Net Zero Industry Tracker 2024 Primary Chemicals

Performance The primary chemicals sector currently accounts for 2.5%476 of global direct CO2e emissions. Fossil fuels account for over 98%477 of energy and feedstock consumption in the industry, making them a critical driver for emission intensity. The chemical sector is the largest industrial energy consumer and the third largest industry subsector in terms of direct CO2e emissions. The chemical industry has a multifaceted opportunity to lower their Scope 1 and Scope 2 emissions and downstream end-market Scope 3 emissions. Scope 3 represents the majority, at 64%, while Scopes 1 and 2 only represent 36%. Primary chemicals industry performance TABLE 16 Performance metric Change (2019-2023) Industry output +37%478 Emission intensity (Mt CO2/Mt chemicals) -2.2%479 Total CO2e emissions +5.8%480 In the 2019-2023 period, industry output increased by 37%,481 while total emissions increased by 5.8%.482 The increase in emissions is primarily due to: 1. Increased production demand: Global demand for chemicals (such as plastics, fertilizers and industrial chemicals) grew due to expanding economies, especially in emerging markets. This led to increased production, which in turn raised emissions. 2. Supply chain and operational disruptions: Global events, such as the COVID-19 pandemic and geopolitical tensions, led to temporary shifts in supply chains and operations. Higher gas prices, which resulted in less efficient production processes, delayed efficiency improvements and raised emissions. In 2022, the energy mix for primary chemicals consisted of 55% gas, 36% coal (mostly used by China), 7% electricity, 1% oil and 0.6% biofuels in 2022.483 Key initiatives, including efforts to integrate circular economy principles, improve energy efficiency and explore alternative feedstocks such as bio-based chemicals, which are critical to achieving long-term emissions reductions. Currently, only 8%484 of total plastics production comes from recycling. The development of advanced chemical recycling technologies, such as depolymerization and pyrolysis, offers a potential solution by enabling the recycling of mixed or contaminated plastics that are not currently recyclable via traditional mechanical methods. Companies like BASF485 and SABIC486 are investing in these technologies to create a closed-loop system for plastics. However, the challenge remains that plastics are typically difficult to collect efficiently, and the quality of recycled plastics often falls short of the standards required for certain high-safety applications, such as food packaging or medical use. Leading companies such as Shell and ExxonMobil,487 supported by both public and private investment, are developing scalable CCUS systems that aim to capture and repurpose the industry’s emissions. In parallel, hydrogen-based chemical production processes are gaining traction as potential long-term solutions for reducing carbon intensity, though their adoption remains in early stages due to high costs and infrastructure limitations. 4 Net-Zero Industry Tracker: 2024 Edition