Decarbonization of the Chemical Industry

The chemicals industry need significant changes to decarbonize, including adopting lower-carbon products and improving energy efficiency through measures like optimizing steam generation and utilizing residual heat.

Key Takeaways

The chemical industry is one of the largest contributors to global carbon emissions, accounting for approximately 2% of total emissions.
Decarbonizing the chemical industry requires fundamental shifts, including the adoption of lower-carbon products, resource-efficient production, and stricter material requirements.
Key decarbonization levers for the chemical industry include optimizing steam generation, utilizing residual heat, changing electricity procurement methods, and improving energy efficiency.

The chemical industry holds a prominent position globally, boasting impressive annual revenues of approximately $4.7 trillion. Its products are deeply intertwined within major value chains like manufacturing and construction, shaping numerous sectors of the economy.

In recent years, the industry has experienced significant shifts driven by changing consumer preferences and environmental concerns. Consumers now demand lower-carbon products, exhibit greater awareness of recycling and the use of recycled materials, and prioritize resource-efficient production. Simultaneously, regulatory pressures have intensified, calling for stricter material requirements and emissions reduction.

The chemical industry's emissions in 2021 amounted to approximately 925 million metric tons (MT) of CO2, accounting for around 2 percent of global emissions. Recognizing the need for change, various decarbonization projects were studied across multiple countries, including Belgium, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, and Sweden. These projects showcased several effective strategies for emissions reduction, such as optimizing steam generation, harnessing residual heat, adopting cleaner electricity procurement methods, and enhancing energy efficiency.

While our analysis and illustrative examples primarily focus on the German chemicals industry due to the abundance of available data and its significance, it is crucial to acknowledge that the decarbonization levers identified have general applicability across countries. By implementing similar strategies, chemical industries worldwide can make substantial progress towards restructuring the energy system, reducing CO2 emissions, and embracing a more sustainable future.

Germany in Focus - Decarbonization

In the year 2021, the industrial sector in Germany made a significant contribution to the country's carbon emissions. Out of the total emissions of 762 million metric tons (MT) of CO2, the industrial sector accounted for 181 MT. Within the industrial sector, the chemicals industry specifically contributed 40 MT of CO2, as shown in Exhibit 1.

chemicla industry - carbon emissions.png

Based our estimates, the chemical industry in Germany is expected to become the largest CO2 emitter by 2030 if emissions continue at current levels. Unlike other emissions-intensive sectors such as energy and transport, decarbonizing the chemical industry poses unique challenges. The industry's emissions are not solely driven by fossil fuel combustion but also by the use of fossil fuels as feedstock and process gas.

Overcoming these challenges will require technological innovations like recycled materials, carbon capture, and alternative reduction agents. While electrification can be applied in some areas, certain chemical reactions still require high temperatures that are not efficiently achievable through electric devices. Therefore, decarbonization efforts for the chemical industry must focus on tailored solutions specific to these challenges.

The Decarbonization Journey

With a focus on journey of decarbonization, we looked at concentrations of chemical plant clusters in Europe, North America and Asia with an emphasis on major levers being used to substantially reduce emissions.

Steam generation, heat integration, electricity procurement, and energy efficiency play vital roles in reducing emissions and improving sustainability in the chemical industry. Here's a closer look at their significance:

Steam Generation: Steam is a commonly used heat source in chemical processes. Optimizing steam generation involves improving boiler efficiency, reducing fuel consumption, and minimizing associated emissions.

Advanced technologies and operational practices can enhance steam generation efficiency, leading to significant energy savings and emissions reduction.
Heat Integration: Heat integration involves optimizing the use and transfer of heat within a chemical plant or across multiple processes. By maximizing heat recovery and minimizing heat loss, heat integration improves overall energy efficiency and reduces the need for additional heat generation.

This approach can significantly decrease energy consumption and associated emissions, making it an important strategy for decarbonization.
Electricity Procurement: The procurement of electricity from low-carbon or renewable sources is crucial for reducing emissions in the chemical industry. Switching to renewable energy suppliers or generating on-site renewable energy through solar or wind installations helps to decarbonize the electricity used in chemical processes.

By sourcing cleaner electricity, the industry can minimize its carbon footprint and contribute to a more sustainable energy system.
Energy Efficiency: Improving energy efficiency across all aspects of chemical production is a key component of emissions reduction. Energy-efficient equipment, optimized processes, and advanced control systems can reduce energy consumption, resulting in lower emissions.

Enhancing energy efficiency not only contributes to environmental sustainability but also improves cost-effectiveness and competitiveness for chemical manufacturers.

These measures collectively contribute to the overall goal of decarbonizing the chemical industry. By focusing on efficient steam generation, maximizing heat integration, adopting renewable electricity sources, and prioritizing energy efficiency, the industry can significantly reduce its carbon emissions, enhance resource utilization, and foster a more sustainable future.

Early Stage Decarbonization Investments

The chemicals industry is undergoing a transformative journey towards decarbonization, seeking innovative solutions to reduce its environmental impact. In this pursuit, strategic investments in startups are emerging as catalysts for change. By supporting entrepreneurial ventures that focus on green chemistry, carbon capture, renewable energy, recycling, digitalization, and sustainable supply chain solutions, the industry can unlock new pathways towards a low-carbon future.

These startup investments hold the potential to revolutionize traditional chemical processes, promote sustainable materials, and drive the adoption of cleaner technologies. As the demand for sustainable practices continues to grow, the chemicals industry is at the forefront of leveraging startup innovations to shape a greener and more resilient future.

Green Chemistry and Sustainable Materials Startups: With a focus on developing sustainable and eco-friendly chemicals and materials can contribute to decarbonization. These startups may explore alternative feedstock sources, develop renewable chemicals, or create innovative materials with lower carbon footprints.
Carbon Capture, Utilization, and Storage (CCUS) Startups: Supporting early stage investments working on CCUS technologies can be a significant investment opportunity. These startups develop solutions to capture CO2 emissions from industrial processes and convert or store them, reducing the overall carbon footprint of the chemicals industry.
Renewable Energy Startups: Investing in startups involved in renewable energy generation and storage can indirectly benefit the chemicals industry. Access to clean and affordable energy sources, such as solar or wind power, can help reduce the reliance on fossil fuels for energy-intensive chemical processes.
Recycling and Circular Economy Startups: Emphasis on recycling technologies and promoting a circular economy can have a positive impact on decarbonization in the chemicals industry. These startups may develop innovative recycling processes, create sustainable packaging solutions, or facilitate the efficient utilization of waste materials in chemical production.
Digitalization and Process Optimization Startups: Investments in startups leveraging digital technologies and advanced analytics can help optimize chemical processes, leading to energy efficiency improvements and reduced emissions. These startups may develop software solutions, artificial intelligence applications, or IoT devices to optimize operations and reduce energy consumption.
Sustainable Supply Chain and Logistics Startups: Supporting startups that enhance the sustainability of the chemicals industry's supply chain and logistics can contribute to decarbonization efforts. These startups may focus on improving transportation efficiency, developing eco-friendly packaging solutions, or implementing sustainable sourcing practices.