Crediting temporarily bound carbon reduces emissions and costs in integrated production of EU refineries

Abstract Oil refineries must transition to become climate-neutral, but their integrated production of fuels and chemicals makes this challenging. Carbon pricing systems can encourage cleaner production, but currently ignore carbon stored in plastic products. A promising approach is to credit this temporarily stored carbon, which would incentivize renewable materials. However, it remains unclear how such policies affect overall refinery operations. Here we show that crediting carbon stored in plastic products significantly reduces emissions, fossil fuel consumption, and production costs compared to current regulations. Using an optimisation model, minimising cost of integrated refinery production in Europe by 2050, we demonstrate that including this carbon credit leads to a more efficient system. Our findings provide guidance for policymakers designing carbon pricing mechanisms that can effectively accelerate the transition to sustainable refinery operations.