Tüpraş, the pioneer of the Turkish energy industry since its establishment, announced its "Strategic Transformation Plan” in coordination with Koç Group’s Carbon Transition Program, aiming to maintain its leadership in the future of energy. The Company has committed to reduce its carbon emissions by 27% by 2030 compared to 2017, and to become carbon neutral by 2050, focusing on energy efficiency and expanding into new areas. Tüpraş plans to dedicate a large part of its investments to new energy sources such as sustainable aviation fuels, green hydrogen and zero-carbon electricity. Tüpraş General Manager İbrahim Yelmenoğlu: “We are transforming to contribute to a more sustainable world while producing the energy of the future. Going forward, we aspire to become a key player in alternative energy generation as well, while reducing carbon emissions from refinery operations. Our ambition is to strengthen our position as Turkey's largest industrial company by producing different types of energy with an integrated and carbon-neutral business model and lead our country’s clean energy transformation.”
Pioneering the Turkish energy industry for 60 years, Tüpraş announced its Strategic Transformation Plan to produce the energy of the future, at a hybrid press conference held at the company's new Head Office in İstanbul, Mecidiyeköy.
According to the Strategic Transformation Plan, Tüpraş aims to lead the transformation of Turkey's energy industry through investments in new areas to support its sustainability while managing existing assets to achieve sustainable profitability growth. Additionally, Along with a balanced and diversified clean energy portfolio, Tüpraş aims to become a carbon-neutral company by reducing its emissions.
Energy to the Future: We will lead the transition of Turkish energy sector towards clean energy
"Energy to the Future" is the motto of the new strategic plan which strives for a sustainable world and the balance of life. Tüpraş aims to fund this transformation by improving existing operations through investments in efficiency and in production of higher value-added streams. The company initially plans to allocate majority of its new energy investments to zero-carbon power required to establish an integrated business model with green hydrogen generation, and rest of its investments on biofuels and electrolysis plants.
Tüpraş commits to reduce its Scope 1 and 2 emissions initially by 27 percent by 2030 and 35 percent by 2035, compared to 2017 base year. As of 2050, the company aims to become a carbon-neutral energy company.
“A low-carbon future awaits us”
Tüpraş General Manager İbrahim Yelmenoğlu announced the Strategic Transformation Plan, which marks the beginning of a new era and a major milestone for Tüpraş. Yelmenoğlu started his words by emphasizing that the global climate crisis has become the single biggest challenge worldwide. Reminding that Koç Holding, the parent company of Tüpraş, has recently announced the Carbon Transition Program, Yelmenoğlu said: "We are moving forward with our transition journey towards a low carbon economy to tackle the climate crisis in conjunction with the vision set by Koç Holding. We have been working in this direction for a long time."
“A new global energy economy is emerging”
Regarding the global energy industry, Yelmenoğlu said: "The International Energy Agency’s World Energy Outlook 2021 Report clearly states a new global energy economy is emerging and solar and wind power, electric vehicles and other low-carbon technologies will stand out. According to the report, while 16 percent of the world's primary energy supply was provided by renewable resources in 2020, oil holds 29 percent and total share of fossil fuels reaches 79 percent. Although many prominent international organizations have varying forecasts for the future of the energy market, the consensus is that oil will gradually be replaced by low-carbon alternative energy sources, yet, it will remain a major energy source for many years to come."
“2030 will be a major milestone for the Turkish energy industry”
Sharing the company's predictions for the Turkish energy industry, İbrahim Yelmenoğlu stated that the green transformation has only recently accelerated offering many opportunities for Tüpraş to achieve its goals. Yelmenoğlu continued: "Turkey has a unique position in the transformation, with its proximity to the EU, the center of green transformation, and growing domestic demand. We predict that electric vehicles will constitute the majority of new passenger car sales by 2030 and account for the majority of all vehicle sales after 2040. We expect hydrogen to grow gradually by 2030 and gain momentum after 2040. We expect approximately 10 percent of aviation fuels to be sustainable aviation fuels (SAF) by 2030 in Turkey, which has one of the world’s leading aviation industries. Additionally, we foresee synthetic and hydrogen-based fuels to penetrate aviation fuels market in the long term. In light of these expectations, we predict that Turkey's fossil fuel consumption will peak in 2030. Even though the demand for diesel in particular will be gradually replaced by hydrogen and electric vehicles after 2030, we expect existing domestic refining capacity to still be critical in the long run, which remains a large import market especially in diesel.”
“We will focus on Sustainable Refining, Biofuels, Zero-Carbon Electricity and Green Hydrogen in the near future”
Explaining how Tüpraş will carry its energy into the future and the details of their new business model, Yelmenoğlu emphasized that they have always been a "purpose-driven company" and built their strategies with the same approach. Yelmenoğlu added: "While planning for the future of Tüpraş, we have drawn a roadmap to transform our products and services to better respond to the expectations of all our stakeholders. As part of our Strategic Transformation Plan, we will be focusing on four business areas. These are Sustainable Refining, Biofuels, Zero-Carbon Electricity and Green Hydrogen. Energy needs are diversifying in line with changing consumer behaviors and needs. Our business plan reflects these changes and aims to meet the demand for new energy types. We have a long way to go and many challenges to overcome in the transition to clean energy. The recent volatility and price hikes in the energy market have reminded us of the importance of a well-balanced and planned transformation and the challenges the consumers will face, if otherwise."
