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Decarbonising Manufacturing – A Long Term Game

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Manufacturing relies on processes requiring intense heat, the carbon-intensive extraction and refinement of resources and huge power requirements to keep process lines humming. It is estimated that industrial processes, such as mining and manufacturing, consume 44% of Australia’s energy and 40% of electricity each year. While advances are being made, such as the development and use of green hydrogen and green ammonia, these are far-off initiatives. Many manufacturers have completed the early stages of decarbonisation — the quick wins. These have shown the world, their investors, stakeholders, and employees they are doing everything in their power to decarbonise. The next stage of decarbonising is dubbed ‘hard-to-abate’ but it can be done.

Achievement of Quick Wins

Many manufacturers have declared their net zero intentions, as part of mandatory emissions reporting. It creates an impetus to ensure a declared public target is not another act of greenwashing. This external pressure is acting to push manufacturing companies to stay on track, either meeting or exceeding targets. While many have enacted meaningful change, they have done so at a smaller scale so that failures could be mitigated and isolated.  For example, one global food and beverage manufacturer identified several pilot locations in each region with a good level of engagement and readiness from site-level management, and used these to build a proof-of-concept for low-carbon operations before scaling up across its global footprint. Additionally, many have either begun or completed the replacement of end-of-life equipment or mining plant and equipment with more energy efficient equivalents. These include implementing heat pumps, changing lighting from halogen to LED and switching to smart technologies which automatically power down equipment. NCI Packaging, for one, installed 500kW of rooftop solar at its site in Preston, Melbourne, reducing its energy consumption from the grid by 22%. While it may only decarbonise a production line or robotics, it is a key step towards decarbonisation as well as a proof-of-concept for future rollouts across the rest of its sites. Research reveals that 75% of organisations globally have achieved most of these quick wins. They are now tackling the harder-to-address challenges often associated with implementation.

Next Steps

Manufacturing is hard to abate but it is incumbent on companies to achieve their targets, while remaining financially viable and competitive. Short-term wins are great for the morale of the team, but projects with timelines stretching anywhere from 2-15 years make it harder to see the light at the end of the tunnel. Forward-thinking heavy steel fabrication companies are embracing long-term goals and those that are not risk falling behind. Furthermore, new technologies and advances such as green ammonia and green hydrogen are emerging and, while not yet mature, they should be part of any holistic decarbonisation strategy. One of the biggest aspects of net zero is something that seems out of control, but must be considered. Scope 3 emissions may fly under the radar for now, but there is a responsibility incumbent on organisations to begin aligning with suppliers focused on sustainable practices. Scope 3 emissions are set to increasingly make up a key pillar of decarbonisation reporting and research needs to be started on a sustainable post-pandemic supply chain. Meanwhile, offsets should not be deployed in isolation to authentically reach net zero, but the use of offsets for residual hard-to-abate emissions can help organisations decarbonise around the edges.

Final Thoughts

It is acknowledged that manufacturing is a hard-to-abate sector due to its reliance on industrial processes and what is next beyond the quick wins is complex. But hard-to-abate does not mean impossible-to-abate and it is incumbent on organisations to ensure they do their utmost to meet their targets, both for the future of the planet and the future of their business.

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Rio, BHP Join Forces with BlueScope for Green Steel

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Australia’s biggest steelmaker and the nation’s largest iron ore producers have announced a new collaboration aimed to create a pathway to decarbonise steel production. Miners Rio Tinto and BHP sent teams from their Pilbara operations to join BlueScope at its Port Kembla terminal on Friday to make the announcement. Faced with the risk of falling behind the global effort to decarbonise, the iron ore competitors and the steelmaker have been exploring the development of an electric smelting furnace for iron-making. BlueScope chief executive Australia Tania Archibald said it was necessary to establish a commercially viable alternative to blast furnace steelmaking. “This is a major opportunity for Australia on a global scale as the broader heavy steel fabrication industry seek to decarbonise,” Ms. Archibald said. The project faces many challenges aside from the technology development; it will also be dependent on securing a substantial gas supply and, ultimately, green hydrogen.

