gy Powering the Transition to Sustainable Fuels & Energy May 2023

Powering the Transition to Sustainable Fuels & Energy

UTILISATION OF CAPTURED CARBON RENEWABLE HYDROGEN & HYDROGEN SAFETY RECYCLED ALUMINIUM OVERCOMING GRID CONSTRAINTS

SUSTAINABLE AVIATION AND MARINE FUELS PRE-COMBUSTION CARBON CAPTURE TECHNOLOGY PATHWAYS FOR SAF DECARBONISATION OF REFINING VALUE CHAINS

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Contents

May 2024

European refiners need to shift from volume to value Alan Gelder Wood Mackenzie

Technology pathways for sustainable aviation fuel (SAF) Svetlana van Bavel and Chippla Vandu Shell Catalysts & Technologies

Towards net zero with synthetic fuel gasoline Constanza Berckemeyer CAC Engineering

Low-carbon hydrogen potential with autothermal reforming Phil Ingram Johnson Matthey Integrating CCS and synthetic fuels production in a refinery Juan Carlos Latasa López IDOM Consulting

Pre-combustion carbon capture Stephen B Harrison sbh4 Consulting

45 Could carbon capture be the key to decarbonising heavy industry? Suzanne Ferguson Wood

Recycled aluminium: a key enabler in the energy transition William Beer Tunley Environmental

Decoding the complexities of decarbonisation Bamrung Sungnoen, Wiwut Tanthapanichakoon and Khavinet Lourvanij SCG Chemicals

Pongsatorn Anukulnaree Thai Polyester Company Apinan Soottitantawat Chulalongkorn University Electrification as a pathway towards a green refinery Damien Feral Schneider Electric

Life cycle assessment at industrial scale Daniel Bochnitschek AllocNow GmbH

Overcoming grid constraints via energy management solutions Stuart Little Powerstar

77 Zeopore is making its mark in green applications through zeolite modification

©2024 . The entire content of this publication is protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the copyright owner. The opinions and views expressed by the authors in this publication are not necessarily those of the editor or publisher and while every care has been taken in the preparation of all material included the publisher cannot be held responsible for any statements, opinions or views or for any inaccuracies.

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The world’s energy system is changing. To solve the challenges, Shell Catalysts & Technologies is developing its Decarbonisation Solutions portfolio to provide integrated value chains of technologies to help industries navigate the energy transition. Our experienced teams of consultants and engineers draw on Shell’s owner–operator– licensor expertise to co-create pathways and technology solutions to address your specific decarbonisation ambitions – creating a cleaner way forward together. Learn more at shell.com/decarbonisation. Accelerating decarbonisation solutions together

Combatting climate change is the greatest endeavour mankind has ever embarked upon. Developing new technologies that drive the transition from fossil to renewable sources is in itself a major challenge, but it is just the start. Bringing those technologies to market and then deploying them on a global scale, with the aim of making fossil energy sources redundant, is the next major step. The drawdown of carbon dioxide from the atmosphere to permanently store or to use it in combination with renewable hydrogen is highly ambitious in concept and scope. Then, there is a need to ensure a just and affordable transition. Worldwide, many people will benefit directly from the transition either via short-term employment or long-term careers in research and development, engineering, project management, data management, and operational roles. Nonetheless, the energy transition requires that we account for the cost of emitting carbon dioxide and other greenhouse gases. This will drive an increase in the cost of energy for consumers, even though this may be partially offset by increasing energy efficiency, in transport, manufacturing processes, domestic heating, and cooling. As it matures, the circular economy drive for reuse and recycling can create a materials efficiency that complements energy efficiency. The timescale of the transition is another consideration. 2050 is just over 25 years away, which, in the context of the United Nations Framework Convention on Climate Change (UNFCCC) net zero goal, is not very long at all. However, 25 years is beyond the planning horizons for most businesses and, indeed, national governments. By definition, investors expect a return on their investments commensurate with the risks associated with commercialisation of new technologies and a fundamental shift in energy from fossil- based to renewables-based systems. Industrial enterprises, governments, and investors must all work together to minimise these risks and stay the course. Governments need to be more honest with their electorates in explaining that we all face an increase in costs resulting from climate damage and that this will only begin to ease once the climate is stabilised. We must also adapt to higher energy costs. The combination of the cost of climate damage and higher energy costs leads to a higher cost of living. This is a multi-generational issue, and the longer we take to act, the higher the cost. Everyone will be impacted, and while the onus is on industry, governments, and the financial markets to deliver the technologies required, we must all consider what we can do as individuals. For nine billion people to live well on this planet, we will need to learn how to live within personal environmental constraints and planetary boundaries.

Managing Editor Rachel Storry

rachel.storry@emap.com tel +44 (0)7786 136440

Consulting Editor Robin Nelson robin.nelson@ decarbonisationtechnology.com

Editorial Assistant Lisa Harrison lisa.harrison@emap.com

Graphics Peter Harper

Business Development Director Paul Mason info@decarbonisationtechnology.com tel +44 844 5888 771

Managing Director Richard Watts richard.watts@emap.com

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Cover Story The Pearl (gas to liquids) GTL plant Doha, Qatar. MENA Courtesy: Shell Global

Dr Robin Nelson

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CO 2 Catch it ’cause you can!

