DG GROW
Meeting between Gwen Cozigou and ExxonMobil,
at ExxonMobil and
at ExxonMobil
BRIEFING NOTE (Commission Internal)
KEY messages
A strong EU industrial base, including the energy-intensive
industries (EIIs), creates jobs and growth in the long term. This is
why the Commission adopted in September a renewed industrial
policy strategy and proposed an integrated approach.
EIIs, including refining and petrochemicals sectors contribute to
the global transition towards a digital, low-carbon, resource-
efficient and circular economy by providing materials and
products for, for example, smarter and cleaner buildings, vehicles
and power supply.
EU EIIs competitiveness depends on several factors including an
access to finance for innovation and investments, skilled
workforce, affordable energy, CO2 allowances and raw materials,
and a global level-playing field.
The EU needs to overcome challenges linked to preserving the EII
global position, restoring the capability to attract investments to
make their processes and products smarter and cleaner.
We understand industry's concerns about key elements of the EU
ETS reform - in particular about the reducing amount of total free
allowances available - but it was important to strike the balance
for a complex system, under strong technical and political
constraints.
Looking ahead, the Commission objective is to ensure cost-
efficient implementation of climate and energy policies.
Decarbonisation of transport will be a key challenge. CO2 targets
in transport will have to be aligned to the EU’s climate and energy
goals and be based on a rigorous economic assessment.
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Background
Renewed Industrial Policy Strategy
On 13 September 2017 the Commission adopted the Communication
"Investing in a smart, innovative and sustainable Industry – An Industrial
Strategy for Europe", outlining main priorities and key actions for
strengthening Europe's industrial base, including: a deeper and fairer Single
Market, upgrading industry for the digital age, building on Europe's
leadership in a low-carbon and circular economy, investing in infrastructure
and new technologies to drive industrial transformation, supporting
industrial innovation on the ground, promoting open and rules-based trade
and empowering regions and cities to address challenges. The
implementation of the strategy will require a joint commitment from
industry as well as all relevant European, national and regional
stakeholders.
Furthermore, the Commission will organise an annual Industry Day,
providing an open forum for stakeholders to contribute to the
implementation and monitoring of the strategy, so as to identify further
action needed. The Commission will also establish a High Level Industrial
Roundtable to provide feedback. The High Level Industrial Roundtable will
provide feedback on the Commission's initiatives and actions, and advise
on the implementation of industrial policy at different levels. The next and
second European Industry Day will take place on 22 and 23 February 2018.
Importance of EU manufacturing and EIIs in global value chains
EU manufacturing industry accounts for 15.3% of EU GDP, 75% of EU
exports, 65% of EU productivity growth and 80% of EU private spending on
R&D. EU EIIs create around 2.6 million direct jobs and contribute to around
15% of EU manufacturing added value.
In order to remain competitive in global value chains, EIIs have to specialise
in higher added value and niche products by adding, if possible, new
functionalities and services.
The High-Level Group on EIIs allows the Commission to discuss the most
pertinent issues that EII are facing. DG GROW also conducted several
cumulative cost assessments (CCAs) of EU legislation for most EII sectors
(steel, aluminium, chemicals, forest-based, glass and ceramics).
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Access to finance for innovation and investment
An important level of EU financing is available: Horizon 2020 (including Bio-
Based Industries and SPIRE PPP), European Fund for Strategic Investments
(EFSI), European Structural and Investment Fund (ESIF) and COSME.
Encourage stakeholders to contribute to the work on the next multiannual
financial framework and to participate in the EU programmes and
initiatives.
The EU Emissions Trading Scheme (ETS) proposal envisages an Innovation
Fund for innovative low-carbon projects (e.g. renewables, carbon capture
and storage and utilisation (CCS/CCU) and new technologies for
manufacturing sectors).
Access to right skills
The technological and environmental transformation faced by EIIs has
broad implications for the skills needs.
GROW supports participation of EIIs (e.g. steel and paper) in the Blueprint
for Sectoral Cooperation on Skills, which is a framework for strategic co-
operation between stakeholders.
It is a bottom-up initiative; hence a strong commitment and pro-active
approach by industry to involve all relevant partners is essential for the
Blueprint to deliver.
Access to a global level-playing field (EU TDIs/Trade Defence
Instruments)
EIIs are the main users of the TDIs. The competitiveness of EII depends on
effective TDI and the conclusion of their revision is a matter of urgency.
GROW welcome the progress in the Council on the TDI modernisation and
on the new anti-dumping methodology.
Access to affordable energy
Energy is a significant cost component for EIIs, impacting their global
competitiveness. Industrial energy prices differentials inside the EU and
with the rest of the world should be therefore monitored and reduced.