More than 70% of global steel is produced using blast furnaces, around 20 per cent through electric arc furnaces and around five per cent as Direct Reduced Iron (DRI). DRI is seen as the most promising pathway to decarbonise iron and steelmaking. In the DRI process, gas and ultimately green hydrogen replace coal. BlueScope believed natural gas-based DRI could reduce steelmaking emissions by around 60 per cent, while green hydrogen-based DRI would take the process towards zero. DRI technology is also dependent on high-grade ores for steel fabrication in mining and Australia’s ore supply in the Pilbara is disadvantaged by high levels of impurities. Ms Archibald said the three companies would work together in attempt to find a way to process the low and medium-grade ores. “The challenge is to evolve the technology to unlock the ability to consume Australia’s abundant Pilbara ores in the DRI process,” she said. “This is really about how we crack the code with using the Pilbara ores in a DRI process.” She said the collaboration was critically important for BlueScope’s net zero 2050 goal.

Iron ore is Australia’s biggest export, and Rio Tinto Iron Ore chief executive Simon Trott said the announcement was key to securing the industries into the long term. “With Central Queensland developing as Australia’s new green energy capital, we need to ensure that iron ore from Australia is well positioned for a green steel future,” Mr. Trott said. “Today is about making sure that that continues in the decades to come.” Incoming BHP Western Australia iron ore asset president Tim Day said the project was critical for Australia. “If we can crack it, it is actually going to be a significant uptick for mining plant and equipment , the Pilbara, Western Australia and Australia in general and the globe,” Mr. Day said. The steelmaker said a key advantage for the project would be adapting technology from its electric smelting furnace processing DRI in New Zealand. Locations around the country will be considered, including BlueScope’s Port Kembla steel mill. The companies said the cost was not resolved and would be shared equally amongst the partners, with the project also designed to allow additional partners including the federal government. The companies believed the pilot facility could be commissioned by 2027.

Hydrogen Storage Fuel Background

Public-Private Partnership backs Hydrogen Engineering

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In what the Queensland government believes is Australia’s biggest investment in green hydrogen so far – almost $117 million — has been made by the Queensland and federal governments and a consortium to fund the front-end engineering design for the Central Queensland Hydrogen (CQ-H2) project at Gladstone. When completed, the engineering design will bring the project closer to a final decision, expected late next year. Green hydrogen can decarbonize oil and gas, manufacturing, heavy haulage, shipping, aviation, heat induction bending services, and other industries.  The project will be powered by renewable energy and is expected to produce 200 tons of hydrogen a day by 2028, rising to 800 tons a day by 2031. That is equivalent to fueling more than double Australia’s fleet of heavy vehicles. The hydrogen needs to be liquified or converted to ammonia for export and potentially local industry offtake.

The Australian Renewable Energy Agency (ARENA) will provide $20 million in funding, $15 million will be from the Palaszczuk Government and the remainder $81.8 million from consortium partners which are passionate about green hydrogen. These consortium partners are: Iwatani Corporation (Japan), Kansai Electric Power Company (Japan), Marubeni Corporation (Japan), Keppel Infrastructure (Singapore) and Queensland’s publicly owned Stanwell Corporation. Federal Minister for Climate Change and Energy, Chris Bowen, said projects such as this are critical to scaling up Australia’s green hydrogen industry. “The government is committed to making Australia a global hydrogen leader. Projects like the CQ-H2 Project could lead the way in exporting renewable hydrogen to the international market.

“Japan, Korea and China are three of our largest trading partners and have all made clear commitments to increase the use of hydrogen, with a focus on establishing international supply chains for imports,” said Minister Bowen.  Queensland Premier, Annastacia Palaszczuk said the international partnership highlights Queensland’s position as a global hydrogen heavyweight. “Because of the investments we’re making, the Queensland economy will reap the benefits of the global clean energy transition, while ensuring Queensland has more and cheaper, cleaner renewable energy to power our businesses and homes,” she said.  Developing a green hydrogen export industry in Gladstone will create significant economic opportunities for Queensland: project is expected to create almost 9,000 jobs, including in the steel fabrication industry, and over $17.2 billion in hydrogen exports in its 30-year life.

Queensland Treasurer and Minister for Trade and Investment Cameron Dick said it was the largest green hydrogen investment of its kind in the nation’s history. “It is … an endorsement of the Palaszczuk Government’s Energy and Jobs Plan,” he said. “The Palaszczuk Government is working hard to drive the state’s hydrogen industry forward, to create highly skilled jobs, especially in regional Queensland. “That’s why, through the Treasury’s Queensland Renewable Energy and Hydrogen Jobs Fund, we invested $15 million into this stage of the project.” The Queensland government believes the public-private partnership in the CQ-H2 project is within the top 10 hydrogen projects in the world, which includes the EU plan to replace Russian fuel with hydrogen. The project will complement other planned investments in a renewable hydrogen industry in the Gladstone region, including the Commonwealth Government’s Regional Hydrogen Hubs program. Michael O’Rourke, CEO of government owned energy generator and provider Stanwell Corporation said the project could create thousands of jobs and deliver billions of dollars in economic benefit. “We are proud to be leading the CQ-H2 project with our partners, which demonstrates our commitment to driving the development of Queensland’s hydrogen industry and other new technologies.

