The past few weeks have been a pressure cooker for large oil and gas companies. The message delivered by shareholders was clear: “Get serious about your environmental, social, and governance (ESG) performance [particularly regarding climate impacts].” Consider the following news:
In an unprecedented move, the Hague District Court recently ordered Royal Dutch Shell to reduce its greenhouse gas (GHG) emissions by 45%, by 2030. Chevron’s shareholders voted in favor of a plan to reduce its Scope 3 emissions. (Scope 3 refers to indirect emissions resulting from the use of a company’s products, such as fuel and chemicals.) Moreover, in a profound development, the ESG-driven investment firm Engine No. 1, which owns only a 0.02% stake in Exxon, managed to land three of the four activists that it nominated on the Exxon Board of Directors. By all accounts, those nominations were backed by major Exxon investors BlackRock and Vanguard, which also have made their commitment to ESG goals very clear.
What does that news mean to those of us in the reliability, availability, and maintenance (RAM) trenches? It means that it’s time to make sustainable manufacturing practices a priority. I have written about this in the past: As RAM professionals, our ability to influence emissions associated with Scope 3 is limited. We can, however, significantly impact other GHG emissions by implementing better asset-management practices, especially on energy consumption and fugitive emissions.
The U.S. Department of Energy (DOE) estimates that refineries can reduce energy consumption by over 13% through the implementation of existing, state-of-the-art practices. DOE also estimates that with investment in R&D, this sector could reduce its energy consumption by over 38%. The opportunity is even greater in the chemical industry, where implementing current best practices would reduce energy consumption by nearly 23%. With some investment, however, the chemical sector’s energy consumption, could, conceivably, be reduced by more than 62%. (For the most part, that type of investing would go toward asset-management improvements to boost combustion efficiency, reduce parasitic frictional losses, eliminate leaks and fugitive emissions in compressed-fluid systems, manage flares, etc.)
Let’s put this opportunity into perspective. The total end-use energy consumed in the United States equates to about 21,000 TWh (a TWh is equal to 1,000,000 MWh). About 35% (or 7.5 TWh) of that end-use energy is consumed by the industrial sector. Together, the chemical and refining sectors are responsible for 60% of industrial-energy consumption. The chemical industry’s efforts to cut its energy consumption by 23% would result in a reduction of 0.66 TWh. Similarly, the refining sector could save another 0.22 TWh. With investments in future technologies, these two sectors alone would be able to reduce energy consumption by 2.43 TWh. That’s nearly one-third of the total industrial sector’s current energy consumption.
Now, let’s translate those calculations into climate impacts. As a general rule, each kWh of energy consumed produces about 0.707 kg of CO2-equivelent emissions. By implementing current state-of-the-art energy-management practices in the refining and chemical industries, we could reduce CO2-equivelent emissions by over 20%, or about 622,000 metric tons.
The market has spoken. Reducing climate impacts in the petrochemical industry is a top priority. RAM professionals certainly can’t solve the entire industrial GHG emissions problem. But we can think globally, act locally, and become a big part of the solution. By doing so, we can reduce energy costs associated with production, reduce carbon impacts, and reduce Scope 3 emissions by increasing the life of our equipment assets. It’s a good-news story, all the way around!TRR
ABOUT THE AUTHOR
Drew Troyer has over 30 years of experience in the RAM arena. Currently a Principal with T.A. Cook Consultants, he was a Co-founder and former CEO of Noria Corporation. A trusted advisor to a global blue chip client base, this industry veteran has authored or co-authored more than 300 books, chapters, course books, articles, and technical papers and is popular keynote and technical speaker at conferences around the world. Drew is a Certified Reliability Engineer (CRE), Certified Maintenance & Reliability Professional (CMRP), holds B.S. and M.B.A. degrees. Drew, who also earned a Master’s degree in Environmental Sustainability from Harvard University, is very passionate about sustainable manufacturing. Contact him at 512-800-6031, or email dtroyer@theramreview.com.
Tags: reliability, availability, maintenance, RAM, environmental sustainability, greenhouse gas emissions, GHG, Scope 3 emissions, industrial energy consumption, Royal Dutch Shell, Chevron, Exxon, climate impact, climate change, Engine No. 1, BlackRock, Vanguard, ESG goals, U.S. Dept. of Energy, DOE
