Decarbonizing the Chemical Industry - 2025

According to the IEA, the chemical industry is the largest industrial energy consumer and the third-largest industry in terms of direct CO2 emissions. The industry is highly dependent on fossil fuels both as an energy source and a feedstock for chemical production. In addition, high energy requirements make chemical emissions hard-to-abate. Given that chemicals are in approximately 95% of manufactured goods, it is of the utmost importance to decarbonize the industry to achieve net-zero.

This report assesses the suitability of energy transition technologies and strategies, including process efficiency, electrification, alternative feedstocks, hydrogen, and CCUS, all of which have significant decarbonization potential for chemicals. Additionally, this report also presents an overview of emissions performance, as well as both interim climate and net-zero targets across key chemical companies. This provides an outlook on industry progress towards net-zero.

Technologies that can help the industry achieve decarbonization will become commercially viable at different times, influenced by varying levels of technological maturity, existing industrial applications, and market demand. Many energy transition technologies are still emerging and remain expensive. Even when technology costs decrease, scaling up production and developing the necessary infrastructure for industry-wide decarbonization may require significant time and investment. Challenging market conditions can exacerbate this.

The decarbonization technologies identified within this report can be broken down into strategies that provide near and long-term emissions reduction. Short-term emission reduction will focus on electrification to reduce emissions and on improving process efficiencies to reduce energy demand. However, decarbonization objectives cannot be met by simply increasing efficiency, and although some processes can be electrified, the majority of energy requirements for chemical production cannot rely on electrification alone. As such, long-term emission reductions will be achieved through CCUS, low-carbon hydrogen, and biomass and waste feedstocks.

Key Highlights

• The industry is the largest industrial energy consumer and the third-largest industry subsector in terms of direct CO2 emissions.
• According to the IEA, despite forecasted growth in demand for the industry's outputs, its emissions must peak in the next few years and decline by around 15% relative to current levels by 2030 to get on track with the NZE Scenario.
• Most chemical companies are targeting 2050 as the year to achieve net-zero. Notably, Reliance Industries has set an ambitious goal to become Net Carbon Zero by 2035.
• Due to the industry's dependence on hydrocarbons for feedstock and energy, CCUS is seen as a priority technology for the industry's current decarbonization efforts.
• As of 2024, CCUS capacity for the chemicals industry accounted for 1.8mtpa.
• Similarly, low-carbon hydrogen, from renewable sources or through carbon capture, has the potential to decarbonize the chemical industry by replacing grey hydrogen as a feedstock or as an alternative energy source instead of traditional hydrocarbons.
• The capacity of low-carbon hydrogen allocated to chemicals is predicted to grow at a substantial pace from 2025 to 2030, reaching over 2.3mpta

Scope

• Overview of chemical emissions, global chemical production, and what the net-zero scenario for chemicals looks like
• Net-zero targets for selected chemical companies
• Analysis of chemical companies' interim emissions targets
• Chemical companies' Scope 1 and 2 emissions data
• Analysis of different decarbonization technologies (process efficiency, electrification, CCUS, alternative feedstocks, hydrogen), including an assessment of their development stage and suitability for the chemicals industry
• Macroeconomic challenges facing the decarbonization of chemicals
• Case study examples of decarbonization technologies being used within the chemicals industry

Reasons to Buy

• Identify the market trends within the industry and assess what the biggest players in chemicals are doing to reduce emissions.
• Develop market insight of the major technologies used to decarbonize the industry, including an assessment of their development stage and suitability for the chemical industry, alongside the drivers and barriers to their implementation.
• Facilitate the understanding of what is happening within hard-to-abate industries as they look to become carbon neutral by 2050.