February 2025 Decarbonisati n Technolo gy Powering the Transition to Sustainable Fuels & Energy May 2023
Powering the Transition to Sustainable Fuels & Energy
CARBON NEUTRALITY RENEWABLE HYDROGEN & HYDROGEN SAFETY
CO 2 MANAGEMENT AND LOW-CARBON HYDROGEN DECARBONISATION OF REFINING VALUE CHAINS
OUTLOOK FOR 2025 SUSTAINABLE AVIATION AND MARINE FUELS
SAF: POTENTIAL OF DIVERSE FEEDSTOCKS UTILISATION OF CAPTURED CARBON
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More than Waste
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Contents
February 2025
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Key things to watch in 2025 Alan Gelder Wood Mackenzie
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Carbon neutrality as an opportunity for value creation Fred van Beuningen Chrysalix Venture Capital
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Future focus: CO₂ management and hydrogen decarbonisation Stephen B Harrison sbh4 Consulting Role of carbon-14 testing in advancing renewable fuels Haley Gershon Beta Analytic Gary Lee Parkland Refining
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Driving SAF production with feedstock diversity Paul Ticehurst Johnson Matthey
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Managing corrosion risk in SAF and renewable diesel processes William Fazackerley Emerson Key elements of flow assurance in carbon capture and storage Abbey Grant Belltree Group
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Sand: an innovative approach to storing sensible heat S Sakthivel and Atul Choudhari Tata Consulting Engineers
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Unlocking the potential of waste heat recovery Sara Milanesi Exergy International
56 Harnessing the power of data for oil and gas in the energy transition Daniel Mardapittas Powerstar
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Solutions for heat tracing in renewable diesel production Mike Allenspach, Jeff Fabry and Pele Myers nVent
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Decarbonisation through innovation Sanicro 35 from Alleima bridges the gap between stainless steels and nickel alloys
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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
The International Meteorological Office has confirmed 2024 as the warmest year on record. It also noted that 2024 was the first year when the annual global average approached 1.5ºC. This followed a run of increasing temperatures over the last decade. The human and economic cost of climate change continued to mount in 2024, with floods in South and Southeast Asia, China, and Europe and, most recently in 2025, the wildfires in Los Angeles. Even given a sense of urgency, it will take decades to achieve the scale necessary to transition to a lower carbon energy system with a measurable reduction in global emissions. An ongoing focus on energy efficiency during production processes will continue to reduce the emissions per unit of product or fuel. In the longer term, design initiatives to improve energy efficiency are expected to reduce the consumption of fuels and consequential emissions from aviation and shipping. Actions to reduce methane from coal, oil, and gas operations are the most expedient ways to reduce overall emissions in the near term. In this regard, it is heartening that methane emissions have fallen in some countries, and the International Energy Agency (IEA) believes these can be reduced by 50% by 2030. Much of this can be done through wider deployment of known and existing technologies, as demonstrated by the best-performing countries and companies. Extending the use of recycled materials in energy-intensive industries such as concrete, steel, and aluminium production offers economically attractive opportunities for near-term reductions in energy use and overall emissions. However, forecast growth in global demand for these materials will only be met by increased extraction and production. Installing carbon capture technology to capture the carbon from industrial flues offers a medium-term opportunity to reduce emissions from these energy-intensive industries on a meaningful scale. The IEA global hydrogen review for 2024 reports that low- emission hydrogen capacity (both electrolysis and fossil fuels with CCS) is currently only 1% of total hydrogen production at 97 Mt. Should all announced projects proceed, an additional 49 Mt of low-emission hydrogen capacity could be added by 2030. In 2024, the European Emissions Trading System (ETS) came into effect for ships trading in the EU, followed at the start of 2025 by the FuelEU maritime regulation. Bunker suppliers for shipping in the EU are now required to provide documentation to show the fuels meet the EU greenhouse gas (GHG) intensity standards. However, a challenging market for biofuels led to the introduction of anti-dumping measures in the EU, but not before several projects to build domestic capacity were cancelled in 2024. There is a need to develop robust certification systems for all forms of renewable energy, hydrogen, low-carbon fuels, chemicals, and materials. The emergence of globally aligned certification systems is vital to reduce the risk of fraud and, just as importantly, to provide assurance throughout the supply chain. Dr Robin Nelson
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Key things to watch in 2025
A review of the oil, refining, chemicals, and liquid renewables industries in 2024, highlighting the key things to monitor this year
Alan Gelder Wood Mackenzie
