Decarbonizing Basic Chemicals Production in North America, Europe, Middle East, and China: a Scenario Modeling Study

Area of Science:

• Chemical Engineering
• Environmental Science
• Industrial Economics

Background:

• The chemicals industry contributes significantly to global greenhouse gas emissions (5%) and is challenging to decarbonize.
• Focusing on basic chemicals (olefins, aromatics, methanol, ammonia, chlor-alkali) which are highly energy-intensive.

Purpose of the Study:

• To model decarbonization pathways for basic chemical production.
• To analyze the impact of corporate investment decisions and uncertain future environments on decarbonization timelines.
• To construct least-cost decarbonization timelines based on individual abatement projects.

Main Methods:

• Scenario analysis approach considering corporate investment decision-making under uncertainty.
• Modeling abatement projects across over 2,600 production facilities in four major regions.
• Varying the pace of decarbonization capital allocation under plausible future world contexts.

Main Results:

• Decarbonization timelines vary significantly by chemical and region, heavily influenced by the investment environment.
• Deep decarbonization necessitates annual capital spending exceeding historical levels, with cumulative investments surpassing $1 trillion.
• Constrained investment environments extend industry decarbonization timelines well into the latter half of the 21st century.

Conclusions:

• Corporate investment decisions and future investment environments are critical determinants of the chemicals industry's decarbonization pace.
• Substantial and sustained capital investment, beyond business-as-usual, is essential for achieving deep decarbonization.
• Achieving ambitious climate goals in the chemicals sector requires proactive strategies to navigate investment uncertainties and accelerate abatement efforts.