The African Refiners and Distributors Association (ARDA) and other energy experts have reported that over 90 percent of refineries in Africa require urgent upgrade, without which the continent will continue to face the dangers of high sulphur fuel.
According to the experts, these refineries, including those in Nigeria would require at least $15.7 billion for the upgrade to avert looming health and environmental challenges.
They made this known at the second Refining and Specifications’ Virtual Workshop organized by ARDA. The experts warned that the Paris Agreement and other agreements which target a safer and hygienic environment may remain elusive, without the upgrade achieving net-zero emission.
With growing divestment and capital reallocation away from hydrocarbons into renewables/energy transition, the stakeholders noted that consideration for environmental, social, and governance (ESG) in the downstream segment of Africa’s petroleum industry now remained a key leeway to the over $15.7 Billion required for the continent to improve its refineries.
Maryro Mendez, Oil and Refining Research Analyst at Vitol, while speaking at the event noted that despite the withdrawal of funds from fossil, investment with sustainability plans is on the rise.
Quoting Bloomberg statistics, Mendez stated that sustainable debt annual issuance now drifts around $824.7 Billion as capital raised for renewables, and PE funds now dominate the energy sector. She noted that 66 carbon regimes around the world lead to a lack of carbon policy, price and timing of implementation.
The Paris Agreement and other agreements which target a safer and hygienic environment may remain elusive, without the upgrade achieving net-zero emission.
According to her, lack of uniform policies make it difficult for refineries to pass on the cost of carbon to their customers, as carbon price shifts the cost burden of climate change, from society as a whole to the entities responsible for the emissions, thus providing lack of incentive for refiners to reduce emissions.
“The refining sector accounts for only three per cent of the global energy sector emissions. While refineries’ contribution to global energy sector emissions is low, the opportunities for reducing them are significant. Refineries globally have started thinking about measuring, monitoring and reducing carbon emissions. Environmental sustainability has to be a priority for refiners and Africa is no exception,” Mendez stated.
Ms. Mendez also complained about the 80 percent of refinery carbon emissions which come from fuel combustion, hence fuel source and energy optimization would present the biggest opportunity to reduce emissions. Accordingly, she stated that as a number of options exist for refiners, the technologies already exist to develop a refinery that has net zero carbon emissions. “The challenge is not technical but is commercial with facilities requiring sufficient incentive and capital to invest, without impacting on their competitive position,” she stated.
Anibor Kragha, the Executive Secretary of ARDA, also noted that the adoption of harmonized specification would halt importation of fuels not meeting the AFRI specifications into Africa, in addition to giving existing refineries until 2030 to upgrade their facilities to produce the cleaner, lower sulphur AFRI-6 (10 ppm) specifications. He also stated that targeted financing is urgently needed for projects to upgrade refineries and infrastructure to produce and transport cleaner fuels.