Introduction The year 2024 marked a significant election period, with more than half of the world’s population involved in the democratic process. In many countries, the incumbents remained in power but with reduced mandates. Populism prevailed in some form. The run-up to the US election was particularly long, with the victory by former President Trump and the clean sweep by the Republican party offering the potential of 2025 being very different from 2024. 2024 had many events that impacted global energy markets, with the Houthi rebels attacking maritime traffic around the Red Sea, disrupting shipping, and an escalation of the Israel/Hamas conflict. The conflict in the Middle East widened as Israel confronted Hezbollah in Lebanon and exchanged missile attacks with Iran. The Russia/Ukraine conflict ground on, with no significant breakthrough by either side. Global oil demand reached a new high in 2024, but the oil market has been plagued by concerns that demand was weaker than projected with a focus on potential over-supply, as OPEC+ withheld significant supplies throughout the year. Plans for OPEC+ to increase supply through the easing of voluntary cuts were delayed, as oil prices weakened during the year, particularly in the second half of 2024. Oil prices, however, spiked upwards in moderate surges during periods of high geopolitical tension, such as when Israel was threatening to attack Iran’s energy infrastructure. Oil prices fell quickly when tensions eased due to the ample spare capacity. For 2024, oil demand growth has surpassed 2024 in review u Oil market
the increase in supply, with only a small gain in non-OPEC production for the year. That will change in 2025 when non-OPEC growth is equal to the projected increase in demand, which is another factor that weighed on oil prices late in 2024. The concerns about demand centre on the forecasts for 2024 oil demand growth published by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), which have been unusually divergent, adding to the sense of confusion. Both organisations (and Wood Mackenzie) have been revising their demand growth projections downward as the year progressed. US inflation remained high, slowing the pace at which the US Federal Reserve could cut interest rates, delaying the shift to increased industrial production. China’s economy started 2024 reasonably strongly but weakened as the year progressed, with a weak housing market depressing a key sector in the Chinese economy. Europe continued to struggle with high energy costs, weak competitiveness, and low investment levels. Despite these woes, oil prices did not collapse and only briefly flirted at levels below $70/bbl. v Refining Refining margins were back to five-year average levels at the end of 2023. The global composite margin reset to (or just below) the five-year average, as shown in Figure 1 . For Europe, the regional reference margin is at pre-pandemic levels. This was despite the disruptions of the Russia/Ukraine conflict and the Red Sea, both of which make global inter-regional trade less efficient and more costly, which would support refining margins.
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Refining margins returned to traditional norms, with competitively weak sites in both Europe and Asia suffering economic run cuts due to the low-margin environment. These lower refining margins reflect several factors, with the key drivers being refinery capacity additions outpacing demand growth and several Very Large Crude Carriers (VLCCs) being cleaned and used to transport diesel/ gasoil from the Middle East to Europe. This helped offset the impact of higher freight costs from vessels diverting around southern Africa. Refineries are complex to commission; however, facilities such as Dangote in Nigeria were successfully commissioned during the year, lowering the imports of gasoline to West Africa. w Liquid renewables The year 2024 was challenging for the economics of liquid renewables. Using US Renewable Volume Obligation (RVO) credit prices as a proxy for the health of the sector, the 2024 annual average price collapsed to just more than 50% of 2023 levels as the supply of renewable liquids grew strongly. This over- supply reflected a surge in capacity that was commissioned during 2024. Given that liquid renewables are predominately supplied as a blend component to road fuels, the combined 230,000 b/d decline in demand for diesel/ gasoil across OECD Europe and the US, due to weak industrial production, exacerbated the supply overhang. This led to the harsh reality of numerous projects being cancelled, the Figure 1 Weekly five-year range gross refining margin ($/bbl)
Figure 2 Global ethylene annual capacity change vs demand change
most notable being Shell pausing its world- scale project in Rotterdam – a facility that was already under construction. Liquid renewables are more expensive to produce than fossil fuels, so their growing adoption requires sustained and stable regulatory and policy support. Sweden provided a stark example of the risks of relying upon policy as the key pillar for an investment. Sweden’s regulation focuses on greenhouse gas reductions, and for diesel, its target percentage reduction has been tightening from 21% in 2020 to 30.5% in 2023. However, this dropped to 6% in 2024 due to the high retail cost of diesel and its contribution to the cost-of-living crisis felt by the Swedish electorate. Sweden’s diesel can now be largely delivered by blending with FAME, so there has been a marked drop in the need for renewable diesel, further weakening the economics of renewable diesel production in Europe. x Commodity chemicals The global olefins market continued its expansion in 2024, but the year marked a low point for ethylene capacity investments, as shown in Figure 2 . Only 1.3 million tonnes per annum (Mtpa) of capacity was added in Asia, well below the 2020-2025 average of 8.7 Mtpa. In contrast, propylene capacity growth continued, primarily driven by propylene dehydrogenation (PDH) unit additions in China. PDH investments are expected to peak in 2024, reflecting poor margins.
