Phillips 66 upbeat on hydrogen fuel
Phillips 66 is optimistic that hydrogen can help diversify the energy mix as industries around the world step up efforts to reduce greenhouse gas emissions in coming years.
After introducing a lower-carbon unit called Emerging Energy in January of this year, the US independent refiner fielded a rush of calls from groups looking for project investments, as well as a fair amount of commentary from peers skeptical of its hydrogen initiatives, according to vice-president of emerging energy Heath DePriest.
"We talked to a lot to our peers and we heard a lot of people say, 'That is really not feasible, hydrogen, that is 2030-plus,'" DePriest said recently at a conference at Houston's Rice Baker Institute. "But we see people doing it, and we think of the mantra that 'the person who says it is impossible should not interrupt the person doing it.'"
The Emerging Energy business is already overseeing a few hydrogen investments, including plans to explore hydrogen as a fuel option for light-duty and heavy-duty vehicles through Phillips 66's Switzerland-based COOP retail joint venture.
But hydrogen has many potential use cases beyond automotive, where hydrogen fuel cells have been largely overshadowed by the electric vehicle in recent years. While sustainable aviation fuel (SAF) is front-and-center in most discussions about decarbonizing aviation, a few companies including European plane manufacturer Airbus intend to develop hydrogen combustion-powered aircraft by the 2030s. These varying approaches will be necessary to help many industries wean off of fossil fuels, DePriest says.
"People trying to electrify planes, that is going to take a long time," DePriest said. "And the stable aviation fuel made today cannot be blended more than 50:50 with traditional fossil fuels, so how do we get to 100pc?"
DePriest's appearance at Rice came just before Phillips 66 committed to new greenhouse gas reduction targets on 30 September. The company pledged to cut its Scope 1 and Scope 2 emissions — those arising from directly owned and operated assets and from energy consumption, respectively — by 30pc by 2030, compared with 2019 levels.
Unlike several of its US refining peers, some of which also tout emissions reduction targets amid widespread support for decarbonization, Phillips 66 has addressed concerns over its Scope 3 emissions with a pledge to cut greenhouse gas emissions resulting from use of its products by 15pc this decade.
Colorful debate
Stronger demand for renewable hydrogen products could help bring Phillips 66's lower-carbon goals within reach. It plans to produce 150,000 metric tonnes/yr of renewable hydrogen by 2030 under its new sustainability plan, at a time when many analysts expect hydrogen demand to rise in the aviation, shipping and steel sectors. But what Phillips 66 means by "renewable" is still unclear.
The US refiner has shown support for carbon capture and storage (CCS) techniques that promise to trap emissions caused by production of hydrogen with natural gas, typically referred to as "blue hydrogen" production. On the other hand, the company sees a "huge technological gap" that needs to close before industries can count on so-called "green" hydrogen produced with solar- and wind-powered electrolyzers, chief executive Greg Garland said at a media roundtable this summer.
Although environmental justice groups including Earthjustice have accused oil and gas groups of using blue hydrogen and CCS as an avenue to continue exploiting fossil fuels, they appear likely to receive significant capital in ensuing years. To wit, CCS projects are earmarked to receive around $3.6bn in federal funding in the Infrastructure Investment and Jobs Act proposed in the US Congress.
Despite its own preference for blue hydrogen methods in the near-term, Phillips 66 has bet on both horses through a plan to participate in a green hydrogen initiative in the UK through its 230,000 b/d Humber refinery in Killingholme. It did not respond to a request for comment on how it defines the renewable hydrogen targets in its new sustainability plan.
But any debate between green and blue methods in today's terms comes down to questions of scale and efficiency, DePriest said.
"I think those [green hydrogen] projects are important, but it is the scale you have to think about," he said. "The largest electrolyzer in the US, the amount of hydrogen it produces is one-tenth of what an average hydrogen plant at a refinery makes."
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