1xChemicals permeate every facet of our lives; from the clothes we wear and the foods we eat to the fuels we use to warm our homes and power our industries. In the modern world, chemicals are as fundamental to our existence as air and water.
And yet, our relationship with chemicals is a rather complex one.
Our reliance on, or some would say addiction to, chemicals comes at a heavy price. They demand as much as they deliver, and form a key component of the damage we do to our precious environment.
Severing our relationship with chemicals is impossible without impacting our whole way of living.
The chemicals industry is responsible for converting natural raw materials such as fossil fuels, minerals, metals, and water into a range of consumer and industrial products. A life without manufactured chemicals would be a very different life indeed: No agricultural chemicals for fertilizers and pesticides; no pharmaceuticals; no petrochemicals for plastics and synthetics; no resins, sealants, or adhesives for industry; no inorganic compounds at all, in fact, that do not occur naturally in the Earth’s crust.
We could exist, yes, but it would be a neutered existence, with our global society perpetually stuck in first gear.
So, exactly how big is the chemicals industry, and what precisely is the scale of its toxic footprint?
Adding fizz and bang to global GDP
Our lifestyles and buying behaviors show widespread support for the chemicals industry. Commercially, it is booming. The sector generated revenues in excess of US$ 5.7 trillion in 2022, up steeply from US$ 5.1 trillion in 2021 and US$ 3.9 trillion a year earlier, when growth flatlined due to the COVID-19 pandemic. Further growth of around 1.8% is expected in 2024.[1]
China, with its massive and growing industrial base, dominates the sector worldwide. It captured 43% of global chemical revenues in 2021, followed by the European Union with 14.7%, and the USA with 10.9%.[2]
The largest companies by revenue that fiscal year demonstrate the industry’s international reach: BASF SE (Germany, US$ 93 million), Dow Inc (USA, US$ 55 million), Saudi Basic Industries Corp (Saudi Arabia, US$ 47 million), LyondellBasell Industries NV (UK, US$ 46 million) and Mitsubishi Chemical Group Corp (Japan, US$ 35 million).[3]
We manufacture chemicals on a scale the human mind finds hard to conceptualize. Each year more than 250 billion tons of chemicals depart our labs and plants to satisfy worldwide demand. Further, the Organization for Economic Co-operation and Development (OECD) estimates that between 2000 and 2050 global production of synthetic chemicals will increase sixfold.[4]
If our most commonly produced primary chemicals – ethylene, propylene, benzene, toluene, mixed xylenes, ammonia and methanol – sound scary, that is probably because they are. Studies suggest there are now some 700 rogue chemicals found in the average human body. More than 400 of these are linked to cancers, with others blamed for nervous system or reproductive disorders.
However, with global warming and widespread species extinctions on the ascendance, it is the collective impact of chemicals on our precarious environment that is causing most soul searching.
After all, if the chemicals sector was a country, it would rank as the fifth largest carbon emitter in the world.[5]
Counting the cost of our chemical dependency
No cohesive plan to tackle climate change can ignore the chemicals trade. As of 2021, the global chemicals industry accounted for approximately 2% of total carbon emissions, equal to some 925 million metric tons of CO2.[6]
While consumer-based approaches to decarbonizing the chemicals sector are important, they are inadequate in isolation. Just 10% of plastics are recycled annually, for instance – a drop in the ocean, which is sadly where much of our used plastic ends up floating.
Meeting the Intergovernmental Panel on Climate Change’s (IPCC’S) net zero target by 2050, will require an altogether grander vision – one addressing the chemical industry’s CO2 emissions during production, usage, and disposal phases.
The International Energy Agency (IEA) estimates that chemical sector emissions must decline 15% by 2030, to keep the net zero goal alive, all while meeting growing demand for products. That is a challenge which will demand unprecedented innovation from both public and private realms.
The chemicals sector is ‘only’ the third largest industrial emitter of CO2, while simultaneously being the leading consumer of energy. Why the disparity? Because around half of the sector’s energy input is used directly as raw material for products (so-called feedstock) instead of as a processing energy source.[7]
While chemical production outputs must rise to meet future demand, forecasts suggest processing energy need not rise in tandem. Rather, processing energy could stabilize between now and the end of the decade at around 9 exajoules (EJ) per annum, with coal partially supplanted by greater contributions from electricity and bioenergy.