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Rationalisation efforts progressed in Europe and Asia, driven by overcapacity and sluggish demand growth. While European crackers maintained positive margins on average in 2024, significant closures have been announced for facilities in France, Italy, and the Netherlands. More closures are anticipated, given Europe’s high production cost and weak industrial activity. In China, Sinopec and PetroChina outlined plans to phase out smaller, uncompetitive crackers between 2025 and 2026. Asia’s ethylene margins were negative due to overcapacity and weak economic growth. Conversely, US ethane crackers thrived based on their strong feedstock advantage. In 2024, the polyethylene market faced rapid capacity expansion, shipping volatility, geopolitical tensions, rising trade barriers, and weak margins. Several facilities in Europe and Asia permanently closed due to declining demand for virgin polyethylene, stricter regulations, and unfavourable margins. Operating rates, especially in Asia, were pressured by fluctuating upstream prices and margin constraints. However, major capacity expansions, such as Sinopec’s 1.2 Mtpa polyethylene plant in China and Reliance’s 1.5 Mtpa polyethylene unit in India, helped alleviate local supply shortages. Since 2022, aromatics pricing has been impacted by above-average octane values. The first half of 2024 continued to see aromatics pricing supported by the elevated alternative value in the gasoline pool. However, as forecasted, this pressure significantly reduced at the end of the 2024 driving season. Freight disruptions have not been enough to avoid a persistent import substitution of aromatics derivatives in Europe and the Americas. China’s capacity additions pressured margins globally. China has also structurally transitioned into an exporter of the largest benzene derivative – styrene. Aggressive pricing strategies have enabled Chinese producers of derivatives, such as purified terephthalic acid (PTA), to put pressure on their counterparts around the world. Europe has been the most impacted region, where rationalisation has been unavoidable.
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Key things to watch in 2025 u Oil market
Wood Mackenzie projects 2024 to be the low point of global GDP growth, with 2025 being stronger, the economy rebalancing to growth in both services and industrial production. Global oil demand growth is projected to increase to 1.2 million b/d for 2025, with oil demand growth across all regions except Europe. However, the challenge for OPEC+ remains, as shown in “ Wood Mackenzie projects 2024 to be the low point of global GDP growth, with 2025 being stronger, the economy rebalancing to growth in both services and industrial production ” Figure 3 , as global demand growth provides limited opportunity for OPEC+ to reduce their cuts without significantly weakening the oil price. Wood Mackenzie’s current Brent oil price projection for 2025 is in the mid-to-low $70s range. Besides the typical risks to the oil price around global GDP growth, geopolitical events and conflict, the recent re-election of President Trump could present a material downside risk to the oil price. The imposition of tariffs on all US imports would dent global economic growth, add inflationary pressure to the US consumer, and slow oil demand growth, which could
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growth and a re-balancing of the economy has diesel/gasoil as the highest-demand growth fuel in 2025. Higher demand requires a greater volume of liquid renewable blending. There are also two key policy support elements – the first is California’s revisions to its Low Carbon Fuels Standard (LCFS). The low LCFS credit price seen over the past two years reflects an oversupply of low carbon intensity fuels, which has prompted the regulator to accelerate its carbon intensity reduction targets to capture the faster progress. The carbon intensity reduction target for 2025 has been increased by 9%, with the 2030 target raised from 20% to 30%. This will tighten the credit market in 2025 and subsequent years. The second mechanism is the European Union's requirement that aviation fuel contain a 2% minimum share of sustainable aviation fuel (SAF) by volume in 2025. As shown in Figure 4 , this provides a material uplift to the demand for SAF, which will improve the economics of renewable liquid supply during 2025 and beyond. The EU’s requirement for greater use of renewable and low-carbon fuels in the maritime sector also adds support to the demand for liquid renewables. Besides the broader risks of tariffs and trade, the key risks to the outlook for liquid renewables are, again, policy-related. Firstly, policy can be volatile, with Sweden providing an example, as in August 2024, it increased the blending obligation to 10% from July 2025 onwards. Secondly, there is the risk that the small refiner exemption returns under the Trump presidency. This policy exemption eliminated the obligation for refiners under 75,000 b/d of crude input to blend the minimum volumes of renewable fuels into their products. x Commodity chemicals In 2025, global ethylene capacity is poised to resume its growth, with 8.8 Mtpa of new capacity coming online, the majority of which will be contributed by China. However, China’s investment in PDH facilities is expected to slow, which could help ease the long-term oversupply in the propylene market. Olefin margins are expected to remain under pressure in 2025. While stronger GDP growth is forecast for 2025, it will be challenging
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depress oil prices by around $5-7/bbl in 2025, with further declines likely thereafter. v Refining The CDU capacity investment wave witnessed in 2024 eases after Q1 2025, with crude distillation capacity effectively flat after Q1 as announced closures (PetroIneos at Grangemouth and LyondellBasell in Houston) and re-configurations (such as Shell at Rhineland) take place. Global refinery utilisation remains broadly flat as refinery projects commissioned in 2024 reach full commercial operations. Refining margins are projected to remain at current levels through 2025. Oil demand growth can be met by the additional capacity that has become operational during 2024. The slow return of OPEC+ volumes should enable VLCCs to remain in distillate service for some time, keeping downward pressure on freight rates and limiting the upside to refining margins. The potential imposition of US import tariffs provides an upside to US refining margins, given the support this will provide to US ex-refinery gate prices on gasoline, which is still imported in significant volumes into the US Atlantic Coast. Higher US crude runs represent a downward risk to refiners elsewhere, which, when combined with weaker global oil demand growth, could lower global composite gross refining margins for 2025 from ~$5/bbl by $2.5/bbl. w Liquid renewables The outlook for liquid renewables in 2025 is positive, as our outlook for stronger economic Figure 4 SAF expected demand from all offtake agreements by region
