Market insight papers
EU petrochemicals face rising carbon costs
The EU's Chemicals Industry Action Plan and CBAM should level the playing field for the chemicals covered by ETS - but there could be unintended consequences.
As the EU phases out free carbon allocations and introduces border adjustment mechanisms, European olefins and derivatives producers face rising costs and growing competitive pressure. In this analysis, Chemicals experts Anna Fittock and Alan Williamson and Carbon expert Victoria Hatherick unpack the implications of EU ETS Phase 4 and CBAM for the region’s steam cracker fleet, including:
- How free carbon allocation is calculated and the amount that costs will rise by for steam cracking as free allocation is phased out
- What to watch as ETS prices rise and the cost gap widens between top-performing and standard crackers
- How the EU's Carbon Border Adjustment Mechanism is proposing to protect the region's chemical industry, but could have the unintended consequence of accelerating downstream import substitution
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