September 2022

PlanetPositive
Chemicals
Pathways for the chemical industry to enablea sustainable global economy

2Planet Positive Chemicals

Table of Contents
4

Preface6Endorsements

8

Acknowledgements

9

Executive summary

22

Chapter 1: The chemicals system – untenablegrowth and an imperative call for control

74

Chapter 4: Can the global chemicals system
become a carbon sink?

78

Chapter 5: Implications of the transition on
infrastructure, production geography andemployment

80

Ammonia and methanol are set to dominate new
infrastructure buildout

81

Renewable energy infrastructure scaling
implications

82

Geographic implications and opportunities

24

The story of a linear system

83

Value chain shifts in the future chemical industry

26

The incompatibility of growth and climate change
objectives

84

Steam cracker assets can live on if retrofitted

30

Unabated scaling of the chemical industry is
incompatible with planetary boundaries

85

Early-stage disruptive technologies development

87

The promise of job creation

33

The imperative call for circularity

38

Chapter 2: Getting the house in order - achieving
net zero production of basic chemical intermediates(Scope 1&2)

88

Chapter 6: Chemicals system economics overcoming the financing wave

90

The true cost of low-emissions chemical products

93

Who will pay for low emissions chemicals?

40

Three main approaches can abate chemical
production

94

Policy will still accelerate the scaling of
low-emissions chemicals

41

Seven processes form the basis of the newchemical industry

97

Disruptive approaches to value creation

46

Ammonia as fertilizer and low-emissions fuel49

Methanol, the new platform chemical for alternative
carbon102

Chapter 7: Urgent action is required now - 10
recommendations to transform the system

52

Olefins: challenges and opportunities

55

Aromatics: the need for a fundamental shift inproduction

110

Conclusion

112

Appendix: Scope, approach and methodology

58

Chapter 3: The elephant in the room - how to address
feedstock and end of life emissions (Scope 3)

112

General overview

113

Scoping a large share of the complex chemicalindustry

60

Fossil feedstock: time to switch

65

From material to carbon circularity

114

Modelling supply and demand GHG reductions

67

Atmospheric carbon feedstocks: locking up GHGs

117

Key parameters

69

Green hydrogen is the missing link in the shift tonon-fossil sources of carbon

122

References70

The role of CCS in carbon management

72

The end-of-life challenge; no good answer today

126

Glossary

Planet Positive Chemicals

3Preface – the reasons
for writing this report
Climate action in the global chemical industry is lagging compared to other sectors.
As of August 2022, only seventeen industry players had committed to targets in linewith a 1.5 degrees future as part of the Science Based Targets initiative (SBTi). That
represents just 17% of the companies in the sector that have made commitments;
less than half the global cross-sector average of 35%. This report by the Center
for Global Commons, University of Tokyo & SYSTEMIQ aims to create clarity
aroundhow the global chemical industry can transition to operate within planetary
boundaries. This, in turn, seeks to catalyse action and clarify the industry’s role insafeguarding the global commons.1
Three main uncertainties are delaying this transition: uncertainty around demand fornet zero chemicals; uncertainty around the most suitable technology to produce net
zero chemicals; and uncertainty around the best pathway to achieve overall net zero
Scope 1-32 emissions. To address these uncertainties, the report defines possible
pathways to net zero Scope 1-3 emissions by 2050 for the global chemicals systemand outlines its future role in helping other sectors of the global economy reach net
zero. It is unique in scope as it addresses the bulk of emissions in the sector at a
global level, analyses how both demand and supply side interventions can be used toabate them and seeks to do so within planetary boundaries.
A detailed quantitative analysis3 was conducted by the core project team incollaboration with a panel of international experts. The resulting report is not only
about whether the chemicals system can reach net zero Scope 1-3 but how. The
analysis suggests that the chemicals value chain has multiple pathways to reachnet zero if action is taken soon enough, but each of these pathways present varying
degrees of risk and opportunity. Therefore, the global chemicals system requires amore nuanced set of metrics by which to determine success that consider:
How fast net zero is achieved. This is critical for determining the use of the global
carbon budget as, without rapid abatement, the current global annual emissions rateof 59 Gt CO2eq per year will exhaust the budget for 1.5 degrees of global warming

shortly before 2030 and for 2 degrees by 2040. 4 That means the speed of abatement

and cumulative emissions to 2050 per pathway is a key determinant of success.
How reliably the chemicals system can transition to a planet positive model.5 Even if
many of the technologies considered in this report have already reached commercial
maturity, it remains uncertain whether they will attain the massive scale required toabate the chemicals value chain over the 30-year timeframe of the analysis. Sometechnologies may fail to scale and some feedstocks may become scarcer than
anticipated. This makes it essential to de-risk the transition as far as possible byavoiding dependence on a limited number of, or less mature, technologies.

4

Planet Positive Chemicals

How strategically the global chemicals system can position itself in a way thatenables the operation of a net zero global economy. The chosen combination ofalternative feedstocks, renewable energy sources, and approaches to abating
residual emissions represents different long-term strategic positions for thesystem after 2050. Selecting different pathways to net zero e.g. most economic
or fastest abatement, will also impact its continued relevance and future growthprospects in a net zero global economy.
This report focuses on three scenarios. One scenario was selected to illustrate thechallenges and risks of achieving net zero with unimpeded demand side growth andonly supply side interventions. The other two scenarios act in tandem to create astrategic choice between the most economic and fastest abatement approaches to
net zero, within which executives must chart their organization’s transition strategy.
These scenarios are not forecasts but use the best available data to describe whatneeds to happen to bring about net zero through different approaches. As such, thereport aims to be a starting point for key decision makers to align around a common
set of facts, challenges and potential solutions by shedding light on uncertainties
around future demand and technology for net zero chemicals.
The biggest risk of all is inaction. This is true for the chemical industry, but even more
so for the entirety of society which depends on its future. The perfect economic,
policy and technology conditions are unlikely to present themselves imminently.
Thus, while this report aims to provide the best possible quantified view of the future,
leadership through uncertain times will be the deciding factor in bringing about apositive outcome for the global chemical system, for society, and for the planet. We
hope that through this work we inspire leadership and action to unlock capital, drive
innovation, enable policy making and build the chemical system the planet needs.

Naoko Ishii

Martin Stuchtey

Executive Vice President andProfessor, University of Tokyo

SYSTEMIQ Founder& Project Director

Director, Center for Global
Commons

1.

The five Global Commons Domains are: Climate System, Ozone Layer, Oceans, Land Biosphere, Ice Sheets & Glaciers

2.

Greenhouse gas (GHG) emissions are categorized into three groups or “Scopes” by the Greenhouse Gas Protocol. Scope 1 covers direct emissions from sources owned or controlled by thecompany. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling. Scope 3 covers all other indirect emissions that occur in a company’s value
chain.

3.

Using a python coded Agent Based model4.

Pathway C1. Current global emissions are ~60Gt, meaning this will be consumed by mid-2028 at current rates.

5.

Planet centric refers to operating within nine planetary boundaries: climate change, novel entities, stratospheric ozone depletion, atmospheric aerosol loading, ocean acidification, biochemical flows,
freshwater use, land-system change, biosphere integrity.

Planet Positive Chemicals

5Endorsements
I applaud the breadth and depth of this unprecedented report that quantitatively
analyzed pathways for the chemical industry to reach net zero not only in scope 1& 2, but also scope 3 upstream and downstream. While it contributes to clarifying
uncertainties that have impeded the chemical industry’s progress in net zero, it isalso a warning that has made us renew our resolve in sustainability. We are keen
to collaborate with a broad spectrum of partners on this journey toward the newroles of the chemical industry. I am sure this report will be widely acknowledged
and trigger many such collaborations in the industry to accelerate the transition thisreport calls for - we are proud to have sponsored this groundbreaking research.
– Nobuo Fukuda, Representative Corporate Executive Officer,
Executive Vice President, Mitsubishi Chemical Group Corporation

Healthy and resilient biophysical systems on Earth — our Global Commons — areat the heart of our health, security, and prosperity and we must work together tomanage them responsibly. Unfortunately, they are subject to excessive humanpressure, threatening the stability of the entire planet. In addition to climate impact,
the chemicals industry in its current state has an adverse impact on a numberof the planetary boundaries that regulate the liveability on earth. The release ofnovel entities, including plastic pollution, has already exceeded the estimated safe
boundary. Therefore, concerted steps need to be taken to rapidly mitigate thechemical industry’s impacts and achieve net zero pollution. The Planet Positive
Chemicals report provides an unprecedented and detailed roadmap for the industry
and its value chain. It demonstrates that the necessary transformation is possible andoutlines the need for stakeholders across the value chain to act now to ensure that theinnovation and investments required are galvanized to tackle this existential challenge.
– Professor Johan Rockström, Stockholm Resilience Centre,
Potsdam Institute for Climate Impact Research

The chemicals industry is at a pivotal moment: without change it could lose its
social license to operate. At the same time, the challenges are immense, and it
is arguably the hardest sector to abate. The Planet Positive Chemicals sets out
tangible pathways for the sector to become the enabler of a sustainable economy
and develop a planet-positive system. The sector is in dire need of transformational
leadership to drive the required changes and the report marks the beginning of anurgent and business-critical conversation for the industry and its value chain.
– Paul Polman, Co-founder and Chair IMAGINE, Member of the Board of SYSTEMIQ Ltd

6

Planet Positive Chemicals

The Planet Positive Chemicals report recognises clearly that the chemical industry
lies at the heart of the global economy, and therefore it holds great potential tospark change across multiple sectors. By 2050, the sector can become a carbonsink, using CO2 from the air to produce chemicals, and can be a vehicle for growthin the global south. In order to make this a reality however, the time to act is now.
Effective regulations, policies, investment and coordination are required to realize
these opportunities and transform this sector into a force for good for sustainable
development, climate and the environment.
– Nick Stern, Professor of Economics, Chair of the Grantham Research Instituteon Climate Change and the Environment, London School of Economics,
Chair of the Board of SYSTEMIQ Ltd

Chemicals are at the core of a successful transition to a net zero economy: andthe pace of chemicals decarbonisation could make or break our ability to reachessential climate targets. The Planet Positive Chemicals report sets out thechallenge and makes clear that both supply and demand side actions will be
critical to ensure that the sector moves away from dependence on fossil fuels.
Achieving this transition is clearly technically and economically feasible but as
the report emphasises, will require collaboration across the industry value chain- from governments to financiers and companies both within and outside theindustry - if fast enough progress is to be delivered.
– Lord Adair Turner, Chair, Energy Transitions Commission

We need realistic and immediate action from industry on the climate goals agreed
at an international level. The road to a sustainable global chemicals system will not
be an easy one, but the Planet Positive Chemicals report is a major contribution to
begin this journey. I think it will become a global reference document for at least thenext decade and the 10 recommendations will help focus action on what otherwise
could be seen as an impossible task. From the creation of 29 million additional jobs,
to the increased use of chemicals to drive a sustainable global economy, we want tosee ambitious companies grabbing these opportunities and transforming the way
we see the chemicals sector.
– Chad Holliday, co-Chair, Mission Possible Partnership

Planet Positive Chemicals

7

AcknowledgementsCore Team:

Expert Panel:
Arturo Castillo

Research Fellow, Imperial College

Florie Gonsolin

Director Climate Change
Transformation, CEFIC

Naoko Ishii

Executive Vice President
and Professor
Director, Center for Global
Commons

Daisuke Kanazawa
Collaborative Researcher

Jonathan Cullen

Professor, University of Cambridge

Julien Boucher
Partner, EA

Katja Hansen

Independent Consultant

Martin Stuchtey
SYSTEMIQ Founder& Project Director

Eveline Speelman
PartnerSophie Herrmann
Partner

Alexandre Kremer

Associate (co-lead author)

Andreas Wagner

Associate (co-lead author)

Jane Leung

Associate (co-lead author)

Peter Goult

Associate (co-lead author)

Achim Teuber
Associate

Floor van Dam
Associate

Mike Muskett

Independent Consultant

Yasunori Kikuchi
Associate Professor,
University of Tokyo

Kash Burchett
Associate

Manuel Braun
Associate

Min Guan
Associate

Shajeeshan Lingeswaran
Associate

Pim Sauter
Associate

For special thanks for their participation,interviews and/or feedback:Mark Wilson

Fanran Meng

Jun Nakatani

Joanna Kolomanska

Adair Turner

Kiyo Kurisu

SYSTEMIQ Senior Advisor
WEF

Simon Moreno
PIK

8

University of Cambridge
Chair of the Energy Transitions
Commission

Masahiko Matsukata
Waseda University

Planet Positive Chemicals

University of Tokyo
University of Tokyo

Yuko Oshita

University of Tokyo

Executive
summary
The chemicalindustry is a majorbuilding blockof our global
economy, providing
15 million jobs
worldwide and 4%of global GDP.

The global chemical industry generates $4.7 trillion in revenues annually,
representing ~4% of global GDP, and directly employs over 15 million people.1,2
The products from the chemical industry underpin our way of life, health andprosperity and our transition to a net-zero-emissions economy. They are present
in the healthcare, packaging, agriculture, textiles, automotive, construction andmany other systems, with 96% of manufactured goods depending on their use.3 As
a result, the production of basic chemical intermediates, such as those in scope forthis study (ammonia, methanol, ethylene, propylene, butadiene, benzene, toluene,
xylene), directly impacts almost every part of the global economy. Therefore,
unless the chemical system transitions to a sustainable model of operation,
it makes it challenging for other parts of the global economy using chemical
products to be truly sustainable.

Planet Positive Chemicals

9By embracing a“planet positive”
circular and netzero-emissions
transition, thechemical system
could grow 2.5x
by 2050 and enabletransitions to netzero-emissions
in other sectors,
whilst keeping
its own Scope
1-3 greenhousegas emissions
in line with theParis Climate
Agreement.
The chemicalindustry today
has a significant
carbon footprint
and is lagging otherindustries in thetransition to netzero-emissions. The
current trajectoryof the system isaligned with 4˚C ofglobal warming.

This report is grounded in a detailed economic model that outlines future pathways
for the chemical system from 2020-2050, along with the environmental impacts ofeach of these pathways. The analysis highlights three key opportunities:
1.

The global transition to a circular and net-zero-emissions economy is an
opportunity for the chemical system to grow annual production volumes 2.5 times
annual production volume by 2050, enable transitions to net-zero-emissions inother systems such as shipping and energy storage and create 29 million newjobs globally, of which 11 million would be direct new chemical industry jobs;

2.

Even with this 2.5x growth trajectory by 2050, Scope 1-3 greenhouse gas
emissions from the system could realistically align with the Paris Climate
Agreement; and3.

With new manufacturing approaches based on bio-based feedstock and direct
air captured carbon dioxide, there is a technically feasible pathway for the nonammonia chemical system to become a “carbon sink” that absorbs 500 million
tonnes (net) of CO2 per year by 2050.

This growth opportunity is not evenly distributed across the chemical system – it isparticularly significant for ammonia and methanol-based chemical pathways. The
opportunity relies on urgent and ambitious transformations in chemical manufacturing
alongside aggressive demand-side circular economy approaches in the downstream
value chains using chemicals in materials and products. These transformations, actionplans and investment needs are outlined in detail in this report.

The chemical industry is currently lagging in its commitments to science-based targets
to transition to net-zero-emissions and is expected to be the last system to achieve thekey tipping points needed to mainstream emission reduction technologies.6
The production of basic chemical intermediates in-scope for this report has a Scope
1, 2 & 3 emissions of 2.3 Gt CO2eq, representing just under 4% of the 59 Gt global

annual emissions and an estimated 72% of all chemical system emissions. Within
the 2.3 Gt, Scope 3 represents the majority at 64% (1.5 Gt CO2eq), while Scope 1&2

only represent 36% (0.8 Gt CO2eq). The magnitude of Scope 3 in the chemical systemis driven by its dependence on fossil, leading to high upstream scope 3 emissions

from oil and gas extraction (0.5 Gt CO2eq), as well as carbon-dense products such as

plastics and urea resulting in high associated downstream Scope 3 emissions (1.0 Gt
CO2eq). It is for this reason that focusing on Scope 3 in the chemical system transition
to net zero is so essential.

Based on the most recent IPCC carbon budgets and the analysis carried out for thisreport, the chemical system’s combined production and Scope 3 emissions meanthat if this one industry continues to scale up without reducing its emissions, it would
be responsible for 24-38% of the total 2020-2050 global carbon emissions budget fora 1.5°C future. This “business as usual” scenario would align the system with a 4˚Cglobal warming scenario by 2050.7

10Planet Positive Chemicals

The chemicalsystem is alreadytransgressing
other planetary
boundaries.
Environmental
pollution andpotential
unintended
consequencesfrom climate
solutions (such as
land use change)must be avoided.

Beyond climate impacts, the leakage of chemicals and downstream products (e.g.
plastics and fertilisers) into the environment has a range of other adverse impacts on
the nine essential planetary processes that regulate the stability and resilience of the
Earth system. The tolerable limits of human impact on these systems are referred to as“planetary boundaries”,8 and there has been increasing awareness that the chemicalsystem is breaching many of these boundaries.
The planetary boundaries for the release of novel entities, including chemical
pollution and specifically plastics, as well as biogeochemical flows (e.g. nitrogen
flows contained in ammonia-based fertilizer run off), into the biosphere have bothalready been exceeded.4,5 Furthermore, care must be taken to avoid an uncontrolled
net zero transition, which could have severe impacts on biodiversity and land use if
the use of biomass as feedstock is not regulated and sustainable, particularly in lightof competition for sustainably produced feedstocks. Therefore, the current operating
model of the chemical system represents a multi-pronged threat to the planet andsociety. Mitigating these impacts requires that the industry take a broader approachthan solely abating climate impacts.

6.

Analysis conducted on SBTi commitments across the sector placed chemicals commitments at 17% vs a 35% cross-sectoral average. For “The Paris Effect: COP 26 Edition” SYSTEMIQ conducted abalanced scorecard survey of all sectors to evaluate readiness to mainstream abatement technologies, among which the chemicals system was the found to be the slowest.

7.

IPCC AR6 III below 4 degree is 4,220 Gt and above 4 degrees is 5,600 Gt. Based on an allocation of chemicals (2.0%), of which only 72% is in scope, and shipping (1.6%) of global emission, total
emissions budgets would be 128-170 Gt respectively in a below and above 4-degree scenario. BAU-BAU scenario is expected to generate 146 Gt of CO2eq emissions during the period 2020-2050.

8.

The planetary boundaries are: i) chemical pollution and novel entities, ii) climate change, iii) atmospheric aerosol loading, iv) ocean acidification, v) freshwater use, vi) land system change, vii)
biosphere integrity, viii) biogeochemical flows, and ix) stratospheric ozone depletion.

Planet Positive Chemicals

11Demand reduction
through circular
economyapproaches
would save over
$1 trillion intransition costs
from 2020-2050(~30% of total) andreduce pressure
on planetary
boundaries.

Demand-side circular economy approaches (reduction, reuse, substitution andrecycling) can reduce the absolute amount of future chemical production andtherefore the transition investment needed over the next decades by over $1 trillion(almost 30% of total incremental investment required) between 2020 and 2050.
This requires coordinated and ambitious action from the chemical system and thedownstream value chains using chemicals in materials, fertilisers and products.
Today, the global chemical value chain is predominantly linear, 9 with low reuse
and recycling rates and significant waste generation. For example, up to 70% of
nitrogen input in fertilizer is not taken up by crops and only 9-14% of plastic evercreated has been recycled.6-8
Ambitious demand-side circular economy approaches reduce the relianceon new technology developments that are still scaling up (e.g. new bio-based orwaste-derived feedstocks or carbon capture storage and utilization (CCUS)). They
also reduce the growth of production, waste and pollution from the system and its
associated downstream products, directly reducing planetary boundary impacts.
Applying circular economy approaches to this linear value chain can reduce
total demand in the system by 23-31% (372-526 Mt) versus business-as-usualand net zero growth without sacrificing any functional benefit or utility. This isparticularly relevant for non-ammonia demand resulting in 33-51% reduction. Of
total system reduction, elimination represents 41% of total circularity impact, reuse
19%, substitution 14%, and recycling10 26%. The chemical industry must embrace
this demand reduction from downstream customers, while pursuing a broad rangeof direct and indirect benefits circularity brings about, including; social (e.g., net job
creation, thriving communities), environmental (e.g., biodiversity, soil, and natural
ecosystem preservation) and climate (reduced greenhouse gas emissions).9-12

9.

The chemical value chain today converts fossil feedstocks to chemical products which are rarely returned into the value chain via reuse or material/chemical/carbon recycling.

10.

Mechanical recycling, dissolution and depolymerisation only.

12

Planet Positive Chemicals

The chemicalsystem transition
requires a supplyside shift awayfrom fossilbased inputs
for feedstocks
and energy,
towards inputs
that are based onalternative formsof carbon, greenhydrogen, andrenewable energy.
There is no silver
bullet technology
solution for thetransition.

Decoupling from fossil: Almost the entire carbon feedstock (713 Mt carbon) usedin the system is from virgin fossil sources. Fossil faces multiple uncertainties in its
future, including extraction abatement challenges, potential price volatility, andunacceptable environmental impacts. Continued unilateral dependence on fossil forfuel and feedstock is a risky strategy. Furthermore, incineration and landfill are not
attractive end-of-life options for non-ammonia chemicals today and carbon captureand storage (CCS) has yet to scale. Therefore, the continued extraction of virgincarbon augments the challenge of abating emissions and achieving true net zero
Scope 1-3 emissions.
Switching to renewable feedstocks: There is an imperative to switch to alternative
feedstocks for basic chemical intermediates production. Key alternative carbon
feedstocks are biogenic and direct air captured CO2 (atmospheric carbon), as well as
point source CO2 and solid waste (carbon as an economic by-product). By 2050, as

much as 82%11 of carbon feedstock can come from alternative sources, leaving only
77 Mt of virgin fossil carbon in the system, an 89% reduction from today. In addition,
up to 234 Mt p.a. of green hydrogen may also be required, predominantly (99%) as
feedstock for ammonia and methanol to enable use of alternative carbon feedstocks
for chemical production.
Switching energy source: using renewable energy rather than fossil fuel to produce
heat can avoid process emissions. Up to 12,000 TWh of renewable energy capacity
will be required in a net zero system, although this is predominantly needed to
produce green hydrogen feedstock. Of the remainder, 4% is used for electric steam
crackers and other production processes, 3% is used for carbon capture, and lessthan 1% is used to make green hydrogen for steam cracker heat.
Carbon capture and storage: some process emissions and end-of-life disposal
emissions are unavoidable and thus CCS is likely to be required as a means ofabating residual emissions that cannot be addressed via switching feedstocks orenergy sources. Up to 640 Mt p.a. of CCS will need by 2050 to abate the system.

11.

Multiple scenarios have been modelled. The most pertinent values have been selected to illuminate the executive summary to avoid complexity. For detail around values per scenario, the main report
should be consulted.

