The chemical industry must take urgent action if it is to enable a sustainable global economy, otherwise it will align with 4°C of global warming by 2050, with catastrophic consequences for the planet, says a report by sustainability advisory and investment group Systemiq (London; www.systemiq.earth) in collaboration with the University of Tokyo Center for Global Commons (Tokyo; www.ifi.u-tokyo.ac.jp/en/units/cgc).

Published in September 2022 and funded by Mitsubishi Chemical (Tokyo; www.m-chemical.co.jp/en), the Planet Positive Chemicals report paints a “stark choice” for the industry, which can double in size and create 29 mn new jobs if it is able to reinvent itself as a climate solution, essentially by becoming carbon negative by the early 2040s and acting as a “carbon sink”, which absorbs 500 mn t/y (net) of CO₂, by 2050.

The industry is lagging other sectors and radical intervention is needed on both supply and demand sides for it to operate within planetary boundaries, the report says. As such, it suggests 10 key actions for transforming the system to one that is planet positive. These include establishing a global charter of transition principles and a first-movers coalition to seed markets for net zero chemicals, scaling circularity and retrofitting legacy infrastructure.

The study, which outlines future pathways for the global chemical system for the period 2020-2050, highlights three key opportunities. The first of these is a transition to a circular and net zero-emissions economy, which provides the chemical industry with the possibility to grow annual production volumes two and a half times by 2050.

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Systemiq’s research shows that implementing a circular system could save the chemical industry nearly USD 1 tn (EUR 1 tn) in the incremental capital expenditure needed to reach net zero. Brands and retailers will be instrumental in driving the implementation of circular economy approaches, including reduction, reuse, substitution and recycling, which together can cut total chemical demand by between 23% and 31%, or 372 mn t and 526 mn t versus a business-as-usual scenario.

Substitution will be a key lever in the packaging industry, with the rising use of paper and compostable materials expected to displace 38 mn t to 44 mn t of demand for chemical intermediates/plastics feedstocks by 2050. The construction industry may also see a small shift towards bio-based materials, estimated at between 8 mn t and 16 mn t.

Recycling is unlikely to account for more than a 19%-26% reduction in demand for basic chemical intermediates because of feedstock and scaling limitations. Given that it has the lowest energy requirements, mechanical recycling is expected to scale up to its maximum potential, but will still only meet 23%-32% of total polymer demand.

Achieving more ambitious recycling rates will be constrained by the technology’s inherent limitations, for example losses along the collection, sorting and recycling chain, high-purity challenges for recycled material and a lack of waste management infrastructure development.

Chemical recycling technologies are likely to be dedicated to specific product applications, producing 5 mn t-10 mn t of monomers and polymers by 2050, but Systemiq notes they could be game-changing for certain sectors, such as PET in textiles and bottles, rigid food-grade PP and PS. Overall, the research suggests that recycling capacity will scale four-fold by 2050, from 23 mn t to 95 mn t, but will still only account for 40% of combined virgin and recycled plastic demand.

The net zero transition will see surging demand for wind and solar energy, with a subsequent rise in demand for polymers such as PVF and PTFE for solar panels, and technical composite materials such as epoxy resins, PVC, and PU for turbine blades.

A second opportunity relates to new manufacturing approaches based on bio-based feedstock and direct air-captured CO₂, which Systemiq says offers a technically feasible pathway for the non-ammonia chemical system to become a carbon sink that absorbs 500 mn t/y of CO₂ by 2050.

According to the research, steam crackers will remain essential assets for producing olefins – a key feedstock for plastics – and account for 14%-31% of both olefins and aromatics production by 2050. Crackers can be abated in various ways to deliver climate neutrality, through electrification, shifting to feedstocks containing biomass or waste, or by upgrading the methane off-gas from the cracking process to methanol, which can be converted to olefins and aromatics. This latter option avoids emissions and also increases the high value chemical yield from the cracker.

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Methanol to olefins and aromatics is likely to become the new technological, non-fossil platform, representing 19%-22% of the production mix by 2050, potentially reaching the scale of cracking today, especially as conventional technologies are decommissioned.

This offers the possibility that methanol, of which 28% of global output is already used to produce the major polymers, will become the primary system feedstock, displacing naphtha. The catalytic conversion of methanol to olefins – based on coal – is currently deployed at commercial scale, but only in China for now.

Demand for aromatics will remain mostly flat by 2050 as growth is levelled off by the expansion of circular strategies, particularly in the case of PET, affecting paraxylene (PX), and PS, impacting styrene. An anticipated decline in fuel use and a shift in olefins production will reduce aromatics’ availability, with methanol to aromatics being the only existing sustainable route, presenting a technology risk for the industry.

The third opportunity that Systemiq highlights is that the industry – even as it grows production to meet a circular and net zero economy – can still realistically align Scope 1-3 greenhouse gas (GHG) emissions with the Paris Climate Agreement, which aims to cut emissions and limit the increase in the earth’s temperature to 1.5 °C.

Related: Major plastics producers partner to cut GHG emissions

The chemical industry’s Scope 3 emissions – those indirectly released upstream and downstream in a company’s value chain – represent the majority of all emissions at 64% because of its dependence on oil and gas extraction, as well as carbon-dense products such as plastics. Scope 1 and 2 emissions together account for 36%.

Achieving net zero Scope 1-3 emissions will require an annual capex deployment of roughly USD 100 bn between 2020 and 2050, which is nearly three times more than that required for the system’s business-as-usual growth scenario.

Systemiq says while the industry has set up various initiatives to work towards achieving Scope 1 and 2 emission targets, its efforts are not nearly sufficient, and they do not address Scope 3 emissions.

The UK-based group adds, its research shows that bringing demand within an acceptable range is a pre-requisite for the industry and that, in parallel, it must develop carbon capture, utilisation and storage, a new feedstock supply chain, vast renewable energy sources and a balanced zero emissions technology portfolio to mitigate transition risk. “Failure to do so is likely to have dramatic consequences,” it warns, adding that the industry has a “once-in-a-century opportunity” to add value to society through circularity and broaden its span of control over new industrial territories.