Energy & Materials
Transition
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TNO Public

TNO 2024 R11075 9 September 2024
Exploration of Transition Strategies in
Dutch Refineries and Organic Chemicals
Industry for Climate Policy

Refineries and the large volume organic
chemicals industry

TNO Public

Author(s)

Ayla Uslu, Carina Oliveira

Classification report

TNO Public

Number of pages

78 (excl. front and back cover)

Number of appendices

Project name

KVE 23 Industrie weglekeffecten

Project number

060.55401

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Summary

The heavy industry sector, particularly the petrochemical industry, relies on fossil fuels for a
variety of processes, both energy and non-energy applications. Non-energy fossil fuel use
refers to raw materials derived from fossil fuels, such as naphtha and other feedstocks that
are essential for manufacturing processes, accounting for nearly 50% of the total energy use
in industry. In alignment with combating climate change and meeting the objectives of the
Paris Agreement, the Dutch government has set the national ambition to become climate-
neutral by 2050. Additionally, the Dutch government expressed its aspiration for the country
to become fossil free and circular by 2050. Achieving these goals will require substantial
changes in industrial processes that currently depend on fossil fuels.

This study aims to support the Ministry of Climate and Green Growth1 of the Netherlands and
serve as a starting point for broader discussions on future developments within the heavy
industry sector. It focuses on the significant changes required in industrial processes to
become climate-neutral by 2050. Thus, this study assumes a scenario in which the ambition
to reach carbon neutrality by 2050 will be reflected globally in national policies. The study
focuses on the refineries and the large volume organic (LVO) chemicals industries. Another
study has been conducted for the iron and steel industry and the fertilizer industry, with the
results of that study reported separately.

This research employs a desk-study approach, utilising both qualitative and quantitative
assessments of possible industry retrofits and the demand for renewable resources. This

within the

framework of a carbon-neutral energy system. The study also considers the potential risks of
value chain relocation to other regions where renewable resources are more abundant and
cost-effective. However, it excluded an analysis of carbon leakage issues and the broader
competitiveness of the industrial sectors. Possible environmental impacts or effects on
human capital of both adaptation strategies and the relocation risks were also beyond the
scope of this analysis. Instead, the focus was on the availability of renewable feedstocks
necessary for the sector's transformation.

A brief overview of the results for the refineries and LVO chemical industries can be found
below. A more detailed summary of these findings is presented in the subsequent sections.

Refineries
Dutch refineries, which contribute significantly to European capacity and production, are
likely to face significant challenges in the transition towards climate neutrality by 2050.
Future scenarios involving climate policy implementation project a significant reduction in
demand for fossil fuels, which could lead to downsizing or conversion of existing facilities,
but much will depend on key factors such as the development of renewable fuels,
geopolitical dynamics, and the industry's ability to adapt to shifting market conditions.

The review of company plans indicates that while Dutch refineries acknowledge the need for
long-term transitions towards renewable fuel production, their efforts have been limited and
reactive, driven more by current market conditions. This underscores the need for a more

_______
1 Previously, this ministry was named Ministry of Economic Affairs and Climate Policy

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robust and forward-looking approach to ensure the successful transition of the refining
sector.

The adaptation strategies for refineries involve the integration of additional steps in the
value chains, with biomass co-processing emerging as a transitional solution. This approach
could help refineries gradually shift towards producing renewable fuels. While the potential
for biomass as a sustainable feedstock appears sufficient, the mobilisation of these
resources and the establishment of tradable bio-oil commodities that are produced from
various types of biomass feedstocks has been lagging. This lag presents a challenge to the
transition of refineries.

Another challenge relates to the limited research on the effectiveness of co-hydrotreatment
of bio-oil with petroleum streams. This knowledge gap hinders the development of
comprehensive retrofit strategies and the efficient use of existing refinery infrastructure.
Therefore, further research is needed to explore the potential of these technologies and their
implications for refinery operations.

Despite the challenges associated with retrofitting existing refineries, there is significant
strategic value in developing fully integrated biomass-to-fuel refineries in the Netherlands.
These refineries could not only support the country's transition to a carbon-neutral energy
system but also provide essential biogenic products, such as naphtha for the chemical
industry and biogenic CO2 for negative emissions or synthetic fuel production.

In summary, the future of Dutch refineries lies in their ability to adapt to a rapidly changing
energy landscape. While the risk of relocating existing refineries diminishes, the need for
strategic adaptation and addressing potential bottlenecks becomes increasingly critical.

Large volume organic(LVO) chemicals
The Netherlands is a key player in the European organic chemical industry, strategically
positioned within the Antwerp-Rotterdam-Rhine-Ruhr-Area (ARRRA).

The industry is navigating a complex regulatory environment where current EU policies aim
to reduce emissions but do not explicitly mandate a transition to circular feedstocks, leaving
uncertainties about how to shift from fossil to renewable feedstocks. Consequently, current
company strategies focus on reducing direct greenhouse gas emissions and exploring
electrification, with slow progress on renewable feedstocks. While plastic pyrolysis is a
promising alternative and explored more by the companies, its expansion is uncertain due to
potential limitations on plastic waste.

The LVO chemical sector is closely intertwined with the refinery sector, and any
transformation in the latter is expected to influence this industry significantly.
Transformations in refineries, particularly if they produce bio- and synthetic naphtha in
significant quantities, would create a renewable naphtha market and reduce possible
relocation risks in these industries. However, the oil refineries also produce aromatics. The
downsizing of oil refineries could create the risk that the production of aromatics from these
processes may shift elsewhere.

The relocation risk mainly relates to new processes, like bioethylene production from
bioethanol, as they may be located in regions with abundant biomass. Current leading
bioethylene production is in countries like Brazil, India, China, and the USA. Similarly,
methanol-to-olefins and biomass-to-aromatics production may also be situated in resource-
rich areas. Nevertheless, the easy transportation of polymer pellets allows the displacement

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Refineries

Today, Dutch refineries contribute approximately 6% of the European installed capacity and
10% of the production. Overall, 55% of the production serves the Dutch market and the
remaining portion is exported. Within the Dutch manufacturing sector, refineries represent
the second-largest greenhouse gas (GHG) emitting industry, after the basic metals industry.
The Dutch government has been in the process of establishing tailor-made agreements with
refineries to ensure that they reduce their annual operational CO₂ emissions (referred to as
scope 1) by 2030 and share their long-term visions.

The refineries will need to adapt to changing market conditions as the demand for oil
products is projected to be significantly reduced when stringent climate policies are
implemented.
The majority of the refinery products are used as transportation fuels, and the demand for
these products will undergo significant changes as a result of the policy instruments within
the Fit-for-55 package. While the European Emission Trading Scheme (EU ETS) and the
Dutch CO2 tax aim to reduce GHG emissions that occur during processing, other policies,
particularly the transport sector related climate change mitigation policies, will affect the
demand for fossil oil products. Consequently, looking beyond 2030, crude oil refineries may
need to substantially downsize their throughput or face the risk of shutting down their
processes. Achieving Paris Agreement goals and pursuing climate neutrality by 2050 will
result in a global oil product demand reduction. This reduction can be up to 75% globally
(IEA, 2023), and 90% within the EU (EC, 2018). Given that the majority of the refinery
product slate relates to transport fuels, this will require refineries to adapt their business
models to align with evolving market conditions.

The refinery adaptation strategies will involve the creation of additional steps in the
value chains and biomass co-processing could be a transitional choice.
Depending on the site s complexity, some refineries can retrofit their existing units to
produce renewable fuels, and biomass co-processing could be a transitional choice. Bio-oils
can be processed with crude oil, and existing assets, particularly the hydroprocessing units
can be utilised for this. The key advantage of these units relates to generating product slate
better suited for heavy-duty transport, aviation and maritime sectors.

In the Netherlands, refineries are equipped with hydroprocessing units, and supplying just 5-
10% of hydrotreatment feed from bio-oil will suffice for 10-20% of current maritime
bunkering demand. Scaling up to 50% supply of hydrotreatment feed could meet the entire
maritime bunkering demand, though, such intensive co-processing would require substantial
revamping and a significant increase in hydrogen demand.

Sustainable biomass potential appears to be sufficient but the mobilisation of these
feedstocks and the creation of tradable commodities, for instance, bio-oils, is lagging
behind. Retrofits in Europe predominantly focus on the use of lipids, such as vegetable oils,
used cooking oils (UCO) and animal fats. However, there are policy limitations and caps on
the use of these feedstocks, therefore, their future role will be more limited. Conversely,
there are significant amounts of lignocellulosic feedstocks both in Europe and globally.

Based on the most recent update of sustainable biomass potential in Europe eligible for
biofuel production under the Renewable Energy Directive (REDIII) (COM, 2024), about 1% of
the lignocellulosic biomass potential in Europe appears to be sufficient to meet 5 to 10% co-
processing in hydroprocessing units in the Netherlands. Converting hydrotreater units to

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50% co-processing, or fully converting existing hydrocrackers, would require approximately
5.5% of the sustainable lignocellulosic biomass potential in Europe.

As previously mentioned, current retrofit initiatives use lipids, which are tradable
commodities. Biomass-to-oil supply chains that use lignocellulosic feedstocks, particularly
wastes and residues from agriculture and forestry will need to be established. Refinery
retrofits, regardless of whether they are co-processing or full retrofits, will require the
mobilisation of significant amounts of biomass resources. Given the limited domestic
biomass availability, biomass will need to be supplied from elsewhere and the biomass
harvesting and conversion to bio-oils supply chains will need to scale up to satisfy the
existing hydroprocessing capacities. Two thermochemical technologies emerge as pivotal in
this context: biomass pyrolysis, which is fully commercial but whose implementation is still
limited, and Hydrothermal Liquefaction (HTL), which is on the brink of commercialisation.

Furthermore, while lipid co-processing in existing hydroprocesses appears to be a low-
cost option, there is limited research on the use of hydropocessing units and co-
hydrotreatment of bio-oil with petroleum streams.
Literature review indicates a potential saving of 30% to 50% in capital expenditures when
bio-oil is co-processed, however, the levelized cost of producing biofuels from co-processing
in comparison to stand-alone processes has not been sufficiently covered. Therefore, further
research is needed to assess the use of existing hydroprocessing units, where the specifics of
different refineries and the functioning of various hydrotreaters are taken into consideration.
In that way, the revamp requirements can be better detailed.

While retrofitting existing refineries and supplying bio-oil from other regions could
contribute to achieving a carbon-neutral energy system in the Netherlands, there is a
strategic value in fully-integrated biomass-to-fuel refineries in the Netherlands.
For instance, stand-alone biomass gasification followed by Fisher-Tropsch synthesis not only
provides diesel and kerosene for the transport sector, but also biogenic naphtha for the
chemical industry and also biogenic CO2, which can be stored for negative emissions and/or
used for the production of carbon carrying synthetic fuels.

The review of company plans highlights that oil refineries act and react to the existing
market conditions and their efforts towards the long-term transition to producing
renewable fuels and feedstocks are limited.
While nearly all companies that own Dutch refineries have set the ambition to become
carbon-neutral by 2050, their strategies for 2030 have been changing each year. Biomass
co-processing in existing refineries in the Netherlands has not been considered due to the
complexity and methodological uncertainty of tracing biogenic carbon in refineries and
determining the renewable content of the product to be counted towards the renewable
target within the Renewable Energy Directive2. Currently, the methodology is defined by
Commission delegated regulation (EC(2023)3513), which may influence refinery
perspectives.

An important aspect that needs further attention is the knock-on effects of shifting from oil
refineries to renewable refineries. The refineries are closely integrated with their
surroundings, delivering naphtha and several basic chemicals, as well as steam and refinery
gases. While these integrations have previously been seen as a competitive advantage, they
may also pose bottlenecks in the transition process.

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2 Based on the communication with stakeholders

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Further research needs and recommendations
• Each refinery has a different configuration and product slate, therefore, individual sites

should be studied in detail to identify whether they are suitable for conversion to a
renewable refinery. Additionally, depending on the biomass type and the bio-oil
characteristics, bio-oil co-processing in existing refineries will require additional hydrogen.
The total volume , the availability and the cost of hydrogen need further research.

• A detailed study for the Dutch refineries should be complemented by an EU- wide study

that covers European refineries. This can provide an optimal use of existing refining
capacities in Europe and the relative importance of Dutch refining.

• Timely supply of biomass resources in large quantities will be essential not only for

refinery conversions, but also to attain transport sector-related climate mitigation
objectives. While the current studies indicate significant amounts of biomass resources,
their mobilisation has been slow. There is a need for good understanding of mobilisation
strategies and the related investment needs.

• There is strategic value of having fully integrated biomass-to-fuel refineries in the

Netherlands. This strategic value relates not only to the supply part of the transport fuels,
but also to providing biogenic naphtha to the chemical industries and to biogenic CO2,
which can be stored for negative emissions and/or used for the production of carbon
carrying synthetic fuels.

• Further research on synergies between biomass to fuels and feedstocks and renewable

power to fuels and feedstocks is needed to identify better business models.

• Related to the topics above, in retrofits, the hydrogen demand will increase significantly,

and the availability and affordability of this green hydrogen will be one of the key
considerations.

• In addition, in the medium-to-long term, e-fuels value chains will require biogenic CO2,

highlighting again the importance of biorefineries.

Large Volume Organic (LVO) chemicals
industry
The Netherlands hosts a significant organic chemical industry, strategically located with
strong connections to other industrial clusters in the Antwerp-Rotterdam-Rhine-Ruhr-Area
(ARRRA) region. The total production capacity of olefins and aromatics, also referred as high
value chemicals, comprises approximately 16% of the EU's production capacity. Among
basic chemicals, ethylene and propylene are the most relevant in terms of export activity,
especially within the EU, and exports of polyethylene pellets are significantly higher
compared to other semi-finished products.

Overall, the base organic chemicals industry faces a complex regulatory framework with
unclear directions regarding feedstock transition.
The sector heavily relies on fossil fuels as energy sources for processes and fossil feedstocks,
particularly naphtha, to produce olefins and aromatics. Numerous EU policy initiatives affect
this industry; while policies such as the Emission Trading System (ETS), the Dutch CO2 tax,
and REDIII (Hydrogen Obligation for Industry) aim to reduce direct process emissions, they
do not directly require transitioning from fossil feedstocks to circular and sustainable
alternatives. There are various policy initiatives which provide guidelines and identify actions
for a green, digital, and resilient chemical industry, as well as dedicated directives specifying
plastic use types with the aim of promoting circularity, and regulations that focus on the
end-of-life to minimize environmental impacts, requiring production of more durable and
reusable products. For instance, a recent policy, the sustainable Carbon Cycles

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communication (COM(2021)8000) introduces ambitions to source 20% of the carbon used in
chemical and plastic products from sustainable non-fossil sources.

Within this complex landscape, assessing the possible relocation aspects of transitioning
to renewable feedstock becomes quite challenging.
Reviews of company strategies and the current plans indicate that companies primarily
focus on reducing direct GHG processes emissions (Scope 1) and on exploring electrification
opportunities (both direct and indirect electrification). The transition towards renewable
feedstocks is slow as these multinational companies continue to expand their fossil
manufacturing capacity worldwide to meet growing demand. Among the options for circular
feedstocks, the focus lies mainly on plastic pyrolysis with intentions to co-process in Europe
and in the Netherlands. However, the expansion of such alternatives in the future is still
uncertain due to possible limitations on plastic waste availability for pyrolysis.

Given the complex policy framework and uncertainties surrounding decarbonisation
pathways, TNO has conducted scenario modelling aimed at achieving a climate-neutral
energy system in the Netherlands (Scheepers et al, 2024). Within this modelling, two
scenarios were constructed with varying ambitions for GHG emission reductions in
international bunkering and ambitions for achieving circular carbon in the base chemicals
industry. The relevant conclusions for this study are as follows:
•  The LVO chemical sector is closely intertwined with the refinery sector, and any

transformation in the latter is expected to influence this industry significantly.
Provided that renewable refineries produce bio- and synthetic naphtha and these
become tradable commodities, there will be no direct relocation risk to existing
processes.
Steam crackers can replace fossil naphtha with renewable naphtha. Bio and synthetic
refineries supplying renewable fuels to the transport sector can also provide feedstock
co-products for the organic chemicals industry. Depending on the available volumes and
the composition of bio- and synthetic naphtha, these could replace fossil naphtha.
Naphtha is a tradable commodity, which companies already import to the Netherlands
currently, therefore, in the case of using renewable naphtha, the current processes would
not face any relocation risk. This, however, should not be mixed with the current pressure
industry is facing due to increasing energy and feedstock prices and affecting their
competitive position against their peers elsewhere.

• This also applies to plastic pyrolysis, there will be no relocation risk at the

downstream processes
While the production of pyrolysis oil from plastics may occur elsewhere, following
hydrotreatment, these feedstocks can also be fed into existing crackers, not affecting
downstream processes. The potential for replacing fossil naphtha input with pyrolysis oil
depends on the availability of plastic waste.

• The downsizing of oil refineries will affect aromatics production as these are

integrated and produced in oil refineries, creating the risk that they may locate
production elsewhere.
To compensate for the downsizing of oil refineries aromatics will need to be produced
stand-alone. The modelling results indicate biomass-to-aromatics production as a
promising option. However, whether these new processes will locate in the Netherlands
or elsewhere carries a large uncertainty.

• (Re)location becomes more pronounced for new processes, such as the production of

bioethylene from bioethanol.
The modelling results indicate this route becoming a promising low-cost option, and this
value chain may be situated in regions with abundant biomass feedstocks and larger
bioethanol production facilities. In fact, the largest commercial production of bioethylene

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is in Brazil, followed by countries like India, China, and the USA. Other value chains
appearing in the scenario modelling include methanol to olefins and biomass to
aromatics. Again, these value chains may occur in regions with abundant renewable
resources, impacting on the competitiveness of Dutch polymers in the market. The easy
transportation of polymer pellets allows the displacement of semi-finished product
supply. Post-processing plants can flexibly import more polymer pellets to produce final
plastic products, further facilitating the use of imported materials. Regulations, such as
carbon pricing through mechanisms like the Carbon Border Adjustment Mechanism
(CBAM), will play a crucial role in shaping the competitive landscape.
These results should not be mixed up with the current pressure on the competitiveness of
industry due to rising energy and feedstock prices.

