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European refining 2050: Turning the vision into reality

Europe’s refiners, through their industry organization Fuels Europe, have set out their long-term ambitions in a new program called Vision 2050. Putting this vision into practice will require Europe’s refiners to rethink and rebuild their long-term strategies, along the way transforming their organizations into modern, flexible knowledge-based enterprises. Read more in this market insight by KBC Chief Economists.

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Whitepaper summary

Earlier this year, Europe’s refiners, through their industry organization Fuels Europe, set out their long-term ambitions in a new program called Vision 2050. This new outlook sees Europe’s refiners staking a claim to remain at the center of transport fuels supply and the petrochemicals industry - even as Europe’s Energy Union strategy accelerates a low-carbon, sustainable energy transition.

While Europe doesn’t speak for the rest of the world, its aspirations for greenhouse gas reduction and technology leadership will help to define the global direction of travel in the decades ahead. Just as European standards for higher fuel quality have spread throughout much of the world, Europe’s future embrace of green technologies and sustainable practices will drive energy efficiency and emissions reduction to help the world achieve its commitments under the 2015 Paris climate change agreement (COP21).

Vision 2050 starts with the premise that Europe and the world will continue to rely upon liquid transport fuels for the foreseeable future – they are the most energy-dense, cost-effective and in some cases (e.g. aviation) the only practical way to maintain affordable mobility. Electric and hybrid cars – alternatively fueled vehicles (AFVs) - will play a role in private transport, but they cannot meet the needs of the entire transport sector, much of which will continue to rely upon liquid fuels.

This longer-term dependence on refined products is not a radical view. The International Energy Agency’s (IEA) 2017 World Energy Outlook ‘current policy scenario’ also anticipates a world where oil demand continues to grow for at least another two decades as population growth and economic development outpace efficiency gains from AFVs and other new technology. However, in some IEA future scenarios, these new technologies will start to slow the rate of growth to a point where oil demand peaks and emissions reduction starts to take hold.

If Europe isn’t ready to part with fossil fuels, Fuels Europe suggests that these fuels can be made greener by introducing more renewable material into the mix, and by using renewable energy to produce and distribute them. By lowering the carbon density of these fuels, they argue, a broader and more immediate impact on fossil CO2 emissions can be realized than by waiting while new AFV technology matures and propagates around the world.

The vision also calls for the EU to maintain technological leadership in this area, developing and commercializing new processes and technologies. New process technologies and Digitalization will develop and sustain new highly skilled jobs in many sectors across the EU. Vision 2050 asks for a technology-neutral playing field, letting economics separate winners and losers so long as results are achieved, and it asks for a long-term stable investment climate to give investors the confidence they need to make the big-ticket, long-term investments that will be needed to deliver this vision.

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