Refinery Closures Will Impact Craft Breweries in California
California’s craft beer industry faces a significant obstacle with the planned closure of Phillips 66’s Wilmington refinery and the potential shutdown of Valero’s Benicia and Wilmington facilities. A critical consequence of this is the disruption to the industrial CO2 market, which could significantly impact craft breweries across the state. In 2024, 13% of commercial CO2 in the US was sourced from refineries.
A combination of factors has led to the closure of more and more refineries. Declining demand for gasoline, aging infrastructure requiring expensive upgrades, tightening environmental regulations, low profit margins, and increased competition from newer, more efficient refineries overseas have made it economically unviable for many companies to continue operations at older refineries. As a result, CO2 production from these facilities is shrinking, which strains supply chains further.
Price Increases and Shortages
With these refineries closing, one of the major sources of CO2 supply in California will shrink and make breweries more vulnerable to price increases and supply shortages. This is not the first time the industry has faced such challenges, where previous plant shutdowns have led to CO2 shortages, price increases, and even put breweries into force majeure. The demand for CO2 is projected to grow 2% annually during the next five years, and supply is growing slower than demand.
The Impact on Craft Breweries
For craft brewers who rely on external CO2, these refinery shutdowns could mean:
CO2 Recovery as a Solution
Given these uncertainties, CO2 recovery systems offer a powerful solution. By recovering CO2 from fermentation, breweries can reduce or eliminate their reliance on external suppliers, protect themselves from price fluctuations, and reduce their environmental impact. Many breweries around the world, including in the U.S., have already implemented this technology to ensure a reliable, high-purity CO2 supply while avoiding the risks of shortages and price increases.
Future Proof Your Brewery
Investing in CO2 recovery technology is a long term strategy that strengthens your brewery's resilience against supply chain disruptions, cuts costs, and supports a financially and environmentally sustainable future for the craft brewing industry.
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