What needs to be done to decarbonize the industrial sector? Email: [emailprotected] The 2020-2030 period will likely see significant investments in this field by many stakeholders, though large-scale commercialization might happen only post 2030. These products are also at a current disadvantage because they cost more. These pillars are applicable across all industrial subsector and have the capability to deliver near-term and future reductions as the GHG emissions intensity of the electrical grid decreases, technologies develop, and hard-to-abate sources are addressed. Compared to other prominent industries with similar emissions (textiles, for instance), the chemical industry has been under less scrutiny and pressure thus far on the decarbonization front. But opting out of some of these cookies may affect your browsing experience. Some have also committed to investment ranging from a few hundred million dollars in the near term to as much as $5 billion by 2030. Necessary cookies are absolutely essential for the website to function properly. The chemicals industry faces challenges in its path to decarbonization, caused in part by the wide variety of products produced by the industry, the use of hydrocarbons as feedstocks, and the industry's many heterogeneous yet interconnected subsectors. Solvay aims to cut emissions by 2030 to 26% of 2020 levels, while Sabic aims to cut 25% of 2010 emissions level by 2030. However, chemicals will continue to require refineries, so these facilities must be decarbonized. Given the added potential that green hydrogen has as an energy storage medium for electric transport, large-scale green hydrogen infrastructure is likely to be built worldwide during the next ten years, and this will significantly benefit the chemical industrys decarbonization endeavours. By clicking Accept All, you consent to the use of ALL the cookies. Joint planning and timely action can accelerate the development of low-carbon technologies for industry and help to coordinate the dual transformation of the energy and industrial sectors. Look at the trends . Globally, companies are feeling the pressure to align their business models with a net-zero economy. But with strategic investments and partnerships, the industry may be able to achieve moderate decarbonization by 2030 based on efforts with this strategic intent. Three industries - iron and steel, non-metallic minerals (cement, glass, lime), and chemical industries - are responsible for 70 percent of all direct industrial CO2 emissions today. If we do not meet the 2030 goal, it is theoretically possible to catch up if the actions we take now enable us to accelerate emissions reductions in the 20 years after. Whether this will work on industrial emissions is yet to be seen. As can be observed from the exhibit, DSM has committed to cut emissions by 30% from 2016 levels and Dow and LyondellBasell have committed to cut emissions by 15% from 2020 and 2010 levels, respectively. It eliminates the need to burn fossil fuels to power foundational chemical reactions and replaces that combustion with light from LEDs and renewable electricity. We need to transform." The key takeaway from the above summary is that the chemical industry has the opportunity to achieve moderate reductions for the present while they eye much higher reductions in future. Unless industry can lower its emissions, the world will struggle to reach the GHG reduction targets of 80 to 95 percent that governments set under the Paris Agreement of 2015. Possibilities are even being explored in which the reaction processes themselves are converted into an electrochemical process from the current thermochemical processes. Of the total direct emissions from the primary petrochemicals industry, about 500 million tons can be attributed to ammonia production alone. The heating infrastructure is configured for use of fossil fuels mainly natural gas and oil. Most U.S. transportation runs on gas and oil, but that is likely to change as electric vehicles become more prevalent, driving down some of the demand for refining. Governments can also adjust regulations and incentives to support decarbonizationfor example, encouraging investment in renewable-generation capacity by altering the financial requirements on utilities and other companies involved in generating and distributing energy. These cookies will be stored in your browser only with your consent. According to the IEA, 2018 CO2 emissions from the chemical sector were 1.5 gigatonnes or 18% of industrial CO2 emissions. The industrial sector is progressively becoming the primary source of CO2 emissions, and its decarbonization is critical to limiting the global temperature increase. An additional challenge . DC-MUSE is grateful for the sponsorship of the Sloan Foundation and National Science Foundation. Decarbonization of industrial sectors: The next frontier, Sustainability & Resource Productivity Practice, McKinsey_Website_Accessibility@mckinsey.com, Read our latest thinking on decarbonization, Improving energy efficiency is a cost-effective way to lower CO, Where carbon-storage sites are available, CCS is the lowest-cost decarbonization option at current commodity prices. One effective template would be to use strategic intents. Decarbonization and Electrification in the Current Industry In order to decarbonize the chemical industry, we need to reduce carbon dioxide emissions by closing and moving beyond the current carbon cycle. California's chemical industry employs over 80,000 people and its total value of shipment is around US$82 billion. What's interesting about Chemicals is that we work both as an enabler for the decarbonization of hard to abate sectors - while being a hard-to-abate sector ourselves. 