Planet Positive Chemicals

13

Ammonia (5xgrowth by 2050)
and methanol (4xgrowth by 2050)
will be central
to the chemicalsystem transition

Ammonia production is the largest contributor to Scope 1&2 emissions (0.36 Gt
of CO2eq – 44%) by the basic chemical intermediates industry today. Continued

growth in fertilizer demand due to population growth and ammonia’s use in new
applications, such as power storage and fuel for net-zero shipping, mean it would
experience a surge in demand from 185 Mt in 2020 to more than 1,000 Mt by 2050
(of which three-quarters is new net zero applications). This would be the largest
demand growth of any basic chemical intermediate by 2050, representing as muchas 32% of the 500 Mt p.a. of projected global green hydrogen demand in a net-zero
economy by 2050.13,12 This is why transforming both existing and new production

capacity to renewable (non-fossil) energy and feedstocks is critical to enable asustainable future.
Methanol also has a bright future because it can be produced from non-fossil
carbon and green hydrogen feedstocks, and it can be manufactured into a wide
range of downstream chemicals, including olefins and aromatics. Green methanol
can therefore be used to displace fossil feedstocks (i.e., naphtha), thus avoiding
upstream production Scope 3 emissions. It can also enable more efficient recyclingof waste carbon within the chemical system (e.g. via capture of CO2 from industrial

point-source emissions or waste gasification). As a result, methanol is expected toexperience 330% growth from 102 Mt in 2020 to ~440 Mt in 2050.

The systemtransformation
requires capital
investments ofaround $100
billion per year
over the next
three decades,
but will only havean estimated ~1%
impact on costs oftypical productsthat are madefrom chemicals.

12.

Achieving net zero Scope 1-3 emissions will require ~$100 billion per year incapex deployment between 2020-2050, 2.7X larger than capital requirements
for business as usual growth of the system. Firstly, adequate large-scale
capital must be allocated for deployment into the system transition. Secondly,
a network of financial intermediaries, infrastructure, products and expertise to
deploy the capital must be developed. Thirdly, a pipeline of high-quality joint
venture transformation projects are needed to create a clear track record formainstreaming circular and low-emissions technologies. Achieving this will require
government policy support as well as shifting perceptions of value, businessmodels, technology risk, rates of return, and capex profiles across the chemicalvalue chain.
Despite the scale and holistic nature of the infrastructure transformation, theimpact of the increased manufacturing cost to end user products is limited to low
single digit percentages, for example soft drinks 0.7-3.2%, cars 1.0-1.1% and fooditems 0.6-0.9%.

Projections vary considerably. In this instance 500Mt global production by 2050 has been taken.

14

Planet Positive Chemicals

The systemtransformation
requirescoordinatedaction from thechemical industry
and companies in
its upstream anddownstream value
chains, the energy
system, innovatorsand governments.

Implications for the chemical industry: Operationally delivering the transition will
require the chemical industry to drive major shifts in the technologies and locationsof production. Existing brownfield production capacity such as steam crackers
and steam methane reformers will need to undergo retrofitting with low-emissions
technologies such as green hydrogen firing, electrification or CCS. The shift will also
result in the retirement of some refinery assets such as catalytic reformers for the
production of aromatics.
Production infrastructure will need to shift towards low-emissions orientatedtechnologies of electrolysis, methanol-to-olefin and aromatics, bioethanol
dehydration, gasification and carbon capture and utilization. While legacy production
assets are likely to remain in situ in industrial clusters to benefit from downstream
integrations and synergies, greenfield capacity installation will gravitate towards
regions with abundant, affordable renewable energy (for green hydrogen production)
and also renewable carbon sources (for methanol production). This will result in
the restructuring of global chemical value chains and trade patterns. End-of-lifeemissions must be abated, thus a network of carbon capture, utilization and storage(CCUS) capabilities must be applied across the global incinerator portfolio.
Looking outwards, the new operating model of a net zero chemical industry will
require far deeper engagement with adjacent segments of the economy suchas renewable energy providers, biogenic feedstock producers, waste managers
and end-of-life disposal i.e. incinerator owners. As a result, players will require
lateral and vertical integration through a framework of “build, buy or partner” withthese systems, offering new synergies and revenue opportunities. Equally, looking
inwards to the value chain, engagement in circular economy models (e.g., throughChemicals-as-a-Service models), may present an opportunity to decouple from thevolume-based model today and derive revenue from more efficient, value-adding,service-focused applications of chemicals.
Implications for the chemical value chain: Driving rapid change will require acoordination of industries moving in parallel and new models of system governance toaccelerate the transition. This may include establishing a first movers demand coalition
comprising converters, brands, retailers, shipping companies and fertilizer companies
to guarantee a market for low-emissions chemicals through offtake agreements.
Such a coalition can also demand mandatory recycled content regulations and call for
more stringent end-of-life recycling and CO2 emission reductions as part of extended

producer responsibility obligations. Brands and retailers will be instrumental in driving
the implementation of circular economy approaches for plastics such as elimination
and reuse models. Downstream collection and sorting of plastics must be optimized,
mechanical and chemical recycling infrastructure must be expanded, and end-of-life
incineration facilities must be upgraded to include carbon dioxide capture. Finally,a global charter of transition principles would help the broad range of stakeholders
involved in the transition align pre-competitive approaches to shifting the system tooperate within planetary boundaries.

Planet Positive Chemicals

15

Implications for the energy system: The energy system will need to build out
renewable energy sources to produce up to 12,000 TWh for the chemical systemby 2050, representing as much as 13% of global generation. This will requireestablishing additional generation capacity in locations with affordable, abundant
renewable energy potentially presenting a major economic development opportunity
in the Global South. The majority of energy will be for green hydrogen feedstock
production and represent almost 50% of total global green hydrogen demand in
2050. Therefore, the chemical (and particularly the ammonia) industry will be pivotal
in driving the scale-up of electrolyser production for the green hydrogen industry.
Implications for innovators: Ensuring this transformation is possible at anaffordable rate and with feasible economics will require the innovation community
to fast-track critical technology innovations to commercial scale, specificallymethanol-to-aromatics technologies, carbon capture technologies, andelectrolysers. The innovation and innovation finance community should seek toovercome the key energy intensity, material efficiency, and technical challenges
in these spaces to reduce cost and scale of the infrastructure buildout needed.
Breakthrough technologies capable of disrupting the industry (e.g., biotechnology,
electrochemistry) should be supported generously via R&D funding and scale-up
programs.
Implications for government policy makers: Policy changes are required to enable
the shift to a circular and net-zero-emissions chemical system. An enabling policy
framework could help to cushion economic shocks, incentivize preferred actions
and disincentivize harmful actions. This could be in the form of a carbon tax13 or
incentives to put the businesses cases for low-emissions technologies on-par or
better than the traditional technologies. Ultimately, either the public and/or value
chain shareholders must pay the additional costs of low-emissions chemicals.
National governments are the ultimate arbiter of where these costs must beborne most heavily, and each government must determine its policy based on its
perspective of how society should pay the dividend back to nature and eliminate
market externalities over time. Lastly, scaling adoption of circularity models
upstream and downstream is essential and will likely benefit from integration withindustrial decarbonization policy to ensure circularity receives due precedence.

13.

Preferred over emissions trading approaches.

16

Planet Positive Chemicals

Urgent andcoordinatedaction is required
to change thetrajectory of theindustry andreduce risks forcorporations,investors andsociety at large.

There is no time to lose. Long lifetimes for chemical industry facilities mean thatinvestment decisions in the next few years will determine the trajectory of theindustry during the critical decades out to 2050. Recent extreme weather events
caused by climate change are highlighting the risks to corporations, investors andsociety at large, meaning that investments in fossil-fuel dependent facilities now
carry well-documented stranded asset risks. “Wait and see” is no longer a viablestrategy for corporations and investors in this industry.
This report illustrates viable pathways to a “planet positive” chemical system that willallow the chemical industry to thrive and grow. A number of companies are alreadyshowing the way. If industry can mainstream and accelerate this transition, it has theprospect of being every bit as central to the progressive story of the 21st century as it
has been to that of the 20th century.

Planet Positive Chemicals

17

How to readthis report:
numbers andterminology

18

Planet Positive Chemicals

This report focuses on three scenarios. It briefly mentions the

The nature of the chemicals system is highly complex, thus

Business-As-Usual, Most Economic (BAU-ME) scenario toevery effort has been made to keep the language non-discuss the impacts of unmitigated scaling of the system, but

technical while maintaining veracity to the subject, although

thereafter, unless explicitly mentioned, figures will refer to thea background level of knowledge about chemical production

Low Circularity, Most Economic (LC-ME) and Low Circularity,

has been assumed. The reader should note the difference

No Fossil production capacity installed After 2030 (LC-NFAX)

between the “chemical industry” (players), the “chemical value

scenarios as a range, expressed as XX-YY million tonnes (Mt)chain” (feedstock and energy production down to incineration),or $XXm-$YYm in respective order. This is to provide the reader

as well as chemical products. The term “chemical system”

with insight into the most economic value and the fastest

is used as a catch-all for the whole entity, especially given

abatement value, identify the lower and upper boundaries

the focus on Scope 1-3 net zero. “Chemicals” refer to allof feasible pathways, and thus help the reader to chart theirin-scope chemicals, referred to as intermediates (ammonia

own pathway between these values. This report focusesand derivatives urea and ammonium nitrate, methanol,

predominantly on supply side abatement technologies, thus key

ethylene, propylene, butadiene, benzene, toluene, xylene).

scenarios focus on more modest levels of circularity rather than

The ammonia system is split out due to its size and different

the maximum possible levels of circularity.

approach to abatement. All other chemicals are referred to as

The time series of the analysis runs from 2020-2050, withand methanol are referred to as “olefins & aromatics”. Neta focus on 2050 as a post-transition end state where thezero, unless explicitly stated otherwise (e.g. Chapter 2), refers

system is set up for long term sustainability, but with someto net zero Scope 1-3 emissions.

the non-ammonia system, and chemicals other than ammonia

key values (e.g., investment costs) stated cumulatively tounderstand the magnitude of the transition. The analytical

A glossary of definitions and technical terms is available

model is not deterministic, but rather collates a granular viewin the Appendix.

of feedstocks and production technology data 2020-2050
such as costs and emissions factors, then objectively selects
these year-by-year over the time series based upon the
scenario priorities (e.g. most economic or fastest abatement
approaches to net zero). The model optimizes based onachieving net zero Scope 1,2 & 3 upstream.

Chapter 1 focuses on the state of the

Chapter 4 focuses on the potential for

Chapter 6 discusses the economics ofchemicals system today and its impact

the non-ammonia chemical system tothe transition and potential new roles

on planetary boundaries.

achieve negative emissions

for the chemical system in a sustainable

Chapter 2 focuses on how the chemical

Chapter 5 discusses the implicationsindustry can transition to reach Scopeof the transition to net zero for

Chapter 7 presents the report

1&2 net zero.

infrastructure operations, production

recommendations of what is needed togeography and jobs.

catalyse the transition of the chemical

2050 global economy.

Chapter 3 focuses on how thesystem towards a sustainable model overchemicals value chain can transition to

the coming critical decade.

reach Scope 1-3 net zero with a focus on
non-ammonia chemicals.

Planet Positive Chemicals

19

Overview of Key Scenarios
2020
The global
chemicals
system today

What scenario
shows

2050
Business as usual +new net zero applications demand, mosteconomic scenario(BAU-ME)Can net zero bereached with only
supply sidesolutions, and how
risky is this?

Baseline

1400Mt2,100Mt

2050
Low circularity
most economic(LC-ME)
What is thelowest cost
approach toachieve net
zero?

What is thefastest way
to reach net
zero?

Playing field of planetcompatible pathways to
net zero and beyond

ReduceSubstituteRecycle1700Mt

400Mt ofdemand reduction
through circularity
Methanol
(20%)
Other
(20%)

Today

2050
demand after
circularity

74%

95%

83%

74%

34%

17%

30%

47%

40Mt

150Mt

170Mt

230Mt

Grey hydrogenin chemicalindustry

Carbon captureand storage(mt O₂ p.a.)

Chemicals sector needs
to decouple from fossil
and switch the renewablecarbon feedstocks

430

26%

Fossil Carbon(% of 500Mt global
demand in 2050)

Production volumes will
still more than double
overall by 2050, driven by
new net zero enablingchemical applications;
Ammonia will represent
60% of demand andMethanol 20%

26%

490

Green
HydrogenCircularity can reducedemand by ~20% saving$1 trillion capex needed
to abate the system

830

5%

(biogenic, point
source, direct air
capture, municipal
solid waste)Feedstocks (Mt)

2050
max

Growth750

Alternative
Carbon3 main scenarios arepresented within thisreport to illustratepossible future pathways
for the global
chemicals system

Ammonia(60%)

Business as
usual growth
(20%)

700Mt

KEY INSIGHTS

Eliminate

New NetZero
Applications(80%)

Demand(Mt)

2050
Low Circularity,
No Fossil capacity
installation
after 2030
(LC-NFAX)- 0.7

Industry high CCS
cap (1,800Mt)

N/A

900Mt

Demand reduction isneeded to bring CCS
requirements safely withinscaling constraints

300Mt

600Mt

Industry low CCS
cap (600Mt)…and green hydrogen,representing
up to half of global
demand by 2050

Energy4-6X growth in renewableenergy will be required,predominantly for greenhydrogenFossil (1000 TWh)
2,000 TWh required today,
predominantly from fossil

Renewable(1000 TWh)

5x increase

Technology mix

7%

1200
5%

24%

5%

300
~100%
Ammonia(incl.
Derivatives)

20

6x increase1600(Mt chemical produced, %)Unabatedfossil4x increase

Abated steam
cracking

500

1200

17%

750

79%

19%

67%

6%

46%
16%

Abated gas
reforming

Planet Positive Chemicals

38%

Olefins &Methanol& Aromatics

Electrolyzer+
Haber-Bosch

Ammonia(incl.
Derivatives)

Olefins &Methanol& Aromatics

Carbon capture& utilization

850
17%
22%

80%

30%
15%

Ammonia(incl.
Derivatives)

18%

7%

17%

~100%
Olefins &Methanol& Aromatics

1200

43%

3%

14%
2%

Ammonia(incl.
Derivatives)

Olefins &Methanol& Aromatics

Methanol to olefins& aromatics (MTX)

OtherElectrolysis+Haber Boschwill be the dominant
technology for green
ammonia across all
scenarios
Non-ammonia
chemicals can be abatedmost economically via
retrofitting existing fossil
tech (steam crackers andgas reforming) andfastest through zero
emissions technologies(CCU and MTX)KEY INSIGHTSBAU-ME

2020

Cumulative
CAPEX required(2020-2050)

LC-ME$2.7 tn$3.7 tn$1.2 tn

LC-NFAXA net zero system
requires ~2.7X moreincremental investment
than a world failingto transition$3.2 tnbaseline cost

Net emissions(Gt CO2eq p.a. 2050)

2.3

Net Emissions

0.5

Scope 1
Scope 2
Scope 3 Upstream
Scope 3 Downstream

0.6

0.8

1.0

0.65

0.5

0.1

0.0

0.5

0.0
-0.17

Cumulative
scope 1-3 global
emissions2020-2050

Scenario
summary

- 0.7

47Gt

44Gt

35Gt

Continued highfossil production
thus high CCS
requirements

Dependence
upon abatedfossilproduction

Decouplingfrom fossil

Highest cost
scenarioLowest cost
scenario9%(% of 1.5 degree carbon
budget consumed)More emissions
intensive

The non-ammonia
chemicals system canbecome carbon negativefrom 2043 and sequester~0.5 Gt p.a. by 2050

0.05

0.6

0.2

0.2

Chemical system
passes net zero
to become carbon
emissions negative

8%

Lowest cost
scenario

Net zero notachieved

7%

Circularity and faster
abatement can preserve
12Gt of the global
carbon budget

Shift toalternative
feedstocks andzero emissions
production
technologies
Goes emissions
negative by
2050 tobecome acarbon sink

Recommendations
GovernanceOperations

Data

1. Establish first movers
coalition(s) to seed
low-emissions
chemicals markets

2. Establish global charterof transition principles

3. Chemicals industry to
advocate for a net zero
enabling policy framework

4. Scale circularity
5. Switch production from fossil to renewable feedstock sources
6. Retrofit legacy infrastructure
7. Abate end of life chemicals
8. Digitize the value chain and disclose key environmental system dataInnovation

9. Fast track critical innovations to commercial scale

Finance10. De-risk large-scale financial investment

Note: Many numbers in the Executive Summary are rounded for simplicity. Accurate values can be found in the main body of the text.

Planet Positive Chemicals

21

Chapter 1:

The chemicals
system – untenablegrowth and animperative callfor control.
Unimpeded scaling of the global chemicals systempresents significant climate and planetary boundaryrisks, and the risks entailed in transitioning to a safe
operating model need to be mitigated by increasingmaterials circularity as an effective tool to reducedemand and drive resource efficiency.

22

Planet Positive Chemicals

Chapter summary
The global chemicals system is predominantly linear, fossilbased and emissions intensive. While it has multiple compounding
factors that make it arguably the hardest to abate system, action
is lagging. Pressure is mounting to achieve Scope 1-3 net zero.
Continued, steady growth is projected for the system, augmented by asignificant increase in demand for chemicals that enable a broader net
zero global economy, namely ammonia and methanol. If the chemicals
system is not abated, it aligns with a 4-degree global warming scenario.
Unmitigated growth places heavy dependence on a few untested,unscaled technologies to reach net zero, creating major climate risk ifthey fail to scale.
Even if net zero can be achieved, the chemicals system impacts a
range of other planetary boundaries (e.g., novel entities in the formof chemical pollution, and biogeochemical nitrogen flows) due to lowlevels of control over the use phase of its products, meaning that there
is a direct correlation between size of the system and size of leakage.
Resource efficiency through materials circularity is a highly effective
strategy to increase control over the system, optimize resource use,
mitigate demand growth, reduce transition costs and, most importantly,
de-risk the transition to net zero in the event that some supply sidetechnologies do not scale as anticipated.
Materials circularity can reduce total demand by 23-31%(373-527 Mt) by 2050. This involves elimination (41-47%), reuse(19-20%), substitution (14%), and recycling (19-26%) in a low
and high circularity scenario.

Planet Positive Chemicals

23

The story of alinear system.
The global chemicals system
is predominantly linear andhighly emissions intensive
due to its reliance on fossil
sources for both feedstockand energy inputs.

The global chemicals system is predominantly linear. Only 9-14% of plastic
materials, which constitute over 70% of olefins and aromatics, are recycled today.
Instead, they are predominantly disposed of in waste management value chainswith various level of effectiveness and leakage rates, depending on the circularity
level. Similarly, about 70% of ammonia is used for food fertilizer in an inefficient linear
system, with over 70% of nitrogen input not taken up by crops and potentially running
off to the environment.6–8,15
In recent decades, the affordability of current fossil feedstocks, paired with theunequalled benefits delivered by chemical products, has fuelled more aggressive
growth than experienced by any other resource sector of comparable size.16 This
growth has been largely driven by the production of plastic resins and fibres, which
increased from 2 Mt in 1950 to 381 Mt in 2015, a compound annual growth rate
(CAGR) of 8.4%,6 roughly 2.5 times the CAGR of the global gross domestic productduring that period.
Today’s chemicals system is a by-product of the oil and gas industry. The production of
petrochemicals is almost exclusively fossil-based and absorbs around 14% of oil and
8% of gas production globally.16,17 Similarly, the vast majority of current global ammonia
production uses gas reforming to produce hydrogen. By contrast, bio-based chemicals
are still largely marginal, comprising less than 0.5% of plastic resins, for example.
At end-of-life, 41% of plastic globally is mismanaged, meaning that it either leaks into theenvironment (ocean or land) or is openly burned.8 An additional 31% is either landfilled
or incinerated with or without partial energy recovery, with the latter driving massive
greenhouse gas (GHG) emissions due to the carbon density of most plastic (~80%) andthe low thermodynamic efficiency of electricity generation from waste combustion.
The total Scope 1&2 emissions of the chemical industry account for 2.0% of global
GHG emissions today (1.16 Gt CO2eq).12,18 but Scope 3 emissions upstream (e.g., fossil

extraction and fugitive emissions) and downstream (e.g., end-of-life incineration or

fertilizer nitrous oxide emissions) account for 64% of the industry’s total emissions –an additional 1.46-2.79 Gt of CO2eq.
The chemical industry is arguably the hardest-to-abate sector. Other hard to abate
industrial sectors include heavy duty road transport, aviation, iron and steel, shipping,aluminium, and cement and concrete, the Scope 1&2 emissions of which collectively
account for around 30% of global GHG emissions.19 The cement, iron and steel, andchemicals sectors, which together account for around 6.5 Gt CO2eq, are consideredparticularly hard to abate due to processes requiring high temperature heat inputs, longasset lifetimes that create slow infrastructure turnover, and producing GHG process
emissions as outputs.20 However, the chemical industry is arguably the hardest toabate sector for the following, additional reasons: i) chemicals generate high upstream
emissions due to their current fossil nature; ii) the industry has high end-of-life emissions
due to the high embedded carbon content in plastics and N2O emissions from fertilizers;

and iii) a complex range of technologies is required to abate the system across an

extraordinary diversity of applications across all sectors, i.e. there is no silver bullet.

24

Planet Positive Chemicals

Figure 1: Sectoral score card toward low-emissions market tipping point – sourced from
“The Paris Effect: COP26 Edition”

2050

2048
2049

2047

2046

2044
2045

2043

2042

2040
2041

2039

2038

2036
2037

2035

2034

2032
2033

2031

2030

2028
2029

2027

2026

2024
2025

2023

2022

2020
2021

2019

2018

2016
2017

2015

2014

2012
2013

2011

2010

2008
2009

2007

2006

2004
2005

2003

2002

2000
2001

1999

1998

1996
1997

1995

1994

1992
1993

1991

The chemical industry is anticipated to be the last to tip towards
low-emissions models
Electricity

Light Road Transport
Fugitive Emissions
Building heating
Food & Agriculture

Trucking
Aviation
Land Use Change
Shipping
Steel
CementChemicals
Other

Low carbon solution maturity
Concept

Solution
Development

Niche Market

Mass Market

Late Market

Market tipping point(cost & critical mass
tipping points)

It is expected that the chemical industry will reach low-emissions technology market
tipping points later than any other sector when evaluated with a balanced score card
(Figure 1).14 There are three immediately evident reasons why more progress may nothave been made:1.

Uncertainty around demand for low-emissions chemicals. Basic chemicalintermediates operate in commodity markets where operational margins do notcurrently take carbon cost into account. This makes it difficult to make a businesscase for the deployment of capital into more expensive forms of production if themarket is not going to recognize the added value of these low emissions chemical
products in the near term.

