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Apex PetroConsultants, LLC

HPI Energy Transition Opportunity

2/9/2023

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Energy transition to achieve NetZero goals will be a tremendous achievement, as the transitions are never easy and take a long time and commitment. The industry will need to make progress in the transition journey by keeping the roadmap to NetZero in mind to avoid a disorderly transition while focusing on no-regret decisions.
We have seen many positive signs of progress and announcements in many areas and industries. On a broader basis, the commitments made in Paris Agreement or later, both the private sector and governments are falling behind on the transition path. Current forecasts indicate that at the current pace, the warming levels could be closer to 2.5 degrees Celsius vs. a reference case of 1.5 degrees set by IPCC.
Some of the factors (listed below) have offered opportunities for acceleration, and acted as headwinds at the same time:
  • Energy crisis driven by conflicts.
  • Economic downturn and higher inflation.
  • Frequent extreme weather events causing food shortages, and social and political pressures. These events also result in a significant financial impact.
  • Geopolitical conflicts and an increasingly fractured world.
  • Trade conflicts, and supply chain disruptions.
Hydrocarbon Processing Industry (HPI) has a significant role to play in the transition as it has the resources (including skilled personnel, technology, innovation, and finances) to accelerate the process. We will still need carbon sources to produce plastic materials that are not only essential for the quality of life we enjoy but also needed to help lower carbon emissions by exploiting renewable resources and by improving energy efficiency. The demand for these products will grow with population growth, expanded middle-income earners, and urbanization but also new applications that help in accelerating the transition. The industry needs to follow a long-term sustainable model that encompasses these among other requirements:
  • Focus fossil fuels away from direct contributions towards greenhouse gas emissions as much as practicable.
  • Minimize the hydrocarbon feed demand through design approaches to extend product life, making them repair-friendly, and easily recyclable at high economic value.
  • Minimize losses to improve overall efficiencies throughout the life cycle.
  • Invest in technologies that will speed up the transition towards NetZero goals.
Energy transition has offered the HPI industry a sustainable path for growth in the future. The key is to take a longer-term business view rather than a short-term focused strategy.
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    Sanjeev Kapur is Principal Consultant at Apex PetroConsultants. He focuses on consulting/advising olefins based petrochemical businesses. He is a leading expert in petrochemicals and integration.

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