Furthermore, there is the possibility of substituting conventional polymers with new
materials. Conventional polymers, well-established synthetic materials, have predictable
properties and widespread applications. In contrast, novel polymers are relatively new
materials with unique properties and potential advantages. Universities, research
organisations and the private sector actively develop novel polymers to address specific
challenges and enhance performance. The EU policy initiatives focus on eco-design
principles, including recyclability and reduced environmental impact, encouraging the
adoption of materials aligned with these goals. If novel polymers meet EU criteria, they
could disrupt the plastics value chain by gaining traction in the European market. Dutch
manufacturers must keep pace with developments to avoid losing out to imported novel
polymers.

However, the current market competitiveness of these new polymers remains a challenge,
and their business case may not yet attract major players. While relocation risks associated
with novel polymers are relatively low at present, vigilance is essential as the industry
evolves.

Further research needs and recommendations
Given uncertainties about the LVO chemical sector's future, a thorough assessment is crucial
to evaluate potential relocation risks and their implications for the Dutch LVO chemicals
industry. Therefore, a thorough assessment combining technical, economic, and
environmental, aspects can bring meaningful insights

The following topics are recommended to be evaluated by future research:
• Assess in detail the production costs of polymer pellets via these alternative value chains

in diverse global regions, in order to evaluate the competitiveness of the Dutch polymers
pellets.

• Evaluate how likely novel polymers could replace conventional polymers, assessing their

scalability, challenges and opportunities to be introduced in the plastics market and how
the Netherlands positioning itself in the development of such emerging materials.

• Similar to the refinery industry, timely supply of biomass resources in large quantities will

be essential for the transformation of the chemical industry. There is a need for good
understanding of mobilisation strategies and the related investment needs.

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1 Introduction

Background
The Netherlands has a significant heavy industry sector, with large refineries, chemical
clusters, and base metal companies. This is thanks to various factors, such as abundant and
affordable natural gas reserves, strategic coastal positioning that facilitates easy access to
European markets via large seaports, and a well-developed infrastructure with excellent
inland connections or connections within Europe for the transit of raw materials, semi-
finished products and products.

The heavy industry sector relies on fossil fuels for various processes, both for energy and
non-energy purposes. Non-energy fossil fuel use covers raw materials derived from fossil
sources, such as naphtha and other feedstocks that are vital for manufacturing processes.
In achieving the Paris Agreement and combating climate change, the European Union (EU)
and the Netherlands have set the goal of becoming climate neutral by 2050. In addition to
climate neutrality, the Netherlands has expressed its aspirations for a fossil-free and circular
economy by 2050 (Coalitieakkoord, 2022; NPE, 2023). Meeting these ambitions and adapting
to changing conditions will require substantial changes in industrial processes, significantly
reducing the use of fossil fuels for both energy and raw material purposes and replacing
them with renewable and circular resources. These changes could profoundly alter the
landscape of industrial activities.

The Dutch government has initiated the National Program Sustainable Industry (NPVI) to
address challenges for the industry and remove uncertainties about sustainable conditions
(i.e., availability of electricity, hydrogen, permits). This program aims to accelerate
investments for a sustainable industry. The Dutch government collaborates with the largest
industrial emitters to implement sustainable technologies that will lead to substantial
reduction of fossil fuel use and CO2

mized agreements

refineries and large volume organic

chemicals industries in the Netherlands.

The current efforts have been mostly focused on the energy use and reduction of direct
emissions from industrial processes. The replacement of non-energy use of fossil fuels,
which comprises almost half of the total energy use in industry, with renewable and
sustainable supply options requires further attention and research.

Objectives of this study
Shifting from fossil fuels to renewables, particularly replacing them with carbon from
renewable/circular sources, presents significant challenges for heavy industry. This study
focuses on refineries and the large volume organic chemicals, that are heavily dependent on
hydrocarbons and assesses their future transformation.

This study aims to support the Ministry of Economic Affairs and serve as a starting point for a
wider discussion on the future transformation of Dutch industry. The specific questions that
are formulated and addressed in this study are the following:
• What are the main policy drivers affecting these sectors?

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• What are the decarbonisation options for refineries and the organic chemical industry

and what are the individual company strategies in this regard?

• What are the industry adaptation options to replace non-energy use and how much

renewable resources are needed?

• Which processes within each industry may face relocation risks, given that renewable

feedstocks, particularly biomass, are limited in the Netherlands? It is important to note
that this question is different from carbon leakage issues, where industries lose
competitiveness due to different policy interventions and move to other world regions.
Nor should it be confused with questions regarding the competitiveness of industries in
general.

While the main aspects studied are the costs and the availability of renewable feedstocks
reallocation risks relate to many other factors such as the investment climate, distance to
customers down stream in the value chain, and the EU policies regarding "strategic" goods.
These aspects are beyond the scope of this study.

Approach
The study approach consists of literature review, stakeholder interviews and scenario
modelling. Based on the literature and the interviews with relevant stakeholders,
information regarding the decarbonisation plans and plans for moving to renewable
resources are identified. Company plans and strategies at a corporate level are collected
from publicly available open sources. When publicly available, their specific project plans
regarding renewable and circular production pathways are presented. The company official
announcements are kept as the main source; when needed, other credible and publicly
available data were used. This information is presented to suggest the significant
importance of Dutch processes among the company processes in Europe and globally and to
provide their decarbonisation plans, which may provide hints regarding their possible
relocation plans.

TNO scenario modelling has been exploring different pathways to achieve a carbon neutral
energy system in the Netherlands. The OPERA model, which is a technology rich, cost-
optimisation energy system model, has been used for these purposes. The study has paid
particular attention to heavy industry in the Netherlands. The results related to refineries
and the organic chemicals industry are included in this report. In order to examine the low-
cost decarbonisation options, particularly the substitution of fossil feedstock with
renewables. The modelling framework, the main assumptions and the full results covering
the whole energy system are presented in Scheepers, et al. 2024.

Outline
The report is outlined in 4 chapters. Chapter 2 delves into the refinery sector, starting with an
overview of the current status of refineries in the Netherlands. This is followed by the
introduction of the key policies that will have the largest impact on this sector up to 2050.
Section 2.3 provides a summary of decarbonization options for refineries and outlines
individual company plans and strategies. In Section 2.4, the future outlook explores the
demand for oil products in both the transport sector and the chemical industry. Section 2.5
delves into the risks of relocation within the industry, with a specific focus on the necessary
adaptations for oil refineries. The following section of this chapter introduces broader
discussion aspects not covered in the assessment, provides sector specific conclusions and
recommendations, where future research needs are highlighted. Chapter 2 follows a similar
structure, shifting its focus to sectors involved in the production of olefins and aromatics in

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2 Refineries

2.1 Current status of Dutch refineries

There are 6 refineries in the Netherlands with a nameplate crude oil capacity of around 67
Mt per year (2861 PJ3) (PoR, 2017) (Olivera & Schure, 2020). Gunvor, one of these refineries,
has recently stopped its oil processing operations. The remaining five refineries contribute to
around 5.7% of the total European primary capacity (Concawe, 2023)4 and account for
approximately 10% of European production5. Five of them are in the Rotterdam/ Europoort
region and one is located in Zeeland. The port of Rotterdam receives crude oil from the
North Sea region and variouse areas, including Russia, and the Middle East. Around 80-85%
of the refinery products relate to fuels and the remaining 15-20% consists of naphtha, base
oils, and bitumen (CBS, 2023a).

Figure: 2.1 Location of refineries and their throughput capacity (VNPI, 2020)
kb: Thousand Barrels per day

Figure 2.2 illustrates the average balance of petroleum products in the Netherlands from
2015 to 2022. This figure shows that the country has been the net importer of petroleum
coke, liquefied petroleum gas (LPG), aromatics, naphtha, and refuse fuel oil (RFO), with
naphtha emerging as the largest commodity. Significant volumes of kerosene, gasoline, and
diesel have been exported to other countries. Overall, approximately 45% of the total
production appears to be exported. However, factoring in the maritime and aviation
_______
3 Calculated based heating value of 42.7 MJ/kg.

4 The average contribution between 2009-2022.

5 blg-876198.pdf (officielebekendmakingen.nl)

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bunkering in the Netherlands, the net export volume reduces to around 25% of the total
production.

The main destinations of refined petroleum exports from Netherlands in 2021 were
Germany, Belgium, the United States, Nigeria and France (CSBS, 2023b; OECD,2023).

Figure 2.2: Petroleum product balance between 2015-2022 in the Netherlands (CBS, 2023a)

Petroleum refineries are the second-largest contributor to GHG emissions among base
manufacturing industries in the Netherlands. Figure 2.3 provides a comparison of direct GHG
emissions of refineries with those from other major industries in the Netherlands in 2020. It
also shows the total emissions of each refinery. Shell Pernis accounts for the majority of GHG
emissions due to its large throughput capacity and high complexity.

In line with the climate goals of the Paris Agreement and the ambition to become climate-
neutral by 2050, the refineries will go through a fundamental transformation.

-40

-30

-20

-10

Petr. Coke

LPG

Aromatics

kerosene

Naptha

Total gasoline

Total diesel

RFO

Production

Import

Export

Bunkering

Consumption

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Figure 2.3: Manufacturing sector GHG emissions broken down to different industries (left) and GHG emissions
of refineries in the Netherlands (right)

2.2 Key drivers for transformation the policy

landscape
This section briefly introduces the key policy instruments and summarises their impacts to
the refineries in Table 2.1.

The Renewable Energy Directive (REDIII)
The REDIII, amended in 2023, sets out specific goals for both the industry and transport
sectors by 2030, in addition to the overall renewable energy objective. According to REDIII,
by 2030, at least 42% of the hydrogen used in industry should come from renewable fuel of
non-biological origin (RFNBO), such as green hydrogen or hydrogen energy carriers produced
via electrolysis. This shift aims to reduce reliance on fossil fuels and lower GHG emissions in
industry. Weeda and Segers (2020) note that a significant portion of hydrogen in industry,
approximately 37%, is used in oil refineries for processes like desulphurization and
hydrocracking, excluding its use as fuel. The directive encourages refineries to transition their
hydrogen production from fossil fuels to renewable hydrogen.

Moreover, REDIII introduces specific renewable energy sub-targets and also an overall GHG
emission intensity reduction target for the transport sector. Consequently, there will be a
shift in demand from conventional oil products to renewable alternatives. Detailed
information on these transport-related targets and the expected demand for renewable
fuels in the Netherlands can be found in a recent study by Uslu (2024).

Aviation and Maritime regulations
The Fit-for-55 package included two major regulations for the aviation and maritime
transport sectors; the FuelEU Maritime and the ReFuelEU Aviation regulations, both entered
into force in October 2023. The ReFuelEU Aviation regulation introduces mandatory volume-
based targets for sustainable aviation fuels starting from 2030 up to 2050. By 2050, at least
70% of the aviation fuel should be from sustainable aviation fuels (SAF). Thus, the fossil
kerosene contribution will be limited to 35% of the total demand. The FuelEU Maritime
regulation introduces a GHG intensity reduction target for ship owners of  more than 5000
gross tonnages. They will need to reduce the GHG intensity of energy used on board by 6%

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in 2030, increasing to 80% in 2050, compared to a reference intensity figure. While this
regulation covers 100% of energy voyages between EU ports, it covers half of the voyages
where the arrival or departure port is outside the EU. The international maritime
organisation (IMO) also adopted a strategy in 2023, which envisages carbon intensity
reduction of international shipping by at least 40% by 2030 and reaching net-zero GHG
emissions by 2050.

New rules CO2 emission standards for cars and vans
The EU has adopted an amendment to its light-duty vehicles (LDV) CO2 standards,
mandating that all newly registered cars and vans from 2035 onwards must be 100% CO2 -
free. Additionally, the CO2 reduction targets for 2030 have been strengthened to -55% for
cars and --50% for vans, compared to a 2021 level. These measures aim to boost the
adoption of electric vehicles.

Furthermore, a provisional agreement on CO2 emission standards for heavy-duty vehicles
was reached in February 2024. This policy introduces a 100% zero-emission target for urban
buses by 2035, covering trucks (over 5 tonnes), city buses, long-distance buses (over 7.5
tonnes), and trailers. The proposal outlines a gradual reduction in CO2 emissions from these
vehicles, aiming for a 45% reduction from January 1, 2030, a 65% reduction from January 1,
2035, and a 90% decrease from January 1, 2040 onwards, compared to 2019 levels.

EU Emissions Trading System (EU ETS)
The new regulation of the EU ETS involves gradually phasing out the free allocation of EU ETS
emission rights, known as EU Allowances or EUAs, currently granted to the industry.
Economic sectors covered by the EU ETS, such as power production and designated energy-
intensive industries, including refineries, are required to reduce their combined emissions by
62% by 2030, compared to 2005 levels. To ensure success, the phase-out of free EUAs will
be accompanied by an annual reduction in the total number of available EUAs for these
sectors. This reduction will be set at 4.3% per year from 2024 to 2027 and 4.4% per year
from 2028 to 2030, resulting in no EUAs in 2040.

The EU ETS also extends its coverage to maritime transport, while a separate ETS 2 will be
established for buildings, road transport, and fuels. Starting in 2026, maritime sector GHG
emissions must be surrendered as allowances in the subsequent year, with interim targets
set for 2024 (40% of CO2 emissions only) and 2025 (70% of total GHG emissions). No free
allowances are allocated to the maritime sector, and each non-compliant allowance will

per tonne of CO2eq. Failure to comply for two consecutive years may

result in restrictions on calling at EU ports.

Initially, the refining sector will not be shielded by a Carbon Border Adjustment Mechanism
(CBAM), exposing European players to higher carbon costs compared to their international
counterparts. Nevertheless, this setup creates a strong incentive for decarbonizing existing
operations.

CO2 levy
Under the Climate Agreement, it has been agreed that the industry will reduce annual CO2
emissions by 14.3 Mt CO2 by 2030. The CO2 levy came into effect on January 1, 2021 to
ensure that this objective is achieved.

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Table 2.1: Key policy instruments and their impacts to the refinery sector.

Policy instrument

Content

Effects to existing refineries

Amendment of the Renewable
Energy Directive (REDIII)

Sets GHG intensity reduction target
and also renewable fuels sub-targets
for the transport sector up to 2030.
Introduces RFNBO obligation to
industry

•  Reduced fossil fuel demand
•  Shift to renewable fuel supply
•  Encourages use of green

hydrogen in its processes

FuelEU Maritime Regulation
proposal

Introduces GHG emissions intensity
reduction targets up to 2050.

• Reduces fossil fuel demand.
• Shift to low carbon/ renewable

fuel supply

ReFuelEU Aviation Regulation
proposal

Introduces a SAF obligation up to
2050, with sub-target for RFNBO

• Reduces fossil fuel demand.
• Shift to low carbon/ renewable

fuel supply

CO2 standards for cars and
vans

Zero-emission vehicles

• Reduces fossil fuel demand.
• Shift to Batter Electric Vehicles

(BEVs) and H2 use via Fuel Cell
Electric Vehicles (FCEVs)

EU ETS amendment

Gradually reduces free allowances
given to industry up to 2034.

• Refinery direct emissions will

need to be zero before 2040.

Extension of EU ETS

EU ETS will also cover maritime sector
emissions.
ETS 2 will be set to cover building
and road transport

• Impacts CO2 prices6
• Further incentivises low-

carbon fuel use

CO2 levy

Industry shall reduce annual CO2
emission by 14.3 Mt by 2030

• Refinery direct emissions will

need to be reduced.

In conclusion, the current policy process will significantly affect the refineries. On the one
hand, direct emissions of the refinery processes will need to reach net zero. On the other
hand, the majority of the refinery products are used as transportation fuels, and the
demand for these products will undergo significant changes as a result of the policy
instruments within the Fit-for-55 package. With the rise of electrification and improvements
in vehicle efficiency, the demand for fuel in road transport is expected to decrease notably.
Additionally, over the coming decades, there will be a shift in demand from fossil fuels to
low-carbon alternatives in aviation and maritime sectors.

2.3 Refinery decarbonisation options and the

company plans
Refinery decarbonisation options were introduced in the MIDDEN report (Olivera and Schure,
2020). These are recapped in Table 2.2. Among the possible options, implementing carbon
capture and storage (CCS) and switching to renewable energy to meet the energy demand
would address direct process emissions (scope 1) and emissions due to utilities (scope 2).
While these measures would contribute to reducing GHG emissions in the industry sector,
particularly under the EU ETS, they do not address emissions associated with the
combustion of refinery products, particularly fossil fuels as transport fuels.

_______

6 ETS1 and ETS2 will be separate systems. Therefore ETS2 will have its own CO2 price

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However, a significant proportion of emissions across the entire value chain is related to the
use of refinery products. To address these emissions, options such as substituting
conventional fossil feedstocks with renewable alternatives and transitioning to renewable
refineries can be considered.

Given the focus of this study on the potential impact of renewable energy supply options
and the possibility of process relocations outside of the country, discussions on CCS and fuel
switch options are not included in the rest of the document.

Table 2.2: Refinery decarbonisation options highlighted in MIDDEN.

