At the writing of this blog, the first COVID-19 vaccines in the Western world have produced impressive initial results from third-stage trials, with the first vaccines now coming to the market. The stunning speed of development is in part due to innovative new messenger ribonucleic acid (mRNA) and viral vector technologies. It is yet another example of how technology is fundamentally changing our daily lives.

Technology and innovation have long been critical success factors for energy, chemical, and agricultural companies. Besides the pandemic, no global problem is as central to business planning and strategy today as addressing climate change and reducing carbon and methane emissions. Innovation and new technologies are needed - and are being actively pursued - to accomplish these herculean endeavors.

Digitalization - the new brains of our industry and economy - is delivering. Combining mega data sets and advanced analytics, tools such as neural networks are addressing challenging business problems. Once solved on graphing paper, complex chemical reactions have moved to mainframes, then desktops and the cloud, and now to quantum machines. These innovations and tools solve problems from small to large - everything from reducing operating costs to mitigating the effects of climate change.

But our industries - and their profits - are based mostly in the physical world. Energy supplies, chemicals, and agricultural commodities require physical infrastructure to extract, process, and deliver products. The oil and crop fields, pipes, reactors, and trucks are the bones and muscles that transform raw materials into the finished products delivered to customers. In this world, innovation is playing an increasingly important role as well. New materials that improve battery performance at lower cost are as crucial as visualizing reservoirs with spatiotemporal tools. Those batteries are not only lowering the cost of utility-scale power storage and electric vehicles (EVs), but they also may be used in new ways to integrate into EV charging stations to level electrical loads and reduce grid costs at the best sites. And these are but a few examples.

Energy demand trends are reviving another type of innovation: integration. Our industries have long shared a degree of integration, but the energy transition is spurring more innovation with the ultimate goal of reducing the carbon footprints of long, complex life-cycle emissions chains. Two oil-refining integration examples involve biomass and petrochemicals. These integrations are not new but are being revived with new pathways to address the energy transition. Today, we see opportunities to use biomass - agricultural waste and commodities - not just as traditional feedstocks but in groundbreaking ways. When deployed in concert with the refining process, biomass produces low-to-negative carbon transport fuels and it promises to scale and improve in the future. The refining-petrochemical integration opportunity is driven by a substantial imbalance between petrochemical feedstocks and transportation fuels. Relentlessly growing demand for petrochemical feedstocks is expected over the coming years. In contrast, transportation fuels - depending on the scenario - are predicted to plateau, peak, or decline, reducing the availability of low-cost byproduct production of naphtha and natural gas liquids (NGLs) for feedstocks.

Our industries have a history of solving large and complex problems, and they will also take on the challenge of reducing greenhouse gas emissions. More petabytes of data will be collected to meet this challenge, more algorithms will be deployed, and more steel, concrete, and wires will be installed. However, technology and innovation, in both the digital and physical spaces, are most critical to our continued success.

For more information on global oil data and outlooks, visit ihsmarkit.com/CrudeOilMarkets

Posted 09 February 2021 by Kurt Barrow, Vice President, Oil, Fuels & Chemicals Research, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.