[ID] => 9863
[post_author] => 34
[post_date] => 2018-07-23 10:43:17
[post_date_gmt] => 2018-07-23 09:43:17
[post_content] => The push for decarbonisation is gathering pace, nowhere more rapidly than in Europe. Governments are planning to phase out liquid-fuelled vehicles within the lifetime of many of those currently at work and, according to a recent study by Wood Mackenzie, we can expect to see global peak oil demand in around 2036.
The massive reduction in the use of gasoline and diesel in particular, along with the concomitant increase in demand for electricity generation, raise serious questions about the future structure of the downstream oil industry. That applies most obviously to refiners but also to bulk liquids storage terminals. The reduction in refinery capacity in Europe over the past decades means that independent bulk liquids terminals have taken on an increasingly important role in managing fuel supply security. But what future do they have if those fuels are to be withdrawn?
The UK government released details of its decarbonisation strategy in July this year. The Road to Zero – Next steps towards cleaner road transport and delivering our Industrial Strategy
sets the future needs of the country and the steps that will be taken to move towards zero tailpipe emissions. The document does not, though, address the question of how the transition will impact the existing fuel supply infrastructure.
The Tank Storage Association (TSA), which represents bulk liquids storage terminals in the UK and Ireland, says it recognises the need for decarbonisation and the focus on road transport as a major contributor to this goal. However, TSA says, the strategy raises several significant concerns for the bulk liquid storage sector, and more widely for the downstream oil industry.
THE CURRENT POSITION
Bulk liquid storage in the UK is an essential part of the fuels supply chain, providing an interface between sea, road, rail, inland barge and pipeline logistics. The tank storage sector provides many of the raw materials and finished products required to ensure that the UK economy thrives and that energy needs are met. The UK is a net importer of both diesel and aviation fuels, which are imported to, and distributed from, bulk liquid storage facilities.
Hydrocarbons account for more than 60 per cent of the volumes of bulk liquids stored at TSA member sites and provide the infrastructure necessary to support the UK demand for transport fuels. UK businesses also rely on these facilities for the export of bulk liquids, including gasoline. Import facilities also provide greater resilience within the supply chain by ensuring flexibility to meet demand, particularly in periods where domestic supplies of transport fuels cannot be guaranteed.
All industrial facilities are subject to continuous maintenance and improvement to ensure that they are efficient, meet the demands of their customers and are compliant with relevant legislation and standards. Financial performance is measured against the returns that those investments make, which ultimately determines viability. Without careful consideration and planning regarding the impacts of decarbonisation, assets that are required to meet current and near-term demand may no longer be viable for owners and investors – impacting on energy security, as well as those businesses that rely on the import and export of bulk liquids in the chemical, agricultural and food markets.
SWITCH TO ELECTRICITY
Electrification is an important aspect of the UK strategy for decarbonisation, particularly for shorter journeys carried out in urban areas and in hybrid vehicles for longer journeys. The government’s strategy sets out how it intends to encourage the installation of electric charging points both in domestic dwellings and within the existing retail network.
Careful consideration must be given to the logistics for installing charging points on the existing retail network – the number of charging points and their nature (for example fast chargers) will have a significant impact on how and if these can be installed, TSA notes.
All charging points, and access and egress to them, will be required to comply with the current industry best practice as described in the Energy Institute ‘Blue Book’. Where space is available to install charging points, in many instances separate feeds will be required for the site, which will necessitate obtaining the appropriate planning consent and wayleaves.
Legislating sites to provide charging points without providing access to funding may also result in many existing retail sites closing, particularly in rural areas where the demand will be highest.
Emerging technologies should also be considered, for example e-fuels and Power to Liquid (PtL), which are carbon-neutral and can utilise existing infrastructure and vehicles, TSA says. Consideration must be given to these alternatives, which may have less impact on the environment, economy and required investment within the supply chain as part of the overall strategy. Fuels Europe recently published a vision for 2050, which looked at different viable energy sources that collectively could be developed to meet government targets.
HOLE IN THE POCKET
Any move away from existing liquid fuels will also have a major impact on the UK government’s income. The duty paid on fuels, either as import duty or fuels duty paid by the consumer, is a significant contributor to the UK economy. For all fuels this is estimated to be £28.2bn for 2018-2019, a large proportion of which represents duty paid on road fuels.
It would appear that the government has not considered how the loss of this income will be addressed during the transition towards full decarbonisation. At present, electric vehicles enjoy lower per-mile costs than conventionally fuelled vehicles but, if the current level of duty is to be maintained there will have to be some movement in electric power prices.
“We ask that the UK government fully engages with all those businesses engaged in the supply of transport fuels to the UK market and provides appropriate opportunities for formal consultation as necessary,” TSA says.
It is, of course, not just the government that will lose money; terminals are highly reliant on hydrocarbon fuels for occupancy and income and, if those fuels are to be replaced, terminal operators will need to find other cargoes to fill their tanks. Given that any investment in new storage capacity has a long payback period, terminal operators are right to be nervous about the future. What level of capacity will be appropriate? Where should those tanks be located? What other services will need to be provided to meet the very different future needs of industry, consumers and the country at large?
These questions are not specific to the UK. Terminal operators across Europe and, increasingly, in the rest of the world are now trying to find answers.
[post_title] => Decarbonisation: What's in the tanks?
[post_status] => publish
[comment_status] => open
[ping_status] => open
[post_name] => decarbonisation-whats-tanks
[post_modified] => 2018-07-23 10:43:17
[post_modified_gmt] => 2018-07-23 09:43:17
[post_parent] => 0
[guid] => https://www.hcblive.com/?p=9863
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