Introduction
Thank you, George.
I was very glad to have been invited to the UKLPG Conference this year and even happier that we are able to sign the Safe Loading Pass Scheme extension to the LPG sector too.
Since I became Director-General at UKPIA part of my ambition has been to do precisely this sort of thing and make sure that the whole of the downstream oil sector is pulling in the same direction.
UKPIA itself represents all six of the UK’s major refinery operators as well as major fuel retail and marketing companies in BP and Shell.
In total our members are involved in around 85% of downstream oil deliveries in the UK every single year.
In recent years we have looked to extend what we offer to other companies who can join as associate members and gain insight into the process safety, major accidents and hazards and now the environmental risk assessment spaces that affect all companies in our industry.
For obvious reasons, delivering good practice – like the SLPS – right across the sector is tremendously important when it comes to safety. At UKPIA we have always had a huge focus on the process, human and all other safety considerations that are so important in our industry.
In fact, we have had that focus since our inception in 1979 – that is 40 years this year.
While we will keep laser-like focus on those vital areas, however, our 40th anniversary is also a time for some reflection: on what has kept us around so long and what can keep us relevant in future.
Where the industry is today
Since 1979 – the year of the ‘Winter of Discontent’, the beginning of Margaret Thatcher’s time in office, and when British Leyland employed over 100,000 people – the UK’s society and economy have changed beyond all recognition.
Yet for many years now there has been some relative stability in our industry: the demand for petroleum products has been around 60 million tonnes for some time, many of the names who have provided those products are known in every household, and the consumer had relied on petrol’s necessity without too many alternatives as shown by year on year growth of miles driven since the 1990s.
Those stable assumptions are changing.
Since 2016 and the Paris Climate Agreement, the Government has issued strategy after strategy after strategy.
Government, in response to the scientific evidence as well as various public pressures is putting out more and more ambitious goals that it wants to achieve.
They want to achieve clean growth – so increasing GDP while reducing carbon emissions.
They want to improve the state of the environment such that in 25 years’ time it is in better condition than it is today, meaning that emissions of particulate matter, sulphur and nitrogen all need to be reduced.
And they want to have net zero emissions from transport – the sector that uses 75% of our products and that is currently responsible for a third of all the carbon emitted across the whole the UK.
These are massive targets that have huge implications for our industry’s long-term and maybe even near-term future.
That last strategy, The Road to Zero, issued by UK Government last summer, is one that is striking in its belief that electric vehicles are the panacea to the carbon emissions concerns they have in transport.
Yet in our view they are missing a trick.
For a start they are focussing too much on tailpipe emissions and forgetting about all the emissions that are produced in manufacturing electric vehicles, which when taken into account show quite a different set of carbon emissions over the lifecycle of a car.
There are other roles that hydrocarbons play in the supply and use of transport with different fuels, speciality products as well as their role in efficiency of all vehicles (plastics / lubrication) all playing their part
Most fundamentally, they are forgetting that petroleum products and how we make them are part of the solution.
Or at least they could be.
Future Vision
This then is the competing impulse facing our sector – a mature, resilient and profitable industry that has served and continues to serve consumers well, faced by a regulatory and legislative environment being propelled by those same consumers wishing to arrest the consequences of climate change and protecting the environment.
How we ‘square the circle’ of this energy conundrum is the defining challenge of our generation. And it is our generation who will have to answer the challenge or live with its consequences.
Fortunately, however, when it comes to energy, as well as economic and technological factors, human ingenuity has so often provided the impetus for the major advances in how we live our lives.
In the last century, petroleum products became the fuel of choice for how we travel, heat our homes, run our businesses and overall function as a society; supplanting as it did the coal which had set in motion and sustained the first Industrial Revolution of the 19th century.
Oil products – thanks to their relative low cost, their reliability and their abundance – have enabled us to channel our talents and endeavours with astoundingly positive results; creating an energy infrastructure that today allows 7 billion people to move, interact and improve their lives beyond measure compared to past generations.
As we look forward to the middle of this century, it is clear that the next wave of human ingenuity is again changing how the energy sector operates.
The challenges of climate change, global and national environmental legislation, technological innovation and new ways of thinking are all revolutionising the approach we are likely to take in terms of mobility and transportation, industrial operations and manufacturing, heating and waste management.
Amidst all these changes, oil and petroleum products will still be a fundamental part of the energy mix.
And this is what we mean by saying the future of decarbonisation – both here in the UK and across Europe and the world – cannot be achieved by a ‘silver bullet’.