The taxes and levies component (defined by MS) was the major driver for
the overall price increase and its level varies significantly across MS.
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Recall that the EU state aid rules allow MS to compensate to certain EIIs
indirect financing costs of renewable energy support schemes.
Access to affordable CO2 allowances (EU ETS/Emission Trading
Scheme)
The transition to low-carbon economy can provide new opportunities for
EII. At the same time, EII are highly exposed to international trade, and
consequently – to the carbon leakage risk.
Energy-intensive industries should therefore continue to be protected
against the risk of carbon leakage under the EU ETS until there is a real
international level playing field.
GROW closely follows the discussions in co-decision on the EU ETS.
Access to affordable raw materials
EU EIIs are faced with volatility of raw materials prices and, in certain cases,
security of supply, as the demand increases from emerging economies and
for advanced technologies.
The Circular Economy Action Plan and Raw Materials Initiative are key to
support industry in securing reliable and unhindered raw materials supply.
Automotive sector, batteries and mobility packages
The EU's automotive sector enjoys a central place in Europe's industrial
landscape. It is the employer of millions of Europeans, often in highly
skilled jobs and a major investor in research and development. The sector is
one of the most competitive in the world and generates a substantial trade
surplus for the EU. It is at a junction of many important EU policies
including; competitiveness, research, energy, environment, transport,
single market, etc. Today's automotive industry is at a turning point: it must
embrace the upcoming digital revolution, automated and connected
driving, environmental challenges (such as climate goals), societal changes
and growing globalisation.
In order to develop a co-ordinated and effective EU approach for the
automotive industry in this changing landscape, the European Commission
established the High Level Group (HLG) GEAR 2030 in October 2015.
2030 climate targets will require a significantly larger proportion of new
cars to be low- and zero-emission vehicles. Battery charged electrical
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vehicles are now the leading segment of zero-emission vehicles around the
world.
An initiative to set-up mass production of battery cells in the EU by EU
manufacturers was launched on 11 October with private companies (BASF,
SIEMENS, SOLVAY, UMICORE, etc.). Battery cells are a key technology for
electric vehicles but also for energy storage. Most of the battery cells are
currently produced in Asia or in the US.
If possible, the 2nd Mobility Package should already announce a
comprehensive package of measures in support of battery cells and battery
packs manufacturing in the EU including available EU funding (Horizon
2020, Structural Funds, European Fund for Strategic Investments, etc.) that
could complement industry investments and MS support (State Aid).
Role of advanced biofuels for the decarbonisation of transport
(see in Annex RES memo drafted by ENER in November 2016)
Despite significant growth of renewable fuels since 2009 and EU’s
leadership role as the largest producer of advanced biofuels, the transport
in the EU still depends on 94% oil supplies to fuel European cars, tracks,
ships and planes. In order to foster the decarbonisation and energy
diversification of the EU transport sector, the revised renewable energy
Directive:
• Introduces an obligation on European transport fuel suppliers to provide
an increasing share of renewable and low-carbon fuels, including advanced
biofuels, renewable transport fuels of non-biological origin (e.g. hydrogen),
waste-based fuels and renewable electricity. The level of this obligation is
progressively increasing from 1.5% in 2021 (in energy terms) to 6.8 % in
2030, including at least 3.6% of advanced biofuels. Preferential rules apply
to advanced aviation fuels in order to support their deployment in the
aviation sector (e.g. their energy content is accounted 20% more).
• To minimize the Indirect Land-Use Change (ILUC) impacts, introduces a
cap on the contribution of food-based biofuels towards the EU renewable
energy target, starting at 7% in 2021 and going down progressively to 3.8%
in 2030.
• Introduces national databases to ensure traceability of the fuels and
mitigate the risk of fraud.
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Chemicals & bio-based industries
Industry driven Public Private Partnerships such as Sustainable Process
Industry through Resource and Energy Efficiency (SPIRE) and Bio-Based
Industries (BBI) – Joint Undertaking (JU) were cited as “having a key role to
play” in the new low-carbon technologies.
Various process and product priority lines (ex. renewables/green
Hydrogen) were identified including:
• Significantly increased resource and energy efficiency of process
technologies;
• Utilisation of renewable electricity, alternative energy sources,
production of Hydrogen with low carbon footprint;
• Better utilisation of alternative sources of carbon: biomass, waste &
recycled materials (CO2 and other off-gases from industrial flue gases
– chemical valorisation of CO2 and other gases);
• More robust and tolerant production systems;
• Integration of advanced process modelling, control technologies and
digitisation;
• Industrial symbiosis;
• Materials “breakthroughs” including better eco-design of materials,
development of advanced sustainable recycling process, high
performance functional materials for low-carbon energy, mobility
and housing.
