As the government released a policy to speed up the shift to renewable energy such as solar power, grumbling is emerging in the petrochemical industry over the policy in it to convert naphtha cracking centers (NCC; Naphtha Cracking Center) to electricity. The industry is carrying out painful restructuring with its survival uncertain and struggling to secure naphtha because of the war, yet the government abruptly said it would push a plan that would require equipment conversion expenses in the trillions of won.
A petrochemical industry official said on the 7th, "Carbon neutrality is a task that must be achieved someday," but added, "With the government-led restructuring of the petrochemical industry and the Middle East crisis making naphtha supply itself difficult, a shift to an electricity-using NCC is hardly even a subject for discussion."
Minister Kim Sung-hwan of the Ministry of Climate, Energy and Environment reported the "popular sovereignty government energy grand transition promotion plan" at a Cabinet meeting on the 6th and said the government would push a transition to electric NCC.
The plan's core is expanding renewable energy. The government decided to increase renewable energy installed capacity, which stood at 37 gigawatts (GW) as of the end of last year, to 100 GW by 2030 through solar and wind power. The gist is to nearly triple power generation facilities for renewables within the next four years.
Through this, the government decided to raise the share of renewables, which currently accounts for 11.4% of total generation capacity, to more than 20%.
At the same time, the ministry said it would promote electrification of industrial processes and cleaner fuels and feedstocks. Along with completing a demonstration facility for hydrogen direct-reduced iron in steelmaking, it proposed that the petrochemical industry convert existing NCCs to electric NCCs. The ministry did not mention the expense issue related to converting to electric NCCs needed in this process.
Petrochemical companies with NCCs crack naphtha at high temperatures of 800–1000°C or higher under high pressure to produce petrochemical feedstocks such as ethylene, propylene, and butadiene. Ethylene, a basic petrochemical product dubbed the "rice of petrochemicals," is used not only in everyday products like plastics and vinyl but also to make various parts for key industries such as automobiles and electronics.
Petrochemical companies mainly use byproducts generated in running NCCs as NCC operating fuel. Byproducts such as methane and hydrogen produced in the process of cracking naphtha are used first. According to the petrochemical industry, byproducts account for about 65–75% of all fuel used by NCCs.
Using byproducts allows immediate reuse without incurring separate fuel expenses, and they have the advantage of high calorific value. If byproducts are not used as fuel, the energy is otherwise wasted. Fuel not covered by byproducts is typically supplemented with liquefied natural gas (LNG).
An official at Company A said, "In an NCC, naphtha must be cracked at high temperatures, and it is not easy to generate that much heat with electricity," adding, "If electricity is generated on a fossil fuel basis, it is hard to find meaning in expanding renewables and the resulting reduction in carbon emissions." The official added, "Even if we use electricity produced from renewables, under the current structure, the burden of expenses arises from having to bear higher power rates."
In particular, converting to an electric NCC creates the problem of having to replace the NCC equipment currently in use. The industry estimates that installing new NCC facilities would require funds in the trillions of won.
An official at Company B said, "The petrochemical industry itself is struggling due to oversupply from China, and there are no funds to convert to an electricity-based NCC."
An official at Company C said, "With naphtha itself in short supply as it is now, this is not a matter that can be discussed at leisure," adding, "If we switch to an electric NCC, there will also be expenses to reprocess methane, which is currently used as fuel."