Meeting Europe s Demand for Transport and Fuels

Transcription

1 Meeting Europe s Demand for Transport and Fuels Kenneth D Rose Technical Coordinator, Fuels and Emissions 7 th A3PS Conference: Eco-Mobility 2012 Vienna, Austria 12 th December, 2012

2 CONCAWE: Research in Diverse Areas CONservation of Clean The Oil Companies European association for health, safety and environment in refining and distribution (founded in 1963) Air and Water in Europe Operating Principles: Sound science Cost-effectiveness of options Transparency of results Automotive Emissions & Fuel Quality Air Quality Water/Soil Quality & Waste Oil Pipelines Safety Refinery Technology Support Health Science Petroleum Products Risk Assessment REACH & GHS Implementation 2

3 CONCAWE Member Companies Membership open to companies owning EU refining capacity Currently 42 Member Companies: AlmaPetroli APC api BP CEPSA ENI ERG Essar Oil (UK) ExxonMobil Galp Energia Hansen & Rosenthal Hellenic Petroleum IBR INA INEOS IPLOM Koch KPI LOTOS LUKOIL LyondellBasell MOL Motor Oil Hellas Murco Neste Oil Nynäs OMV Phillips66 PKN Orlen Preem Raffinerie Heide Repsol Rompetrol SARA SARAS Shell SRD Statoil St1 Tamoil TOTAL Valero Members represent almost 100% of EU refining capacity CONCAWE research mostly funded by Member Companies 3

4 Perspective of the European Road Transport Research Advisory Council (ERTRAC): Decarbonisation of European Road Transport European fuel demand and imports/exports European legislative framework Achieving the legislative expectations for energy and GHG reductions from transportation fuel supply: Improve the efficiency of fuel manufacturing (refining) Replace fossil fuels with renewable fuels Improve the efficiency of vehicles and the road transport system Challenges for European Refining 4

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9 Conclusions from a Recent JRC Report Sustainability Assessment of Road Transport Technologies (L. Ntziachristos & P. Dilara (2012)) there is no silver bullet (vehicle) technology to replace existing ones in the near future The potential of conventional ICE vehicles is still substantial (offering) high cost-effectiveness and driving performance which can hardly be matched by alternative technologies. Electric vehicles have potential to offer substantial GHG and (pollutant) reductions over conventional technologies. However, cost, infrastructure needs, and battery capacity are still significant obstacles in their widespread penetration. JRC = Joint Research Centre of the European Commission 9

10 Demand Mt/a EU-27 Fuel Demand Trends: Including Biofuels Ratio: total diesel / gasoline Source: CONCAWE/IEA/ Wood Mackenzie Gasoline and diesel trends to 2020 are from the JEC Biofuels programme + and B10 scenario + 95g CO 2 /km assumed for cars by Gasoline Jet/Kero On-road Diesel Off-road Diesel (incl. rail) Extension to 2030 is CONCAWE work in progress + 75g CO 2 /km assumed for cars by Continuing shift in road fuel demand from gasoline to diesel Vehicle efficiency improvements and alternative vehicles result in steady decline of total road fuel demand from 2015 onwards Ratio of diesel to gasoline continues to grow through 2030 Jet/kero demand increasing JEC: JRC-EUCAR-CONCAWE 10

11 Balances, Mt. Short on Distillates, Long on Gasoline Surplus European Union Refinery supply balance Deficit LPG Naphtha Gasoline Jet/Kero Diesel Gasoil LSFO HSFO Source Wood Mackenzie (2011) Europe continues to be short on diesel and jet/kero production, long on gasoline, providing a market opportunity for biodiesel blendstocks 11

12 EU Legislative Framework Reduce Greenhouse Gas emissions from energy and transport Energy Efficient Road Transport Vehicles (2008) Fuel Quality Directive (2008) Fuel manufacturing: 6% reduction in GHG emissions by 2020 through refinery efficiency and biofuel blending Emissions Trading Scheme (ETS) Geological Storage of Carbon Dioxide (2008) Encourage use of sustainably-produced renewable fuel products Fuel Quality Directive (2008) Allow up to 10% v/v ethanol in gasoline () Renewable Energy Directive (2008) 10% renewables (energy basis) in road fuels by 2020 New RED Amendment proposes 5% cap on biofuels that compete with food (ethanol, FAME), encourages advanced biofuels, and includes extra credits for non-food products Intermediate targets in 2015 and a progress review in 2014 Member State strategies communicated through NREAPs 12