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European refiners need to shift from volume to value Now is the time to plan for the impact of the energy transition and establish how to secure value growth through diversification away from transport fuels

Alan Gelder Wood Mackenzie

Refining has enjoyed unprecedented profitability The low point of the global pandemic feels a long time ago for the refining sector. During early 2020, one-third of the global population was locked down to slow the spread of Covid-19. Oil demand collapsed by more than 20 million bpd, and refiners were hit hard. Global oil demand in 2024 continues to set records, with 2023 demand already above pre-pandemic levels. The only transport fuel still below 2019 levels is jet fuel, as the fuel efficiency improvements from newer planes are offsetting the return to pre-pandemic levels of passenger numbers. Geopolitical tensions are supporting refining margins, particularly in Atlantic Basin locations, as both the Russia/Ukraine conflict and the Red Sea disruption are making global trade of crude oil and refined products less efficient.

Figure 1 shows the historical weekly global gross refinery composite margin over the past five years. The bottom of the five-year range was set by the pandemic, with the top of the range set by 2022, when the Russia/Ukraine conflict spread fear of significant supply loss. Refining margins for 2023 were less skewed by geopolitical events. However, Q3 2023 margins were driven by a combination of low European distillate stocks, high maintenance in the Middle East and Asia, and a low distillate yield from European refiners, which were processing much larger volumes of light, US tight oil feedstocks. Refining margins in 2024 spiked in February in response to the Red Sea disruption, which caused a significant diversion of inter-regional trade through the much longer route around southern Africa rather than the Suez Canal. The impression that refining margins will remain above the five-year historical average

5-yr range 2023 2024 5-yr avg

5-yr range 2023 2024

5-yr avg 2025

1 4 7 10131619222528 3134374043464952 Week No. -4

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -5

Figure 2 Ex-RVO global gross refinery composite margin – monthly forecast Source: Wood Mackenzie Product Markets Service Short Term

Figure 1 Ex-RVO weekly historical global gross refinery composite margin Source: Wood Mackenzie Product Markets Service Short Term

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2027 Global liquids demand from light vehicles peaks; Global energy use (or combustion) of liquids excl. biofuels peaks

2041 Global liquids demand in aviation peaks

Pre-2020 Demand in industry, power generation, RCA* peaked in 1979. By 2019, demand fell by 55% (power generation), 40% (industry) and 5% (RCA)

Post-2050 Global non-energy use

2028 Global demand peaks for diesel/gasoil (excl. biodiesels)

2033 Global liquids demand in road freight peaks

(or non-combustion) of liquids use continues growing by 2050

2043 India liquids demand peaks

2039 Global jet fuel (excl. biojet) demand peaks

2032 Global liquids demand peaks

2044 L iquids demand peaks in Latin America

2026 US liquids demand peaks

2025

2035

2020

2030

2045

2050

2033 Asia Pacic liquids demand peaks

2025 Global marine oil demand peaks

2040 Middle East liquids demand peaks

2041 Russia & Caspian liquids demand peaks

2029 Global liquids demand in transport peaks

Pre-2020 Liquid demand peaked in OECD Asia Pacic by 1997 and in Europe by 20 0 6

2027 China liquids demand peaks; Global demand peaks for gasoline (excl. ethanol)

2035 Global LPG demand peaks

Post-2050 Africa liquid demand continues growing by 2050

*Residential, commercial, and agriculture

Figure 3 Peak oil demand by sector, product, and region Source: Wood Mackenzie Product Markets Service

is, however, flawed. Global composite refining margins are likely to decline as we progress through 2024 and the wave of new refining projects in Africa, Asia, and the Middle East become fully operational, with more than 2 million b/d of refining capacity scheduled for this year. Figure 2 shows the short-term outlook for the global refinery composite gross margin, which is back to (or below) the five-year historical average later this year and for 2025. The energy transition is a disruptive megatrend for refining Refining margins are unlikely to return to the unprecedented highs of recent years. The challenge for refiners is how to continue value growth in their businesses as the energy transition takes hold. The adoption of electric vehicles in the passenger car segment is the leading edge of the energy transition that will further decouple economic activity from oil demand. Oil demand has already peaked in the industrial and power generation sectors and in regions such as Organisation for Economic Co- operation and Development (OECD) Asia Pacific and Europe. Figure 3 shows how peak oil demand is set to come in waves across sectors and regions, with global oil demand peaking within a decade and then starting to decline. The peak in demand masks two contrary developments; first, the

declining role of oil in energy use, primarily for transportation, and second, the growing demand for oil as a petrochemical feedstock. Mature OECD economies such as Europe and North America will lead the decline in oil demand for transport use as vehicles become more fuel efficient and increasingly electrified. Peak oil demand is a direct threat to the refining sector, as declining demand lowers global refinery utilisation and profitability, leading to the closure of competitively weak sites. Refiners based in regions of falling domestic demand will become increasingly reliant upon the export market to retain high utilisation levels. This will be in direct competition with refiners in destination markets. Given that peak oil is not projected to occur this decade, refinery utilisation will be set by the balance between demand growth and new refining capacity currently under development. With global refining capacity to rise by 2.3 million b/d by 2030, lagging demand growth, refinery utilisation is to remain healthy during this decade, as shown in Figure 4 . Healthy refinery utilisation typically delivers refining margins that sustain operations, providing cash flow for future investments. However, with refined product demand in structural decline in regions such as Europe, refiners need to plan to adapt if they are to remain commercially viable after global oil demand has peaked.

