Authors and contributors
Araceli Fernandez Pales
Pharoah Le Feuvre
IEA (2019), "Tracking Industry", IEA, Paris https://www.iea.org/reports/tracking-industry-2019
The chemical sector is the largest industrial consumer of both oil and gas, accounting for 14% (13 mb/d) of total primary demand for oil and 8% (300 bcm) of gas.
Despite being the largest industrial energy consumer, it is the third industry subsector in terms of direct CO2 emissions – behind iron and steel and cement. This is largely because around half of the sector’s energy input is consumed as feedstock, the emissions of which are calculated downstream in other sectors (e.g. waste and agriculture).
Nevertheless, chemical sector emissions need to peak and return to today’s levels by 2030 to stay on track with the Sustainable Development Scenario (SDS).
The sector’s substantial energy consumption is driven by demand for a vast array of chemical products. Demand for primary chemicals – which is an indication of activity in the sector overall – has grown strongly in recent years.
Continued demand growth is expected in the SDS, underscoring the need for measures to reduce the energy and CO2 emissions intensity of production.
Recycling of thermoplastics counterbalances a small proportion of global demand for virgin plastics, thereby reducing demand for primary chemicals.
Although recycling meets only a small share of plastic demand globally, in Europe the amount of plastic collected for recycling exceeded that going into landfills for the first time in 2016 (Plastics Europe, 2018).
Collection rates must increase globally over the next decade to get on track with the SDS.
Demand for plastics has been growing quickly and will continue to do so. Key plastic end-use sectors are packaging, construction and automotive applications. In many parts of the developing world, demand for plastics has just recently begun to gain momentum.
As demand for plastics drives demand for high-value chemicals (HVCs), which are the key precursors to most plastics, HVC demand increased 5% between 2016 and 2017.
Regional HVC production capacity additions are expected predominantly in North America, the Middle East and the Asia Pacific region.
North America (led by the United States) and the Middle East are projected to each account for about one-fifth of the growth in HVC production by 2025, with Asia Pacific making up most of the rest.
Demand for ammonia, the chemical that is the basis of all synthetic nitrogen fertilisers, has been relatively flat at between 170 million tonnes per year (Mt/yr) and 175 Mt/yr in recent years.
Demand for other synthetic fertilisers that are also critical to modern agricultural systems has been increasing steadily, including those that deliver potassium and phosphates, but they are less important from an energy standpoint.
Ammonia production capacity is projected to expand fairly evenly across the globe in upcoming years, with Asia Pacific leading output growth to 2025, accounting for about one-third.
Ammonia use is driven largely by demand for urea, its largest-volume derivative. Urea and other synthetic nitrogen fertilisers are used in approximately half the world’s food production.
Methanol production is currently expanding the most quickly of all primary chemicals (7% growth in 2017), but its end uses are less familiar to consumers than those of ammonia and HVCs.
Methanol’s main end use is for formaldehyde, which is employed to produce several specialist plastics. Methanol is also used for fuel additive applications (a key driver of the more-than-average growth) and as an intermediate to produce HVCs, mainly when oil is not available as a feedstock.
In IEA projections to 2025, methanol production capacity additions are highly concentrated in North America and the Asia Pacific region owing to the availability of low-cost gas (United States) and coal (China) for feedstock.
To get on track with the SDS trajectory, direct emissions need to peak as soon as possible and decline to the current level by 2030, despite a more than 30% increase in demand for primary chemicals. In the short to medium term, this is achieved primarily by decreasing coal use and raising energy efficiency.
The coal-based chemical industry, particularly prevalent in China, poses a significant environmental challenge, as emissions intensities are significantly higher than from natural gas-based production. Methanol can be produced far more affordably from coal, which has facilitated the large-scale (and rapidly growing) route of producing plastics from coal in China.
Coal accounted for an estimated 33% of process energy used in primary chemical production in 2017, which is over 1.5 times more than in 2000.
The share of coal must fall to 28% by 2030 to be on track with the SDS.
Increased energy efficiency – through both incremental improvements to existing methods and step changes resulting from switching to fundamentally more efficient methods (e.g. from coal- to natural gas-based processing) – is another key mitigation mechanism to be exploited in the near term.
In the SDS, the average process energy intensity of primary chemical production declines 10% from the current level by 2030.
Various policy efforts have been undertaken in recent years to reduce emissions from the production process or to address the use and disposal of chemical products.
With respect to the production phase, some encouraging progress has been made in the energy efficiency policy arena.
