Decarbonising practices in the global chemical industry
The importance of industrial decarbonisation to long-term sustainability is well recognised and requires taking bold steps to improving and reimagining business practices.
The world faces an ever-widening gap between current levels of greenhouse gas emissions and the reduction in levels that must be met in order to mitigate the worst impacts of global climate change. As documented by the United Nation’s Emissions Gap Report 2021, the world is currently on track to reach an average temperature rise of 2.7°C, well over the target of 1.5°C. In a globalised, predominantly capitalist economy, the incentives for sustainable growth and profit are often at odds with environmental sustainability.
Fundamentally, however, it is increasingly seen that sustainable economies are reliant on a sustainable environment; industries require raw materials, while customers, workers, and transportation and logistics infrastructure require sustainable and reliable physical and natural environments. The importance of industrial decarbonisation to long-term sustainability is well established and leading organisations are taking bold approaches to improving and reimagining business practices.
Sustainability, digitalisation, health and wellness, and business models are the four underlying factors for future transformation. Influencing the four models will be the need to build resilience and lower financial risk.
Current status of decarbonisation strategies
Decarbonisation strategies within the global chemical industry remain at an early stage, overall. Much needs to be done in order to fully achieve decarbonisation in regards to Scope 1, 2 and 3 emissions. The global chemicals industry is highly fragmented between individual producers and by the actual chemicals produced. At a local level, however, there are efforts to improve energy consumption trends from capturing waste heat to increasing onsite power generation and the use of renewables.
Actions to further and achieve industrial decarbonisation can be summarised through four key initiatives:
- Decarbonisation roadmap: foundational assessments and action.
- Resource efficiency: improve energy consumption efficiency and develop circular economies.
- Infrastructure enhancement: improve assets and infrastructure.
Innovative business models: advanced performance contracting.
Every organisation will need to adopt a range of measures within each initiative to deliver an effective, holistic means to achieve decarbonisation. The specific set of activities, timeline of implementation and means of verification will be unique; in many cases industrial organisations and facilities will benefit from third-party assistance to ensure strategies are comprehensive and achievable.
Decarbonisation actions for the chemical industry
The global chemicals industry is the world’s largest consumer of oil and gas, making it one of the greatest sources of direct carbon dioxide emissions, behind only the steel and cement industries, according to the International Energy Agency. The chemicals industry, therefore, must be a critical partner in global decarbonisation efforts; this is relevant for direct industry practices and for chemical emissions released downstream. Stakeholders in the industry do have a number of key decarbonisation actions available:
- Heat pumps: leverage heat pump technology to capture heat waste and use it as energy in production facilities.
- Electrification: electricity can be used to create heat, displacing fossil fuels, and to generate electrochemical reactions.
- Power purchase agreements (PPAs): PPAs can help ensure the generation and use of renewable energy.
Sustainable feedstock: a wide range of plastics can be used as non-virgin feedstock in chemicals production.
Implementing strategies that leverage the above options represent key activities in the circular economy of the chemicals industry. This includes addressing sustainable production and feedstocks, reducing consumption and waste, and improving product durability and longevity. Implementing and successfully delivering on these strategies, however, requires an understanding of challenges and complexities that must be overcome.
Current state and challenges
The critical dynamic that complicates decarbonisation within the chemicals industry is that it is not uniform. There are thousands of different chemicals produced and the top 10 global chemical producers only account for 8.8% of 2019 global revenues; this high degree of fragmentation makes it challenging to garner full industry buy-in and to develop easily replicable decarbonisation strategies.
There is also a debate as to whether chemicals used in some products, such as insulation, should be viewed differently because they help offset emissions downstream.
Within closest reach is a chemical manufacturer’s ability to decarbonise its factories and production processes. This effort can become much more complex for companies looking to address upstream Scope 3 emissions from raw materials. Scope 3 emissions are indirectly controlled by chemical manufacturers and, as such, are more challenging to influence. Individual manufacturers select the method that delivers a best business case; looking to use production methods that help reduce the carbon footprint of production is a clear opportunity in decarbonising against a range of chemicals.
What becomes clear, however, is that a great deal of customisation is required for each chemical producer to ensure they have a robust and actionable decarbonisation strategy.
Critical processes and footprint to decarbonise
Decarbonisation efforts in the global chemicals industry are focused on five key areas: product development, energy management, manufacturing operations, the circular economy and the supply chain. During product development, organisations can select existing or help develop new chemicals that will have lower energy requirements. Throughout manufacturing and in energy management, consumption can be targeted for reductions or fossil fuel-derived energy can be replaced with renewable and green energy.
There are benefits in electrochemistry processes that can improve energy footprints in the global chemicals industry. In the supply chain, especially for companies that buy chemicals as ingredients, chemical manufacturers can look to decarbonise those Scope 3 emissions in agreements and raw materials.
In targeting these processes for decarbonisation, manufacturers can advance towards a carbon-neutral and net-zero carbon future.
- Decarbonisation roadmaps: energy audit, distributed energy systems, building performance optimisation, energy procurement and supply services.
- Energy consumption optimisation: simulation and modelling software for quick assessment of renewable integration, digitalisation and connectivity for performance optimisation and CO2 management, asset performance over supply and demand to optimise resource efficiency.
- Energy infrastructure and supply modernisation: grid consulting, improve sustainability via conversion of excess renewable power to hydrogen, load shifting and load shedding for efficient peak load management.
- Service-based business models: energy efficiency as a service, energy-saving performance contracting, PPA green energy supply, decarbonisation as a service.