2. Technology risk. Large scale proof of concept is still required for key
technologies (e.g., carbon capture and storage [CCS], electrification, andnon-coal-based methanol-to-olefins and methanol to aromatics) and carbon
circularity (e.g., carbon capture and utilization [CCU], gasification, and pyrolysis).
Many of the technologies required for abatement are at the start of theirlearning curves and require major process adaptations, making them expensive.
Equally, there is considerable uncertainty around which of the many technology
options to invest in. Moreover, many of these technologies (e.g., CCS) cannot
economically operate at a small scale and therefore require large capex
investments to prove their concept and economic viability. This results in highbarriers and economic risks to participation.

14.

The Paris Effect, COP26 Edition, SYSTEMIQ (2021). Methodology contained in report Appendix.

Planet Positive Chemicals

25

3.

Uncertainty over Scope 1-3 upstream and downstream pathways to net zero.
To date there has been a lack of clarity over the availability of feedstock andtechnology at scale, the required capital allocation over time, the rate of GHG
abatement required, and the parameters within which to execute a safe,
planet centric transition.

There is growing recognition that the chemical industry needs to address its Scope
1&2 and, increasingly, end-of-life Scope 3 emissions. The Glasgow Financial Alliancefor Net Zero (GFANZ), representing 450 institutions with $130 trillion of assets undermanagement, have established as a “starting line criteria” that businesses and industry
need to measure their Scope 3 impact where reliable and practicable.21 So far, 73
chemical companies globally have committed to setting SBTi targets within 24 months,
11 have already set targets in line with a 1.5 degrees maximum global warming (15% of
the total vs cross-sector average of 32%), and a further 2 have set targets to well-below
2 degrees Celsius.22 In order to overcome these challenges and make the transition to
net zero feasible, both supply and demand side management will be required.

The incompatibilityof growth andclimate change
objectives.
Uncontrolled demand growthis highly risky in all scenarios
for the chemical industry
because any key supply sidetechnology failures will resultin unacceptable emissions.

The chemical industry is set to grow steadily by 2050. Under a business-asusual demand scenario,15 IEA expects the production of the eight major chemicalintermediaries to increase 1.5-fold by 2050, from 693 Mt in 2020 to 972 Mt in 2050
(CAGR 1.1%).15,23 To enable a net zero global economy, demand for chemicals willneed to more than double to reach 2,078 Mt by 2050, driven overwhelmingly by lowemissions ammonia. Achieving net zero in the shipping industry and energy sector
will require ammonia production to increase 4-fold to replace fuel oil as shipping fuel,accounting for an astonishing 625 Mt per year by 2050, and specific countries forwhich ammonia for power is relevant, such as Japan and South Korea,16 will accountfor up to 161 Mt by 2050.24,25 Methanol production will also increase by 260-400 Mt to
enable net zero Scope 1&2 production of olefins and aromatics.26, 17
Without action, cumulative emissions from in scope chemicals could accountfor 29-44% of the 1.5-degree global carbon budget due to the chemical industry’s
deep reliance on fossil.12 The report analysis suggests that, in a business-as-usual
demand and supply scenario, Scope 1-3 emissions will increase from 2.29 Gt in 2020
to 7.75 Gt in 2050 (+338%), accounting for a cumulative 29% (146 Gt) of the 1.5-degreecarbon budget over the period from 2020 to 2050 (Figure 2). However, uncertainties
regarding both upstream and downstream Scope 3 emissions could lead to muchhigher estimates – from 4.5-4.6 Gt in 2020 to 14.6-14.8 Gt in 2050 – causing severe
climate risk and potentially accounting for up to 44% of the 1.5-degree carbon budget.

15.

The business-as-usual IEA projections assume the world remains largely unequal by 2050. In a fundamentally different, more equal 2050, where the Sustainable Development Goals have beenachieved, per capita consumption levels (e.g., of plastic and fertilizer) could be similar across global economies. In such a scenario, chemical production could be two-fold higher than the businessas-usual projection – up to 2,162 Mt by 2050 – further exacerbating the risk of missing the net zero target by 2050.

16.

Expert interview from ETC

17.

New demand for olefins, aromatics and methanol from significant renewables buildout and the shift to electric vehicles is also considered in this study but significantly lower volume comparedto ammonia's growth.

26

Planet Positive Chemicals

Figure 2: Total system emissions by Scope 1,2, 3 upstream and 3 downstream in 2020

Methane emissions from fossil extraction upstream and uncertainty overdownstream waste management mean total system emissions could bealmost 60% higher than estimated in this report
Gt CO2eq in 2020

+116%

Estimated in report - 2.3 Gt

2.10

Maximum potential - 3.6 Gt

Upstream
emissions could
be 25-40% larger ifmethaneemissions were
properly
accounted for1

+40%
0.97
0.69
0.49

0.65

0.65
0.19

Scope 3
Upstream

Scope 1

0.19

Scope 2

Downstream
emissions could
be twice as large if
all materials wereincinerated at
end-of-use2

Scope 3
Downstream

Note: (1) Nature, 578, p. 409–412 (2020), (2) Assuming no benefit from energy recovery and no CCS.

Upstream, fugitive methane emissions18 are potentially underestimated. 28 Today,
upstream emissions represent 22% of the industry’s GHG emissions (0.49 Gt) but
fugitive methane could contribute more than is currently estimated. According torecent studies, actual upstream emissions could be 25-40% higher (up to 0.61-0.69
Gt in 2020), presenting an even greater climate risk if unmitigated. Full abatementof these emissions is complex but achievable with enough will and investment, as
highlighted at COP 26 in Glasgow with the launch of the Global Methane Pledge. 29
Downstream, lack of transparency and control over waste management systems
lead to uncertainties over resulting emissions. 8,30,31 Today, downstream emissions
represent 42% (0.97 Gt) of the industry’s GHG emissions but this could rise to 61%(2.10 Gt) if all waste were to be incinerated with or without energy recovery. Givencurrent waste management practices – a mix of landfill, incineration, recycling,
and leakage – only a portion of all potential end-of-life emissions actually takeplace and these stem predominantly from combustion (either controlled throughincineration with or without energy recovery, or uncontrolled from open burning).
As partial energy recovery through incineration is perceived to be a more sociallyacceptable end-of-life transition technology than landfill, a shift toward standardized
incineration could put both the industry and society at risk if those emissions are
not effectively mitigated through CCU or CCS.32,33 Additionally, data gaps in waste
management create uncertainties over the quantity of plastic remaining in stock
versus that entering end-of-life, presenting a serious risk of underestimating plastic’s
contribution to climate change. In Europe, for example, 43% of plastic put in themarket is unaccounted for in waste statistics.30,31

18.

The IPCC defines “fugitive emissions” as intentional or unintentional releases of gases from anthropogenic activities. In particular, they may arise from the production, processing, transmission,storage and use of fuels, and include emissions from combustion only where it does not support a productive activity (e.g., flaring of natural gases at oil and gas production facilities).27

Planet Positive Chemicals

27

Figure 3: Business-As-Usual Demand Scenarios: Comparison of key characteristics(emissions, feedstock mix, CCS requirement)

Steady demand is unstainable from a climate perspective, and achieving
net zero in such conditions is risky due to heavy reliance on just two
technologies: CCS and CCU
BAU Demand Scenario Scope 1, 2 and 3 emissions1
Gt of CO2eq (2050, cumulative)
Scope 3 Upstream

Scope 3 Downstream

Scope 1

Uncertainty4

Share of
1.5°C
carbonbudget2%, 100% =500Gt

Scope 2BAU BAU5

BAU ME5BAU NFAX5

Carbon feedstock mix% of chemical production (Mt of carbon)
FossilCCS
required3
Gt of CO2annually

Key scenario
takeaways

Biomass and Waste
CCU of CO2 (DAC or Point Source)

26 25 4

8 2
12
-8 2
11

25

24

65

69

68

47-115

61

121-189

24-38%

98

9-23%

6-18%

29-91

74

13

42

Fossil & emissions
intensive

2

16

10

45

0.9

Fossil + CCS
intensive

0.6

CCU intensive(i.e., energy intensive)

100%
Notes: (1) Refer to Appendix for Scope 1,2 and 3 definition, (2) IPCC, AR6 III, 2022 (3) includes both CCS from production processes and incineration+energy recovery (4) uncertainties accountfor potentially 20-40% higher fugitive methane emissions and for full release of embedded carbon at end-of-use and assuming no benefit from energy recovery (5) BAU demand refers to
demand scenario according to IEA projections assuming no demand reduction or resource efficiency levers; most economic and no fossil supply refers to scenarios used to achieve net
zero scope 1&2 in those conditions

Achieving net zero without any demand reduction or increased attempts atresource efficiency creates heavy reliance on affordable and effective CCS at scale.
Our analysis suggests that the most economical pathway to achieve net zero Scope
1-3 emissions under business-as-usual demand projections will lead to the industry
relying for the most part on a fossil feedstock plus CCS system. In such a scenario,
the chemical industry could need up to about 1.7 Gt of annual CCS capacity, including
additional capacity to mitigate end-of-life incineration. The associated infrastructure
would be on a scale roughly equivalent to a third of the current global gas industry,raising serious questions about the feasibility of relying too heavily on this strategy
over the next 30 years, (see Chapter 3 section on CCS).

28

Planet Positive Chemicals

Figure 4: System-level net zero demand constraints as defined by supply side abatement capacity

Total demand is constrained by availability of sequestration capacity (CCS),
the availability of atmospheric carbon feedstocks and the scale of recycling

B

Biobased& DAC-CCU

G(Carries negative
CO2 footprint)

Recyclates(Includes CCU)

A Fossil-based

End-of-Life
Carbon Destination

D
DemandF

Incineration(Carries positive
CO2 footprint)

Recycle(Includes CCU)

E Sequestration(CCS, etc.)

LimitedC

Production
and Use Phase

LimitedLimitedCarbon limitation to reach net zero
within planetary boundaries andtechnology scaling constraints

Carbon fromFeedstock

Potential scaling constraints on supply side abatement technology mean demand
reduction is required to safely transition to net zero Scope 1-3. The scaling of
the system is constrained by the availability of technologies that either sequester
carbon (i.e., CCS) or allow the use of alternative feedstocks that offset emissions witha negative emissions factor (i.e., direct air capture [DAC] or biogenic feedstocks). As
Figure 4 shows, for Scope 3 category 12 (end-of-life treatment) net zero to be achieved,
all residual positive emissions (G) must be cancelled out by the same amount of carbon
in feedstock carrying a negative footprint (C). As the supply of biobased feedstock
is limited, the amount of (C) is limited unless DAC can be deployed. Furthermore,
the amount of fossil carbon entering the supply chain (A) must equal the amount of
sequestered carbon (E), which again has risks and limitations. Therefore, the chemicalindustry’s ability to support the demand (D) under Scope 3 net zero depends on thecapacity of (C) and (E) while maximizing (B) and (F). See footnote for detail.19
If any of three key technologies (CCS, DAC and use of sustainable biogenic
feedstock) fail to scale, demand will be too big for supply side interventions
to achieve net zero. This is evidenced by the BAU-ME scenario, in which 55% of the
global biogenic feedstock available and allocated to the chemical industry and 52% of
the CCS capacity is consumed. A sensitivity has been assumed whereby only a thirdof this capacity is available in a downside scenario, meaning that a business-as-usual
growth system (BAU-ME) would significantly exceed these capacities and fail to reachnet zero, while a system reduced in size by low levels of circularity ambition (i.e., LC-ME
or LC-NFAX) would still achieve net zero to within a margin of error.

19.

Carbon balance requires A+B+C = D = E+F+G. By definition B = F, therefore A+C = E+G. Net zero further requires C = G, therefore A = E. Thus, the boxes with the same color must have the sameamount of carbon under Scope 3 category 12 net zero for CO2. This chart assumes Scope 1 & 2 emissions to be net zero, and focuses only on CO2 emissions in Scope 3 category 12.

Planet Positive Chemicals

29

Unabated scaling of
the chemical industry
is incompatible withplanetary boundaries.

Due to the interlinkages between the planetary boundaries, an appropriate
transition needs to have positive impacts across a range of broader planet-focused
metrics beyond GHG emissions (Figure 4). The climate transition cannot be an
isolated strategy and identifying planetary boundary trade-offs is essential. Whilethe development of strong climate pathways will have indirect positive impacts onsome planetary boundaries (e.g., ocean acidification, aerosol loading), for others
a complementary, comprehensive and holistic strategy must be developed. For

To avoid “carbon tunnel
vision” and safeguard theglobal commons, the industry
needs to assess its impact
across the broader set of nine
planetary boundaries.

example, biogenic feedstock usage and renewable energy generation capacity
rollout must be linked to biosphere integrity and land system change.5 Fertilizer
growth and management must be conceived of with biogeochemical flows andfreshwater use in mind.4 And the impact of novel entities on planet and humanhealth must be assessed and monitored.

Figure 5: Planetary boundaries in relation to this analysis

The chemical industry has a direct impact on multiple planetary boundaries
and ultimately a role to play in safeguarding the global commons

Biosphere integrity
and land systemchange: Biomass
will be a key
feedstock to achieve
net zero, sourcing
must be capped toensure land
restoration andbiodiversity is notunintentionallysacrificed at theexpense of climate
strategies.
Freshwater use
Anticipated impacts
are not significant
given futurechemical production
processes are notexpected toconsume more fresh
water anddesalination could
be an affordable risk
mitigation strategy.
Main focusof the study

CLIMATECHANGE
BIOSPHERE
INTEGRITY

Increasing risk

Climate Change: The chemical industry has an essential role in enabling society to remain on 1.5C
trajectory given its emissions are embedded across all industries. Achieving net zero will be critical.
However, the chemical industry is arguably the hardest to abate sector due to the combination ofembedded carbon, high temperature processes and large and long assets life.

NOVEL
ENTITIESOPERATING SPA
FE
CE
SA

BII

STRATOSPHERICOZONE DEPLETION(Not yet quantified)

ATMOSPHERICAEROSOLLOADINGLAND-SYSTEMCHANGE(Not yet quantified)

FRESHWATER
USE

P

OCEAN
ACIDIFICATIONN

BIOGEOCHEMICALFLOWS

Biogeochemical flows: The chemical industry has arole to play in proactively encouraging fertilizer
demand reduction levers (e.g., food waste, dietchange) and higher nitrogen use efficiency levers(e.g., precision agriculture, nitrogen inhibitors) as
well as best agriculture practices (e.g., crop rotation).
Boundaries for whichlevers are directly
accounted in the study

Notes: Picture credit: Stockholm Resilience Centre

30

Novel Entities: A recent study has
quantified the irreversible state ofchemical pollution which is critical
for the industry to address yet notdiscussed in this study.

Planet Positive Chemicals

Boundaries for whichindirect positive
impact is expected

Stratospheric ozone
depletion: Not examined.
Atmospheric Aerosol:
Achieving net zero will
have an indirect positive
impact from reductionof combustion (directly
via carbon capture orindirectly via deploymentof renewable electricity).
Ocean acidification:
Achieving net zero will
have an indirect positive
impact due to limitationof carbon dioxide in theatmosphere andfertilizer run-off.
Boundaries not
impacted by the
results in this study

Global Commons
Domains
Climate system

Aerosols, atmosphericcirculation and composition,
carbon cycle, monsoons

Ozone layer

Stratospheric ozone layer

Land biosphereAmazon & boreal forests,
freshwater, grassland/tundra,
permafrost, soil carbon sink

OceansAcidity, AMOC, biodiversity,
coral reefs, ENSO, methane
hydrates, oxygen content

Ice sheets & glaciers
Arctic sea ice, EAIS,Greenland ice sheet, inlandglaciers, WAISLeakage is inherent to any system but must be kept under control to ensure
safeguarding of the global commons. Leakage from the chemical industry’s supply
chain exists in the form of GHG emissions in the air (e.g., CO2, N2O), and large scalechemical runoffs and localized pollution in the environment (e.g., microplastics,
fertilizer run-off, CFCs).3,8,12,34,35 Leakage has an adverse effect on climate, biodiversity
and ecosystems more broadly, and on human health more directly. Optimizing the sizeof the chemicals system to design out waste inevitably minimizes mass leakage andthus reduces potential impacts on planetary boundaries.
In a regenerative world, where land is restored and biodiversity maintained,biomass will be limited. The demand for biomass has surged, but not all forms ofbiomass production are sustainable. Truly sustainable biomass supply is complex
to estimate, but the latest biomass availability research estimates the global supply
at 40-60 exajoules (EJ), equal to about 2,900-4,300 Mt.5 Taking the needs of otherindustries (e.g., wood industry, pulp and paper, sustainable aviation fuel requirements)
into account , this analysis caps the share the chemical industry can use as biomass
feedstock at only 10 EJ (about 720 Mt of dry biomass).5 Scaling technologies that canprocess biomass streams (especially currently hard-to-valorise ones) will be relevant toany climate roadmap, but either over reliance on those technologies or promoting thedevelopment of an unsustainable biomass supply will have adverse effects on land use
and biodiversity, and ultimately add to the existing climate risk.
Synthetic fertilizers are essential for human development, but misuse or overuse
disrupts biochemical flows and creates environmental externalities such as
eutrophication and ocean acidification. Feeding the growing world population will
require 50% more synthetic fertilizer by 2050 at current rates, but with weak nitrogenuse efficiency and considerable runoff, the environmental impacts are also set toincrease irreversibly.36 The chemical industry should seek to ensure that the fertilizer
its produces is used appropriately downstream and that best agricultural practices
are rolled out, although ownership of this will reside with regulators, agri-techcompanies, and food producers. Fertilizer production can be reduced if food waste is
mitigated, diets shift from animal protein to vegetal protein, and if precision agriculture
enables more effective use.36 Altogether, fertilizer production could be reduced by
11-29%, leading to a direct reduction of run-off. The chemical industry may also beable to develop new business models to support this sustainable transition while
compensating for the financial loss, with fertilizers-as-a-service one obvious example.
Ubiquitous plastic usage has led to increasing amounts of leakage into theenvironment – currently estimated at 11 Mt entering the ocean per year,
threatening biodiversity and ecosystems worldwide.8 Plastic has been the fastest
growing material of the last century, but the lack of adequate waste management
systems has created a gap.8 Macro- and micro-plastic are both prevalent and underincreasing scrutiny. Recent public awareness has raised the issue to the top of thesustainability agenda and created momentum for a Paris-like binding UN treaty,
which governments have committed to negotiate by 2024.35 Alongside mitigating
emissions from production processes, the Breaking the Plastic Wave (2020) reportexamines the fate of plastic materials and associated demand reduction and resource
efficiency levers, including waste management systems and the resulting effects onleakage. The analysis suggests that, if these levers are ambitiously developed, by
2040 environmental leakage both on land and in the ocean can be effectively reducedby more than 80%, and microplastic pollution can be reduced by 78%. Developing
the appropriate circular economy for plastic – including elimination, reuse and waste
management systems – will have multiple co-benefits for society beyond reducing
GHG emissions from virgin production or offering carbon feedstock pools.

Planet Positive Chemicals

31

The safe operating space for the introduction of novel entities20 (e.g., entities
which are geologically new) has already been exceeded, according to recent
research, and this is almost exclusively due to chemical pollution. 3 “Outside thesafe operating space of the Planetary Boundary for Novel Entities” was published inearly 2022 in the journal Environment, Science & Technology by a team of leading
scientists, arguing (quantitatively for the first time) that novel entities are being
released in the environment at a rate outpacing humanity’s ability to conduct safety
related assessment and monitoring. Entities of concern include plastics, as well as
additives (e.g., plasticizers), pesticides, and down-the-drain consumer products.
While this report does not further discuss the impact chemicals have on humanhealth as it is a separate and dedicated area of research, it is vital that the chemicalindustry conduct further studies to address these concerns. More specifically,
additional research is necessary to determine whether climate mitigation strategies
could cause unintended adverse or beneficial impacts on flows of novel entities,(e.g., the role of material substitution).
Anticipated impacts on freshwater use by the chemical industry are notsignificant on a global level, and desalination and purification of brackish water
will provide an affordable mitigation strategy in certain local circumstance.
Therefore, water is not discussed further in this report. While the chemical industry
is a significant consumer of water, the production of primary chemicals accounts
for only around 1% of global freshwater usage.15 Additionally, the technologies
recommended in this report are not expected to consume significantly more watercompared to existing processes as they typically require lower temperatures or relyon electrification, removing some cooling needs. The production of green hydrogen
will also require less water than fossil fuel extraction and processing today.14 However,groundwater depletion constitutes a major risk for localized chemical clusters ofconcern in some regions (e.g., China’s coastline, southern U.S.). Since desalination has
drastically decreased in terms of both costs and energy consumption in recent years(ca. 0.7 $/m³, 3-4 kWh/m³), it might provide an interesting risk mitigation strategy forthe industry at large.37 With needs ranging from approximately 2-20 m³ of water per
tonne of ammonia and steam cracker products respectively, the additional cost forchemical production is marginal (approximately 0.5-1.5% per tonne chemical).38,39
Atmospheric aerosol loading and ocean acidification will be indirectly but
positively impacted by climate mitigation strategies. While ocean acidification
will be positively affected by halting the increase in CO2 concentration in theatmosphere and minimizing fertilizer runoff, atmospheric aerosol will benefit fromthe reduction of combustion and associated emissions due to carbon capture andthe decarbonization of the energy sector. On the other hand, the stratospheric ozone
layer depletion requires different set of levers to the ones discussed in this report
and therefore is not examined here.4
Optimizing demand for chemicals offers a unique opportunity for the industry tocontribute to the stewardship of the global commons and justify the renewal of its
licence to operate. Bringing the size of the chemical industry system to a sustainable
scale means that GHG reduction technologies, which are bound by technology scaling
and feedstock/energy constraints, can more safely transition to net zero and withstandshocks if one or two technologies fail. In addition, a resource efficient economy willallow the industry to focus on essential demand with the greatest value added forsociety, while reducing or substituting some non-essential utility. This new demandmodel could be the basis for a new social contract that aligns the industry’s economic
requirements with society’s demand for environmental and social justice.

20.

New entities are defined as “new substances, new forms of existing substances, and modified life forms that have the potential for unwanted geophysical and/or biological effects”(Steffen et al, 2015). This includes chemical and plastic pollution.

32

Planet Positive Chemicals

The imperative
call for circularity.

This analysis suggests that ambitious deployment of circular levers can
reduce 2050 business-as-usual demand for the eight chemical intermediaries
studied by up to 23-31% (in this section, range refers to low and high circularity
ambition levels respectively). This is particularly relevant for non-ammonia primarychemicals, where it can lead to up to 33-51% demand reduction without removing

Circularity driven by material
demand reduction andresource efficiency is a prerequisite for the chemicalindustry to safely transition
to operation within planetary
boundaries.

any utility benefits (Figure 6). These circular levers include business models thatlead to a net demand reduction for end products and, by extension, basic chemicalintermediates (see Appendix). Most, if not all, levers will be driven by resource
efficiency strategies from downstream consumer facing or product manufacturingindustries. Reducing the need for a material (or a portion of it, e.g., through reuse) in
the first place, abates emissions from its entire value chain by removing the need to
extract fossil resources, manufacture goods and the associated energy, and manage
the related waste generated during and at end-of-life. It also eliminates the risk ofleakage. And all this at little to no cost for the system. This report groups the circularlevers into four relevant categories – elimination, reuse, substitution and recycling –and analyses them across five key industries: agriculture, packaging and fast-moving
goods, building and construction, transportation, and textiles.