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Refining margins are projected to remain at current levels through 2025
for demand growth to absorb the far greater increase in supply. Steam cracker margins are not expected to recover until after 2027 when capacity additions begin to taper off. Adding to the challenges, the potential imposition of a hefty import tariff – up to 60% – on Chinese goods by the Trump administration could significantly disrupt China’s plastic exports. Such a measure would further strain demand growth, exacerbating pressure on the already oversupplied market. In 2025, the global polyolefins market will face a complex mix of opportunities and challenges. Capacity expansions, particularly in Asia and the Middle East, will continue to meet demand across industries, namely those associated with industrialisation. Global utilisation is on a downward trend. Meanwhile, sustainability efforts will intensify, with companies investing in recycling technologies and circular economy initiatives. These factors, coupled with rising production costs, will drive a market that is both volatile and growth-oriented, with innovation and strategic capacity expansions helping to stabilise supply. Octane levels are expected to remain close to levels seen in the second half of 2024. With the gasoline market lengthening in the Atlantic basin, polyester production will become the main factor dictating paraxylene (PX) margins. Benzene-naphtha spreads are projected to decrease starting in 2025 as the growth
in supply gradually surpasses the growth in consumption. China’s capacities will continue to add pressure to global markets despite export-oriented Chinese players facing tougher conditions in 2025. Overcapacity in China and highly integrated chemical production will be key to its industry competitiveness in 2025. Trump’s return to the White House and the increasing number of Anti-Dumping Duties applied to Chinese-origin products will be key to changes in global trade. Operating rates are expected to continue recovering across the polyester value chain, while global styrene operating rates will start bottoming in 2025. However, rationalisation risk remains, especially in certain parts of Europe chains. Conclusions All parts of the extended oil value chain (from oil markets to aromatics and polyolefins) enter 2025 with ample spare capacity, making demand growth crucial to the commercial performance of the individual sectors. Geopolitics and trade tariffs are critical uncertainties that need to be closely monitored, as these could play a key role in defining the winners and losers. Policy is a key risk for the viability of liquid renewables.
Alan Gelder alan.gelder@woodmac.com
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Carbon neutrality as an opportunity for value creation While challenges such as early-stage adoption and cost barriers persist, carbon neutrality efforts also provide clear opportunities for growth and resilience
Fred van Beuningen Chrysalix Venture Capital
A dditional headwinds are expected sustainability objectives of companies, notably in anticipation of the new US administration. We anticipate: • US withdrawal from the Paris Agreement : Rejoining the global climate deal was one of the Biden administration’s first executive orders, so it would be symbolic for the Trump administration to reverse this decision immediately. The Paris Agreement’s three-year exit period is another factor to motivate an early announcement of the US withdrawal from to be forthcoming in the global fight against climate change and the broader participation ( UNFCCC, 2015 ). Such instability in government policy is clearly not conducive to a positive investment environment. • US scrapping of non-business-oriented climate funding : A full repeal of the Inflation Reduction Act is unlikely, as it would hurt business interests in Republican states and is ultimately in the control of Congress. In the short term, defunding of other climate policies (such as funding for agencies and research projects) under the Trump administration is more likely. However, despite such setbacks, carbon risks is essential for long-term business resilience and growth ” “ Investors increasingly prioritise companies with robust decarbonisation strategies, recognising that addressing climate
neutrality still represents a significant opportunity for creating strategic value. Greenwashing was possible for some time, but with climate risks becoming increasingly apparent, fiduciary duty forces investors and industrial companies to be real and factual about climate risks to their portfolios and supply chains. Investors increasingly prioritise companies with robust decarbonisation strategies, recognising that addressing climate risks is essential for long-term business resilience and growth. To achieve carbon neutrality, companies focus on value creation strategies such as asset decarbonisation, leveraging green premiums, developing new growth platforms, managing risks from supply chain vulnerabilities and carbon pricing, and shifting portfolios. Tight timelines add to this urgency: achieving net-zero targets by 2050 requires a rapid transition to carbon-negative operations by 2030. However, a significant percentage of the technologies needed to meet these goals are still in early adoption or pre-commercial stages. Technologies like green hydrogen are currently too expensive, and carbon capture and utilisation (CCU) has not yet reached commercial scalability. Addressing these gaps requires early-stage investment, which is critical for developing scalable solutions. To achieve its climate targets, the EU will require additional annual investments of about 2% of gross domestic product (GDP) between 2025 and 2030, comparable to the EU’s R&D spending in 2022, which was estimated at 2.2% of GDP ( Eurostat, 2024 ). With the European Green Deal, the EU has positioned itself as the global frontrunner in climate policy. Given the
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Optimising processes and integrating energy recovery systems to minimise waste and maximise output. Energy e ciency
Replacing fossil fuels with low-carbon options like hydrogen, biofuels and synthetic fuels. Alternative fuels
Using low-carbon materials such as biobased polymers and advanced composites to reduce emissions. Material substitution
Eliminating waste through resource recovery, recycling and waste-to-value systems. Circularity
Capturing and reusing emissions as feedstocks for industrial applications. Circular carbon systems
Monetising emission reductions through carbon credits and o set schemes. Carbon markets
Removing CO through nature-based solutions like reforestation, soil carbon sequestration and direct air capture. Negative emission technologies
AI as an enabler
Enhancing e ciency and accelerating decarbonisation through predictive analytics and optimisation.
