Creating a more sustainable route to chemicals is a vital to the industry, and will require significant capital investment, innovation in the abatement technologies, and cooperation between industry players, governments, and other organisations, according to a report from consultants Deloitte.
Produced in collaboration with Princeton University’s Andlinger Centre, with insights provided by OPIS data, the study: Pathways toward sustainability suggests that technologies such as carbon capture, clean hydrogen, circular feedstocks and electrification can drive emissions reduction. But scaling these solutions “will require bold investment and strategic coordination across regions,” it notes.
Based on a techno-economic model, the report covers 10 building block chemicals including ammonia, benzene, ethylene, hydrogen and propylene, and covers the regions of North America, Europe, the Middle East and China.
“This study provides a necessary forward-looking view that pushes beyond 2050 to evaluate scenarios based on technology readiness, capital expenditure appetites, cooperation between industry players and governments, and the willingness to pay for low emissions products,” it said. The model generated demonstrates a "tremendous opportunity" for growth and transformation in the chemical industry’s journey toward net-zero in second half of the century, the report said. However it also noted that the routes to significant emissions reductions will require substantial capital investment and a green premium for these building block chemicals and resulting downstream products - neither of which are guaranteed.
Drawing on the Chemical Market Analytics provided by OPIS, the study considers 2700 building block chemical production facilities across the four geographical regions, as of 2023, with estimates for abated carbon dioxide emissions, abatement capital investment required and cost of abated emissions.
The OPIS data shows that China is home to greatest number of production facilities for these building block chemicals. For the ten building block chemicals considered, 1433 production facilities are to be found in China, while across the four regions covered there are a total of 2676 building block chemical production facilities, as of 2023. The data also shows that of all the carbon dioxide abatement technologies available; carbon capture and storage is most widely used across the production of the 10 building bloc chemicals, except for in China, where lower the lower capex for electrolyzers and renewable electricity make green hydrogen more attractive.
The report said that China leads with the highest projected chemical production capacity by 2050, at 734 Mt, while Europe has the lowest at 149 Mt. By 2080 North America, China and the Middle East are expected to approximately double their chemical capacity, while Europe’s capacity is set increase by around 30%.
The report identified five areas where more work is needed:
- Financing: Innovative green finance mechanisms and policy support are needed to narrow the sizable investment gap
- Product carbon footprint (PCF) calculations: Harmonising these will increase transparency, comparability, and market confidence
- Policy: Clear, stable, and supportive global policies will reduce investment risk
- Value chain collaboration: Building markets for low-carbon chemicals will accelerate adoption.
- Engineering and talent shortage: More investment in workforce development and innovation is needed
Further reading:
- 10 critical technologies that can tackle climate disruption and help the planet
- CCS: Two carbon capture projects ready for construction
- Why Europe's chemicals industry has had a 'disappointing' year so far
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