Challenges and opportunities coexist to transform this sector. Photo: UCL Engineering Lowering industrial GHG emissions wont be easy, but it is possible. With the total gross value of all chemicals listed at Possibilities are even being explored in which the reaction processes themselves are converted into an electrochemical process from the current thermochemical processes. Third, industrial processes are highly integrated, so any change to one part of a process must be accompanied by changes to other parts of that process. Besides, the chemical companies in themselves do not have much control over recycling and reuse of the end products made downstream. Washington DC 20002 Industrial companies should prepare for decarbonization by conducting a detailed review of all their facilities and looking at the availability of low-cost electricity, hydrogen, biomass, and carbon-storage capacity. Recycling or reuse of products Another avenue by which the industry can reduce emissions is to produce less in the first place, or produce from a non-virgin, semi-processed raw material that requires much less energy for production compared to that from virgin feedstock. The ITV pilot will objectively assess the performance of emerging decarbonization technologies in industrial environments with a team of DOE National Lab experts. A tradable, low-carbon cement standard would provide a targeted approach to reducing the emissions intensity of the cement sector. During the next three decades, almost every industry is likely to undergo dramatic transformations in their efforts towards low carbon value chains. . Narasimhan Santhanam (BTech-IIT Madras, PGDM-IIM, Calcutta) is the co-founder & Director of Clixoo, an online platform for cleantech intelligence & interactions startup. Autothermal conversion of natural gas offers a substantial potential for decarbonization of chemical and refining industry via avoidance of GHG emissions and CO 2 circularity inside assets. The International Renewable Energy Agency (IRENA), co-founding partner Siemens Energy and 13 companies across all industry sectors have launched the global Alliance for Industry Decarbonization. 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. Since 1990, industrial processes have been one of the fastest-growing global sources of greenhouse gas emissions, nearly tripling over the last three decades. For instance, Dow Chemical in 2021 partnered with Fuenix Ecogy Group in The Netherlands to supply pyrolysis oil feedstock made from recycled plastic waste. Production of cement, the key ingredient in concrete, is responsible for just over 1% of U.S. GHG emissions and 7% of global emissions. If we include emissions from hydrogen production for ammonia, the total primary chemical industry emissions increase to about 1350 million tons of CO2, or about 2.5% of total annual global greenhouse emissions. Pursue recycling and material efficiency through alternative packaging and package waste reduction, Evolve existing processes to reduce waste, including circular economy approaches for concrete construction, Improve materials and energy efficiency with deployment of breakthrough technologies and innovative chemistry solutions, Increase use low carbon binding materials and natural supplementary cementitious materials to lower the carbon-intensity of clinker and solid materials used to create cement, Strategic energy management approaches to optimize performance of industrial processes at the system-level, Systems management and optimization of thermal heat from manufacturing process heating, boiler, and combined heat and power (CHP) sources, Smart manufacturing and advanced data analytics to increase energy productivity in manufacturing processes, Electrification of process heat using induction, radiative heating, or advanced heat pumps, Electrification of high-temperature range processes such as those found in iron, steel, and cement making, Replacing thermally-driven processes with electrochemical ones, Integration of hydrogen fuels and feedstocks into industrial applications, Post-combustion chemical absorption of CO, Development and manufacturing optimization of advanced CO, Development of processes to utilize captured CO2 to manufacture new materials. 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. Electrification of heating for primary chemicals production could lead to significant CO2 emissions when the electricity is supplied from renewable sources such as solar or wind power. Companies that increase their costs by adopting low-emission processes and technologies will find themselves at a price disadvantage to rivals that do not. 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. Dickon Pinner is a senior partner in the San Francisco office, and Ken Somers is a partner in the Antwerp office. As global demand for chemical products continues to grow, there is an urgency to develop and deploy sustainable chemical production pathways and . Companies have already accelerated efforts such as replacing fossil fuel with electricity in operations. 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. 10 G Street NE Phone : 022 35115296 / +91 98202 10790 / +91 98673 93320 / +91 98217 64647 This category only includes cookies that ensures basic functionalities and security features of the website. Energy Security and Zero Emissions Target in India Are They, India to Have Sixty Percent Renewable Energy by 2030, New Method of Bond Detection Could Lead to Cheaper and More, Producing Ethylene from Food Waste Without Greenhouse Gas Emissions, Government to Set up Two Carbon Capture and Utilisation Centres, Mumbai Aims for Carbon Neutrality by 2050, Choosing what Color of Hydrogen to use An Analysis to Demystify the Fuel of the Future, Chemical Industry Digest September 2022, Chemical Industry Digest February 2022 Issue, Chemical Industry Digest January 2022 Issue, Chemical Industry Digest December Issue 2021, Chemical Industry Digest November 2021 Issue, Chemical Industry Digest October 2021 Issue. Incentives for carbon capture are greeted with skepticism from some climate advocates who fear that it will lock in fossil fuel infrastructure and could contribute to continued reliance on fossil fuels at the expense of increasing the use of renewable energy. Ammonia, methanol, and ethylene will be key focuses of China's chemicals industry decarbonization. Decarbonization avenues The following represent the decarbonization avenues available for the