Li Shousheng: In the high-quality development of new energy, the petrochemical industry is highly concerned about several major issues

At the 12th collective study of the Political Bureau of the CPC Central Committee, General Secretary Xi Jinping focused on the theme of new energy technology and mainland energy security, and particularly emphasized: "Pay attention to the relationship between new energy and traditional energy, overall and local, government and market, energy development and conservation, etc., and promote the high-quality development of new energy." "General Secretary Xi Jinping's important speech, for the mainland's energy security, especially the development of new energy pointed out the direction, emphasized the key points, to avoid misunderstandings, is to guide the current and future orderly development of the continent's energy in the important theoretical basis and action guide.

Combined with the new situation of energy security and new energy development in the mainland and the world, I would like to share with you four major issues of great concern to the petrochemical industry from the perspective of industry management.

First, we should pay close attention to the trend of breakthroughs in the frontier of new energy technology innovation.

At present, a new round of scientific and technological innovation is ushering in a gratifying situation of multi-point breakthroughs. 5G technology, new material technology, artificial intelligence technology, blockchain technology, quantum technology, life science technology, etc. are all ushering in new breakthroughs, and new energy technology innovation and the transformation and upgrading of traditional energy are still a focus and hot spot in the world's new round of scientific and technological innovation. Countries around the world, especially economic giants and multinational corporations, have invested heavily in the energy transition and innovative change.

The U.S. Innovation and Competition Act of 2021, which has a scale of more than $250 billion, regards clean energy as a major investment area and an important starting point for U.S. domestic economic revival. In 2019, the European Commission released the European Green Deal, which also takes green and digitalization as the main means to achieve the 2050 carbon neutrality goal, and 30% of the 1.85 trillion euro recovery plan proposed by the European Union is directly invested in climate change-related projects, and other investments are also in line with the 2050 carbon neutrality goal. The Japanese government has announced its "Green Growth Strategy", which will promote greenhouse gas emission reduction in 14 key areas, including offshore wind power, electric vehicles, hydrogen energy, shipping, aviation, and residential buildings, and provide tax support for companies investing in green economy emission reduction. Our country and government also attach great importance to the innovation of energy technology and fully support the implementation of the "dual carbon" goal.

In the innovation of new energy technology, our industry pays close attention to the breakthroughs and progress of five innovative technologies: first, the system technology of hydrogen production in the chemical industry, especially the hydrogen production technology of solar water splitting; the second is methane oxidation coupling and oxygen-free coupling ethylene production technology; the third is the technology of direct cracking of crude oil to produce chemicals; fourth, combustible ice mining and utilization technology; Fifth, carbon dioxide resource utilization technology. The breakthrough of these five cutting-edge core technologies has the potential to directly change the time, progress and structure of new energy transformation.

Among these five new energy technology innovations, we attach great importance to the innovation and breakthrough of hydrogen energy technology. Some predict that hydrogen may be the ultimate solution for humanity's future energy. Because hydrogen energy not only has a high calorific value of combustion, but also has no pollution in combustion products, and a wide range of raw material sources, these three advantages determine the future status of hydrogen energy. According to the White Paper on China's Hydrogen Energy and Fuel Cell Industry 2020, the annual demand for hydrogen in mainland China will reach about 40 million tons in 2030, accounting for about 5% of final energy consumption. In 2050, the annual demand for hydrogen will reach 60 million tons, and the proportion of hydrogen energy in China's terminal energy system will reach 10%, and hydrogen energy is expected to become the main consumer in the energy terminal system. However, whether hydrogen energy can complete the transformation of the main position of energy depends entirely on the systematic breakthrough of hydrogen energy innovation technology. Only when there is an overall breakthrough in the whole system of hydrogen production, hydrogen storage, hydrogen transportation and hydrogen refueling can hydrogen energy be able to enter the stage of dominance. Practice tells us that the innovation and breakthrough of new energy can never be achieved overnight. The principle of "first establishing and then breaking" is our most pragmatic, scientific and prudent choice for the future development of new energy.

The second is to pay close attention to the transition from traditional energy to new energy in an orderly and smooth manner

Under the new situation of great changes unseen in a century, in the context of a significant increase in global uncertainty and the continuous renovation of anti-globalization ideology, energy security has become the overriding priority of all countries. Our country is also facing the challenge of industrial chain security under the alternating impact of green transition and energy crisis.

In this new situation, how do we understand the speed of transformation of traditional energy and new energy? Some companies believe that new energy to replace traditional energy is just around the corner; Some companies believe that traditional energy will be irreplaceable for a long time. I believe that both views are biased, we should not only attach great importance to the current dominant position of traditional energy, but also fully understand the inevitable trend of new energy technology innovation and transformation and development, and make all-round preparations for the development of clean energy and the transformation of energy structure. We must search for the right attitude between the ideal fullness and the realistic skinny feeling, so as to ensure that a new path for the continent's energy to be the lowest-carbon and most sustainable development is found.

