Merchant CO2 Market Stable Despite Refinery Closures; Shortage Looms in 2026
The merchant CO2 market has maintained stability this summer, despite recent refinery closures and a fire at Chevron's El Segundo refinery. The latter, producing 290,000 barrels of crude oil daily, continues to operate its CO2 plant, ensuring supply remains unaffected.
Phillips 66 and Valero have announced refinery closures in California. Phillips 66's El Segundo refinery, producing 600 tonnes of CO2 per day through Linde's CO2 plant, will shut down later this year. Valero's Benicia refinery is set to close in April 2026. Refinery closures may impact CO2 supply, as they produce merchant CO2 by capturing and purifying carbon dioxide from their hydrogen production units.
A recent fire at Chevron's El Segundo refinery was contained and did not affect Linde's CO2 plant. This ensures continued CO2 production at the refinery, which is a significant contributor to the merchant CO2 market. However, looking ahead, a CO2 shortage is expected in 2026, particularly in California, due to anticipated ethanol plant closures.
While the merchant CO2 market remains stable currently, refinery closures and ethanol plant shutdowns may lead to a shortage in 2026, particularly in California. Chevron's El Segundo refinery continues to operate its CO2 plant, mitigating immediate supply concerns, but the long-term outlook requires close monitoring.
