For those of you who are new to UKPIA away days it is worth me saying that in previous years this away day has been about self-reflection for the organisation. Planning our priorities for the next business year, about getting to know one another ‘out of the office’ over one or two drinks...
This year is the organisation’s 40th birthday, having been founded in 1979 and in a funny way this year does have those two themes, just on a slightly grander scale…
On Tuesday as Martin mentioned, we were in the House of Commons, launching the UKPIA Future Vision which is the focus of today. That Vision is indeed about planning future priorities but perhaps we're talking a bit longer than just next year…
Likewise, there is an element of getting to know you today, but as Martin also said, this is a larger and much more diverse set of representatives than we’ve hosted in previous years. Whilst this is really positive, it is also rather daunting!
You are all most welcome and rather than this being a day looking at the association itself, I hope that you will leave feeling that there was something to take away for you and for your own organisation.
Today is a day when UKPIA and our member companies wish to step out of our comfort zone and begin to build wider relationships that can help us meet Government’s net-zero targets.
The UKPIA Future Vision aims to show:
- That low-carbon liquid fuels can achieve similar carbon emissions abatement on a lifecycle basis to those in high electric scenarios.
- That our infrastructure can deliver technologies to produce those low-carbon products, but also reduce significantly the manufacturing emissions in the sector
- That working with other sectors, we can further reduce industrial emissions significantly through clustering
- And that the future of mobility - whether HGV platooning, automation, or simply more time spent in service stations while charging - can continue to be catered for by forecourts; Whether that be as urban logistics and charging hubs or keeping a wide range of energy options and vital services open to rural users.
- This is a vision that can be delivered, and which could offer the clean growth that Government expects to see.
So let’s set out our stall: our sector supplies 38% of final energy consumption and almost all transport energy in the UK –
- all the fuel for planes,
- almost all the fuel for ships
- And around 98% of the road fuels that transport 66 million people every day.
Beyond transport, the petrochemicals sector - that produces products as diverse as crayons and carpets, safety glass and shampoo – is heavily dependence on a vibrant downstream oil sector for its feedstocks…
And over a million tonnes of bitumen builds our roads each year and there are even specialist products in the batteries in your phones.
Yet there are many who seriously question the role of our products in society.
That's alright, companies and people in our sector should not take our position for granted – and it is worth bearing in mind that company shareholders are leading some of those calls questioning what happens next - so it is absolutely necessary that we answer some of those questions that people have about the downstream oil sector’s role in society…
But we want to do more than that:
We are setting out to capture imaginations and show that the positive impact we have on everyday lives through those products can be delivered absolutely in alignment with ambitious climate and environmental goals
That’s worth repeating: our products can be delivered absolutely in alignment with ambitious climate and environmental goals.
Where we are today: Jobs and GDP
A little more about our footprint and about the Jobs and GD that this sector delivers today.
Earlier this year, we published a report done for UKPIA by Oxford Economics that looked to quantify for the first time what the whole downstream oil sector contributes to the UK economy...In short it is still a lot.
The sector that is made up of 6 refineries, 60 terminals, 3000 miles of pipeline and over 8000 filling stations is absolutely everywhere in modern life, supplying reliably and efficiently the products that enable the UK to run, to innovate and prosper.
That infrastructure directly employs over 120,000 people and supports over 300,000 in total.
With the sector directly contributing £8billion of GDP per year and supports a further £12billion beyond that.
The dual challenge: Policies and Paris
Yet undoubtedly, there are challenges ahead.
Climate change resulting from human activity – that very same activity that helps us to prosper – is really happening and changes need to be made.
There is a dual challenge: to grow but to do so sustainably.
The UK Government has understood this and has been at the forefront of new policy that seeks to challenge business and the public.
BEIS set out a way forward that can produce Clean Growth : seeking to maintain and build prosperity but do so in a way that reduces impacts on the environment.
- The Clean Growth Strategy highlighted that the UK has been able to grow whilst reducing Greenhouse Gas Emissions – but said more must be done.
- DEFRA’s Clean Air Strategy shared the evidence that more local emissions to air affect our health and that while many emissions are lower now than they have been for a long time – that more must be done.
- Most recently, the Prime Minister has made clear that the UK’s laser like focus on this area is not waning and we are the first major economy with a net-zero target right there in legislation.
More must be done.
While more must be done, and public feeling is supportive, the UK now needs to find its pathway to achieving those ambitious targets.