Figure 1 Key carbon neutrality levers and technologies
political economy of global climate action and the likely withdrawal of the US from the Paris Agreement, the success of the European Green Deal is vital for global decarbonisation to stand a chance. From this global perspective, it should be recalled that the cost of climate action is far lower than the cost of inaction. How companies achieve their net-zero targets Reaching net-zero goals requires a clear, strategic approach that combines different solutions: • Deep decarbonisation by reducing emissions through technology and operational efficiencies. • Carbon removal, both within and beyond the value chain, to address emissions that cannot be eliminated. • Compensation through offsetting, which ensures residual emissions are balanced. Success depends on aligning financial resources with these strategies. Companies with lower capital may start with efficiency improvements, while those with more resources can invest in advanced technologies or explore new business opportunities. Businesses that approach carbon neutrality as a chance to grow and innovate rather than as a cost can meet their goals while creating long-term value. Key carbon neutrality levers and technologies Decarbonisation relies on a range of technologies
that address emissions reduction and removal across industries (see Figure 1 ). Energy efficiency is a foundational element in optimising industrial processes to reduce emissions. Transitioning to alternative fuels, such as renewable energy and biofuels, is equally critical. Substituting traditional materials with low-carbon alternatives further reduces embedded emissions. Digital technologies , including AI and advanced analytics, are instrumental in optimising resource use and enhancing decision-making across value chains. By leveraging data-driven insights, businesses can identify inefficiencies, streamline processes, and scale climate tech solutions more effectively. The integration of digital tools into decarbonisation strategies represents a vital step in future-proofing industries for a sustainable economy. Circularity is essential Circularity could deliver up to 45% of the global greenhouse gas (GHG) emissions reductions needed to achieve net-zero worldwide ( Ellen “ We need to shift from viewing carbon neutrality as a cost to seeing it as an opportunity for value creation ”
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Construction and Demolition waste (CDW) comprises all waste produced by the construction and demolition of buildings and infrastructure as well as road planning and maintenance. CDW covers a variety of materials, including concrete and building rubble, and accounts for more than one-third of all waste generated in the EU. Following the introduction of the Waste Framework Directive in 2008, most countries in the EU have established practices for separation, recovery, and reuse of CDW waste, with the best achieving recycling rates of up to 90% ( European Commission, 2024 ).
discarded waste concrete rubble continues to be sent to landfill. Based in the Netherlands, C2CA (concrete to cement and aggregates) has developed an industrial-scale solution that transforms waste concrete into high-quality aggregates and sand, which are valuable raw materials for construction (see Figure 2 ). This circular approach facilitates concrete-to-concrete recycling, eliminating the need for virgin materials and reducing the amount of concrete rubble going to landfill as well as carbon emissions. The recycling process begins with density- based separation to remove contaminants and extract reusable aggregates. This is followed by a thermal separation stage to refine the materials further. Finally, advanced quality control and tracing technologies, such as laser- induced breakdown spectroscopy (LIBS) and radio frequency identification (RFID), are used to guarantee material consistency and traceability, ensuring it meets industry quality standards. By 2023, C2CA demonstrated its ability to scale this process, processing more than 1,000 tons of waste annually. The resulting materials, including coarse aggregates, fine aggregates, and ultra fines, are then used to produce new concrete, supporting a closed-loop system. This innovation not only reduces reliance on virgin resources but also provides a practical pathway to integrate circularity into the construction sector, significantly lowering its environmental impact. Circularity in the metals sector Steel is the most widely used metal, followed by aluminum. Both materials are readily recycled, with 90% steel and 37% aluminium reaching end-of-life now recycled in the EU. In their Net Zero Roadmap, the IEA requires the widespread
MacArthur Foundation, 2021 ) and up to 56% of the carbon reductions needed to achieve net zero in the EU ( McKinsey & Co, 2024 ). By reusing materials and minimising waste, circular systems reduce dependency on virgin resources and align with decarbonisation goals. They also create operational efficiencies and new opportunities for growth. Beyond recycling, circularity involves redesigning systems to eliminate waste entirely. Secondary raw materials can replace primary inputs, significantly lowering emissions. Negative emission technologies, such as nature-based solutions and carbon capture, further address emissions that cannot otherwise be avoided. Circular concrete Every year, the world produces 4.1 billion tonnes of cement, which accounts for 8% of global CO 2 emissions. At the same time, 3 billion tonnes of concrete waste is downcycled or discarded each year. Previously, no scalable or affordable technology existed to process waste concrete beyond downcycling, in which the material is downgraded or reused in lower-value applications like roadbeds. Globally, much of the
