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

    1. 1. Green Power for Business – The Way Forward? Tom Crotty - Group Director, INEOS
    2. 2. 2 Outline of Presentation An introduction to INEOS INEOS Power Demand & Issues Renewable solutions
    3. 3. INEOS Overview
    4. 4. 4 INEOS Background 2009 Sales $28.6bn 15,000 employees* 4,500 employee shareholders 60 manufacturing sites worldwide* 40 million tonnes of chemicals capacity 20 million tonnes of refinery products (400,000 bbls/day) A leading global chemical company • Largest refinery in Southern France • Largest refinery in Northern Britain • Largest Olefin producer in Europe * excl. joint ventures
    5. 5. 5 Global Chemical Companies (Top 20) 12.4 12.6 12.8 13.1 14.0 15.3 16.7 19.5 19.9 20.5 23.0 24.5 25.4 25.9 26.8 28.6 31.3 44.9 54.8 19.3 Toray Ind. LG Chem Mitsui Chem Sumitomo Chem Evonik Air Liquide Mitsubishi Chem Akzo-Nobel Bayer LyondellBasell Total SABIC Shell Formosa Plastics DuPont Exxon INEOS Sinopec DOW BASF Sales in 2009 (US$ bn) Source: Chemical & Engineering News
    6. 6. 6 Manufacturing Locations 60 Manufacturing Sites in 13 Countries South Houston 4.1 mtes 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 Lavéra 11.0 mtes Wilhelmshaven 1.0 mtes Ruhr 1.4 mtes Europe 37 sites: 48.3 mtes Köln 5.5 mtes Rafnes 2.3 mtes
    7. 7. INEOS Power Demand & Issues
    8. 8. 8 INEOS Total Power Consumption 50 million MWh of Energy A mixture of electricity, steam & gas
    9. 9. 9 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
    10. 10. 10 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
    11. 11. 11 Wholesale Gas Price Differentials 2002-2007 Source: P Heren – European Gas Markets/EIUG Wholesale Forward Gas Price (pence/therm) 15 20 25 30 35 40 45 50 55 60 65 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 P/Therm UK Continental Europe
    12. 12. 12 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)
    13. 13. Renewable Power Options
    14. 14. 14 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
    15. 15. 15 Viable Renewable Options for INEOS Runcorn Involvement in new nuclear build Energy from Waste
    16. 16. 16 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
    17. 17. 17 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
    18. 18. 18 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
    19. 19. 19 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
    20. 20. 20 Opportunities Electricity at less than market price Funding via PFI lenders Government CHP incentives Well-located brownfield land Merseyside Greater Manchester Runcorn
    21. 21. 21 Progress to date
    22. 22. 22 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

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