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Old Tyres and Boots Used in Next-Gen Australian Steel Manufacturing

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Old tyres, conveyor belts and rubber safety boots have been used in a novel steel manufacturing process commercialized by Australian steel manufacturer Molycop, which will be offered for export to global EAF operators. The process is the result of a collaborative project between Molycop, the UNSW SMaRT Centre, footwear manufacturer Crawford Boots and the Advanced Manufacturing Growth Centre (AMGC). It involves maximizing the recovery and use of waste rubber as a substitute for imported carbonaceous material (‘coke’) used in Molycop’s Electric Arc Furnace (EAF) in Newcastle. Australia’s waste tyre export ban, which began in December 2021, has been a catalyst for companies to find innovative new processing capabilities (such as water tanks) to reduce the huge tyre landfill problem. The development of this new technology reduces the company’s reliance on imported carbonaceous materials from China by up to 20 per cent. It also removes up to 90,000 tyres from landfill and reduces the steel maker’s electricity consumption and scope one carbon emissions.

Molycop, alongside its steel fabrication partners, has developed a means to maximize the use of rubber crumb (polymer) as a source of carbon and hydrogen needed in the steel-making process. Molycop produces over 240,000 tons of steel each year for train wheels, billet steel, steel bar and grinding media. Sustainability is core to the company’s strategy and integrated into how Molycop does business, said the company’s President of Sustainability, Ian Tooze. Displacing fossil carbon materials is also a key objective in Molycop’s decarbonization pathway. “We are investing in innovative solutions that improve the ways we reduce the consumption of virgin raw materials, recover valuable materials from waste streams, minimize waste and reduce our carbon footprint while we perform quality management. “What we have developed is yielding results and delivering outcomes for Molycop, our customers and communities in which we operate.” The AMGC said the innovation will help Australia’s steel manufacturing sector to be more competitive, through lowered production and import costs, and be more sustainable through decreased emissions and energy consumption.

AMGC’s Managing Director, Dr Jens Goennemann said commercializing great manufacturing ideas is where Australia’s future prosperity lies. “Australia has an opportunity to transform from being a lucky country to a smart one through the commercialization of great ideas that have local and global relevance. While the US has floated new steel tariffs based on carbon emissions, Molycop, UNSW and Crawford Boots together have manufactured a product that will reduce emissions and address waste in steel making, while generating more jobs and revenues for the nation – what more could you ask for?” Director of the UNSW Sustainable Materials Research and Technology (SMaRT) Centre, Professor Veena Sahajwalla said it is crucial for manufacturers and researchers to work to tackle environmental issues, while delivering commercial outcomes. “By working collaboratively with Molycop we have been able to prove that polymer injection works and is commercially viable. It is only through partnerships like this that we can truly achieve positive environmental outcomes at scale. I encourage all manufacturers to engage with your local research institution and challenge them with a business issue that needs solving.”

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Palantir and Trafigura to Track Carbon Emissions for Oil Industry

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Palantir Technologies Inc and Trafigura have set sights on a new market, their chief executives told Reuters: tracking, calculating and reporting carbon emissions across the oil and gas sector. The companies are building a platform for oil majors and other commodities firms to vet the environmental impact of their supply chains, applying Trafigura’s data to Palantir’s operating system, known as Foundry.

The effort represents a particularly lucrative long-term opportunity at a time when Palantir’s revenue outlook has fallen short of expectations, with shares trading down 57% this year. This project marks the first time Palantir will go to market with a partner on carbon emissions tracking. Leveraging Trafigura’s expertise in global commodity supply chains, Palantir’s Foundry operating system will be configured to provide consortium partners with an accurate calculation of carbon intensity across supply chains, beginning with crude oil and refined products, and concentrates and refined metals.

In a joint interview at the World Economic Forum’s annual meeting in Davos, Palantir’s Chief Executive Alex Karp said, “This is going to be one of the biggest things we’ve ever done.” Jeremy Weir, Trafigura’s CEO, said the market is “massive. In terms of size, I think it touches everybody.”