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It is critical in a globally competitive commodity market such as refining to understand the relative competitive position of your site. Wood Mackenzie measures competitiveness in terms of net cash margin, but given that the energy transition drives towards lower emissions, it is important to assess relative carbon emissions from refining operations. Figure 5 shows the distribution of assets when assessing net cash margins and emissions intensity, categorising sites into four quadrants. The ‘target’ quadrant is the important place – above-average net cash margin and below-average emissions intensity. Moving from other quadrants into the target involves either investment to add value or emissions reduction. The requirement for both suggests to us that such sites may be at risk of closure or divestment from the portfolio (by owners who have multiple sites). Decarbonisation of operations is a key focus for European refiners due to their exposure to the high cost of emissions from the EU’s emissions trading scheme. Europe’s introduction of the carbon border adjustment mechanism puts site decarbonisation not just on the agenda of refiners in Europe but also refiners who export product to Europe, the US, the Middle East, China, and West Coast India. Value drivers beyond refining are essential Given that the energy transition turns oil demand growth negative in the early 2030s, investments to sustain value growth need to be in sectors beyond transport fuels.

65% 67% 69% 71% 73% 75% 77% 81% 79% 85% 83%

120

110

100

Crude intake CDU capacity Average utilisation rate

2010

2020

2030

2040

2050

Petrochemicals and liquid renewables are the obvious candidates. Petrochemicals is the traditional extension of the refinery value chain, as there are synergies in the production of both fuels and commodity chemicals in an integrated facility. Petrochemicals typically achieve significantly higher prices than transport fuels and so add value. The value uplift does, however, depend upon the health of the petrochemical sector. Figure 6 shows this, as in 2021, the value uplift from petrochemicals was strong. However, in 2022, there was little additional value as the Russia/Ukraine conflict drove transport fuel crack spreads to unprecedented highs. During the latter part of 2022, a significant surplus petrochemical capacity emerged in China. Despite this apparent contradiction, integrated sites demonstrate: Figure 4 Global refinery capacity, utilisation, and throughput Source: Wood Mackenzie Product Markets Service

700

Median

Close/divest

Reduce emissions

600

500

400

Median

300

Integrated site Rening-only site

200

100

Invest

Target

-25

-15

-5

5 Integrated NCM ($/bbl)

Figure 5 Emissions intensity vs Integrated NCM, Global, 2021-2022 Source: REM-Chemicals, PetroPlan

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use. That legislation typically requires a growing proportion of the energy used in transport to be renewable, with mandates on the use of advanced biofuels from non-food feedstocks and renewable fuels of non-biological origin (RFNBO). The European Union has mandates on the minimum share of sustainable aviation fuel (SAF), which rises from 2% in 2025 to 6% in 2030 and 70% in 2050. An increasing fraction of the SAF is to be RFNBO based. In the EU, the penalties for non-compliance are severe. Similarly, in the US, demand for biofuels is driven by a portfolio of policies at both the federal and state levels. At the federal level, the US Renewable Fuel Standard (RFS) requires transportation fuels to contain an increasing share of renewable fuels. Oil refiners and importers are required to blend or supply their share of a renewable volume obligation (RVO), the compliance cost of which is measured through Renewable Identification Number (RIN) credit requirements. There are additional credits available, such as the Blenders Tax Credit, which is to be replaced in 2025 by the Clean Fuel Production Credit (CFPC). This provides a $1/gallon credit for blending fuels with greater than 50% emissions savings. Individual US states have their own incentives and regulations. California’s Low Carbon Fuel Standard (LCFS) programme is the most ambitious, requiring a reduction in the carbon intensity of road transport fuels in the state over time. Current biofuels production uses traditional technologies such as fermentation to produce ethanol using corn and sugarcane as feedstock and transesterification to produce biodiesel (FAME) using vegetable oil as feedstock. Fuel product quality specifications, however, have limits on the ethanol content of gasoline and FAME content of diesel, which limits the use of these biofuels. The next phase of renewable liquid supply growth is driven by hydroprocessing technology using waste oils and fats as feedstock to produce HVO/renewable diesel and SAF. Our outlook for margins for waste-based biofuel production remains healthy. In fact, biofuel unit margins for some combinations of feedstock and technology are many-fold better than fossil fuel refinery margins in the longer term. So, refiners can improve their competitiveness by

10 15 20

2021

5 0 -5

-10

0 10203040 50 Chemicals (wt%)

60 70

A O PO AO APO OPO AOPO

10 15 20

2022

5 0 -5

0 10203040 50 Chemicals (wt%) -10

60 70

• Higher value from olefins rather than aromatics, with polyolefins adding the most value. • The higher the yield of chemicals, the greater the benefit of petrochemical integration. • Integrated sites are highly competitive compared to standalone fuels refiners with the flexibility to switch yields between fuels and chemicals. This suggests that a pivot towards petrochemicals needs to be material to capture significant value and position a site in the target quadrant. Such an investment is unlikely to be available to all, as any petrochemical investment needs to be sufficiently large to be competitive against grassroots facilities currently under development. A further challenge is that our closure threat analysis shows that although petrochemicals can add value, that value may not be sufficient to overcome the challenges and losses from a competitively weak refining asset. Liquid renewables offer a path to sustainability and circularity, but not without challenges There are alternative approaches to the development of a business that is robust to the energy transition, as legislation requires the continuous reduction in transport carbon emissions through growing renewable energy Figure 6 Refinery NCM uplift from petrochemicals. Key: A: aromatics, O: olefins, PO: polyolefins, AO: aromatics and olefins, APO: aromatics and polyolefins, OPO: olefins and polyolefins, AOPO: aromatics, olefins and polyolefins Source: REM-Chemicals

