It's a question nearly all industries that grapple with reducing emissions must consider: How might the implementation of the U.S. Department of Energy's carbon-intensity standard impact the market for industrial decarbonization?
"In regard to meeting the standard that is there today and getting a $3 per kilogram credit, it's going to be hard," said Chet Greene, vice president of business development and the renewables initiative for Par Pacific. "Even if you're thinking about green and hydro power, your numbers can still be above the $3 per kilogram credit that's there."
Speaking at the World Hydrogen North America Conference, held recently in Houston, Greene said he believes the standard needs to be structured.
"It's going to have to be looked at from well to market or well to gate. It will have to be looked at for that whole emissions stream. I think it's going to be a tough number to meet with hydrocarbons," he said.
Approaching the question from "the industrial side," Greene said he agrees with carbon capture.
"There's hydro power, but what we're trying to build is an ecosystem that's going to have a good power source and big industrial [demand]," he said. "It's got to have local demand."
Greene pointed to one of Par Pacific's locations, a refinery inside a port with local electricity that provides a fuel tariff.
"That's well below what the standard is, and it's 97-percent green," he said. "I think those are going to be really good talking points or basically the ways to create clean or green hydrogen today, not discounting the blue [hydrogen] or any of the other colors. I think it's going to take all of our effort to be able to do that."
It's not "a competitive thing," Greene insisted. "I think it's about decarbonization. We put our assets through a process in early 2021 for a roadmap to source decarbonization with an engineering company. They basically produced a list of projects."
The projects were rated and ranked, Greene said, and he concluded that industries are going to have to go through similar processes "to make sure they understand exactly where they can find the low-hanging-fruit opportunities and take advantage of them."
Discussing how to overcome barriers to achieving "the vision of hydrogen," Greene noted, "it's a little bit easier on the permitting side" for carbon capture or converting to blue hydrogen.
"You go through the process or anything you need for permitting," he said. "I think there's a 'growing pain' that we're going to see when trying to go through the permitting process in states, for sure."
Regarding how industry can - or should - be incentivized to transition to green hydrogen, Greene noted that Par Pacific is a large licensor of renewable diesel and renewable jet fuel.
"The carbon-intensity standards that have been set in California, which allows subsidizing renewable fuels, have worked," he said. "It's worked for us. It may not work for the people in California who are paying 80 cents per gallon in gasoline tax, but that's what is happening and that's the incentivizing renewable-diesel wave that we're on right now.
"Is it a great way to spend government money? Is putting CO2 in the ground a great way to spend government money? I'm not going to answer those questions, but I think we all realize that for us to move toward even a blue hydrogen space, it's going to take some government incentives. That's just the way it is."
Ports may potentially provide "a big ecosystem," Greene said, adding that land is very important to the ports.
"Where do you find the infrastructure, like Port of Tacoma in Washington, that has a refinery inside of it? You can look at a long-term [conversion] strategy where you have a public utility that's going to provide us with green electricity to power an electrolyzer on our site, which is in the port. The industry is going to have to look at those types of situations really closely."
The bigger strategy, Greene said, "is to go to a standard aviation fuel (SAF), because you can lower your CO2 emissions with green hydrogen. You also have a refinery that can blend fossil fuels with SAF and be current with standards."
