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Ethylene Supply in a Fluid Context: Implications of Shale Gas and Climate Change

Gillian Foster ()
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Gillian Foster: Institute for Ecological Economics, Department of Socioeconomics, Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria

Energies, 2018, vol. 11, issue 11, 1-17

Abstract: The recent advent of shale gas in the U.S. has redefined the economics of ethylene manufacturing globally, causing a shift towards low-cost U.S. production due to natural gas feedstock, while reinforcing the industry’s reliance on fossil fuels. At the same time, the global climate change crisis compels a transition to a low-carbon economy. These two influencing factors are complex, contested, and uncertain. This paper projects the United States’ (U.S.) future ethylene supply in the context of two megatrends: the natural gas surge and global climate change. The analysis models the future U.S. supply of ethylene in 2050 based on plausible socio-economic scenarios in response to climate change mitigation and adaptation pathways as well as a range of natural gas feedstock prices. This Vector Error Correction Model explores the relationships between these variables. The results show that ethylene supply increased in nearly all modeled scenarios. A combination of lower population growth, lower consumption, and higher natural gas prices reduced ethylene supply by 2050. In most cases, forecasted CO 2 emissions from ethylene production rose. This is the first study to project future ethylene supply to go beyond the price of feedstocks and include socio-economic variables relevant to climate change mitigation and adaptation.

Keywords: ethylene supply; shale gas; non-energy uses of fossil fuels; socio-economic scenarios; climate change (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:gam:jeners:v:11:y:2018:i:11:p:2967-:d:179665