13 Coming Decade for European Road Transport Vehicles: More advanced engines & aftertreatment, diversification in engines and fleet Fuel consumption of LD vehicles improving, HD diesel demand increasing Increasing pressure on OEMs for CO 2 reductions with associated higher cost Customer preferences potentially in conflict with mobility policies Refineries: Increasing imbalance in diesel/gasoline demand ratio Higher CO 2 emissions due to distillate demand and product specifications Increasing pressure on CO 2 emissions reduction (FQD Art. 7a) with higher cost Biofuels and other Renewables: Renewables in transport fuels mandated by RED to 10% (energy) by 2020 Conventional biofuels widely available but with sustainability/iluc* concerns Slower than expected pace of development for more advanced biofuels National Renewable Energy Action Plans (NREAPs) show that pace/priorities differ across Member States, potentially leading to fuel diversification CEN fuel specifications are struggling to keep pace with legislative mandates ILUC = Indirect Land Use Change 13

14 GHG Reduction Challenge for Road Transport Crude Production ~7 % Refining ~9 % Distribution & Retail ~1% Combustion of unit of energy ~83% Well-to-Tank (WTT) ~17% (production side) Tank-to-Wheels (TTW) ~83% (consumption side) Source: For conventional vehicles and fuels: JRC/EUCAR/CONCAWE Well-to-Wheels Study (2011) 14

15 Energy/GHG Reductions from Well-to-Wheels 1. Improve efficiency, reduce GHG from fossil fuel production Improve energy efficiency (WTT) Decrease GHG/CO 2 emissions Immediate impact as manufacturing efficiency improves 2. Replace fossil fuels with sustainable renewable fuels Significant questions regarding availability, sustainability Slower than expected development of advanced biofuels Immediate impact as renewable fuels enter marketplace 3. Improve efficiency of vehicles and road transport Improve efficiency of engines and vehicles (TTW) Longer-term impact as the vehicle fleet is steadily upgraded Improve efficiency of road transport through information technology and non-technology measures (reduce congestion, eco-driving) Immediate impact as efficiency measures are implemented 15

16 CO 2 Emissions from EU Refineries EU total emissions: 5000 Mt CO 2eq /annum This is about 15% of global CO 2eq emissions EU refineries emit about 145 Mt CO 2 /annum This is about 3.5% of total EU CO 2 emissions 1.4 Mt CO 2 /annum emissions from the average refinery Largest complex refineries emit up to 5-6 Mt CO 2 /annum The legislative instrument for reducing CO 2 emissions under the EU climate package is the Emissions Trading Scheme (EU ETS) 16

17 Crude oil quality does not match market demand LPG Naphtha/gasoline Kero/jet Gasoil/Diesel Heavy fuel oil 20 0 Brent Iran light Nigerian Russian Kuwait Demand Crudes are generally heavier than what the market demands Not enough intermediate products, especially middle distillates Too much residual products, especially heavy fuel oils 17

18 The Refinery s Challenge LPG Naphtha/gasoline Kero/jet Gasoil/Diesel Heavy fuel oil 20 0 Brent Iran light Nigerian Russian Kuwait Demand Use readily available crudes Produce the desired demand Adapt to quality variations All products must be on-spec Adapt to different crudes All must be produced at the same on a day-to-day basis time Nothing can be thrown away! Bio-components must be used Minimise energy, CO 2, environmental impacts, and costs 18

19 Refineries turn crude into fit-for-purpose products Demand (%) or Refinery yield (% on crude oil intake) Fuel & Loss (% on crude oil) 100% 10% 80% 8% 60% 40% 20% 6% 4% 2% LPG Naphtha Gasoline Kero/Jet Gasoil/Diesel Heavy Fuel Oil Fuel & Loss 0% 2010 EU Demand Simple Refinery High gasoline High diesel Complex Refineries Achieving this requires complex processing technology and hydrogen Reforming to obtain the desired molecules Residue conversion to crack large molecules into smaller ones Hydrotreating to obtain the desired product quality More complexity means that more energy and hydrogen ( fuel & loss ) are needed and typically more CO 2 emissions are produced in the process 0% 19