Figure 6: Basic chemical demand analysis between 2020 and 2050

While ammonia will grow significantly to fulfil new net zero applications
such as shipping and power, non-ammonia chemicals will experience
the greatest impacts of circularity
Mt of ammonia

Focus of this report
+448%
786

1,014

18

0

0

0

996

968

Shipping

185

42

Power

228

Ammonia

Mt non-ammonia chemicals
321
237

744

508

-18%

-33%
1,065

134
Eliminate

69

Methanol53

Reuse Substitute

Direct Reduction

Butadiene

98

710

Recycle1584

XyleneTolueneBenzenePropylene
Ethylene

2020

2050
BusinessAs-Usual
Scenario

2050 Net ZeroBusiness-As-Usual
Scenario2

Circularity impact

Low

High

Circularity ambition level

Notes: (1) Recycling includes mechanical recycling, depolymerization and dissolution technologies; other chemical recycling technologies such as pyrolysis and gasification were consideredin the supply model as they produce basic chemicals(2) Refers to business as usual demand with new net zero enabling applications added
MTX demand for LC-ME illustrated. Additional demand growth or reduction for BAU and HC demand not captured.

Planet Positive Chemicals

33

Direct reduction – including elimination and reuse – is by far the most importantlever, accounting for 59-67% (221-351 Mt) of total demand reduction of basic
chemical intermediates by 2050. All industries are expected to embraceresource efficient strategies (Figure 6). Demand reduction can take two forms:•

Strict utility elimination accounts for 41-47% (152-246 Mt) of demand reduction.
It is defined as where an entire product, or a share of it, is no longer required
to deliver the same service to society. Elimination is relevant to all industries
where economical and technical solutions exist and are socially acceptable.
Transportation fuel related demand (e.g., methanol as fuel, fuel additives)
represents the largest elimination potential in a net zero world wheretransportation is decarbonized, accounting for 70 Mt by 2050 compared to 2020
consumption patterns. Sustainable transition toward more efficient building anduse of space will require fewer overall resources and can deliver another 24-59
Mt reduction.40 Changes in diet, precision agriculture, and reduction in foodwaste together have the potential to remove the need for 18-46 Mt of fertilizer by
2050.36 Eliminating unnecessary packaging could lead to 19-26 Mt reduction.8
Waste reduction in textile supply chains can reduce the need for 3-6 Mt
of synthetic fibres.41•

Service or reuse models (19-20% of total reduction) is where a product’s utility
is still valued but its delivery through a new business model requires lessmaterial for the same output. A traditional reuse model is milk delivery in glass
bottles that are returned and refilled, which has in modern times been replacedby linear plastics. Today, service or reuse business models is an expanding,rejuvenated concept and is likely to be applied to more and more industries as
the bottlenecks associated with new supply chains and value proposition are
overcome.42 As of today, reuse is especially relevant for the packaging industry,
reducing the need for 52-70 Mt of basic chemical intermediates by 2050, and fortransportation through mobility-as-a-service, which can potentially reduce anadditional 13-27Mt. New business models in the fashion industry might leadto an additional 4-8 Mt reduction.8,41,43

Substitution is the smallest lever, accounting for 14% of total demand reduction
for basic chemical intermediates, and is mostly relevant for the packaging andtextile industries. It includes all levers where utility is being substituted with amaterial not produced by the chemical industry in scope of this analysis. Material
substitution requires clear GHG benefits to be implemented and a thorough life cycle
assessment to ensure no unintended consequences are generated on other impact
categories (e.g., deforestation, biodiversity loss). It can be an especially relevant lever
to consider for chemicals with high leakage potential. Substitution will be a key leverin the packaging industry, with the rising use of paper and compostable materials
expected to displace 38-44 Mt of demand by 2050. The construction industry mightalso see a small shift toward bio-based materials, estimated at 8-16 Mt. Finally,
the fashion industry might be the most impacted by material substitution due tothe return of man-made cellulosic fibres (e.g., lyocell, viscose) and compostable
synthetic fibres (e.g., PHAs), which could displace up to 3-5 Mt.

34

Planet Positive Chemicals

Recycling is a relevant lever, but it is unlikely to account for more than 19-26%
of demand reduction for basic chemical intermediates due to feedstock andscaling limitations. Two forms of recycling are considered:21•

Mechanical recycling22 is expected to scale to its maximum potential, giventhat it has the lowest energy requirements, but will still only meet 23-32% of
total polymer demand. Driven by favourable policies, the report analysis suggeststhat mechanical recycling alone will reach a 33-39% recycling rate23 globally by
2050 (in contrast the EU has targeted 55% of plastic packaging by 2030) andtherefore will remain the primary recycling technology for polymers.8,44 Achieving
more ambitious recycling rates will be constrained by inherent limitations to thetechnology, including: (1) losses along the collection, sorting and recycling value
chain; (2) limits to producing high quality recycled grades (e.g., food grades)
due to the complexity in recovery of pure material and the presence of different
polymer grades, additives, or specific contaminants (e.g., oil); and (3) lack of waste
management (especially collection and sorting) infrastructure development in the
Global South.8 While innovation across the value chain is expected to increasehigh quality closed loop recycling, this analysis suggests that open loop recycling,defined as the recycling of material into applications with lower requirements andused by other industries (e.g., food grade bottles into textiles), will still account forover 25% of recycling volumes globally. Policies set to achieve higher recycling
targets will necessarily require significant decreases in sorting losses (viatechnological advances) or will rely on alternative chemical recycling technologies(e.g., pyrolysis and gasification), or a combination of both.

•

Downstream chemical recycling technologies (e.g., depolymerization andsolvent-based recycling) are expected to continue to play a smaller rolecompared to mechanical technologies, and to be dedicated to specificproduct applications, leading to the production of 5-10 Mt of monomers
and polymers by 2050. Downstream chemical recycling refers to a wide arrayof technologies that recycle polymers into molecules and typically involve
either a molecular reaction (e.g., depolymerization) or the use of a chemical(e.g., solvent). These technologies could be game changing for certain sectors(e.g., polyethylene terephthalate in textiles and bottles, rigid food grade
polypropylene, and polystyrene) by complementing mechanical recycling. In
the case of depolymerization, it can fill gaps by accepting grades rejected by
the mechanical recycling industry (due to contamination or certain materials– like fibres – being hard to mechanically recycle). Solvent-based technologies
could also be increasingly used as a complementary step after (not insteadof) mechanical recycling, to further purify material and potentially achieve
virgin or even food-grade quality outputs (an effect not quantified in thisstudy). However, despite their high relevance, these technologies are unlikely
to be silver bullet solutions as a combination of technological constraints,
current cost, emissions profile, and competition with mechanical recycling
for feedstock make them unlikely to become mainstream technologies for all
sectors and all polymer resins by 2050.31,45

21.

Feedstock recycling technologies (i.e., pyrolysis and gasification) are not covered in this section of the report but are discussed later as they enable the production of basic chemical intermediates(e.g., olefins, syngas).

22.

Mechanical recycling constitutes the recycling of polymers without altering their chemical structure and without the use of subsequent chemical intermediaries. Quality of the output is typicallylower than virgin due to the mixing of polymer grades and their related additives.

23.

Note that recycling rates differ from use of recycled content. Each metric was calculated using the same numerator – amount of plastic recycled – yet the denominator for recycling rates is the total
amount of plastic waste generated, while for recycled content it is total amount of virgin plastic produced.

Planet Positive Chemicals

35

Figure 7: Change in basic chemical demand through circularity across key downstream industries

All major downstream industries will be impacted by demand reduction
levers and resource efficiencies leading to major shifts for the
non-ammonia chemical industry% of change by weight, 100% = 2050 business as usual demand1

278

109

7%
19%

22%
7$

136

25

6%
10%

12%

7%

17%

14%
9%

100%

10$
6%

28%
77%

52%

Reuse
54%

43%

Elimination

Substitution
Recycling2
Virgin demand3

Packaging andFast Moving
Goods
Note:

Buildings andConstruction

Automotive

Fashion(1) volumes considered are for the low ambition scenario and only include demand derived from the 8 chemical in scope for this project: ethylene, propylene, methanol, ammonia,
benzene, toluene, xylene, butadiene (2) Recycling includes mechanical recycling, depolymerization and dissolution technologies; (3) virgin demand includes all supply production
processes yielding virgin products regardless of the feedstock source and therefore include fertilizer synthesis from wastewater nutrient recovery, waste gasification and pyrolysis.

Implementing circularity will fundamentally alter the shape of the system by 2050,
transitioning it from a predominantly linear operation. It is therefore prudent thatcircularity is enacted under two key principles:•

Upstream prioritization – in an optimal circular system, the lowest energy,
most material efficient processes is maximized before waste descends to lessefficient technologies (i.e., maximizing mechanical recycling before passing
waste to chemical recycling).46 This broadly means maximizing upstream
technologies as far as possible due to their downstream value chain ripple
effect. For example, one tonne of elimination results in 100% reduction inmaterial use, direct removal of collection and sorting costs as well as removalof any recycling or disposal costs, emissions and resource losses, vs one tonneof chemical recycling which sustains a larger system.

•

Complementarity of technologies – similarly, to ensure recirculation of material
with the greatest energy and resource efficiency, technologies would ideallynot compete e.g. for feedstock sources at a market level; chemical recycling
technologies would not cannibalize the best feedstocks before mechanicalrecycling.46 In practice, long-term feedstock agreements, feedstock tracking,appropriate pricing mechanisms, and infrastructure synergies will be key enablers.

36

Planet Positive Chemicals

Implementing circularity will reduce incremental capex requirements to reachnet zero by around $0.20 tn for circularity and $0.77 tn for supply side abatement
cumulatively 2020-2050 in the most economic scenarios, so a total saving of almost
one trillion dollars, (see Figure 37 for relative costs of ammonia vs non-ammonia
and circularity impacts). Circularity offers to opportunity to create greater resource
efficiency, reduce leakage and pollution, reduce GHGs, create new businessmodels and therefore revenue streams, and simultaneously reduce overall systems
transition cost. While this analysis has assumed a modest level of circularity, higher
levels make attaining net zero and operating within planetary boundaries quicker,
easier and more affordable.

Planet Positive Chemicals

37

Chapter 2:

Getting the housein order – achieving
net zero productionof basic chemicalintermediates(Scope 1&2)
Achieving net zero Scope 1&2 is feasible byimplementing three complementary strategies:
shifting feedstocks, switching energy source, andapplying CCS. This requires an almost complete
shift to new low-emissions technologies.

38

Planet Positive Chemicals

Chapter summary
The operation of a net zero Scope 1&2 chemicals system can becharacterized by three strategies: a shift from fossil to alternative
feedstocks (e.g., point source, waste, biomass, direct air capture
and green hydrogen), a shift in energy source from fossil torenewable (mostly green hydrogen), and applying CCS.
These three strategies can be applied to seven technology processes
that will form the basis of the future net zero chemicals system: (1)electrolysis (to produce H2) will rapidly scale, especially for ammonia,
and will compete with existing (2) gas reforming (to produce H2), thefuture of which depends on its ability to connect to CCS; (3) gasification(to produce syngas from waste and biomass) will develop but likely
remain expensive in many regions; (4) carbon capture and utilization(CCU) to produce syngas from CO2 will emerge as an alternative sourceof carbon, while catalytic reforming (to produce aromatics in refineries)
will be phased out as the fuel industry declines; (5) steam cracking cancontinue to operate with retrofitting technologies24 while (6) methanolto-olefins and methanol-to-aromatics (MTX), as well as (7) ethanol
dehydration (to produce ethylene), will provide new routes to produce
much needed olefins and aromatics.
Ammonia production is the largest single contributor to thechemical industry’s Scope 1&2 emissions today (0.37 Gt of CO2eq
or 45% of the Scope 1 and 2 emissions produced by the basic
chemical intermediates industry today) and is by far the largest
growing chemical by 2050. Abating its emissions is critical toenable a sustainable future. Ammonia demand will surge from 185
Mt in 2020 to 996 Mt by 2050, predominantly as a low-emissions
fuel and thus abating greenfield production is imperative to achieve
net zero. Abating ammonia Scope 1&2 emissions is driven by two
technological pathways: gas reforming plus CCS, and electrolysis.
Methanol will play a central role within the system both as ameans of recycling carbon at end-of-life and in the productionof olefins and aromatics from renewable sources of carbon andgreen hydrogen. Production of olefins, aromatics and methanol
accounts for 0.46 Gt of CO2eq today, amounting to 55% of the Scope
1&2 emissions of the basic chemical intermediates industry today,and represents the next challenge for the industry to solve. Productionof methanol from biomass, waste, or CO2 in combination with greenhydrogen is the most relevant net zero pathway (i.e., fossil-free andnet zero Scope 1-3) and can then be used to produce olefins andaromatics via MTX. The production of these chemical intermediates
will increase from 508 Mt in 2020 to 710-859 Mt in 2050.
24.

Retrofitting technologies include, for example, using green hydrogen as a heat source, requiring replacing burners on
the steam cracker, or applying carbon capture and storage. For more information please refer to the technical appendix.

Planet Positive Chemicals

39

Scope 1&2
production
emissionsabatement options
for the chemicalindustry can bedelivered throughthree main
approaches:

The chemical industry can achieve net zero Scope 1&2 by deploying justthree strategies (Figure 8):•

Switching the feedstock so that over 59-93% comes from sustainable sourcesby 2050, up from <0.5% in 2020. Sustainable feedstock sources will be required
to abate Scope 1&2 emissions from feedstock used as energy (e.g., crackers
off-gases subsequently used as fuel for energy production on-site) and fromcarbon dioxide released as by a product of a reaction (e.g., gas reforming to
produce hydrogen and subsequently ammonia). The new mix of feedstock will
be balanced across new available pools comprising wastewater (17-20%) for
fertilizer production, biomass (31-35%), waste (1-2%), hydrogen (9-12%), point
source (9-15%), and direct-air-capture (0-15%). 25•

Switching the energy source so that 89-98% of production processes are
powered by renewable energy sources by 2050,26 up from 2% in 2020. Energy

Switching feedstock fromfossil, switching to renewableenergy sources, and using
carbon capture to avoid
residual emissions.

substitution will be direct through renewable electricity (89-97%), although a large
fraction of this share is used to produce green hydrogen. Biomass and waste willplay a minor role in providing energy in both LC-ME and LC-NFAX scenarios (~1%).
•

Capturing emissions so that up to 60-400 Mt (LC-NFAX and LC-ME
respectively) of carbon is captured annually from chemical production
processes by 205027 (Scope 1&2 only), such that CO2 from chemical synthesis

processes and/or the energy provision step is captured and permanently stored
underground. Even after system efficiencies driven by demand reduction, the mosteconomic scenario still relies heavily on CCS to achieve net zero.

Figure 8: Strategies to abate Scope 1 & 2 GHG emissions in the chemical industry

Abating GHG emissions will require three fundamental andcomplementary approaches to be leveraged
Unabated production using fossil

1

2

3

Non-fossil
feedstock source:

Non-fossil processenergy source:

Captured residual
emissions:biomass, waste,
direct-air-capture (DAC),
point source CO₂

Power, biomass, waste,hydrogenCarbon capture and storage(CCS) or utilization (CCU)

25.

Weight percent in tonnes of raw feedstock required.

26.

The energy from non-fossil sources is legacy capacity abated retrofitted with CCS and long term will be phased out after 2050.

27.

Only includes CCS from chemical production processes; Scope 1 and 2 emissions for the chemical sector. Excludes CCS from incineration.

40

Planet Positive Chemicals

Seven processes form the basis of the new chemical industry.
The chemical industry will rely on seven key processes to achieve net zero Scope 1&2 and enable
the application of feedstock shift, energy switch, and CCS (Figure 10).
Figure 9: Production process map of basic chemical intermediates

Five feedstock sources and eight processes form the basis of primarychemicals production, seven of which will be used to abate the system
Feedstock

Process

Energy source

Intermediary

Conventional process

Basic chemicalIntermediate process

Technology compatible
with CCS

Air
Industrial
Emissions
CO2

FossilCxHy

Biomass
CxHyOZ

1.
Electrolysis

2.
Gas reforming

3.
Gasification

4.
Carbon Capture

X. Catalytic
reforming

5.
Cracking1

Renewable
electricity

Renewable
electricity

Renewable
electricity orhydrogenRenewable
electricity

Renewable
electricity orhydrogen

CCS
Renewable
electricity

CO/H2(syngas)H2
Alcohol
Synthesis
Air
N2

Haber
Bosch

6.
Methanol to X

Renewable
electricity

Ammonia
MethanolPoint Source emissions2 and waste generation

Waste
CxHyOzWater
H2O

Olefins andAromatics

7.
Ethanoldehydration

End-of-life

EthanolNote:this figure exclude transition technologies (e.g. blue ammonia, blue hydrogen) (1) pyrolysis is considered as a sub-technology of the cracking system (2) point source encompass potential
emissions from production processes, incineration but also other industries.

Planet Positive Chemicals

41

Electrolysis is one of the technologies with the largest growth potential,
representing 67-80% (LC-ME and LC-NFAX respectively) of ammonia production
by 2050 as the most promising technology for the synthesis of green ammonia
via the production of green hydrogen. It is the only relevant alternative in a no
fossil scenario, but requires significant investment to reach commercial scale.45
The electrocatalytic conversion of water into oxygen and hydrogen is appealingfrom a feedstock point of view as it does not rely on carbon sources, unlike existinggas reforming technologies, and can be powered 100% by renewable electricity.
Hydrogen can then be combined with nitrogen to produce ammonia (Haber-Boschprocess), which is the conventional process today for creating ammonia. Electrolysis
relies on metal-based electrocatalysis and faces significant material demand
constraints, for example over rare metals such as platinum, as well as requiring major
renewable power generation capacity expansion.
Gas reforming capacity accounts for 2-15% of ammonia production and 2-38% of
methanol, olefins and aromatic production by 2050, but will be highly dependent
on the future of fossil feedstock and CCS. The historically important thermal
conversion pathway of methane into either carbon dioxide and grey hydrogen or
methanol might be completely phased out by the respective growth of electrolysis
and CCU. However, the technology is still highly relevant in a “most economic”
scenario given its scale to date and opportunities to be retrofitted with CCS at lower
cost. In the case of ammonia production, hydrogen is then combined with nitrogen(Haber-Bosch process). This route would require two upgrades to be retrofitted toreach a climate viable solution: the energy provision must be electrified, and thecarbon emissions produced must be stored or utilized.
Gasification of biomass or (plastic) waste will represent 1-2% of ammonia
production and 3-8% of methanol, olefins and aromatics. It remains a versatileroute towards both hydrogen and methanol and subsequently ammonia, olefins
and aromatics in a net zero world, but is still in the early commercialization
phase. Thermal conversion of solid carbon-containing products (e.g., biomass,
waste) into syngas can be followed by catalysis-driven conversion of the latter toproduce chemical intermediates (e.g., methanol, ethanol). While biomass and waste
gasification exist at scale for energy production, with almost no exceptions methanol
has been produced at commercial scale via coal and petroleum coke gasification
plants to date.47,48 Gasification can also be combined with either electrolysis or CCS
to appropriately rebalance (decrease) the C:H ratio to allow for Scope 1&2 abatedmethanol synthesis.47 The scale of gasification will be limited by the inherent cost of
the process, which is likely to make it uncompetitive in regions where hydrogen andrenewable energy sources (RES) are expensive.
Carbon capture and utilization (CCU) is expected to emerge as an alternative
source of carbon for methanol production, representing 6-44% of methanol,
olefins, and aromatics production by 2050. The catalytic conversion of CO2(from direct-air-capture or point source industrial emissions) with green hydrogencan be directly transformed into methanol. 28 As a result, the future of CCU in thechemicals system is bound to the low-cost access to H2 and CO2. In a world where
fossil is socially unacceptable, and waste and biomass gasification expensive or

availability limited, CCU is emerging as a leading alternative to provide carbon on
the provision that is it recycled.

28.

CO2 does not need to be converted to CO in this case.

42

Planet Positive Chemicals

Steam crackers will remain essential assets as a route to produce olefins,representing 14-31% of olefins and aromatics production by 2050, andthe process will be retrofitted in various ways depending on the regional
opportunities. Thermal conversion of distilled petroleum products (e.g., naphtha)
or gas (e.g., ethane) are the most common routes to olefins today. Aromatics arealso produced as by-products, but to a lesser degree. Crackers can be abated invarious ways to deliver climate neutrality. To achieve this, the energy provision mustbe electrified or shift towards hydrogen or ammonia, and the feedstock sourcesmust shift to incorporate biomass or waste (via pyrolysis or similar conversion
technologies). Otherwise, any remaining Scope 1 carbon emissions must be
captured and stored. Another abatement option is to upgrade the methane off-gas
from the cracking process to methanol via syngas and then convert the methanol
to olefins and aromatics via MTX processes, thereby avoiding emissions as well as
increasing the high value chemical yield from the cracker.
Methanol to X (X=olefins and aromatics, thus MTX) is likely to become the newtechnological platform for the synthesis of olefins and aromatics via non-fossil
pathways. It represents 19-22% of the production mix by 2050, potentiallyreaching the scale of cracking today, especially as conventional technologies aredecommissioned. This offers the possibility that methanol will become the primarysystem feedstock, displacing naphtha. The catalytic conversion of methanol to olefins,based on coal as a source of carbon, is at commercial scale today but exclusively
used in China.49 MTX is emerging as the most preferred route to produce olefins fromnon-fossil feedstock such as biomass, waste and captured carbon. The process of
converting methanol into aromatics is at an earlier stage in terms of development,
but is the key pathway for the production of aromatics and is essential to fill the gap
caused by decreasing production due to the decline in catalytic reforming.
Ethanol dehydration will continue to grow modestly to remain among the most
relevant technologies by 2050, representing 0-8% of olefins production. The
production of ethanol from crops through fermentation is already a well-establishedmarket, producing >120 Mt.50 By 2050, the production of ethanol from the conversion
of syngas (e.g., via CCU or gasification), which has been proven at scale, is expected
to be more competitive than conventional technologies (e.g., via dedicated crops andfermentation).47 Different syngas to X technologies are expected to compete on themarket (e.g., leveraging synthetic routes or biotechnologies) creating opportunities
for the alternative ethanol route. Consequently, ethanol dehydration will becompetitive with methanol to olefins (MTO) where relevant.
Catalytic naphtha reforming will decline and ultimately disappear from thetechnology mix by 2050, having been a significant source of basic chemicalintermediates, as a result of the decline in fuel refining demand. Today, byproducts from the catalytic reforming of distilled petroleum products (e.g., naphtha)deliver the majority of aromatics production, and catalytic reforming's prime function
is to provide octane for the gasoline pool. As gasoline demand declines towards
zero, catalytic reformers will likely cease to operate, and their aromatic by-products
will no longer be available.