In India, for example, the Perform Achieve Trade (PAT) project requires designated industry sectors and companies to achieve energy-saving targets and provides a trading mechanism that allows companies to trade certificated excess compliance with companies that have not met the targets (BEE, 2018). Fertiliser and chlor-alkali manufacturers were included in the first PAT cycle (2012‑15), in which targeted savings were surpassed by 22 chlor-alkali companies (by 160%) and 29 fertiliser producers (by 70%).
Regarding chemical product use and disposal, policies targeting increased plastic recycling and other material efficiency strategies (such as product reuse and life extensions) have advanced significantly in certain regions, particularly Europe.
As of 2016, Korea, Switzerland, Austria, Germany, the Netherlands, Sweden, Denmark, Luxembourg, Belgium, Norway and Finland all had landfill restrictions in place, which appears to be associated with higher rates of plastic waste-to-energy production and recycling (Plastics Europe, 2018).
Plastic recycling overtook landfilling for the first time in Europe in 2016. Korea and Japan had achieved this feat several years earlier, with landfill rates in each country being in single digits.
The Ecodesign Directive, developed by the European Commission, provides guidance on how to reduce the environmental footprint of consumer products in their various life-cycle phases (European Union, 2009). There have also been calls to ban consumption of certain plastics, particularly for single-use purposes and for which substitutes exist (European Union, 2018).
Nonetheless, accelerated policy progress covering all regions will be needed to get the sector on track with the SDS.
Producing, using and disposing of chemicals and chemical products continue to pose a variety of sustainability challenges. The following ten recommendations – presented and elaborated upon in The Future of Petrochemicals – warrant early and consistent attention.
- Directly stimulate investment in RD&D.
- Establish and extend plant-level benchmarking schemes.
- Pursue effective regulatory actions to reduce CO2 emissions.
- Require the chemical industry to meet stringent air quality standards.
- Adjust fuel and feedstock prices to reflect actual market value.
- Reduce reliance on single-use plastics other than for essential, non-substitutable functions.
- Improve waste management practices around the world.
- Raise consumer awareness about the multiple benefits of recycling consumer goods.
- Design products with disposal in mind.
- Extend producer responsibility.
A clear institutional framework defining stakeholder responsibilities throughout the value chain (from chemical production to the use and disposal of chemical products) is a prerequisite to ensure cost-efficient, concerted action.
Improving collection, transparency and accessibility of energy performance and CO2 emissions statistics on the chemical subsector would facilitate research, regulatory and monitoring efforts (including, for example, multi-country performance benchmarking assessments).
Data on energy intensity with more regional granularity is especially needed to enable better performance assessments and comparisons.
Industry participation and government co‑ordination are both integral to improve data collection and reporting.
Developing and deploying innovative technologies and process routes is crucial for chemical and petrochemical sector decarbonisation.
Key new and emerging low-carbon processes involve replacing fossil fuel feedstocks with electrolytic hydrogen, bio-based feedstocks, electricity as a feedstock and captured CO2. Further development of carbon capture, utilisation, transportation and storage technologies will also be important for decarbonisation.
This process route could avoid generating CO2 emissions in ammonia production if renewable electricity is used for hydrogen production.
Technology principles: Ammonia production involves combining nitrogen with hydrogen in the Haber-Bosch process. Hydrogen can be produced either through steam reforming (with natural gas as the feedstock) or through electrolysis (with electricity as the feedstock). Hydrogen produced by electrolysis is often referred to as electrolytic hydrogen.
Carbon capture is needed to enable chemical production methods that use CO2 as a feedstock. Combined with permanent storage, it could drastically reduce CO2 emissions and even create negative emissions if combined with biomass-based production methods.
This production route could avoid direct fossil fuel use in methanol production if renewable electricity is employed for hydrogen production and CO2 can be obtained from either biogenic sources or unavoidable industrial sources. In the short to medium term, fossil-based and otherwise avoidable emissions can also be used. In a strong decarbonisation scenario, unavoidable CO2 emissions from fossil-based industrial by-products would become scarce in the long term, so extracting it from the atmosphere through biomass cultivation or air capture would become increasingly important.
Technology principles: Methanol production requires creation of a syngas composed of CO, CO2 and hydrogen gas. A wide variety of feedstocks can be used to produce the syngas: natural gas and coal are currently the most common, but biomass and waste can also be used. It can also be made from a combination of hydrogen (produced by natural gas-based steam reforming or electricity-based electrolysis) and waste CO2 from industrial processes.
This process route could replace fossil fuel feedstocks with low-carbon methanol to produce aromatics using conventional naphtha steam crackers, if low-carbon methanol were available. The method currently being explored uses technology similar to what has already been commercialised for methanol-to-olefin production, which employs a silver-impregnated zeolite catalyst.
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Andreas Horn (BASF), Florian Ausfelder (Dechema), Hugo Salamanca (IEA)