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200

150

100

Crude oil rening HVO production

-50

-100

2010 2011

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Figure 7 La Mède earnings (with HVO forecast from Liquid Renewable Fuels Service)

co-producing biofuels or developing dedicated biofuel production facilities. Refiners with a weak competitive position, located in declining demand centres such as Europe and parts of the US, are already converting some refinery sites into bio-refineries or co-producing biofuels. A small bio-site is often a more attractive business than a larger, competitively weak crude oil refinery, as shown in Figure 7 . Having secure access to a supply of waste feedstocks is a key competitive advantage in the supply of such biofuels, as waste feedstock availability is limited. Investments are not just needed in building processing capacity but also in the development of feedstock supply chain infrastructure. The whole aggregation industry must transform by improving collection methods and developing capabilities to make the supply chain efficient. Feedstock supply can be secured by several strategies, including partnerships, acquisitions, equity investments, and developing one’s own supply chain and renewables, new production technologies, such as alcohol-to-jet, biomass pyrolysis or gasification, and the Fischer–Tropsch process, will need to be scaled up and enable a wider range of non-food feedstocks. Many of these technologies are either at nascent stages of development or are capital intensive and require significant amounts of low-carbon hydrogen. Conclusion Refining has recently benefited from geopolitical events, which have reduced the intensity storage infrastructure for collection. To meet long-term policies for liquid

of global competition through introducing inefficiencies in the trade of Russian exports and inter-regional trade via the Red Sea. Wood Mackenzie’s long-term outlook for refining suggests refining margins will remain healthy over the medium term but not repeat the highs of recent years. Refining is an industry with long lead times for investment, so now is the time to plan for the impact of the energy transition, “ European refiners are competitively weak, so it is necessary for them to adapt first and shift their businesses from volume to value focused, with waste-based liquid renewables and RFNBOs providing the opportunity for re-invention ” which will result in the demand for fossil- based refined products peaking and then declining. The outcome of ‘doing nothing’ is clear – the pandemic taught us that. Now is the time to plan to adapt and establish how to secure value growth through diversification away from transport fuels. Many European refiners are competitively weak, so it is necessary for them to adapt first and shift their businesses from volume to value focused, with waste- based liquid renewables and RFNBOs providing the opportunity for re-invention.

Alan Gelder alan.gelder@woodmac.com

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Capturing green opportunities

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Technology pathways for sustainable aviation fuel (SAF) To meet CO 2 emissions reduction targets by 2050, accelerating the development and deployment of SAF is the best option to decarbonise the aviation industry

Svetlana van Bavel and Chippla Vandu Shell Catalysts & Technologies

R efiners have successfully utilised easier- to-process used cooking oils (UCO) and animal fats to produce bio-SAF for some time. Given concerns about the limited availability of these feedstocks, fuel suppliers will need to process more challenging feedstocks, such as biomass residues and renewable (green) hydrogen and carbon dioxide (CO₂). In particular, synthetic aviation fuels (eSAF) made using power-to-liquids (PTL) technology have high potential owing to the virtually limitless supply of feedstocks, namely solar and wind energy or nuclear power, water, and CO₂. Combining the production of eSAF using PTL and bio-SAF made using biomass- to-liquids (BTL) technology can be an enabler for early projects. Crucially, the technologies for eSAF and bio-SAF have high technology readiness levels. Aviation is one of the fastest-growing sources of greenhouse gas (GHG) emissions and one of the most challenging sectors to decarbonise. At present, aviation is responsible for a relatively small proportion of global GHG emissions, viz. 3% in 2019, though the environmental impact of air traffic goes beyond CO₂ emissions, as the formation of contrails and clouds amplifies its overall climate effects. Although air travel fell significantly during the COVID‐19 pandemic, it rebounded strongly in 2023, coming very close to the pre-COVID peak level, and is expected to continue to grow. While advances in aircraft design have enhanced operational efficiency, with newer models consuming up to 20% less fuel, the surge in air traffic can be expected to negate these gains. As a result, international aviation

could contribute up to 22% of global carbon emissions by 2050. Difficulties in decarbonising aviation can be attributed to several factors. Aircraft have long lifespans so it would take decades to replace the existing fleet. Safety requirements mean high scrutiny and long lead times for the adoption of new technologies, such as battery-electric or hydrogen-powered aircraft, especially for long-haul flights. Consequently, the industry will continue to rely on high-energy-density fuels such as kerosene for decades. In addition, there are significant costs associated with many decarbonisation solutions, especially solutions that require modifications to aircraft and fuel supply infrastructure. The aviation industry will, therefore, need to use all available solutions and measures to decarbonise – no single solution will be enough on its own – and SAF is the only scalable in-sector option to help materially reduce emissions in the period to 2050. Specifications for SAF ensure it can be used as a drop-in fuel, allowing it to be blended with conventional kerosene-based jet fuel and used in the world’s existing aircraft fleet without the need for redesign or upgrade. When used unblended, currently available SAF, made from hydroprocessed esters and fatty acids (HEFA), has the potential to cut “ SAF is the only scalable in-sector option to help materially reduce emissions in the period to 2050 ”

