Chemicals industry accounts for around four per cent of global greenhouse gas emissions and must embrace a more circular, low emissions operating model.
That’s according to a major new report that suggests without urgent action the chemicals industry faces reputational and regulatory risk and may lose its social license to operate.
The report by Systemiq and the Center for Global Commons at the University of Tokyo sets out credible pathways for the industry to become an enabler of a sustainable global economy, to double in size and create 29 million new jobs.
It also suggests the industry can reinvent itself as a climate solution, becoming carbon negative by early 2040s and acting as a carbon sink by 2050. But without dramatic and urgent change, the industry aligns with four degrees of global warming by 2050 with catastrophic consequences for the planet. Building a circular, net zero chemical system will require capital expenditure of over $3 trillion by 2050.
The Planet Positive Chemicals report provides an unprecedented blueprint for the future of the chemicals industry, which is worth $4.7 trillion dollars in annual revenues and provides the chemicals that are essential to all sectors of the economy from packaging and consumer goods to construction and fertilisers. It says the industry currently has multiple harmful impacts on our planet, including high carbon emissions and pollution, and its action on climate is currently lagging behind other sectors.
The report identifies the need for radical interventions on both supply and demand sides for the chemicals industry to operate within planetary boundaries. Its findings include:
Chemical products are used across all downstream industries – other sectors of the economy cannot reach net zero without mitigating the climate impacts of the chemicals value chain; chemical production would need to double by 2050 to enable a sustainable global economy, with rapid growth in ammonia (around 440%) mainly for use as a sustainable shipping fuel and methanol (330%) to create plastic without using fossil sources.
Expected growth means net zero will be dependent on the maximum scaling of a few key abatement technologies like carbon capture and storage (CCS) – without which the chemicals industry becomes a major climate risk. Up to 640 million tonnes of CCS capacity will be needed every year by 2050 if the chemicals industry does not move away from fossil feedstocks.
Circular approaches can reduce total demand for chemicals by up to 31% by 2050 – with industry reusing and recycling chemicals, or switching certain chemicals for lower-emissions alternatives. Supply transition requires a shift away from fossil fuels and feedstocks and scaling of CCS to capture residual emission from production processes and end of life chemicals.
Replacing fossil feedstocks will make the chemicals industry the largest global consumer of green hydrogen (up to half of all demand by 2050), driving scale-up of this critical enabler of the energy transition. This creates economic opportunities as the site of primary chemical production for developing countries that have abundant, affordable renewable energy sources to make low-cost green hydrogen.
The industry could become carbon negative by the early 2040s and a carbon sink by 2050, using CO2 from the air and biomass to make plastic and storing carbon underground at end-of-life.
The transition can create 29 million jobs in chemicals industry upstream production, circular chemicals and waste management – but the chemical industry needs to reposition itself in order to attract highly-skilled workers who often seek environmental and social purpose.
Retrofitting of legacy production and new greenfield chemical production infrastructure will require capex expenditure of over $3 trillion, the report says.
Chad Holliday, former CEO of the global chemical company DuPont and former Chairman of Shell, said: “We need realistic and immediate action from industry on the climate goals agreed at an international level. We want to see ambitious companies grabbing the opportunities represented by the global net zero transition, and as the former CEO of a chemicals company, I firmly believe a planet positive chemicals industry IS possible and this is a pivotal moment for the industry to redefine its future.”