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Complex refiners under pressure; carbon cost impact on European refiners
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Report summary
European refiners are entering a new era of carbon regulation that fundamentally challenges the economics of complex refining. The EU Emissions Trading System (EU ETS) phasing out free allowances, combined with the upcoming Carbon Border Adjustment Mechanism (CBAM), will make refiners liable to the full cost of their emissions. This analysis assesses the direct impact on Net Cash Margins (NCM) for complex refiners, which account for approximately 65% of total EU refining scope 1 and 2 emissions. It evaluates the effects of free allowance phase-out by refinery configuration, explores key emission sources and decarbonisation opportunities for complex configurations, examines the sensitivity of FCC operations to carbon credit prices, and finally analyses the possible domestic supply shocks from the rationalisation of the least competitive complex refiners.
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