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ReFuelEU Aviation

2025

2030

2032

2035

2040

2045

2050

% SAF mandate

20%

34%

42%

70%

of which: Aviation biofuels and recycled carbon fuels (from waste) % synthetic aviation fuel (eSAF) from renewable power (including nuclear)

4.8%

15%

24%

27%

35%

1.2%

10%

15%

35%

Table 1 Evolution of SAF incorporation between 2025 and 2050 (EU regulatory framework and decarbonisation strategy)

life-cycle carbon emissions by up to 80% compared to conventional jet fuel. SAF made of bio-residues (bio-SAF) and synthetic aviation fuels made from renewable power, water and CO₂ (eSAF) can achieve even higher life-cycle emissions reductions. Whereas 100% SAF is being developed and tested, SAF is currently limited to blends of up to 50% with conventional jet fuel. There are indications that the highly paraffinic nature of fuels such as SAF produced through Fischer– Tropsch-based BTL or PTL pathways can have benefits by reducing particulate matter emissions and contrail formation. Drivers of SAF adoption Passenger attitudes and regulatory frameworks are the main drivers for SAF adoption. Passengers’ awareness of environmental sustainability is rising, compelling the aviation industry to explore and adopt low-emission alternatives. Although high-quality offset schemes continue to play a role, there is a notable rise in interest in SAF. Perhaps more relevant, however, are the regulatory

frameworks and incentives in place in the EU and the US. In the EU, legislation sets targets and obligations for overall SAF supply, with sub- targets for eSAF supply (see box opposite for definitions). The Renewable Energy Directive II (RED II) is the legal framework for the development of clean energy across all sectors of the EU economy. In addition, the recently adopted ReFuelEU Aviation regulation requires aircraft operators, EU airports, and aviation fuel suppliers to reduce the EU’s GHG emissions from aviation with mandated levels for SAF supplied in EU airports. These mandated levels, summarised in Table 1 , are relatively modest for 2025 but will escalate rapidly over time to 70% SAF incorporation in 2050, half of which should be eSAF. Table 2 shows that a minimum production volume of 8,900 ktpa of SAF will be required by 2035, of which 2,200 ktpa should be eSAF (these figures are likely to be conservative as they are based on the 2019 EU jet fuel market and exclude potential market growth). It should be noted that imports are allowed, so the SAF does not have to be produced in the EU, just supplied in the EU. In the US, the adoption of SAF is encouraged through tax credits, specifically under the Inflation Reduction Act at the federal level, in addition to specific state-level Low Carbon Fuel Standard credits, stimulating domestic production. Although the outlook for SAF- specific tax credits remains uncertain beyond 2027, alternative incentives, such as the 45Q tax credit for carbon capture and storage and the 45V credit for clean hydrogen, are in

Pre-COVID-19 jet fuel consumption

2030

2035

EU jet fuel market in 2019 (excl. UK) = 44 Mtpa SAF supplied in EU, ktpa 2,700

8,900

of which: synthetic aviation fuel (eSAF) supplied in EU, ktpa

530

2,200

Table 2 Projections of EU SAF requirements by 2030 and 2035 (based on the 2019 EU jet fuel market, so likely conservative estimates)

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SAF, bio-SAF, and eSAF: What is the difference?

Renewable energy

CO point sources

Direct air capture

Agri residues, wood waste, municipal solid waste, energy crops

Vegetable oils, algae

Used cooking oil, animal fats

rNG Anaerobic digestion Gas gasication (SGP)

Water electrolyser

Reverse water gas shift

Torrefaction

Fermentation

Syngas to alcohol

Solids gasication

Hydrotreating: Shell R enewable R efining P rocess

Shell Fi b er C onversion T echnology

Hyrdo- pyrolysis

Alcohol to jet

Fischer – Tropsch

Hydroprocessing

Synthetic aviation fuel

Bio-SAF

Figure 1 SAF feedstocks and processing pathways

place until at least 2032. These provisions can contribute to the viability of specific SAF-related projects in the US. SAF feedstocks and technology pathways Regulatory frameworks, such as the EU’s RED II and ReFuelEU Aviation, define SAF incorporation targets and specify feedstock types. In the EU, UCO-based diesel comprises a substantial 19% of total biodiesel consumption, and this is projected to double by 2030. Despite the relative ease of processing through hydrotreating, this feedstock faces supply Broadly, there are three types of SAF – bio-SAF, recycled carbon fuel (RCF), and eSAF – and numerous technology pathways to create them (see Figure 1 ). Bio-SAF feedstocks can be classified into three groups: • Vegetable oils (such as canola or corn oil) and algae. • Waste oils and animal fats, such as UCO. UCO is a byproduct of the food processing and hospitality industries and one of the most mature feedstock options for biofuel production. • A range of wastes and residues derived from agricultural and forestry activities (such as straw and bark, and other fruit and vegetable residues

limitations, particularly as the industry seeks to scale up production to make a more substantial impact on reducing carbon emissions. Although more challenging to process, organic feedstocks such as agricultural residues and biowaste can be processed using a variety of methods. An example is Shell Fiber Conversion Technology, which converts lignocellulosic biomass such as wet distillers grains from corn ethanol plants into enhanced-protein animal feeds, distillers corn oil, and cellulosic ethanol. Ethanol of any origin, including ethanol manufactured through biochemical and waste); materials from natural conservation practices (including urban maintenance of green areas, branches and leaves); and urban or industrial non-recyclable waste. In the case of non-recyclable waste containing both biogenic and non-recyclable plastic components, resulting SAF under EU regulations would be seen as partially bio-SAF and partially RCF. eSAF is produced by combining renewable power, water, and CO₂. In the EU, when renewable power is used to make hydrogen, the resulting eSAF qualifies as a renewable fuel of non-biological origin (RFNBO) under RED II.