Feedstock, on the other hand, is more challenging to decarbonize because oil and gas act as direct sources of hydrogen and carbon, the raw ingredients of everyday chemicals such as ammonia, ethylene, and propylene.
Given our global chemical dependency, how can our innovators and policymakers help navigate the sector towards a cleaner and more sustainable future?
Efficiencies trigger chain reaction of sustainability
Fortunately, the chemicals industry has many pathways to decarbonization worth exploring.
A greater proportion of hydrogen, a key chemical constituent, can be produced using the ever-more refined process of electrolysis.
In electrolysis, water is split into its constituent hydrogen and oxygen elements in a unit called an electrolyzer, with zero greenhouse emissions. The US Hydrogen Energy Earthshot project aims to lower the cost of green hydrogen by 80% to US$ 1 per kilogram within a decade.[8]
The chemicals industry is also ripe for infiltration by a new generation of large-scale high temperature heat pumps. Around a quarter of all chemical processing heat required by the industry is sub-200oC, levels at which heat pumps can feasibly operate. These devices capture heat energy from industrial waste or natural geothermal sources and redeploy it for industrial purposes. This increases process efficiency while also promoting a growing share of electrification – a double win for the sector.
Innovations are also set to transform the production of substances like ammonia, methanol, and bioplastics.
Denmark is leading the way in the production of clean, green ammonia. Its experimental power-to-ammonia (PtA) plant in Lemvig, currently under construction, produces ammonia by adding nitrogen to hydrogen formed from electrolysis.[9] The resulting ammonia can be used as an agricultural fertilizer, helping offset the estimated 1% of global emissions derived from conventional ammonia production techniques.
This year saw the launch of the Shunli methanol plant in Anyang, China – the world’s first large-scale CO2-to-methanol facility.[10] The plant, based around Carbon Recycling International’s Emissions-to-Liquids technology, uses recovered CO2 and hydrogen to create some 110,000 tons of methanol each year. The plant’s investors have already signed an agreement to deliver 300 methanol-powered Farizon Auto heavy-duty trucks, a deal expected to cut annual diesel consumption by 15,000 tons.
Research continues into carbon-friendly plastic alternatives known as bioplastics. These can be bio-based (made from renewable materials), biodegradable, or both. Bio-based biodegradable materials can include polylactic acid (PLA), polyhydroxyalkanoates (PHAs), polybutylene succinate (PBS), or different starch blends. Presently, of the 390 million tons of plastic produced annually, less than 1% are categorized as bioplastics.[11]
Still, even with concerns about raw material availability and biodegradation quality, global production capacity of bioplastics is tipped to grow threefold over a five-year period from 2022.
Individual counties can make a significant dent in their CO2 outputs by tackling decarbonization in the chemicals sector.
A report this year by global business advisory McKinsey focuses on Germany’s plan to reduce carbon emissions from all industry (181 MT of CO2 as of 2021) by 35% by 2030. It will achieve this partly by tackling the 40 MT of CO2 emissions accounted for by the chemicals industry.[12] The country aims to achieve a 50-60% reduction in chemical industry CO2 emissions by exploiting four ‘decarbonization levers’:
- Phasing out coal in favor of steam generation via biomass, solar thermal, hydrogen, biogas, thermal storage, heat pumps and e-boiler technologies (25-30% reduction);
- Using high-temperature heat pumps, steam mechanical vapor recompression or heat separation technologies (10-15% reduction potential);
- Procuring green electricity using power purchase agreements (PPAs) with renewable energy producers (10-15% reduction potential);
- Improving energy efficiency at chemical park clusters with methods such as better equipment maintenance, low energy lighting and increased insulation (1-3% reduction potential).
Coordinated strategies such as these will be vital for decarbonizing chemicals, given the challenges inherent within the sector.
