Chemicals

Tracking Clean Energy Progress

More efforts needed

Direct CO2 emissions from the chemical and petrochemical subsector reached 1.25 Gt in 2017, a 2% increase from the previous year. In the SDS, despite continued strong growth in demand, the sector's emissions increase at a much more modest rate before peaking around 2025 and returning to today's level by 2030. To get on track, efforts from government and industry are needed to address CO2 emissions from chemical production – such as the use of electrolytic hydrogen as a feedstock or the application of CCUS – as well as from the use and disposal of chemical products.

Peter Levi, Araceli Fernandez-Pales, Tiffany Vass
Lead author
Contributors: Andreas Schroeder, Adam Baylin-Stern, Tae-Yoon Kim, Pharoah Le Feuvre, Heymi Bahar, Joe Ritchie

Direct CO2 emissions from primary chemical production

	HVCs	Ammonia	Methanol	Emissions reductions*
2015	219.35	427.79	182.72	
2017	250.87	439.04	237.11	
2025	276.0558138	395.7833795	292.1759347	65.29482571
2030	289.5325109	365.6948463	283.371564	129.7891977
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* Relative to current trends. Direct CO2 emissions encompass energy and process emissions.

Back to Industry sector | TCEP overview 🕐 Last updated Friday, May 24, 2019

Tracking progress


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).

Demand for chemical products

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.


Growth in primary chemical production in the SDS

The considerable demand growth for primary chemicals in recent years is expected to continue in the SDS.

	High-value chemicals	Ammonia	Methanol
2000	100	100	100
2001	100	97	98
2002	105	101	98
2003	111	102	104
2004	116	109	109
2005	118	113	112
2006	124	115	118
2007	130	121	128
2008	125	120	133
2009	126	119	138
2010	138	123	159
2011	140	127	176
2012	140	130	195
2013	146	136	209
2014	147	134	241
2015	154	139	263
2016	157	137	278
2017	165	135	297
2020	181	143	347
2025	202	159	430
2030	216	167	457
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Note: Primary chemicals include ethylene, propylene, benzene, toluene, mixed xylenes, ammonia and methanol. Primary chemical production accounts for two-thirds of energy consumption in the chemical and petrochemical sector.


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.

Plastics

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.

Fertilisers

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

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.

Process energy mix and efficiency

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.


Fuelling primary chemical production in the SDS

The SDS trajectory requires declines in both coal use and the energy intensity of chemical production.

	Coal	Oil	Gas	Electricity	Energy intensity
2015	59.44	3.51	106.94	14.26	0.40
2017	64.73	3.09	114.71	15.14	0.40
2025	72.41666964	0.00	138.89	16.86	0.39
2030	64.09403861	0.00	148.06	15.91	0.36
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Note: Process energy demand excludes feedstock energy.


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.

Policy

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.

Production

  • 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.

Use and disposal

  • 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.

Improve data collection

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.

Innovation gaps


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.

Ammonia production using electrolytic hydrogen

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.

Read more about this innovation gap →

CCUS applied to the chemical sector

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.

Read more about this innovation gap →

Methanol production using electrolytic hydrogen and CO2

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.

Read more about this innovation gap →

Producing aromatic compounds from methanol

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.

Read more about this innovation gap →

Additional resources


References


  1. BEE (Bureau of Energy Efficiency) (2018), "The Perform Achieve and Trade (PAT) Cycle", , https://beeindia.gov.in/content/pat-cycle.
  2. Dechema (2017), Low Carbon Energy and Feedstock for the European Chemical Industry, , http://dechema.de/dechema_media/Technology_study_Low_carbon_energy_and_feedstock_for_the_European_chemical_industry-p-20002750.pdf.
  3. European Union (2009), Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 Establishing a Framework for the Setting of Ecodesign Requirements for Energy-related Products (recast), , https://doi.org/10.1016/j.cirp.2012.03.121.
  4. European Union (2018), Directive 2009/172/EC of the European Parliament and of the Council on the Reduction of the Impact of Certain Plastic Products on the Environment, , http://ec.europa.eu/environment/circular-economy/pdf/single-use_plastics_proposal.pdf.
  5. Government of Norway (2016), "Summary: Feasibility studies, CCS project in Norway", , https://www.regjeringen.no/globalassets/departementene/oed/pdf/summary.pdf.
  6. Holder, M. (2018), "Covestro's manifesto for a sustainable, clean economy", GreenBiz, , https://www.greenbiz.com/article/covestros-manifesto-sustainable-clean-economy.
  7. IFA (International Fertilizer Association) (2018), International Fertilizer Association (database), http://ifadata.fertilizer.org/ucSearch.aspx .
  8. Milne, P. (2019), "Yara aims to move WA into green hydrogen", The West Australian, , https://thewest.com.au/business/energy/yara-aims-to-move-wa-into-green-hydrogen-ng-b881106808z.
  9. Nexant (2015), "Methanol to aromatics: Global impact of a new technology", , http://thinking.nexant.com/sites/default/files/report/field_attachment_prospectus/201602/STMC15_Methanol%20to%20Aromatics_BROCHURE_R4.pdf.
  10. Plastics Europe (2018), Plastics - the Facts 2018, , https://www.plasticseurope.org/application/files/6315/4510/9658/Plastics_the_facts_2018_AF_web.pdf.
  11. WoodMackenzie (2018), Methanol Production and Supply (database)purchase data.
  12. Xu, C. et al. (2017), "Effect of metal on the methanol to aromatics conversion over modified ZSM-5 in the presence of carbon dioxide", RCS Advances, Vol. 18, No. 7, pp. 10729-10736, , https://doi.org/10.1039/c6ra27104a.

Acknowledgements


Andreas Horn (BASF), Florian Ausfelder (Dechema), Hugo Salamanca (IEA)