Government to Closely Manage 'Carbon Supply Chain'... Petrochemical Association Designated as Dedicated Agency

Ministry of Industry Announces 'Support Measures for Stabilizing Carbonated Water Supply'

Report on Carbonated Supply Shortage_SIMPAC ENG., a Metal Forming Company/Incheon=Photo by Hyunmin Kim kimhyun81@

[Asia Economy Sejong=Reporter Lee Jun-hyung] The government has designated the Korea Petrochemical Industry Association as the exclusive agency responsible for the supply and demand of carbon dioxide (CO2) to strengthen the CO2 supply chain used across the industrial sector. To alleviate the cost burden on CO2 importers, CO2 will be included in the 'import insurance' coverage, and financial support will also be provided.

The Ministry of Trade, Industry and Energy (MOTIE) announced on the morning of the 10th that it held a meeting with the CO2 industry, including the Petrochemical Association, at the Seoul Headquarters of the Korea Gas Safety Corporation located in Gangnam-gu, Seoul. On the same day, MOTIE also announced the 'CO2 Supply and Demand Stabilization Support Plan.' The core of the plan is to strengthen government support for stabilizing the CO2 supply chain and to operate an annual 'supply and demand countermeasure period.'

The government's move to support CO2 supply is due to growing supply chain instability. CO2 is an industrial gas used throughout domestic industries such as shipbuilding and semiconductors. Recently, as the fresh food delivery market has expanded, demand for dry ice, whose main ingredient is CO2, has surged. Additionally, as ship orders in the shipbuilding industry increase, demand for CO2 used in welding has steadily grown.

However, CO2 supply has not kept pace with demand. This is due to limitations in domestic CO2 raw material suppliers and supply volumes, compounded by supply chain instability. Some domestic companies import CO2 from overseas, but soaring logistics costs have made it difficult to expand import volumes. Accordingly, the CO2 industry recently requested MOTIE to prepare countermeasures for CO2 supply and demand.

Report on Carbonated Supply Shortage_SIMPAC ENG., a Metal Forming Company/Incheon=Photo by Hyunmin Kim kimhyun81@

Support for New and Expanded CO2 Facilities

This is why the government has rolled up its sleeves to stabilize the CO2 supply chain. MOTIE will first share the next year's regular maintenance schedules of petrochemical, refining, and power generation companies that produce by-product gas?the raw material for CO2?with CO2 manufacturers twice a year, in the first and second halves. If necessary, MOTIE plans to consult with companies to stagger or adjust maintenance schedules. The maintenance schedules of refineries for next year were shared with the CO2 industry last month.

To increase domestic CO2 supply, the government will actively support new and expanded facility projects. In particular, MOTIE plans to focus on improving CO2-related regulations. Additionally, MOTIE will add CO2 to the list of items covered by import insurance by the first half of next year. The Korea Trade Insurance Corporation provides import insurance that allows companies to obtain loans when funds are needed for insured imports. If CO2 importers cannot receive advance payments from exporters, the insurance corporation compensates for losses.

Composition and Roles of the Carbonated Alliance.
[Photo by Ministry of Trade, Industry and Energy]

Launch of the 'CO2 Alliance'

The Petrochemical Association will be designated as the exclusive agency for CO2 supply and demand. Accordingly, the association will work with MOTIE to regularly monitor the domestic CO2 supply and demand status. Considering the regular maintenance schedules of CO2 raw material suppliers and the fact that dry ice demand is concentrated mainly in summer, MOTIE has set May to September next year as the 'CO2 Supply and Demand Countermeasure Period.' During this period, MOTIE will operate an emergency operation team with CO2 industry associations and organizations.

On the same day, MOTIE also held the launch ceremony of the 'CO2 Alliance.' The alliance includes four representative associations and cooperatives from the CO2 supply and demand industries: the Korea Petrochemical Industry Association, the Korea Carbonic Acid Industry Cooperative, the Korea High-Pressure Gas Industry Cooperative Federation, and the Korea Welding Industry Cooperative. The alliance will share information on CO2 supply and demand trends and discover related policies to convey to the government.

Lee Kyung-ho, Director of Materials, Parts, and Equipment Cooperation at MOTIE, said, "It is significant that the CO2 industry has united as an 'Alliance' for mutual growth," adding, "The government will also actively promote necessary policies such as technology development, infrastructure construction, and system improvements reflecting industry demand."