The global coal crisis provides an opportunity for petroleum refining and gas processing companies like Honeywell UOP (Universal Oil Products) to develop sustainably. After the economic activity rebounding post the second COVID-19 wave, industrial power demand has increased globally leading to a surge in global coal prices and freight costs. Honeywell UOP’s President and CEO Bryan K. Glover says that the ongoing coal crisis will pave the way for sustainable technologies. “Certainly high prices of oil, high prices of coal, high prices of gas makes solar and wind much more attractive,” Glover told Business Today.
“Now, a complication exists: the wind doesn't blow all the time and the sun doesn't shine all the time, but the base cost of solar and wind is unchanged irrespective of the price of oil. As the presence in the grid grows, the price of solar and wind will have to start to incorporate the price of energy storage. Some renewable technologies will bring more stability and sort of more independence for the industry,” Glover said.
The Honeywell President said while the current coal crisis hasn’t affected Honeywell’s business directly, it has had some trickle down effect. “We have seen the knockout effects of the coal crisis owing to high price of gas and the growing price of oil. I think the high prices of oil are good for producers. They're not necessarily good for consumers. We deal with the people in the middle, who are the refiners and the petrochemical producers and for them, high prices, medium prices, it doesn't make a whole lot of difference, but what they really look for is some stability in the price,” he explained. In terms of exploration, he said, one of the challenges of the low oil prices from the pandemic and even going back to 2016 is that it can “slow down the rate of exploration, investment in new oil and gas, and it can have knock out effects like reduced investment in coal and tightened gas supply.
Asia Pacific makes up 36 per cent of the total market for Honeywell UOP and the company plans to push it further in these key markets where it runs refining and petrochemicals processing, natural gas treatment and software-enabled services among other businesses. Glover believes developing countries like India have a unique opportunity to develop sustainably unlike the developed world. “From a developing world perspective, the developing society has societal needs and those need to be respected and they need to be taken care of and I think any economy that's growing has to chart its path. Other countries may have had the advantage of using fossil fuels extensively to grow their economies and why should developing economies be denied that. Developing economies in some respects have a much better opportunity to just develop sustainably,” said Glover.
“If you look at North America or Europe, a lot of the challenge on sustainability is essentially replacement of assets that exist, that aren't very sustainable, but in places like India most of those assets haven't even been built yet,” he added.
Coal accounts for over 70% of India's electricity output and the target is to take non-fossil fuel power to 40% by 2040. “This sounds like a pretty reasonable path but there’s an enormous challenge. There’s a huge amount of energy demand but there’s also a huge amount of infrastructure that has to grow and develop. I think right now from what we've seen and maybe it's been helped by the pandemic, but I think attitudes and approaches and intentions in the world have changed. We've seen a change and societies are moving firmly in the direction of sustainability,” said Glover.
“Essentially anything that's hydrocarbon based today is going to need to evolve. We've also been adapting to the changing markets and the demand for fossil fuels in India and other developing regions will continue to grow. In developed regions, in Europe, it's probably peaked or plateau-ed already,” he added.
Glover added that India’s focus on growing power through solar and wind can help support the country’s overall economic growth. Honeywell UOP’s focus right now is to help drive advances in the area of carbon capture, for combustion sources and blue hydrogen. “We believe today these are technologies that are the most effective in the world and we're continuing to invest to make those better to bring the cost down to get to lower targets. Energy Storage is another area where we're working. We're looking at alternative battery types with the goal of getting the cost down to something that's significantly less expensive than lithium today and something that when coupled with solar or wind and that pairing can together still be more cost competitive than fossil sources,” he said.
Honeywell UOP will spend the next few years in investing in renewable fuels particularly renewable fuels for diesel and for jet applications and aviation fuel which is one of the hardest to decarbonize in terms of energy. One of the technologies we’re working on will help convert agro field waste that today in India gets burned. Being able to convert those into diesel or even gasoline or feedstock for making petrochemicals. That's one of the next horizon and that we're investing in to extend our existing technology,” Glover said.
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