Technology

Relevant process

Scope

CCS/CCU

Mainly for H2 production unit, FCC
and gasification unit
Also applicable to all stacks

Reduction of scope 1
emissions

Fuel switch

Use of electric
furnaces

Applicable to all process that use
gas-fired equipment (atmospheric
distillation, cracking, reforming)

Reduction of scope 1 and
when renewable
electricity is used also
scope 2

Electric boilers

Replacing steam boilers

Electric shaft
equipment

Replacing steam turbines

Blue/green H2 as fuel

All processes that use gas-fires
equipment

Feedstock
substitution

Co-processing
•  biolipids and/or
•  stabilised pyrolysis

oil, and/or

• Fischer-Tropsch

(FT)-wax

Co-feed in Fluid Catalytic Cracking
(FCC) (only 2 refineries have this
process)

Co-feed to hydrocracking and
hydrotreatment
Demand for additional H2

Reduction of limited
scope 1 and limited
scope 3

Blue/green H2 as
feedstock for process

Desulfurization, hydrotreatment,
hydrocracking

Scope 2 emissions

New process
rebuilt

Bio and e-refineries

Scope 1, 2 and 3

2.3.1 Company plans and announcements

The refineries in the Netherlands are owned by multinational companies that have many
operations across the world, with global strategies. Even though the diverse operations,
different markets and regulatory environments will factor into their decisions for different
regions, they will likely align with their global strategy. Therefore, this section introduces
current company plans regarding their decarbonisation strategies and shift to renewable
fuel and feedstock production.

Table 2.3 provides an overview of the companies that have operations in the Netherlands. It
shows the relevance of Dutch refineries in comparison to the global and European refining
capacities. This is to give some indication of how significant the Dutch production processes

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are within the overall portfolio of company-owned refineries. In addition, it introduces their
announced plans as indications of their decarbonisation strategies.

Shell has been updating its main energy transition targets7, and re-evaluating its refinery
business and the five clusters strategy (Shell, 2023a). In its energy transition strategy in
2024, Shell announced that it will remain committed to reaching net zero emissions by 2050
(Shell, 2024). However, it has abandoned its 2035 net carbon intensity target due to
uncertainty regarding changes across countries and the broader energy transition (Shell,
2024a). According to this new strategy, it will keep oil output stable up to 2030 (Argus,
2023).
In the Netherlands, Shell has announced a final investment decision to build an 820 kt/year
biofuel facility at the Pernis Refinery. For comparison, Shell refinery nameplate capacity in
the Netherlands is 21,000 kt/year. In addition, Shell took the final investment decision to
build a 200 MW electrolyser and to produce 60 tonnes of renewable hydrogen per day, to
replace hydrogen produced from natural gas (grey hydrogen) that is used for its oil refining
processes. The renewable electricity will come from offshore wind in the North Sea.

Similarly, BP announced its vision to become carbon-neutral by 2050 and had plans to
reduce its oil and gas output by 40% in 2030, compared to 2019 (BP, 2020), but according to
recent announcements (BP, 2024), it has rolled back its plans to cut oil and gas output. In a
recent communication, BP indicated an aim for a 50% reduction in scope 1 and 2 emissions,
a 20-30% reduction in the emissions associated with the carbon in upstream oil and gas
production (scope 3) by 2030, and to reduce the average carbon intensity of products to
net-zero by 2050. The main focus is set to replace its own grey hydrogen consumption with
green hydrogen (hydrogen produced from renewable electricity using electrolysers). For
bioenergy, BP aims to grow its global biofuels production to around 100 000 barrels per day
by 2030 and increase its supply volumes of biogas (BP, 2023). BP plans five major biofuel
projects across existing facilities, with the Rotterdam refinery among them. However, there
has been no final investment decision yet for the Rotterdam refinery. BP already co-processes
biofuels at three refineries in Germany, Spain, and the US (Chery Point).

ExxonMobil

focus lies within the United States with a significant portion of its

operations driven by the incentives provided by the US Inflation Reduction Act (IRA). The
main focus is on CCS technologies. The company is engaged in the development of a low-
carbon hydrogen production facility from natural gas, with carbon capture located in Texas.
In addition, ExxonMobil has plans to enhance renewable diesel production at its Imperial Oil
refinery near Edmonton, Alberta (Canada). ExxonMobil is also involved in co-processing trials
to produce lower-emission fuels, including sustainable aviation fuel (ExxonMobil, 2024).

TotalEnergies has transformed its La Mède refinery in France into a biorefinery with a
capacity of 500 kt of hydrotreated vegetable oil (HVO)-type biofuels per year. TotalEnergies
currently transforms its former Grandpuits refinery site in France into a zero-crude platform
for biofuels and bioplastics. It will construct a renewable diesel unit, producing aviation fuel.
This unit is planned to be commissioned in 2024, to process 400 kt per year, of which 170 kt
is Sustainable Aviation Fuel (SAF), 120 kt is renewable diesel and 50 kt renewable naphtha.
The unit will process mainly animal fats from the EU and used cooking oil, supplemented
with other vegetable oils like rapeseed. In addition, TotalEnergies has a joint venture with
Corbion to produce poly lactic acid (PLA) (a substitute for fossil polymers) from sugar in the
_______
7 In the first update to its main energy transition targets since 2021, Shell said it will target a 15%-20% cut in the net carbon

intensity of its energy products by 2030 compared with 2016 levels. It had previously aimed for a 20% cut by 2030. The
company said it now plans to reduce the net carbon intensity of the energy products it sells by 9-12% by 2024, 9-13% by
2025, 15-20% by 2030, compared to 2021 and 100% by 2050 (S&P Global, 2024; Shell 2024).

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EU, following their plant in Thailand. TotalEnergies
chemical recycling plant with Plastic Energy (TotalEnergies 60%, Plastic Energy 40%)
(TotalEnergies, 2023;2020).

Vitol and Gunvor Groups are among the largest commodity trading companies with some
investments in refining. In the Netherlands, Gunvor Group acquired the Rotterdam refinery in
2016, however, it closed its two crude processing units, one in 2019 and the other in 2020 (S&P,
2021). Its operations now focus on the desulphurization of high-sulphur products and the
production of gasoline. Currently, Gunvor intends to renovate its existing oil refinery facilities
in Europoort Rotterdam and make them suitable for the processing of vegetable and animal
oils and fats into renewable fuels, mainly SAF and renewable diesel. The plan is to construct
two production trains each with a production capacity of 350 kt/year. Each train corresponds
to around 7.5% of the fossil refinery nameplate capacity8. The facilities are planned to be
built on the previously decommissioned lubrication oil plant. Gunvor has also agreed to partner
with petrochemical group Dow to purify pyrolysis oil feedstocks derived from plastic waste, using an
existing unit at its refinery site in Rotterdam. Next to that, Gunvor has signed an agreement with Air
Products for a green ammonia supply terminal. The VPR refinery in Rotterdam has been acquired by
the Vitol Refining Group. Vitol focus has been more on supplying biofuels rather than on investing in
the production processes.

Review of the company plans highlights that the oil refineries react to the existing market
conditions and their efforts towards the long-term fundamental transition to producing
renewable fuels and feedstocks are limited. Biomass co-processing in existing refineries in
the Netherlands has not been considered by the companies due to the complexity regarding
tracing biogenic carbon in refineries and determining the renewable content of the product
to be counted for renewable targets within the Renewable Energy Directive9. Until 2023, the
methodology to determine the share of biofuel via co-processing was not set. Currently, this
methodology is defined by the Commission Delegated Regulation (EC (2023)3513).

IEA (2023) indicates that the oil and gas industry has not taken a leading role in the global
transition to clean energy systems. It states that clean energy investment by the oil and gas
industry as a whole represented 2.7% of its total capital spending in 2022 and 1.2% of total
investment in clean energy. More than 60% of this came from four companies: Equinor,
TotalEnergies, Shell and BP, which spent each around 15-25% of their total budgets on clean
energy (IEA, 2023).

Table 2.3: Review of the decarbonisation plans of companies that have refinery operation in the Netherlands.

Relevance of the Dutch
refinery

List of known project plans

Shell

•

44% of the

refining capacity in
Europe10

•

25% of the
company global
refining capacity in
2022

Germany
• Rheinland refinery plans: Expand electrolysers capacity to

100 MW, produce SAF using renewable power and biomass,
and develop a bio-LNG plant.

• Miro Karlsruhe refinery: Add synthetic fuels to product slate

of around 50 kt/y.

• Plans to establish two state of the art biomethane production

facility in Karstaedt and Steinfeld, to fulfil up to 5% of

(Shell, 2024b).

_______
8 Name plate capacity of Gunvor was mentioned as 4500kt/y.

9 Based on the communication with stakeholders.

10 In case of joint Ventures, the refining capacity is corrected based on the joint venture share (i.e. for MIRO refinery

in Germany and Trecate refinery in Italy.

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Relevance of the Dutch
refinery

List of known project plans

The Netherlands
• FID to build 820 kt/a biofuel facility in Rotterdam.
• Bio-LNG plant with Nordsol and Renewi in Amsterdam

Westport (3.4 kt/y).

• Green H2 plant in Shell Pernis refinery.
UK
• With Quarter Energy blue and green H2 plant.

•

46% of company
refining capacity in
Europe.

•

25% of the
company global
refining in 2022

• Globally invest in five major biofuel projects, of which three of

them adjacent to existing refineries and up to two
conversions of existing refineries.

Germany
• In Lingen refinery: green H2 production of 50 MW in 2022 to

100 MW in 2024, comprising around 20% of the H2 from
natural gas in Lingen.

The Netherlands
• H2-fifty, 250 MW plant to produce green H2 (45 kt/y) to

desulphurization, replacing grey hydrogen. No FID yet.

Spain
• At Castellon refinery: Develop a 20 MW electrolyser with

further expansion to 115 MW, with the aim to replace grey
hydrogen production.

TotalEnergi
es (owner
of 55% of
Zeeland
Refinery11)

• 6% of the company

capacity in Europe

• 5% of the company

global refining
capacity in 2022

• Total has chosen biofuels as its target market. The company

projects renewable diesel production of nearly 5 mln tonnes
per year by 2030 and aims to become a market leader in
renewable diesel, reaching 15% share of the biofuel market.

France
• La Mede: a 500 kt/y HVO plant, where it recently began SAF

production.

• Grandpuits facility: Converting it from 93,000 b/d into a 400

kt/y biorefinery to start up in 2024.

• Plans to add 300 kt/y of HVO capacity in Europe from co-

processing at existing facilities.

Belgium
• TotalEnergies' Antwerp refinery: considers adding co-

processing biofuel units with capacity of 150 kt/y, processing
UCO&AF.

The Netherlands
• Zeeland refinery: with H2ero project, a 150 MW electrolyser

to produce renewable H2.

Germany
• Refinery in Leuna : TotaEnergies and Sunfire investing in a

project to produce methanol from green hydrogen and highly
concentrated CO₂ from the refinery production processes.

ExxonMobil
(Esso
refinery)

• 16 % of the

company European
capacity

• Focus on scope 1 and 2 emissions and to become net-zero in

2050.

• Lower emission investment plans through 2027.

_______
11 Zeeland refinery is currently a joint venture between oil companies Total (55%) and Lukoil (45%). Since Total has

a larger share, information about this company is illustrated in the table.

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Relevance of the Dutch
refinery

List of known project plans

• 4% of the company

global refining
capacity in 2022

•  Renewable diesel   Strathcona, Canada and Slagen, Norway.
•  Bio co-processing   Sarnia, Canada.
•  Baytown low-caron hydrogen, ammonia and CCS project plan

2027-2028.

Vitol

• A trading company,

acquiring five
refineries globally.

• 55% of the

company refining
capacity in
Europe12

Gunvor

• A trading company

that acquired three
refineries

• Only Gunvor

Refinery Ingolstadt
is operational

The Netherlands
• An HVO/HEFA plants, with a total production capacity of 700

kt/y.

Spain
• Gunvor acquired/invested in a biofuel plant in Spain (Gunvor

Biofuel Berabtevilla; built in 2008) which has a 400,000 Mt/y
capacity based on
transesterification/esterification/distillation.

• Additionally, Gunvor invested in the biofuel plant Heulva, built

in 2012. The plant was built to refine vegetable oil. Gunvor is
upgrading it to allow for UCO and fatty acids.

- Refining capacity in Europe is based on the Concawe dataset. When the refinery is part of a joint venture,

the capacity is corrected by the joint venture share.

- Global refining capacities of companies are based on the Statista, Global refining capacity of key oil majors

2022.

2.4 Outlook

2.4.1 Reduction of fossil oil demand for transport

As stated previously, the future strategies of the oil refineries will depend on many factors,
most importantly the petroleum product demand in the future. It is evident that the
demand for the transport sector will decrease, especially in Europe. However, the pace of
this decrease will depend on policy implementation and is highly uncertain. This difficulty
can be addressed with energy modelling and related projections, which can provide valuable
information regarding demand reductions within a pre-determined scenario framework.

A recent study from the IEA explores the outlook for oil and natural gas producers based on
two scenarios: the Announced Pledges Scenario (APS) and the Net Zero Emissions by 2050
(NZE) Scenario (IEA, 2023). These scenarios set out global transition pathways aligned with
regional and global net-zero targets respectively, and assess what this would mean for oil
and gas companies and producer economies. The APS scenario sets the framework based on
the announced pledges by individual countries. It assumes that all climate commitments
made by governments and industries around the world as of the end of August 2023,
including Nationally Determined Contributions (NDCs), will be met. The NZE scenario sets out

_______
12 Vitol owns the VPR refinery in Rotterdam and is co-owner of a smaller refinery in Cressier, Switzerland.

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a pathway for the global energy sector to achieve net zero CO2 by 2050. While both
scenarios are exploratory scenarios, they are well aligned with the Paris Agreement goals,
and the EU goal of carbon neutrality by 2050, particularly the NZE scenario.

Figure 2.4 illustrates the projection results. The IEA scenarios show an overall oil product
demand reduction of 45% and 75% by 2050 compared to 2022 for the APS and NZE
scenarios, respectively. Transport fuels, such as gasoline, diesel, and kerosene, are projected
to undergo significant decline over the coming decades. The decline in gasoline demand is
particularly pronounced, with a share of 25% today, declining to 15% by 2050 in the APS,
and to almost zero in the NZE Scenario. Diesel and kerosene are projected to decline
significantly in the NPE scenario as the decarbonisation of long-distance transport and
aviation sectors takes effect. In contrast, demand for petrochemicals feedstocks (such as
ethane, LPG, and naphtha) is expected to remain more stable according to these projections.
The share of product demand is projected to exceed 50% by 2050 in the NZE scenarip, up
from 22% today. This shift highlights the significant importance of strategic adjustment by
the refining industry to align with future markets.

Figure 2.4: Oil product demand in the APS and NZE Scenario [IEA, 2024] the oil and gas industry in net zero
transition

The European Commission Communication (EC, 2018): clean Planet for all- A European
long-term strategic vision for a prosperous, modern, competitive and climate neutral

sectoral and economy-wide low carbon energy transformation

pathways. The model-based quantitative analysis explored eight different scenarios
achieving different levels of emission reduction, contributing to the Paris A

temperature objectives of keeping global temperature increase to well below 2oC, and
pursue efforts to achieve a 1.5oC temperature change, thus reaching net-zero GHG
emissions. Figure 2.5 illustrates the transport sector oil demand results related to scenarios
achieving GHG emissions reduction close to 90% by 2050 compared to 1990 and reaching
net-zero GHG emissions by 2050. Results are presented for the transport sector excluding EU
international maritime fuel demand and for international maritime fuel demand. The overall
demand for oil products is projected to be reduced by approximately 75% and 90% in
205013 compared to 2015. It is important to highlight that the international maritime sector
_______
13 The low range is based on the comparison of combination of COMBO scenario for inland transport, including

aviation and 50% emission reduction scenario for the EU international maritime sector with 2015. The 90%

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GHG emission reductions were set at 50%, 60% and 70% at the time of these projections,
whereas International Maritime Organisation has introduced a recent strategy in 2023 to
pursue efforts towards phasing out GHG emissions from international shipping entirely by
the middle of this century.

Figure 2.5: EC scenario projections for the fossil fuels consumed in transport sector(excl maritime) and
international shipping in the EU

TNO has defined two scenarios for energy system in the Netherlands: ADAPT and
TRANSFORM. Both scenarios are based on a framework for achieving carbon neutrality in the
Netherlands. However, they differ in aspects regarding the total energy demand for
transport sector and the emission reduction objectives for the aviation and maritime
bunkering in the Netherlands. ADAPT follows the Climate and Energy Outlook (KEV)
projections from PBL (2023) and assumes that the aviation and bunkering-related emissions
will be reduced by 50%. TRANSFORM considers aviation and the maritime bunkering to reach
zero emissions by 2050. In addition, due to the assumed behavioural changes of consumers,
the demand for aviation and maritime fuels is lower in TRANSFORM than in ADAPT. Within
the framework of this scenario modelling, the demand for oil products for transport sector is
projected to reduce by more than 85% in ADAPT and more than 95% in TRANSFORM,
compared to 2019 (see Figure 2.6). Further details of this scenario modelling can be found in
Scheepers et al, 2024.

_______

reduction refers to 1.5 oC scenario, combined with 70% GHG emission reduction in EU international maritime
sector.

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Figure 2.6: Oil product demand in the Netherlands according to ADAPT and TRANSFORM scenarios

2.4.2 Demand for petrochemical intermediates

Crude oil refineries do not just produce fuels for transport, but also petrochemical
intermediates for the base chemical industry, such as naphtha, LPG, ethane and reformates
for aromatics. These products may turn into the main sources of demand growth for
refineries.

The future demand for petroleum feedstocks like naphtha and LPG will be influenced by,
among other things, policies affecting plastics production and demand, such as the
implementation of circularity. However, the policy formation on this topic is currently less
concrete than it is for the transport sector-related policies (see section 3.1.1), therefore the
future demand for fossil feedstocks is more uncertain. For instance, the IEA (2023) projects
an almost 20% reduction in petroleum feedstock demand by 2050 compared to 2022 in its
APS scenario and a 37% decline in the NZE scenario.

Another study that underpins the EC communication on  Clean Planet for All  (EC, 2018),
indicates that fossil naphtha consumption may increase by 25% in 2050, compared to 2015
when CCS is implemented to reduce GHG emissions of the chemical industry (ICS &
Fraunhofer, 2018). Another scenario variant that considers a significant amount of biomass
and biogas use, next to plastic recycling, results in 80% reduction of fossil naphtha in the EU
in 2050 compared to 2015.

This uncertainty about the future market demand for petroleum feedstocks adds an
additional layer of complexity to the refinery sector.