Sustainable Refining: “Refining is at the core of our operations, and will drive our transformation”
İbrahim Yelmenoğlu remarked that in refining, Tüpraş will focus on projects supporting the transition to a low carbon economy or providing quick returns and will produce higher value products within current capacities while emitting less emissions. Yelmenoğlu continued by saying: "Being our core competence, refining will be the engine of our transformation. We plan to invest approximately $2.3 billion until 2035 for projects in energy efficiency, modernization, decarbonization and in increasing value-added products.”
Stating that they foresee refining business will account for 90 percent of operating profits by 2030, and for 70 percent between 2030 and 2035, Yelmenoğlu said: "As we are dedicating a large part of the refining profit to new areas and reducing our carbon footprint, we will also maintain our high-dividend payout policy. We will continue to meet growing domestic demand while shaping the future of Tüpraş with investments to support the transition to low carbon economy."
Biofuels: "We aim to be Turkey's leading sustainable aviation fuel (SAF) producer"
Highlighting that the International Energy Agency Report predicts a fivefold increase in biofuel consumption by 2050 compared to 2020, İbrahim Yelmenoğlu said that biofuels are expected to complement the green transformation both during the transition period and in the long term, and Tüpraş is currently focusing on second-generation biofuels derived from non-food renewable resources and waste. Yelmenoğlu added:
"We believe biofuels will have competitive edge in air transport and play a major role in the decarbonization of the industry. By focusing on long term investments in Sustainable Aviation Fuels capacities, we will continue to be the biggest supplier and business partner of Turkish aviation industry, one of the leading global markets, and make significant contributions to reducing its emissions. We aim to process 400,000 tons of bio feedstock by 2030, and triple our sustainable aviation fuel production capacity by 2035. We plan to become Turkey's largest SAF supplier. This is where integration has critical importance so we are working on long term sustainable collection and sourcing of agricultural and animal based waste.”
Zero-Carbon Electricity: "We will use most of the electricity we produce for green hydrogen generation"
Stating that the International Energy Agency forecasts a twofold growth in global electricity consumption by 2050 compared to 2020, Yelmenoğlu said: "Electricity will play a key role in the energy industry, both in meeting future energy needs directly and much more efficiently, and also in serving as the main input for green hydrogen generation. Yelmenoğlu also confirmed that they will only use zero-carbon resources in line with their approach to combating climate change to establish capacities required to meet the significantly rising electricity demand, and added: "We have completed the first phase of the Solar Power Plant in Batman and will be building another one in Kırıkkale as well. We will prioritize suitable sites at our plants for further investments and focus to meet internal consumption for green hydrogen production. We will also sell electricity occasionally for optimization purposes and for providing zero-carbon electricity to consumers. We aim to become one of the leading producers of zero-carbon electricity by reaching an installed capacity of approximately 1 GW by 2030, and 2.5 GW by 2035 through greenfield projects and acquisitions."
Green Hydrogen: “Hydrogen will soon become not only an input in our manufacturing processes but also one of our top commercial products”
Underlying that hydrogen will be used mostly in the transportation industry according to the International Energy Agency's projections for 2050, İbrahim Yelmenoğlu explained: "As Turkey's largest hydrogen producer, we currently use hydrogen in our refining processes. We will focus on producing green hydrogen with electrolysis, which stands out from other hydrogen types thanks to zero emission emitted during production. As we gradually switch to green hydrogen starting from 2025, we aim to eliminate all our emissions from hydrogen production by 2040. Hydrogen will soon become not only an input in our manufacturing processes but also will become one of our top commercial products.
In addition, we are going to make a significant contribution to reduce Turkey's current account deficit on the back of decreasing natural gas consumption. Tüpraş also aims to be the pioneer in this emerging market by selling green hydrogen to logistics and heavy transportation industries by 2030 and other industries later on. Furthermore, Tüpraş aspires to serve as a bridge between Turkey and the EU by operating in different parts of green hydrogen value chain and benefit from export potential."
Yelmenoğlu stated that Tüpraş will continue its leadership in high-priority areas like digitalization, R&D and innovation, and added: "Our highly capable workforce is ready for this major transformation. We have tremendous expertise, especially in chemistry and engineering, and have the ability to operate in hazardous working environment at highest international safety standards. We are starting this transformation journey one step ahead with our well-equipped and distinguished workforce and planning to leverage these qualifications with the needs of the future."
- As part of its Strategic Transformation Plan, with an annual average investment of $350 million, Tüpraş aims to invest approximately $5 billion by 2035 and $10 billion by 2050 in total.
- The investments are expected to boost annual EBITDA of Tüpraş by 30 percent compared to last 5 year average, reaching $1.3 billion in 2030 and plans are in place to maintain this level on average until 2035 as new investment areas start to make higher contribution.
- By 2035, 30 percent of EBITDA is expected to come from new lines of business; namely Sustainable Aviation Fuel, green hydrogen and zero-carbon electricity sales.
- The company aims to pay out an average of 80 percent of its distributable profit as dividends as it sustains operating profit.
- Tüpraş, is to set aside $50 million for venture capital investments until 2030 to capitalize new technologies and business models in energy transformation.
- Having continuously improved its overall performance on Environmental, Social and Corporate Governance (ESG), Tüpraş is also planning to benefit from growing ESG focused funding opportunities with this transition roadmap.
In addition to being Turkey's largest industrial establishment and number one producer in the refining industry, Tüpraş is the seventh largest refining company in Europe, and one of the most complex refining companies in the Mediterranean basin. Since its acquisition by Koç Holding in 2006, the company has invested a total of $7 billion.
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