Figure 2 C2CA system for turning waste concrete into high-quality materials
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adoption of innovations in both primary production and recycling of steel and aluminium to minimise emissions and meet growing demand (see Table 1 ). There is scope to improve the environmental efficiency and cost of recovery and recycling processes. Companies like Sortera Technologies and Therm Ohm are taking the lead in implementing circularity in the metals sector. Sortera uses AI and sensor fusion technology to sort aluminum scrap by alloy and then recycle the scrap into high-value, low-carbon end products. Its high-throughput platform enhances resource recovery, ensures consistent material quality, and improves the efficiency of sorting processes in material-heavy industries. Meanwhile, Therm Ohm has developed an innovative process to upcycle steel scrap by removing copper contamination. This breakthrough reduces feedstock costs, minimises DRI dilution, enhances the quality and value of electric arc furnace (EAF) steel production, and generates a sustainable copper byproduct. These efforts support circularity in metals production and contribute to decarbonisation goals. Conclusion Upcycling wood, metals, plastics, and concrete provides an important pathway to carbon neutrality. Materials are kept at their highest value and the energy used is from renewable sources. Venture investment in circularity offers a good opportunity, provided the fundamental economics are attractive and allow for rapid scale-up. The interplay between market drivers, economics, technology, and business models determines the viability of circular opportunities. Circular carbon (CCU), also known as valorisation of CO 2, can be a future source of carbon for the production of chemicals, fuels, polymers, and materials. However, to meet current announced net-zero targets, global CCUS capacity needs to grow more than 100 times in the longer term, reaching 4-6 gigatons CO 2 by 2050 and decarbonising around 15 to 20% of today’s energy-related emissions ( McKinsey, 2024 ). Circular carbon is challenging because of cost and technology readiness, and some of the factors to watch out for are
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regulatory interventions, willingness to pay for lower carbon products, valorisation of CO 2 as a feedstock, and the development of the voluntary carbon removal markets. Different industries have different carbon- neutral pathways. For the chemical industry, there are different sustainable carbon cycles, including using carbon from industrial processes and carbon derived from products that Table 1 Required adoption of low-emissions primary production and recycling for steel and aluminium Source: IEA, 2023 previously originated from fossil sources, as well as using carbon from plants (CEFIC, 2024). Achieving carbon neutrality requires a combination of enabling technologies, circular systems, and strategic investment. While challenges such as early-stage adoption and cost barriers persist, carbon neutrality efforts also provide clear opportunities for growth and resilience. Businesses that act now to embrace climate tech and decarbonisation strategies will position themselves to succeed in the transition to a sustainable future and create new growth platforms. “ Achieving carbon neutrality requires a combination of enabling technologies, circular systems, and strategic investment ”
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Fred van Beuningen fbeuningen@chrysalix.com
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Future focus: CO 2 management and hydrogen decarbonisation Five years ago, the trajectory of hydrogen decarbonisation and CO 2 management was uncertain. There is still some time to act and plenty of good reasons to refocus
Stephen B Harrison sbh4 Consulting
A fresh vision for fossil fuels European and US debt is at an all-time high. Developing nations are struggling to feed their people and bring them basic healthcare provisions. The costs of war and plans for rising defence expenditure are eating into national budgets. The notion that governments will be borrowing huge additional sums of money to pay for a net- zero future is unrealistic. We must accelerate progress with limited budgets, which means we should focus on achieving the best bang for our buck with hydrogen decarbonisation. We must rethink the decarbonisation paradigm. ‘Green’ ideology and regulations suited for 2050, rather than 2025, have held back progress towards net zero for too long. It is not the ‘greenest’ projects that will proceed and receive infrastructure-scale investment; only the ‘best’
projects will be bankable. What does ‘best’ mean? To the bank, it means a clear business case with an acceptably low level of risk. As we review carbon dioxide (CO₂) management and hydrogen decarbonisation mid-decade, it is abundantly clear that responsible use of fossil fuels is a reality that we must work with, not against, for many years to come. The use of fossil fuels with appropriate greenhouse gas (GHG) emissions mitigation is compatible with a net-zero vision. Fossil CO₂ and methane emissions to the atmosphere are the issue, not the use of fossil fuels per se. Let us attack the issues with razor-sharp precision, not get distracted by peripheral noise. Sequester CO₂ that is already captured When ammonia is made from steam methane reforming of natural gas, CO₂ leaving the
Burner ue gas
Air
CO
Purge gas
Natural gas feed
Haber-Bosch ammonia synthesis reactor
CO desor- ption
Steam
Super- heated steam
Feed compressor
Steam generation
Hydrogen
ATR
