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Scenario analysis for energy transition in the chemical industry: An industrial case study in Saudi Arabia

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  • Alshammari, Yousef M.
Abstract
Carbon emissions from the industrial sector represents nearly 21% of global carbon emissions. The chemical manufacturing industries are a major part of the industrial sector, which tends to be less included in battle against climate change. This paper analyses the impact of natural gas prices on carbon abetment costs while analysing IRR and payback period for different CO2 prices, using the linear optimisation model MESSAGE. We show that carbon capture and solar technology may provide the technology mix for deep carbon reduction targets by 2030. In addition, the volatility in natural gas prices was found to create an increase in the abatement costs by $20/Ton as the gas prices increase by $0.10/MMBTU. Furthermore, we find that the minimum carbon price needed is $27/Ton to make investments viable though at a long payback period, 9.5 years. Results show practical scenarios complemented with policy recommendation for energy transition in the chemical industry to achieve climate targets by 2030. This suggests that current commercial prices of carbon ($29/Ton in Europe) may be sufficient to pay off the costs required for carbon capture.

Suggested Citation

  • Alshammari, Yousef M., 2021. "Scenario analysis for energy transition in the chemical industry: An industrial case study in Saudi Arabia," Energy Policy, Elsevier, vol. 150(C).
    • Handle: RePEc:eee:enepol:v:150:y:2021:i:c:s0301421520308399
    DOI: 10.1016/j.enpol.2020.112128
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    Cited by:

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    2. Andrius Zuoza & Vaida Pilinkienė, 2021. "Energy Efficiency and Carbon Emission Impact on Competitiveness in the European Energy Intensive Industries," Energies, MDPI, vol. 14(15), pages 1-16, August.
    3. Xu, Renjing & Xu, Bin, 2022. "Exploring the effective way of reducing carbon intensity in the heavy industry using a semiparametric econometric approach," Energy, Elsevier, vol. 243(C).
    4. Fan, Jing-Li & Li, Zezheng & Ding, Zixia & Li, Kai & Zhang, Xian, 2023. "Investment decisions on carbon capture utilization and storage retrofit of Chinese coal-fired power plants based on real option and source-sink matching models," Energy Economics, Elsevier, vol. 126(C).
    5. Natalia Iwaszczuk & Jacek Wolak & Aleksander Iwaszczuk, 2021. "Turkmenistan’s Gas Sector Development Scenarios Based on Econometric and SWOT Analysis," Energies, MDPI, vol. 14(10), pages 1-18, May.
    6. Ahmed Aljudaya & Stavros Michailos & Derek B. Ingham & Kevin J. Hughes & Lin Ma & Mohamed Pourkashanian, 2024. "Techno-Economic Assessment of Molten Salt-Based Concentrated Solar Power: Case Study of Linear Fresnel Reflector with a Fossil Fuel Backup under Saudi Arabia’s Climate Conditions," Energies, MDPI, vol. 17(11), pages 1-29, June.

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