At this stage, oil, coal and natural gas still dominate energy consumption. According to the statistics of BP's World Energy Outlook in 2021, the world's primary energy consumption reached 18.03 billion tons of standard coal, and in the primary energy consumption structure, the proportion of oil is more than 34%, the proportion of coal is 30%, and the proportion of natural gas is 24%. According to BP's forecast, with the implementation of the Paris Agreement, by 2035, the proportion of oil and coal in primary energy consumption will be 28% and 24% respectively, both down nearly 5 percentage points compared with 2015, while the proportion of natural gas will rise by 1 percentage point to 25%. From the predictive analysis, we can clearly see that oil and gas are still the dominant energy sources in the absolute sense of the word. And judging from the remaining proven reserves, they will continue to play an important role in world energy consumption in the future.

However, oil demand will decline in the next 30 years, and it is imperative to reconstruct the world's energy structure in the future. Therefore, the traditional energy industry and related enterprises need to deeply realize that under the premise of ensuring national energy demand and energy security, they should pay close attention to the layout and research and development of new energy technologies, and embark on a new path of orderly replacement, steady promotion and leapfrog transformation from traditional energy to new energy.

We also noted that at the Cambridge International Energy Week conference held in Houston in March this year, some oil company giants put forward different views on the global energy transition. For example, Saudi Aramco CEO Amin Nasser said that according to a new report by KPMG, 82% of the world's energy consumption still came from fossil fuels last year. "Over the past 20 years, more than $9 trillion has been invested in the global energy transition, but to date wind and solar energy have accounted for less than 4% of global energy supply, less than 3% of total time spent with electric vehicles, and fossil fuels have remained stable at more than 80% of global energy supply," he stressed. ExxonMobil CEO Darren Woods emphasized the same point at the conference: he "predicts that oil consumption will hit new highs this year and next, and the peak of global oil demand will not come soon." "As things stand, we're not on track to achieve net-zero greenhouse gas emissions by 2050." The "difficulty" the world faces in getting closer to this goal, he argues, is that "while our societies want to reduce emissions, no one wants to pay for it." Their shared view is that after the intense turmoil in energy markets caused by the pandemic, the Ukraine crisis, etc., "simple linear global transitions and expectations have been shaken, the complexity of the energy transition will be further enhanced, and the global energy transition will take a multidimensional route." "Although alternative energy sources contribute to reducing emissions, much better results would be achieved if the world focused on reducing fossil fuel emissions." The Cambridge Energy Week website explains "multi-dimensional" as: multi-speed, multi-fuel, multi-technology. There was broad consensus that there is no universal pathway to net zero. The multiple pathways of the energy transition do not constitute an either/or option, let alone a simple alternative to fossil fuels with renewable energy.

Although people's understanding of traditional energy and new energy is different, many companies still regard the innovation of new energy technologies and new energy technologies as the growth point of future business. According to data provided by U.S. Secretary of Energy Jennifer Granholm, there are currently more than 600 new energy investment projects underway in the United States, with a total value of more than $200 billion. In the next few years, wind and solar power generation in the United States is expected to surpass coal power generation for the first time.

Therefore, we should be soberly aware that the end of the Stone Age was not because there were no stones, but because of the emergence of smelting technology; The end of the oil age will not be due to the absence of oil, but the emergence of new renewable energy technologies. Therefore, our correct attitude is: we must not only attach great importance to the practical role of fossil energy under the premise of correctly understanding the complexity of energy transition, but also promote the innovation of new energy technology without relaxation, and not only shoulder the heavy responsibility of traditional energy supply, but also assume the responsibility of new energy technology innovation breakthrough, which is the dual responsibility of our industry! We must have high hopes for new energy technology innovation! This is the strategic vision and strategic determination that we should have.

The third is to pay close attention to the structural optimization and green development of traditional energy in the process of continuous innovation

As a traditional energy source, natural gas will also occupy an important position and play an important role for a certain period of time. Some experts predict that in the current process of world energy development from fossil energy, natural gas, as a transitional fossil energy, will enter a heyday, and natural gas will play a more important role in the future multi-dimensional energy transition. Some research reports believe that clean energy will become the protagonist in the world's energy field in the future, and natural gas may be the protagonist among the protagonists, and the proportion of natural gas will rise sharply to 27.6%, surpassing the proportion of oil at 27%, becoming the largest energy variety.

According to statistics, since the construction of oil and gas pipelines between China and Russia, Russia's natural gas exports to China have increased dramatically, and the total amount of natural gas delivered to China through oil and gas pipelines has exceeded 10 billion cubic meters. By the end of 2021, the daily volume of Russian gas delivered from pipelines to China increased by 50%. At the same time, Australia's natural gas exports to China have also increased by almost 7% over the past year to 47 billion cubic metres. The Chinese market accounts for nearly 40% of its total exports to northern Asian countries. This year, China will surpass Japan in the amount of Australian natural gas purchased for the first time, becoming the largest buyer of Australian natural gas. It is foreseeable that the consumption, transportation, loading and unloading, and logistics of natural gas will face huge changes in the future, and how to develop the natural gas industry in an orderly manner, we need to carefully study and put forward an optimized strategic plan to systematically meet the future market demand.

