WPC 2021: Middle East companies focus on climate change, circular-economy solutions

17:54 PM | March 12, 2021 | Mark Thomas

The industry’s focus on sustainability and circular-economy solutions has been catalyzed by the COVID-19 pandemic, with technology playing a key role in the industry’s response to increasing external pressures to find solutions that address the challenge of climate change, according to a panel of leading executives at IHS Markit’s World Petrochemical Conference (WPC) 2021, being held in a virtual format.

“The pandemic reemphasized the value of the products the industry produces,” said Sabic’s Bob Maughon, chief technology officer/executive vice president sustainability, technology, and innovation. “We were going through a phase prior to the pandemic of questioning the role of plastics and their role in the value chain. It became very clear that they do provide a value. But the pandemic also accelerated the need to address the challenges,” he said. The pandemic has had “a focusing effect” for the industry, creating an acceleration of funding for the infrastructure and investments needed, as well as additional pressure on addressing the challenges, he said. 

The past year has seen “digitalization and artificial intelligence come to the fore,” said Alan Nelson, CTO at Adnoc. “If you didn’t believe in digital before the pandemic, you most certainly do today. The companies that were not investing, or not investing at scale, in digital technologies were caught out during the pandemic.” 

The scale and importance of the energy and petrochemicals industries means “we have to deliver on this transition,” said Ahmad Al Khowaiter, CTO, Saudi Aramco. “It’s really our role, as an energy company that is integrated with the hydrocarbon industry. It is critical for success. Some people believe it’s going to happen, regardless. I have to say that they don’t understand the scale of our industry, if they don’t understand that we have to be part of the solution. Otherwise there’s not going to be a solution, in my view.”

One of the challenges ahead is that the last few years “have been a challenge for investment in supply,” said Khowaiter, who is expecting “some real challenges to meet supply in the next few years” as the global economic recovery takes place. “There’s always this bounce of pent-up demand. We think markets are going to get tight. That’s why, while others were really trying to reduce costs and avoid investment, we continued to invest in supply and new production, because we’ve been there before, and we know this can lead to a crisis. So, to avoid that, we’ve continued to invest through the market because that also puts us in a very good position when the bounce-back does come,” he said.

Pressure to improve sustainability did not decrease during the pandemic, said Maughon. “Although the demand for our products increased, and the value of our products was apparent—whether that be in PPE, healthcare, or equipment supporting the lives of individuals—the need to address the waste, and the carbon challenge, became even more pressing,” he said. Sabic has prioritized around key pillars including resource efficiency, carbon intensity of its products, innovation and sustainability solutions, and circular solutions, he said, focusing on developments around renewable-based products, certified renewable materials, and closed-loop solutions. The company is “even changing the way we look at our capital allocation, and ensuring that we’re prioritizing the right investments to make that a reality in the future,” said Maughon.

“There’s no question that today we, across the industry—whether it’s oil and gas, or petrochemicals—are facing unprecedented challenges," according to Nelson. "Equally, we’re facing these challenges at a pace that is unparalleled in recent memory. Technology is providing us with a significant opportunity to address all of these challenges, whether that’s increasing processing efficiency, production capacity, decarbonization, or otherwise increasing the industry appeal to a new tech-focused generation. Technology is really the cornerstone that will allow us to address all of these challenges, not only those we’re facing today but also those we’ll face in the future,” he said.

Adnoc’s 2030 sustainability business strategy, launched in 2020, has seen it focus on several technologies to lower its emissions and create a more circular business model, he said. Adnoc has targeted a decrease of 25% in its carbon dioxide (CO2) intensity by 2030, with “many projects and ongoing initiatives to improve our operating efficiency and reduce our overall CO2 and greenhouse gas emissions,” he said. “I want to stress the operating efficiency aspect of this as well. Simply by implementing commercially proven, ready technology, we can have a significant impact in reducing our overall CO2 footprint, not only for Adnoc but industry-wide as well,” he added. 

Adnoc currently has the capacity to capture and utilize, primarily for enhanced oil recovery, around 800,000 metric tons/year of CO2, but is now aiming to increase this capacity to 5 million metric tons/year by 2030. “Many of these projects are well underway today,” he said. 

Aramco’s Khowaiter highlighted the low-cost advantages of the Middle East, attracting the petrochemical and other industries because of its feedstocks. “A lot of people out there are saying this is going to end because there is not a need for hydrocarbons in the future. I believe not only that there is going to be a greater need for hydrocarbons going forward, but it’s going to be this region leading in that,” he said. This will be due to trends including higher carbon prices, which Khowaiter said would mean that low-cost resources “will be emphasized and accelerated in the transition because of the higher cost of emissions. The lowest emissions, lowest-cost hydrocarbons will actually be more competitive,” he said.

Sabic’s Maughon also highlighted the role that both mechanical and chemical recycling will play in providing more sustainable solutions. “We see both as essential to the solution… you’re going to see a set of complimentary solutions, an integration of those two solutions, as the most efficient way to manage the waste,” he said. The industry will, however, have to target chemical recycling “where it makes the most sense, where it addresses those materials that need that processing to take advantage of the recycling solutions. You’ll see both, and we’re focused clearly on both,” he said. 

Khowaiter also flagged the importance of blue hydrogen initially in the energy transition. “Hydrogen has a tremendous role,” he said. “Blue hydrogen is going to be a big market, [but] it’s going to take some time. We don’t think it’s really going to take off until 2030.” 

By 2030 and beyond, however, “we’re all expecting this to reach—even by 2050—up to 10–15% of the energy mix, which is a tremendous amount,” he said.