Purge gas
High temp. shift
Hydrogen- ation
SMR
Condenser
Catalyst bed
Phase separator
Steam generation
Raw syngas
Low temp. shift
Sulphur removal
Cryogenic heat exchanger
NH
Boiler feed water
Recycle compressor
Liquid ammonia
Fuel Air
Distillation column
Condensate
Feed preparation
Reforming
CO removal
Methanation and cryogenic nitrogen wash
Ammonia synthesis
Ammonia liquefaction and storage
Water gas shift reactors
Figure 1 Air-fed ammonia production process
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Recycle gas
CO
Town gas
T.H.T. Ordorant addition
Superheated steam Steam
To grid
Steam super- heater
Naphtha storage tank
Gas dr ye r
Boiler feed water
Steam reboiler
Tubular reformer
Town gas composition Carbon dioxide
16.3% – 19.9%
Natural gas from pipeline
Town gas energy value Calori c value
Carbon monoxide
1.0% – 3.1%
17.27 MJ/m
Methane Hydrogen
28.2% – 30.7% 46.3% – 51.8%
Speci c gravity Wobbe index
0.52
24
Nitrogen and oxygen 0% – 3.3%
Figure 2 Hong Kong Town Gas – Tai Po catalytic rich gas naphtha/methane reformer and CO₂ capture process
reformer must be removed to enable the catalytic Haber-Bosch ammonia synthesis reaction to take place (see Figure 1 ). Every natural gas- fed ammonia plant already has a CO₂ capture facility. The Capex is spent, and the energy costs for CO₂ capture are committed. This CO₂ must be sequestered to reduce the CO₂ intensity of this ammonia. Large-scale projects for green hydrogen for ammonia production should not be prioritised until we have decarbonised existing natural gas-fed ammonia plants massively. Coal-to-chemicals is another area of low- hanging fruit. Immediately after coal gasification, the raw syngas is fed to a Rectisol unit, where CO₂ and sulphurous gases are removed. At present, this CO₂ is blown to atmosphere, just like the CO₂ from ammonia production is vented on most ammonia plants today. This captured CO₂ must be a priority for sequestration since the capital and operating costs of the Rectisol plant are absorbed into the overall costs of the coal-to-chemicals production. To reduce the CO₂ intensity of coal- to-chemicals, the only incremental costs are CO₂ transmission and sequestration. In Hong Kong, Town Gas production already involves CO₂ capture to control the heating value of the product (see Figure 2 ). This CO₂ is vented to atmosphere. It should be sequestered. Production of ethylene oxide on many petrochemical plants also requires CO₂ removal within the process to purge CO₂ (a byproduct of ethylene oxidation) from the process recycle.
Also, natural gas processing removes CO₂ in midstream operations to ensure dry, acid- free gas enters the pipeline transmission infrastructure. These are tier 1 priorities for sequestration of captured CO₂. Decarbonising refinery hydrogen In many oil refineries, grey hydrogen produced from natural gas on steam methane reformers (SMRs) is used to produce marketable liquid fuels. The CO₂ from these SMRs is not captured at present. However, 60 to 70% of the CO₂ produced on the SMR is available at a very high partial pressure prior to the reformate gas mixture entering the hydrogen separation pressure swing adsorption (PSA) unit. The unit cost of CO₂ capture in this location is low. New equipment and new energy would be required. But the incremental costs of capturing this CO₂ would be less than the incremental cost of implementing carbon capture and storage (CCS) to processes with more dilute CO₂ streams, such as power generation, cement, or steel making (see Figure 3 ). Despite the ideal process conditions, there is not an overwhelming wave of SMR CO₂ capture projects being implemented because the business case is not strong enough. The costs of CO₂ emissions do not cover the costs of new equipment and the energy penalty. CCS of CO₂ from SMRs would be ‘good value for money’ and help with the rapid decarbonisation of hydrogen production
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Notes: – CO emissions are also associated with the energy and power requirements for this industry sector – These can potentially be decarbonised with renewable power and electrical heating or microwaves – CCS to capture CO from the process and/or the associated energy production is possible
Steam methane reformer
Aluminium smelting
Calciner tower & clinker kiln
Blast furnace
Oil re ning
Aluminium smelting Cement making
Iron making
Hydrogen production from methane reforming for fuels desulphurisation CH + H O CO + 3H CO + H O CO + H Use turquoise hydrogen or green hydrogen to avoid the reforming reaction; or As above using renewable methane feed the reformer with biomethane instead of natural gas
Reduction of iron ore to iron using coke
Reduction of limestone to calcium oxide CaCO CaO + CO Replace a portion of the limestone with alternative materials such as calcined clay to make clinker for cement Above reaction can only partially be avoided
Reduction of alumina to aluminium using graphite electrodes
Application that releases CO
2Fe O + 3C 4Fe + 3CO Fe O + 3CO 2Fe + 3CO Use hydrogen instead of coke; or substitute coke with carbon from turquoise hydrogen production As above using renewable carbon, or use hydrogen: Fe O + 3H 2Fe + 3H O None
2Al O + 3C 4Al + 3CO
Chemical reaction producing CO Decarbonisation approach for CO generated by the process
As above using renewable graphite electrodes carbon from fossil fuels to make the electrodes Gold and silver re ning, electric arc furnace to melt scrap steel Use carbon from turquoise hydrogen production instead of
Reactions for the decarbonised process
– Lime making, as above
Other industries with similar applications
Ammonia, urea, methanol, gas-to-liquids
– Refractory materials; MgCO MgO + CO – Glass making Na CO , CaCO , MgCO
