INSIGHT by Dr. Bob Maughon, Executive Vice President, Sustainability, Technology & Innovation and Chief Technology and Sustainability Officer, SABIC. This article was first published by the World Economic Forum.
〉The chemical industry is set to reduce its own emissions and improve circularity in the coming decades.
〉But its role and potential in value chains that span the global economy is perhaps more impactful.
〉Collaboration between industry players and outside will be essential in this effort.
The chemical industry is critical to the global economy and for meeting societal needs. The innovations the field has given rise to have addressed some of the world’s most pressing challenges, ranging from climate change to food security.
With strategic research and development focus, sustainability-minded companies are now on track to unlock further progress through low carbon technologies in a bid to withstand growing environmental challenges and turn the tide against climate change.
To be successful, however, advancements must be collaborative, ensuring progress across industries and value chain partners. This is true for most fields — but particularly for the chemical industry, given the key role it plays in providing the building blocks needed across various material chains. The industry is developing disruptive innovations in driving circularity and reducing emissions in both production footprints and downstream products that will have a profound economic and environmental impact in the sector itself and globally.
The chemical industry is critical to the global economy and for meeting societal needs. The innovations the field has given rise to have addressed some of the world’s most pressing challenges, ranging from climate change to food security.
With strategic research and development focus, sustainability-minded companies are now on track to unlock further progress through low carbon technologies in a bid to withstand growing environmental challenges and turn the tide against climate change.
To be successful, however, advancements must be collaborative, ensuring progress across industries and value chain partners. This is true for most fields — but particularly for the chemical industry, given the key role it plays in providing the building blocks needed across various material chains. The industry is developing disruptive innovations in driving circularity and reducing emissions in both production footprints and downstream products that will have a profound economic and environmental impact in the sector itself and globally.
| Circular economy and the chemical industry’s multiplier effect
With product use and manufacturing accounting for 45% of global greenhouse gas (GHG) emissions, reducing our use of resources has the potential to cut global annual GHG emissions by 39% — that’s 22.8 billion tons less in the atmosphere — and play a crucial role in averting the negative impacts of climate change. The circular economy model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible has garnered widespread support among legislators across multiple jurisdictions and industry leaders alike.
The industrial chemical sector supplies the great majority of materials for all manufactured products, signaling that as chemical products become more sustainable, there will be a significant multiplier effect.
Simply put, offering circular materials is a requirement to stay competitive today, and will usher in a transformation of business models and roles across value chains. A more circular economy can foster deeper collaborations, transforming suppliers into partners and products into services that can be used again. By helping manufacturers, suppliers and retailers embrace circularity, chemical companies act as powerful partners, helping brands respond fast to changing consumer preferences and ultimately earn greater trust.
| Chemicals as an economic catalyst
Sustainability is also an economic driver. The United Nations Environmental Plan (UNEP) calculated that in 2050 the global economy will benefit from more effective resource use by $2 trillion a year. A reportfrom the Center for Global Commons and Systemiq found that 29 million new jobs can be created by the chemical industry embracing low-carbon and energy efficient technology and process.
In a circular economy, this gain could be achieved through increased turnover from new circular activities and the creation of more versatile uses of the same number of materials and means of production. The development, production and maintenance of these circular products requires a specialised workforce, which in turn significantly increase the demand for jobs. New, circular business models focused on reuse, repair, remanufacturing and sharing models offer significant innovation opportunities for companies to take advantage of and redesign their business approach to maximise emission reductions while also remaining competitive.
While the chemical industry’s transition will not take place overnight, industry leaders are already making headway on the complex, multi-decade effort required. SABIC has developed a two-phase plan to achieve its carbon neutrality goals — and the approach could offer a template for others to follow suit.
Lasting until 2030, the first phase will focus on reducing direct (scope 1) and indirect (scope 2) emissions by 20%, compared to a 2018 baseline, with a multi-billion dollar investment plan. This process will involve continuous investments in assets to improve energy efficiency; securing renewable-electricity supplies for assets through purchase power agreements to replace fossil-based electricity; selective equipment electrification investments; use of low carbon hydrogen as well as renewable feedstock and rolling out carbon capture, utilisation and storage infrastructure.
Also in this first phase, the company will implement a first adopter program within its affiliates to demonstrate at commercial scale the efficiency of three technologies in decarbonising its olefin crackers, namely through the use of hydrogen (H2) to replace fossil fuels, CCUS and furnace electrification. Executed on a commercial scale, the purpose of this programme is to deliver the low carbon heat needed across its cracker and reformer assets to achieve net-zero ambitions.
During the second phase, SABIC will take additional steps to bring the company to a net-zero end state by 2050, leveraging the learnings from the First Adopter program and expand it across its asset base, balancing the technology solutions best suited to each site’s geographic requirements and infrastructure availability.
No company will succeed in a vacuum, however. Collaborations are already proving vital, such as the Low-Carbon Emitting Technologies (LCET) initiative, which brings together major players in the chemical the industry towards carbon neutrality. Mission-critical technology building blocks — such as hydrogen generation in low-emission processes, the use of CO2, biomass and plastic waste as feedstock and overall electrification — are being addressed in the initiative’s pipeline.
| The views expressed in this article are those of the author alone and not the World Economic Forum.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