“Green” Hydrogen
The use of renewable energy to produce “Green Hydrogen” to deliver
process decarbonisation, fuel and storage alternatives was mentioned as a
potential cross-sectorial deep decarbonisation vertical and the following
initiatives and approaches relevant to chemicals were highlight in the
workshops:
• Fatal Hydrogen generated as side stream;
• Hydrogen production with CCS.
CCS/CCU
Carbon Capture and Storage (CCS) and/ or Usage (CCU) were identified as
“end of pipe” and necessary solutions to achieve cross-sectorial deep
decarbonisation and the following initiatives and approaches relevant to
chemicals were highlight in the workshops:
• Chemical valorisation of CO2 (and CO) from gaseous industrial
effluents;
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• Second generation capture technologies (such as high pressure
turbines
Advanced carbonate fuel cell technology in carbon capture and
storage
Advancing economic and sustainable technologies to capture carbon
dioxide from large emitters such as power plants is an important part of
ExxonMobil’s suite of research into lower-emissions solutions to mitigate
the risk of climate change.
Carbon capture and storage (CCS) is a process by which carbon dioxide that
would otherwise be released into the atmosphere is captured, compressed
and injected into underground geologic formations for permanent storage.
ExxonMobil is a leader in CCS applications with extensive experience over
the last three decades with all of its component technologies, including
participation in several carbon dioxide injection projects. In 2015,
ExxonMobil captured 6.9 million metric tons of carbon dioxide for
sequestration – the equivalent of eliminating the annual greenhouse gas
emissions of more than 1 million passenger vehicles.
ExxonMobil believes that the greatest opportunity for future large-scale
deployment of CCS will be in the natural gas power generation sector.
Therefore, ExxonMobil, with partner FuelCell Energy, Inc., is advancing new
technology that can substantially improve CCS efficiency, effectiveness, and
affordability for large natural gas- fired power plants. Achieving meaningful
reductions in greenhouse gas emissions will require a wide range of
solutions, and ExxonMobil believes that CCS has the potential to play an
important role in managing emissions.
Carbonate fuel cell technology: better efficiency, more power, and less carbon
dioxide
ExxonMobil’s scientists have been pursuing new technology that could
reduce the costs associated with current CCS processes by increasing the
amount of electricity a power plant produces while simultaneously
delivering significant reductions in carbon dioxide emissions. At the center
of ExxonMobil’s technology is a carbonate fuel cell.
Laboratory tests have demonstrated that the unique integration of
carbonate fuel cells and natural gas power generation captures carbon
dioxide more efficiently than current, conventional capture technology.
During the conventional capture process, a chemical reacts with the carbon
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dioxide, extracting it from power plant exhaust. Steam is then used to
release the carbon dioxide from the chemical – steam that would
otherwise be used to move a turbine, thus decreasing the amount of power
the turbine can generate.
Fuel cells to capture carbon dioxide from power plants allow a more
efficient separation of carbon dioxide from power plant exhaust. This will
also increase output of electricity. Power plant exhaust is directed to the
fuel cell, replacing air that is normally used in combination with natural gas
during the fuel cell power generation process. As the fuel cell generates
power, the carbon dioxide becomes more concentrated, allowing it to be
more easily and affordably captured from the cell’s exhaust and stored.
ExxonMobil’s research indicates that a typical 500 megawatt (MW) power
plant using a carbonate fuel cell may be able to generate up to an
additional 120 MW of power while current CCS technology consumes about
50 MW of power.
ExxonMobil’s research indicates that by applying this technology, more
than 90 percent of a natural gas power plant’s carbon dioxide emissions
could be captured. Natural gas is already the least carbon-intensive of the
major energy sources.
In addition, carbonate fuel cell technology has the potential to generate
significant volumes of hydrogen. Simulations suggest that the new
technology can produce up to 150 million cubic feet per day of hydrogen
while capturing carbon dioxide from a 500 MW power plant. To put that in
perspective, world scale steam methane reforming hydrogen plant
produces around 125 million cubic feet per day. In addition, synthesis gas,
or syngas, composed of hydrogen and carbon monoxide, can be produced
that can be upgraded to other useful products such as methanol, olefins, or
higher molecular weight hydrocarbons for transportation fuels or
lubricants.
Next steps in development ExxonMobil has been assessing a number of carbon capture technologies
for many years and believes that carbonate fuel cell technology offers great
potential. The technology’s capability has been demonstrated in the
laboratory, and data from those simulations is currently under analysis.
Further development will involve a more detailed examination of each
component of the system, and optimization of the system as a whole.
