Technical and Cost Considerations for Decarbonizing the “Refinery of the Future”
The Refinery of the Future report examines the technical pathways that existing refineries1 could use to decarbonize their operations during a transition away from traditional transportation fuels – such as gasoline and diesel – while continuing to provide the necessary intermediate products for modern life, such as asphalt, solvents, waxes, lubricants, and petrochemicals. The pathways include:
- Energy Efficiency: Includes better heat integration, waste heat upgrading, electrification, and improved energy monitoring systems to lower the carbon footprint.
- Carbon Capture and Storage: This includes applications for hard-to-abate process emissions from the fluidized catalytic cracker (FCC) and the crude distillation unit (CDU).
- Low-Carbon Hydrogen: Hydrogen produced electrolytically using renewable energy and hydrogen made from natural gas with carbon capture and storage (CCS) can serve as a refining feedstock and fuel within the refinery.
- New technologies: Upcoming technologies such as electric-powered furnaces (e-furnaces) and oxy-firing may play a significant role in future decarbonization projects. However, these technologies are currently at low levels of technical readiness and are not included in this analysis.
The report examines refining in four geographic areas: 1) Europe, 2) the United States Gulf Coast, 3) the Middle East Gulf Cooperating Council, and 4) Singapore. This analysis explores the costs and barriers refining must overcome to contribute to a decarbonized future. Subsequent CATF reports will describe policies in these regions that could facilitate this transition. Highlighted here are key findings from Europe and the United States.
Decarbonizing Europe’s existing refineries
Europe’s refining sector has been prominent for decades. In recent years, however, capacity on the continent has declined, and today, it represents around 13% of global refining capacity. Expected shifts in regional product demand will cause small, remote refineries to close, and surviving refineries will adapt by shifting configurations and implementing decarbonization technologies.
To meet near-term announced pledges by European nations, refineries can implement energy efficiency improvements and electrification projects, along with carbon capture on critical sources within the refinery, such as the FCC and the CDU. Refineries will also likely increase low-carbon hydrogen use (both electrolytic hydrogen and hydrogen made from natural gas using CCS) to meet net-zero objectives.
However, costs and lack of infrastructure constrain the deployment of these approaches and will require a stronger policy push. Fuel switching of boilers and fired heaters to hydrogen or electricity is also anticipated in the 2050 decarbonization roadmap.
Decarbonizing existing U.S. refineries
The refining and chemical sector in the U.S. is responsible for 60% of industrial emissions, with refining generally responsible for ~10% of the lifecycle emissions associated with a barrel of oil. The study investigated Scope 1 & 2 emissions reduction pathways based on a combination of methods and technologies.
In the U.S., legislation such as the Inflation Reduction Act (IRA) has established tax credits for low-carbon hydrogen production and carbon capture, utilization, and storage. The study found that energy efficiency projects will be economically viable by 2030, and like in Europe, most refineries will likely have strict energy management systems. The report determined that centralized carbon capture through a new autothermal reformer using refinery off-gases as feedstock was the most financially viable carbon capture strategy compared to multiple post-combustion carbon capture units.
The centralized approach requires high capital investment, and the refinery’s total natural gas consumption will increase. A significant and common emission source in U.S. refineries is the FCC, which can only be decarbonized with post-combustion carbon capture.
Other key findings and considerations
The economic assessment of decarbonization projects in this analysis excluded the opportunity cost of shutting down refineries or certain sections of the refineries for extended periods to undertake significant capital projects. Furthermore, refineries optimize their real estate to minimize distances between unit operations. Some plants may lack space for carbon capture or must locate units far from the ideal place, increasing capital costs and eroding economic prospects.
The study also investigated the prospect of converting refineries into biorefineries to produce sustainable aviation fuels (SAF) to reduce Scope 3 emissions2 and deliver low-carbon fuels to decarbonize certain transportation industry sectors. The study found a positive economic case for biorefineries in the U.S. and Europe under the existing tax credits and subsidies. Although many refiners and oil majors have been converting their refineries to produce SAF, biorefinery capacities (5000 – 15000 BPD) are significantly smaller than those they replace. Biorefining capacity is not expected to exceed a small fraction of global crude oil refining, in part due to limits on the supply of sustainable biomass feedstocks that can be used to produce bioenergy products, posing scalability challenges for refineries globally.
What’s next?
Decarbonizing refineries is technically feasible, but the economics of doing so largely depend on the facility’s configuration, site-specific factors, and the policy environment in which they operate. Without significant policy changes, decarbonizing a conventional refinery would be uneconomic and unlikely to occur without further incentives or regulations. Future CATF reports will describe policy options to overcome the barriers identified in this report.
Future refineries may differ significantly from those operating today and be tailored to producing petrochemicals. Many integrated refinery and petrochemical sites exist today, and refineries can be modified to maximize the production of petrochemicals. There are also proposed crude-to-chemical processes that ‘bypass’ the traditional refinery process. This petrochemical route will need to be investigated further but will unlikely be pursued by existing refineries.
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Supplemental reports
1 This report focuses on the various options that can be done to transition a single hypothetical refinery and does not account for all system-level constraints that may affect the various approaches that are described in the report. The results of this report do not necessarily reflect all of the positions of Clean Air Task Force.
2 Other pathways to reduce Scope 3 emissions and to repurpose refining assets were clean fuel facilities (e-fuels) and clean hydrogen, ammonia and methanol production facilities although a techno-economic assessment for these options.