20 How can refineries respond to these challenges? What options are there to meet policy expectations for GHG reductions from the fuel supply while also meeting the future demand for transport fuels? Improve energy efficiency of refineries? Yes, about 0.5% efficiency improvement per year Replace refinery fuel by more natural gas? Yes within limits Selectively use lighter crudes in Europe and reject heavier crudes to refineries in other parts of the world? No, crude oils and CO 2 are international commodities Implement Carbon (CO 2 ) Capture and Storage (CCS) in refineries? Not likely in refining until power sector implements Replace fossil fuels by bio-blending components? Yes within limits 20

21 Energy/GHG Reductions from Well-to-Wheels 1. Improve efficiency, reduce GHG from fossil fuel production Improve energy efficiency (WTT) Decrease GHG/CO 2 emissions Immediate impact as manufacturing efficiency improves 2. Replace fossil fuels with sustainable renewable fuels Significant questions regarding availability, sustainability Slower than expected development of advanced biofuels Immediate impact as renewable fuels enter marketplace 3. Improve efficiency of vehicles and road transport Improve efficiency of engines and vehicles (TTW) Longer-term impact as the vehicle fleet is steadily upgraded Improve efficiency of road transport through information technology and non-technology measures (reduce congestion, eco-driving) Immediate impact as efficiency measures are implemented 21

22 JEC Biofuels Study: Implementation Scenarios Collaborative Projects The JEC research collaboration was initiated in 2000 by: JRC: Joint Research Centre of the European Commission EUCAR: European Council for Automotive R&D CONCAWE: Research Association of the European Oil Refining Industry : Projects Completed Well-to-Wheels (WTW) Study Versions 1, 2b, and 2c WTW Study Version 3: enhancing pathways and vehicles Impact of ethanol on vehicle evaporative emissions (SAE ) Impact of ethanol in petrol on fuel consumption and emissions JEC Biofuels Study for a 2020 time horizon (2011) : Projects in progress 2012+: Version 4 of the JEC WTW Study 2012+: Update of the 2011 JEC Biofuels Study Analysis of nine scenarios for biofuel implementation in road transport by

23 JEC Biofuel Implementation Scenarios Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 Gasoline Grade 2 E20 Gasoline Grade 3 Gasoline Grade 3 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 Diesel Grade 2 B10 (HD) Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 E20 Gasoline Grade 2 Gasoline Grade 3 Gasoline Grade 3 E85 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 Diesel Grade 2 Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 Gasoline Grade 2 E20 Gasoline Grade 3 Gasoline Grade 3 E85 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 B10 (all) Diesel Grade 2 Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 E20 Gasoline Grade 2 Gasoline Grade 3 Gasoline Grade 3 E85 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 B10 (all) Diesel Grade 2 B10 (HD) Scenario Gasoline Grade 1 Gasoline Grade 2 E5 Gasoline Grade 3 Diesel Grade 1 B7 Diesel Grade 2 B15 (HD) Scenario 1: Reference Case Source: JEC Biofuels Study (2011) 23

24 Mtoe/a Scenario 1: Reference Case %vol Mtoe/a % RED Biofuel grades in Scenario 1: Reference Case Increasing ethanol in petrol up to E5 by No vehicle compatibility restriction due to availability of E5 protection grade petrol New (main) grade introduced in compatible vehicles assumed to be MY2005+ Increasing FAME in diesel up to B7 by No vehicle compatibility restriction Assumed 1 Mtoe FAME/HVO coming from waste oils with a 2x RED factor (DG ENER) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Biofuel blends in EU market Gasoline Grade 1 (E5) Gasoline Grade 2 () Diesel Grade 1 (B7) Diesel Grade Alternative fuel demand in all transport sectors CNG LPG FAME HVO BTL EtOH conv FAME Total Ethanol RED: road RED: all sectors 15,0% 12,5% 10,0% 7,5% 5,0% 4 EtOH adv. 5 2,5% Electricity B7, 0,0% 24

25 JEC Biofuel Implementation Scenarios Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 Gasoline Grade 2 E20 Gasoline Grade 3 Gasoline Grade 3 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 Diesel Grade 2 B10 (HD) Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 E20 Gasoline Grade 2 Gasoline Grade 3 Gasoline Grade 3 E85 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 Diesel Grade 2 Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 Gasoline Grade 2 E20 Gasoline Grade 3 Gasoline Grade 3 E85 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 B10 (all) Diesel Grade 2 Scenario Scenario Gasoline Grade 1 E5 Gasoline Grade 1 E5 Gasoline Grade 2 E20 Gasoline Grade 2 Gasoline Grade 3 Gasoline Grade 3 E85 Diesel Grade 1 B7 Diesel Grade 1 B7 Diesel Grade 2 B10 (all) Diesel Grade 2 B10 (HD) Scenario Gasoline Grade 1 Gasoline Grade 2 E5 Gasoline Grade 3 Diesel Grade 1 B7 Diesel Grade 2 B15 (HD) Scenario 1: Reference Case Scenarios 2-4: Higher Biofuel Grades Scenarios 5-6: Higher Biodiesel Grades (HD) Scenarios 7-9: Plus Flex-Fuel Vehicles (FFVs) Source: JEC Biofuels Study (2011) 25

