Opinion by Ron Beck
The energy transition, inextricably linked with a global drive for sustainability in energy, chemical and related industries, is already impacting the European economy and all players across the energy value chain. These geopolitical forces were put into sharp focus in the final months of 2021. First, at COP26 and latterly at the major international energy event held in November, ADIPEC 21, where representatives of the capital-intensive industries discussed how their businesses are focusing strongly on increasing efforts to improve sustainability reach carbon-zero targets, and at the same time satisfy the world’s ongoing needs for energy from all sources.
Such events, together with the pressing countdown to 2030, and the culmination of the EU’s climate target plan, are focusing minds; acting as a catalyst for change and increasing the urgent need for technology that enables sustainability and environmentally-efficient operations. An additional thrust is a soaring demand for energy as we emerge from the impacts of the pandemic and as Asian economies continue to grow, also underscoring the need for more sustainable solutions, which includes the responsibility to meet the needs of affordable energy to a growing middle class in emerging economies.
Industry has been implicitly granted the opportunity to demonstrate a leadership role, given that the world’s governments at COP26 fell short of reaching the kinds of agreements that climate change activists and much of the global public have been calling for. There is growing evidence that energy companies are taking this mantle of responsibility very seriously. ARC Advisory Group’s recent report, “The Sustainability Future for Energy and Chemicals” revealed that 90% of global energy and chemical companies have sustainability initiatives in place. A recent AspenTech survey of over 300 companies globally indicates that 78% of executives believe that effective carbon reduction provides their company an opportunity for competitive advantage
But what solutions are most suitable to meet the needs of the energy transition and help energy companies achieve their sustainability goals? Renewable energy sources such as wind, solar, and geothermal power generation are of unequal potential geographically. Many parts of Asia are challenged by limited access to locations that can generate substantial solar or wind power. Whereas advantaged locations such as Indonesia and Iceland have abundant geothermal potential (as well as the mineralogy to support permanent fixing of CO2 as carbonates). In addition, some industrial applications, such as air and ocean transport and steel manufacture, are hard to decarbonise. What’s more, electrification of vehicles and other applications will create a large future demand for metals processing, especially the so-called rare earths, which has an uncertain lifecycle carbon impact as well as a concentrated supply chain.
Enter hydrogen which offers the opportunity to fill a significant fraction of the world’s need for energy and can be generated carbon-free. Tayba Al Hashemi, CEO of ADNOC Sour Gas and chairman of ADIPEC, referenced its importance when he said, in the lead-in to the important international gathering: “If the world is going to manage a secure and successful energy transition the role of traditional energy companies, with their expertise, resources and capabilities will be critical. ADIPEC 2021 will provide a much-needed platform for industry leaders and innovators to explore the impact of shifts in government policy and changing demand dynamics, as well as to progress the decarbonisation potential of technologies like CCUS and hydrogen.”
Indeed, on day one of the ADIPEC event Abu Dhabi National Oil Company (ADNOC) and ADQ announced that Japan’s Mitsui and the South Korea’s GS Energy have agreed to partner with TA’ZIZ and Fertiglobe to develop the world-scale low-carbon blue ammonia facility at the TA’ZIZ Industrial Chemicals Zone in Ruwais. The partnerships are expected to accelerate Abu Dhabi’s position as a leader in low-carbon fuels, capitalising on the growing demand for blue ammonia as a carrier fuel for clean hydrogen.
However, for all its undoubted potential, hydrogen also presents several challenges, especially with respect to safety and infrastructure challenges of storage, transport, cost of electrolysis generation, sources and availability of renewable electricity for electrolysis, cost and efficiency of carbon capture (in the case of blue hydrogen) and end-use safety.
Despite these challenges, the hydrogen economy is seeing strong momentum, reflected in a continuing wave of announced capital projects that aim to deliver hydrogen generation and storage at scale. In fact, several regions are investigating the feasibility of a hydrogen economy as a significant zero-carbon alternative.
Digital technology will be an essential component in delivering the hydrogen economy, accelerating and de-risking innovation, de-risking adoption and enabling faster and better scale-up and optimisation of the hydrogen value chain. It will require significant investment in new infrastructure to scale this technology up, and a concerted effort by government and the private sector to support the process. But digital technology will ultimately be fundamental in overcoming many value chain obstacles, maximising commercialisation, design and supply chains, and boosting production and economics.