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fermentation, can be converted into jet fuel via alcohol-to-jet (ATJ) technology. Another option is to produce methanol from CO₂ and hydrogen (via syngas manufacturing steps or directly) and then convert the methanol into SAF via oligomerisation and hydroprocessing steps. Technology for methanol-to-jet has yet to be fully de-risked and scaled up. However, it is at the advanced stage, and the resulting jet fuel is undergoing certification to qualify as a blend-in component of conventional jet fuel. As previously mentioned, aviation fuel made via Fischer–Tropsch pathways and ethanol-to-jet has been approved for aviation use in blends up to 50% with conventional refinery kerosene, viz. standard Jet A1. Although a proven technology, the production of bio-SAF relies on the availability of sustainable biomass residues, a resource not universally accessible across all regions. This geographical variability, together with potential competition with food production, has prompted EU policymakers to restrict the production and use of bio-SAF to 50% of the total SAF in 2050 (Table 1), with eSAF making up the balance. eSAF made using renewable power, water, and CO₂ eSAF is produced through a PTL process, eliminating the need for organic feedstocks. As shown on the left of Figure 1, the process uses water electrolysis to generate hydrogen using renewable sources such as solar, wind, and hydropower and the reverse water gas shift (RWGS) reaction to produce carbon monoxide (CO) from CO₂. The configuration shown in Figure 1 is the most technically mature option at present; in the future, water electrolysis and RWGS could be replaced by co-electrolysis of CO₂ and water in solid oxide electrolyser cells, or co-SOEC, which would make syngas, or a mixture of hydrogen and CO, in one step. The CO₂ could be obtained from point sources or direct air capture (DAC). Subsequently, hydrogen and CO undergo Fischer–Tropsch synthesis, followed by product upgrading. This approach provides flexibility in the products generated, enabling the production of various paraffinic fuels and/or products. When SAF is the desired product, the plant can be designed such that 80% of all production

is aviation fuel, the rest being naphtha (used as a chemical feedstock or for blending in the gasoline pool). However, producing renewable hydrogen and sourcing the right type of CO₂ present challenges. At present, renewable hydrogen production is constrained by the need for significant investment and infrastructure development to scale up electrolysis technology and manage the intermittency of renewable energy sources. Both must be addressed to achieve cost-competitive and scalable renewable hydrogen production. For eSAF to meet the required GHG savings of at least a 70% reduction vs a fossil benchmark of 94 gCO₂/MJ(fuel) under EU regulations, it must be made from acceptable CO₂ sources. The European Commission published a delegated act specifying which CO₂ sources will be allowed over a defined timeline. Until 2040, the use of specified industrial (fossil origin) point sources of CO₂ will be permitted, whereas CO₂ originating from power generation can only be used until 2035. Beyond 2040, the CO₂ will be limited to that originating from the production or combustion of sustainable biofuels, bioliquids or biomass fuels, and DAC. Regulations in non-EU regions are yet to be shaped. There are many ongoing developments in DAC technology worldwide, driven by both direct air carbon capture and storage (DACCS) as a form of offset and growing demand for synthetic fuels. Scaling up DAC, which is recognised as a key technology for the net zero pathway, depends on the development of policy and regulation, as well as unpredictable growth dynamics. Nonetheless, in the IEA Net Zero Emissions by 2050 Scenario, DAC technologies are expected to capture more than 85 Mt of CO₂ in 2030 and about 980 MtCO₂ in 2050, requiring a large and accelerated scale- up from almost 0.01 MtCO₂ today. This outlook positions DAC as a relevant source of CO₂ in the context of SAF production by mid-century. Combined production of eSAF and bio-SAF: A sweet spot When the options and challenges in SAF production are considered, the joint production of bio-SAF and eSAF emerges as a strategic choice due to several advantages: • Full utilisation of biomass carbon: The relatively low hydrogen-to-carbon ratio of

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Oshore wind

Complementary renewables (solar and wind)

Green power connection (24/7)

Fossil jet fuel (reference)

Renewable power (solar and wind hybrid) Water electrolysis Hydrogen storage Synthesis plant (RWGS + Fischer–Tropsch + Upgrading) CO from a point source