26 EU27+2 Transport FAME and Ethanol Demand (Mtoe/a) JEC Biofuel Implementation Scenarios % RED FAME Ethanol % RED: Road % RED: All Modes 15.0% 12.5% 10.0% % % 5 2.5% 0 Scenario FAME Ethanol 1 (REF) B7 B7 B10 B10 B7/B15H B7/B10H B7 B7 B7/B10H E20 E20 E20 E20 /E85 E20/E85 /E85 0.0% Optimistic assumptions used for vehicle compatibility and market uptake Considerable coordinated effort would be required to implement higher biofuel scenarios by 2020 achieving only a small increase in % renewables Source: JEC Biofuels Study (2011) 26

27 Future Fuel Grades: Implications and Wildcards Implications: Before 2020, E5/ (ethanol and ether), B7, and E85 are most likely fuel grades for broad market penetration Selected markets for B10 and B30-B100 for captive fleets Customer awareness and fuel/vehicle labeling important Difficulty meeting RED and FQD targets complicated by 5% cap on conventional biofuels and ILUC reporting factors Demand for advanced biofuels that tick all the boxes Wildcards Member State mandates and expectations (NREAPs) Fuel demand on refineries and imports/exports Compatibility of future vehicles with higher biofuel grades Pace of development of advanced biofuel technologies Fuel costs and customer acceptance 27

28 Energy/GHG Reductions from Well-to-Wheels 1. Improve efficiency, reduce GHG from fossil fuel production Improve energy efficiency (WTT) Decrease GHG/CO 2 emissions Immediate impact as manufacturing efficiency improves 2. Replace fossil fuels with sustainable renewable fuels Significant questions regarding availability, sustainability Slower than expected development of advanced biofuels Immediate impact as renewable fuels enter marketplace 3. Improve efficiency of vehicles and road transport Improve efficiency of engines and vehicles (TTW) Longer-term impact as the vehicle fleet is steadily upgraded Improve efficiency of road transport through information technology and non-technology measures (reduce congestion, eco-driving) Immediate impact as efficiency measures are implemented 28

29 New Expectations, New Options for Road Transport Modern Engine Systems Spark Ignition + Sequential Fuel Injection + Gasoline Direct Injection Compression Ignition + Direct Injection Alternative Engines and Powertrains Advanced Combustion + HCCI, CAI Hybrids & Plug-in Hybrids Battery Electrics + Hydrogen and Fuel Cells Urban Air Quality (CO, HC, NOx, Ozone, Noise) and Energy/GHG Reduction (CO 2, CH 4, N 2 O) Modern Fossil Fuels 10 ppm Sulphur Fuels Vapour Pressure Cetane Number Additive Technology Alternative Fuels Bio-fuels + 1 st and 2 nd Generation Compressed Gases + LPG, CNG + DME, Biogas, H 2 Advanced Aftertreatment Advanced Aftertreatment 29

30 Global Engine Production by Technology Source: AVL (2012) 30

31 Paths Forward in a Carbon-constrained World Source: MIT Consortium: On the Road in 2035 (2008) 31

32 Challenges for European Refining Economic outlook combined with refinery over-capacity will keep pressure on margins (5 10 years?) With many product quality & supply/demand challenges Continuing restructuring and new players in refining sector Legislative pressure is continuing to increase Plus more compliance to come from existing EU Directives Political focus is on GHG reduction but traditional environmental issues have not disappeared Vehicle emissions, air quality, noise, water, waste, etc. EU is adopting an anything but oil strategy Goal is 80-95% decarbonisation of energy sources by 2050 Energy for transportation is continuing to move away from conventional refinery products to renewables/alternative fuels Vehicle fleet will continue to diversify - changing the fuel demand, diesel/gasoline balance, import/export outlook, etc. 32

33 Thank you for your attention! 33