2.4.3 Possible company responses

The companies will set their strategies for the coming period, and depending on the business
case and the refinery type, they may decide one of the below options.

200

400

600

800

2019

2030

2050

Oil products demand in transport in the

Netherlands

ADAPT inland + aviation

ADAPT Maritime

TRANSFORMinland+aviation

TRANSFORM martime bunkering

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• Hold their investment levels and/or milk their previous investment: Due to high margins14

in the short-to-medium term, companies may decide to hold onto their assets. They may
decide not to re-invest or go for major maintenance but instead keep the refining running
until the operational cash flow is below salvage values. Current company plans,
introduced in Section 2.3.1, indicate this trend, at least up to 2030.

• Shrink selectively and shift to chemicals. Companies may seek niche markets with the

highest value and longer time duration. They may change their individual process units,
change the mix of process units, or build more direct crude-to-chemicals plants
(Fitzgibbon et al., 2022).

• Shut down and divest: Companies may decide to close many of the oil processing units

and look for opportunities to shift to renewable refineries.

Petrochemical integration with oil refineries has been considered as one of the key
parameters in determining refinery resilience to competition. Refineries that have some
chemical-oriented process and supporting processes15 can adapt to shifting demand from
transport fuels to chemicals (Fitzgibbon et al., 2022; CIEP 2017). This may provide a financial
safeguard against declining demand for diesel and gasoline and a competitive advantage
over non-integrated refineries. However, as stated in the previous section, this option
depends heavly on future policy formation regarding circularity and emission reduction
objectives for the chemical industry.

Table 2.4 presents the most relevant processes that can increase the feedstock yield, such
as naphtha, for the chemical industry. This table also shows the Dutch refineries where
these processes are available.
• Fluid catalytic cracker (FCC): This process converts higher-molecular-weight (heavy)

hydrocarbons into lighter products. The products usually consist of high-octane gasoline,
light fuel oil and olefin-rich light gases (Olivera & Schure, 2020). This process can be
redesigned to produce higher petrochemical yields, resulting in increased production of
olefins, aromatics, and LPG & naphtha for the steam crackers.

• Hydrocrackers: Hydrocrackers yield diesel, jet fuel, and steam cracker feed such as LPG

and naphtha. Refineries may boost petrochemical output while still keeping diesel and jet
fuel production by increasing the hydrocracker capacity and shifting towards higher yield
of light-ends feedstocks (Fitzgibbon et al., 2022).

• Naphtha reformers: Refineries can reduce gasoline production and maximise aromatics

production by adopting reforming process.

Table 2.4: Units that are most relevant for chemicals production within the Dutch refineries (derived from
table 3 in Olivera & Schure, 2020)

Naphtha

Reformer

Hydrocracker

FCC

ESSO

Gunvor

Shell

Vitol

Zeeland

_______
14 i.e., increased profit margins due to tight market and high fuel prices.

15 Such as hydrogen generation, aromatics separation and handling, and light ends storage.

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2.4.4 Possibility to shift to renewable fuels

The possibility to shift to producing renewable fuels could offer an alternative for refineries.
The refinery transition to renewable fuels can be grouped under four general
implementation routes (CONCAWE, 2019). These are:
• Refinery integration: this refers to integration of renewable fuels with the existing crude

oil refinery.

• Refinery conversion: existing refineries can be adapted to process 100% renewable

feedstocks.

• Refinery co-location: renewable refineries can be built stand-alone, for instance adjacent

to fossil refineries and use some of the existing logistics and infrastructure, or

• They can be fully self-containing, greenfield projects.

Existing fossil refineries can be integrated with produce renewable fuels and feedstocks. At
present, several refineries in Europe are either retrofitted to produce 100% biofuels or co-
process lipids alongside traditional crude oil with limited or no modifications to the existing
processes16, as demonstrated by for instance Preem, Cepsa, and Repsol. Preem, one of the

-processing companies, co-processes up to a 30% ratio of lipids, including

tall oil methyl ester (Egeberg et al., 2011). In a recent announcement, Preem together with
Haldor Topsoe, has achieved up to 85% co-processing in its Gothenburg refinery (Bioenergy
international, 2021). Table 3.2 in Appendix A introduces the list of current and planned
retrofitted fossil refineries in Europe.

Co-processing can occur at different injection points within refineries, with two most
common being the hydroprocessing units and the Fluid Catalytic Cracking (FCC) unit. A
simplified flow diagram of a refinery with the two main insertion points are illustrated in
Figure 2.7. The FCC products usually are: high-octane gasoline, light fuel oils, and olefin-rich
light gases (Olivera & Schure, 2018).The hydroprocessing unit comprises two major
operations: i) hydrotreatment, which aims at removing sulphur, nitrogen and oxygen, next
to other undesirable metals, and ii) hydrocracking, where the heavier petroleum
intermediate products such as heavy gas oil and vacuum gas oil into is cracked to lighter
products by catalytic cracking and hydrogenation. These result in gasoline and diesel range
fuels that meet the environmental regulations. The Dutch Petroleum Industry Association
(VNPI)17 indicates the total refinery hydrotreatment capacity in the Netherlands as 24 Mt/y
and the hydrocracking capacity 12 Mt/y for fuels production in the Netherlands (VNPI, 2022).
Detailed hydroprocessing capacity per refinery to produce fuels is presented in Appendix B.

_______
16 Around 5-10% co-processing of renewable feedstock

17 VNPI changed its name to Association of Energy for Mobility and Industry (Vemobin)

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Figure 2.7: Simplified flow diagram of a generic refinery with biomass co-processing

Co-processing can be considered as a near-term option as the oil demand will be
significantly reduced in the medium to long term (see Chapter 2.4.1). Therefore, the
possibility to expand the renewable feed to 100% and establish stand-alone co-located
biorefineries appear as the promising next steps. In Europe, the repurposing of existing
refineries and the conversion to Hydrogenated Vegetable Oil/ Hydro-processed Esters and
Fatty Acids (HVO/HEFA) have been happening. For instance, ENI has been repurposing its oil
refineries in Italy (Portho Marghera in 2014, Gela in 2019) into stand-alone, renewable
facility (ENI,2024). The conversion was estimated to cost about one-fifth to one-fourth of
the cost of establishing a new greenfield facility due to use of existing infrastructure (ENI,
2014). TotalEnergies refinery La Mède in France was converted to biorefinery between 2015
and 2019 (TotalEnergies, 2024). In the Netherlands, Gunvor refinery has decided to produce
HVO from used cooking oil, animal fats and other vegetable oils. The refinery has already
been processing some limited amount of biofeed in its existing hydrotreatment facility. With
this new plan, next to the existing reactor a new installation for hydrotreatment is planned.
By doing so, existing other process installations will be used, such as the amine recovery
installation, the acid water stripper, hydrogen supply, the petrol factory, connections to the
tank farm for the storage of renewable fuels and utility systems such as water, steam,
electricity, nitrogen, refinery gas and sewage.

In 2021, Shell announced its final investment decision to build a biofuel plant adjacent to its
refinery in Rotterdam, in which it will convert vegetable and animal oils and fats into
biofuels. The plant will produce 820 kt biofuels, of which more than half will be sustainable
aviation fuels and the rest renewable diesel. The feedstock base is reported to consist of
used cooking oil, waste animal fats and other industrial and agricultural residue products. In

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addition, a range of certified sustainable vegetable oils, such as rapeseed, will supplement
the feedstock input (Shell, 2021).

2.4.5 Feedstock use and availability

Almost all of the commercial plants are currently based on vegetable oils (such as palm,
rapeseed, or soybean), animal fats, and used cooking oils. However, use of these feedstocks
to produce biofuels are either banned18 (i.e. use of biomass feedstocks with high indirect
land use change (iLUC) impacts, such as palm and soy oil) or capped by the renewable
energy directive (REDII) due to sustainability concerns (i.e. used cooking oil and animal fats,
and food and feed crop based biomass)19.

Alternative feedstocks with significant potential for co-processing include bio-oils generated
through thermochemical processes like fast pyrolysis, catalytic pyrolysis, or hydrothermal
liquefaction (HTL). Unlike fats and oils, these can be derived from abundant sources like
forest or agricultural residues. However, it's important to note that these technologies are at
different stages of technology readiness. Fast pyrolysis is a commercial technology, but
pyrolysis oil from woody biomass contains high water and oxygen and is not compatible
with fossil fuel oils to be directly co-processed. The product from HTL technology, biocrude,
has lower water and oxygen content making it more advantageous to transport and co-
feed. However, HTL technology is less advanced than fast-pyrolysis oil. Appendix D
introduces the technology status of pyrolysis and HTL.

Since the pyrolysis technology is already commercial, its use as refinery feedstock has been
investigated the most (Seiser at al., 2022; Lammers et al., 2019; Dyk et al, 2019, 2022). Its
poor thermal stability and the high oxygen content requires pyrolysis oil to undergo a
hydrotreatment to remove some of the oxygen and make it more stable. This so called mild
hydrotreatment can be done back-to-back with the pyrolysis process, and improve the
transportation costs, or this can be done at the refinery, making use of existing installations.

Table 2.5 provides indicative refinery integration options in the Netherlands and related
biomass feedstock demand if the existing hydrotreating and hydroprocessing units for
transport fuels are to be utilised. Two options are examined. Option 1 refers to refinery
adaptations using lipids. Option 2 refers to converting lignocellulosic biomass into pyrolysis
oil and use of this pyrolysis oil in exiting refinery processes. This table shows the order of the
magnitude feedstock demand compared to the sustainable biomass potential in Europe.
The sustainable biomass potential is based on a recent publication by DG RTD (EC, 2024).
This study has updated the European sustainable biomass potential for energy markets and
indicates the total biomass supply potential to be in the range of 310-836 million dry tonnes
for 2030 and 294 - 892 million dry tonnes in 2050. The European biomass potential, across
different sectors can be found in Appendix c. This Appendix also shows a comparison of this
study results with other biomass potential assessment studies.

_______
18 The revised Renewable Energy Directive (RED II) introduced a new approach to address the issue of the iLUC

effect. It sets limits on high iLUC-risk biofuels, bioliquids and biomass fuels which pose a high risk of indirect land-
use change and are therefore associated with significant GHG emissions. Article 26(2) of RED II provides for a
progressive phasing out of high iLUC-risk biofuels mainly from palm oil and soybean oil by 31 December 2030.

19 Biofuels produced from food and feed crops are limited to their supply in 2020. Biofuels from feedstocks listed in

annex IX, part B of REDII are capped to max. 1.7% of transport fuel demand. It is important to note that FuelEU
aviation regulation does not introduce any or limitation to the use of biofuels produced from annex IX, list b for
the aviation sector.

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5-10% co-processing in existing hydrotreaters in the Netherlands would demand
approximately 1.3 to 2.9 Mt of lipid input20, provided that the fuel throughput stays
comparable to current level. A full conversion would require almost 29 Mt lipids. To put these
numbers into perspective, the sustainable supply potential of UCO and animal fats is
estimated to be around 3.9 Mt in Europe in 2030 and 2050 (EC, 2024). Thus, the demand for
these biomass resources exceed the sustainable potential in Europe (above 100%),
according to the calculated potential by the recent study (EC, 2024). In 2022, however, the
EU consumption of UCO and animal fats was exceeding this potential already, with imports
from outside Europe, totalling to approximately 5.2 Mt (USDA,2023) and the global
consumption of UCO for biofuels was around 10 Mtonnes21. In 2022, more than 70% of the
UCO based biofuels supplied to the Dutch market was from outside of Europe, China
contributing the largest (Nea, 2022). It is important to note that existing installations,
whether co-processing or stand alone, currently use other vegetable oils such as rapeseed
and sunflower oil, palm and soy oil, next to UCO and animal fats. Nevertheless, we can
conclude that this route, regardless of where it is in the form of co-processing or 100%
conversion, will be limited.

Co-processing via pyrolysis route appears to demand approximately 3.5 to 7 Mt
lignocellulosic feedstocks. The total supply potential of sustainable lignocellulosic biomass in
Europe is estimated to be in the range of 380-650 Mt, according to medium and high
mobilisation scenarios (EC, 2024). Thus, in average 0.7-1.5% of the European lignocellulosic
feedstock potential would suffice to meet the demand. However, when 50% conversion of
hydrotreaters is considered, up to 7.5% of the sustainable biomass potential in Europe may
be needed to satisfy this. This 50% conversion corresponds to fuel substitution of more than
80% of the aviation and maritime bunkering in the Netherlands in 2019, or more than 20%
of the EU international aviation fuel consumption22 in 2015.

It is necessary to note that these figures are indicative, assuming use of clean wood for the
pyrolysis oil integration. A more detailed analysis, where different biomass feedstock
compositions are taken into consideration, next to the refinery specifics, will be necessary to
provide a more robust understanding.

_______
20 Applying the lipid conversion of 83% for co-processing in exiting hydrotreatment (Concawe, 2019).

21 See Global Supply and Trade of Used Cooking Oil (cleanfuels.org)

22 In 2015, aviation fuel consumption is estimated to be 53.5 Mtoe.

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Table 2.5: Integration of biomass use with the existing refineries in the Netherlands23

Hydrotreatment

Hydrocracking

Hydro treatment
capacity in the
Netherlands (Mt/y)1

Co-processing ratio(%)

10%

50% of base

capacity

100% of base

capacity

Renewable fuel (Mt)

1.2

2.4

6.0

12.0

Option1. Lipid demand
(Mt)2

1.5

2.9

7.4

14.8

Share as total UCO and
AF potential in Europe
(%)3

37%

74%

190%

380%

Option 2. Raw pyrolysis
oil demand (Mt)4

2.5

5.0

12.5

25.0

Option 2. Woody
biomass demand (Mt)5

3.5

7.2

17.9

35.7

Share as lignocellulosic
feedstock potential in
Europe (%)6

0.6-0.9%

1.1-1.9%

2.7-4.7%

5.5-9.4%

Refinery implicates

•

-purpose H2

increased 25 to 100%.

•

Re-optimisation of existing fossil
units.

•

Moderate reduction in fossil diesel
production and slight loss of crude
capacity.

•

-purpose H2

increased x2 to x4.

•

Major reduction in fossil diesel
production and major loss of
crude capacity with closure of
many fossil process units.

1 the total Dutch hydrotreatment and hydrocracking capacities are derived from VNPI, 2022
2 lipid hydrotreatment efficiency is assumed as 83%; lipid hydrocracking 81% (derived from Concawe, 2019)
3 European potential is 3.9 Mt (see EC, 2024)
4 pyrolysis oil hydrotreatment efficiency is set to 48%
5 pyrolysis oil yield from woody biomass is assumed as 70%
6 lignocellulosic biomass potential to be in the range of 650-380 Mtdry based on high mobilisation versus medium
mobilisation scenario of EC, 2024.

There are other ways to produce biofuels from lignocellulosic feedstocks but their
compatibility with current refineries is somewhat limited or non-existing. These are:

• Lignocellulosic ethanol pathway: consists of biomass pre-treatment, hydrolysis to

fermentable carbon sugars, sugar fermentation, and distillation of ethanol to fuel
grade. This pathway has only limited scope for refinery integration, mainly via
common use of utilities and logistics.

• Biomass gasification, followed by Fischer Tropsch (FT) synthesis to hydrocarbons

pathway: the FT synthesis results in a product, called wax that undergoes further
processing steps to produce a number of products such as naphtha, diesel, and
kerosene. A low-level co-processing via use of refinery hydrocrackers, or unit
transformation, use of utilities including heat, power and hydrogen, or using existing

_______
23 Follows the Concawe, 2019 calculation method.

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FCC for upgrading, product handing, blending and logistics are considered as
possible integrations with the existing refineries (Concawe, 2019). Currently, there
are no commercial plants that produce biofuels via FT synthesis.

An alternative route to syngas production is the power-to product (PtX) pathways. These
pathways involve conversion of CO2 into syngas using hydrogen from electrolysis using
renewable electricity. This e-syngas would get through FT synthesis producing e-wax, and
similar integration as the biobased route could be considered.

Biomass gasification followed by methanol synthesis and power-to-methanol pathways are
not touched upon here on as these are considered under the chemical sector, even if they
can be used for transport. Their integration with the chemical industry appears as a more
logical option. Table 2.6 recaps the evaluation of refinery integration of various renewable
based value chains.

Table 2.6: Refinery integration of various renewable feed based value chains (adapted from Concawe, 2019)

Refinery integration

Additional
investments

Feedstock
availability

Level of integration

Lipids

Diesel
hydrotreaters or
hydrocrackers can
be utilised,
resulting in CAPEX
savings.
Alternatively, FCC
unit can be utilised
for co-processing.

Requires storage
and pre-treatment,
resulting in
additional
hydrogen demand.

Sustainable
feedstock
availability is
limited

Significant

Biomass pyrolysis
oil

Use of existing
hydrotreaters and
hydrocrackers
Alternatively, FCC
unit can be utilised
for co-processing.

Special oil storage
for raw bio-oil. Raw
pyrolysis oil will
need to go under a
mild treatment to
be stabilised. This
will require
additional
investments and
hydrogen demand.
In addition,
biomass to-
pyrolysis oil value
chain will need to
be established.

Sufficient feedstock Significant

Biomass
gasification

FT can be further
processed in
existing
hydrocrackers.

Biomass to FT wax
processes will need
to be established.
Storge units for FT
wax.

Sufficient feedstock Moderate

E-FT

FT wax can be fed
into existing
hydrocrackers.

E-FT process will
need to be
established.
Storge units for
wax.

Depends on
availability of
hydrogen and
carbon

Moderate

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2.4.6 Costs

As stated, current co-processing at refineries is limited. One of the reasons relate to the
suitability of biofeed to the existing processes. Bio-oils have different characteristics such as
chain length, number of double bonds and the amount of free acids versus triglycerides,
which require special treatment during processing (Dyk et al., 2022). This extra processing
necessitates higher hydrogen consumption and storage of feedstocks, adding to the overall
investment required. Whether this approach is economically viable depends on various
factors, including feedstock availability and costs, the potential value of renewable products,
and the specific conditions at each refinery.

