Abatement costs of CO2 emissions in the Brazilian oil refining sector

This study aims at estimating the abatement costs of CO2 emissions of the Brazilian oil refining sector. For greenfield refineries that will be built until 2030, mitigation options include the modification of refining schemes and efficiency gains in processing units. For existing refineries and those already under construction, only mitigation options based on efficiency gains in processing units are evaluated. The abatement cost of each mitigation option was determined on the basis of incremental costs compared with a reference scenario. Two discount rates were applied: one adopted by the Brazil’s government official long term plan (8% p.a.), and another typically adopted by the private oil sector (15% p.a.). Findings indicate that refineries face high abatement costs. The cost of changing the processing scheme of greenfield plants reaches US$100/tCO2 at 15% p.a. discount rate. Even at 8% p.a. discount rate the abatement cost is higher than US$50/tCO2. The most promising alternative is thermal energy management, whose abatement cost equals US$20/tCO2 at 8% p.a. discount rate. However, private investors perceive this option at US$80/tCO2, which is still high. This difference in cost indicates the need for public policies for promoting carbon mitigation measures in Brazilian oil refineries.

► We estimated the marginal abatement costs of CO2 emissions of the Brazilian oil refining sector, for existing and for new refineries.
► The cost of changing the processing scheme of new plants reaches US$100/tCO2 at 15% p.a. discount rate.
► At 8% p.a. discount rate the abatement cost is higher than US$50/tCO2.
► Thermal energy management, the most promising alternative, has an abatement cost equals US$20/tCO2 at 8% p.a. discount rate.
► Private investors perceive thermal energy management at US$80/tCO2.