Direct CO2 emissions from primary chemical production were 920 Mt CO2 in 2020, a 2.3% decrease from the previous year, resulting from production declines due to the Covid-19 crisis. Nevertheless, this is still a 2.1% average annual increase from 2015.
In the Net Zero Emissions by 2050 Scenario, emissions from primary chemical production peak in the next few years and then decline to ~10% below the 2020 level by 2030, despite strong growth in demand. To get on this track, government and industry efforts need to address CO2 emissions from chemical production, as well as from the use and disposal of chemical products.
The chemical sector is the largest industrial consumer of both oil and gas, as well as the largest industrial energy consumer overall. However, it is the third industry subsector in terms of direct CO2 emissions, behind cement and iron and steel. This is largely because around half of the chemical subsector’s energy input is consumed as feedstock – fuel used as raw material input rather than as a source of energy.
Nevertheless, chemical sector emissions need to peak in the next few years and decline towards 2030 to stay on track with the Net Zero Emissions by 2050 Scenario.
The sector’s substantial energy consumption is propelled by demand for a vast array of chemical products. Demand for primary chemicals1 – which is an indication of activity in the sector overall – has increased strongly in recent years, although a decline occurred in 2020 due to the Covid-19 crisis. Demand is expected to resume growth and then continue increasing strongly in the Net Zero Emissions by 2050 Scenario, underscoring the need for measures to reduce the energy and CO2 emissions intensity of production.
Plastics
Demand for plastics has been rising quickly and will continue to do so. Key plastic end-use sectors are packaging, construction, and automotive applications. In many parts of the developing world, demand for plastics has just recently begun to gain momentum.
Demand for plastics drives demand for high-value chemicals, which are the key precursors to most plastics. Although demand for these chemicals declined 2.4% in 2020 due to the Covid-19 crisis, it grew at an annual average rate of 3.5% from 2015 to 2019.
Demand growth is expected to resume and regional production capacity additions are anticipated predominantly in North America, the Middle East and the Asia-Pacific region2. North America (led by the United States) and the Middle East are projected to together account for nearly 30% of the growth in high-value chemical production by 2025, with Asia Pacific making up most of the rest.
Recycling of thermoplastics counterbalances a small proportion of global demand for virgin plastics, thereby reducing demand for virgin primary chemical production. Although recycling meets only a small share of plastic demand globally, in Europe the amount of plastic collected for recycling exceeded that going into landfills for the first time in 2016. Collection rates must increase globally over the next decade to get on the Net Zero Emissions by 2050 track.
Ammonia
Demand for ammonia, the basis of all synthetic nitrogen fertilisers, has been relatively flat at around 180 Mt/yr in recent years. Synthetic fertilisers are used in approximately half the world’s food production. Demand for other synthetic fertilisers critical to modern agricultural systems (including those that deliver potassium and phosphates) has been increasing steadily, but they are less important from an energy standpoint.
Ammonia production capacity is projected to expand fairly evenly across the globe in the coming years, with the exception of Asia Pacific, which accounts for 35% of output growth to 2025. Ammonia use is driven largely by demand for urea, its largest-volume derivative. Strengthening nutrient use efficiency measures on farms, including the 4 R’s of fertiliser application (right source, right rate, right time and right place), helps lower demand in the Net Zero Emissions by 2050 Scenario, contributing to reduced emissions.
Methanol
Methanol production is currently rising the most quickly of all primary chemicals, with the exception of a 7% production decline in 2020 prompted by the Covid-19 crisis. In 2015-2019, production expanded an average 7% each year.
Methanol’s end uses are less familiar to consumers than those of ammonia and high-value chemicals. Its main end use is for formaldehyde, which is employed to produce several specialised plastics and coatings. Methanol is also used for fuel applications (a key driver of its above-average demand growth) and as an intermediary to produce high-value chemicals, mainly when oil is not available as a feedstock.
In IEA projections to 2025, methanol production capacity additions are highly concentrated in the Asia-Pacific region owing to the availability of low-cost feedstock. - iea.org-