Twelve months ago, we sat down with Nippon Gases Europe, a leader in the production and distribution of carbon dioxide (CO2) in Europe, to discuss the region’s CO2 market.

It was a period of relative calm for this often fragile supply chain, with Jose Ramon Calvo – Marketing Director Europe at Nippon Gases – affirming, “…under normal circumstances we do have a stable CO2 supply chain in Europe with sufficient capacity to meet the demand.”

The key element in that statement was Calvo’s cautionary words ‘under normal circumstances’. Several months later, and we would see anything but normal circumstances. Headlines erupted in early September 2021 as supply chain shortages broke out in the UK and parts of Europe, against the backdrop of soaring natural gas prices.

These sustained high gas prices in Europe loaded intolerable pressures on both the energy sector and various industries, most notably the fertiliser business where operations in Europe became unprofitable and widespread plant closures quickly took hold. With fertiliser plants falling like dominoes across Europe as various (temporary) closures or curtailment of capacities were announced, ammonia production was grinding to a halt and with it, the capacity for CO2 production.

Nippon Gases Europe was among those that affirmed to gasworld in September it was working closely with its customers to minimise the impact of the crisis. Indeed, a combination of UK government interventions and the collective efforts of the CO2 sector as a whole were able to largely curtail the crisis itself before the month had concluded.

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Source: Nippon Gases Europe

It was then, very much a storm in a teacup shortage. Yet it served to remind us all of the inherent fragilities in the CO2 supply chain.

On the eve of gasworld’s annual CO2 Issue and the return of its CO2 Summit event this March, we caught up again with Calvo (pictured) to better understand the position the market finds itself in today and what Nippon Gases is doing to diversify its already impressive sourcing channels.

 

Consolidation of infrastructure

Nippon Gases owns four of the largest and most reliable production facilities across the continent, as well as having significant access to third-party production.

The company operates 12 CO2 production facilities with nine CO2 storage terminals, three ships and 13 dry ice production facilities.

It brought on-stream a new £9.5m CO2 terminal in Warrenpoint, Northern Ireland at the end of 2020, a 2,500 tonnes capacity facility that stores liquid CO2 for the food and drinks industry across Ireland. It was an investment that came soon after the great CO2 crisis of summer 2018 and the company confirmed to gasworld last year that the terminal ‘clearly will help alleviate the impact of the UK outages in Ireland’.

It’s the consolidation of this leading network of CO2 supply production and distribution that Calvo says Nippon Gases has been focused on since we last talked in early 2021 and since those whirlwind weeks of September. This, he affirms, will help to ensure continuity of supply.

“Over the past 12 months our focus has been on the consolidation of recent infrastructure investments and the development of new opportunities,” he explained. “In recent months, the energy crisis has impacted fossil fuel-based sources across Europe and our efforts have been directed at ensuring continuity of supply.”

“The high gas prices have resulted in curtailments and reductions of ammonia (NH3) plants across Europe, with a direct impact on Nippon Gases and the market in general.”

“As a company leading the supply of LCO2 (liquid CO2) in Western and Northern Europe, inevitably the energy crisis has created a strong challenge for our organisation to maintain the supply of CO2 to our customers,” he underlined. “The quality of our team and our strong supply chain helped us to mitigate the effects on the market, however you can imagine this has been a very tough period and once again, what makes the difference is the quality of the team and the diversification of the supply chain.”

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Source: Nippon Gases Europe

We reach a natural and increasingly important element of our interview: the diversification of sources. There’s a certain sense of inevitability that diversification will come up in any discussion of the CO2 supply chain, such is its nature, and Calvo affirms that Nippon Gases ‘has been working for some time’ on the diversity of its sources.

“We anticipated this need, it is a priority for us and we proceed according to this strategy. Of course, biogenic and other low-carbon CO2 sources are in our scope but as you know, to evaluate and then convert a potential source into a real one takes time.”

“There are many potential ‘non-fossil’ sources arising, typically as a result of decarbonisation initiatives and often chasing subsidies. It is important to assess their viability with regard to scale of investment, business model, logistics and compatibility with key market requirements – such as those of the food and beverage industry.”

“Nippon Gases is working with a number where we see a good potential for a long-term partnership.”

From diversification to decarbonisation

Another inevitable tangent in our conversation and indeed any conversation today, is decarbonisation; this is very much where the circular economies approach comes to the fore, and Calvo has already more than hinted at the potential to diversify the supply chain alongside the development of sustainability initiatives.

Indeed, this is where he sees the greatest opportunities for the CO2 sector, as he continues to explain.

“The most important lesson [learned from recent CO2 shortages] is that the CO2 world is changing very fast and the Carbon Neutrality policy of the EU (European Union) and the efforts of industry to decarbonise production processes is already having a significant impact on this.”

“Exactly in the Carbon Neutrality ecosystem [is where we see the greatest opportunities]. We do see a lot of initiatives to use CO2 as part of the solution to reducing GHG (greenhouse gas) emissions in circular economy projects.”

Calvo also points to areas such as home deliveries and the need to maintain the cold chain as growth areas for those in the CO2 business, describing it as ‘a reality’ and adding, “our estimation is that this sector will keep growing.”

With the discussion moved onto decarbonisation and those important circular economies, what of the role of major world events like COP26, held in Glasgow towards the end of last year?

‘Uniting the world to tackle climate change’ was the mantra of the 26th annual Conference of the Parties (COP26), countries who are considered part of the United Nations Framework Convention on Climate Change (UNFCCC) – an organisation that aims to bring nations together to combat anthropogenic, or man-made, climate change.

Considered the world’s foremost climate change-related international conference, last year’s gathering from 31st October – 12th November was held during tumultuous times: an intensifying of climate-related activities such as wildfires, floods, and storms, all pinned against the backdrop of a pandemic which has brought global industry to its knees.

The conference set out to discuss potential strategies for reaching global net zero carbon emissions by 2050, in addition to limiting a temperature rise to 1.5°C, targets delineated by the Paris Agreement. Accelerating the phase out of coal, as well as deploying more CO2 reduction methods such as carbon capture, utilisation and storage (CCUS) were among many objectives for the event.

With such targets, as well as 90 world leaders, tens of thousands of negotiators, government representatives, business and citizens all in attendance, one could be forgiven for thinking the pressure on those involved in the gases and energy sectors is only ramping up.

Calvo acknowledges that Nippon Gases sees challenges as well as opportunities as a result of such gatherings and the worldwide attention they attract, but assures the company is nonetheless focused on uniting both. “We do see both and our job is to convert the challenges into opportunities.”

With such a rich history and expertise in gases, molecules and equipment, combined with a progressive agenda in the circular economies and its already impressive network of operations across the CO2 value chain, you’d have to think that Nippon Gases is in pole position to realise the carbon opportunities.

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