Petrochemicals could be made with almost no carbon emissions if the industry invests an extra $759bn (£604bn) by 2050, according to a new report from research firm BloombergNEF (BNEF).
The sector – which produces the high-value chemicals (HVCs) used to make plastics and many other manufactured goods – is rapidly becoming the largest driver of global oil demand.
HVCs are also responsible for up to 2% of global emissions, equivalent to aviation, and double the aluminium industry’s contribution.
However, BNEF's report outlines a pathway to net zero for the sector, with electrification and carbon capture and storage (CCS) playing a central role, even while total production grows.
The $759bn bill for new clean capacity and retrofits is roughly 1% of the $172trn estimated to be needed to decarbonise the global energy sector by 2050.
“Deploying these technologies will be expensive in the short term, but it could set the sector on a lower-cost decarbonisation path,” explained Ilhan Savut, sustainable materials analyst at BNEF.
“Given their long asset lifetimes, chemicals players must move quickly and fund net-zero projects as soon as possible, or risk getting locked out of key technologies. Investments today will be key to managing longer-term costs and pay dividends post-2035.”
The report outlines how, by 2050, CCS could be the cheapest option for net-zero petrochemicals and abate the emissions of 40% of HVC production.
Another 35% would rely on new electrified cracker designs, which could provide the only net-zero production route that is cost-competitive with conventional steam crackers.
The authors explain how CCS is a “unique opportunity” for integrated oil majors, which already have expertise in the technology and could accelerate cost declines.
However, they also highlight how the sector will face continued challenges when looking at the final products made from petrochemicals.
“While many net-zero targets do not cover Scope 3 emissions, customers and investors will link incinerated plastic to oil and chemicals companies, as they did with plastic waste,” said Julia Attwood, head of sustainable materials at BNEF.
“The whole supply chain is a plastic producer’s problem. A low-carbon petrochemical sector will require circular economy action.”
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