The idea grew out of a pilot last year when Trafigura’s global head of carbon trading approached Palantir with a desire to better assess indirect carbon footprints, known as “Scope Three” emissions. The announcement builds on the work already done over the past year, with the initial pilot already having built scenarios across ten million carbon pathways using actualized commodity shipments by integrating Trafigura data and metrics supplemented by third-party data.

“Our customers are increasingly asking us for visibility into the lifecycle emissions of the commodities we move as they prepare for regulated Scope 3 emissions reporting and more generally for Net Zero,” said Weir. “The complexity involved in commodity supply chains requires robust cooperation across the industry and a technological solution that can enable meaningful decisions and change. We are delighted to jointly deliver a solution to market with Palantir, whose technology can manage the complexity and data security required to provide additional services to our customers and the market.”

Customers can subscribe to the new platform and take part in what Palantir and Trafigura are calling a consortium. They did not disclose financial terms. Concerns about energy security fuelled by Russia’s invasion of Ukraine have not dampened interest in sustainability, said Weir. “We’ve got a severe bump in the road, but we still have to decarbonize,” he said. For Palantir, the war, which Moscow has called a “special operation,” has meanwhile created potential for other products it developed, such as secure data transfer across allies. “You’ll have to use your imagination to figure out how those things may be in use, but we play a crucial role in the security of the West,” Karp said.

 

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Decarbonizing the Oil and Gas Industry

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Today, the oil and gas industry’s operations account for 9% of all human-made greenhouse gas emissions. It also produces the fuels that create another 33% of global emissions. Thus, the oil and gas industry will have a major role to play for the world to meet its climate-change goals. Investors are pushing companies to disclose consistent, comparable and reliable data of their sustainability targets and investments. Activist shareholders are challenging US- and Europe-based oil majors on their climate policies and emissions-reduction plans. There are other developments which are shaping the way forward for a more sustainable future and which put the future of petrochemicals at stake. Where does the oil and gas industry fit in this scenario? Let’s find out in this blog.

Actions by Upstream Operators

Upstream Operators

Upstream operations account for two-thirds of sector-specific emissions. Some of the actions which oil and gas upstream operators can take are listed as follows: –

Changing power sources – One oil and gas company is using on-site renewable-power generation to provide a cost-effective alternative to diesel fuel. By replacing on-site renewable power generators with a solar PV and battery setup, oil and gas companies can reduce emissions significantly. Connecting onshore or nearshore rigs and platforms to the central grid (as opposed to decentralized diesel generation) can also work well: for example, in its drive for electrification, Equinor recently connected its Johan Sverdrup field, which lies 140 kilometers offshore, to the grid.

Reducing fugitive emissions – Companies can cut emissions of methane, a powerful greenhouse gas, by improving leak detection and repair (LDAR), installing vapor-recovery units (VRU), or applying the best available technology (such as double mechanical seals on pumps, dry gas seals on compressors, and carbon packing ring sets on valve stems).

Electrifying equipment – One oil and gas company replaced gas boilers with electric steam-production vessels, including high-pressure storage for nighttime steam supply, to support separation units with the expectation that the project will pay for itself in less than ten years. In many circumstances, there is already a good business case, on purely financial grounds, for combining the use of solar and gas in place of conventional boilers.

Actions by Downstream Operators

Downstream Operators

Energy efficiency – Efficiency is a factor in every part of the industry but new downstream-specific technologies can make a big difference. Waste-heat-recovery technology and medium-temperature heat pumps in refineries, for example, reduce the amount of primary energy used in distillation.

Green hydrogen – Hydrogen production through electrolysis has become both more technically advanced and less expensive. Bloomberg New Energy Finance estimates that the cost of hydrogen could drop as much as two-thirds by 2050. Using renewable energy rather than steam methane reforming to power the electrolysis could offer refineries a way to reduce emissions—a result known as “green hydrogen.” To know more about methane emissions in the US, click here.

Greener feedstocks – Replacing some conventional-oil feedstocks in refineries with bio-based feedstocks or recycled-plastic materials (initially, through pyrolysis or gasification) would also reduce emissions—including Scope 3 emissions. In an increasingly decarbonizing world, this may extend the lifetime of refining assets.

Conclusion

There are multiple options available by upstream and downstream oil and gas operators to reduce emissions. It would come as a pleasant surprise to know that cutting emissions is not necessarily expensive; and an analysis observed that implementing initiatives would most likely lead to a positive Net Present Value (NPV) in the long run. However, implementing these options would require the oil and gas players to come out of their comfort zone and adapt to the sustainable way of working. Climate change is real and these companies need to wake up and smell the coffee!

© K999 Engineering & Construction Co. Ltd. 2023