Challenges emerge in chemical decarbonization
Decarbonizing the chemicals sector relies, at least in part, on the ready availability of green electricity and hydrogen. The good news is that production of these sustainable resources is increasing annually, with the IEA calculating that the proportion of renewable energy generated worldwide will rise from 29% presently to 35% by 2025[13].
However, every other industry in the world undergoing an eco-transition will be competing for the same pool of green energy, meaning demand is likely to outstrip supply, with subsequent cost implications.
As such, fossil-based energy sources will remain a tempting economic proposition for the foreseeable future, placing great commercial pressure on chemical operators.
Some chemical manufacturers might feel compelled to switch production to countries with less rigorous carbon policies. Even if an international agreement were to be reached on standardized carbon premiums, any additional costs would have to be passed on to consumers, who would remain free to favor economic imperatives over environmental ideals.
Question marks also remain within the industry over the quality of carbon measuring and reporting frameworks. While embryonic plans exist for universal measuring and reporting rules, no global agreement is yet in place, leaving inconsistency in lieu of confidence.
Key players need to make more headway in decarbonizing the entire chemical value chain, including processing end-of-life materials. Waste continues to blight the sector due to outmoded and inflexible business models, and chemical recycling lags behind recycling in other industries.
Curtailing, capturing and repurposing emissions in an economically viable manner will require new technologies and skillsets, spanning everything from electro-chemistry to AI. However, there is a global shortage of both technology investment and skilled labor, with competition from rival sectors likely to put the brakes on hopes of a rapid transition to chemical decarbonization.[14]
Given these challenges, what sort of environment is conducive to decarbonization within the chemicals sector? The answer, inevitably, is one boasting a solid infrastructure base and robust policy support.
Infrastructure and policy are catalysts for success
The mass rollout of carbon capture technologies (drawing CO2 from the atmosphere and storing it in permanent form) remains fundamental to the chemical industry’s decarbonization process.
Under the IEA’s net zero regime, approximately 5% of all carbon captured should derive from the chemicals sector by 2030. Yet, carbon capture infrastructure is still playing catch-up with the technology.
Worldwide, there are some 40 carbon capture facilities in operation. Even with the seven new large-scale facilities launched since the start of 2022 (four in China, two in the USA and one in Europe[15]) shortfalls are apparent. The 110 Mt CO2/year carbon storage capacity forecast to exist by 2030 is still only one-tenth of that needed to meet net zero milestones by that date.[16]
Luckily, the efforts of lawmakers and regulators suggest policies are gradually coalescing behind chemical decarbonization internationally.
The EU, as part of its European Green Deal, launched its Chemicals Strategy for Sustainability (CSS) package in 2020, emphasizing the need for rapid decarbonization within the sector. The CSS aims to limit emissions by advancing chemicals and production technologies that require less energy.
The EU’s European Chemicals Agency (ECHA) will focus on multiple strategies including banning the most harmful chemicals in consumer products, measuring the cumulative ‘cocktail effect’ of chemicals when assessing risks, and phasing out damaging per- and polyfluoroalkyl substances unless essential.[17]
Across Europe many countries are formalizing their own initiatives to decarbonize chemicals. France became the latest nation to target the sector in 2021, aiming to lower emissions from chemicals by 31% by the end of the decade.[18]
Worldwide, more than 60 countries have now declared unofficial war on plastics, one of the key drivers of the chemicals industry. In 2022 Canada announced it was prohibiting the manufacture or importation of harmful single-use plastics including bags, cutlery, straws and plates.[19] Earlier that year India announced a similar ban, also covering ear buds, ice cream sticks, packaging film and cigarette packets.[20]
Public pressure is mounting behind sustained efforts to decarbonize chemicals – just ask any investment firm with environmental, social and governance (ESG) priorities. Failing to decarbonize chemicals is, arguably, now a riskier strategy than ignoring the clarion calls for progressive action.
How private sector can address chemical imbalance
Major private sector players in the chemicals industry are converging behind their public realm counterparts in confronting the decarbonization issue head-on.
Due for launch at the end of this year, the Low-Carbon Emitting Technologies Initiative aims to use clean technology as a spur for decarbonizing the chemicals sector.