Although there is limited information available about the investment costs associated with
co-processing, it is reported to be significant due to the need for infrastructure, feedstock
reception, storage, reactor feeding, and other equipment requirements. Hamelinck et. al.
(2021) assumes these costs to be roughly half of a greenfield HVO plant. ENI has estimated
the conversion to cost about one-fifth to one-fourth of the cost of establishing a new
greenfield facility due to use of existing infrastructure. However, none of these estimates are
based on bio-oil from lignocellulosic biomass. CONCAWE (2019) indicates the capital
expenditure for feed pre-
exceed this by a factor of 5.

An IEA study (2020) calculates biofuel production cost via the pyrolysis route, using
lignocellulosic feedstocks, comparing the co-processing route with the stand-alone route.
This study highlights that the figures are based on Rough Order of Magnitude (ROM)
calculations. Data is generally not available, and refineries are different in terms of their
investment needs and processing capabilities such that a generic figure cannot be
estimated. According to this study, the capital expenditures of a stand-alone system appear
to be lower than the co-processing route24. There is no detailed clarification behind these
numbers. The relatively low production costs of a stand-alone facility may be explained by
the higher conversion efficiency assumption (68%), compared to the co-processing biomass
conversion efficiency (29%). Yanez et. al. (2020) studies a number of co-processing case
studies in an oil refinery located in Colombia, with an average capacity of 250 kbpd. In Yanez
et. Al. (2020), the capital cost of refurbishing is assumed to be about 50% of the cost of
adding a new unit. While this study acknowledges the uncertainties surrounding such
comparison due to different technology readiness levels and related cost entailments, it
shows the fast pyrolysis co-feed to the refinery with a max of 10% co-feed as the low cost
option, among the different co-processing options. This study indicates that higher pyrolysis
oil co-feed, with esterification of pyrolysis oil increases the production cost significantly.
Unfortunately, this study does not include a stand-alone process to make a comparison
between the co-feed versus stand alone. TNO has also conducted an analysis of levelized
cost of biofuels production via biomass pyrolysis, followed by two stage hydrotreatment,
thus considering a stand-alone process. This resulted in approximately 28-

, which

falls within the IEA (2020)calculation range. The main assumptions regarding the financial
parameters used in these studies can be found in Table 2.7.

In conclusion, while 5-10% co-feed may be the low cost option, for higher levels of co-feed
detailed techno-economic analysis will be needed, where the refinery specifications are
taken into account.

_______
24 The specific investment of a co-processing value chain is highlighted to be in the range of 2250 -

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Table 2.7: Comparison of bio oil co-processing with stand-alone production of biofuels via pyrolysis and HTL

Literature

Pathway

Co-feed

rate

Biomass

price

Biofuel

productio

n cost

Of which

bio oil

production

Of which

bio oil

co-

processing

IEA (2020)

Co-processing

2,8

21,9

10.8

1,7

5,6

38,6

18.1

1,7

E. Yanez, et al.
(2020)

FPOtoFCC

10%

3,4

17,0

5,2

12,0

FPOe1toFCC

20%

3,4

31,0

24,8

5,8

FPOe1toHDT

20%

3,4

25,0

20,5

4,2

HTLOtoHDT

15%

3,6

21,0

12,7

8,0

IEA (2020)

stand-alone

100%

2,8

22,8

100%

5,6

35,3

TNO

stand-alone

100%

5,00

28-30

1 this includes esterification of fast pyrolysis oil for the co-processing.
FPO: fast pyrolysis oil; FCC: Fluid Catalytic cracking; FPOe: Fast pyrolysis oil that is esterified: HTLO: Hydrothermal
liquefaction oil; HDT: Hydro-processing

2.5 Process relocation due to de-fossilisation

It is highly uncertain how the companies strategies will evolve and what pathways the
Dutch refineries will follow. Nevertheless, they will need to transform and adapt to the
changing market conditions. Oil refining will shrink but this trend will also occur in other
countries and regions under the assumption that the Paris Agreement goals are pursued
globally. Under this consideration, new supply chains based on renewable resources will
emerge and they may occur elsewhere. This relates to the limited availability of biomass
resources in the Netherlands, when compared with the order of the magnitude demand to
retrofit existing hydroprocesses and cracking processes, or the demand for the large
bunkering in the country.

Figure 2.8 illustrates the possible options to consider, provided that the existing assets in the
Netherlands are to be used. Within the first two options, the (re)location refers to feedstock
collection and their conversion to a transportable commodity. Alternative three refers to the
possibility of importing solid biomass. In these options, the relocation is limited to the
collection and densification of solid biomass and its transportation. Solid biomass has
already been traded in the form of wood chips and wood pellets. In 2021, the total woody
biomass import to the Netherlands was approximately 3 million tonnes (dry) for energy
production, and exports were approximately 0.9 million tonnes (CBS, 2023c)25. The last

_______
25 Nationale balans vaste biomassa, 2021

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option refers to the possibility of importing the end product, thus biofuels, from elsewhere.
This case refers to a full relocation of the value chain.

Figure 2.8: (Re)location risks related to the adaptation of existing assets to produce biofuels

The following aspects are of importance in analysing the likelihood of each value chain:

An important factor relates to the establishment of biomass (intermediate) supply
chains and related costs to the Netherlands and, once they become tradable
commodities, the market prices of these renewable materials should also be
considered in this analysis. In addition, costs associated with the adaptations
needed to integrate those value chains with the existing assets, and the selling price
of renewable fuels will be key parameters for decision making. Mobilising biomass
feedstocks in sufficient quantities with affordable prices will be important both for
adapting existing refineries and for establishing stand-alone biorefineries. The low
bulk density of many different biomass feedstocks, combined with their divergent
chemical compositions, will necessitate pre-treatment and densification. Thus,
conversion of primary biomass into intermediate energy carriers in close proximity
to the feedstocks will be needed.

• There is already a commodity market for wood chips and wood pellets. Bioethanol

and biodiesel have been traded globally. In addition, fats, oils and greases including
used cooking oil are collected globally and have been used to produce biodiesel or
renewable diesel, and traded volumes have increased.

• However, there is need for establishing new bio-based commodity markets to

enable mobilisation of biomass feedstocks with low energy density, such as
agricultural residues.

• As stated in the previous section, biomass pyrolysis and hydrothermal liquefaction

are suitable feedstocks for existing refinery integration and promising routes to
convert biomass into tradable commodities. However, these technologies need to

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be scaled up and implemented commercially for different types of biomass
feedstocks.

• While densification could reduce transportation costs, additional costs associated

with this step, along with decreased overall mass and energy yield, would influence
the overall economic performance. Jong et al (2017) have studied cost reduction
strategies for biofuel production, where integration with existing industries, and
distributed supply chain configurations (i.e., supply chains with an intermediate pre-
treatment step to reduce biomass transport cost), have been looked into. HTL was
used for the analysis of a supply chain with intermediate HTL crude production and
transport versus centralised biofuel production (thus HTL crude and further
upgrading to biofuels in a centralised location). The study results showed that
distributed supply chain configurations do not provide a significant cost benefit,
when compared with the centralised supply chain. This is because, producing HTL
crude and transporting this to the upgrading (final conversion) locations results in
loss of synergies between the HTL and upgrading processes (i.e., off gas integration
and shared utilities). Thus, the lower transportation costs are outweighed with the
integration benefits. Nevertheless, a distributed bio intermediate supply chain will
involve many other benefits, such as utilising a wider variety of different types of
biomass feedstocks, access to larger volumes, increasing local experiences with
feedstock handling. In this regard, a more comprehensive assessment taking wider
system aspects is needed.

In 2024 TNO has explored different future visions, where the Dutch energy system would
achieve carbon neutrality by 2050. The TRANSFORM scenario described a future vision where
the energy system in the Netherlands will become carbon neutral by 2050. In addition, the
GHG emissions from international bunkering (both aviation and maritime shipping) will be
zero by 2050. The TNO energy optimisation model OPERA has been deployed to illustrate the
cost optimal way of achieving the set targets. Further details of this scenario modelling can
be found in Scheepers et al, 2024.

Figure 2.9 presents the TRANSFORM scenario modelling results concerning the transition of
refineries in the Netherlands. As oil refining diminishes, renewable refineries emerge,
continuing to produce both transport fuels and feedstocks for the chemical industry.
Renewable refineries cover biomass and renewable electricity based renewable fuel and
feedstock production facilities, excluding renewable methanol and ammonia. These two
commodities are grouped under the chemicals in this scenario modelling even when they
are used for the transport sector.

Up to 2030, biomass value chains appear as the cost-effective option, maintaining stability
until 2050. In 2030, almost half of the biofuel production relates to HVO from UCO,
highlighting the integration opportunities with the existing hydrotreatment processes.
Beyond, while HVO/HEFA continues to play an important role, biomass gasification followed
by the FT synthesis to produce kerosene becomes equally important. This value chain
supports the deployment e-FT kerosene production by supplying biogenic CO2.

Due to limited supply of sustainable biomass feedstocks26 and increasing competition for
chemicals production, there is a shift towards deploying synthetic fuels and feedstocks. An
essential factor here is the availably of biogenic carbon for synthetic fuels production.
Therefore, a biomass-to-fuels and feedstocks value chain, with biogenic carbon captured
within the process, becomes favourable. This biogenic carbon can be partially stored for

_______
26 The study assumes the solid biomass import of 650 PJ, of which 550 PJ from the EU.

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negative emissions and partially utilised for synthetic fuels production. Thus, the low cost in
terms of capital expenditures and operation expenditures versus low cost in terms of a full
system optimisation may mean different things.

It is important to note that this is not a forecast, but a scenario projection within a pre-
determined framework and Dutch circumstances.

Figure 2.9: TRANSFORM scenario results relevant for the refinery transition

2.6 Discussions, conclusions, and further

research needs

2.6.1 Discussions for this sector

This study examines the potential risks associated with relocating certain refinery processes
due to the shift towards renewable energy resources in line with the efforts to reduce

and achieving net zero emissions by 2050. It serves as a

starting point for broader discussions on transforming the refining industry in the
Netherlands, focusing on developments beyond 2030.

The current policies primarily target reducing GHG emissions from industrial processes to
meet the national Climate Agreement, REDIII and EU ETS goals. Achieving GHG emission
reduction targets does not necessary require refineries to switch to renewable energy

500

1000

1500

2030

2040

2050

TRANSFORM

Refinery transition

Synthetic
feedstock

Synthetic fuel

Bio feedstock

Biofuel

Fossil feedstock

Fossil fuel

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carriers. Alternative carbon reduction options, such as carbon capture and storage can also
be utilised. However, this study does not delve into all possible options for reducing direct
emissions or associated relocation risks. Related to this, the aim of this study should not be
confused with the carbon leakage issue. Carbon leakage refers to production shifting to
other countries as a consequence of the cost implications of climate policies. This could
result in a rise in their overall emissions and certain energy-intensive industries, such as
refineries, are particularly vulnerable to this risk.

European refineries already face several challenges, including overcapacity and intense
competition, leading to downsizing or shutdown of several refineries. Since 2009, out of
close to 100 refineries operating in Europe, 26 refineries (threshold > 30 kbbl/d or 1.5 Mt/y)
were closed or transformed (Concawe, 2024). Thus, the focus has not been on the future
leakage risks associated with the competitiveness of individual refineries.

This study reviews the current decarbonisation plans of companies owning refineries in the
Netherlands, to understand their future strategies. However, the information is limited to
their announcements and publicly available data. While we draw some indicative
conclusions regarding their strategic importance relative to the overall capacity of these

, this is not sufficient to make any concrete conclusions. For instance,

the Dutch refining capacity of Shell and BP appears more than 40% of the companies
European refining capacity and approximately 25% of the companies global refining
capacity. This information alone cannot be translated into willingness to use their existing
assets and retrofit to renewable refineries in the Netherlands. At the same time, they play a
strategically important role due to their integration with the chemical clusters in the ARRRA
region (Antwerp-Rotterdam-Rhine-Ruhr-Area).

The availability and sustainability of biomass for energy have long been debated, with
studies offering wide-ranging estimates of biomass potential in Europe and globally (i.e.,
S2Biom, 2018, JRC, 2018; Calipolies et al., 2021). While this study doesn't extensively analyse
biomass potentials, it acknowledges the complexity of quantifying biomass supply potential
for the Netherlands due to differing study results and the diverse nature and dispersion of
biomass feedstocks. For instance, a PBL study (2020) indicates the sustainable biomass
potential in Europe to be 14.9-29.7 EJ in 2030 and 16.8 EJ in 2050, whereas the recent EC
study (2024) mentions the biomass potential for biofuels to be 5-13.6 PJ in 2030, and 4.8-
14.6 EJ in 2050 in Europe. Next to that, large-scale, centralized biorefineries are considered
cost-optimal for producing biofuels due to economies of scale and integration opportunities,
but mobilizing biomass feedstocks requires careful consideration as they are diverse in their
chemical composition and are dispersedly located.

The document introduces possible refinery adaptations for transitioning to renewables,
particularly biomass. However, each refinery in the Netherlands has different configurations
and production capacity and retrofitting some of these refineries may prove to be very
challenging and costly. Therefore, a case-by-case assessment should be done in close
collaboration with the refineries.

The outlook for fossil refineries is presented based on the scenario projections. The general
trend observed is that they will shrink, but at what level is uncertain. Nevertheless, such a
shrink will have significant implications to the surrounding environment of refineries. Shell
Pernis, for instance, is connected to the Shell Nederland Chemie site in Moerdijk delivering
naphtha and several basic chemicals. Shell Nederland Chemie converts product streams of
the refinery into products such as propylene, Methyl tert-butyl ether (MTBE) and polyether
polyols. Shell Pernis refinery is also closely linked in terms of energy with the Shell Nederland

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Chemie Pernis. In addition, the surrounding companies such as Hexion, Shell Nederland
Chemie and Shin-Etsu are strongly dependent on steam and refinery gas supply from the
refinery. Esso refinery is also closely connected to the ExxonMobil chemicals. This refinery is
also linked to the Rotterdam aromatics plant (RAP) and the Rotterdam plasticizers plant
(RPP). At some distance in Europoort Rotterdam Esso is connected with the oxo-alcohols
plant (ROP). Air Products has its hydrogen facility on this site to deliver hydrogen to the
refinery hydrocracker unit. This 300 t/day steam methane reformer (SMR) plant uses on
average 60-70% of refinery gas input, and additionally uses natural gas. A relatively large
share of the products is sold to the petrochemical sector (steam crackers, aromatics). Fuel
gas and steam are delivered to ExxonMobil RAP and ExxonMobil RPP, and some fuel gas to
Air Liquide. Moreover, these refineries are connected with the other industrial clusters in the
ARRRA. These connections allow oil and refinery product (such as naphtha and multiple
other petroleum products) transportation to and between refineries and steam crackers.

2.6.2 Conclusions

Dutch refineries are well-placed due to their large seaports allowing for the import of fuels
and raw materials, along with a robust infrastructure with excellent inland connections for
transporting materials. Additionally, their integration with the petrochemicals industry, both
locally and regionally, positions them favourably to adjust to evolving supply-demand
dynamics.

However, meeting the goals of the Paris Agreement and achieving climate neutrality by
2050 will significantly impact oil refineries, especially regarding policies aimed at
decarbonizing the transport sector. This will lead to a decrease in demand for oil products,
particularly demand for transport fuels.

Globally, there can be a substantial reduction in fossil fuel demand by 2050, with Europe to
see a decrease of 75-90%, within the carbon neutrality framework. This will likely result in
significant reduction of refinery throughputs and closures unless they can adapt to changing
market conditions by shifting towards producing feedstocks for chemicals and renewable
fuels.

Thus, fossil fuel refineries will need to transform and begin producing renewable fuels using
existing assets and infrastructure. In the short term, this can be achieved through biomass
co-processing, while in the mid-to-long term, refineries can undergo conversion to fully
utilize renewables. Access to biomass resources will be crucial, considering the limited
availability of domestic resources. While there is a market for lipids like vegetable oils and
used cooking oils, competition for these feedstocks is already high. Mobilizing other biomass
feedstocks such as agricultural and forestry wastes and residues will be necessary to
achieve higher volumes.

Although this study provides a rough estimate of the biomass needed to utilize key assets in
the Netherlands, each refinery has unique characteristics that must be considered.
Configurations, product slates, and site-specific factors vary, and not all sites may be
suitable for adaptation. Further research is required to determine the appropriate scale for
upgrading in each refinery, considering factors like access to available hydrogen.

Relocation risk within refinery transitions is tied to biomass resource supply, pre-treatment
processes like densification or liquefaction, and transportation. While full relocation of the

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value chain from biomass supply to biofuel production is possible, it may not be the most
strategically favourable option. Biorefineries offer various benefits to countries, including
enhancing energy security, providing feedstocks for the chemical industry, supplying CO2 for
renewable electricity-based refineries (power-to-X), and achieving negative emissions
through CCS.

2.6.3 Further research needs-recommendations

This study has been part of a wider study related to heavy industry in the Netherlands and
the supply of renewable resources. Therefore, it stays as explorative, and more research is
needed to provide sound policy recommendations. The recommendations regarding further
research need are as follows:
• Each refinery has different configurations and the product slate, and they should be

studied in detail to identify whether they are suitable for conversion to renewable
refineries.

• A detailed study for the Dutch refineries should be complemented by an EU-wide study

where the European refineries are covered. This would investigate the optimal use of
existing refining capacities in Europe and the relative importance of Dutch refining.

• Timely supply of biomass resources in large quantities will be essential not only for

refinery conversions but also to attain transport sector related climate mitigation
objectives. While the current studies indicate significant amounts of biomass resources,
their mobilisation has not been happening. There is a need for good understanding of
mobilisation strategies and the related investment needs.

• There is a strategic value of having fully integrated biomass-to-fuel refineries in the

Netherlands. This strategic value relates not only to supply part of the transport fuels, but
also provide biogenic naphtha to the chemical industries and the biogenic CO2, which can
be stored for negative emissions and/or used for the production of carbon carrying
synthetic fuels.

