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The chemical industry has a key part to play in tackling climate change

The chemical sector is one of the largest industrial energy consumers; decarbonising it is essential to a net zero future.

We use chemicals every day and would struggle to live in a world without them. Over 95 per cent of manufactured products rely on chemicals, from fertilizers, paints and cooking equipment to makeup, clothes and furniture.

But the industry faces a problem. Not only do chemicals account for more than six per cent of greenhouse gas emissions, but the toxicity and plastic pollution associated with the chemical industry is having a devastating impact on the planet.

We need to dramatically change the way we make and use chemicals. Our recently published benchmark sets out the actions chemical companies need to take now to limit global warming to 1.5C

Plastics are one of the most harmful products of the chemicals industry

Many people are unaware that chemicals, and particularly plastics, are a major consumer of fossil fuels. Eight per cent of world oil production goes to manufacturing plastics, four per cent for the processes involved and four per cent for ‘feedstocks’ - where the carbon is not emitted but embodied within the chemical as a raw material. It is estimated that 75 per cent of the weight of plastic is fossil carbon.

According to scientists, we have already crossed planetary boundaries for chemical pollution, meaning that current levels of chemicals and plastics threaten the planet’s ability to sustain life.

There are clear steps the chemical industry can take to decarbonise

The energy-intensive processes of making chemicals have so far meant the burning of fossil fuels at enormous rates. The emissions come from the processes needed to make chemicals, such as creating heat, steam or pressure. These are called scope 1 and 2 emissions within industry. To decarbonise, companies must electrify their processes and use renewable energy. As the cost of renewable energy falls, this can become a more cost-effective way of making chemicals than burning using fossil fuels.

Methanol, a high-volume chemical in Europe, needs carbon as part of its chemical structure. Like all fossil fuel feedstocks, the carbon is emitted at the end of the product’s life when it is used or disposed of. We call these scope 3 emissions. Chemical companies can replace fossil fuel feedstocks with emissions-neutral options, like green hydrogen made with renewable energy.

A report by Systemiq estimates that 82 per cent of carbon feedstocks can be replaced by renewable alternatives by 2050.

Making emissions-neutral chemicals and plastics is essential for reaching net zero and preventing the worst effects of global warming. But this won’t solve our other environmental crises. Chemical companies' have limited control over what happens to their products after they leave the factory – so they need to ensure products are suitable for reuse and recycling.

In a circular economy chemical companies can reduce emissions and waste

The first priority is simply to make and consume less. Right now, the chemical sector produces as much plastic as it can sell, not what consumers actually need.

The second is to make products that can be reused for as long as possible. Reuse is the most simple and powerful way of circulating materials, avoiding extracting new resources, energy use and waste involved in making new products. This also takes pressure off waste management systems that are struggling to collect, sort, and recycle large volumes of plastics. To make proper reuse and recycling possible, chemical companies must remove harmful substances from their products wherever possible, reducing toxic pollution and associated damage to our ecosystems.

As far as possible, we need to design plastic out of use, ending our unnecessary reliance on short-life plastic products.

Chemical companies need to act now to reach net zero by 2050

Scope 1, 2 and 3 emissions must reach net zero by 2050. The European chemical industry has a responsibility to take urgent action to achieve fast, steep and immediate emissions reductions – it is both technically feasible and economically viable. But, the long life of industrial assets means the industry has less than three years to make brave but critical decisions.

To create a chemical sector that’s aligned with 1.5°C and works within planetary boundaries, companies must make huge changes to their production process, products and business models. If they cannot keep pace with the transition to net zero and a circular economy, the material financial risks they face now will only grow with time.

Chemical companies need to show they have a credible path to:

  • Replacing fossil fuels with emissions-free alternatives like green hydrogen by 2050
  • Electrifying all new and existing processes and switching to 100 per cent renewable energy

Without changing how chemicals are manufactured, and changes from the wider industry and beyond, we could face a rise in global temperatures of as much as 4°C above pre-industrial levels. We all know the consequences are too serious to let that happen.

We’re monitoring and engaging with Europe’s chemical industry

Chemical companies are not household names, which might explain why many have evaded public demands for climate and pollution action.

Former professional footballer, now CEO of GFBiochemicals, Mathieu Flamini has publicly acknowledged this: “everyone is talking about fighting climate change and reducing CO2 emissions, but why are we not talking about the petrochemical industry, which affects all of us on a daily basis?”

We want to change this. Using our recently published benchmark which sets out the actions chemical companies must take now to limit global warming to 1.5C, we're assessing the biggest companies in Europe. And we’ll be supporting investors worth $6tn to engage with them where they fall short.

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