decarbonization chemical industry decarbonization chemical industry decarbonization chemical industry

Decarbonization: Can the Chemical Industry Be a Catalyst for Change?

As a major emitter of CO2, the chemical sector must drastically go on the decarbonization path in its operations. At the same time, its products are indispensable for bringing about a fundamental global energy transition. Already today, a range of options are available that will allow the industry to become a trailblazer on the path to a carbon-free world.

The chemical industry has a CO2 problem. It is not only one of the biggest sources worldwide of carbon emissions, which it mainly causes through thermal energy generation as well as plastics and ammonia production; it is also the largest industrial consumer of fossil fuels in the form of natural gas and oil. In 2020, primary chemical production accounted for 923 MtCO2 globally.

Nearly half of these discharges (450 MtCO2) are due to ammonia production, while another 251 MtCO2 come from the production of high-value chemicals that are mainly used as plastic precursors. These emissions are primarily caused by power plants (55 MtCO2 in 2017), steam crackers that break down saturated hydrocarbons (32 MtCO2), and production of grey hydrogen for ammonia (24 MtCO2). In the EU, chemical corporations account for 18 percent of all industrial emissions.

Decarbonizing this sector is challenging, however, for a number of reasons. First, many of its production processes rely on carbon-based feedstock – raw precursor materials that cannot be easily replaced even if energy consumption is switched to renewable sources. The emissions associated with these products are released further downstream in the value chains. Secondly, because many products and services provided by the chemical industry are indispensable for achieving the energy transition and other UN Sustainability Goals, they cannot be exchanged for greener alternatives at short notice.

Conversely, reducing emissions in chemical production would have significant knock-on effects by helping other sectors downstream decarbonize their own value chains. In the wake of the 2016 Paris Agreement, all economic actors are under growing pressure from regulators, investors, customers, and society at large to drastically reduce their carbon footprints in order to limit global warming to no more than two degrees Celsius.

Incentives for decarbonization

In practical terms, this creates an incentive to ensure that greenhouse gas (GHG) emissions decline sharply by 2030 and to arrive at net zero emissions around 2050. The EU’s Renewable Energy Directive (REDII), for instance, envisages a minimum share of 32 percent renewable energy production by 2030. To ensure these targets are met, the EU is introducing a raft of measures including emissions trading schemes (ETS), CO2 pricing, and carbon taxes.

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However, these incentives may not be sufficient, according to industry representatives. In May 2021, Brigitta Huckestein, Senior Manager for Energy and Climate Policy at German chemicals giant BASF, told the EURACTIV media network that the ETS plans were insufficient and called for the EU to introduce contracts for difference, which are payments intended to make up the difference between the cost of carbon-neutral operations and the carbon price as determined by the EU’s ETS – guaranteeing that industry players will see a return on their investments into carbon neutrality.

Pathways to net zero

Whatever the regulatory measures imposed by national or supranational bodies, it is clear that technological solutions will need to be part of the picture. There are several levers that enable chemical producers to cut back on emissions while remaining productive and competitive, and which may even give them competitive advantages in attracting new business or investment.

In essence, there are three pathways for achieving zero carbon emissions: With efficiency gains, CO2 emissions can be incrementally reduced. Carbon capture and storage (CCS) technologies can help avoid emissions, for instance, by trapping the CO2 underground. Finally, in the long run, switching to e-fuels and greener production processes can help the chemical sector become carbon-neutral.

Short-term and affordable efficiency gains can be achieved in chemical plants through a range of solutions for direct emissions reduction. By modernizing or upgrading existing assets such as rotating equipment and components for electrification, automation, and digitalization, the industry can incrementally reduce its carbon footprint at a relatively low cost of between €10 and €30 per tonne of CO2.

Such measures may be designed, for example, to enhance the efficiency and thus lower the emissions of gas or steam turbines, or of associated hardware like seals, compressors, or generators used in chemical plants. Some fuel-flexible turbines are able to use residual gases from chemical processes, while completely replacing obsolete, high-emissions plants using fossil fuels (e.g., coal) with more sustainable options will bring down emissions significantly.

Cleaner processes

Looking beyond individual hardware components, there are also ways of making entire processes in the chemical industry more climate-friendly. According to a June 2021 report by the German think-tank Agora Energiewende, there is significant potential for abating the CO2 caused by the three most emissions-intensive processes in the chemical industry – heat production, the plastics value chain, and ammonia production – by deploying low-carbon technologies.

Generating thermal energy for process heat and steam could be achieved with a lower carbon footprint using Power-to-Heat (PtH) solutions that convert electricity into thermal energy. According to the Agora report, such technologies can be deployed on a large scale by 2030 as coal is phased out throughout Europe. Electrode boilers and other PtH options could be even more efficient than using hydrogen, especially when powered by renewable electricity.

These could be complemented in hybrid operations by combined heat and power plants and boilers using natural gas when needed. To make PtH commercially viable, the report’s authors argue, electricity pricing would need to be designed competitively with tariffs and surcharges.

In the production of plastics and synthetics, upstream emissions caused by the energy consumption of refineries can be reduced in the end-of-life phase of plastic products. Steam crackers used to break up crude oil into its component substances can also operate with electrical power or equipped with CCS solutions. A number of chemical recycling options are currently being explored in pilot plants by chemical companies, including the use of residual or waste gases and plastics as fuel or the use of (solar) electricity in electrochemical processes and crackers.

An expanded role for hydrogen

Hydrogen already plays a key role in the chemical industry, as a feedstock (for example for methanol and ammonia production) and also as a reaction agent in certain processes. However, the Agora report anticipates that its importance in refinery operations will diminish as the fossil fuel industry is phased out by 2050. Instead, hydrogen use will shift from the chemical industry to the steel sector, which is expected to consume 123 TWh of lower heating value (LHV) hydrogen energy by the middle of the century. Hydrogen will nevertheless still be needed to make ammonia and methanol as well as for the recycling of chemical plastics.

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Here, the use of green hydrogen – made by breaking down water into hydrogen and oxygen in an electrolyzer powered by renewable energy – can contribute further to the decarbonization of processes in the chemical industry as well as associated sectors. Beyond its use as feedstock and as a fuel, it also serves as a storage medium that can enable sector coupling through “Power-to-X” solutions.

As such, the chemical industry can indirectly support the energy transition to a more sustainable power supply by stabilizing grids and assisting the uptake of energy from wind, solar, and other stochastic power sources.

The chemical industry – a catalyst for change?

Transforming the chemical industry, and indeed all industry sectors worldwide, will be a vital part of global efforts to limit global warming and achieve the goals stated in the Paris Agreement to ensure the planet remains habitable for future generations. Indeed, this transformation is already underway, and all major players in the chemical sector must now move towards accelerated decarbonization if they wish to remain relevant. The current investment cycle will determine the sustainability of operations for decades to come.

All industry actors are feeling the pressure to adapt their investments and production processes as well as demands from regulatory agencies and other stakeholders to decarbonize their processes, products, and services. There are many options for achieving this transformation – some are incremental, some transformational. Every corporation must choose their specific pathway, which will be highly dependent on their business model as well as external factors, such as their geographic location and its potential for renewable energy, as well as the regulatory framework in which a company operates.

The bottom line is that the chemical industry, which accounts for a sizeable share of global carbon emissions, can become a catalyst for change and lead the way in the bringing about a transition to a zero-carbon future.

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Chris Findlay

I'm a journalist, editor, and translator based in Zurich, Switzerland. I write about technology and future timelines at supertrends.com, where I also help expand the community as Expert Relationship Manager.

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