The group is composed of more than 70 senior chemical industry executives, including representatives of BASF SE, Dow Inc, LyondellBasell Industries NV and the Mitsubishi Chemical Group Corp.[21] Its goal is to usher in a culture of decarbonization by addressing technological, regulatory, funding and market challenges; by collaborating beyond the industry to increase the maturity of low-carbon emitting technologies; and by developing real-life projects to transform traditional operating models.
The First Movers Coalition, meanwhile, an international group focusing on hard-to-mitigate sectors such as chemicals, launched a new white paper in July this year advocating for non-polluting cement chemistries in the construction industry.[22]
Cement is notoriously damaging to produce, accounting for just 10-15% of concrete’s mass yet responsible for up to 90% of its greenhouse gas emissions.[23]
Without the strategic deployment of chemicals we are unable to progress our global society, improve human living standards or initiate many of our projects for ameliorating the looming climate crisis.
The notion of ‘decarbonizing chemicals’ is more wide-ranging and impactful than it at first sounds. Indeed, it is the keystone to potentially reducing emissions in other heavy-polluting industries including shipping, iron, steel and more.
We should not be afraid of big steps: Abolishing fossil fuel subsidies, legislating for the reduction of lethal emissions, replacing high-sulfur fuels with low-sulfur alternatives, and consigning plastic waste to the history books forever.
We want warm homes. We want food to eat, jobs to sustain us, clothes to wear and transport systems to connect the global web of civilization. Ensuring these rights are available to future generations too, rather than just being luxuries for our brief window of privilege, will mean reformulating our relationship with chemicals once and for all.
[1] https://www.statista.com/statistics/302081/revenue-of-global-chemical-industry/
[2] https://www.statista.com/topics/6213/chemical-industry-worldwide/#topicOverview
[3] https://www.globaldata.com/companies/top-companies-by-sector/chemicals/global-chemical-companies-by-revenue/
[4] https://www.theworldcounts.com/challenges/planet-earth/state-of-the-planet/chemical-pollution
[5] https://initiatives.weforum.org/low-carbon-emitting-technologies-initiative/about
[6] https://www.mckinsey.com/industries/chemicals/our-insights/decarbonizing-the-chemical-industry
[7] https://www.iea.org/energy-system/industry/chemicals#overview
[8] https://www.energy.gov/eere/fuelcells/hydrogen-production-electrolysis
[9] https://new.abb.com/news/detail/102175/the-worlds-first-dynamic-green-power-to-ammonia-plant-takes-shape
[10] https://www.carbonrecycling.is/news-media/first-large-scale-co2-to-methanol-plant-inaugurated
[11] https://www.european-bioplastics.org/bioplastics-facts-figures/
[12] https://www.mckinsey.com/industries/chemicals/our-insights/decarbonizing-the-chemical-industry
[13] https://www.weforum.org/agenda/2023/03/electricity-generation-renewables-power-iea/
[14] https://www.deloitte.com/content/dam/assets-shared/legacy/docs/perspectives/2022/gx-pathway-to-decarbonization-chemicals.pdf
[15] https://www.iea.org/energy-system/carbon-capture-utilisation-and-storage
[16] https://www.iea.org/energy-system/industry/chemicals#overview
[17] Chemicals Strategy for Sustainability – ECHA (europa.eu)
[18] https://www.ecologie.gouv.fr/sites/default/files/2021.05.07_Annexe_au_cp_feuille_de_route_decarbonation_chimie.pdf
[19] https://www.canada.ca/en/environment-climate-change/news/2022/12/change-is-here-canadas-ban-on-certain-harmful-single-use-plastics-starts-to-take-effect-this-month.html
[20] https://www.weforum.org/agenda/2022/07/india-ban-policy-single-use-plastic-pollution
[21] https://initiatives.weforum.org/low-carbon-emitting-technologies-initiative/home
[22] https://www3.weforum.org/docs/WEF_Surfacing_Supply_of_Near_Zero_Emissions_Fuels_and_Materials_in_India_2023.pdf
[23] https://www.nrdc.org/bio/veena-singla/cut-carbon-and-toxic-pollution-make-cement-clean-and-green
Added to press kit
