Amit Rao, principal consultant at S&P Global, looked at how Europe specifically has put clean energy high on its agenda.
“Tanks are the backbone of the energy supply chain in Europe,” he said. “But European clean energy emissions targets are reshaping the industry.”
A shift to alternative fuels
Europe’s bulk liquid storage is expected to shift towards alternative fuels with emissions reduction high on the agenda.
“Looking at the energy trilemma of emissions reduction, security and affordability, emissions have been the most important for Europe. But we are seeing increasing importance given to security due to Russia’s invasion of Ukraine and the decoupling of US/EU relations. This has made energy security more important in the eyes of European policy makers.
“If we overinvest in expensive alternatives, we could invest in our own bankruptcy.“
“But what is the cost of the renewables and future fuels which need to be integrated to achieve energy security? How can the bulk liquid industry navigate from here to balance the trilemma?
“The industry is predominantly dominated by oil, fuel and chemicals. If we don’t adapt, we risk being left behind. If we overinvest in expensive alternatives, we could invest in our own bankruptcy.
“In the long term, the industry will be impacted and this shift has already started, so we need to make decisions today to ensure sustainability tomorrow. But where do we look? Which infrastructure do we invest in?”
A balancing act
Rao looked at both biofuels – specifically SAF – as well as bunker fuels – methanol, hydrogen and ammonia – which he says will both play their part going forward, although the cost for these is expected to remain high.
“The industry is currently walking on a tightrope with a big stick in our hand,” he explained. “If we invest too far in the energy transition, or choose a specific infrastructure for alternative fuels without the correct financing, we will tip over. But we will tip the other way if we purely maintain or expand our current legacy infrastructure. It is a balancing act that we need to get right.”
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