Planet Positive Chemicals

43

The mix of these technologies across scenarios can be seen below (Figure 10) in which
it is evident that ammonia production is dominated by electrolysis to produce greenhydrogen for Haber-Bosch. However, olefin and aromatic production varies between
dependence on abated fossil technologies such as steam cracking and gas reforming in
LC-ME vs LC-NFAX which depends more heavily on CCU and MTX for faster abatement.
More detail on this will be discussed in the coming chemical deep-dive sections.

Figure 10: Chemicals production split by technology grouping

In 2050, Ammonia is consistently dominated across scenarios by a single
technology, electrolysis to produce green hydrogen for Haber-Bosch,while the future of olefins and aromatics production depends on a choice
between abated fossil and non-fossil production technologies
Chemicals Production split by technology grouping
Mt Chemicals produced
Catalytic Reforming

Other

Gasification of coal (unabated)

Bioethanol dehydration

Steam cracking (unabated)

Methanol to olefins& aromatics

Gas reforming (unabated)

CCU (DAC CO2+ green H2 to methanol)
CCU (PS CO2+ green H2 to methanol)
Waste water toAmmonium Nitrate

1,627Electrolysis Green Hydrogen+ Haber-Bosch to Ammonia

22

1,174
22

1,212

1,212

176

176

Gasification of biomass andwaste (abated)
Steam cracking (abated)

391

Gas reforming (abated)

82
71
277
930

818

966

21

515

54

13

16

247

188

186

2020

2050
BAU-ME

2050
LC-ME

44

750

267
30

2020

192

47

208

229

164

23

284

26

2050
LC NFAXAmmonia & Derivatives
Note:

9

37

2050
BAU-ME

16

65

142

12

302

750

855

2050
LC-ME

68

21

121

2050
LC NFAX

Non-Ammonia Chemicals

1) Both the methanol production as well as chemicals produced from methanol are included. 2) Electrolysis includes the production of urea, which requires CO2 and could also be
included under CCU. 3) 2050 LC-ME corresponds to the low circularity demand scenario presented in section 1, ammonia differs due to the use of different units: Mt of ammonia indemand scenario vs Mt of urea and ammonium nitrate in production scenarios. Total non-ammonia chemicals may vary vs other demand charts due tp use of methanol as a feedstock forolefins & aromatics meaning proportions will vary by use of the MTX pathway.

Planet Positive Chemicals

By 2050, the new mix of production processes will require greater flexibility in output
balances compared to what has been proven at scale to date in order to respondcost-effectively to varying balances of demands within olefins and aromatics. With
new technologies emerging, the mix of chemical outputs (products and by-products)
will change to a degree. Specifically, the model suggests that the shift from crackers
to MTO technologies will lead to an oversupply of propylene to meet ethylene
demand, 29 while the shift from catalytic reforming to methanol to aromatics (MTA)
may lead to either an oversupply of benzene or xylene, depending on the technology
used. This tension between production technologies and demand requires
improvements in MTX catalysis, but novel processes will allow more flexibility andenable producers to tune process outputs to market demand.
The technology roadmap to achieve net zero Scope 1&2 for the industry laid out inthis report leads to the conclusion that:•

Conventional technologies30 employing fossil as fuel and feedstock arefundamentally unsuited to a net zero world in their current state and will require
a complete shift (decommissioning, retrofit, upgrade) to achieve Scope 1-2 netzero, regardless of the time horizon.

•

Shifting towards new energy sources without switching feedstock (e.g.,remaining predominantly fossil) will require CCS to be implemented at scale
across the industry and at chemical end-of-life. As most processes haveefficiency losses, and despite greater utilization of heat between processes
within a co-located cluster, emissions would occur as soon as the fossil carbon
used as feedstock is consumed. If the chemical industry perpetuates the fossil
feedstock paradigm, the successful scaling of CCS will be a pre-requisite for net
zero, which is strategically risky and will still result in some residual emissions.

Shifting toward new feedstock and away from the fossil plus CCS system will
require a more radical change in infrastructure and significant investments into newplants, but is more likely to be a successful climate mitigation strategy. The switch
in feedstock will be necessary but require deep transformation to ensure proper
supply to the industry and sufficient handling of feedstock consistency. However, thealternative of wide-spread CCS application is inherently riskier and still does not leadto net zero due to upstream Scope 3 emissions and incomplete CO2 capture in CCS(see Chapter 6 of the report for implications of infrastructure costs).

The following section examines four chemical sub-systems in detail, starting withammonia, followed by methanol, then olefins (ethylene, propylene and butadiene)and finally aromatics (BTX – Benzene, Toluene, Xylene), whose future areinterlinked from a chemical, feedstock and technology process perspective. The
need to apply the three abatement strategies and seven processes described in thischapter in very different ways to achieve net zero Scope 1&2.

29.

Our research shows that, on average, crackers tend to produce more ethylene than propylene, while MTO processes tends to produce more propylene than ethylene. The 1-1 subsitution of crackers
by MTO processes for the production of olefins will therefore not be straightforward.

30.

Defined as technologies fed with fossil feedstock and without CCS used for the production of chemicals today , for example catalytic reforming, steam reforming, and steam cracking.

Planet Positive Chemicals

45

Ammonia as fertilizer and low-emissions fuel.
Abating ammonia production Scope 1&2 is different to abating other basic chemical intermediates
as it is achieved by switching from high emissions hydrogen feedstock production (grey) to two
low emissions upstream technology pathways: gas reforming plus CCS (i.e., blue hydrogen), andelectrolysis (i.e., green hydrogen).

Figure 11: Ammonia demand and supply overview by 2050

Ammonia and Fertilizers
Ammonia – Urea - Ammonium nitrate
OthersPower Generation

996 Mt16%

Urea

Ammonium nitrate

4%
7% 7%
3%

Other Fertilizers

0.95 Gt

End-usesplit 2020

Expected Demandby 2050 in a low

Estimated scope

1, 2 & 3 emissions

circularity (LC)in 2020net zero world

63%

Marine Transport

Demand projections by 2050
Mt ammonia equivalent/year (LC-ME)
786

228

185

42

2020

IEA projections

Shipping

625

Power

161

2050
BAU

Additional
demandSupply – Technology split1
Mt ammonia & derivatives/year2

2050
Net Zero996-182050 Net Zero
+ Circular

Circular
Levers

Production Economics (2050)$/tonne ammonia

1.212

1.174

1,014

1.212

1.016
416

302

2020

BAU-ME

LC-ME

163

600
328

171

AbatedGasification of coal

Other

Gasification of
biomass and waste

Gas reforming

Waste water toAmmonium Nitrate

Gas reforming

Electrolysis Green Hydrogen+ Haber-Bosch to Ammonia

32

251

LC-NFAX

2050
Unabated

522

422

Electrolyser
+ HB
OPEX

CAPEX

Gas reforming
Biomass+ CCS + HB Gasification + HB
CCS

Max

Min

Notes: (1) The model is designed to reach higher production capacities than required by demand. The precise oversupply margin is defined by asset retirement in the case of oversupply
and differs by scenario. (2) Values are calculated as sum of Mt ammonia/ammonium nitrate/urea and not ammonia equivalent.

46

Planet Positive Chemicals

Ammonia contains nitrogen, it does not contain embedded carbon and therefore
is fundamentally different from other basic chemical intermediates in scope(Figure 11). It is one of the highest volume chemicals manufactured today, with 185
Mt produced, ~70% of which is exclusively used for producing nitrogen fertilisers. 23
As ammonia production is the largest contributor to Scope 1&2 emissions by
the chemical industry, abating its emissions is critical to enable a sustainable
future, especially as ammonia is considered the most promising pathway toward
decarbonizing shipping and power in specific countries. 31, 6–8,23,51 In addition, despite
greater efficiency in use, fertilizer production will continue to grow to feed a growing
population.
The synthesis of ammonia is straightforward but expensive, with hydrogenproduction the main emissions factor requiring attention. As of today, ammonia
is synthesized via the Haber-Bosch process, which is a high temperature andhigh-pressure process. This fundamental technology has not changed significantly
for a century and is not expected to in the near future. The Haber-Bosch processitself has no mid-high technology readiness level (TRL) contender, althoughalternative catalysis and processes to reduce the temperature and pressure arebeing researched. 32 Additionally, the process is electrifiable at large scale (pumps,
compressors, heating) , making the transition if not easy at least reasonably
achievable. 23,52 However, upstream, the production of hydrogen feedstock requires
attention as almost all emissions occur at this stage.53 Hydrogen can come fromthree sources: (1) the conventional route: gas reforming; (2) electrolysis, whichis expected to be available at large scale by 2025; and (3) coal, biomass or waste
gasification. 33
Green hydrogen will dominate the production of low carbon hydrogencompared to blue hydrogen (fossil + CCS) due to lower production costs inalmost all regions. The falling costs of electrolysers and renewables make greenhydrogen from dedicated renewables sites very favourable in cost compared togreenfield blue ammonia plants. Beyond economics, the lack of CCS requirement forgreen hydrogen is easing the infrastructure transition requirements. While some ofthe existing gas reforming and coal gasification infrastructure may be economically
retrofitted with CCS units, the analysis suggests blue ammonia will represent asmall overall share of total ammonia production (<15%, largely dependent on gas
price assumed). Uncertainties around upstream methane emissions and residual
CCS emissions make electrolysis also more desirable from a climate perspective.
Given the significant majority of low carbon hydrogen will be green hydrogen
derived via electrolysis, this report focusses predominately on green rather thanblue hydrogen.45 Deploying green hydrogen for zero-carbon ammonia production
is crucial, as completely abating the emissions from the significant ammonia
production growth will be imperative to get the global climate transition right,
probably more so than for any other chemical.

31.

Non-CO2 emissions from ammonia combustion (i.e., N2O and NOx) can be abated with high efficiency in selective catalytic reduction (SCR) systems.

32.

Energy efficiency of the process has been optimized significantly over the last decades getting increasingly close to theoretical minimum energy required for the reaction.

33.

Other technologies not mentioned here are considered below TRL 7 and excluded from the analysis (e.g., ammonia electrocatalysis).

Planet Positive Chemicals

47

By 2050, the future of ammonia production will decouple from gas reforming.
In both BAU-ME and LC-ME scenarios, the technology only accounts for 16%
and 15% respectively, falling to just 2% in the LC-NFAX scenario. Instead,electrolysis will emerge as the dominant alternative technology pathway,
accounting for 67-80% of ammonia production by 2050. Electrolysis will develop
fastest in regions where abundant, low-cost renewable energy is available toproduce cheap green hydrogen. In a world where regulatory pressure increases
on fossil feedstock, or where a sufficiently high carbon pricing mechanism is put inplace, the larger abatement potential from electrolysis will create incentives to shift
faster, despite operating challenges around energy intermittency. 34 It is worth notingthat the relative competitiveness of each technology – determining which comesout as a front runner in all pathways – is dependent on the price of natural gas andthe price of power: a gas price increase to above $10/MMBTu or a RES power pricebelow $45/MWh would be enough to make electrolysers equal to the gas reforming
plus CCS system. 35 In all scenarios, gasification remains small due to higher costs inmost regions.
Ammonium nitrate production is expected to increase as it is less Scope
3 emissions intensive than the alternative (i.e.,urea), and because it is the
only intermediate where a climate efficient process allows direct synthesis,
by-passing ammonia production. 34 Ammonium nitrate is one of the largest
nitrogen-based fertilizers (after urea), with 48 Mt of production in 2020.23 Filtrationof wastewater can yield ammonium nitrate. Given its affordable cost and feedstock
availability, 36 wastewater is overwhelmingly available and an externality in mostcountries; therefore it needs to be valorised. Wastewater is likely to be recovered
instead of synthesized via ammonia, but it often requires significant scale to justify
the initial capital investment. Additionally, ammonium nitrate is 28-41% less Scope
3 emissions intensive than urea, making the substitution an attractive option for
limiting N2O emissions.56 As a result of its lower Scope 1&2 production and Scope

3 emissions, ammonium nitrate production is expected to benefit from a shift awayfrom urea and reach 157-236 Mt by 2050 for fertilizer applications only.

34.

Haber-Bosch requires a constant hydrogen stream given its scale and temperatures, therefore, if using electrolysis, it requires mitigating intermittency of renewable energy. This can be either in theform of back-up connection to the grid or an on-site hydrogen storage solutions to act as buffer.

35.

All of these price moves are within the realms of probability, as demonstrated by market price history (54,55).

36.

Expert interview.

48

Planet Positive Chemicals

Methanol, the new platform chemical for alternative carbon.
Methanol will become the cornerstone of carbon management in a net zero world via production
routes from all carbon sources to key carbon outputs.

Figure 12: Methanol demand and supply overview by 2050

Methanol
Others362 Mt

23%

Fuel

27%

0.26 Gt

End-usesplit 2020

Expected Demandby 2050 in a low

Other
Polymers

circularity (LC)

Estimated scope

1, 2 & 3 emissions

22%
28%

net zero worldin 2020
Major Polymers1

Demand projections by 2050
Mt methanol equivalent/year (LC-ME)
436
-74

362

Circular
Levers2050 Net Zero
+Circular

290
146

102

2020

44

IEA projections

2050
BAU

Additional
demandSupply – Technology split2
Mt methanol/year

2050
Net Zero

Production Economics (2050)$/tonne methanol

908

OPEX

354

CAPEX

CCS

BAU-ME

LC-ME

LC-NFAX

2050
Unabated

Min

1.071

461

100
2020

Max

225
74

AbatedGas reforming

Gas reforming

CCU (DAC)

Gasification

CCU (PS)

Gasification

369
148

299

Gas
reforming3

499

892

260

221

238

180

Green H₂
+ PS

Green H₂
+ DAC

MSW
Gasification+ green H₂

Notes: (1) Includes PE, PP, PS, PET, PUR, PVC (2) The model is designed to reach higher production capacities than required by demand. The precise oversupply margin is defined by asset
retirement in the case of oversupply and differs by scenario. (3) Combined reforming, fully abated scope 1&2 (4) CAPEX and OPEX from lowest and average cost RES regions presented.

Planet Positive Chemicals

49

In this analysis, methanol emerges as a key new system input by 2050, allowing
carbon to be recycled back into the chemicals system and displacing naphtha,
thus enabling the net zero transition (Figure 11). Methanol can be produced frombiomass, municipal waste, or CO2 in combination with green hydrogen and therefore

enables a fully circular CO2 life cycle. The critical switch of carbon source from fossil towaste, biomass and atmospheric CO2 requires a fundamental shift in the infrastructureof the chemical industry, away from steam crackers and towards MTX (see Chapter 5).
With 102 Mt in 2020 and growing to 362-511 Mt in 2050,37 methanol will becomea central building block for many chemicals in the industry. Methanol is alreadythe primary chemical with the highest diversification of its end-product portfolio,
with 28% being used for the major polymers,38 22% used for lower volume polymer
applications,39 27% used for fuel, and the rest used in a wide range of other chemical
products. Methanol’s future is intrinsically linked to the other carbon-based primarychemicals, as it can be converted to olefins via MTO and MTP (methanol to propylene)
and aromatics via MTA. Methanol will also be the feedstock for all critical derivatives

for polymer production: ethylene, propylene, benzene, xylene and formaldehyde. Other
methanol demand remains flat as its use as gasoline’s blend component is abandoned
and circular consumption and mechanical recycling levers are implemented.
Moreover, methanol is not expected to become a key energy carrier for shipping fuel,energy storage, or road transportation in a net zero scenario because it emits carbon
dioxide on combustion. It can therefore at best be carbon neutral in these applications,whereas the use of methanol as a chemical feedstock may lead to overall negative lifecycle emissions (see Chapter 4).
In contrast to ammonia, the abatement challenge for methanol is two-fold:realizing a simultaneous 4-5 times growth in demand while abating production
emissions, ideally via a feedstock switch towards sustainable carbon sources.
Today, around 37% of all methanol production is based on unabated coal gasificationand the overall methanol emissions intensity globally is on average about 3 tonnesof CO2 per tonne of methanol. Therefore, abating the emissions from methanol
production is essential for the abatement of the entire chemicals system. As

discussed in Chapter 3, non-fossil feedstocks are also preferred from a Scope 3
downstream perspective.

37.

The demand for MTX means that LC-ME and LC-NFAX have different demand profiles for methanol.

38.

PE and PP via MTO, minor contributions to PVC, PET and PU.

39.

Predominately resins produced via formaldehyde derivatives.

50

Planet Positive Chemicals

However, non-fossil production methods are more expensive than those based on
fossil feedstocks, in particular natural gas. This is in part driven by the high capexand energy intensity of gasification. Moreover, large amounts of green hydrogen(10 Mt in LC-ME and 73 Mt in LC-NFAX) are required for the synthesis of methanolfrom waste, biomass and CO2.40 While costs for green hydrogen are declining, theyneed to drop below 1 $/kg for it to become cost competitive with fossil production

technologies, which is unlikely to happen in locations where fossil is available. The
formation of a green methanol commodity market is therefore essential to overcome
the production cost premium.
By 2050, methanol production is dominated by abated gas reforming (80%)
in the LC-ME scenario and by CO2 + green hydrogen conversion (81%) in the

LC-NFAX scenario. Gasification of coal (+CCS), biomass and waste contributesmaller shares of total production (6-15%). The mix of different gas reforming
technologies, complemented with CO2 point source and DAC, will play a major role infuture production. 41 The up-scaling of methanol production relies on CCS (53 Mt in

LC-ME) for blue hydrogen production, and the availability of CO2 as a feedstock (513

Mt in LC-NFAX).

40.

Green hydrogen would be co-fed to fully utilize all carbon in the waste and bio feedstocks before entering the methanol synthesis reactor.

41.

Gas reforming can be abated via CCS of process and flue gas emissions, electrification of heat provision, or via adjusting the reforming process to avoid any additional heat input and the fullconversion of process carbon.

Planet Positive Chemicals

51

Olefins: challenges and opportunities.
Olefins will continue to be a predominantly cracker-based industry in a net zero world and the rise of
MTO will heavily depend on the future of fossil as a feedstock.

Figure 13: Olefins demand and supply overview by 2050

Olefins

Ethylene – Propylene - Butadiene
Others16%

263 MtOther polymers

7%

Rubber4%
6%

Expected Demand

PVC

by 2050 in a low
circularity (LC)End-usesplit 2020

Estimated scope

1, 2 & 3 emissions
in 2020

3%
4%
PS1

26%

net zero world

0.69 Gt

PE

34%

Other
Polymers

PP

Demand projections by 2050
Mt olefins equivalent/year (LC-ME)
468

440
150

290

2020

2%
28

-205
263

2050
BAU

IEA projections

2050
Net Zero

Additional
demandSupply – Technology split1
Mt olefins/year

2050 Net Zero
+Circular

Circular
Levers

Production Economics (2050)$/tonne ethylene

496
295

2020

Unabated

Note:

52

285

BAU-ME

LC-ME

266

LC-NFAX

2050
AbatedCatalytic Reforming

Bioethanol dehydration

MTX

MTX

Other

Other

Steam cracking

Steam cracking

CCS

1.221
41
1.180

CAPEX

1.419

OPEX

1.495

202

167

1.217

1.320

Max

Min

1.517
8

2.096
150

188

2.612
140

2.472

1.946

MTO H₂ fueled Naphtha
Green
Naphtha SC + CCS
methanolSC

1.329

Electric
Naphtha
SC

Bio-oils Bioethanol
SC
Dehydration(1) The model is designed to reach higher production capacities than required by demand. The precise oversupply margin is defined by asset retirement in the case of oversupply anddiffers by scenario. (2) SC = steam cracking (3) All SC business cases include a off-gas upgrade unit via methanol synthesis and MTO to fully abate scope 1&2 emissions

Planet Positive Chemicals

With the three major olefins representing 290 Mt in 2020 (ethylene 56%,
propylene 39%, and butadiene 5%), olefins have incontestably become thecornerstone of the chemical industry’s ability to produce a wide diversity of
products, especially polymers, which represent 84% of their use (Figure 13). Whilehundreds of different polymers exist, five of them – poly(ethylene), poly(propylene),poly(ethylene terephthalate), poly(vinyl chloride) and poly(styrene) – represent 73% andare used across almost all sectors. The continuous cost reduction in olefins production
has partially fuelled the growth for low-cost plastic over the last century and is thebasis of the non-ammonia chemical industry known today.
Combined demand for olefins would reduce by 28-50% from 2020 to 2050 in aworld where elimination, substitution, and upstream recycling42 are leveraged
across just four industries – transportation, construction, fast moving goods,
and textiles. Reduction is the most important lever and will mostly come frompackaging and construction, followed by transportation, assuming the scaling of new
consumption patterns (e.g., packaging reuse, compact living, mobility-as-a-service).
Mechanical recycling and other recycling technologies will play an important role in
reducing demand for basic olefins, but will not come close to displacing demand forvirgin plastic. This analysis suggests that recycling capacity will scale aggressively by
4-fold, from 23 Mt in 2020 to 95 Mt in 2050,43 but still represent only 40% of combined
virgin and recycled plastic demand by 2050.
Demand for olefins related to the net zero transition, especially ethylene, will
require an additional 28 Mt. Most notably, with the surging demand for wind andsolar, demand for olefins as a basic component will increase. Solar panels will requirea range of specialty chemicals such as ethyl vinyl acetate (EVA) and fluoropolymers(e.g., PVF, PTFE), creating significant demand for additional ethylene. Wind farms will
require blades, whose core structure might be made of PET among other materials
and require a range of more technical composite materials (e.g., epoxy, PVC, PUR).25

42.

Includes mechanical recycling, depolymerization and solvent-based recycling. It excludes pyrolysis and gasification which ultimately produce olefins and therefore do not reduce demand.

43.

Calculated on an olefin-basis not on polymer basis. Therefore, mass excludes all non-olefinic polymer functions.