• Further research on synergies between biomass to fuels and feedstocks and renewable

power to fuels and feedstocks is needed to identify better business cases.

• Related to above, in retrofits, the green hydrogen demand will increase significantly, and

the availability and affordability of this hydrogen will be one of the key considerations.

• In addition, in the medium-to-long term, e-fuels value chains will require biogenic CO2

highlighting again the importance of biorefineries.

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3 Large volume organic

(LVO) chemicals

3.1 Current status

There are three companies that produce High Value Chemicals (HVC) in the Netherlands.
Table 3.1 summarizes the production capacities of the steam cracker facilities located in the
country. The total capacity represents 16% of the total EU+UK ethylene production capacity
(total production capacity of the EU countries and UK is based on data retrieved from CEFIC,
2013).

Table 3.1 - Production capacity in the Netherlands for the main HVCs (Petrochemicals Europe, access 2023 &
Heino et al., 2017)

Capacity (kt/yr)

Site

Ethylene

Propylene
(calculated)*

Butadiene
(calculated)*

Aromatics
(calculated)*

SABIC (Geleen)

1310**

616

187

400

Shell (Moerdijk)

910

428

130

278

Dow (Terneuzen)

1825

858

260

558

Total

4045

1903

576

1236

* Ethylene production capacity values are original numbers from the Petrochemicals Europe database extracted in
2023. Propylene, butadiene and aromatics capacities were estimated considering the production ratios for a typical
naphtha steam cracker, as described by the Best Available Techniques report from the Joint Research Center (Heino
et al., 2017)
**This value does not consider the possible closure of one of the steam crackers as announced by SABIC in January
2022 (Argus, 2022)

The feedstocks used by Dutch steam crackers consist of naphtha and LPG and, in some
cases, recycled ethane and propane. The average naphtha use was 302 PJ (6.9 Mt) between
2017-2022 in the Dutch petrochemical industry; this number was 94 PJ (2.1 Mt) for LPG (CBS,
access 2023d).

The steam crackers have a strategic location and are heavily connected to other industrial
clusters in the Antwerp-Rotterdam-Rhine-Ruhr-Area (ARRRA). Figure 3.1 shows the main
pipeline systems that allow feedstocks and chemicals transport between different industrial
sites in the ARRRA. Notably, crude oil, naphtha and ethylene are the main materials
transported.

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chain. The trade flows are relevant to assess the exchange dynamics of such materials and
helps to identify which activities from the value chain are more prone to relocation.

The figures below show that, among the basic chemicals, ethylene and propylene are the
most relevant in terms of export activity, specially within the EU and exports of polyethylene
are by far the highest when compared to other semi-finished products. Regarding imports,
propylene, benzene and polyethylene present the highest volumes. Imports and exports
to/from the Netherlands and from/to other countries outside the EU are smaller compared
to the numbers within the EU. Due to physical properties, long distance transport (e.g., via
ships) of ethylene and propylene is difficult, however, the robust pipeline infrastructure
around the ARRRA region facilitates trading activities of these chemicals within the EU. The
semi-finished products present in Figure 3.4 are normally transported in form of pellets,
which the transport via ships is possible, facilitating imports and exports from/to overseas.

In short, although ethylene, propylene and butadiene are traded within the EU, their transit
is limited to the current pipeline infrastructure and the import overseas is not practical,
which diminishes the risk of importing these olefins from other countries. On the other hand,
the long-distance transport of polymers pellets is easier and could increase if Dutch pellets
become less competitive in the market, allowing relocation of part of the value chain.
Examples of how the relocation of polymers pellets production could take place is explored
in section 3.2.

Figure 3.3 - Trade volumes from/to the

Netherlands in 2021 of basic chemicals (CBS,

access 2023e)

Figure 3.4 - Trade volumes from/to the

Netherlands in 2021 of semi-finished products

(CBS, access 2023e)

400

800

1200

1600

/ y

Imports from EU

Exports to EU

Imports from non-EU countries

Exports to non-EU countries

400

800

1200

1600

/ y

Imports from EU

Exports to EU

Imports from non-EU countries

Exports to non-EU countries

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3.1.1 Policies relevant for LVO chemicals value chain

The main policies and communication that could influence the value chain of plastics and,
therefore, the large organic chemicals are listed in this section. There is still quite a lot of
uncertainty of how these policies will concretely take place and how the market will react,
this summary intends to give some light of the main factors that could impact to significant
changes in the value chain studied.

EU transition Pathway for the Chemical Industry
In 2023, the European Commission published this plan, co-developed together with industry
stakeholders and NGOs. This document brings guidelines and identifies the actions and
conditions needed to achieve green and digital transition and improve resilience in the
chemical industry. The strategy presents a high-level transition pathway for the chemical
industry towards sustainable future and one of the topics covered refers to circularity, which
is quite relevant for the LVO chemicals value chain. The document also highlights which
regulation and communication directives are relevant for the sector, such as Single-use
plastic directive (SUPD) and sustainable carbon cycle (SCC) which are briefly described in this
chapter.

(EU) 2019/904 Single-Use Plastics Directive
The directive focuses on promoting circular approaches that prioritize re-usable products
and recycling rather than single-use products. Among other categories, this directive applies
to certain single-use plastics, such as cutlery, plates, straws, stirrers, cotton bud sticks, and
specific plastic packaging items. The aim is to reduce the impact of certain products on the
environment, some of the measures include:

• action from member States to reduce use of single-use plastics by defined targets

by the countries.

• member states should include restrictions on placing single-use products on the

market, prohibiting specific products (e.g., plastic plates, cutlery, food containers);

• product requirements: specific guidelines on how improve sustainability of certain

single-use products, such as PET bottles should have at least 25% of recycled plastic
in their composition.

The mentioned measures indirectly affect the high-value chemicals industry, including
propylene and ethylene production, as they drives demand for alternatives to traditional
plastics.

Sustainable Carbon Cycle - (COM(2021) 800)
This is a communication document that focuses on the short-term actions to upscale carbon
farming as a business model, motivate practices on natural ecosystems that increase
carbon sequestration, and promote new industrial value chains that target sustainable
capture, recycling, transport, and storage of carbon. The focal point of this communication
to boost activities that either reduce GHG emissions or remove carbon from the atmosphere.
It discusses the establishment of a regulatory framework which identifies of the activities
that remove carbon from the atmosphere and can decrease the atmospheric CO2
concentration. This framework should also cover the certification of carbon removals, based
on robust accounting methodologies, for high-quality sustainable carbon removals from
both natural ecosystems and industrial solutions. Because one of the discussed measures in
this communication is the reduction of industry dependency on carbon by promoting circular
economy, the framework would impact directly LVO chemicals value chain, especially if
sustainable carbon targets towards 2050 are set for the industry sector. Alternative

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feedstocks and technology that rely on circular carbon would be favoured by the framework
measures.

Packaging and packaging waste, amending Regulation (PPWR)
This regulation aims to minimize the environmental impact of packaging and packaging
waste. It sets targets for the recovery and recycling of packaging materials, promotes the
use of reusable and recyclable packaging, and establishes requirements for the
management of packaging waste. Among other measures, the regulation includes
restrictions for substances/additives in packaging (e.g., restrictions on the presence of lead).
Furthermore, all packaging would have to be recyclable (designed for recycling by 2030 and
can be recycled at scale from 2035). The proposal also introduces minimum recycled
content in plastic packaging from 1 January 2030 (e.g., 30 % for single use plastic beverage
bottles), with some exemptions (e.g., for medical devices), the percentages would increase
from 2040. Depending on how these targets are eventually put into practice in the EU, the
impacts on the LVO chemicals value chain may differ, especially in relation to recycling rates
and feedstock use.

Ecodesign for sustainable products regulation (ESPR)
Proposed regulation lays down rules applying to all products placed on the EU market
(including those imported to the EU), with the aim of boosting circularity. The focus of the
regulation requirements go beyond energy efficiency, to aspects such as recycled content,
carbon and environmental footprints, product repairability, reusability and the presence of
chemical substances that creates barriers for recycling will also be covered. The regulation

sustainability would be available to authorities and consumers. It is expected that the
regulation also covers plastics products, therefore, it would impact several aspects of the
LVO chemicals value chain, such as carbon sourcing.

Carbon border adjustment mechanism (CBAM)

Commission, aiming to put a fair price on the carbon emitted during the production of
carbon intensive goods that are imported by EU countries. CBAM will apply in its definitive
regime from 2026, until then the transitional phase is taking place, which is aligned with the
phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS).
This pricing scheme will initially apply to imports of selected goods: cement, iron and steel,
aluminium, fertilisers, electricity and hydrogen, which were identified by the Commission as
presenting high risk of carbon leakage in the short term. The objective of the transitional
period is to serve as a pilot and learning period for all stakeholders (importers, producers and
authorities) and to collect useful information on embedded emissions to refine the
methodology for the definitive period. It is still uncertain whether such a scheme will be
extended to plastics value chains, however, depending on how the transition period goes,
there is a possibility that such products will be added to the CBAM mechanism after 2026.

Other energy related policy instruments, such as EU ETS and REDIII (see Section Current
status of dutch refineries 2.1) focuses on reducing direct emissions in industry, including the
LVO chemicals industry.

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3.1.2 Decarbonisation of high-value chemicals production

and the company plans
The MIDDEN (Manufacturing Industry Data Exchange Network) database includes reports for
the steam cracking sites of SABIC, DOW and Shell Moerdijk, which describe a series of
decarbonisation options for the sector. These options are summarized in the following
paragraphs (Wong, L & Van Dril, T., 2020; Oliveira, C. & Van Dril, T., 2021; Eerens, H. et al.,
2022):

1. Electrification: Electrification of cracking furnaces refers to the use of electricity to meet

the process heat demand, substituting the conventional gas-fired furnaces. The
technology development follows two different approaches: retrofitting existing steam
crackers and replacing gas-fired burners with electric heating systems; the other route
focuses on entirely new methods of electric heating and radical innovation of the
cracking technology. This entails, for instance, the development of novel techniques for
direct heating, such as the production of ethylene via plasma technology using methane
as feedstock. Brightlands, the research centre located in the Chemelot cluster, is working
on developing such technology in the so-called Plasma Lab. The lab presents a small-
scale pilot reactor for experiments. The first approach is more likely to be ready for
commercial application sooner than the second. When furnaces are electrified, there will
be a significant amount of fuel gas (methane-rich by-product from cracking reactions)
available, which is normally used as furnace fuel in the conventional process.

Electrification of steam driven compressors: the major compressors in a steam cracking
facility are driven by steam turbines (e.g., cracked gas compressor), the substitution of
such equipment by electrical machines would significantly reduce the steam
consumption on site. Also, companies see this application as an important step to
stablish electric cracking systems.

2. Hydrogen as fuel: The aim of this option is to replace the fuel gas by hydrogen as energy

source for the steam cracking furnaces. Hydrogen combustion generates only water,
therefore, its use in replacement of natural gas and/or fuel gas in fired processes results
in reduction of direct CO2 emissions. To avoid carbon leakage, the hydrogen used should
be produced through a low CO2 process. In principle, the application of hydrogen as a fuel
would require changes in the operating conditions related to the combustion itself and
the installation of burners that are capable to burn gas with high concentration of
hydrogen. Also, hydrogen combustion releases exhausted gases with high concentration
of NOx components, being necessary the addition of a NOx abatement device to the
exhaustion system.

3. Alternative feedstock: Bio-naphtha: as a substitute for fossil feedstock to steam crackers,

bio-naphtha can be supplied via different production routes, such as a by-product from
the manufacture of Hydrotreated Vegetable Oil (HVO) or from biomass gasification
followed by Fischer-Tropsch. This biobased feedstock has already been used by the major
players from the petrochemical sector. The largest European producer of bio-naphtha is
located in the Netherlands (Neste with nameplate capacity of 1.3 Mt/year) (S&P Global,
2021). Plastic solid waste (PSW) can be used as feedstock in steam crackers via pyrolysis,
a process that converts the waste into a fuel oil that can be upgraded to naphtha level.
Pyrolysis can be defined as thermal cracking process in an inert atmosphere, under
controlled temperatures. The raw pyrolysis oil most likely will need to be hydrotreated in
order to be used as naphtha replacement. This option has been explored by the major

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players in the petrochemical sector. SABIC, together with PlasticEnergy are building a 20
kt/yr (input) pyrolysis plant in Geleen, The Netherlands.

4. Alternative processes:

a. Dehydration of bioethanol: this option allows the production of bio-based ethylene.

The bioethanol is normally produced via fermentation of sugars (sugar cane, for
instance). However, there is also the possibility of obtaining ethanol via fermentation
of lignocellulosic biomass.

b. Methanol to olefins: catalytic conversion of methanol into olefins (ethylene, propylene,

and butadiene). Currently it is widely applied in China with coal-based methanol.
However, the future projects intend to use renewable methanol as feedstock (bio
and/or e-based).

5. CCS/CCU: Carbon capture from exhausted gases leaving the steam cracking furnaces. The

concentration is normally low (8-10% vol.), which increases the cost of capture. A
relevant aspect for CCS is the location of the site, since its proximity to CO2 infrastructure
and storage location under the North Sea influences the feasibility for CO2 storage. For
instance, sites located far from the coast could face limitations regarding CO2
transportation.

A summary of main strengths and weaknesses for the application of each technology is
presented in Table 3.1.

Table 3.1 - Technology options strengths and challenges HVCs sector

Technology

Strengths

Weaknesses

Technology readiness

level

Emissions scope/

relevance to

renewable feedstock

supply

Post-
combustion
CCS in steam
crackers

No major changes in
current assets are
needed.
Infrastructure for CO2
transport is being
currently developed in
some locations close to
industrial clusters
(PORTHOS). Relevant
for scope 1 emissions
reduction.

CO2 concentration
normally is quite low in
flue gases.
CO2 transport can be
challenging if site is not
located close to the
sea.
Storage limitation
Policies might limit the
fossil products market.

TRL range 5-7, this
technology has been
developed and tested
at significant scale, but

full commercial
deployment.

Reduction of direct
process emissions
(scope 1).
Not relevant to
renewable feedstock
supply.

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Technology

Strengths

Weaknesses

Technology readiness

level

Emissions scope/

relevance to

renewable feedstock

supply

Electric
cracking

Scope 1 emissions
reduced completely.
Companies are building
consortiums to develop
electrification
technology.

Reduction of scope 1
and when renewable
electricity is used also
scope 2.
However, the residual
fuel gas should be
repurposed

Excess of fuel gas
requires sustainable
destination, otherwise
it could lead to carbon
leakage.
If electricity supply is
not renewable, the
scope 2 emissions are
high and the overall
GHG emissions impact
is higher than the
conventional process.
Requires significant
amount of renewable
electricity.
Little flexibility in
operation when it
comes to electricity
supply fluctuation,
reliable supply of
electricity is crucial.

Still in early stage of
development
(TRL 3-4), being the
main challenges
related to the
electricity provision
infrastructure and
availability of
renewable electricity.
However, most steam
cracking companies
envision the application
of such technology as
relevant to reach net
zero emissions in the
long term (2040-2050).

Reduction of direct
process emissions
(scope 1) and when
renewable electricity is
used also related
emission (scope 2).
However, the residual
fuel gas should be
repurposed.
Not relevant to
renewable feedstock
supply.

Methanol to
olefins (MTO)

High efficiency towards
olefins, when
compared to steam
crackers.
Commercially available
technology.
Diverse projects being
developed in the
Netherlands focusing
on renewable
methanol
production/imports.
Long distance
transport of methanol
is doable.

It does not produce the
other HVCs besides
olefins, such as
aromatics (unless if
dedicated technology
as methanol to
aromatics -MTA).
Competition with other
sectors for renewable
methanol supply.

Commercially available,
several installations in
China (TRL 8-9).
However, the challenge
relies on the availability
of renewable
methanol. For instance,
biomass to methanol
process has a TRL falls
under the range of 7-8.

Potential to reduce
scope 1, 2 and 3
depending on the type
of methanol used and
its origin.
Relates to renewable
feedstock supply.

Bio-ethylene
via bioethanol
dehydration

Use of renewable
carbon in the value
chain
Less energy demand
compared to fossil
ethylene.
Bio-ethanol catalytic
dehydration
technology
commercially available
and competitive.
CO2 tax and other
policy measures such
as CBAM could make
this option more
attractive economically
Development of bio-
ethanol production via
lignocellulosic
feedstock.
Long distance
transport of bioethanol
is doable.

Highly dependent on
biomass availability
Price gap with fossil
ethylene.
The production via
sugarcane is difficult to
replicate in EU.
Bioethanol used for
bio-ethylene could
compete with fuel
sector.
Dependent to the
mobilisation of
sustainable biomass .
Careful consideration
of sustainability of
biomass feedstocks
used.

TRL 6-7 late stages of
development, with
pilot-scale validation
and readiness for
commercialization,
however, further
scaling and integration
into large-scale
industrial facilities are
necessary to achieve
full commercial
deployment.

Reduction of scope 1
and scope 3 emissions
Relates to renewable
feedstock supply

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Technology

Strengths

Weaknesses

Technology readiness

level

Emissions scope/

relevance to

renewable feedstock

supply

Bio/e-naphtha
as feedstock

No pre-treatment
required prior feeding
to crackers.

Availability in the
market.

Depends on how the
bio-naphtha is
obtained.
Bio-naphtha can be a
by-product from HVO
process and it is
commercially available.
Bio-naphtha via
biomass gasification
followed by Fischer-
Tropsch conversion.

Reduction of scope 1
and scope 3 emissions.
Relates to renewable
feedstock supply.

Plastic waste
pyrolysis oil as
feedstock

Alternative for recycling
mixed plastics streams.

Hydrotreating required
to reach naphtha level
quality prior feeding to
crackers.
Highly dependent on
collection and sorting
of plastic waste.

TRL 6-7 late stages of
development, with
successful pilot-scale
demonstrations and
readiness for
commercialization,
however, further
scaling and integration
into large-scale
industrial facilities are
necessary to achieve
full commercial
deployment.

