INEOS Faces $31 Million Penalty Despite Reducing Carbon Emissions by 75%
INEOS Acetyls said in a news release June 29 it faces a £23 million ($31 million) penalty in withheld carbon credits despite slashing emissions by 75% at its site based in Hull, in the north of England.
INEOS claimed the U.K. Environment Agency is proposing to reclassify the Hull site as a “new installation” after it switched the facility’s fuel source to low-carbon hydrogen instead of natural gas. Such a reclassification would mean the site would not receive U.K. Emissions Trading Scheme (UK ETS) allowances until 2028, according to INEOS.
Emissions allowances are central to the U.K. ETS, which aims to reduce industrial greenhouse gas emissions by capping the total amount of carbon dioxide companies can emit. Under the scheme, companies like INEOS typically receive a number of free allowances, helping offset the cost of compliance.
“It’s bonkers,” said INEOS Acetyls CEO David Brooks. “We’re being punished for doing the right thing. We’ve invested to slash emissions, and in return the government wants to ‘re-categorize’ our site – leaving us over £23 million worse off in the next couple of years. It sends entirely the wrong message.”
The U.K. Environmental Agency told OPIS it was aware of INEOS’ concerns but did not recognize the claim by INEOS after investigating the U.K. ETS permit for INEOS Acetyls installation.
“The operator [INEOS] will continue to receive free allocations under the U.K. Emissions Trading Scheme. This has always been the case, and they continue to be calculated on activity data for the previous year,” a spokesperson for the Environmental Agency told OPIS Friday.
“There have never been any plans to reclassify the site or adjust their carbon credit allowances in the first place,” said the Environmental Agency. “To adjust [INEOS’] allowance to reflect the production and fuel use changes at the site we need 12 months of activity data by March 31, 2026. Therefore, INEOS’ free allocation in February 2026 will be based on the allocation they receive
in 2025 as we will not have received the data to assess.”
Just two weeks earlier, INEOS Phenol, the world’s largest phenol maker with production sites spanning Europe, the U.S. and Asia, announced its intention to permanently close its plant in Gladbeck, Germany, amid what it described as “punitive” carbon tax policies.
The plant, INEOS’ largest in Europe, has a capacity to produce 660,000 metric tons/year of phenol and 409,000 mt/year of acetone, according to data from Chemical Market Analytics by OPIS.
–Reporting by Ellis Nicoll, enicoll@opisnet.com