The petrochemicals sector is hard-to-abate with currently commercially-available technologies. The sector's direct carbon dioxide (CO2) emissions grew by 41% between 2010 – 2020, despite the fact that carbon intensity has stagnated over the past few years. To reach net zero emissions by 2050, the sector’s direct emissions need to decrease by 12% between 2020 – 2030, and then be reduced even faster with maturing low-carbon technologies.
With the increasing urgency to combat climate change and manage associated physical and transition risks, the petrochemicals sector is feeling the need to decarbonise. Decarbonisation pressures are also coming from the end of the value chain, including companies that use petrochemicals for their own products, such as packaging in the food and beverage and retail industries.
Commenting on ING's recent research, the company's ESG Researcher, Coco Zhang; Senior Sector Economist, Gerben Hieminga; and Energy Transition Research Assistant, Teise Stellema, noted:
“Petrochemical products, such as plastics, rubber, and fertilizers, are the building blocks supporting our day-to-day activities. Because of their huge contribution to the global economy, petrochemicals are the biggest driver for near to medium-term oil demand increase. The petrochemicals sector is also hard-to-abate with currently commercially-available technologies. The sector's direct CO2 emissions grew by 41% between 2010 – 2020, despite the fact that carbon intensity has stagnated over the past few years. To reach net zero emissions by 2050, the sector’s direct emissions need to decrease by 12% between 2020 and 2030 — and then be reduced even faster with maturing low-carbon technologies. With the increasing urgency to combat climate change and manage associated physical and transition risks, the petrochemicals sector is feeling the need to decarbonise. Decarbonisation pressures are also coming from the end of the value chain, including companies that use petrochemicals for their own products, such as packaging in the food and beverage and retail industries.
“Multiple decarbonisation pathways possible for exploration: using biobased feedstock to replace fossil feedstock in the production of petrochemicals has been a relatively common practice that has existed for a long time; plastic recycling is an area that has great potential for improvement because of current insufficient efforts; steam cracking, the process of breaking down more saturated hydrocarbons such as naphtha, butane, propane, and ethane to less saturated ones like ethylene and propylene, has also become the target of petrochemical companies in their quest to reduce emissions; clean hydrogen (green hydrogen produced from renewables or blue hydrogen with carbon capture and storage [CCS]) can be used in petrochemical production either as a fuel for combustion during the steam cracking processes or as a feedstock for synthetic petrochemical products such as methanol; and CCS is gaining attention from petrochemical companies as a technology to reduce emissions from petrochemical production.
“All the decarbonisation pathways need significant investment to support the scale-up of relevant technologies. The United Nations Environmental Programme (UNEP) recently proposed a Systems Change Scenario, where the inflow of virgin plastics is more than halved and the outflow of mismanaged plastic waste is slashed by 80% by 2040 compared to the Business As Usual scenario. Today, both incentives and restrictions are in place among many governments to accelerate the decarbonisation of the petrochemicals sector. Efforts from the EU and US show that policymakers are serious about tackling the environmental challenges associated with the petrochemicals sector. But more is needed to spur investment to the level outlined by the UN and to ensure a long-term structural change towards sustainable petrochemical production.”