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The impact of CO2 taxation on the configuration of new refineries: An application to Brazil

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  • Gomes, Gabriel Lourenço
  • Szklo, Alexandre
  • Schaeffer, Roberto

Abstract

This article evaluates the impact of pricing CO2 emissions over the configuration of new refinery complexes in their conceptual phase. Two refineries' schemes were simulated through a linear programming optimization model in order to compare the optimum configuration obtained before and after the input of different CO2 prices. The cases analyzed represent refining projects to be located in Brazil, a growing market for fuels and petrochemical feedstocks, as well as an oil producing country with rising crude exports. After 2012, emerging countries, such as Brazil, may adopt carbon emission reduction targets. Therefore, it is worth analyzing the impact of pricing CO2 emissions in these countries, where the majority of new refining projects will be located. Our findings indicate that the initial refinery configurations proposed are quite rigid technologically for CO2 prices up to US$ 100/t CO2. For CO2 prices higher than US$ 100/t CO2, refineries reduced their emissions by increasing the consumption of natural gas used to produce hydrogen, and through changes in the original configurations towards less-energy consuming process units. Promising technological advances, such as carbon capture and storage (CCS), can also diminish the rigidity of the model and facilitate actions to curb carbon emissions.

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  • Gomes, Gabriel Lourenço & Szklo, Alexandre & Schaeffer, Roberto, 2009. "The impact of CO2 taxation on the configuration of new refineries: An application to Brazil," Energy Policy, Elsevier, vol. 37(12), pages 5519-5529, December.
    • Handle: RePEc:eee:enepol:v:37:y:2009:i:12:p:5519-5529
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    Cited by:

    1. Fernanda Guedes & Alexandre Szklo & Pedro Rochedo & Frédéric Lantz & Leticia Magalar & Eveline Maria Vásquez Arroyo, 2018. "Climate-Energy-Water Nexus in Brazilian Oil Refineries," Working Papers hal-03188594, HAL.
    2. Borba, Bruno S.M.C. & Lucena, André F.P. & Rathmann, Régis & Costa, Isabella V.L. & Nogueira, Larissa P.P. & Rochedo, Pedro R.R. & Castelo Branco, David A. & Júnior, Mauricio F.H. & Szklo, Alexandre &, 2012. "Energy-related climate change mitigation in Brazil: Potential, abatement costs and associated policies," Energy Policy, Elsevier, vol. 49(C), pages 430-441.
    3. de Barros, Marisa Maia & Szklo, Alexandre, 2015. "Petroleum refining flexibility and cost to address the risk of ethanol supply disruptions: The case of Brazil," Renewable Energy, Elsevier, vol. 77(C), pages 20-31.
    4. Joshi, Jignesh M. & Dalei, Narendra N. & Mehta, Pratik, 2021. "Estimation of gross refining margin of Indian petroleum refineries using Driscoll-Kraay standard error estimator," Energy Policy, Elsevier, vol. 150(C).
    5. Castelo Branco, David A. & Gomes, Gabriel L. & Szklo, Alexandre S., 2010. "Challenges and technological opportunities for the oil refining industry: A Brazilian refinery case," Energy Policy, Elsevier, vol. 38(6), pages 3098-3105, June.
    6. Johansson, Daniella & Rootzén, Johan & Berntsson, Thore & Johnsson, Filip, 2012. "Assessment of strategies for CO2 abatement in the European petroleum refining industry," Energy, Elsevier, vol. 42(1), pages 375-386.
    7. Castelo Branco, David A. & Szklo, Alexandre & Gomes, Gabriel & Borba, Bruno S.M.C. & Schaeffer, Roberto, 2011. "Abatement costs of CO2 emissions in the Brazilian oil refining sector," Applied Energy, Elsevier, vol. 88(11), pages 3782-3790.
    8. Al-Salem, S.M., 2015. "Carbon dioxide (CO2) emission sources in Kuwait from the downstream industry: Critical analysis with a current and futuristic view," Energy, Elsevier, vol. 81(C), pages 575-587.
    9. Aragão, Amanda & Giampietro, Mario, 2016. "An integrated multi-scale approach to assess the performance of energy systems illustrated with data from the Brazilian oil and natural gas sector," Energy, Elsevier, vol. 115(P2), pages 1412-1423.

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