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Repsol to cut carbon emissions to net zero by 2050

January 14/2020

MOSCOW (MRC) -- Spainís Repsol pledged to reduce net carbon emissions from its operations and most of its products to zero by 2050 and absorb a 4.8 billion euro (USD5.3 billion) hit to the value of its oil and gas assets in the process, according to Hydrocarbonprocessing.

Describing the move as an industry first, Repsol said it wanted to lead a wider transition to renewable energy, in line with the goals of the 2015 Paris Agreement to avert catastrophic climate change.

Repsol announced its target as delegates opened a United Nations climate summit in Madrid aimed at injecting fresh impetus into the accord, which enters a crucial implementation phase next year.

Oil and gas producers are coming under increasing pressure from shareholders and environmental activists to reduce their role in fuelling climate change, and investors have poured money into funds that take account of companiesí green credentials.

Repsolís pledge makes it an outlier relative to larger energy companies, which are still investing in developing oil and gas fields that are incompatible with the Paris goals, according to financial think-tank Carbon Tracker.

A Repsol spokesman said the new target covers 95% of the emissions released by the use of products it sells, which are complex to account for and have become a key issue for shareholders.

These emissions - known as Scope 3 - are typically around six times larger than the combined emissions produced by oil companiesí own operations and power supply needs, according to Reuters calculations.

Basing asset values on prospects for oil and gas prices in line with the Paris Agreement would bring a post-tax impairment charge of 4.8 billion euros in 2019, but that will not affect cash flow or shareholder remuneration, the company said.

Companies aiming to achieve "net-zero" usually balance emissions from their operations by investing in technology that can store carbon, or in natural sinks such as forests.

Repsol said it could reach at least 70% of its goal using technology that was already developed or nearly mature, and then would implement carbon capture, use and storage to raise that figure, and turn to natural sinks if necessary.

"We are convinced that we must set more ambitious objectives to fight climate change," Chief Executive Josu Jon Imaz said in a statement.

Giving extra impetus to its new goals, Repsol will link at least 40% of managersí long-term variable pay to its emissions reduction targets.

It will also increase its targets for low-carbon generation capacity to a total 7.5 gigawatts in Spain and beyond by 2025, double its production of biofuels from vegetable oils, and start producing green hydrogen in its refining business.

As MRC reported earlier, in the last week of September 2019, Spainís Repsol resumed operations at its cracker in Sines, Portugal. The news was not directly confirmed by the company while it was not clear as of the time of press whether or not Repsol lifted a force majeure at the site. The company had declared the force majeure on the output from its cracker due to a technical glitch in early September. The cracker has a production capacity of 410,000 tons/year of ethylene and 215,000 tons/year of propylene. The company also owns a butadiene unit with a production capacity of 45,000 tons/year at the same site.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, ethylene, petrochemistry, Repsol, Spain, Russia.
Category:General News
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