Climate change is here, and chemicals play an increasingly significant role in the transition to net zero.
FREMONT, CA: The decisive decade for mitigating the effects of climate change has arrived, and the chemical industry is playing an increasingly crucial role in the worldwide transition to net zero. Annually generating $US4.7 trillion in global sales, the chemicals industry supplies 96 percent of the world's produced goods with vital components, resources, and technologies. Attaining net-zero aspirations at the required scale and speed necessitates collaboration between businesses, communities, investors, and governments. The existing position of the chemicals industry in all major industries, including agriculture, construction, and energy, provides fertile ground for cross-sector partnerships to commercialize and produce value from significant net-zero technologies.
Today's chemicals are essential sustainability facilitators that are sometimes disregarded. Globally, chemical products and their derivatives are employed for energy efficiency, decarbonization, and circularity. For instance, epoxy resins made from petrochemicals manufacture wind turbine blades. As a lightweight and robust material, they are also utilized in the aerospace and automobile industries, especially electric cars, to improve fuel efficiency. Polystyrene is another example of plastic made from petrochemicals used in building insulation and reduces HVAC energy usage.
Beyond its role as an enabler of sustainability, the chemicals industry is embracing change and taking measures toward net zero. The scope and rigor of global agreements to combat climate change are expanding. Additionally, many investors are making sustainability goals a prerequisite for funding access. These changes present the industry with both problems and opportunities.
Sustainability activities in the chemical industry are important to the global transition to net zero emissions.
Investing in a carbon-reduced future
Demand for chemical products increases as population and living standards rise. Scaling alternate sources of potential emission reduction is expected to enable deep decarbonization in the industry beyond renewable power sources. The creation of clean hydrogen for low-carbon ammonia and methanol, for instance, can be utilized to cut emissions in the fertilizer industry and offer new potential energy storage solutions. Sustainability tailwinds have a tremendous impact on the supply chains of mature chemistries, making room for novel alternatives and feedstocks.
It is not unexpected that the chemicals industry is the third-largest producer of industrial greenhouse gas emissions, given the pervasiveness of its products. It is consequently increasingly vital to monitor and optimize its substantial carbon footprint. However, emissions data is only one lens for evaluating environmental impact, and it frequently ignores downstream sustainability advantages. Substitution of materials with novel chemistries must always be balanced with consideration of their durability and applicability in the final market, necessitating a more holistic approach to reaching net-zero goals.
More sustainable opportunities
Consequently, numerous lucrative investment opportunities centered on sustainability are emerging—biotechnology for low-carbon replacements, feedstocks derived from electricity, process technologies, and digital enablement via sensors. However, there is no single answer or technology for lowering emissions in the chemical industry, necessitating several initiatives.
Companies in the chemical industry are also at the forefront of driving global plastic recycling rates through the development of circular product loops. Given that just 10 percent of plastics are recycled worldwide, the potential for recycling is enormous. However, garbage collection issues are anticipated to impede recycling adoption, and virgin plastic sources will likely continue to be used in specific applications, such as building and packaging. Emerging bio-based and biodegradable polymers, such as polylactic acid and PHA, have boosted consumer goods businesses' attention as they seek to satisfy customer demand for clean labels and environmentally friendly products. Together, these two ideas have the potential to make the plastics supply chain independent of fossil feedstocks and to solve the waste problem.
Currently, enormous volumes of chemicals are sold globally, necessitating global supply chains and large-scale production units in designated places. As the globe contemplates nearshoring and onshoring various supply chains, this will affect the location where chemicals must be produced, creating investment opportunities that can also reduce the transportation emissions associated with transporting these chemicals.
