European 10% ethylene production capacity is facing closure

In recent days, the price of naphtha has repeatedly hit new highs, and the original flat European ethylene market has risen sharply. Although market vitality began to recover, at the European Chemical Industry Committee Economic Outlook Conference held last week, Pierre Katniss, executive director of the European Chemical Industry Council and secretary general of the European Petrochemical Manufacturers Association, stated that the development of the European ethylene industry The outlook is not optimistic. The implementation of the European Union's carbon emissions trading system (ETS) will lead to or accelerate the closure of ethylene crackers in Europe.

Katniss said that the additional cost of purchasing a carbon dioxide emission license will put European ethylene cracker manufacturers, which are already on the verge of profit and loss, in a more difficult position, which may cause a large-scale ethylene cracker shutdown in Europe. The capacity of the equipment to be shut down will reach 2.2 million tons/year, accounting for approximately 10% of the current 25 million tons/year ethylene cracking capacity in Europe.

Katniss said in an interview during the workshop that the data was based on the assumption that ETS implemented an additional €30/tonne cost for ethylene cracker producers. This additional cost is enough to cause most European ethylene cracker producers to fall into a loss situation. . With the continuous increase in the trading price of carbon emissions, new costs may increase further. The average production cost of ethylene crackers in the current European region is approximately 1,200 euros/ton, while the average production cost of producers in the Middle East is only 300 to 400 euros/ton. Small crackers with design capacity of less than 300,000 tons per year and older equipment with service time of more than 35 years are expected to be eliminated first. In addition, those ethylene crackers that do not extend downstream are also at risk of closure. Katniss also pointed out that during the economic recession, the European region will shut down 600,000 tons/year of ethylene cracking capacity each year, and it is difficult for these closed devices to restart.

The ETS is the main pillar of the EU’s climate change policy. It came into effect in January 2005. According to this system, EU member states that emit large amounts of carbon dioxide must monitor their emissions and submit relevant data to the government each year. The ETS plans to reduce carbon emissions by 1.74% annually to meet the target of reducing carbon emissions by 20% in 1990 compared to 1990. More and more chemical companies will join the plan, and their free carbon emissions will gradually shrink. The European Commission announced at the end of October this year that it plans to control carbon dioxide emissions by 2.039 billion tons by 2013.