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The scope of the agreement between ExxonMobil and FuelCell Energy, Inc.
will initially focus on better understanding the fundamental science behind
carbonate fuel cells and how to increase efficiency in separating and
concentrating carbon dioxide from the exhaust of natural gas-fueled power
turbines.
In October 2016, FuelCell Energy and ExxonMobil announced the selection
of a location to test novel fuel cell carbon capture technology under
development by the companies. The James M. Barry Electric Generating
Station, a 2.7 gigawatt mixed-use coal and gas-fired power plant operated
by Southern Company subsidiary Alabama Power, will host pilot plant tests
of the technology, which uses carbonate fuel cells to concentrate and
capture
carbon dioxide streams from power plants. The tests will
demonstrate carbon capture from natural gas-fired power generation
under an agreement between Fuel Cell Energy and ExxonMobil announced
in May, and from coal-fired power generation under a previously
announced agreement between FuelCell Energy and the U.S. Dept. of
Energy. This fuel cell carbon capture solution could substantially reduce
costs and lead to a more economical pathway toward large-scale carbon
capture and storage globally.
2017 Outlook for Energy:A View to 2040 (see Annex)
The Outlook for Energy is ExxonMobil’s global view of energy demand and
supply through 2040. It uses the data and findings in the book to help guide
our long-term investments. It also highlights the dual challenge of ensuring
the world has access to affordable and reliable energy supplies while
reducing emissions to address the risk of climate change. We share the
Outlook with the public to help promote a better understanding of the
issues shaping the world’s energy needs. It is important because energy is
fundamental to modern life. It is critical to human progress and to
improving living standards for billions of people across the globe.
Competitiveness of the Refining sector (Extract from Exxon
webpage)
The refining industry operates in a global market. Thanks to the easy and
relatively cheap transport of refined products, European refineries
compete with each other and with their counterparts in Asia, the U.S., the
Middle East and elsewhere. European refineries are often constrained in
their ability to be globally competitive due to high labour and energy costs
in the EU combined with stringent environmental regulations.
To maintain and improve the competitiveness of EU refineries,
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policymakers should avoid adding to operating costs with regulations that
have unintended consequences on the sector. (See in Annex B the role of
the refining sector for the energy transitionà
EU Refining Forum (DG ENER in the lead, for GROW: D2 (and C4
and I4 for transport)
The eighth meeting of the EU Refining Forum will take place on 1
December 2017 in Brussels. For the first time, the Forum will meet at
expert level, allowing a more in-depth discussion of specific topics relevant
to the refining sector. Participants will exchange views on various issues,
including the Clean Energy for All Europeans package and the impact of
internal combustion engines on urban air quality. A high-level meeting of
the Forum will follow in the first half of 2018.
The EU Refining Forum was established in 2012. The aim of the Forum is to
provide an opportunity for the industry, EU countries, Members of the
European Parliament, the Commission and other stakeholders to discuss
planned and future regulatory proposals with potentially significant
impacts on the EU oil refining industry and on the EU's security of supply of
petroleum products.
Advanced biofuels developed by Exxon (extract from Exxon
websites)
ExxonMobil continues to fund and conduct research on advanced biofuels.
This work is part of our many investments in new technologies with the
transformative potential to increase energy supplies, reduce emissions, and
improve operational efficiencies.
ExxonMobil is funding a broad portfolio of biofuels research programs
including our ongoing efforts on algae as well as programs on converting
alternative, non-food based biomass feedstocks, i.e. cellulosic biomass, to
advanced biofuels. They believe that fundamental technology
improvements and scientific breakthroughs are still necessary in both
biomass optimization and the processing of biomass into fuels. Specifically,
scientific breakthroughs are needed to ensure that advanced biofuels can
be scaled up economically and produced with the desired environmental
benefit of lower life cycle greenhouse gas (GHG) emissions. In this type of
breakthrough research, clearly understanding the challenge and breaking it
down into manageable questions that can be addressed through science
are the first crucial steps towards finding solutions.
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Scientists and engineers at universities, government laboratories, and
companies are investigating a wide range of feedstocks and processes to
develop advanced biofuels. We are working with some of these leading
researchers and have designed our research portfolio to progress the
science that we feel will be needed to deliver advanced biofuels with
environmental benefits.
Their advanced biofuels research portfolio includes joint research
collaborations focused on algae-based biofuels with Synthetic Genomics,
Inc. (SGI), Colorado School of Mines and Michigan State. We are also
exploring a variety of biomass conversion processes that could be used
with non-food based feedstocks such as whole cellulosic biomass, algae
feedstocks and cellulose-derived sugars. These programs are being carried
out currently with Renewable Energy Group (REG) and the University of
Wisconsin.
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