(113d) Do Global Carbon Markets Support Investing in GHG Reduction Projects for Ethylene Plants?

Globally, governments and petrochemical companies have committed to reducing greenhouse gas emissions from their facilities. Ethylene crackers are the largest producer of carbon emissions in the sector. In Canada, the federal Output-Based Pricing System (OBPS) collaborates with provincial systems such as Alberta's TIER and Ontario's EPS to offer a carbon credit market. Meanwhile, the European Union’s Emissions Trading System (ETS) may affect North American exporters through the Carbon Border Adjustment Mechanism (CBAM). This paper reviews these regulatory frameworks that incentivize greenhouse gas emissions reductions from industrial facilities.

This paper explores options to decarbonize the ethylene production supply chain. Steam cracker decarbonization strategies including carbon capture, electrifications, and fuel switching are considered and discussed. Alternate chemistry such as ethanol dehydration process is also reviewed as a way to reduce facility emissions. Approximate marginal abatement cost for carbon reduction is compared for the various options. The value proposition of investing in carbon reduction projects is assessed by comparing carbon market credit prices in several jurisdiction against the abatement cost of the strategies reviewed.