Global energy demand is constantly on the rise despite efforts to transition to a low-carbon future. The oil sector is challenged to meet the growing energy demand while reducing overall carbon emissions. Moving towards a low-carbon future requires practical and persuasive solutions.
Why is it important for oil trading industries to go towards decarbonization?
The oil industry will need to play a significant role if the world is to come close to achieving its climate change goals as oil is one of the largest energy contributors and accounts for a significant amount of greenhouse gas (GHG) emissions. 9% of all greenhouse gas emissions are attributable to activities in this sector. Additionally,the oil industry manufactures the fuels responsible for an additional 33% of world emissions.
Therefore, the oil industry needs to reduce its emissions by at least 3.4 gigatons of carbon dioxide equivalent annually by 2050, which is a 90% reduction in current emissions. This reduction is to enable the oil industry to play its part in climate change mitigation to the necessary extent. While it is obvious that reducing the consumption of oil would make it simpler to achieve this goal, such a reduction needs to be balanced with finding reliable, sustainable, and cost effective fuel alternatives which is still very much lacking in today’s world. But even if the oil demand doesn’t decline significantly, the industry may reduce the majority of its emissions at an average cost of less than $50 per tonne of carbon dioxide equivalent by giving priority to the most cost-effective interventions. The most affordable alternatives will be promoted through process modifications and small adjustments that assist oil trading companies in reducing their energy use.
Efforts that should be taken by Oil Industries for a low carbon future
Let’s look at some strategies that oil companies can incorporate into their efforts to achieve a low-carbon future.
- Energy efficiency
Oil refineries can cut down on the amount of primary energy required for distillation by using waste-heat recovery technology and medium-temperature heat pumps. This method will assist in increasing energy efficiency, which will result in a low carbon future. To achieve this, refineries will need to invest heavily into improving their existing infrastructures.
- Green hydrogen
Electrolysis is now a more efficient and a less expensive way to produce hydrogen. According to Bloomberg New Energy Finance, the price of hydrogen might decrease by up to two-thirds by 2050. Refineries may be able to cut emissions by running the electrolysis on renewable energy rather than using steam methane reforming.
- High-temperature electric cracking
Several experimental projects in refining employ electric coils to generate heat rather than fuel gas. The technology is currently developing and is of limited scope. Power can be created or acquired at a profit if investment is scheduled to coincide with the natural investment cycle and additional capital investments are made.
- Greener feedstocks
If some conventional oil feedstocks in refineries were replaced with biobased feedstocks or recycled plastic materials, it will also cut scope 1(direct emissions) and, to a considerable extent, scope 3 emissions(all indirect emissions that occur in a company’s value chain). This might increase the lifespan of refining assets in a world that is decarbonizing more quickly.
It will be crucial for the oil industry to adapt to the global energy transition while meeting consumer energy demand, and how it does so will depend on the strategies that will be employed. Oil companies that adopt the above-suggested strategies may find themselves in a stronger position in facilitating their journey towards a low-carbon future.
About Winson Oil
Winson Oil was established in 1998 and has since grown to be one of the largest international oil trading firms. It is well known for its oil trading, bunkering, and storage operations throughout Asia. Winson Oil has solid and stable ties with the major refineries in Asia as a prominent energy trader in the region. Every client can receive the entire supply chain services from our highly effective staff, including logistics planning, onshore oil tanks, boats, shipping service distribution, and distribution of shipping services. All of our products and services are focused on the needs of the customer, and we work hard to provide them in a timely and high-quality manner.
Winson Oil is looking to adopt different strategies with the goal of reducing carbon emissions to assist the world in moving towards a low-carbon future.
To learn more about our initiatives and how our team could assist you, visit Winson Oil.