Potential to reduce
scope 3 emissions due
to the circular aspect of
this value chain.
Relates to circular
plastic supply.

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3.1.2.1 Company plans

Dow Terneuzen

emissions by 40%

in 2030. The plan presents three phases. The first phase includes the construction of an
autothermal reformer (ATR) plant to convert the fuel gas from the crackers into hydrogen
and CO2. The hydrogen could be used for fuel substitution in the steam crackers furnaces
and the CO2 could be captured and stored. The company explores also alternatives to use
CO2 instead of storing it. The hydrogen plant is expected to start up in 2026 and the
company states that this measure would enable the Terneuzen site to reduce CO2 emissions
by approximately 1.4 million tonnes per year. The first phase also includes additional
investments in infrastructure for CO2 transport and storage, oxygen production and
hydrogen distribution.

In the second phase, Dow plans to capture CO2 from its ethylene oxide plant and to replace
a number of gas turbines with electric motors by 2030. The company estimates that
additional 300,000 tonnes of CO2 emissions per year could be avoided. In the final phase,
Dow plans to replace completely the use of fuel in the steam crackers by renewable
electricity. Together with Shell, Dow is currently developing electric cracking technologies
(Dow, 2021). The two companies completed the construction of an e-cracking furnace
experimental unit in 2022, which is located at the Energy Transition Campus Amsterdam.
The experimental unit will be used to test a theoretical electrification model developed for
retrofitting the gas-fired steam cracker furnaces used today (Sustainable Plastics, 2022).

Globally, Dow announced partnership with New Energy Blue for the construction the New
Energy Freedom site, a new facility in Iowa, United States, that is expected to process 275 kt
of corn residue per year and produce commercial quantities of second-generation ethanol
and clean lignin. Nearly half of the ethanol will be turned into bio-based ethylene feedstock
for Dow products (Dow, 2023). The completion year for this project was not mentioned by
the company.

SABIC Geleen
SABIC is currently focusing on the construction of a plastic waste pyrolysis plant. The
technology is provided by Plastic Energy and the unit will be able to process 20 kt/year of
plastic waste. The intention was to start up the facility in the second half of 2022, the

completion (Industry & Energy, 2023). SABIC is also constructing a hydrotreating unit to
upgrade the raw pyrolysis oil as feedstock to the steam crackers, which should also be able
to treat imported pyrolysis oil in the future.

included, as well as electrification; however, the publication does not specify which units in

the major compressors and to explore electrification technologies for the steam crackers. In
2021, the company signed a joint agreement with BASF and Linde to develop solutions for
electric steam crackers (SABIC, 2023).

Recent news mentions the closure

crackers (Olefins 3). The unit

stopped operation this year due to maintenance reasons and will not return to operation

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when the turnaround period is over. This is the oldest cracker from SABIC and presents lower
energy performance than Olefins 4 (Industry & Energy, 2024). This unit presents an ethylene
production capacity of 595 kt/year (Oil & Gas journal, 2015).

Worldwide, SABIC continues to develop fossil-based projects. Together with ExxonMobil, the
company established a joint venture (Gulf Coast Growth Ventures) in Texas, United States.
The new manufacturing facility started operation in 2022. It includes an ethylene production
unit with an annual capacity of 1.8 million tonnes, which will feed two polyethylene units
with annual capacity of about 1.3 million tonnes and a monoethylene glycol unit with
annual capacity of about 1.1 million tonnes (ExxonMobil, 2022)

Shell Moerdijk
In 2022, Shell Moerdijk announced their main plans for achieving net-zero emissions by
2032. The site is investing in a pyrolysis oil upgrading unit, with capacity of 50 kt/year (input)
and it is expected to start production in 2024. Shell also mentioned the intention to build a
hydrogen production plant on site, which would use fuel gas from steam crackers as
feedstock and the produced hydrogen would be used as fuel in the cracking furnaces.
Similar to Dow Terneuzen, Shell Moerdijk plans to capture and store CO2 output from the
hydrogen plant. Additionally, Shell is building a biofuels plant in Rotterdam which production
is planned to start in 2024; this facility would be able to provide bio-based feedstock to the
Shell Moerdijk steam crackers (Shell, 2022).

In 2020 the company also announced that 16 old furnaces would be replaced by eight new
units at Shell Moerdijk site, which are more energy efficient. The installation started in 2022
and it is planned to be completed by 2025. The company claims that the operation of the
new furnaces contributes to the reduction of carbon emissions due to higher efficiency, but
no specific reduction targets were disclosed.

Shell Moerdijk has plans to install an
intention is to start co-processing pyrolysis oil with naphtha in the steam crackers for olefins
production. The production capacity of this new unit was not disclaimed.

Similar to other petrochemical major players, Shell is expanding fossil production worldwide.
In June 2016, Shell Chemical took the final investment decision to build a major
petrochemicals plant in Pennsylvania, United States. In November 2022, Shell commenced
operations at the plant which consists of an ethylene cracker with a polyethylene derivatives
unit. The plant uses ethane from shale gas and has a designed output of 1.6 million tonnes
of polyethylene annually (Shell, 2023).

ExxonMobil
ExxonMobil does not have steam crackers in the Netherlands; however, it has relevant
activity worldwide in the chemical sector. ExxonMobil has completed in 2022 the initial
phase of a plant trial of a advanced recycling process for converting plastic waste into raw
materials for production of HVCs. The plant is lo
Baytown, Texas. Upon completion of the large-scale facility (2026), the operation in Baytown
will have an initial planned capacity to recycle 30,000 tonnes of plastic waste per year.

Braskem
Braskem  activity in Europe is limited to two polypropylene units in Germany; however, the
Brazilian petrochemical company was the first to start bio-ethylene (in 2007) production via
bio-ethanol from sugar cane. Braskem started in 2022 to expand production capacity at its
green ethylene plant in Rio Grande do Sul (Brazil), from 200 kt/year to 260 kt/ year. The

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petrochemical technology licensor, Lummus Technology and Braskem, have joined forces in
2022 to develop technologies for two ethanol-to-green ethylene production units to be set
up in North America and Asia.

In summary, the petrochemical companies focus mainly on reducing direct GHG processes
emissions (Scope 1) and explore the electrification opportunities. In terms of changing the
feedstock base, the focus is mostly on plastic pyrolysis with the intention to co-process.
Because the major players are multinational companies and climate regulations differ
significantly in different parts of the world, these companies are still expanding their fossil
manufacturing capacity worldwide. Also, in Europe, regulations regarding carbon crediting
for circular biobased chemicals is still incipient and uncertain, therefore, the shift from fossil
to renewable feedstocks is rather limited.

3.1.3 Demand for plastics and LVO Chemicals production

As already exposed in Figure 3.2 basic chemicals production is highly interlinked to the
plastics market. Therefore, evaluating the current and future trends of the market is key to
understand possible changes in LVO chemicals demand and relocation activities.

In 2021, the global plastic production was 390.7 Mt and the EU27 was responsible for 15%
of it, while China reached almost one third of the total. The European production share was
higher in 2017 (19%), which indicates the rapid growth of Asia in plastics production
capacity. Also in 2021, polyolefins (polyethylene PE and polypropylene- PP) represent the
majority of the global production (46.2%) and the main market application was on
packaging and buildings & construction (Plastics Europe Facts, 2022).

In Europe, there was a total polyolefins production of 23.2 Mt in 2021, which represented
almost 13% of the global polyolefins production. Regarding trading from and to the EU, both
the USA and China were the main trade partners of the EU27 plastics industry together
responsible for nearly 27% of total imports to the EU27 and 22% of the exports from the
EU27 (Plastics Europe Facts, 2022).

Figure 3.5 Distribution of the global plastics production by type (extracted from Plastics Europe Facts 2022)

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The Global Plastics Outlook report from OECD presents 3 scenarios: Baseline, Regional action
and Global action (OECD, 2022). The Baseline is a business-as-usual scenario and considers
only the impact of current policies and the modelling projections indicate that the plastics
use could almost triple globally by 2060, mainly due to economic and population growth,
especially in emerging countries. The Regional action scenario focuses on the impact of
policies that aim to improve the circularity of plastics use while still allowing economic
growth, being the implementation of such policies being stronger for the countries within
OECD. In this scenario, the plastic waste decreases by almost a fifth below the Baseline by
2060, mainly due to the implementation of a tax on plastic use. The most ambitious
scenario, Global action, considers a very stringent policy package that aims to reduce plastic
leakage to the environment near to zero by 2060; the policies considered are the same as in
the Regional scenario, but with more ambitious targets. In the Global scenario, the plastic
waste reduced by a third below the Baseline by 2060, being both taxation and recycling the
main reasons for this result.

Despite the difference in results for plastic waste volume and plastic leakage to the
environment, all three scenarios considers that plastics demand will grow worldwide by
2060 (with less intensity to the most ambitious scenarios), mainly because of emerging
economies. Also, plastics are an important input for many economic activities, which
highlights how the economies around the globe will remain significantly dependent on
plastics. The plastic demand development behaves differently depending on the world
region. In fast-growing emerging economies, the plastic use grows by higher pace than in
Europe in all scenarios. For Europe specifically, the plastic use is projected to increase around
110% in 2060 (compared to 2019 volume) for the Baseline scenario, being the increase
around 90% and 80% for the Regional and Global scenarios, respectively (OECD, 2022).

In summary, the main takeaways from the trends and current production levels are:

• Production in the EU27 is quite relevant worldwide, especially for trading of

packaging plastics.

• It is expected that emerging economies will develop their production capacity for

plastics, as well as their plastic demand.

• The plastic demand in Europe is expected to grow for the next 40 years, however,

other regions in the world will present a faster and more relevant growth.

• Recycling is increasing its role in the plastic market.
• It is uncertain what will happen with the chemical sector in Europe, mainly due to

lack of clear regulations around materials.

The trends presented in this study help to highlight that the plastic economy will most
probably continue to grow and that the European plastic demand market will become less
relevant than it is currently due to emerging economies. All these factors combined are
relevant when looking into possible relocation of the Dutch plastic manufacturing value
chain.

3.1.4 Pathways to de and re-carbonising LVO Chemicals

production in the Netherlands

The most recent study on Sustainable Scenarios for the Netherlands examines possible long-
term development pathways for the Dutch energy system, with the goal to achieve carbon
neutrality by 2050 (Scheepers et al, 2024). It includes the low-cost decarbonation options
for the chemical industry from a systems perspective. This study involves two scenarios with
the common goal of achieving a carbon neutral energy system in the Netherlands. They

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differ in future demand projections and targets introduced for international bunkering. In
addition, they differ from each other in regard to introduction of circular carbon target for
the chemical industry.

• ADAPT scenario assumes a future that is in line with the Climate & Energy Outlook

projections (PBL, 2023) up to 2040 and continues growth beyond. The GHG emission
reduction target for international bunkering is set to 50%. No circular carbon target
is introduced for the chemical industry, however, due to increasing biofuels
production and, therefore, growing bio-naphtha availability, the share of biogenic
carbon in chemicals also increases.

• TRANSFORM scenario considers a future, where society is better aware of

sustainability and therefore there are some demand reductions. The international
bunkering is assumed to produce zero emissions by 2050. In addition, this scenario
introduces a circular carbon target of 80% in 2050 to feedstock use in the chemical
industry, particularly for the production of high value chemicals (see Scheepers et
al., 2024, forthcoming).

The modelling results show that the TRANSFORM scenario drives a significant shift of the
chemical industry towards alternative feedstocks, especially bio-based feedstock. Next to
the circular carbon target, reasons for such transformation is the considerable shrink of fossil
refineries (85% in 2050) and growth of renewable refineries. The production of e/bio-
kerosene increases the availability of e/bio-naphtha to steam crackers because the latter
can be a by-product of Fischer Tropsch and HVO/HEFA processes. Also, the considerable
shrink from the fossil refinery sector in the TRANSFORM scenario directly affects aromatics
production. With lower production of reformates/aromatics by fossil refineries, alternative
ways of production are needed, the bio route being the most relevant one. However, it is
important to highlight that no imports of chemicals were considered in this scenario.

Technology selection
In the more ambitious scenario, electrification of steam crackers appears as the most
relevant technology to produce olefins in 2050 in both scenarios, followed by bioethanol
dehydration. Methanol to olefins has smaller presence mainly due to limited availability of
renewable methanol to be used in the chemical sector. Similar situation occurs for the use of
pyrolysis oil as feedstock in crackers, the lower availability of plastic waste for recycling limits
its contribution to the sector. For ADAPT, the production volume of olefins is higher because
of the demand assumptions set in this scenario; also, pyrolysis oil from plastic waste has less
participation than in TRANSFORM.

For aromatics production, biomass to aromatics becomes the most relevant production
route in TRANSFORM. Fossil refineries shrink in 2050 decreases the production of aromatics
and reformates (conventional feedstock for aromatics production). Because of the limited
availability of alternative technology for aromatics, the bio-based route becomes responsible

In ADAPT, refineries are still quite active in 2050,

which allows more fossil aromatics production.

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Figure 3.6 - Olefins production for TRANSFORM
(technology selection)

Figure 3.7 - Olefins production for ADAPT
(technology selection)

Figure 3.8 - Aromatics production for TRANSFORM
scenario (technology selection)

Figure 3.9 - Aromatics production for ADAPT
scenario (technology selection)

Feedstock selection

In TRANSFORM, biobased materials are the most relevant feedstocks in 2050 for the overall
LVO chemicals production. This is mainly due to the standalone production of aromatics via
biomass gasification. Synthetic feedstocks also become more prominent in 2050 because of
higher availability of e-naphtha as by-product from synthetic fuels production from
renewable refineries. When looking closely at steam crackers, both bio and e-based naphtha
are similarly relevant. Circular feedstocks are limited to domestic availability only, therefore,
their use in 2050 is restricted.

In ADAPT fossil feedstocks still play an important role in both olefins and aromatics
production. Also, synthetic naphtha presents much lower share as feedstock for steam
crackers, when compared to TRANSFORM, especially due to lower availability in the system.
These results can illustrate how interlinked the refinery and LVOCs sectors are and how
sustainable targets may affect the choices regarding technology and feedstock use.

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3.2 Process relocation due to de-fossilisation

There are several possibilities on how the olefins value chain in the Netherlands can change
considering the decarbonisation options mentioned in the previous sections. Shifting to
renewable feedstock alternatives, for instance, can increase (re)location risks in these
industries. Figure 3.14 presents the first group of alternative value chains, which relates to
bio and/or e-based feedstock. Considering the current assets, imports of bio/e-naphtha from
other countries would not result in modifications to steam crackers and the current olefins
value chain would remain unchanged, provided that these have the same chemical
composition as fossil naphtha (thus drop-ins) and they become tradable commodities. This
consideration, of course, is valid within the framework of implementing Paris Agreement
goals globally and providing the level playing field in terms of implementing circularity.

The alternatives that include the use of bio/e-naphtha would rely mostly on the refinery
sector transformation, where oil processing will likely reduce up to 2050, and be replaced by
renewable refineries. As both bio and e-naphtha are by-products of renewable refineries,
these feedstocks could be supplied to the current steam crackers.

Other alternatives are the import of bioethanol for bioethylene production in the
Netherlands via dehydration or the import of bio/e-methanol as feed for methanol to olefins
(MTO) process. Both processes are currently non-existent in the Netherlands, however, there
are some project plans:
• The project called Blue Circle Olefins, for instance, aims to produce olefins using only

renewable methanol and the installation location is the Port of Rotterdam (Blue Circle
website, access 2024). This project started in cooperation with the Dutch research
institute TNO to realize the first circular methanol-to-olefins production facility.

• There is a recent announcement indicating the intentions to build the first plant for

production of ethylene from bioethanol in Europe, located at the Chemelot Industrial
Park in Geleen, the Netherlands. The production capacity is mentioned to be 100 kt
(syclus, 202327).

Nevertheless, the potential for new investments is mostly in other regions of the world
where biomass availability is higher, such as North and South Americas.

It is important to note that neither bioethanol dehydration nor methanol to olefins
processes are able to produce the full range of products that a steam cracker is capable of,
therefore, these technologies cannot fully replace a conventional steam cracker. For
instance, the production of aromatics is not possible with these two new technologies. Such
characteristic is also relevant when assessing relocation risks.

_______
27 See PRESS RELEASE 2023 07 03 (syclus.nl)

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Figure 3.14: Renewable feedstock import alternatives

When it comes to circular feedstocks, the private sector has been showing significant
interest in importing pyrolysis oil to be used in the current assets in the medium term.
Companies such as Shell and SABIC are investing in new hydrotreaters to upgrade such oil to
be used as naphtha substitute. The expansion of pyrolysis oil use in steam crackers is highly
dependent on plastic waste collection and sorting, therefore, regulations and policies around
recycling would directly affect the availability of pyrolysis oil in the market. Also, as
mentioned in the previous chapter, this option would require new investments in
hydrotreaters facilities.

Figure 3.15: Circular feedstock import alternative

The alternative value chains mentioned in the previous paragraphs could also occur abroad
up to the production of polymer pellets, which are easily tradable overseas (Figure 3.16 and
Figure 3.17). These imported materials would compete directly with the Dutch polymer
pellets and, therefore, could significantly impact the olefins value chain in the Netherlands.
The demand for olefins from the conventional steam crackers assets could be reduced
significantly. On the other hand, the polymer processing units present in the country would
not be directly affected because the imported material would still serve as feedstock for
further processing into plastics products.

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Figure 3.16 Renewable semi-finished products import alternatives

Figure 3.17 - Circular semi-finished products import alternative

One important remark is the fact that the polymers processing step in the value chain would
not be impacted in any of the alternatives explored above, therefore, the relocation risk of
such activity can be considered lower than relocating other steps of the LVO chemicals value
chain. The possibility of importing finished plastic goods exists; however, the higher flexibility
and lower costs of trading polymers pellets in comparison to finished goods could make the
occurrence of such imports less attractive.

