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

The chemicals industry accounts for about 5% of global greenhouse gas emissions today and is among the most difficult industries to abate. We model decarbonization pathways for the most energy-intensive segment of the industry, the production of basic chemicals: olefins, aromatics, methanol, ammonia, and chlor-alkali. Unlike most prior pathways studies, we apply a scenario-analysis approach that recognizes the central role of corporate investment decision making for capital-intensive industries, under highly uncertain long-term future investment environments. We vary the average pace of decarbonization capital allocation under plausible alternative future world contexts and construct least-cost decarbonization timelines by modeling abatement projects individually across more than 2,600 production facilities located in four major producing regions. The timeline for deeply decarbonizing production varies by chemical and region and depends importantly on the investment environment context. In a best-of-all environment scenario, to deeply decarbonize production, annual average capital spending for abatement for the next two to three decades will need to be greater than (and in addition to) historical "business-as-usual" capital spending, and cumulative investment in abatement projects would exceed $1 trillion. In futures where key drivers constrain investment appetites, timelines for decarbonizing the industry extend well into the second half of the century.