The role of digital technology in the hydrogen economy
Simply put, software technology will be a strategic asset as the industry seeks to successfully navigate the energy transition. In the case of the hydrogen economy, digital technology will be a major accelerator for driving down the cost of hydrogen, evaluating and optimising many value chain alternatives and removing constraints to safely scale the value chain.
Drilling down further, here’s how today’s digital technologies can expedite the transition to hydrogen, impacting key functional areas:
Employing advanced methods for innovation and optioneering, while driving down costs – Rigorous process simulation software, incorporating both chemistry and electricity, can represent hydrogen electrolysis, hydrogen reformer processes, other innovative hydrogen synthesis approaches and hydrogen liquefaction and pipeline transport – accelerating commercialisation and improving access to capital.
Several specific digital technology opportunities to accelerate innovation include:
- Hybrid models incorporating Artificial Intelligence (AI) together with first principles models for new processes, including membrane technology, combining reforming, carbon capture and novel processes
- Rate-based simulation modeling for carbon capture
- Powerful, rigorous models to handle electrochemistry
- High-performance computing for evaluating thousands of alternatives in an optioneering context
- Integrated economics to rapidly screen techno-economic alternatives during concept design and pilot plant testing.
- Integrating collaborative engineering workflows. Cross-functional teams (within and across organisations) will be able to rapidly select concepts, scale-up designs, execute projects and use modular design to accelerate industrial implementation. This will drive down project timetables 50% or more
- Facilitating advanced, integrated supply chain planning. New software advances optimally integrate the hydrogen economy value chain with existing natural gas and power networks
- Automating processes to create the self-optimizing plant paradigm. New technologies such as hydrogen electrolysis, carbon capture, crude to chemicals and industrial scale fuel cells to be deployed as autonomously as possible to compensate for shortages of highly-skilled operators
- Optimising the value chain with risk and availability modelling. Use new capabilities to evaluate hydrogen production, transportation, storage and end-use options as well as the risks to achieve reliable energy goals.
For both hydrogen electrolysis and fuel cells, the ability to simulate electrochemistry, handle dynamics and consider stochastic variation are all crucial. Advanced modelling and digital twin solutions have played a prominent role in the hydrogen generation research and development arena for the past 30 years.
Solution: Digitalisation Across the Value Chain
As the industry transitions to hydrogen, it’s vital that companies look for asset optimisation software that extends across the entire value chain, addressing the key areas of production, distribution and storage and usage.
This kind of technology will be key in assisting companies as they explore all avenues of the hydrogen economy including choosing between different energy choices, given all the different variables they may have to consider around regional energy options, industrial players and government policies. It will be crucial also in supporting the adoption of innovative new approaches: from green hydrogen electrolysis to carbon capture, or process models from integrated economic and cost modelling, energy efficiency optimisation and risk modelling workflows.
Beyond Hydrogen: Short- and long-term sustainability
The energy industry today is facing a number of challenges – the need to drive to net-zero carbon, macroeconomics impacting global demand for hydrocarbons; and an energy transition that’s gaining momentum and building demand for renewable electricity and zero-carbon mobility solutions.
At the World Economic Forum’s Davos Agenda in January 2021, Bill Gates talked about the need to create a trusted global carbon market, which will spur the need to shift very large capital investments into low carbon areas. He talked specifically about the hydrogen economy, carbon capture and energy storage, as well as Green Premiums and driving the economics of new technologies through scaling and investment. At ADIPEC 2021, some projected that by 2030 green hydrogen would be cost compatible with blue hydrogen. However, IHS Markit Vice Chairman, Daniel Yergin, countered that that the limiting factor might be the supply constraint of “green molecules.” Yergin predicts that the global demand for oil and gas will continue to grow well into the 2030s.
Given this projection, it is clear that change is not happening fast enough for many advocates, and political pressure will continue to grow. There are unique and differentiated technologies available today with respect to innovating, scaling and achieving competitive advantage in the hydrogen economy, biofuels and other energy transition strategies. There is significant opportunity now for companies to accelerate the time-to-value for the hydrogen economy, carbon capture and biofuels by leveraging today’s digital solutions that help ensure faster adoption, scale and competitive advantage. Those that do so will be well placed to claim a leading role as this new economy plays out.
About the Author
Ron Beck is the Senior Director for Industry Marketing at AspenTech.
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