Figure 3.18 illustrates quite a different concept when compared to the alternatives already
presented. In this case, novel polymers with different chemical compositions might
substitute for conventional polymers pellets. For instance, well-known Polyethylene
terephthalate (PET) pellets could be replaced by PEF (Polyethylene 2,5-furandicarboxylate) in

technology and feedstocks when compared to PET, however, it presents similar mechanical
properties as PET. PEF is 100% plant-based, recyclable and biodegradable plastic, being
considered more sustainable than PET (Avantium website,2024). Polylactic acid (PLA) is
another example, which is a biodegradable substitute for polystyrene (PS) and can be
applied to produce food containers.

Emerging polymers exhibit properties that are in some cases either equivalent to or superior
when compared to conventional polymers. These novel materials can be chemically
recycled more easily and may incorporate safer additives and chemicals in their
composition, as highlighted by the CIEP (2022). Their adoption could potentially impact the
existing LVO chemicals production in the Netherlands, leading to relocation risks. If these

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3.3 Discussions, conclusions and further

research needed

3.3.1 Discussions and conclusions

This section highlights the main factors associated with potential relocation risks for certain
activities of the LVO chemicals production value chain due to the transition of the chemicals
sector towards sustainable resources, aiming to achieve net zero emissions by 2050. Similar
to the assessment of the refinery sector, this analysis serves as a starting point for broader
discussions on transforming the base chemicals industry in the Netherlands, focusing on
developments beyond 2030. Therefore, it should not be considered as an extensive review of
all possible relocation risks of such value chain.

The current plans from the leading LVO chemical companies show that the primary focus of
the private sector remains on reducing direct process emissions, also refereed to scope 1
emissions (e.g., electrification of steam crackers, use of sustainable hydrogen as fuel). This is
due to the robust policy framework and GHG emission reduction obligations introduced for
the industries within EU ETS. However, regulations targeting certification of carbon removal
and circularity aspects of the value chain are still incipient and uncertain. For this reason, the

many of these companies operate globally and have assets in diverse regions, including
countries where climate policies lag behind those of the European Union. Additionally, some
regions may have more abundant and cost-effective natural resources, such as biomass.
This circumstances pose some challenges for the viability of new value chains, as companies
strive to remain competitive in the market.

The absence of clear EU regulation and specific targets related to carbon sourcing in this
sector introduces significant uncertainty about its future behaviour. Consequently, assessing
relocation risks becomes challenging due to the lack of concrete guidelines. Nevertheless,
the transition from fossil refineries to renewable refineries would impact the LVO chemicals
production sector. The availability of fossil naphtha would be limited, leading to increased
relevance of alternative feedstocks such as biomass, synthetic naphtha, bionaphtha and,
synthetic methanol, bio-methanol and pyrolysis oil. Strategically, when renewable refineries
have significant development in the Netherlands, the LVO chemicals manufacturing sites
would have easier access to sustainable feedstocks.

However, if other regions of the world offer more cost-effective manufacturing of polymer
pellets, it could impact the competitiveness of Dutch polymers in the market. This cost-
effectiveness might arise from factors such as access to cheaper and sustainable feedstocks
or weaker climate policies in those regions. Due to easy transportation of polymer pellets,
displacement of supply of semi-finished products is possible. Processing plants are flexible to
import more polymer pellets to produce final plastics products, this flexibility also makes use
of imported material easier. Regulations play a crucial role here, for instance, if imported
polymers become subject to carbon pricing (for example through CBAM), it could further
influence the competitive landscape.

Researchers in the public and private sectors are keen on developing novel polymers to
address specific challenges and enhance performance. The EU has been proactive in
promoting eco-design principles, including recyclability and reduced environmental impact
of materials, being plastics products one of the targeting groups. This focus may encourage

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the adoption of materials that align with the mentioned goals. If novel polymers meet the

-design and recyclability, they could gain traction in the European market

and the large-scale production of these materials could disrupt the plastics value chain,
potentially affecting existing manufactures. If Dutch manufacturers fail to keep pace with
developments, the might lose out to imported novel polymers.

However, it is important to highlight that the current market competitiveness of these new
polymers remains a challenge and their business case may not yet attract major players.
Considering the current landscape, the relocation risks associated with novel polymers are
relatively low. But vigilance is essential as the industry evolves.

3.3.2 Further research needs and recommendation

Given the uncertainties surrounding the future of the LVO chemical sector, a comprehensive
assessment is essential to evaluating potential relocation risks and their implications for the
Dutch LVO chemicals industry. For instance, conducting a systemic techno-economic and
environmental impact assessment of the emerging value chains and the traditional
production methods for large volume organic chemicals (including alternatives involving
drop-in replacements) would provide valuable insights into how production costs of
fundamental chemicals might vary. Additionally, this comparison should encompass
scenarios where these alternative value chains operate in diverse global regions.

Furthermore, there is a research need to study novel polymers and evaluate how likely these
novel polymers could replace conventional polymers, assessing their scalability, challenges
and opportunities to be introduced in the plastics market and how the Netherlands
positioning itself in the development of such emerging materials.

The future transformation of refineries and their structural effects on the chemical industry
has been studied for the Netherlands, using the OPERA model. Such structural effects should
also be studied at the European and global level. These will provide valuable insights
regarding the optimal locations and the possible relocation risks.

Conducting an in-depth analysis of emerging EU policies would provide valuable insights into
the evolving policy landscape and its potential impact on the studied sector, not only within
the Netherlands but across the entire European Union.

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Appendix A
Operational and planned
HVO/HEFA retrofits in
Europe

Table 3.2: Operational and planned HVO/HEFA retrofits in Europe(BioFitHandbook_EN_2ndEdition_2022-03-
15.pdf (biofit-h2020.eu))

Owner/Operator Location

Type

Feedstock

Main
product

Main product
capacity
(t/year)

Status

PREEM

Sweden
(Gothenburg)

Retrofit Tall oil, also

triglyceides

HVO

220,000

Operational

PREEM

Sweden
(Gothenburg)

Retrofit

HVO

1,080,000

Planned

Spain
(Castellon)

Retrofit

HVO/HEFA 80,000

Operational

Repsol

Spain

Retrofit Palm oil

HVO/HEFA 200,000

Operational

Cepsa

Spain (La
Rabida)

Retrofit

UCO

HVO

43,000

Operational

Cepsa

Spain (San
Roque)

Retrofit

Bio-oil

HVO

43,000

Operational

ENI

Italy (Venice)

Retrofit
(100%)

Bio-oil

HVO/HEFA 300,000

Operational

ENI

Italy (Gela)

Retrofit
(100%)

Bio-oil

HVO/HEFA 600,000

Operational

ENI28

Italy
(Livorno)

Retroffit
(100%)

Vegetable
waste and
residues

HVO

500,000

Planned

Total

France
(Grandpuits)

Retrofit

HVO/HEFA 400,000

Planned

Total

France (Le
Mede)

Retrofit

Bio-oil

HEFA

100,000

Operational

Gunvor

Netherlands
(Rotterdam)

Retrofitt

HVO/HEFA 350,000

planned

_______
28 Eni moves ahead with conversion of the Livorno refinery into a bio-refinery

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Appendix B
Refinery specific
hydrotreatment capacity

Table B.1: Hydrotreatment capacities of existing refineries in the Netherlands that are dedicated to fuel
production (derived from worldwide refining survey 2018)

Gasoline
desulfuri
zation

Kerosine/Je
t
desulfurizat
ion

Diesel
desulfurizat
ion

Other
distillate
desulfurizat
ion

Other
hydrotreati
ng

Total

kt/y

Mt/y

BP refinery

7712.4

4059.1

744.2

433.0

ExxonMobil

1095.6

1967.1

Gunvor

528.9

1098.1

293.8

Shell

460.7

1429.3

2490.0

1679.3

Vitol

Zeeland

Total

460.7

10766.2

9614.3

744.2

2406,0

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Appendix C
Sustainable biomass
availability

A recent publication by DG RTD (EC, 2024), indicate the total European biomass potential
available for the energy market, to be in the range of 310-836 million dry tonnes for 2030
and 294 to 892 million tonnes in 2050. Figure c.1 presents the European29 biomass potential,
across sectors.

Figure C.1: Total biomass potentials in Technical, low, medium, and high mobilization scenarios in 2030 and
2050 in million dry tonnes (EC,2024)

•

The 'technical potential' refers to the European biomass potential that complies with REDIII. In the low
mobilization scenario, it is assumed that only 20% and 16% of the technical potential in 2030 and 2050,
respectively, will be available for energy uses such as heat, electricity, and biofuels. In the medium
mobilization scenario, these shares increase to 34% and 33% for 2030 and 2050, respectively. In the high
mobilization scenario, the percentages rise to 55% and 54% for 2030 and 2050, respectively.

Figure c.2 and Figure c.3 compare the EC (2024) study results with the former scenario
studies by JRC-Times, DG-RTD and Concawe (Imperial College (IC), Panoutsou, 2021). The
potential assessment in this recent study, particularly the low mobilisation, are providing
more conservative results. One of the important factors for these differences relates to the
implementation of competing uses and the feedstock mobilisation factor. Next to that, all
studies apply different assumptions and data inputs ranging per mobilisation scenario and
_______
29 European potential includes from EU regions and Associated countries.

200

400

600

800

1000

1200

1400

1600

1800

2000

Technical

2030

Low 2030

Medium

2030

High 2030 Technical

2050

Low 2050

Medium

2050

High 2050

Milli

Agriculture

Forestry

Biowaste

Agrofood residues

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Biomass import to the Netherlands
Currently biomass trade occurs in the form of wood chips, wood pellets and waste wood.
Figure c.4 shows the biomass balance for energy purposes between 2013 and 2020. As
shown, import of solid biomass in the form of wood pellets has increases significantly in
2020 for the co-firing purposes. Next to solid biomass, liquid biomass resources such as
vegetable oils, used cooking oil and animal fats have been traded. The Neste plant in
Rotterdam has an annual production capacity of a maximum of 1.4 Mt. In 2022, roughly 95
percent (92 percent in 2021) of the feedstock used by Neste to produce renewable diesel
consisted of waste and residue feedstocks. The waste and residues consist of animal fats,
used cooking oil (UCO), palm fatty acid distillate (PFAD), palm effluent sludge, bleaching
earth oil, and technical corn oil (co-product of corn ethanol production). Neste is expanding
its refinery in Rotterdam increasing capacity roughly by 1.3 Mt of renewable diesel/SAF. This
investment brings the total annual renewable (biofuels and intermediate feedstocks)
production capacity in Rotterdam to 2.7 Mt, of which roughly 1.5 billion litres of SAF. The

2023)30.

Figure C.4: Solid biomass balance for energy in the Netherlands (CBS, visited 2024)

_______
30 DownloadReportByFileName (usda.gov)

-20

100

120

2013

2014

2015

2016

2017

2018

2019

2020

Solid biomass balance for energy

Inland production

Import

Export

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Appendix D
Biomass feedstock
conversion to dense
bio-intermediates for
co-processing

The low bulk density of many different biomass feedstocks, combined with their divergent
chemical composition, will necessitate densification. The pre-treatment and densification
methods can ease transportation and handling and also provide uniform intermediates to
be co-processed with existing refineries. For refinery integration, literature focuses on liquid
intermediates that can be feed into the refineries FCC units and the hydrotreatment units.
The intermediates most commonly studied are (used) vatable oils, bio-oil via fast pyrolysis or
catalytical fast pyrolysis, upgraded bio-oil, dehydrodeoxygenated bio-oil , and bio-crude via
hydro thermal liquefied crude oil (Prastyo et. al., 2020; Magrinie et. Al., 2021). The research
focus has been developing bio-oil intermediates for injection into the existing refineries with
the most impact. The incretion points are set to fluidised catalytical cracking,
hydrotreatment and hydrocracking units.

Technology status
While lipid-based co-processing has been implemented commercially, co-processing of bio-
oil intermediates has not been commercially demonstrated in refineries. There has been
some pilot scale work based on 10% bio-oil feed into the Fluid catalytic cracking (FCC) units
(i.e. pilot work by ENSYN and Petrobras). This relates to the fact that there has been no large-
scale supply of bio-oil from biomass feedstocks. While biomass pyrolysis is a commercially
proven technology, the production is still limited and the produced bio-oil is used to produce
heat and electricity. There are currently 6 operational commercial plants, which can add up
to 136 million litre bio-oil per year globally, if all these plants are assumed to produce full
capacity (IEA, 2023. The current practices, however, relate to converting woody feedstocks
into bio-oil. Various other feedstocks, for instance agricultural residues with large potential,
have not yet been fully proven on commercial scale.

HTL is a thermochemical process that converts wet biomass (i.e. sewage sludge, food waste,
wood, algae) into a high energy density liquid fuel, called biocrude, under high temperature
(250 oC to 400 oC) and pressure (up to 25 MPa). HTL is not fully commercial yet. There have
been some pilot-scale operations aiming to carry this technology to commercial scale in the
future. IEA (2023) reports 6 demonstration plants, and a start of the first commercial plant
by 2023 in Canada. This facility is also planned to be based on wood.

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Table D.1: Commercial status of direct thermochemical liquefaction technologies (IEA Bioenergy, 2023)31

Owner

Country

Technology

TRL level

Capacity

Feedstocks

Status

Ensyn,
Suzano S.A.

Brazil

Fast pyrolysis

TRL 8

83 ML/y

Under
development

Arbios
Biotech

Canada

HTL

TRL 7-8

8 ML/y

Forestry
residues and
waste

Under
development

Bioenergy AE
Côte-Nord

Canada

Fast pyrolysis

TRL 9

338 Ml/y

Wood residues
from a sawmill

Operational

Kerry Group

Canada

Fast pyrolysis

TRL 9

11 ML/y

Mill and forest
wood residues

Operational

Onym Group

Canada

Fast pyrolysis

TRL7-8

6 ML/y

Wood
residues,
including bark

Under
development

Green Fuel
Nordic Oy

Finland

Fast pyrolysis

TRL 9

20 ML/y

Sawdust and
wood residues

Operational

Circa Group
AS

France

Catalytic
pyrolysis

TRL 7-8

0.8 ML/y

Waste
cellulosic
biomass

Under
development

Twence

The
Netherlands

Fast pyrolysis

TRL 9

20 ML/y

Clean woody
biomass

Operational

Pyrocell AB

Sweden

Fast pyrolysis

TRL 9

21 ML/y

Sawdust

Operational

Ensyn

USA

Fast pyrolysis

TRL 8

76 ML/y

Mill wood
residues,
forest residues

Under
development

Kenny Group

USA

Fast pyrolysis

TRL 9

20 ML/y

Wood residues Operational

Circa Group
AS and
Norske Skog

Tasmania

Catalytic
pyrolysis

TRL 6

40 kL/y

Lignocellulosic
biomass

Operational

Arbios
Biotech

Australia

HTL

TRL 6-7

1.6 ML/y

Post-consumer
and biomass
residues

Operational

Metro
Vancouver

Canada

HTL

TRL 6-7

2 dryt/day

Primary and
secondary
sewage sludge
from
wastewater
treatment
plant

Under
development

Shanxi
Yingjiliang
Biomass
Company and
Shanghai Jiao
Tong
University

China

Fast pyrolysis

TRL 6-7

8 ML/y

Rice husk

Operational

Crossbridge

Denmark

HTL

TRL 7

4000 dry t/y

Wet

Under

_______
31 Commercial status of direct thermochemical liquefaction technologies IEA Bioenergy: Task 34 June 2023

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Owner

Country

Technology

TRL level

Capacity

Feedstocks

Status

Energy

wastewater
sludge

development

Fraunhofer
UMSICHT

Germany

Intermediate
pyrolysis and
integrated
reforming

TRL 7

500 kg/hr

Biomass,
biogenic
residues

Operational

Shell
Catalysts &
Technologies

India

Catalytic
hydropyrolysis

TRL 7-8

5 t/day

Forestry,
agricultural,
and urban
waste

Operational

MASH MAKES
A/S

India

Pyrolysis

TRL 7-8

3000 t/y

Agricultural
residues

Operational

Reliance
Industries
Limited

India

Catalytic HTL

TRL 8

80 l/day

Algae, food
waste and
sludge

Operational

Silva Green
Fuel

Norway

HTL

TRL 7-8

1.5 ML/y

Forest residues Operational

Altaca Energy Turkey

Catalytic HTL

TRL 7

8.7 ML/y

Various
biomass
sources

Operational

Biogas Energy
Ltd

USA

Fast pyrolysis

TRL 6-7

500 kg/h

Wood waste,
forest residues
and orchards
grindings

Operational

Annelotech

USA

Fast pyrolysis

TRL 6-7

Wood, corn
stover,
bagasse

Operational

RTI
International

USA

Catalytic
pyrolysis

TRL 6

1 t/day

Lignocellulosic
biomass

Operational

Frontline
BioEnergy
and Stine

USA

Autothermal
pyrolysis

TRL 6-7

50 t/day

Corn stover

Near
completion

Financial parameters used in biomass pyrolysis value chain calculations.
SGAB follows a simplified methodology by estimating the production cost from a capital cost
contribution, an OPEX contribution and the feedstock contribution. CAPEX is seen as equal to
the overnight investment cost for building the plant and no cost for interest during
construction or working capital has been added. The capital recovery charge is composed of
an annual cost estimated as an annuity based on the CAPEX using a real interest of 10% for
15 years. Elements of a fully elaborated project economic model such as level of grant
support, debt-to-equity ratio, loan repayment grace and amortization periods, etc. have
been ignored (SGAB, 2019).

TNO calculations follows the SDE++ methodology (see SDE++ calculation tool from RVO32), in
which a 22 MW output reference installation, with a 61% energy efficiency, is considered.

_______
32 Rekentool SDE++ 2023.xls (live.com)

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Table D.2: Financial parameters used in different studies

SGAB 2019

Yanez et al., 2020

TNO

Full load hrs

8000

7500

Life time

Interest rate

10%

12%

Inflation

1.5%

Equity/debt ratio

30%/70%

Required return on
equity

15%

Document Outline