1. Ara Partners invests in the industrial & manufacturing . The U.S.-led First Movers Coalition, unveiled at the UN climate conference in Glasgow, featured 25 founding member companies that pledged to support innovation needed to achieve net-zero targets by purchasing early supplies of near-zero emissions steel, cement, aluminum and chemicals, among other breakthroughs. Collaborations like the Industrial Innovation Initiative are bringing key industry actors and environmental groups together to identify policies needed to foster this new low-carbon industrial revolution. Growing numbers of companies have made commitments to become carbon neutral or meet a science-based target, yet few industrial companies are on these lists. All in all, industrial companies can drastically lower their carbon emissions, but only by collaborating with other stakeholders. Decarbonization goals and commitments announced by chemical companies. Additionally, it is expected that demand for the products produced in the chemicals sector . Adding emissions from upstream activities related to petrochemicals in oil & gas, downstream production of organic and inorganic chemicals, and emissions post-use disposal of chemical products, the total emissions from the global chemical industry is over 3 billion tons of CO2 per annum. Decarbonization initiatives in the chemical, Waste plastic pyrolysis at an inflection point, Closing the circularity loop with bio-based polymers, Long-lasting and detrimental: Countries banning phthalate-based PP catalysts, 2022 Chemicals Outlook: Stability and sustainability over growth, Chemical Shorts Podcast Episode 1 Mining Chemicals, Growing regulations restrict toxic PFAS chemicals globally. Please try again later. It . This review and analyses will focus on decarbonization for the primary chemicals sector. Ammonia is produced using the Haber Bosch process. Industries that Need Decarbonization The five greatest energy-intensive industries are: Chemical production - Responsible for 20% of industrial CO2 emissions and 24% of industrial energy usage. The Intelligent Enterprise for the Chemicals Industry. of these sectors will cost between $11 trillion and $21 trillion through 2050 and will require accelerating the build-out of renewable-energy capacity, to provide four to nine times as much clean power as industry would need in the absence of any effort to reduce emissions. Meanwhile a growing list of steel producers, including the worlds largest, have committed to going carbon-neutral by 2050, and the Portland Cement Associated has published a roadmap to carbon-neutral concrete. And it presents some big potential opportunities for the chemical industry. 10 G Street NE There is no doubt that decarbonization will be very challenging. Ammonia, methanol, and ethylene will be key focuses of China's chemicals industry decarbonization. A lot of the pressure for reducing CO2 emissions comes from Europe and we expect facilities of the above companies there to adopt cleaner technologies faster than the rest of the world. Search all of the site's content. Steelmaking accounts for 5% of industrial emissions in the United States. Besides, the chemical companies in themselves do not have much control over recycling and reuse of the end products made downstream. this perspective describes the challenges and opportunities to decarbonize the chemical industry via electrification powered by the low-emission electric power sector, both in the near-term and. Ultimately, elected officials and regulators need to limit pollution from the industrial sectors, both by incentives and standards. Carbon capture and storage (CCS) and/or a fundamental change to the ingredients that make up cement will be needed to reduce these process emissions. The U.S. Department of Energy today released a request for information (RFI) seeking input on the opportunities and challenges for decarbonizing the U.S. industrial sector. Interestingly, while renewable electrification benefits chemical production, chemicals can also provide benefits to renewable electrification by offering a medium (through hydrogen or ammonia, for instance) to store their intermittent energy generation. The largest emitting industrial sectors in the United States chemicals, refining, cement and steel are a good place to begin decarbonizing this sector. Co-processing of CO 2 in oxidative dry/wet conversion of methane is one of the examples, which provides an efficient solution for CO 2 utilization. The zero-carbon transformation of the chemicals industry is critical to the national goal of carbon neutrality and the low-carbon transformation of the global chemicals value chain. The primary factors that are pushing companies to decarbonize are: 1 Community perception and customer demands 2 Pressure from investors 3 Adherence to new policies and government targets 4 Cost optimization of current operations using unique technology The chemical industry relies heavily on hydrocarbons used as feedstock and energy sources. It is thus important for the industry to have better clarity on the status and decarbonization potential that each of these avenues presents. Forrestal Building1000 Independence Avenue, SWWashington, DC 20585, DOE Report Identifies Pathways for Decarbonizing Critical Components of American Industry, Announces $104 Million to Fund Emission Reduction Technologies and Build on President Bidens Climate Agenda. Avenues for the industry to become more widespread. please email us at: pathways obstacles Decarbonization investments direct carbon emissions some stakeholders will be stored in your browser only with your consent such increase! 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