PODCAST: Mushrooming carbon costs will push Europe chemicals to transform

BARCELONA (ICIS)–Forecasts of sharp increases in the cost of carbon for Europe’s chemicals industry highlight the need to plan now for a transition to more efficient production.

• Chemical industry currently enjoys a lot of free carbon allowances
• However, these will be decreased, adding significant costs
• 2021-2025 – Europe chemicals to pay €1bn/year (with €50/tonne carbon price) to €1.5bn/year (€70/tonne)
• 2026-2030 possible 40-50% cut in free allowances for chemical sector
• 2026-2030 ICIS carbon price forecast €90-€100/tonne
• Carbon Border Adjustment Mechanism (CBAM) will prevent carbon leakage
• This will allow higher carbon pricing in Europe without disadvantaging local production
• CBAM applies first to cement, electricity, fertilisers, iron and steel
• Chemicals, polymers could be added towards 2030 or later
• Chemical companies need to make radical changes to business models
• Low carbon solutions must work in developing countries

Will Beacham interviews Florian Rothenberg, ICIS carbon and power analyst; John Richardson, ICIS senior consultant Asia; and Paul Hodges, chairman of New Normal Consulting.

Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS.

ICIS is organising regular updates to help the industry understand current market trends. Register here .

Read the latest issue of ICIS Chemical Business.

Read Paul Hodges and John Richardson’s ICIS blogs.