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Climate Change Summit - Tom Crotty

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  • Notes The UK Gas Forward market is no longer competitive with Europe The European Gas Price shown includes all the “oil” effects – it is actually competing fuels that European gas is priced against – and these are Heavy Fuel Oil (70%) and Gas Oil (30%) – HFO has not increased in price in dollars over a 2 year period 3. UK Industry – and particularly Energy Intensive Industries – require competitive energy – we compete in European markets and we cannot pass price increases on to customers 4. In order to manage risk, we need to be able to purchase our energy in the forward markets. We sell a proportion of our products ahead at agreed prices and need the ability to do the same with our input costs.

Climate Change Summit - Tom Crotty Climate Change Summit - Tom Crotty Presentation Transcript

  • Green Power for Business – The Way Forward? Tom Crotty - Group Director, INEOS
  • Outline of Presentation
    • An introduction to INEOS
    • INEOS Power Demand & Issues
    • Renewable solutions
  • INEOS Overview View slide
  • INEOS Background
    • 2009 Sales $28.6bn
    • 15,000 employees*
    • 4,500 employee shareholders
    • 60 manufacturing sites worldwide*
    • 40 million tonnes of chemicals capacity
    • 20 million tonnes of refinery products (400,000 bbls/day)
    • A leading global chemical company
      • Largest refinery in Southern France
      • Largest refinery in Northern Britain
      • Largest Olefin producer in Europe
    • * excl. joint ventures
    View slide
  • Global Chemical Companies (Top 20) Sales in 2009 (US$ bn) Source: Chemical & Engineering News
  • Manufacturing Locations 60 Manufacturing Sites in 13 Countries North America 16 sites: 8.4 mtes Mobile 0.8 mtes Asia 7 sites: 0.3 mtes Grangemouth 11.9 mtes Runcorn 4.0 mtes Antwerp 2.4 mtes Wilhelmshaven 1.0 mtes Ruhr 1.4 mtes Europe 37 sites: 48.3 mtes Rafnes 2.3 mtes South Houston 4.1 mtes Lavéra 11.0 mtes Köln 5.5 mtes
  • INEOS Power Demand & Issues
  • INEOS Total Power Consumption
    • 50 million MWh of Energy
    A mixture of electricity, steam & gas
  • INEOS ChlorVinyls – Our Major UK Power User Second largest chlorine plant in Europe Competitive on-site power station and world scale chemical plants Only UK chlorine producer Critical supplier to the UK chemical industry Completed £400m investment programme at Runcorn in 2006 Chlorine & PVC. Acquired from ICI in 2001. Based at Runcorn, Cheshire
  • Our Energy Position in Runcorn
    • Electricity is a raw material
    • Power consumption at Runcorn site is the same as the city of Liverpool
    • We purchase gas, which is toll converted through a highly efficient CCGT station on-site
    • Energy is 80% of the cost of making our products
    • We compete with all other major European producers of PVC
    • Totally dependent on competitive UK gas prices
  • Wholesale Gas Price Differentials 2002-2007 Source: P Heren – European Gas Markets/EIUG
  • Other Issues Impacting Energy Competitiveness
    • Multiple policy instruments creating a cumulative burden
    • All stick & no carrot & overly complex
    • EUETS
    • Climate Change Levy
    • Carbon Reduction Commitment
    • Renewables Obligation
    • Renewable Heat Incentive
    • UK offers limited exemptions compared to other EU States
    • Energy intensive industry cannot afford to lose current exemptions
    • Energy intensive industry must be exempt from new energy taxes
    • Future changes to CCL must retain exemption for electrolysis
    • The best result for CO2 emissions is to manufacture energy intensive products in low carbon economies
    • PVC production in China results in 5 times the CO2 emissions of European production (IFEU Dec 2008)
  • Renewable Power Options
  • A full move to renewables?
    • INEOS demand is 50 million MWh
    • To source that CO2 free via…
    Biodiesel – would require an oilseed rape acreage the size of Switzerland Wind – would require a wind farm larger than Luxembourg Nuclear – would require 4 new nuclear stations
  • Viable Renewable Options for INEOS Runcorn
    • Involvement in new nuclear build
    • Energy from Waste
  • New Nuclear
    • Runcorn electrolysis provides an ideal baseload demand
    • Steady offtake 365 days per year
    • ‘ Exeltium’ model in France works well
    • Investment by energy intensive industry in a ‘virtual’ nuclear plant, delivering power now
    • CO2 free, low cost, predictable energy source
    • Cash from consortium allows EdF to invest in next generation reactors
    • Done without infringing EU state aid rules
  • Runcorn Energy from Waste
    • A very significant energy from waste investment
    • £400m project covers 25% of Runcorn’s energy
    • No other renewable technologies can deliver energy at sustainable cost today
  • Runcorn Energy From Waste Project
    • Why Runcorn?
      • Good location
        • Central within region
        • Transport links
        • Brown field site
        • Next to Runcorn Site
      • CHP benefits
      • Ineos benefits
        • Source of energy not reliant on natural gas
  • Runcorn CHP Energy from Waste Facility
    • Phase 1
    • Financial close 2009 – PFI-funded
    • Operation late 2012 / early 2013
    • 425,000 tonnes of refuse derived fuel per annum
    • Phase 2
    • Contracts agreed 2010 – merchant facility
    • Operation 2014
    • 425,000 tonnes of refuse derived fuel per annum
  • Opportunities
    • Electricity at less than market price
    • Funding via PFI lenders
    • Government CHP incentives
    • Well-located brownfield land
    Merseyside Greater Manchester Runcorn
  • Progress to date
  • Conclusions
    • Need to diversify energy base away from gas dependency
    • Energy source needs to be cost competitive and reliable
    • Two primary options are nuclear and EfW
    • France provides an excellent model for new nuclear
    • EfW provides an excellent CHP option for those who need both heat and power
    • All investments are long term and require a stable planning & regulatory framework from government to allow us to develop leadership in green manufacturing technologies