Figure 3 Difficult-to-decarbonise industries – CO₂ is released from within the process
and refinery operations. Policymakers must recognise the benefits of hydrogen with any degree of reduced CO₂ intensity. The current criteria for ‘blue’ hydrogen are tight, and if a decarbonisation initiative does not get the ‘blue’ badge, the case is weak. CO₂ intensity must be a sliding scale The ‘blue’ hydrogen benchmark is relevant for new-build projects based on autothermal reformers (ATRs) or gas heated reformers (GHRs) with built-in CCS, but 2,000 SMRs operating today can be decarbonised with CO₂ capture equipment retrofits. This is 2025, and in many parts of the world, there has been significantly less progress towards declared net-zero targets than has been promised. ‘More of the same’ will not help us achieve 1.5°C and is unlikely to cap climate change at 2 or 3°C. We
need high-impact action now – ideas that can rapidly and cost-effectively be deployed. The costs and scalability of green, blue, or hydrogen of any degree of CO₂ intensity must be seen in the context of alternative industrial decarbonisation measures. The idea of a hydrogen project going for ‘green, blue, or broke’ has resulted in failed business cases and inhibited meaningful progress. CO₂ intensity is what matters. Every reduction in GHG emissions is beneficial. Making a rapid impact means there is no room for the perfect to be the enemy of the good. We must accept that the next 30 years will be about rapid decarbonisation of existing infrastructure in addition to progressive development and deployment of ultra-clean technology. There must be support for GHG emissions reduction in all forms rather than CO₂ intensity thresholds, which indirectly promote some technologies above others.
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Use the 'polluter pays' principle for GHG gas emissions with meaningful minimum costs (such as CO₂ €150 to €200 per tonne and others based on CO₂ equivalence). This will: u Incentivise sequestration of CO₂ that is already captured from natural gas processing, ammonia and ethylene oxide production, and coal-to-chemicals. Incentivise capture of CO₂ from high partial-pressure process streams on SMRs. Eliminate the need for a threshold approach to CO₂ intensity with an arbitrary cut-off point for ‘blue’ hydrogen. The 'polluter pays' principle would, in effect, implement a sliding scale of embedded CO₂ and tax or incentivise based on that. Broaden policy acceptance and viability of EOR and EGR as valid mechanisms for CO₂ sequestration. Commit to building common CO₂ pipeline infrastructure to link fossil, geogenic, and biogenic CO₂ emitters with CO₂ storage/utilisation/removals locations. Commit to building a colour-agnostic, common hydrogen pipeline infrastructure with underground hydrogen storage in salt or rock caverns. Support projects that build the bankability of green hydrogen to allow a progressive ramp-up of green hydrogen as renewable power ramps up to support it. Policy priorities for hydrogen and CO 2 management in the second half of this decade
Table 1
A fair assessment of CCS, EOR, and EGR Despite some failures, disappointments, and poor reporting in certain carbon capture and geological storage (CCS) projects, there have also been many successes. The way to get better is to do more and learn faster. Enhanced oil recovery (EOR) and enhanced gas recovery (EGR) should also be seen as meaningful ways to store CO₂ in suitable geological formations. Dismissal of EOR and EGR as valid CCS mechanisms due to concerns that they may increase fossil fuel production is not valid on a global scale. There is an abundance of crude oil and natural gas reserves in the Middle East and Russia; these nations will produce according to demand. To say that EOR or EGR stimulate demand for fossil fuels is a flawed argument. Local production avoids the cost and environmental impact of fuels distribution. Extending the life of wells can increase economic efficiency. Policymakers must take a more supportive view of EOR and EGR as valid means of CO₂ sequestration. Also, when we consider the number of successful EOR schemes, underground geological storage of CO₂ has an overwhelmingly positive history. Greenhouse gas emissions are the problem Excessive CO₂ in the atmosphere is the problem now and will remain a risk for eternity. We must
address the problem rather than favour one solution ahead of others. To do that is a risky guessing game that no policymaker can afford to make. In many areas, policy is no longer technology agnostic – it should return more closely to that principle. Now more than ever, a focus on CO₂ emissions reduction and carbon dioxide removals (CDR), by whatever means, must be priorities. The costs of GHG emissions, whether they be CO₂, methane, F-gases, or others, must be paid by the polluter. Taxation of the polluter pays principle has driven the reduction of NOx and SOx emissions in several countries in northern Europe. At present, CO₂ emissions are too cheap. The tax penalties or incentives for GHG emissions reduction are too weak. The cost of CO₂ emissions should be in the order of €150 to €200 per tonne (see Table 1 ). Methane, F-gases and nitrous oxide must be scaled in line with their CO₂ equivalence. Any concerns about unfair competition due to policies moving at different speeds around the world can be met with embedded CO₂ cross-border tax adjustments. The EU ETS, US 45Q, and other ‘carrot or stick’ schemes around the world must set a cost to CO₂ emissions, ensuring there is a business case for decarbonisation investments. Even if there is a degree of GHG emissions cost fluctuation,
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