Every day, dozens of tanker trucks thunder through the gates of an imposing steel and concrete factory in the northeast of the Netherlands, many of them hauling pig manure and other types of agricultural waste. piled up.
This pungent cargo is mixed into a slurry and pumped into giant tanks where starving bacteria convert it within weeks into methane gas, which is eventually fed into the energy grid for home heating and electricity generation. will be sold.
This gas is a biofuel, similar to natural gas pumped from offshore wells in the North Sea, but is considered carbon neutral due to its biological origin.
According to factory manager Fritz Ulrich, the key to success is keeping the microbes fed with a steady stream of waste. “We have to pamper them,” he said on a recent morning. “They are our factories.”
Ulrich, who came to the job after running an oil depot, seems baffled to find he’s tending to germs. However, the energy industry is undergoing disastrous changes, especially in Europe.
The plant’s main owner, Valo Energy, said such a biogas facility could be the future, or at least part of it, for the privately held Swiss refinery that sells diesel and petrol at petrol stations across northwestern Europe. symbolizes
Governments such as the European Union and Switzerland are forcing petroleum product suppliers to increase the proportion of fuel they sell that comes from renewable sources to mitigate climate change. Russia’s efforts to use natural gas as a political tool in the Ukraine war have heightened the urgency to end its dependence on fossil fuels.
As a result, companies that refine and sell The oil industry is making huge investments that were previously unthinkable. Valo this year bought an 80% stake in the biofuel plant in Koeforden, Netherlands, to give it a foothold in what is expected to be a fast-growing business. Europe’s largest energy companies, Shell and BP, recently spent billions of dollars buying similar biogas companies.
Varo isn’t an oil giant like Shell or BP, but its executives, engineers and traders are similarly responsive to changing demands as the industry changes. In interviews, they appeared enthusiastic about this transition, but remain cautious and bet wide as it is unclear how regulation and markets will evolve. The company itself has set a target of net zero emissions by 2040.
“Every year we see countries adapting and changing their rules,” said Theo Panequito, executive vice president of new energy innovations at Varo. “It’s a very high-risk environment.”
At Kuforden, Ulrich is already overseeing an expansion that will increase the factory’s output by 50%. The company also plans to invest in equipment to cool and liquefy the gas so that it can be used as an environmentally friendly alternative to diesel.
Looking ahead, Baro has a preliminary contract to supply German airline Lufthansa with so-called sustainable aviation fuel. That fuel starts with a blend made from used cooking oil and later transitions to hydrogen, which many consider to be the green fuel of the future.
The company’s future is still tied to oil, with Baro owning and operating its only refinery in Switzerland and a second in Germany, but company executives say they are slowly becoming greener and more customer friendly. The company said it would benefit from helping to meet its clean energy goals. And under various national schemes aimed at phasing out emissions or green-certifying energy, Varo can also earn so-called bio-tickets that can be sold to polluting companies, which is another 1 an important source of income.
But there are obstacles in this glorious new energy world. For example, the locally produced pig manure and other waste is not enough to keep the Koeforden plant running. That means Ulrich will have to scour the globe with ships loaded with rotten corn and other agricultural debris to fill tanks. The factory also purchased grain contaminated by the explosion that destroyed Lebanon’s port of Beirut in 2020.
And waste is not free. Natural gas prices soared in Europe last year, but soaring demand also drove up the cost of raw materials used in biofuels, contributing to the plant’s financial loss last year.
The global thirst for biofuels has led to questionable practices such as clearing forests for wood waste and growing crops for fuel rather than food. Mark Braunstein, senior vice president for the energy transition at the U.S.-based Environmental Defense Fund, said the total amount of suitable waste and other inputs available would be “aviation fuel, transportation fuel, industrial gas. Many times less than the global demand for supplies.” Non-profit advocacy group.
But Varo executives believe a foothold in the European energy market will give the company a stable future. Now cut off from Russia’s natural gas supply, Germany is hungry for greener alternatives to generate electricity and power energy-hungry factories like steel mills and chemical plants. They think there will be. The German border is through the road just outside the gates of the biogas plant. “We are in the right zip code,” Varo chief executive Dev Sanyal said in an interview.
Varo is an 11-year-old company with approximately 2,100 employees and annual revenue of $26 billion in 2022, earning approximately $500 million annually from refining and distributing and trading petroleum products. But the company’s owners, US-based private equity firm Carlyle and commodities trading giant Vitol, have realized the business needs to prepare for what’s to come. Last year, it hired Sanyal, who was head of the gas and renewables business at BP, to change direction.
Like other oil companies, Varo hopes to satisfy multiple audiences, including clean energy demanding customers and regulators, as well as steady buyers of gasoline, diesel and other products from the two refineries. and
Sticking to the status quo is not an option for oil companies amid mounting environmental pressures. “If you’re just converting crude oil into refined products, at some point it’s going to be unattractive to do it in Europe,” said Alan Gelder, vice president of refining and chemistry at consulting firm Wood Mackenzie.
When Eduardo Gueus, a former Shell executive, took charge of the Barro refinery in Cressier, Switzerland, last year, he was skeptical about the viability of the 1966 plant in a wooded area. However, he said he realized that two lines of refineries made more sense as demand for petroleum-based fuels, especially in the aviation sector, is likely to continue for some time.
This will streamline refinery operations to reduce energy consumption and emissions, while planning new processing units for low-carbon fuels made from used cooking oil and logging residues from Swiss forests. meant. Varo is already blending small amounts of biofuels into the diesel and gasoline it produces for cars and trucks, but it needs to go further in the future.
Not everyone thinks Valo’s efforts are good enough. In October, police arrested a handful of demonstrators from the group Debt Switzerland for Climate Change, who blocked the entrance to a refinery demanding a shift away from fossil fuels.
The government of the Swiss canton of Neuchatel wants to keep the refinery running. It provides jobs for about 300 people and creates jobs for many others. Owners like Mr. Geus take care to be good neighbors, and these days they run a pipe, Sends excess heat from the factory to nearby village homes. “It connects us even more closely with neighboring communities,” he said.
As Switzerland’s only refinery, which supplies about a third of the petroleum products consumed by Switzerland, the Crecier plant also strengthens the country’s energy security. “It’s good that production takes place on our land,” said manager Yves Lehmann. State Environment and Energy Agency. “We are confident they have a role to play in the future.”