Case studies and regional initiatives
Snapshot examples presented below outline key steps organisations in Belgium, Germany, the Netherlands and the UK have taken to reduce consumption and optimise energy use, as well as grow the use of sustainable feedstock in their production processes.
Tata Europe (UK)
In 2019 Tata announced a carbon capture and utilisation (CCU) demonstration plant that will capture CO2 and use the emissions as feedstock in the production of sodium bicarbonate. A key driver of this policy change is that Tata Europe’s site in the UK has historically been the largest single user of liquid CO2 in the UK. It presents a step change in the facility’s local operations and increasing its sustainable footprint through an impactful decarbonisation effort.
BASF (Belgium, Germany)
BASF has committed to becoming climate-neutral by 2050, with a focus on full electrification, using renewable energy sources. Initial efforts are focused on plants in Antwerp, Ludwigshafen and Schwarzheide. Effort will focus on improving asset and process energy efficiency and the purchase of green energy from third parties. Waste heat already supplies 45% of steam requirements and BASF plans to increase this further.
DuPont is focused on achieving greater energy savings and efficiency. The organisation aims to achieve a 23% reduction in energy consumption over 10 years. Key to this is an effort to make the company’s Derlin Renewable Attributed polymer with as low a carbon footprint as possible. To deliver on this ambition, DuPont aimed to ensure the polymer is created from a 10% biofeedstock from waste, production uses 100% certified renewable electricity and steam used is sourced from municipal waste energy recovery.
Solutions that support decarbonisation
The global chemical industry has identified important initiatives to reduce energy consumption, increase the use of renewable energy and adopt greater rates of electrification.
Energy solutions and services delivering decarbonisation are based on a strategic approach, utilising value-stacking to exploit the full potential to optimise energy generation and sourcing, energy efficiency, supply security and reliability, or business and asset performance. This ensures the delivery of a positive impact right from the start and in the long term for the entire organisation.
Demand-side efficiency is based on a thorough energy audit and performance data monitoring for complete transparency of energy utilisation and asset performance. In a first step, energy efficiency solutions reduce the overall energy consumption and optimise energy efficiency of the entire facility. Asset performance management ensures the reliable and efficient performance of all business assets.
On-site energy supply
Local energy solutions are based on sustainable generation of power, heat and cooling with a maximised use of renewable energy sources.
In combination with energy storage solutions, such as electrical storage or hydrogen storage, an on-site solution provides flexibility and allows for a maximum usage of renewable energy.
Energy management and grid control tools ensure a reliable and efficient control of energy supply, usage and storage — and new profit streams by connecting the local energy solution to the energy market or managing it as part of a virtual power plant.
These are critical components in moving towards decarbonisation. Power purchase agreements that deliver green, renewable energy can also offer a faster-to-implement method of reducing carbon footprint. Additional efforts in capturing and using waste heat and the creation of circular economies are also core components of many strategies.
Regional and local challenges in implementing decarbonisation
At a local level, however, there are regions that experience renewable energy supply challenges and higher economic costs in these initiatives. This is further complicated by a fragmented competitive landscape that is more greatly influenced by local conditions. As a result, regional and local landscapes can be highly variable. Regions and localities may require structural assistance and incentives in order to help drive decarbonisation activity.
External third-party support can also help manufacturers in these locations navigate these complexities to identify near-term opportunities as well as long-term initiatives that reflect changing local conditions to keep decarbonisation initiatives running.
The way forward
Achieving economic change at the speed and completeness required to successfully respond to the world’s decarbonisation mandate requires focus and investment at a scale never seen before; this reinforces the need to act as a community to ensure critical success. The successes stemming from current initiatives by some chemical manufacturers need to be replicated globally. Increasing energy efficiency, greater renewable energy consumption, greater electrification and facility improvements in more energy-efficient process equipment are all actions that must be embraced throughout industries.
Focus on Scope 3 emissions in addition to Scope 1 and Scope 2 emissions
In order to meet ambitious global targets, and to achieve sustainable industrial activity through decarbonisation, a greater and deeper effort must be made in order to reach these goals. This requires industrial manufacturers to go deeper on Scope 1 and Scope 2 decarbonisation initiatives while pushing into strategic Scope 3 emissions reductions. Pushing into Scope 3 emissions reductions will require greater engagement with upstream and downstream partners, which is complex but necessary in order to deliver sustainable industrial economies.
Focus and invest on technology developments
Thanks to available technologies such as renewable energy sources, energy storage, forecasting and data analytics, it is possible to optimise operations, decrease energy usage and to create significant energy and resource savings. Energy management solutions incorporate this to deliver on the sustainability goals of the organisation and at the same time support the financial side of the business and foster growth.
A holistic approach to sustainability measures ensures that measures are not implemented based only on individual payback time and ROI, but also on their cross-synergies, allowing positive impacts to start earlier and also slower and less effective measures to be implemented, so that the highest total effectiveness can be achieved.
Engage in the industrial community
Engaged industrial organisations exist throughout the world; their activities help form a blueprint for others to follow and from which to expand decarbonisation activities. Engaging in the industrial community is critical to delivering success.
Further, looking outside of the industrial community for further strategy and innovation success is key; this includes bringing in third-party partners to help evaluate facilities and organisations, to develop actionable strategies to push organisations towards decarbonisation, and to monitor and confirm success.
AMW2024 is on at ICC Sydney, in Darling Harbour, 17–19 April 2024.
Exposure to high levels of ammonia can lead to chronic lung conditions and irreversible organ...
Producing steel by the direct reduction of iron ore with hydrogen would replace coke as a...