Global refining sector could reach 50 million tonnes per annum (Mtpa) by 2050, says Wood Mackenzie

KEY INSIGHTS

1. Oil refining is one of the largest markets for hydrogen, accounting for about 32 Mtpa or 30-35% of global hydrogen demand in 2020
2. Hydrotreating and hydrocracking are the major refinery processes consuming over 90% of hydrogen in the refining sector
3. more than 65% of hydrogen demand in refining is met by hydrogen supplied as a by-product from catalytic reformers and ethylene crackers;this is unlikely to be replaced by low-carbon hydrogen
4. Low-carbon hydrogen has the potential to replace on-purpose hydrogen as a feedstock if low-carbon hydrogen becomes cost competitive and policy support develops over time
5. Real game-changer is in replacing fossil fuels in combustion applications to generate heat and steam. This will provide a larger market for low-carbon hydrogen in refining with potential market size reaching up to 40 Mtpa by 2050, and up to 300 Mtpa or about 25% reduction in carbon emissions

BOTTOMLINE

From costs and emissions perspective, a leap towards green hydrogen rather than blue is more likely in refining in the longer term. However, countries with low-cost gas resources and CO₂ sequestration capacity will have the opportunity to enter the blue hydrogen market.