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With the help of an EY team, an innovator reduces the carbon intensity of its customers’ products.
The better the question
EY team helps build a unique business case for carbon capture and sequestration.
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Read moreAn innovative multi-billion-dollar private company aims to make a dramatic impact on decarbonization by helping refiners capture regulatory incentives for carbon capture and a lower-carbon product.
With growing concerns about the carbon intensity of energy and energy production, carbon capture and sequestration (CCS) is a critical lever that can strengthen refineries’ market position and support continued production. It is also a technology that will unlock the potential of many manufacturing and energy products as companies proactively embrace decarbonization and the energy transition.
This particular company plans to capture carbon dioxide emitted from energy production and various manufacturing and industrial processes and transport it via pipeline for underground sequestration, where it will be permanently and safely stored. Ultimately, this service will enable refineries to significantly reduce the carbon intensity of their products while qualifying for tax and other incentives that will improve profitability.
“Refining has been (and will continue to be) an important component of our nation’s energy system,” said Derek Przybylo, Climate Change and Sustainability Services Principal, Ernst & Young LLP. “This company’s CCS service can make a significant difference in the carbon intensity of the energy-related product production process and help these refineries maintain their social license to operate in a lower-carbon world. Our role was to help them develop the critical infrastructure and processes they needed to go to market successfully.”
Although CCS technology is particularly viable for this use case, there was a great deal of work to be done behind the scenes before the company’s goals could be achieved.
The primary challenge was developing both functional and technical requirements – including the necessary operational processes – to define a digital infrastructure that could enable the commercialization and financing of its businesses.
Most importantly, it was crucial to be able to produce verifiable and high-fidelity data that enabled the tracking and traceability of carbon molecules across the value chain. As a new company selling a green service, customer trust is a business imperative and data accuracy is critical.
Additionally, the company needed to be able to navigate the complex legal structures that exist at the refinery sites where carbon would be captured and the sequestration facilities where it would be stored. This was a major challenge for optimizing commercial processes and necessitated the development of effective solutions to provide seamless operations and compliance.
The better the answer
Navigating the complexity of the company’s offering required in-depth experience.
Ernst & Young LLP (EY) was engaged to assist in defining these requirements and creating a roadmap for the development of a carbon operations technology platform. This platform will serve as the fundamental backbone, supporting and enabling the entire business while driving their strategic goal of becoming the leading CCS operator in the world.
The initial support of EY centered on gaining a comprehensive understanding of the business requirements that would support the company’s commercialization model. This included analyzing commercial value streams and tying out specific data needs from various internal and external sources while creating transparency for all stakeholders.
Then, a cross-functional team of EY subject-matter resources (SMRs) – with experience in carbon capture and storage solutions; business development; commercialization and economics, technology enablement; accounting; and tax – worked closely with the company’s personnel to answer the following questions:
Together, the combined team defined the company’s functional and technical requirements and developed a supporting technology enablement roadmap.
By working with the EY team of SMRs, the company was able to translate its strategic vision – “what we’d like to be” – into a real-world, go-to-market offering.
“Focusing on a clear data strategy early is critical to helping this company build its market leadership in a relatively new industry,” said Traci Gusher, Americas Data and Analytics Leader, Ernst & Young LLP. “Enabling high-quality and production-scale accessible data is a vital step that some companies overlook in their rush to capture business.”
There is another benefit to this in-depth approach – the ability to innovate rapidly in response to customer needs and market demands.
“By designing their systems with a strong data foundation, the company will be able to rapidly build data products and data-driven applications that will help scale their commercial vision from the get-go,” said Erik Funfar, Americas Technology Leader for Sustainability, Ernst & Young LLP.
The better the world works
With a strong technology backbone in place, the company can make CCS commercialization a reality.
The company’s significant commitment to “data high fidelity” as the foundation of its business model is an approach that all companies with carbon-related strategies will need to embrace – sooner rather than later.
“The economic value chain in carbon capture-related projects is highly complex, and the data, process and ability to track the movement of carbon molecules is not only a requirement, it can also be a market differentiator,” said Greg Matlock, Global Energy & Resources Industry Tax Leader, Ernst & Young LLP. “Developing the infrastructure and roadmap to appropriately track molecules across operations adds meaningful value – especially in an industry where that tracking is tied to revenue.”
In the future, the company can deploy a carbon ledger to make sure there is a consistent methodology to data gathering across the value chain. Carbon ledgers provide a verifiable audit trail that makes it easy for all parties to see and understand volumes captured, volumes injected, total emissions from capture to storage and the commercial implications of the carbon inventory.
Eventually, this data will help the company create and brand around a differentiated product, monetize carbon emissions taken out of the atmosphere via a carbon market or other opportunity and capture incentives from the Inflation Reduction Act.
With its breadth of experience and multi-disciplinary approach, EY is uniquely positioned to help companies understand today’s carbon challenges and opportunities.
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