Refiners turn to cogeneration to fulfil climate obligations

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With energy representing up to 50% of operational costs, oil refineries are increasingly looking for opportunities to invest in energy efficiency, with combined heat and power production representing an important part of the solution.

ExxonMobil this week (23 March) inaugurated a new cogeneration unit at its Antwerp refinery, aiming to cut greenhouse gas emissions by approximately 200,000 tonnes per year. This equals taking about 90,000 cars off Europe’s roads, and is achieved by using 12% less fuel that a normal refinery would, the energy giant said.

Cogeneration is a tested technology which involves the simultaneous production of electricity and heat. As plants produce electricity for their own industrial purposes, the combined heat generated from the process is fed into cities’ district heating systems or used to generate steam used in industrial processes.

But the Antwerp refinery applies cogeneration in a unique manner. Instead of feeding the heat into district heating systems, it uses it to replace nearly half the fuel needed to heat up crude oil and convert it into refined products.

“Antwerp is unique because of the integration with the crude. I think there is an example where we took a very well-established technology, looked at the constraints of the site, and then applied this technology in a unique way that fits this site,” Darren Woods, ExxonMobil’s refining director for Europe, the Middle East and Africa, said at the plant’s inauguration.  

Woods said the company continues to investigate opportunities to expand its cogeneration capacity from the current 100 or so installations to sites where “investments make sense and we can get an economic return”.

He stressed that cogeneration is a great example of oil companies choosing to invest in a technology driven by market forces, rather than government incentives. “It is an important part of our energy efficiency strategy,” he said, adding that it both offers a business opportunity and cuts emissions. There is, however, a mix of investments in energy improvements, and cogeneration is just one component, he said.

EU pressure to cut emissions

The European oil refining industry has been alarmed by EU plans to set a cap on industrial CO2 emissions, arguing that it will hamper their competitiveness and drive business to areas with less stringent environmental rules.

The revised EU Emissions Trading Scheme, agreed in December 2008, caps industrial emissions at 21% below 2005 levels by 2020. However, energy-intensive sectors, including refining, cement and chemicals, have been pushing for exemptions and will be eligible to receive free pollution permits until 2027 if they meet certain criteria. As part of a compromise agreed by EU leaders in December, industries facing a significant risk of relocation were promised free allowances until that date (see EURACTIV LinksDossier).

Isabelle Muller, secretary general of Europia, the European Petroleum Industry Association, told EURACTIV that the European oil refining industry was concerned that in the absence of global carbon prices, Europe would be in a competitive disadvantage (EURACTIV 15/10/08).

“Today, when investing in refineries, we do not know if 40 years from now, we will have to pay 40 euro a tonne of CO2 emissions. Our concern is that it is only in Europe that we have to pay for CO2 emissions and not elsewhere. It is a competitive disadvantage for Europe. As soon as we have global carbon prices, then there will be no disadvantage and the decisions to invest in Europe or elsewhere will be even.”

ExxonMobil’s Woods agreed that the EU ETS is an “industry-wide challenge”. He said decisions on how to implement the system will have to recognise the costs they would bring to the industry. 

He pointed out that refineries are very energy-intensive, absorbing around half of their operating costs in energy supply.

“The industry is seeking a process that maintains maintains global equity,” said Woods. The major energy costs facing the industry were already an incentive for the industry to focus hard on energy-saving measures, he added.

In December 2008, EU leaders agreed new legislation to reduce the EU's emissions of CO2 and related greenhouse gases by 20% by 2020, while boosting the bloc's share of renewable energy use to 20% over the same period (EURACTIV 12/12/08).

The revised EU's Emissions Trading Scheme (see EURACTIV LinksDossier on 'EU ETS'), the 'flagship' EU policy to tackle climate change, agreed as part of the package, obliges the European power sector to buy all its emissions allowances in auctions from 2013 onwards. 

In other sectors, free allocations of emission allowances, which used to be the rule under previous legislation, will gradually be phased out, reaching 70% in 2020, with a view to full auctioning in 2027.

Nevertheless, certain energy-intensive sectors such as refining, cement or heavy chemicals could continue to receive all their allowances for free, if they are deemed to be "at significant risk of carbon leakage" – meaning relocation to non-EU countries with looser carbon dioxide legislation (see EURACTIV LinksDossier on 'carbon leakage').

  • 26-27 March 2009: European Business Summit to debate global climate negotiations. 
  • 31 Dec. 2009: Deadline for the publication of the Commission's list of sectors deemed to be exposed to a significant risk of carbon leakage. 
  • 2013:  Revised EU ETS due to enter into force.

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