Chemicals - The Next 40 Years

Changes of government, shifts in foreign policies, ongoing geopolitical tensions — against a backdrop of the war between Russia and Ukraine, and the conflict in the Middle East — continue to have implications for the affordability and availability of resources, and they are playing a significant role in shaping energy policies and strategies. Maintaining energy security remains a priority that provides an impetus for adopting sustainable technologies and keeping carbon-based technologies in the energy mix. How will electoral outcomes around the world and the West’s uncertain relationship with China impact commodity markets and trade?

Evolving consumer demands for durable goods are a traditional growth driver for the global chemical industry. In the emerging economies, this trend is fueled by rising disposable incomes, urbanization and changing lifestyles. Meanwhile, as consumers worldwide become more aware of the environmental impact of their choices, there is also a growing demand for sustainable and eco-friendly products. This shift in consumer preferences is pushing the chemical sector to innovate and develop new materials and technologies. Advancements in manufacturing processes and supply-chain management can enable the sector to meet demand more efficiently and effectively. How will the chemical sector continue to adapt and meet the evolving needs of consumers to drive its long-term growth?

Feedstock costs and supply have always been determining factors for the chemical industry’s capital investments and planning. In response to increasing decarbonization regulations and commitments, market demand, particularly in Europe, is shifting toward more sustainable chemicals produced with lower-emission feedstocks. Demand for bio-based and other renewable products and feedstocks — including from the chemical and fuel sectors — currently outweighs supply. Securing offtake agreements with feedstock providers in the earlier stages of market development can help offset the risks of paying more later, as market demand and competition for fundamentally constrained feedstock supplies drive prices higher. How will chemical producers achieve supply security for bio-based feedstocks, including waste plastics for recycling?

Continued innovation remains key to growth and decarbonization, and success will require collaboration among stakeholders and along value chains. The chemical industry is witnessing significant investments in a variety of new technologies, but identifying those with the potential for large-scale implementation to meet decarbonization goals remains a challenge. What are the technologies with the potential to revolutionize the industry and drive sustainable advancements?

The billions invested in petrochemicals for long-term growth require supply chains to keep pace. The International Maritime Organization's revised strategy, with specific interim targets, is a significant step to align shipping industry decarbonization goals with the Paris Agreement. Ambitious targets and a clear timeline will accelerate investments in lower-emission technologies and fuel alternatives. By 2030, at least 5% of maritime fuels should be carbon neutral to help achieve net zero by 2050. The competition between ammonia and methanol as carriers of hydrogen will impact supply-chain decarbonization pathways. How can stakeholders identify and find the most viable, cost-effective options?

The global recycling rate for plastics is still relatively low, and significant amounts of plastic waste end up in landfills or the environment. Efforts are underway to improve plastics circularity, including the development of advanced recycling technologies, the establishment of extended producer responsibility schemes, and the promotion of eco-design principles. Additionally, there is a growing emphasis on reducing single-use plastics and transitioning toward more sustainable alternatives. Achieving full plastics circularity requires a collective effort from all stakeholders including governments, industry, consumers and waste-management systems. How can the petrochemicals and plastics industry play its part by implementing effective strategies, and introducing new business and financing models that drive circularity?

The petrochemical industry can steer toward sustainability through the power of carbon markets and carbon management. By participating in carbon markets, companies can actively manage their carbon emissions and contribute to global emission-reduction efforts. Carbon markets provide economic incentives for companies to invest in cleaner technologies and practices, as they can financially benefit from reducing their emissions and selling excess carbon credits. Are these financial mechanisms, such as green bonds or carbon markets, strong enough to propel the industry forward?