Planet Positive Chemicals

53

Olefin demand can be met by methanol to olefins production (15-26%) as well ashydrogen and ammonia fired, electrified and CCS-fitted crackers (43-75%). The
rest will be met by other smaller-size technologies including bioethanol dehydration.
Regulation may ultimately be required to force retrofitting and/or decommissioningof existing crackers in a world where demand growth is flat and the need to build newcapacity is not pressing. MTO is the most relevant pathway to produce sustainableolefins, especially in a no-fossil future, as there is limited supply of waste and biomass
feedstock and MTO will be complemented by equally relevant bioethanol dehydration(24% of olefin production in LC-NFAX). On-site upgrade of crackers with small MTO
units to valorise off-gases while abating Scope 1 emissions will be competitive from2035, due the decreasing cost of zero carbon methanol. In addition, electric crackers
are only found to be economical on a new-built basis, so most existing cracker retrofits
will use cheaper available options (e.g., hydrogen-powered crackers or CCS) in a world
with stalling demand. The future of electric crackers therefore also depends on the
future of olefins demand, and whether new-build will be needed or not.44 Finally, in a
no-fossil scenario, ethane crackers have been found more complex to retrofit given
their lack of flexibility in switching feedstock sources.45 As a result, ethane crackers
will need to be phased out.46 By contrast, naphtha crackers, while benefitting from awide range of feedstock substitutes (e.g., pyrolysis oil from plastic waste or bio-oils),
might also benefit from the deployment of technologies in other industries, especiallythe aviation industry as naphtha-like grades are co-produced with sustainable aviation
fuel. Overall, the analysis suggests that most existing crackers will be retrofitted rather
than decommissioned, if not because it makes economic sense, at least to safeguard
existing onsite synergies with downstream processes.
The ability to flex product output ratios among olefins is needed as up to~75% of olefins are co-produced and certain products (e.g., propylene) might
become oversupplied. In the chemical space, supply has an important role instructuring demand given the physical constraints of chemical processes. For
example, today, around 95% of butadiene is produced as a by-product of the steam
cracking process, the main purpose of which is to produce ethylene and propylene.
This by-product oversupply resulting from process output ratios is also true for
MTO processes. Oversupply of base chemicals presents a significant risk to there-structuring of demand based on new market prices and availability, but an evengreater risk is the slower adoption of reduction, substitution, and recycling levers –especially in an ambitious circular scenario. 47 This must be resolved by developing
processes with better capabilities for fine-tuning chemical outputs to justify
investments in MTX processes. Additionally, some plants might need to be shutprematurely if circular objectives from downstream industries are met, as today’s
capacity would in some scenarios already meet projected 2050 demand.

44.

Note that the analysis considers existing commitments for new-built fossil run crackers (e.g., in China).

45.

Biogas technologies have been considered unable to produce volumes require to substitute ethane cracker feedstock.

46.

It highlights the difficulty some regions dominated by ethane cracker infrastructure will have to move away from fossil feedstock (e.g., North America), which might create localized lock-in effects.

47.

Given the long asset lives of the chemical plants, the risk of market distortion through oversupply is real. In such a world, an opposite effect on demand may arise e.g., (a) polymer prices may drop
significantly and may potentially lead to increased demand, or (b) entire plants may shut down potentially leading to demand across several olefins as co-products would also be lost.

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Planet Positive Chemicals

Aromatics: the need for a fundamental shift in production.
Aromatics are likely to be the chemicals most profoundly affected by the transition to net zero due tothe demise of catalytic reforming as a main source of production.

Figure 14: Aromatics demand and supply overview by 2050

Aromatics

Benzene – Toluene - Xylenes
PS

15%

85 Mt

Others0.39 Gt

31%
End-usesplit 2020

Expected Demandby 2050 in a low
circularity (LC)

Fuel additives

net zero world

Estimated scope

7%

1, 2 & 3 emissions

39%

7%

in 2020PET

PUR

Demand projections by 2050
Mt aromatics equivalent/year (LC-ME)
159

161

2

2%

2020

-49

42

116

IEA projections

2050
BAU

Additional
demandSupply – Technology split1
Mt aromatics/year

2020

OPEX

112

BAU-ME

2050 Net Zero
+Circular

Circular
Levers

Production Economics (2050)$/tonne xylene

223

115

2050
Net Zero

112

LC-ME

128

LC-NFAX

2.221

CAPEX

274

1.748
106

1.947

1.642

2050

Unabated

AbatedCatalytic Reforming

MTX

Steam cracking

Steam cracking

Catalytic Reforming

MTA Green

Notes: (1) The model is designed to reach higher production capacities than required by demand. The precise oversupply margin is defined by asset retirement in the case of oversupply anddiffers by scenario. Larger discrepancies are observed for aromatics due to poor fit between MTA production mix profile and demand ratio of benzene:toluene:xylene.

Planet Positive Chemicals

55

At 116 Mt in 2020, demand for aromatics – benzene (36%), toluene (23%),xylenes (40%), referred to collectively as BTX48 – is significantly smaller involume compared to olefins, ammonia, and methanol (Figure 13). Like olefins,aromatics are mainly used as building blocks for polymer applications, of which justthree – PET, polystyrene and poly(urethane) – represent 61% of total consumption.
Toluene is the least valuable of the aromatics, its main uses stem from blending
into the gasoline pool, producing isocyanate for polyurethanes, and the onward
production of benzene and xylene.
Demand for aromatics is set to remain mostly flat by 2050 as growth is levelled off
by the expansion of downstream circular strategies. Projected demand growth iscancelled by the combination of the three levers over the next 30 years: (1) elimination
and recycling of PET bottles and films will considerably impact the PET market that
represents over 80% of the xylenes outlet; (2) the reduced need for fuel will eliminate
over 25% of demand for toluene, for which value is likely to decrease even further;and (3) the potential reduction in the use of polystyrene across industries, for various
economic and social (rather than technical) reasons, may considerably affect benzene
demand as it represents over 30% of polystyrene demand.
Today, most aromatics are produced as a by-product in fuel or olefinsproduction; in the future, fuel production will undergo a necessary decline andolefin production will produce less aromatics. The expected decline in fuel use,
and therefore reduced need for refineries across the world, means less aromatics
will be available from that source. In parallel, the shift in olefin production processes
will also reduce aromatics availability. Cracker retrofitting (e.g., change to feedstocks
containing less aromatics and naphthenes) will also mean less aromatics in the
output ratio, and alternative olefin production processes (e.g., MTO and ethanol
dehydration) will not produce any aromatics.

48.

These percentages are pre-toluene conversion. Toluene is, in some regions, considered a by-product and commonly converted into benzene and xylenes which are higher value chemicals. Xylenesin this report include the 3 isomers para-, ortho-, meta-xylene.

56

Planet Positive Chemicals

To date, MTA constitutes the only existing route to a sustainable supplyof aromatics decoupled from that of olefins in a net zero world. In a world
shifting away from fossil, MTA is therefore the only alternative, which constitutes
a technology risk for the industry. Given the outlook on fuel and olefins discussed
above, getting MTA technologies to a higher TRL, so that it can be demonstrated
commercially at scale, is absolutely key to the net zero transition.
Similarly to olefins, there is a chronic risk of oversupply of one of the aromatics(benzene, toluene or xylene) unless production technologies (e.g., crackers, MTA)
develop more flexible product slates. As explained for olefins in the previous section,
given the physical constraints of chemical processes, supply plays an important rolein structuring demand in the chemical space. The analysis performed for this reportsuggests that aromatics processes are the least flexible over changes in demand.
The production ratio for the main aromatics will not exactly match the change indemand, that affects each one differently (e.g., different sectors, timelines, materials),
therefore creating some oversupply. As for olefins, oversupply may not occur as
demand may adjust to supply, but it will lead to reduced incentives for downstream
industries to implement circular levers to their full extent. The future of xylenes
and PET is especially critical, but it would require further analysis to understandwhether PET demand can influence xylenes production (and therefore all aromatics
production), or whether xylene production will be stronger, thereby slowing theincremental use of recycled content or de-incentivizing it for PET elimination.

Planet Positive Chemicals

57

Chapter 3:

The elephantin the room –how to address
feedstock and endof life emissions(Scope 3)~64% of in-scope emissions of the chemicals systemlie in Scope 3. Reaching full net zero therefore requires
changing the feedstock carbon source, decoupling fromfossil, and changing the end-of-life carbon destinationfrom GHG emissions to recycling and sequestration.

58

Planet Positive Chemicals

Chapter summary
The vast bulk of total in-scope system emissions stem from Scope
3 (~64% today). Therefore, abating Scope 3 is the biggest driverfor system emissions reduction and the driver of the bulk of thetechnology shifts needed to abate the system.
Decoupling from fossil feedstock increasingly mitigates systemtransition risk. Fossil faces multiple, compounded risks in its future andthe unilateral dependence upon it for feedstock and energy sources is ahighly risky strategy towards 2050.
Therefore, there is an imperative to shift to renewable carbon
feedstocks such as waste, point source, direct-air-capture (DAC), andbiomass as they offer an alternative means of low emission productionthat leaves more fossil carbon in the ground.
There is no silver bullet alternative feedstock: each of theserenewable feedstocks entail multiple trade-offs around cost, energy
density, mobility, ubiquity, abundance, and impact on planetary
boundaries, so securing access to a diversified range of feedstocks isadvisable to de-risk production.
Alongside carbon, hydrogen feedstock will also need to be secured,amounting to 20-50% of global green hydrogen production by 2050,
predominantly for feedstock to enable the use of these alternative
carbon sources but also to power some hard-to-abate processes.13
Circularity can extend beyond material boundaries into a broader
concept of carbon circularity via use of pyrolysis, gasification, andincineration +CCU to drive higher levels of molecular circularity
withing the system.
The carbon density of olefins and aromatics means that downstream
Scope 3 emissions are large (35% of emissions), but there is no
attractive end-of-life solution today; traditional landfill is socially
unacceptable, has capacity limitations, and risks potent methane
emissions, while unabated incineration is highly emissions intensive.
Therefore, a better end-of-life solution must be developed.
Either incineration must be abated as soon as possible through aframework of either CCU or CCS, or measures must be taken to
establish a new form of solid state controlled disposal of plastic,
mitigating any pollution, leakage or methane emissions risk.
However, given the risk of these nascent technologies failing toscale, every effort must be made to drive maximum circularity andresource efficiency in order to reduce materials reaching end oflife in the first instance.

Planet Positive Chemicals

59

Scope 3 emissions represent 64% (1.46 Gt of CO2eq) of the combined ammonia
and non-ammonia chemical industry’s total emissions today and thus should
receive equal – if not more – focus when discussing abatement as Scope 1&2
emissions. This section focuses largely on approaches to abating Scope 3 for the nonammonia system, given that the bulk of ammonia abatement comes from switching togreen hydrogen for the Haber-Bosch process, as discussed in Chapter 2. However, itcannot go without mention that ammonia represents around 50% of total scope threedownstream emissions today and 80-90% of total system residual emissions in LC-ME
and LC-NFAX scenarios in 2050 (339 Mt CO2eq). Despite efforts to optimize deploymentof less emissive fertilizers, increase nitrogen efficiency and improve land management,
some N20 emissions are considered inevitable from the agricultural sector. Theseemissions are considered justifiable based upon food system services rendered tosociety, and natural solution offsets or compensations are warranted to balance these
positive emissions.49 The downstream impacts of urea and the switch to ammonium
nitrate have already been discussed in the ammonia section of Chapter 2.
In the non-ammonia system (58% of total system emissions today, 1.3Gt scope1-3), 66% of emissions reside in Scope 350 (upstream accounting for 31% anddownstream accounting for 35%, a total of 0.9 Gt). For this reason, abating feedstock
production and end-of-life disposal in effect determines many of the technology
choices required in Scope 1&2 abatement of the non-ammonia system, particularly
for greenfield production. Therefore, while Scope 1&2 abatement is an imperative
for the chemical industry to maintain its license to operate, abatement of Scope 3
emissions offers the largest opportunity for system abatement.
Achieving Scope 3 net zero in the non-ammonia system can be accomplishedby: 1) switching from fossil feedstock sources to alternative, renewable carbon
feedstocks and green hydrogen; and 2) abating end-of-life emissions throughCCUS on incinerators.

Fossil Feedstock:
time to switch.
The attraction of fossil
feedstock and fuel isunderstandable given its
energy density, mobility andabundance, but emissions
intensity and strategic riskmean the system must aim to
shift away from this paradigm
towards alternative, renewableforms of feedstock to abate
Scope 3 emissions.

The development of the chemical industry is deeply rooted in the history of fossil
carbon sources and fossil feedstocks, which are economically and chemicallyattractive compared to alternatives given their abundance, mobility, energy andcarbon densities. While some of the processes that will be used to abate the system
are not new (e.g. steam cracking or gas reforming), innovations are required to power
them with new energy sources, feed them with new (and arguably more challenging)feedstocks, or connect them with CCS. Therefore, all legacy fossil technology thatremains in the system will require some form of retrofitting.
As can be seen in Figure 15, the current non-ammonia system is highly linear, removing
carbon from the ground as fossil and using it to make olefins or aromatics, which thenaccumulate either in the economy, the atmosphere, or the environment via leakage andlandfill. This is not a sustainable operating model for the system. Continued upstream
fossil production emissions and end-of-life incineration emissions or traditional landfill
with associated methane emissions are not acceptable in a net zero world.

49.

It is for this reason that the LC-ME scenario does not reach net zero, and in LC-NFAX, the impact of carbon negativity is reduced at a system level due to the need to offset these residual emissions.
Whether the non-ammonia system should use used as a means of offsetting the ammonia system is a question of principle outside the scope of this study.

50.

38% of the total in scope system emissions (412Mt and 466Mt Scope 3 up and downstream olefins & aromatics respectively, over total system emissions of 2,295Mt).

60

Planet Positive Chemicals

Figure 15: Chemical production flows 2020 non-ammonia chemicals system

The current non-ammonia chemicals system is highly linear and fossil-based
Non-ammonia chemicals system 2020

Air
EconomyAccumulate in
the economy
29%

Biomass >1%

Incineration without CCS
18%
Open Burning
16%

Mechanical Recycling 5%

Feedstock95%

Production
95%

Manufacturing
100%

Use Phase100%

End of Use
100%
519 MT

Leakage 11%

Landfill 21%
Fossil 94%

GroundNote: % of chemical production from sources and to end of use destinations
Mechanical Recycling includes solvent-based recycling technologies
Over a long term horizon chemicals stored in the economy (eg. construction plastics averaging 35 year lifespans) will begin to churn out

Figure 15 is a Sankey diagram that shows, relative to tonnes of chemical produced,
where feedstocks originate proportionately, how much material is circular andwhere chemicals produce end up at end of life.51 From the figure, it is evident thatthe in scope non-ammonia chemicals system operates on a linear model that largely
functions by extracting fossil carbon from the ground and uses it to make plastics
that – often after a single use – are either landfilled,52 openly burnt in an uncontrolled
fashion or increasingly incinerated and emitted as CO2. Due to the challenges fossil
fuel and feedstock face, as described in the previous section, the system must shift

from its current fossil “ground to air” carbon emissions vector in order to de-risk thesystem’s transition to net zero. Notably, a large proportion of plastics enter stockin the economy; these are typically durable plastics i.e. construction plastics withlifespans of 35 years or more. These will ultimately churn out of the economy but are
predominantly landfilled without organic contamination thus their embedded carbon isconsidered to have a neutral GHG impact on system GHG emissions. In addition to thebusiness-as-usual pathway of sourcing carbon from the ground and emitting it into theair, three alternative carbon pathways emerge (Figure 15).

51.

Numbers are indexed to production volumes, therefore do not represent either tonnes of carbon or tonnes of feedstock/waste, thus will not correspond with values in feedstock, waste or CCS charts.

52.

Plastic in landfills does not directly cause GHG emissions, but organic contamination of e.g. food contact or hygiene waste plastics result in methane emissions generation. The UK Department
of Food & Rural Affairs estimates that 22% of all UK methane emissions stem from landfilling. The methane emissions intensity of landfilling has led to the EU implementing the Landfill Directive,
requiring member states to send no more than 10% of municipal solid waste to landfills by 2035, resulting in the majority of European waste being incinerated with energy recovery, which is of lower
emissions intensity but still emitting >2 tCO2 /t of waste.

Planet Positive Chemicals

61

Figure 16: Long term carbon pathways possible in the chemicals system

Can the carbon vector of the chemicals system be inverted to sequester
carbon in a new climate positive operating model?

Atmosphere
Carbon source(biogenic, captured carbon)

Ground(fossil)3

4

GHG
neutralEmissions
negative

1

2

Business as Usual –emissions intensive

Less emissions
intensive3

Atmosphere

GroundCarbon destination

Note: (1) Neutrality in the context of CCS technologies should be read as ‘quasi-neutral’ as residual emissions will occur, (2) As these are long term carbon pathways, the temporary presence of carbon in
the economy is not represented, (3) Still may result in some emissions due to upstream fossil production but significantly reduced due to end of life sequestration

The system must shift from fossil to alternative sources of carbon feedstock, ofwhich there are four principal categories to choose between within this analysis:biogenic, municipal solid waste, point source, and direct air capture (DAC).
Similarly, the system must shift from traditional landfill, open burning and unabatedincineration to a non-emitting technology such as incineration + CCS. As a result,four carbon vectors exist around which to build the future system operating model:
Business-as-Usual – emissions intensive: today’s “ground to air” pathway
as the current predominant model whereby fossil carbon is used to makeplastic, which is incinerated at end of life.
Less emissions intensive: sourcing fossil carbon to make plastic thensequestering emissions at end-of-life via e.g. incineration + CCS, thus
“ground to ground”. Emissions still occur due to unabated upstream fossil
feedstock production i.e. methane leakage, thus this route will requireemissions offsetting.
GHG neutral or negative: using atmospherically sourced feedstocks
such as biogenic sources, and then burning them at end-of-life. An “air toair” model which has neutral emissions – the carbon in the feedstock isreturned to the air.
Emissions negative: sourcing carbon from the atmosphere in biogenic
feedstock and sequestering it in the ground at end-of-life via e.g. CCS thus
“air to ground”.

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Planet Positive Chemicals

The below framework illustrates the key similarities and differences in feedstock
properties based on their physical state and geophysical source (Figure 16).

Figure 17: Relationship and trade-offs between alternative feedstocks

Four key alternative carbon feedstocks are linked by their geophysicalsource and their physical state, impacting how they are processed andhow they drive the system towards a new paradigm: carbon negativity
or carbon circularity
Gaseous
CarbonSolid
CarbonEconomic
by-product

Point Source

Municipal
Solid Waste

Drives carbon
circularity

Atmospheric
Stock

Direct Air
CaptureBiogenic

Drives potential
carbon emissions
negativity

Carbon Capture& Utilization is
key technology

Gasification
is key technology

The different properties of these feedstock sources have complex impacts on theirusage in the future system, for example:•

Abundance − i.e. atmospheric carbon is over-abundant, while sustainablebiomass is scarce.

•

Affordability − i.e. point source is considered free, while DAC is expensive.

•

Production efficiency − i.e. gasification of municipal solid waste via syngas tomethanol then olefins & aromatics is lengthy and expensive.

•

Ubiquity/mobility − i.e. solid feedstocks face logistical challenges and thus
need densifying, while point source can only be accessed from other industrial
clusters, and atmospheric carbon is ubiquitous.

Each alternative carbon feedstock faces multiple, complex trade-offs: there
is no silver bullet alternative. While fossil feedstocks have excellent abundance,
affordability, production efficiency and mobility, their extraction, use and disposal
have multiple negative impacts on the climate and environment. Alternative
sources of feedstock, however, have far more significant variance across these
dimensions, meaning that there are multiple trade-offs associated with accessing
each of them, as shown in Figure 18.

Planet Positive Chemicals

63Figure 18: Feedstock tradeoff table

Despite its negative planetary impacts, fossil demonstrates excellent
characteristics as both a feedstock and energy source, while foralternative sources of carbon there is no silver bullet
Feedstock

EnergyPlanetPositive

Abundance

Affordability

Production
Efficiency

Ubiquity /Mobility

Key trade-offs

FossilFossil is understandably the feedstock and energy
source of choice given climate and environmental
impacts have been historically disregarded

Municipal
solid waste

Using waste as feedstock avoids disposal
impacts, displaces fossil, but quality feedstocks
are scarce and distributed thus requiredensifying at point of generation

Biogenic

Potentially carbon negative and affordable but scarce,
competed for, exposed to a deteriorating climate,
distributed and thus require densifying

Pointsource CO2Abundant, free and their use acquires responsibility
from other sectors for their abatement. May shrink asother sectors approach net zero

Direct Air
Capture CO2

Ubiquitous, potentially carbon negative but highly
energy intensive and therefore expensive and limited
to areas with abundant renewable energy
Fuel and feedstock that is zero carbon, but highly
energy-intensive thus expensive and need to be
produced in regions with abundant,
affordable renewables

Green
Hydrogen
Key:

HighlysuitedPossibleuse

Very Poor

Poor

AverageGood

Excellent

Note: This chart is qualitative but informed byunit values for each feedstock aligned aroundthe balanced score card of criteria. It takes alevelized view of the feedstock over the2020-2050 timeframe of the analysis

As there is no silver bullet feedstock, to de-risk the transition to net zero it isprudent for chemical industry players to establish a diversified frameworkof feedstock sources. A key value added in this analysis is that the selection offeedstocks is not deterministic and is therefore less at risk of human bias. Instead, theanalytical model used places parameters on the selection of each feedstock based on:i) feedstock availability caps (for biogenic and waste); ii) technology scaling rates; andiii) costs evolving over the 2020-2050 timeseries (see Appendix). As such, the feedstockmix, volume and region per scenario is derived for each year using computationalalgorithms driving off a broad range of granular data points, making it as objective as
possible. The subsequent mix of feedstocks per scenario are represented below (Figure19) and notably demonstrate, particularly in the LC-NFAX scenario, that a diversified
range of feedstocks is recommended by the model to satisfy scenario parameters.

Figure 19: Carbon
feedstock sources (Mt, 2050)

Shifting away fromfossil carbon will bepossible only if adiverse feedstock
portfolio is developed831

Mt of Carbon
Feedstock, 2050
0%
Waste

9%

2%

15%

PS

490

DAC

8%
15%

Biomass

74%

Fossil

3%

434
18%

2%

18%
74%

43%
18%

BAU- ME

64

Planet Positive Chemicals

LC-ME

LC-NFAXAs can be seen in Figure 19, between BAU-ME and LC-ME demand side circularity
is applied, reducing total carbon feedstock demand from 998 Mt to 562 Mt andshrinking most feedstock sources proportionately. Notably, fossil carbon is still thedominant feedstock in LC-ME. Then, between LC-ME and LC-NFAX, supply side
abatement levers are prioritized to abate the system’s emissions faster, meaning
fossil dependence is reduced from 74% of total feedstock in LC-ME down to only
18% in LC-NFAX. Correspondingly, there is a lower dependence on CCS in LC-NFAX,
with a third of the capacity required compared to BAU-ME and half of that in LC-ME.
LC-NFAX contains little fossil and thus contains highly diversified sources of carbon
feedstocks (82%), which lowers transition risk should one or more technologies failto scale. Biogenic sources of carbon play a consistent role but are more prominent
in LC-NFAX, where they are the largest source of carbon (43%). Point source carbon
and DAC are balanced (18% each). 53 Notably, over 60% of carbon feedstock in LCNFAX is from atmospheric sources. Gasification of municipal solid waste does notfeature because of the relative cost of the methanol and then MTX routes.