Cutting emissions, yes – but also (and I didn’t want to mention the Brexit word) keeping the economy strong, keeping the country moving and helping the UK to establish itself at the forefront of delivering the Paris Goals.
That balance is a tough one and will not happen overnight. [pause]
With that in mind, we’ve looked to consider how that progression might occur…
In particular, we’ve looked at some of the most ambitious scenarios out there which are fully in line with the Paris goals, and which identify many technologies that could get us to a net-zero economy.
In every scenario we’ve looked at, there remains a clear role for the fuels we already produce. That comes from the fact that HGVs and aeroplanes have high energy density requirements that existing battery technologies simply cannot provide.
Batteries and hybrids have a huge potential to decarbonise passenger vehicles, but they are not necessarily the silver bullet.
It is at that point where the development of a new scenario comes in and one which we term the low-carbon liquids scenario.
Working with our colleagues in Fuels Europe, we show that low-carbon liquids – can reduce emissions as much as a high deployment of Electric Vehicles when we consider the whole lifecycle of vehicles and the fuels they use.
Given that the low-carbon liquids scenario can achieve the same end-point, we believe that it is a scenario worth pursuing.
Low-carbon liquid options
The Vision identifies many low-carbon solutions, which could decarbonise right across the economy. Some of the technologies needed are already here and some need some work.
There are those we already know such as
- Low-carbon Fossils – LNG or LPG - and Biofuels like ethanol and FAME
But there are also less familiar options too…we explore:
- Renewables from Non-Biological Origins (RFNBOS). Such power-to liquids or e-fuels
- Fuels produced from unrecyclable plastics
- And Development Fuels – which have been introduced via the RTFO in recent years also look to increase new pathways to delivering low-carbon liquids.
All of them can reduce lifecycle emissions from today’s fuels.
They are not without their individual pros and cons and we need to think carefully about what feedstocks, energy and other resources will be available in coming years, but many of these future fuels are well understood processes and ones where the UK downstream oil sector is well placed to deliver them.
Using the expanse of assets we already have to deliver low carbon options would make a lot of sense.
Downstream already delivers hundreds of millions of litres of fuel every day and due to that infrastructure, the introduction of low carbon fuels into that supply chain could make a big difference in the near term.
98% of UK cars still use petroleum products, but if they could run on low-carbon fuels then this will have a far greater impact now on reducing emissions while consumers make the transition to new vehicles.
Government has already mandated biofuels which make some difference, but we believe that incentivising all low-carbon liquids production can make a much greater impact.
Refinery of the Future
Of course, the fuels need to be produced first. And that is where innovation and new infrastructure may be needed.
So, we have looked to scope out what we’ve termed ‘The refinery of the future’ that could be more efficient itself as well as able to create these new fuels.
As with fuel alternatives, there are a range of options to lower emissions on a refinery.
From the incremental; like energy efficiency measures and improving catalyst that are ongoing…to more fundamental changes such as using digital technologies to improve running times and safety and even using some of those lower carbon fuels mentioned before to replace crude oil in a refinery.
Those changes, incremental and more fundamental will be important in decarbonising our sector, but an area of great potential is in Carbon Capture technologies.
The important role for carbon capture technologies to decarbonise our sector is not something new - it was already identified by the joint industry and government work on the ‘2050 Pathways’ back in 2014, but it is also a technology that, combined with many other changes, could take industrial emissions to near net-zero.
That is why we believe that CCUS needs to happen more quickly in the UK.
It is not just our sector that benefits as the technology has many potential applications across energy intensive industries.
I want to make clear today that our members are willing to work with others to make this happen and see scale deployment of carbon capture technology in the UK.
Working more with others is another major theme of the Vision that I would like to draw out a little more, and, could actually help us make the economic case better for CCUS.
Our Vision has a dedicated section on industrial clustering as a new way of working that could bring individual companies from across multiple sectors to deliver emissions reductions and business synergies that can benefit all.
I was privileged enough to visit the Port of Rotterdam earlier this year and speak with folks there who are at the vanguard of industrial clustering.
(not wanting to steal any of Erik’s thunder!)
They have set an ambitious pathway towards mid-century that in their most ambitious scenarios sees the Port’s total carbon emissions reduced by as much as 98%.
That is 5 refineries and many other companies based in the port thinking in a more collaborative sense not just about how they make money as individual entities but about how they can share….
- common goals: like to decarbonise,
- resources: like shared 3D printing of manufacturing components –
- and even sharing expertise: in their staff across business in the cluster to benefit all.