Too often the debates we conduct about the environment and the energy sector are driven by a very human desire to come up with a single, reducible, solution to the challengers we are confronted by.
We therefore react to each new potential technology or industrial process as the answer to our collective prayers, a ‘silver bullet’ capable to allowing us to reach in one simple bound the end point we all aspire to.
However, choosing the ‘silver bullet’ we close down our options. By rejecting potential alternatives and instead pushing for preferred outcomes, no matter how well intended we increase the risk of creating perverse outcomes and failing to reach our goal.
Which is why for all the amazing developments we have seen in recent years – such as the vast increase in the numbers of electric vehicles or the expansion of renewables in the power sector – and the potential for new, exciting opportunities on the horizon, it is incumbent on us to explore every option, keep every avenue open and that includes looking to the downstream oil sector not as a stumbling block towards decarbonisation, but as a source of the solutions to it.
And as an industry we are already focused on the evolution in operational processes, product types and quality, fuel specifications and technologies that will become necessary to support these radical changes whilst at the same time providing the same reassurances to consumers that allows social and individual progress.
For the UK downstream oil sector that means developing the ideas and strategies needed to successfully navigate the years ahead, so that we contribute to decarbonisation goals, whilst providing security, reliability and affordable products to wider society.
To do this we need a clear vision for the future of our industry.
And that is what UKPIA, working closely with our members, has set out to do.
Whilst no one can predict or prescribe how the future downstream oil sector will look, through our ‘Future Vision’ publication being released this summer, we nonetheless will paint a vivid picture of the range of possibilities on offer for the refining and fuel marketing industries, and outlines the innovation opportunities to achieve a circular economy thanks to developments across the sector.
From the development of low-carbon fuels and products, to the use of new technologies to increase refining efficiency, and the changing nature of how we do business, we aim to illustrate to stakeholders across our industry, in government and across wider society what is possible to help create a downstream industry that contributes to solving the challenges we all face, whilst underpinning high-skilled employment and security of supply across our economy.
Some of these new ways of working are not only on the horizon, but already a part of how we do business.
Others will require a significant amount of investment and policy support to become a reality.
But taken together each different pillar of the downstream oil sector has a wealth of opportunities that can be pursued that will ensure to 2050 and beyond our industry can play a diverse, exciting and sustainable role in our energy and transport mix.
Developments in fuels are revolutionising the potential for delivering low-carbon liquid hydrocarbons into the market, building on existing infrastructure as opposed to having to create from scratch a new, expensive and complex supply chain.
From the second generation of biofuels to Power-to-Liquids, e-fuels and fuels derived from waste feedstocks, these cleaner, low-carbon products have the potential to compete with all other alternatives whilst providing the same environmental benefits across the entire life-cycle of their use.
Technologically, we continue to improve efficiency in downstream operations, such as using Combined Heat & Power plants to reduce reliance on the electricity grid or by integrating refinery operations with petrochemical facilities to avoid duplication.
The research, development and eventual deployment of Carbon Capture Utilisation and Storage – or CCUS – at refinery sites will not only reduce emissions but could also create a market that could completely shift the paradigm in how we think about industrial decarbonisation.
This will all require a change from industry: a reconceptualised approach that sees an evolution from clearly delineated business models to one where different actors continue to compete but also ‘cluster’ their processes, share resources, increase efficiencies and create economies where they previously did not exist.
Conclusion: Working with others to achieve the Vision
This then is the task set before us.
It is a task that the downstream oil sector – from our refineries, across the network of terminals and pipelines all the way to the filling station forecourts – is prepared to meet.
However, our sector cannot hope to achieve all this on our own.
Which is why constant engagement, dialogue and sharing of expertise and different points of view across the energy industry and beyond is essential to the efforts we are making.
UKPIA and our members need the help and support of other parts of the industry if we are to succeed, and we need to be willing to work across the same boundaries to help others.
Only together can we persuade government and regulators of the need to ensure we have a business climate that enables industry to make the low-carbon transition that is in society’s interests, that encourages investment and harnesses the market to drive new products in a technology-neutral way.
The way that we work with UKLPG is a testament to the spirit of cross-sector collaboration that we so desperately need.
The specialisms, experience and insight that UKLPG provides is known and respected across our industry, with a heritage that stretches back much further than 1979!
I know that I have always benefited from the friendship and advice that George and his team have been happy to provide, and I know that our future success will very much depend on continuing in that spirit of cooperation and mutual assistance for the benefit not only of our industries, employees and supply chain members, but for the consumers who rely on our products now and in the future.
Let that be our vision.
Thank you.