Chemicals

The chemical sector is the largest industrial consumer of both oil and gas. Yet despite being the largest industrial energy consumer, it is the third industry subsector in terms of direct CO2 emissions – behind iron and steel and cement. This is largely because around half of the sector’s energy input is consumed as feedstock, the emissions of which are released downstream in other sectors.

The sector’s substantial energy consumption is driven by demand for a vast array of chemical products. Demand for primary chemicals (high-value chemicals, ammonia and methanol) – which is an indication of activity in the sector overall – has grown strongly in recent years.

Demand for plastics, mainly derived from high-value chemicals (HVCs), has been growing 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. Recycling of thermoplastics only counterbalances a small proportion of global demand for virgin plastics, thereby reducing demand for primary chemicals.

Demand for ammonia, the chemical that is the basis of all synthetic nitrogen fertilisers, has been relatively flat in recent years, but demand for other synthetic fertilisers that are also critical to modern agricultural systems has been increasing steadily, including those that deliver potassium and phosphates, but they are less important from an energy standpoint.

Methanol production is currently expanding the most quickly of all primary chemicals. Methanol’s main end use is for formaldehyde, which is employed to produce several specialist plastics. Methanol is also used for fuel additive applications (a key driver of the more-than-average growth) and as an intermediate to produce HVCs, mainly when oil is not available as a feedstock.

With increasing demand for chemical products, it will be crucial to reduce the emissions intensity of production. Reducing the share of coal-based production towards gas and adoption of CCUS or innovative process routes based on electrolytic hydrogen can help.

Use and disposal of chemical products should also be addressed, through efforts such as reducing reliance on single-use plastics and improving waste management practices.

Last updated Jun 16, 2020

Key findings

Direct CO2 emissions from primary chemical production in the Sustainable Development Scenario, 2015-2030

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Growing demand for chemical products

Direct CO2 emissions from primary chemical production were 880 MtCO2 in 2018, a nearly 4% increase from the previous year, driven by growth in production. In the SDS, emissions from primary chemicals peak in the next few years and then decline to about 10% below today’s level by 2030, despite continued strong growth in demand. To get on track, government and industry efforts need to address CO2 emissions from chemical production as well as from the use and disposal of chemical products.

Chemicals: Tracking progress 2020