Figure 20: Flow of chemicals from feedstock to end-of-life – LC-ME Scenario 2050

The LC-ME scenario demonstrates increased circularity but a continued
dependence upon fossil sources
2050 Low Circularity Most Economic Scenario

Air

EconomyPoint Source - Incineration +CCU* 5%

Accumulates inthe economy 25%

Waste polymers to feedstock 2%
Depolymerization 1%

Biomass 10%

Open burning 6%
Incineration without
CCS 1%

Mechanical Recycling** 21%
Reuse 12%

Production
67%

Feedstock 389

Manufacturing88%

Use Phase
100%
587 MtEnd of use
88%

Leakage 4%

Substitution 9 %Elimination 17 %Landfill 16%

Incineration with CCS 7%

Fossil 49%

GroundCarbon sourceLong term carbon pathways in the chemicals sector
Atmosphere(biogenic, captured carbon)

Ground(fossil)

GHG neutralor negative

Emissions
negative

Business as Usual –emissions intensive

Less emissions
intensive3

Atmosphere

GroundCarbon destination

Note: (1) Neutrality in the context of CCS technologies should be read as ‘quasi-neutral’ as residual emissions will occur, (2) As these are long term carbon pathways, the temporary presence of carbon in
the economy is not represented, (3) Still may result in some emissions due to upstream fossil production but significantly reduced due to end of life sequestration

Note: Substiution and Elimination represent the % chemicals that will be reduced through LC levers.
*Point Source - Incineration + CCU assumes all chemical related energy recovery emissions are circulated back**Mechanical recycling includes solvent-based recycling technologies. Over long term time horizon chemicals stored in the economy (e.g. construction plastics averaging 35 year lifespans) will begin to churn out.

From material tocarbon circularity.

The scale of the linear system can be further reduced by extending the concept ofcircularity beyond traditional material boundaries to include “carbon circularity”
through the use of by-product “waste” carbon in the economy (point source andmunicipal solid waste) to mitigate climate and environmental impacts.
Beyond the more traditional materials circularity, the chemicals system has thepotential to derive further value from economic “waste” by-products by reusing theembedded carbon (Figure 20).57 This carbon circularity can be achieved via four
approaches; i) use of point source captured gaseous carbon from other sectors’
Scope 1 process emissions, ii) pyrolysis, iii) gasification, and iv) incineration +CCU.

53.

The LC-NFAX scenario builds new technologies based on maximum Scope 1-3 abatement, therefore DAC is preferred over other potentially more expensive technologies. See Appendix for further
modelling details.

Planet Positive Chemicals

65

As can be seen in the above Sankey diagram of the LC-ME scenario, the scaleof the linear system has been reduced. Elimination and substitution have shrunk
the size of the total use phase while maintaining utility. The material circularity
levers of reuse, mechanical recycling, and depolymerisation couple with thecarbon circularity levers of gasification, pyrolysis, incineration + CCU and point
source carbon from other industries to circulate carbon in the economy. This inturn reduces the scale of virgin biogenic and fossil feedstocks. While non-trivial
volumes of chemicals end up accumulating in stock in the global economy, end-oflife emissions are abated by CCS or end up in landfill.
Using point source and waste carbon has a positive effect in multiple ways, including:i) the need for both biogenic and fossil virgin feedstock is reduced ii) the need forsafe and controlled disposal with associated costs is removed; and iii) an abundant,
low-cost source of alternative feedstock is available to the system. However, theapplication of all these technologies have trade-offs between themselves in termsof energy efficiency (input and recovery), feedstock tolerance/yield, cost, andproduction technology route.
Use of point-source CO2 emissions are captured from industrial processes acrossthe chemicals value chain and other sectors. As they are obtained from other sectors
currently employing fossil feedstocks (e.g., steel, cement, etc.), these emissions are
anthropogenic in nature for the foreseeable future. It is currently an abundant sourceof carbon, but it may dwindle as other sectors approach net zero and optimize theirprocess emissions. Point source CO2 capture is significantly less energy intensive
than direct air capture, at about 0.35 MWh/t CO2 (compared to ca. 2 MWh/t for DAC),
due to higher CO2 concentrations in industrial emissions streams;54 it is thus also
more affordable. However, the need for capture and processing infrastructure colocation has technical and cost implications. Utilizing point sourced carbon could also
be considered a system service to other sectors, by acting as a destination for theircarbon emissions that would otherwise require abatement/sequestration. This places
the responsibility for controlled disposal of this carbon at the ultimate end-of-life after
recycling (e.g., incineration + CCS or responsible landfilling) on the chemicals system.
Pyrolysis of waste: Given other post circularity efforts (including mechanicalrecycling, dissolution and depolymerisation), only 30-60 Mt of remaining polyolefins(or ~5-15% of total plastic waste generated) will be available, suitable and used for
pyrolysis. This limited availability not only stems from competition with mechanicalrecycling and the availability of waste management infrastructure, but also from theinherent limitations caused by the waste quality that the pyrolysis technology requires.
Only clean mixtures of PE, PP and polystyrene can be used, and this ultimately leads tosubsequent sorting and losses. Investment focus is currently geared towards pyrolysis
as it leverages existing steam cracker assets.55
Gasification of waste: Gasification of waste is far more feedstock tolerant and candeal with waste fractions not suited to pyrolysis. According to the model, 3-4 Mt will betreated this way in 2050. However, gasification follows a different, longer production
pathway – through syngas to methanol then, possibly, to olefins or aromatics (MTX) –which is inherently more expensive than pyrolysis from a process opex perspective,
as well as from a capex perspective given the need for greenfield production assets as
this waste-to-plastic route is not built out.56

54.

Cost/energy demand of capture will highly depend on the level of purity.

55.

The levels of leakage within the existing plastic system and waste feedstock intolerance of pyrolysis mean that unless vast improvements are made in circularity, only a very small proportion of theoriginal naphtha mass entering the cracker is returned through the system as p-oil into the cracker to displace virgin naphtha. Furthermore, some of the naphtha product slate does not go intopolymers and is generally hard or impossible to recycle. For this reason, pyrolysis as a route requires on-going fossil exploitation to sustain the cracker operation.

56.

There are no plastic-to-plastic dedicated gasification plants operational at scale today globally at the time of writing this report, even if the component parts of the value chain exist at massive scale indifferent locations.

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Incineration + CCU is not a widely used technology today but may become moresignificant in the future, particularly as policy makers intensify their focus onemissions abatement. Given that end-of-life emissions represent such a large
proportion of total emissions, abatement of incinerators is essential. Where
circularity has failed to keep material out of incinerators, this must be abated via
carbon capture and potentially utilization as an in-system point source of carbon.
These last three forms of downstream thermal treatment (pyrolysis,
gasification and incineration + CC) all face trade-offs and should be establishedwithin a complementary framework to circulate non-mechanically recyclable
waste carbon. The differences in energy efficiency, material resource efficiency(process losses/yield), and feedstock tolerance mean that the “waste hierarchy”
of circularity prioritization can be extended to optimize both each technology’s
application and the system’s carbon and energy efficiency, as shown in Figure 21.44

Figure 21: Extension of the “waste hierarchy” beyond materials circularity to carbon circularity

Circularity growth needs to be optimized for efficiency and complementarity
Extended Waste Hierarchy

Hierarchy Dimensions

Top of Hierarchy

Efficient

Comment

Efficient

Efficient

ReduceFour driving principles
determine the hierarchy; energy
intensity, material intensity, timeintensity and "feedstock quality"

Dissolution / Physical Recycling

Incineration + CCU
Incineration + CCS or controlled disposal
Traditional landfilling

Low

IntenseTime

Gasification

EnergyDepolymerization
Pyrolysis

The circularity “wastehierarchy” can be extended
beyond material circularity
to carbon circularity

High

Mechanical recycling

MaterialStore

Recycle carbon

Recyclematerial

SubstituteFeedstock quality

ReduceEliminate

IntenseIntenseHigher tier circularity
applications should be
maximized before material
is passed to lower-levelapplications

Bottom of Hierarchy

Atmosphericcarbon feedstocks:
locking up GHGs.
The direct (DAC) or indirect(biogenic) extraction of
atmospheric carbon forfeedstock has technical andenvironmental limitations.

Biogenic feedstocks and DAC are attractive feedstocks from a GHG perspective.
They are considered to have a negative carbon footprint because their carbon issourced from the atmosphere and thus reduces atmospheric GHG concentration.
As a result, even if the chemical products they make emit Scope 1 GHG, or are
burned at end-of-life, their net GHG impact is zero, and if they are landfilled or
sequestered through CCS, they can make total system emissions negative on a life
cycle basis. However, both feedstocks have limitations.
Sustainable and non-food competitive biogenic feedstocks are hard to rely on as
they are scarce, intensely competed for by other sectors seeking to reach net zero(e.g., aviation), and vulnerable to a warming climate. Various analyses indicate a likely
range of only 12-23 EJ of biomass earmarked for the chemical industry.5,58 Bio-oils
are limited in their use and therefore present themselves in only small quantities (44Mt/year). In addition, there are fundamental environmental questions around theappropriateness of deliberately growing biomass for the manufacture of plastics in
2050.59 Large increases in sustainable biomass are not anticipated, meaning any
growth in its use in the chemicals sector will require re-allocation and prioritization
above other sectors, for which the chemical industry is considered an appropriate
use given the abatement challenges it faces.
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67

Direct air capture of CO2 is an appealing carbon source but very energy intensive toharness – and thus very expensive – so it will only make sense in specific geographicalor local instances. However, the CO2 price for DAC is assumed to drop from about$300 in the 2020s to below $100 per tCO2 by 2050, with an accompanying drop inenergy consumption57 from 2 to 1.3 MWh/t CO2. As long as it is powered by renewableenergy sources, DAC is considered to have a negative Scope 3 carbon footprint
upstream as it directly lowers the levels of CO2 in the atmosphere.

Figure 22: Flow of chemical industry carbon from feedstock to end-of-life – LC-NFAX Scenario 2050

Increasingly, sourcing carbon feedstocks from the atmosphere can charge
the chemicals system and has potential for generating negative emissions
2050 Low Circularity – NFAX Scenario

Air

EconomyPoint source CO₂ from other sectors 12%
Waste polymers to Gasification, Pyrolysis 2%
Direct Air Capture 12%

Depolymerization 6.3 %Biomass
29%

Mechanical Recycling** 21%

Accumulates inthe economy
24%
Open burning 7%
Incineration without
CCS 1%

Reuse 12%

Feedstock 389

Production
67%

Manufacturing88%

Use Phase
100%
587 MtSubstitution 9 %Elimination 17 %Fossil 12%

End of use
88%

Leakage 4%;
Landfill 16%

Incineration with CCS 12%

GroundNote:

Substiution and Elimination represent the % chemicals that will be reduced through LC levers.
*Point Source - Incineration + CCU assumes all chemical related energy recovery emissions are circulated back**Mechanical recycling includes solvent-based recycling technologiesover a long term time horizon chemicals stored in the economy (e.g. construction plastics averaging 35 year lifespans) will begin to churn out. All circulated carbon in Mt and as % of total use phase utility (l.e. Including sub and elimination).

Figure 22 represents the best case scenario for the non-ammonia chemicals
system by 2050 after it has been reshaped by materials circularity, carbon
circularity, feedstocks have been switched, and carbon emissions have been
abated downstream at end-of-life via CCS. In this optimal state, ~60% of carbon
mass feedstock (239 Mt) input into the system is sourced from the atmosphere, andonly ~20% from the ground. 790 Mt of utility are still provided by the system, and only
236 Mt of carbon are released from the system into the environment or atmosphere,
providing a far higher plastic use efficiency. Notably, 144 Mt of carbon accumulate in
the economy and consideration must be given to the long-term churn of plastics indurable products as they reach end-of-life, for which further analysis is needed.

57.

Mixture of thermal energy and electrical energy, depending on negative emissions technology.

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Green hydrogen is
the key ingredientin the shift to nonfossil sources ofcarbon.

Green hydrogen will have a major role to play in the future of the non-ammonia
system, allowing alternative sources of carbon to be converted to methanol andthen on to olefins and aromatics. Already today, about 43 Mt of fossil hydrogen(derived from natural gas and coal) is used in the chemical industry.60 While thelarge majority of green hydrogen will be used as feedstock for ammonia (68–92%)
a significant proportion (7-31%) will be used to make green methanol. Coupled withammonia usage, this totals around 147-234 Mt of green hydrogen in the LC-ME
and LC-NFAX scenarios respectively (Figure 23). This equals about 20-50% of total
expected green hydrogen demand in a net zero world in 2050.45 Co-feeding green

The switch to alternative
sources of carbon will requirea major increase in greenhydrogen feedstock production
to make methanol, potentiallymaking the chemicals system
the largest user of greenhydrogen globally.

hydrogen as feedstock will also play an essential role in maximizing the carbon
utilization of gasification processes by adjusting the ratio of hydrogen and carbon ina process gas stream. 58
Green hydrogen production will become economically competitive with greyhydrogen production in average and high natural gas cost regions within thisdecade, meaning the chemical industry should begin seeking production
sources immediately. Multiple players in the green hydrogen sphere suggest
production costs below 2 $/kg by 2030.61,62 In the long term, green hydrogen iscommonly considered the lowest cost hydrogen production method in almost all
geographies due to significant cost declines in renewable power and electrolysers.
While smaller in volume, green hydrogen will be essential for other uses beyond
ammonia and methanol production, such as high temperature heat (>800°C) typicallyachieved today via natural gas firing. In fact, our analysis anticipates that greenhydrogen will provide most high temperature heat production for steam crackers in
the chemical industry of the future. 59
Beyond the chemical industry, other adjacent industrial sectors will also requiresignificant amounts of green hydrogen (e.g., steel, synthetic aviation fuel),
thereby presenting opportunities for cooperation synergies on production,
storage, and transport infrastructure investments. Coordination acrossindustrial clusters and with policy actors will be essential to share investment risks
and coordinated infrastructure build-out, including RES production, hydrogenproduction, and hydrogen transport and storage.

Figure 23: Green hydrogen production by 2050

Achieving net zero in the chemicals system will require large volumes ofgreen hydrogen, which is driven by the production of ammonia andmethanol for direct usage (not for energy)
LC-ME

Mt/yearHeat/Energy
MethanolAmmonia

LC-NFAX

250

250

200

200

150

150

100

100

50

50

0
2020

2025

2030

2035

2040

2045

2050

0
2020

2025

2030

2035

2040

2045

2050

58.

Gasification of carbon-rich feedstocks (e.g., coal, biomass, municipal waste) produce too much carbon vs. hydrogen for methanol production. Today, surplus carbon is released into the atmospherein the form of CO2. Instead, green hydrogen can be co-fed into the processes to precisely adjust the molecular ratios and eliminate any CO2 process emissions.

59.

H2-based retrofitting is lower cost than building new electric crackers.

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69

The role of
CCS in carbon
management.

Due to constraints on alternative feedstocks and energy sources, it is likelythat CCS will still be required to enable the chemical industry to reach net
zero by 2050. The chemicals system today uses >99% fossil feedstock, butthat radically declines to 41% and 7% towards 2050 in the LC-ME and LC-NFAX
scenarios, respectively. Naphtha (82% in LC-ME and 95% in LC-NFAX) and coal
(78% in LC-ME and 99% LC-NFAX) consumption drop most steeply, largely driven

CCS economy will be neededat scale to reach net zero inan orderly fashion, requiring
significant infrastructuredevelopment efforts for CO2
capture, transport and storage.

by the complete retirement of catalytic reforming and coal gasification, which are
generally more emissions intense and often higher cost. The scenarios developedin this report do not capture national infrastructure, trade or energy security
considerations and it is therefore difficult to translate these developments into
national strategies (e.g., China’s coal dependence). Nevertheless, it is possible toanticipate that the limited availability of alternative feedstocks might mean thatfossil consumption will still be required by mid-century.
CCS is therefore necessary to abate the emissions from residual fossil usage.
Beyond simply capturing Scope 1 process emissions of chemical production, CCS
will be critical to abate end-of-life emissions, for example from the incineration ofwaste. In a net zero world, any sequestered fossil carbon extracted from the groundfor feedstock must ultimately be abated by re-sequestering by the same mass ofcarbon. The geographic dispersion and proximity of incinerators compared to CO2

storage sites necessitates the development of CO2 transport infrastructure. CCS is

economically attractive for Scope 1 abatement due to comparably small retrofit costs
for the capture plant (e.g., 10% capex increase for methanol production from naturalgas). In combination with low fossil feedstock costs, CCS as an abatement option isvery competitive when compared to processes using alternative feedstocks instead.
CCS faces significant drawbacks that must be factored into any reliance on thistechnology, including:
Full CO2 capture from CCS is not currently being pursued and is technicallychallenging. An incomplete capture rate of typically <97% - and sometimes as low
as 50-60%60 – entails that some residual Scope 1 emissions will be unavoidable. In
this report, an optimistic 95% capture rate is assumed, without which scaling CCS is
unlikely to be an attractive climate mitigation tool. In addition, as Scope 3 upstream
emissions from production/transport/storage of the fossil fuel remain unmitigated,even with high capture rates, the fossil + CCS pathway is still (standalone, without
offsets) incompatible with a net zero system. While it might be theoretically possible
to compensate residual emissions from use of fossil feedstocks + CCS, there may bescarcity of biogenic carbon compensations. Any form of compensating via negativeemissions will be competed for by other sectors such as agriculture, aviation, and for
ultimately lowering the CO2 concentration in the atmosphere.
Local storage availability and lack of transport and storage logistics. The proximityof the CO2 source and capture plant to the nearest CO2 storage site is essential

as captured CO2 needs to be safely transported before being permanently stored

underground. The size and scale of this infrastructure at a global level is vast,61 andbuilding it is politically and geographically complex.

60.

Current efforts in CO2 capture often only capture process CO2 emissions, which have much lower capture cost due to higher CO2 concentration in the stream. Flue gas from process heat/steam/power creation remains unabated.

61.

CO2 storage will be on the same scale as today’s natural gas production infrastructure with regards to volumes/mass moved: today’s natural gas production is in the order of 4000 billion cubic meter
natural gas, equivalent to ca. 3.2 Gt natural gas.

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Planet Positive Chemicals

Leakage avoidance: While it is technically feasible to permanently store CO2 via CCS,

site management and maintenance are critical to avoid leakages of CO2 at the boreholeor via adjacent wells that may have already been abandoned.62

Long lead-times and high project failure rates. Development of suitable CO2 storagesites is slow and typically requires 7+ years. Over the last decade many projects havebeen shelved due to technical difficulties or lack of sustainable business models.
Engineering challenges around retrofitting existing plants. Integrated refineries
and chemical industrial clusters are commonly custom-designed plants specific tolocal feedstock supply conditions and production capabilities. The integration of CCS
requires a careful re-engineering of steam and power balances and typically requires
significant plant downtime, which would affect the operator’s cashflow.
Financing of CCS projects will require $4.5bn globally.63 While the direct cost to thechemicals system is $850bn, distributing and coordinating the financing of this sharedservice between sectors will not be straightforward.
Despite all the above hurdles, CCS could play a significant role in abating GHG
emissions under certain circumstances, but it should be used selectively toaddress residual emissions that cannot be mitigated by alternative feedstockand energy levers.
Total global CCS technology capacity scaling is forecast to reach around 7 Gt per yearby 2050 for all sectors.55, 63-65 The realistic deployment rate of CCS as a GHG emissions
abatement technology is expected to remain conservative – and be led by Europe andNorth America – for the initial decade between 2020 and 2030, before increasing at
varying degrees for most regions of the world, most notably in China.63

Figure 24: CO2 storage technology scaling capacity cap for CCS in the Chemical Industry

CCS availability is constrained due to project pipeline, North America
and Europe lead the way in 2020s
Mt/year

1,740
Compound annual
growth rate 2020-2050

Japan

5%
7%

Russia+13.7%

Latin America

12%AfricaMiddle East

768

India

12%
19%

Rest of Asia and Pacific
EuropeNorth America
China

240

33%

37
2020

2030

2040

62.

This is true for depleted oil and gas reservoir storage, but not true for saline aquifers, which have not been drilled prior to use for storage.

63.

While there are fewer developments today in China, it does possess suitable sites which are mainly located in northeast, northwest, southern North China, and the Sichuan Basin.

Planet Positive Chemicals

2050

71

This study has apportioned the chemicals system a maximum of 25% CCS. That
limits the volume of chemical production and end-of-life incineration that canbe abated by CCS to 1.75 Gt in 2050, and in a constrained sensitivity where thetechnology struggles to scale, a third of this.

Figure 25: Impact of CCS on production and end-of-life incineration related emissions (Mt CO₂
captured and stored) (2050)

CCS will be responsible for abating the 0.6-0.3 Gt of residual CO₂
not abated by alternative feedstocks in LC-ME and LC-NFAX
scenarios respectively
BTX

899
6

63

50

259

Olefins
Methanol

61

641
4

53

280

Ammonia(incl. Derivatives)

19

520
243

243

LC-ME

LC-NFAX

Incineration
BAU-ME

306
1
32 11

As shown in Figure 25, BAU-ME is a fossil intensive scenario with no demand
reduction, creating a larger dependence on CCS of 0.90 Gt for end of life abatementof non-ammonia chemicals. In the LC-ME scenario the need for CCS is reduced
to 0.64Gt, the majority of which is scope 1 ammonia (blue hydrogen) production
abatement and end-of-life abatement (i.e., CCS on incinerators). Alternatively, in aworld where no new fossil-based production plants are given the license to build
past 2030 (the LC-NFAX scenario), the only major residual requirement for CCS is on
incinerators for end-of-life abatement of non-ammonia chemicals (0.24 Gt). Unlesscircularity scales beyond all expectations, some form of end of life abatement will beessential for the non-ammonia system in 2050 to reach net zero.

The end-of-life
challenge; no goodanswer today

In this study, it has been assumed that in 2050 ~100% of waste incinerators will have
CCS applied to them. As discussed, Scope 3 downstream64 (end-of-life) emissions
in the non-ammonia system represent the bulk (35%) of total emissions today.
However, the 100% CCS assumption is vulnerable to challenge for three reasons: i)geographical reach of CCS infrastructure may be limited, for example inland; ii) while
geological storage capacity is massive, some regions lack suitable storage; iii) even

Abating Scope 3 CO2emissions in the non-ammonia
system requires better end-of-life
control through reduced open
burning and improvement on
existing end of life abatement
technology options.
64.

in 2050, rollout of CCS in some Global South economies is still a stretch target froma development perspective. Irrespectively, continued unabated incineration in 2050
is incompatible with a net zero world, thus the study has assumed that some form ofabatement at end-of-life for controlled disposal of waste will be a necessity. Several
alternative abatement options can be considered:

Scope 3 downstream emissions refer exclusively to end-of-life emissions.

