Japan is approaching the time for a large structural change in liquefied carbon dioxide (CO2) and dry ice supply.
Reduced demand for gasoline in recent years has resulted in closures of many source material suppliers. This has reduced refinery operating rates and caused chronic decreases in crude gas supply.
According to demand predictions from the Agency for Natural Resources and Energy, consummation of gasoline will continue to fall at about 2% a year.
To combat this issue, during the shortages, plants with surplus capacity have managed to supply products by tank truck between locations and have also invested in new plant facilities in an attempt to meet demands.
However, plants that produce liquefied CO2 and dry ice with gas from petroleum refining, ammonia synthesis, and ethylene oxide production as the main source material, are all located in petrochemical complexes in the Tokyo metropolitan area, Nagoyo, the Kinki region, the Chugoku region, and Kyushu.
Incidentally, round trip tank trucking distances for liquefied CO2 can now be as long as 700km. Normal round trips would be around 200 km, indicating more than a three-fold increase in distances. This naturally increases shipping costs and the demand for drivers and trucks.
A liquid CO2 manufacturer spokesperson, stated that in the last five years, tank trucking distances have increased by 45% and this is projected to increase by a further 20% in this fiscal year ending March 2017.
Increasing the number of plants near user locations is a potential solution, however unlike air separation gas plants, the flexibility to build liquefied CO2 plants at these locations is limited due to the Lack of available feedstock.
Using emission sources for CO2 gas could eliminate this constraint as they are essentially unlimited. More than 300 million tonnes of CO2 is released into the atmosphere in Japan every year from exhaust emissions, thermal power plants and other combustion furnaces. Capturing this would allow for liquefied CO2 production to be produced in any part of the country.
The only drawback here is the purity of the crude gas. For example, furnaces that burn natural gas, the purity of the CO2 is less than 10% compared with the 90% purity reached at oil refineries. To improve purity would involve adding processes which would increase production costs.
Additionally, drink and food product users have an aversion to coal fuels due to concerns over impurities, so even though there are many sources of CO2 emissions, the number of them that would be suitable for liquefied CO2 production on a business scale is extremely limited.
Dry ice production is also adversely affected by low liquid stocks. When demand becomes difficult, block dry ice is imported from South Korea. Naturally, the longer distances incurred in this procedure increases sublimation losses. There is also the likely circumstance that South Korea’s production capacity will also dwindle in the not so distant future.
Among these large changes in the supply environment, there are the beginnings of a movement to change liquefied CO2 and dry ice pricing.
Air Water Carbonic has already implemented price increases in April 2016. Nippon Ekitan announced that they will increase 20% of prices for liquefied CO2, dry ice, and their composite gas products in Japan starting April 2017, and Showa Denko Gas Products is set to raise its prices by 15% as of April 2017.
In the future, a 10% reduction in refining capacity is scheduled for oil refineries through measures taken in response to the Sophisticated Methods of Energy Supply Structures Act, which may lead to even fewer sources. This will result in the need for even greater investments in plants and will force other suppliers to also revise pricing.
Although there are concerns about decreased demand of liquefied CO2 and dry ice in regards to welding for the ship building industry, new applications are being developed in areas such as food products, agriculture, medicine and cosmetics. For those fields alone, stable and substantial supply will be required in the future.
The Gas Review, issue no. 429