In addition, China's energy supply guarantee capacity continues to increase, but the problem of extensive use of energy is still prominent, with the acceleration of the modernization process and the improvement of people's living standards, energy demand will still maintain rigid growth. In the face of the prominent contradiction between energy supply and demand, it is urgent to take energy conservation as an important way to alleviate the contradiction between energy supply and demand and meet the growth of energy demand. Therefore, improving the utilization efficiency of traditional energy and promoting the innovation and development of energy-saving and carbon-reducing industries is still an important way to do a good job in the innovation and development of traditional energy.

Fourth, we should pay close attention to the realization of the "dual carbon" goal, which is not only a challenge for the chemical industry, but also an opportunity for the chemical industry.

The "14th Five-Year Plan" clearly states that "reducing carbon emission intensity, supporting qualified localities to take the lead in reaching the peak of carbon emissions, and formulating an action plan for carbon emission peaking before 2030" is an arduous and urgent strategic task, and our industry has the responsibility to take the lead in making breakthroughs.

In the work of carbon peak and carbon neutrality, we must take realistic measures and actively and steadily and orderly advance. First, we need to define the boundaries of responsibility for emissions reduction. The first step is to do a good job in the carbon emissions in the production process, especially to do a solid job in the basic work of CO₂ emissions in the production process, carbon emissions must have a digital concept, to put unified standards and measurement methods in the first place, and to make the measurement methods scientific and accurate. We must take the lead in establishing standards and measurement methods for CO₂ emissions. Without standards and unified measurements, all work is empty talk, let alone a carbon tax solicitation. In the process of establishing the "carbon peak" target, we must not only consider the current situation of CO₂ emissions, but also leave room for future development, and consider economic development and carbon peak in a unified manner.

Second, it is necessary to accelerate the research and development and promotion of green processes to reduce CO₂ emissions. Our industry must rely on advanced green technology, advanced process technology, to achieve CO₂ emission reduction. Especially in the process of oil and gas exploration and development, in the production process of oil refining units, in the process of coal chemical process, and in the chain of industrial production, how to reduce CO₂ emissions through green and advanced technology, how to separate and capture CO₂ in the production process, and how to do a good job in the transportation and storage of CO₂ all require technological innovation and process technology.

Third, it is very difficult to reduce CO₂ emissions, and it is even more difficult to neutralize CO₂. We need to be deeply aware that the final solution to carbon neutrality must also rely on the chemical industry. How to achieve carbon neutrality? We should give full play to the unique advantages of the chemical industry, and actively explore the physical application of CO₂ in the food industry, medical industry, solvent extraction, and chemical application of small molecule compounds (synthesis of urea, methanol, water acid, inorganic salts, etc.), polymer materials (co-condensation reaction, addition copolymerization reaction, ternary copolymerization reaction, etc.), copolymerization reaction with epoxy compounds and biotechnology integration and development. Only by finding the technologies, processes and products for CO₂ resource utilization can we achieve the initiative of carbon neutrality. With the breakthrough of technological innovation, there are more and more methods and products for CO₂ resource utilization. CO₂ can be used not only to produce methanol, ethanol and polyols, but also to produce degradable materials, butadiene rubber, aviation kerosene......

At present, our industry has formed a broad consensus on the transformation of green and low-carbon development mode. We believe that during the 14th Five-Year Plan and the upcoming 15th Five-Year Plan period, a new situation will emerge in the green and low-carbon development of China's petroleum and chemical industry.

Finally, I would like to talk about an important point of view, that is, the innovation of our industry, only on the track of taking the enterprise as the core, can it be possible to create a new situation of industry innovation and national innovation. Because the innovation competitiveness of the country and the innovation competitiveness of the industry are concentrated in the competition of enterprises representing the country and the industry level. In a certain sense, the competitiveness of an enterprise represents the competitiveness of the country and the industry, and the competition level of the enterprise represents the competition level of the country and the industry. Judging from the current situation of the development of enterprises in our industry, although the innovation ability of enterprises has been greatly improved compared with themselves, there is still a big gap compared with international advanced enterprises, and the lack of first-class petroleum and chemical enterprises with international competitiveness is a big gap. Conscientiously analyzing the current situation of enterprise competitiveness, learning from the experience of multinational corporations, improving the innovation ability of enterprise management, and speeding up the pace of cultivating first-class enterprises are a very urgent strategic task facing our entire industry.

This year marks the 75th anniversary of the founding of the People's Republic of China and a crucial year for the realization of the 14th Five-Year Plan. Innovative development, sustainable development, and the cultivation of new quality productivity have all put forward new and higher requirements for new energy innovation and green and low-carbon transformation. As long as we have clear goals, effective measures, first establish and then break down, and seek progress while maintaining stability, the "30·60" goal set by the CPC Central Committee and the State Council will definitely be achieved, and the "green and low-carbon transformation" and "beautiful China construction" will definitely achieve new achievements that will attract the attention of the world!

Author: Li Shousheng, President of China Petroleum and Chemical Industry Federation