Building a sustainable business. Industry leaders debate sustainability and the future of fossil fuels
There’s a lot to say about sustainability, especially when you’ve built your business on fossil fuels. And when a group of international business leaders from the downstream industry came together to discuss its impact on their sector, there was high-octane debate and probing questions on the next phase of the energy transition, and its effect on the environment.
Chaired by Alexander Radach, Principal at DuPont Sustainable Solutions, the discussion brought together senior industry leaders from Pertamina Hulu, Nayara Energy, OQ, PETRONAS, Air Liquide and KBR to drive the discussion on sustainability ROI, private public collaboration, the hydrogen hype, and building a sustainable future in a digital era.
Gaining a sustainable perspective
When it comes to sustainability, “it is important to consider the word in larger perspective”, stressed Dr. Purandar Chakravarty, Head of Innovation and Alternate Energy and Nayara Energy. “Not only for the environment, but for the entire business…. You have to take into account things about economics, about your employees and all stakeholders”.
Sharul Rashid, Group Technical Authority, Instrument and Control at PETRONAS agreed that “a holistic view” is necessary to build a sustainable business.
His company’s commitment to net carbon zero emissions by 2050, and their new mission statement of “progressive energy… enriching lives for a sustainable future”, is a roadmap towards sustainability of the community.
Bursting the hydrogen bubble
There’s a lot of hype around hydrogen, but when it comes to a sustainable future, Nils Michel, Senior Sales Manager, Licensing and Technology at Air Liquide, cautioned that “hydrogen will play a role and get more important, but it is only… one of the choices [we have]”.
When only around 1% of total hydrogen production is “green”, operators have to decide if the high production and transportation costs make the gas a good investment. Kemas Adrian, Environmental and Sustainability Engineer at Pertamina Hulu summed it up, “the challenge is always the same… the price”.
“[We’ve got] to get to an economic place where this is viable”, added Hari Ravindran, Senior Vice President, Technology at KBR. “[We’re] working with governments to get this going in many parts of the world. Many corporates are looking at technologies that will improve energy efficiency. There is going to be some level of [private] investment and government policy should support this”.
With this investment, and with new technologies streamlining production processes, hydrogen is on the rise, with global production set to double by 2030. Goldman Sachs predicts that by 2050, green hydrogen will be a $12 trillion market.
Sustainable business value
Sustainability needs to be sustainable: not just for the environment, but for the business. The panel agreed that there was a need for a clear ROI for sustainability to stay the course. “[This] is not a charity”, Chakravraty said firmly. “It is to be done with a certain purposes and ploughing back”.
As Adrian noted, “we’re now facing a triple shock: the uncertainty of the dollar, the uncertainty of consumption, the uncertainty of oil prices. Sustainability means your organisation needs to be able to sustain itself”. He bases his holistic sustainable strategy around three ‘P’s’: people, profit, planet. “We need to find a way to make the organisation become profitable first. Then protect the environment and community”.
With 77% of voters in an interactive poll citing regulation as the key factor in making sustainability economically viable, governments have a role to play in steering sustainability across a population that is often divided.
“In Indonesia, the people are split”, Adrian reasoned. “Those who want to go green… and those who just want to provide [affordable] energy for their families”. Overall the panel agreed that whether through tariffs, such as the recent Singapore carbon tax, or incentives for environmental initiatives, governments can help make sustainability a more lucrative choice.
“At the end of the day the customer has to make a decision, do I pay or not?” , summarised Christiaan van der Wouden, VP Operational Excellence, OQ. “It’s the role of the government to make sure the pricing helps the consumer make the right choice”.
Innovation could help make these decisions easier. In pre-pandemic times, digital transformation and sustainability often appeared together towards the top of the business agenda. Now, as technology dominates the spotlight, it can stop sustainability falling behind.
“With digitalisation, there are steps”, Michel set out. “As a technology provider [we are] thinking how to help plants in a digital way”. Part of this is marking the road to post-pandemic recovery. “Having digitalisation helps…operate plants with less staff or even remotely. [This is] sustainable in that a crisis like COVID will not affect operations as much”.
For Adrian and Pertamina – which is planning a V-shape vertical integration vision by 2030 – “sustainability can be integrated into all aspects of the management system. So can digitalisation. It can enhance quality of training. And process modelling can help lead towards more energy efficient practices”.
Maintaining and sustaining good business
The world we live in is becoming more connected, and more vulnerable. “We’re in a circular economy. What one should be looking at is the various dimensions of sustainability. Doing business in an integrated way. Integrating multiple processes together”.
For Van der Wouden, it’s a cradle-to-grave approach that will allow for operators to maintain sustainability “from resource to extraction”. “Look at environmental impact all round”, he warned. “If you look at the single part, you may make the wrong decision”.
Sustainability needs a big-picture approach. But it also needs a close analysis of assets, and an eye on the bottom line. Smart and sustainable is the only way for operators to save their (business) environment.