It remains early days of course but it was inspiring, to hear of business leaders coming together, to bring their skills, their infrastructure – along with their shareholders’-interests of course – and being able to plot a way forward that can grow businesses in a sustainable way.
This is absolutely what I believe BEIS wish to see when setting out the Clean Growth Strategy and is already happening in our industry overseas.
I want it to happen here.
If we can realise the potential of this sector to decarbonise – working hand-in-hand with other sectors – then I believe it can have an effect right across the supply chain.
Delivering a new set of products – low carbon products - through our existing infrastructure from modern refineries at the centre of low-carbon industrial hubs, and delivering to…
The forecourts of the future. Those that have responded to the needs of the consumer and remain what they are today: important and available to rural users as a ‘local shop’, and increasingly convenient for urban users with all able to act as a logistics hub for online shopping, or offering a bigger, more convenient retail offer while customers refill, refuel and recharge alongside one another.
Ultimately, ensuring that all users – EV, hydrogen or low carbon drivers, business, personal or ride sharers are all able to safely and securely meet their transport energy needs.
Are you still with me?
The UKPIA Future Vision makes the case that the UK downstream oil sector is both willing and able to deliver new processes and products that are 100% in line with UK ambitions to reduce carbon emissions by mid-century.
How do we make this future a reality?
Technologies and interconnectivity are key but breaking down boundaries elsewhere so that best available technologies can be deployed more widely, and quickly is an undoubted benefit that working in partnership could bring.
And this is where we need your help. While some of the technology solutions I’ve outlined are already making progress, that progress is not always here in the UK and that is something that we need to address.
I want UKPIA to work hand-in-glove with Government as well as with the whole of the downstream oil sector and beyond to ensure that low-carbon liquids, produced at advanced UK manufacturing facilities (our refineries) are a major contributor to the UK achieving a net-zero economy.
The last part of the Vision looks at policies.
We don’t say what the answers should be – government is much better placed to make such decisions that affect all businesses and voters alike – but I hope that by highlighting the positive role that this sector could play, and by pointing to policies that we believe could be enhanced to make that role a reality that we can work together to deliver this Vision.
Today I am delighted that we have representatives of the downstream oil sector in the same room as people who have different skills, different business interests and different approaches to reducing emissions.
Those from academia (whose research we need to move forward and have offered some of the technologies I’ve outlined today)…
….from other industries (who may share some of the same challenges in net-zero that we will)…
….from regulators (who are a key partner in helping us grow safely and remain focussed on meeting what the public expects)…
…and of course those in government (who must daily step back and consider how to balance the competing needs of growing society today while been sustainable for tomorrow)…
In writing this vision, and in talking about it today, I believe that while challenges lie ahead, that our sector can continue to contribute now while evolving itself early for tomorrow’s society.
That is something that must happen in fact. To meet UK targets, but also to help others reach theirs.
If the UK can lead the way in developing a more sustainable, low-carbon downstream sector then there is huge potential for that vision not to just be ours here in UKPIA, but that it can develop elsewhere.
First, by exporting high quality products that outcompete alternatives.
Then, being able to export the good practice, the know-how, and the technologies so that others can learn from the UK’s lead.
The UK represents a little over 1% of the world’s Greenhouse Gas emissions so it is vital that the answers that we are looking to produce years are exportable and that we carefully design, learn lessons and share those lessons in time.
As I have said earlier, it is great that we have a diversity of views in this room and I am sure that there will be some lively discussions in this afternoon’s breakout groups.
The downstream oil sector is able to help other parts of society meet its goals – when it is clear what needs to be done and the market is allowed to deliver.
It has done this previously by expanding rapidly in last century to make mass mobility possible.
It did it more recently, reducing sulphur in fuels to more or less zero, that meant vehicle manufacturers could make more efficient engines.
Reducing carbon and other emissions are the next such challenge and we can contribute.
UKPIA has set out our Vision for what the downstream oil sector could be: what products it could provide, and how it could greatly reduce the emissions we create in making those products.
I hope that by working with other sectors, with governments and regulators and with technical and academic experts, that we can again respond positively to challenges that are posed to us.
The Vision has been a considerable undertaking for the UKPIA team and one that I am very proud of.
Yet the hard work is just beginning.
There will be areas that are of big interest to the people in this room and some less so.
There will be some areas that we see in 2050 and some that may have fallen by the wayside.
But I look forward to building new relationships today and hearing your feedback on our Vision so that in the coming weeks, months and years UKPIA can continue to drive change that helps make our Vision a reality.