Achieving the United States’ target of net-zero greenhouse gas emissions by no later than 2050 requires economy-wide decarbonization. This includes key industrial subsectors like petroleum refining, which constitutes 13% of U.S. industrial emissions and approximately 3% of all U.S. emissions. Petroleum refining’s annual emissions of 198 MtCO2e are equivalent to the CO2 emissions from nearly 36 million homes’ annual electricity use. To establish a long-term path toward deep emissions reductions, a strong set of innovative technologies must be developed and quickly deployed for refineries.
New analysis from WRI finds that current and novel technologies — like fuel switching; electrification; and carbon capture, utilization and storage — can decarbonize refineries, which will deliver climate benefits and improve local air quality as the United States transitions away from fossil fuels in the coming decades.
Outlook for Fossil Fuel Demand and Petroleum Refineries
While the United States must aggressively transition to electric vehicles (EVs) and other electrified processes, demand will not turn off overnight. There are 287 million registered vehicles on the nation’s roads, which won’t be immediately discarded. Additionally, finding substitutes for other vehicles that the economy depends on — such as those used for trucking, shipping and, critically, aviation — is much more difficult and costly than passenger cars, or not available at scale. One large-scale study projects that ambitious transportation electrification would cut motor gasoline demand by 80% by 2050, while aviation fuel demand would only shrink marginally — but remaining demand may be met with fewer climate impacts if refineries switch to producing low-carbon fuels.
Because of fossil fuels’ large role in both the nation’s overall emissions and the refining sector’s emissions, there is an urgent need to simultaneously reduce demand for fossil fuels and cut emissions from refineries themselves. Decarbonization will also enable refineries operating in certain states and markets to better comply with clean fuel standards, like the California Low Carbon Fuel Standard.
Sources of Refining Emissions
The 13% of U.S. industrial emissions from refineries can be further broken down into different sources. Each of these sources must be addressed to effectively decarbonize petroleum refineries.
Stationary combustion, which involves burning fossil fuel for heat, is the largest source of refinery emissions, accounting for 63% of the sector’s 2018 emissions. Process emissions take second place at 31% and are split between its two largest sources: the fluid catalytic cracker (FCC), which “upgrades” oil into usable fuel like motor gasoline; and the steam methane reformer (SMR), which uses steam and pressure to convert methane into hydrogen. These sources account for 22% and 9% of total sector emissions, respectively.
The remaining 6% come from miscellaneous emissions from minor processes and other assorted sources. These sources are generally too small for significant overhaul, but may be reduced as part of the other abatement options. For example, methane flaring — the process of burning excess methane that isn’t recovered or recycled — would shrink as natural gas and refinery fuel gas are phased out for electricity or hydrogen.
Technological Pathways for Decarbonizing Petroleum Refining
As the United States works toward expanding EV accessibility and improving the electric grid’s cleanliness, the refining sector can begin tackling large portions of its substantial emissions through key technological pathways. These pathways would reduce emissions from heat generation and chemical processes, along with miscellaneous emissions.
Heat Generation: Fuel Switching and Electrification
Reducing emissions from stationary combustion would require replacing fossil fuels, but what they get replaced with depends on the desired temperature from burning those fuels.
Electrification with clean electricity is the best option for low- and medium-temperatures because high-temperature electrified processes are not widely available and are difficult to integrate, although some companies are working to bring more options to market.
For the highest temperatures, combusting hydrogen is a viable substitute for currently-used fossil fuels because it can burn about as hot as natural gas and it emits water vapor instead of CO2. Refineries are also uniquely positioned to use hydrogen as fuel because:
They are the largest domestic market for hydrogen, meaning most refineries already have or are located near hydrogen supply infrastructure. In fact, 55 out of 139 refineries in 2018 already produced hydrogen on-site as a chemical feedstock.
Steam methane reforming, a carbon-intensive refinery process which creates 95% of U.S. hydrogen, can be designed to capture CO2 and eventually be replaced with renewable-powered electrolysis systems.
Refineries produce most of their current fuel mix on-site as a waste product, called refinery fuel gas, which can be cleanly steam-reformed into hydrogen instead of combusted for heat.
These factors make refineries an ideal first sector to launch the hydrogen market for other industries and commercialize cleaner hydrogen fuels that are more expensive to produce. As demand for clean hydrogen increases, other production methods like electrolysis — which uses renewable electricity to split water in pure hydrogen and oxygen molecules — and biomass gasification — which uses oxygen and steam to convert plant waste into hydrogen — are projected to become less expensive.
Process Emissions: Carbon Capture, Utilization and Storage (CCUS)
Point source CCUS technology is a key solution to mitigate process emissions. This type of CCUS technology specifically targets single sources of high-volume greenhouse gas emissions like smokestacks. Captured CO2 can be used in other products — like curing cement or making synthetic aggregate for low-carbon concrete. While these products can help store emissions, storage in geologic formations will likely be the only option for permanent, gigaton-scale carbon removal.
Fortunately, many refineries are located near CO2 pipelines and underground storage formations, positioning them as ripe CCUS hubs. Alongside the CO2 captured from steam methane reforming, existing and expanding pipelines can receive CO2 from the fluid catalytic cracker. These emissions can even be used on-site as a feedstock for a low carbon “semi-circular” refinery, a theoretical concept in which a facility would use existing technologies on its own waste products. If the concept works, it would reduce on-site emissions and the carbon intensity of its products.
A Future, Low-Carbon Refinery
Refineries fulfilling remaining fuel demand must operate differently to reduce their emissions and the carbon intensity of their products. These refineries should incorporate new technology and modify processes to reduce on-site emissions. Where possible, they should also shift away from refining petroleum in favor of processing sustainable feedstocks like waste biomass from forestry and agriculture, as well as hydrogen and CO2 produced at a refinery, in order to produce low-carbon fuels and products. How a refinery today adopts these technologies and feedstocks depends greatly on demand, resource availability, cost and space.
As the United States pursues economywide decarbonization, the nation must also greatly reduce the sizeable climate and social impacts of refineries. While decarbonization technologies would be applied primarily to reduce CO2 emissions and other local pollutants in the process, it is unclear how much this would improve local air quality. These technologies would not likely eliminate the harm caused to local communities from poor air quality, especially considering the long legacy of this harm. While this analysis focuses on greenhouse gases, refineries pose other considerable environmental hazards that must be addressed in collaboration with impacted communities. The Clean Air Act has reduced the severity of local pollution, but imperfect and intermittent monitoring can lead to higher pollution levels. Facilities must take responsibility to mitigate and address the impacts of equipment malfunctions, leaks and explosions that release toxins into the surrounding area.
To address refinery emissions, the United States needs to continue investing in expanded research on clean hydrogen production technology, CCUS and electrified heat, while strengthening air quality monitoring and impact mitigation and reducing demand for liquid fuels as much as possible through electrification. The nation should establish policies that incentivize refineries to deploy these technologies, such as through financing for early movers with verifiable reductions and implementing facility-level emission reduction requirements. Through a combination of public and private investment and action, the United States can capitalize on all emission reduction opportunities and adapt this sector for a new, low-carbon future.