chemical industry. The focus is now on how to reduce the carbon footprint of the chemical industry, which is the third largest emitting industry behind the iron/steel and cement industries. However, sustained investments in the U.S. chemicals industry are expected to continue the strong growth in domestic bulk chemical production. Reduce food waste throughout the supply chain through methods identified in life cycle assessments and collaboration between manufacturers. Industry consumes 32 percent of U.S. energy. We need to transform." Green hydrogen for decarbonizing the chemical industry. But there is no escape from it and a strong start needs to be made from now. Renewable natural gas is already being produced in many parts worldwide from biomass waste and organic waste such as food waste, though this sector is yet to prove that it can scale. Veera Desai, Opp. Remarkable progress has been made in all these areas in China. The most important factors are the availability and cost of low-carbon energy sourcesspecifically, zero-carbon renewable electricity and sustainably produced biomass. One effective template would be to use strategic intents. The use of green hydrogen, renewable energy and CCUS could offer near- and long-term decarbonization opportunities. Access to storage capacity for captured CO2, along with public and regulatory support for carbon storage, will affect the possibility of implementing CCS. The transition towards carbon-neutral chemical production is challenging due to the fundamental reliance of the chemical sector on petrochemical feedstocks. Bio-based alternatives Bioplastics are an obvious example of fossil feedstock being replaced by a renewable feedstock embodying much less net carbon compared to synthetic plastics. Whitepaper: Energy transition and decarbonization - Pathways for the chemical industry Will you lead or will you be led? DC-MUSE's vision is to catalyze the decarbonization of the chemical industry by innovating chemical manufacturing processes powered by sustainable electricity grids. However, chemicals will continue to require refineries, so these facilities must be decarbonized. Green hydrogen Given that the current method of hydrogen production from fossil natural gas constitutes a significant portion of the total industry emissions (about 350 million tons per annum), zero carbon hydrogen will be valuable to its decarbonization efforts. Subscribed to {PRACTICE_NAME} email alerts. Of the total direct emissions from the primary petrochemicals industry, about 500 million tons can be attributed to ammonia production alone. Some can be implemented in a short time while others would need fundamental changes from selection of feedstocks to the chemistries to the entire manufacturing chain requiring very long time frames. U.S. industries account for 30% of national greenhouse gas (GHG) emissions, while the industrial sector globally accounts for 40% of all GHG emissions. Switching to more sustainable fuels and using carbon capture, use and storage (CCUS) can be part of the solution. March 29, 2021 3:59 pm ET Order Reprints Print Article The global push to reduce carbon emissions is bringing disruption to the chemicals industry, according to UBS New opportunities are. It is not only one of the biggest sources worldwide of carbon emissions, which it mainly causes through thermal energy generation as well as plastics and ammonia production; it is also the largest industrial consumer of fossil fuels in the form of natural gas and oil. Other provisions in the law create programs to design, pilot and demonstrate approaches to put carbon captured from industrial facilities back in the ground permanently. . 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. Local advocates fear the incentives could keep factories operating long past their intended life while failing to curb other pollutants that harm nearby communities. The industrial sector has long been the biggest contributor to . The industrial sector is a vital source of wealth, prosperity, and social value on a global scale. Pressures from government agencies, investors, and consumers are, however, driving decarbonization commitments in the chemical industry. The chemical industry, with 10% of global energy consumption and 7% of greenhouse gas effect emissions, encompasses many sectors in the modern economy. Switching to biomass as a fuel or feedstock is financially attractive at cement factories and newly built steel plants because mature technologies are available for biomass in these settings. The GCC chemical industry must refocus business and operating models to deliver on decarbonization and circularity goals and overcome fundamental structural challenges. Subscribe to our FREE Newsletter & Stay Updated. 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. Hard-to-abate sectors are highly energy-intensive sectors where fossil fuels serve as the primary source as well as feedstocks and are seemingly difficult to substitute. Decarbonizing cement is challenging because the manufacturing process involves heating limestone at extremely high temperatures to produce lime, which emits carbon dioxide. Very scientifically planned, well directed and smartly executed routes are possible, though some of it would be challenging. Industry 4.0 is swiftly making its substantial presence in sectors such as manufacturing, construction, and shipping. by innovating manufacturing processes powered by renewable energy, such as electrochemical reactors and membrane separation units, our vision is to decarbonize the production of products we use. With stricter norms for being carbon-neutral, ESG compliant, green process-driven enterprises have turned to new-age . For an industry such as the chemicals sector, the key stakeholders for the 2020-2030 period are: Top management of medium and large chemical companies Biomass can also replace fossil-fuel feedstocks for ethylene and ammonia production. If you would like information about this content we will be happy to work with you. Policymakers, investors and businesses will have to take bold action in the next decade to get on a path to decarbonization. "We love a challenge. 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. The chemical processing industry is among the top of all heavy industries in CO2 emissions. The Ministry of Ecological Transition published a Decarbonation Roadmap for the chemicals sector. 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