Challenges in bio-SAF and eSAF production Shell recently conducted a case study for a PTL production scenario in the Middle East in 2030 (see Figure 2 ). In this scenario, the investment in renewables, electrolysis, and storage (stable supply of renewable hydrogen) would be four times higher than that in the synthesis plant where the hydrogen and CO₂ are converted into eSAF. Over time, the costs associated with renewable hydrogen production are expected to decrease owing to technology improvements and intermittency solutions, including flexible operation of the synthesis plant. The study also showed that combined bio-SAF and eSAF production is a cost-effective solution, with anticipated costs 15% to 30% lower than a standalone eSAF PTL project with a point source of CO₂. In the case of DAC, this delta in costs would only further increase. Another Shell analysis shows how location affects the cost of PTL (see Figure 3 ). Advantaged locations include those with hydropower, benefitting from a 24/7 stable renewable power supply, followed by a combination of solar and wind power in locations close to the equator. Nuclear power can also play a role (it is accepted for meeting mandates under ReFuelEU Aviation, though not for RED targets for RFNBO). Figure 3 Relative PTL production costs in 2030, $/t(fuel)

biomass presents a challenge for hydrocarbon fuel production. Adding renewable hydrogen to a BTL process facilitates the full utilisation of biogenic carbon in the biomass instead of emitting (‘losing’) some of the carbon in the form of CO₂. In this case, the production becomes partially BTL and partially PTL. • Scale efficiency and cost: Joint production of bio-SAF and eSAF requires smaller-scale electrolysers when compared to a pure PTL process. Given the present elevated cost of electrolysers, this method has a competitive edge, especially for early projects, with the expectation that electrolyser costs will decline in the future. • Simplified process without RWGS: Although RWGS has a high technology readiness level, at the time of writing (February 2024) it is not fully de-risked for large-scale commercial applications. In bio-SAF and eSAF co- production with a limited PTL component, RWGS can be eliminated. • Scale-related benefits: An integrated strategy combining bio-SAF and eSAF uses larger Fischer–Tropsch and hydroprocessing units, resulting in economy of scale. Figure 2 Breakdown projection of the levelised production cost of synthetic aviation fuel using PTL technology in the Middle East

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Renewable energy

CO point sources

Direct air capture

Sustainable biomass, bio waste

Water electrolyser

Shell R everse W ater G as S hift P rocess

Torrefaction

Solids gasication

CO + H

Shell Fische r– Tropsch P rocess

Shell W ax H ydroconversion P rocess

Shell technology: in development

Ex-Shell technology: Shell expertise

Shell technology: commercially proven

Figure 4 The Shell XTL Process features three line-ups: PTL, BTL, and a PTL/BTL hybrid

Some of the least advantaged locations are those with offshore wind not backed up by a stable solar power supply, such as locations in North West Europe. These studies demonstrate that the most promising opportunities are in locations with available sustainable bio-feedstock and/or low-cost renewable power, particularly, 24/7 stable hydropower or complementary wind and solar profiles. Key requirements For bio-SAF and/or eSAF production to become a viable and economically attractive option, it is necessary to address challenges across the entire production chain. For initial projects, establishing a clear and consistent regulatory framework specifying acceptable (bio and waste) feedstocks, emissions standards, power and carbon sources, and other environmental considerations is paramount. Understanding the expectations of end users, including industries and consumers, is also crucial. Critical technical considerations include: • The availability of water electrolysis technology at scale and low cost. • Establishing a reliable and affordable supply chain of bio-feedstocks that meet sustainability and GHG criteria (as defined under RED II). • The scaling of CO₂ conversion and feedstock gasification technologies. Another essential requirement, and the primary anticipated cost factor, involves securing access to renewable power derived

from sources such as solar, wind, or hydropower at an acceptable cost. Ideally, this power should be available at a large scale and exhibit round-the-clock stability. Solar parks and offshore wind farms experience intermittency challenges. Mitigating this entails advancing and de-risking solutions such as hydrogen and battery energy storage systems or adopting flexible operational strategies for synthesis plants to cope with energy fluctuations. As CO₂ is an essential feedstock for eSAF, its efficient and cost-effective supply from point sources and the development of DAC technologies are imperative for minimising the carbon footprint and cost of PTL production. Finally, optimal integration of all processes and utility building blocks, including off- gas recycling, and synergies with existing assets, such as chemical plants and refineries, should be explored to capitalise on shared infrastructure and resources, thereby contributing to overall cost-effectiveness. Technology development level Many technology building blocks for the production of eSAF and bio-SAF from biowaste residues are commercially proven, while others are at the advanced de-risking stage. There is also significant know-how about process and utilities integration (for instance, from commercial gas-to-liquids (GTL) plants). However, there is more to be learned and de-risked, in particular around integration with renewable power supply.

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XTL, PTL, BTL, and GTL: What is the difference?

The Fischer–Tropsch process is at the core of the world’s largest GTL plant, Pearl GTL in Qatar, which has been operating since 2011. With a capacity of 1.6 bcf/d of wet gas, this facility produces 140 kbbl/d of GTL products and 120 kbbl/d of natural gas liquids and ethane. Pearl GTL was the culmination of more than three decades of research, with 3,500 GTL- related patents filed. Much of the understanding acquired through the GTL process is directly applicable to PTL and BTL processes, in particular Fischer–Tropsch synthesis itself, product upgrading via hydroprocessing of Fischer–Tropsch wax into final products, and the overall process and utilities integration. Syngas manufacturing has to be adapted to the new type of feedstock (renewable hydrogen, CO₂, and biomass), but it can still leverage expertise obtained from syngas manufacturing from conventional fossil feedstocks. Building on this experience, Shell Catalysts & Technologies recently started licensing the Shell XTL Process, which offers an integrated solution for eSAF and/or bio-SAF made from sustainable biomass or biowaste feedstocks (see Figure 4 ). It is based on Shell’s commercially proven Fischer–Tropsch technology. Shell is involved in several projects relevant to this value chain. For example, it: • Is developing a 760 MW offshore wind farm in the Netherlands with Eneco. • Is building the Holland Hydrogen I project, which, with an anticipated capacity of 200 MW and powered by offshore wind from the North Sea, will be Europe’s largest renewable hydrogen plant. XTL, or X-to-liquids, is a generic term for multiple processes that convert a feedstock into liquid hydrocarbon fuels or chemicals. X is used in the sense of sustainable, renewable, low-carbon feedstocks. XTL pathways include biomass-to-liquids (BTL), power-to-liquids (PTL), and waste-to- liquids (WTL). WTL can be technically the same as the BTL process, provided waste feedstock is largely

• Has developed post-combustion CO₂ removal technology and is developing a DAC demonstration unit at Shell Technology Center Houston, USA. • Has been running a RWGS pilot plant in Germany in partnership with MAN Energy Solutions. Conclusion To meet CO₂ emissions reduction targets by 2050, an effective decarbonisation approach for the aviation sector is imperative, and accelerating the development and deployment of SAF is the single best option to decarbonise aviation. Power-to-liquids for eSAF and biomass- to-liquids for bio-SAF have great potential as a supplementary solution to the existing HEFA route for making SAF from UCO or animal fat. Combining the production of bio-SAF and eSAF provides advantages in terms of the most efficient use of biogenic carbon from biomass, scale efficiency, and cost. This is achieved by reducing the demand for electrolysers, enabling early projects by eliminating the need for RWGS (until it is fully de-risked) and facilitating the use of larger Fischer–Tropsch and hydroprocessing units and thus benefitting from economy of scale. biogenic origin. However, when waste contains a high fraction of non-recyclable plastics, other conversion pathways, in particular other gasification technologies, would be required (not covered in this article). GTL uses natural gas feedstock and is already proven on a commercial scale. These processes typically involve several steps and often include Fischer–Tropsch synthesis.

Svetlana van Bavel svetlana.van-bavel@shell.com Chippla Vandu chippla.vandu@shell.com

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Where energies make tomorrow

Technip Energies is playing a key role on the journey towards a low-carbon society and is strategically positioned as a leader in CCUS. With Capture.Now™, we offer a broad portfolio of CCUS* solutions across industries to help you cost-effectively decarbonize your operations, utilize low-carbon energy, valorize carbon into products and achieve your net-zero goals. Now. At scale. Anywhere in the world.

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* CCUS: Carbon capture, utilization and storage

Towards net zero with synthetic fuel gasoline

How the integration of a synthetic gasoline production plant into an existing refinery is crucial for reducing CO2 emissions while ensuring continuity of supply

Constanza Berckemeyer CAC Engineering

T he world is currently facing two contrasting scenarios. On the one hand, national governments around the world have committed to highly ambitious goals to reduce emissions of carbon dioxide (CO 2 ), methane, and other greenhouse gases (GHG) (UNFCCC, 2024) via their Nationally Determined Contributions. On the other hand, the demand for oil and gas continues to grow, prices are up in all markets, and production has increased (OPEC, 2023). Achieving the goal of limiting the increase in the global average temperature to less than 2ºC while aiming for no more than 1.5ºC by 2050 requires a significant shift in the entire global energy supply and demand system that we all use today. Many of the world’s top companies have committed to net zero goals with emissions reduction targets, and are playing a key role as first movers. Finding substitutes that can promote such a systemic change will be essential for balancing production processes and their economy. As the world transitions to lower carbon energy sources, the role of hydrocarbons in the energy market will gradually decline. However, the use of crude oil as a feedstock for petrochemicals will persist and even increase, mainly in non-OECD countries (OPEC, 2023). The transport sector is a significant contributor to global GHG emissions and is predominantly reliant on conventional fossil fuels. Together with electrification, substitution of fossil fuels with renewable or low-carbon fuels represents a transformative approach to mitigating these environmental impacts and steering the sector towards a sustainable future. In developed economies, the transition to electric vehicles is underway. However, low-

carbon fuels (synthetic fuels, renewable fuels of non-biological origin (RFNBOs) or biofuels) represent a viable alternative as a means of decarbonising the internal combustion engine, which will continue to comprise the largest segment of the existing road vehicle fleet for at least the next decade. The role of synthetic fuels in diversifying decarbonisation options for road, aviation, and maritime transport is recognised. Synthetic low-carbon fuels are drop-in fuels that are fully fungible with conventional fossil fuels. They exhibit the same advantages of high energy density and can make use of existing storage and transportation infrastructure (IEA, 2024). From the market perspective, low-emission fuels are at a pivotal juncture. Governments are introducing policies that support low-carbon options, including incentives such as synthetic fuel mandates, which will create the commercial drive to speed up the transition to low-carbon transport. The automotive industry’s support for synthetic fuels (commonly named e-fuels) is growing, especially in Germany, Italy, France, and Hungary. The highly influential motor racing industry is transitioning to low-carbon fuels (Oltermann, 2023). Companies are introducing net zero strategies in all markets, and more than 200 low-carbon fuel projects are currently under development globally. However, synthetic fuels are expected to remain more expensive than fossil fuels for the foreseeable future. With more than 60 years of engineering and construction experience within the refining, petrochemical, and chemical sectors, CAC Engineering has used these experiences to develop substitute products and solutions. It has

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