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Increase gasification of waste. Gasification is a feedstock quality tolerant technology.
Therefore, rather than incinerate, a larger proportion of residual waste might beeconomically gasified and then converted from syngas into methanol for MTX, if
the upstream and waste system removes the worst contaminants from the system.
Gasification is a more waste-to-energy efficient means of energy recovery thanincineration, with lower emissions and comparable by-products but, as alreadydiscussed, it is under-represented due to the lengthy/expensive process to manufacture
polymers. However, the lowest quality feedstocks are likely to drive ever greater
operational and therefore economic inefficiencies, making this route challenging.
“Controlled disposal” vs landfilling of plastic waste. Landfilling is rightly
highly stigmatized today due to methane emissions from organic contamination,
toxic leakage from lower quality landfills, and risks of geological erosion andenvironmental pollution, but most importantly the social issues arising from living
near to landfills. Unfortunately, landfilling is a very low-cost, scalable, simple andreadily available technology option that crowds out other circular and end-of-lifemodels. However, controlled disposal of carbon through higher quality plastic
landfilling where methane emissions are mitigated has been discussed in expert
circles as an economically viable and, (with the right controls such as biologicalstabilization),66 a climate neutral end-of-life option. In light of the risks around
CCS scaling, exploring methane mitigation in high quality landfilling may offer analternative, lower-risk option for sequestering carbon at end of life. It would likely
consume around half a cubic km per year globally.
Carbon capture and utilization on incinerators overcomes some of thegeographical infrastructure challenges of CCS, as discussed earlier in the chapter.
The chemicals system may wish to source its point source carbon from incineration+ CCU within its own system for feedstock security reasons. It will avoid theincremental cost of sequestering its carbon via CCS, and thus is more aligned with
the LC-ME scenario. It will also reduce the risk of guaranteeing fossil emissions offtaking thus abatement from other sectors, and thus the potential for a hidden Scope
3 emissions upstream. Finally, it will augment levels of carbon circularity within thesystem. However, it also raises new questions, for example how will the carbon beused, does it need transporting, if it is to be converted to green methanol where will
the green hydrogen be produced?
There is no simple solution to end-of-life olefins and aromatics, which is why every
effort at circularity must be made to keep waste away from an end-of-life fate.
Limiting demand growth through circularity means that – should CCS technology, or
any other end-of-life technology, fail to scale – the chemicals system would need torely on negative emissions from biogenic or direct air capture to achieve net zero.
Ultimately, the market will decide between two future paradigms: LC-ME with higher
levels of carbon circularity, or LC-NFAX and high levels of carbon negativity and the
non-ammonia chemicals system becoming a carbon sink.

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73

Chapter 4:

Can the global
chemicals system
become a carbon sink?
Utilizing the same approach as is required to reach net zerocan reinvent the chemicals system as a climate solution
to regenerate the planet.

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Planet Positive Chemicals

Chapter summary

The global chemicals system has the potential to pass net
zero by the early 2040s and become a carbon sink, sequestering
0.5 Gt of CO2 p.a. and deriving economic value from carbon use
and sequestration.
“Carbon negativity” offers a complementary model to circularitythat can hedge system transition risk related to operating within
planetary boundaries while reinventing itself as a climate solution.
If circularity fails, carbon negativity scales. The most importantfactor is that the whole system shifts to a model of either circularity
or carbon negativity – and does not maintain is current emissions
intensive, linear model.
Unlike more linear, pure cost driven but not necessarily more
technologically mature carbon removals pathways, 65 thechemicals system is uniquely positioned to make use of carbon
to provide social and economic value, potentially multiple
times through material or carbon circularity, before it is ultimately
sequestered. For this reason, CCS capacity should be prioritized forchemicals carbon negativity above more direct uses.
The accreditation of system wide sequestration of carbon will
require collaboration between the chemical industry, as controllersof system feedstock inputs, and incinerators. However, if this canbe achieved, commercial value may be attached to this service,offering a new revenue stream as well as the ability to attach acarbon negative Scope 3 value to all non-ammonia products.

65.

Bio energy with carbon capture and storage.

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75

Shifting the source and final destination of carbon in the chemical system is arequirement to reach net zero Scope 1-3 emissions. Scope 3 in the chemicals
system is so large that the total emissions of the system are highly sensitive to thisshift. That’s why it is the most powerful abatement lever. If the same levers used
for switching the carbon source and end-of-life destination of carbon are extended,
the chemicals system can pass through net zero, invert the carbon vector of thesystem, and – rather than emit – begin to sequester carbon as an externality.

Figure 26: Scope 1, 2 & 3 emission profiles by 2050 in the LC-NFAX scenario

Carbon negative feedstocks and end-of-life abatement can rapidly bringthe carbon-based chemical system below net zero
Mt CO2eq/year (excluding ammonia)

Scope 1 & 2

1400

Scope 3 Upstream

1200

Scope 3 Downstream

1000

Net emissions

800
600
400
200
0
2020
-200

155
2025

2030

2035

2040

2045

13

2050

-671

-400
-600

2050

-800

Figure 26 shows the emissions breakdown between Scope 1,2&3 upstream andScope 3 downstream for the LC-NFAX scenario (excluding ammonia), which achieves
net zero by 2043, and reaches ~0.5 Gt of carbon sequestration per year by 2050
rather than consuming the carbon budget. This scenario is driven by a preference forabating feedstocks rather than choosing the most economic feedstocks, but does
not deliberately target carbon negativity; it places limitations on the use of fossil after
2030, which results in an uptake of alternative feedstocks. This has the potential togrow further and thus establish the non-ammonia chemicals system as a source ofcarbon removals in the latter half of the 21st century, thus becoming a climate solution
and playing a climate stabilization role in a net zero world.
This sequestration may act as a new source of revenue for the chemicals
system akin to carbon “offsets” or “compensation”. The global carbon offsets
market is forecast to grow to between 7-13 Gt p.a. by 2050.67 Based on the
expected increase in carbon price by 2050, the sequestration described in the LCNFAX scenario has been conservatively estimated to be worth ~$55bn a year. 66
This new revenue stream may act to offset the costs of the transition to net zero.
Notably, by inverting the carbon vector, not only are plastic emissions avoided,
66.

Project offset price increase to $110, 0.5 Gt sequestration.

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Planet Positive Chemicals

atmospheric carbon is simultaneously sequestered, thus one tonne of carbon
inversion causes as much as 7 tonnes of CO2 in the atmosphere to be avoided.67

In order to accredit this offset, the chemicals system would need to ensurethat the carbon sourced from the atmosphere did indeed end up sequestered,requiring close collaboration, partnership or even acquisition of incineratorswith CCS applied to them, or other means of sequestration. Further analysis isrequired to establish the most appropriate model.
Carbon negativity acts as a risk hedge with circularity. If circularity should
fail to scale, carbon negativity and thus climate benefit increases. However,circularity should still be a primary system objective because, while a larger
chemicals system would lead to greater volumes of sequestration (~1.4 Gt forbusiness-as-usual demand growth with no unabated fossil installation after2030), as discussed there are multiple other feedstock/energy/technology scaleconstraints and non-GHG planetary impacts that require the system size to be
kept as efficient as possible.
The chemicals system is uniquely positioned to be repurposed to play this role.
Other forms of carbon removal make less efficient or no use of the carbon;
bioenergy with carbon capture and storage (BECCS) provides energy only once,
while the chemicals system is positioned to derive commercial value from both
the repeated carbon use and sequestration.68 What’s more, there may not be time
to construct a carbon removal industry at sufficient scale to drive the negativeemissions necessary to achieve a 1.5 degree or even 2 degree scenario, thus
the chemicals system is at a strategic advantage today as it can repurpose itself
rapidly to become a commercially driven engine of carbon sequestration. It makes
more productive use of carbon than comparable carbon negative routes such as
BECCS, making it an appropriate use of whatever limitations in CCS capacity arise.
Furthermore, in ascribing value to waste, this may have the positive impact of
reducing mismanagement through open burning and system leakage.
Therefore, by taking a disruptive approach to GHG emissions, the chemicals system
has opportunities to disrupt its future role within the global economy, including:i.

By scaling use of biogenic and DAC feedstocks towards 2050 to reposition
itself as a commercially driven means of climate stabilization andregeneration.

ii.

By driving CCS and green hydrogen rollout it can be a major contributor toscaling out those sectors, thus lowering costs and enabling sectors that
require smaller volumes of CCS and green hydrogen to participate in theseessential new net zero services.

All these roles could be considered positive contributions to protecting planetary
boundaries and providing effective stewardship of the global commons.

67.

(1.9 tonnes CO2eq in production, ~2.7 at end of life and ~2.7 in the production of biogenic feedstocks).

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77

Chapter 5:

Implicationsof the transition
on infrastructure,
production geography
and employment.
The new net zero system model will reshape the location of
global production infrastructure, trade patterns and value chains.

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Planet Positive Chemicals

Chapter summary
A holistic system production infrastructure shift is required fromthe fossil orientated technologies of unabated steam cracking, gas
reforming, and catalytic reforming (86% of production in 2020) to either
abated production through retrofitting or to low-emissions orientatedtechnologies of electrolysis, gasification, and carbon capture and utilization(79% of production in 2050 LC-NFAX scenario). Catalytic reforming will
decommission completely, whereas steam crackers and gas reforming will
be predominately retrofitted with abating technologies.
Energy demand of the chemicals system will increase by 4-6 times
by 2050, driven by the 100% shift to renewable sources. This increase
originates from the overall demand increase and the replacement of fossil
fuel energy input with the production of green hydrogen. This translates
into very significant RES growth, in the order of 9-13% of global electricity
production in 2050.
The renewable energy requirements for the production of net zero
enabling chemicals (ammonia and methanol) will likely drive greenfield
capacity installation to gravitate towards regions with abundant,
affordable renewable energy such as Latin America, the Middle East andNorth America. Olefins production via brownfield steam cracker retrofits
will remain in their current location.
This will also likely lead to major shifts in the import/export patternsof ammonia and methanol around the globe, potentially benefiting
the Global South, as well as restructuring the value chain for waste andbiogenic feedstocks, which will require feedstock densification at point ofgeneration to ensure logistics do not become prohibitively expensive.
The reshaping of the value chain necessitates a broadened span of control
by the chemical industry to secure sustainable feedstock and collaborate
with other adjacent sectors involved in CO2 and H2 handling (e.g., steel).
Low growth in olefins and aromatics, and the need for capex
efficiency, will require existing legacy production capacity, suchas steam crackers, to remain in situ in industrial clusters. This will
enable them to benefit from downstream integrations, synergies andundergo retrofitting with low-emissions technologies, such as greenhydrogen firing with off-gasses upgraded rather than burned.
Lower-TRL technologies in inorganic catalysis, biotechnology,
alternative energy provision, and process innovation may disrupt thechemicals system and offer lower cost alongside decreased energy
intensity and higher feedstock utilization. Further R&D investments are
required to enable these nascent technologies to reach commercial scale
within the next 10 years.
The new chemicals system will create 29 million more direct and indirect
jobs compared to business-as-usual by 2050 despite demand reduction.
Planet Positive Chemicals

79

Figure 27: Demand growth for primary chemicals

3-5x Growth in ammonia and methanol vs. declining demand for olefins
and aromatics reshapes future of chemical industry
Mt chemicals

Ammonia and Derivatives

MethanolOlefins and Aromatics

Ammonia for fuel and power

Methanol for MTX

Olefins

Ammonia for chemicals

Methanol for others chemicals

Aromatics

+438%

996

996

+256%

786

511
406

362

786

439

185
185

2020

210

210

LC-ME

LC-NFAX

102
72

2050

Ammonia andmethanol are set
to dominate new
infrastructurebuildout.

290
31

72

72

LC-ME

LC-NFAX

2020

-14%

2050

290

116

349

349

263

263

85

85

LC-ME

LC-NFAX

2020

2050

Methanol will play a central role in the future of a net zero chemicals systemand become the cornerstone to circulate carbon in the economy via MTX
routes (i.e., carbon circularity) (Figure 27). It will thereby displace a significant
share of naphtha used as most common primary system input feedstock for nonammonia chemicals in-scope. Methanol combines several advantages:•

it can be transformed into most basic chemicals: olefins via methanol-to-olefins
and methanol-to-propylene route (MTO, MTP – both well established), andaromatics via methanol to aromatics (MTA, currently at TRL 7)69

The largest growth
opportunities for thechemical industry lie within
the ammonia and methanol
markets, with 5x and 4x
demand growth respectively,
necessitating major greenfield
infrastructure build out.

•

it can be produced from a variety of sustainable feedstocks via gasification (bio,waste) and direct hydrogenation (CO2) in combination with green hydrogen•

it is a liquid, shippable commodity (20% of its production is already shipped today)

A significant share of both olefins (15 % in LC-ME, 27% in LC-NFAX) andaromatics (87% in LC-ME, 95% in LC-NFAX) will be produced via MTX routes,
highlighting the significant infrastructure shifts required from steam cracking andcatalytic reforming towards MTX. This corresponds to approximately 100-150 MTO/
MTP and 1,000-1300 MTA plants required by 2050 (Figure 28).68 In addition, small
scale methanol production and MTO conversion is used to abate steam cracker
off-gases via conversion into olefins. While this is more costly, due to the smallerscale of the methanol and MTO plants, it can be a powerful method to avoid any
Scope 1 CO2 emissions.
Beyond the small growth in ammonia demand for fertilisers (0.2% CAGR, 132 to 140
Mt ammonia equivalent), ammonia will enable a net zero world as a shipping fuel(625 Mt ammonia) and play a role as chemical energy storage molecule for total
power system decarbonization (161 Mt).

68.

Approximate estimated MTO/MTP plant capacity: 0.5 Mt/annum and MTA plant capacity: 0.1 Mt/annum based on existing plants, literature and expert input.

80

Planet Positive Chemicals

Figure 28: Production capacity for key enabling technologies

MTX, Electrolysers and RES require exceptional scaling
MTX plants (#plants)
MTO/PElectrolyser capacity (GW)RES capacity (GW)

MTA

1,450

1,886

2,916

150

1,150

1,209

1,964

100

67x

1300

1850x

23x

1050

30
2020

2050 LCME

2050 NFAX

2050
Note:

179

1
2020

2050 LCME

2050 NFAX

2020

2050 LCME

2050

2050 NFAX

2050(1) Plant sizes for MTX are approximate. (2) For electrolyser and RES, the total global installed capacity was multiplied with the chemical industry emission share (6.4 %) to reacha representative share for the chemical industry. Sources: IEA (2019), Future of hydrogen; IRENA (2021), Renewable capacity highlights; (3) a load factor of 50% was assumed
for electrolysers, and 35% for RES.

Renewable energy
infrastructure
scaling
implications.
The chemical industry willconsume 9-13% of total
electricity generationand 20-50% of global greenhydrogen consumption
by 2050.

The chemical industry will require significant amounts of RES (8,000 and 12,000
TWh/annum in 2050 for LC-ME and LC-NFAX respectively), in particular to
produce green hydrogen for use as feedstock. This is in the order of all RES
capacity in 202069, and about 9-13% of total electricity generation in 2050. 26,70,70
The total green hydrogen consumption (147-234 Mt) by the chemical industry will bein the order of 20-50% of global green hydrogen consumption by 2050 and requires
significant ramp-up of electrolysers (500-4000 GW).71 The lower energy densityof new feedstocks in the net zero chemical industry (e.g., CO2) compared to fossil

feedstocks require significant energy input via green hydrogen (see Chapter 3). The
overall primary energy input (feedstock + process energy) from fossil feedstocks was
about 46 EJ in 2020 and declines towards 24 EJ (LC-ME) and 5 EJ (LC-NFAX) in 2050.
This energy was embedded in the fossil feedstocks and did not require any additional
input, thus switching to a alternative carbon source means RES alongside bio andwaste are required to compensate for this decline in fossil energy input.
The main consumers of green hydrogen will be ammonia (136-161 Mt H2 in LCME and LC-NFAX) and methanol (17-73 Mt Hydrogen in LC-ME and LC-NFAX).

The energy use of green hydrogen (e.g., for steam crackers) is significantly smaller(0.5-1.2 Mt). Other minor energy consumption stems from direct electrification ofheat provision and DAC. The growth in RES requires a significant infrastructurebuild out for the entire power system value chain, from transmission grid to powersystem balancing. Nevertheless, no physical or technical barrier is foreseen for thisglobal electrification of the global economy. 26

69.

Ember Global electricity review 2022 suggests a total of ca. 7000 TWh generation by hydro, wind and solar in 2050. Nuclear, bioenergy and other renewables would add additional ca. 3500 TWh but areconsidered to only contribute minor shares in 2050.

70.

Compared to 90,000 TWh required by the “supply-side decarbonization plus maximum energy productivity improvement“ in the ETC scenario.

71.

Strongly dependent on load factor. For 50% load factor, 900-2650 GW for LC-ME and LC-NFAX, respectively.

Planet Positive Chemicals

81Figure 29: Total feedstock and energy input in the chemical industry

Fossil feedstock is displaced by green hydrogen as an energy and feedstock carrier
EJ
Electricity for other capture

47

Electricity for DAC

61

56
1

2

Electricity for electrification

4

1

1

2
5
12

22

H2 for energy
H2 feedstock methanol

4

46

26

H2 feedstock ammonia
24

Biomass & waste
Fossil1052020

Geographic
implications andopportunities.

2050 LCME

2050 NFAX

Global greenfield production will shift to regions with low-cost and abundant
RES (ammonia) and carbon sources (methanol). This will lead to a subsequent
restructuring of the global production value chain, decentralizing production
away from fossil-based economies and often towards Global South economies,
and enabling a truly global transition. Some of the lowest cost RES in the world isfound in the Global South due to more favourable solar irradiance coupled with strong

Low-cost abundant RES
regions will dominate thefuture production of ammonia
and methanol creating
significant opportunities for
the Global South.

winds, making some locations particularly attractive for ammonia and (if carbon sourceis available) methanol production. While no region experiences an absolute decline in
the total volume of chemical production by 2050, there is high variance in growth. With
the re-location of large volumes of primary chemical production, new trade patterns
may emerge, with local production of methanol and ammonia in locations of abundantcheap RES followed by shipping to markets for further downstream processing.
This offers a development opportunity stemming from the excellent natural
renewable resources of many Global South economies (e.g., Namibia, Chile) thatcan decentralize and de-risk global production from where it is today. The knowledge,
capital and technology to reach net zero by 2050 exists in abundance in the Global
North but transitioning the system in these economies while neglecting the Global
South will undermine the impact of this achievement. The time-series to 2050 is too
short to transition the Global North system first and then begin transitioning the Global
South – they need to be done simultaneously. In the Global South, the mechanisms
for IP, capital and knowledge transfer are currently not well established from a legal,
technical, commercial or social perspective. Therefore, there is a risk of the Global
South lagging, or worse, being overlooked entirely.
Sustainable bioethanol as feedstock may take up a significant role in ethylene
production, but will be locally limited to low-cost production regions, e.g., Northand South America. It will be critical to ensure that growing of crops for bioethanol
production does not compete with food production or have negative consequenceson land use (e.g., deforestation). In addition, recent studies have highlighted thatan assessment of the full life-cycle emissions of bioethanol production, including
emissions associated with fertiliser use for crops growth, will be needed to ensure thisroute is emissions neutral/negative.71

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Planet Positive Chemicals

Value chain shifts
in the futurechemical industry.

The chemical industry has all the means to be the cornerstone of CO2 andhydrogen handling, two critical enablers for the transition of the global

economy. Synergies with, for example, steel companies to utilize their valuable offgases for chemicals production are already being explored today.72 Similar synergies
exist with the aviation sector, where naphtha like by-products during Fischer-Tropsch
based synthetic aviation fuel synthesis could become critical feedstocks for steam

The transformation of alinear chemical industry
based on fossil feedstocks
to a more circular systemopens vast opportunities
for vertical and horizontal
integration in the market.

crackers. Beyond CO2 and hydrogen, waste (including CO2) management will

become feedstock management for the chemical industry, with growth opportunities
in the re-use/substitute/recycling and biomass & waste sourcing. Sustainablecarbon sources are very geographically dispersed (see chapter 3).72
Transport of carbon sources (biomass, waste, CO2) in a densified form (e.g.,conversion to methanol or pyrolysis oil) is therefore essential to reachcentralized chemical industrial clusters, especially in rural and remote areas.
The growth of methanol is key in this shift, as methanol is far denser and more easilytransported compared to some of its raw feedstocks. The methanol production
process (i.e., gasification>syngas>methanol) may be redistributed, followed by amore centralized MTX downstream infrastructure. Similarly, pyrolysis of waste
may develop in a distributed fashion, with pyrolysis oil transported back to steam
crackers. As such, the improvement of methanol production and pyrolysis processes
to allow small scale operations at a low cost will be one of the keys to enabledistributed operations. Significant waste management infrastructure developments,
in particular in the Global South, will be required to ensure low plastics leakage, highrecycling rates, and high waste feedstock utilization.8
The flat demand for olefins, combined with their large brownfield asset base,means industrial clusters may remain intact (Figure 30). Retrofits of existingchemical industry assets (e.g., steam crackers) are less capex intensive than
newbuilt and capitalize on existing experience in the workforce, downstream
processing,73 and value chain connections (i.e., geographic stickiness). However,limited availability of non-fossil feedstocks that can be utilized in steam crackers (i.e.,
pyrolysis oil, bio-oils) and the need to avoid prolonged dependence on CCS highlightthat 55% of steam cracker capacity would retire in the LC-NFAX scenario compared
to only 14% in the LC-ME scenario (Figure 31).

Figure 31: Global production infrastructure shift (LC-ME)

Ammonia & methanol greenfield plants dominate infrastructure changes
while olefin production is largely retrofitted with only a small role fortransition technologies
Retrofitted plants –transitional (75)

Chemicals production
Mt chemicals
Ammonia
MethanolOlefins
Aromatics

Existing
plants 2020
(689)
New buildplants (1414)

Retrofitted plants (493)

Decommissioned plants(134)

2050 production(1976)

Note: Decommissioning is performed if there is no abatement technology available or if production > demand. Retrofits are preferred over new-build if more economic. Transitional plants allow
for partial abatement.

72.

With the exception of DAC, which can be positioned wherever there is cheap RES. Point source CO2 and waste availability is associated with industrial sites and urban clusters. Sustainable biomass availability
is dispersed, typically low volume and at the point of generation are much less energy dense than fossil feedstocks due to inherent physical properties (including high water and oxygen content).

73.

High levels of integration within chemical industry clusters to increase energy and resource efficiency and leverage downstream synergies will continue to play a critical role.

Planet Positive Chemicals

83

Steam cracker
assets can live on
if retrofitted.

Abating steam crackers gives rise to strategic trade-offs between capex/
opex and between CCS and energy abatement approaches (green hydrogenand ammonia abatement and electrification) (Figure 32).74 Green hydrogenfiring is anticipated to be less capex intensive 75 compared to electrification due
to lower retrofitting costs. However, due to lower energy efficiency, the opex
are higher for green hydrogen fired crackers. If the goal was to sustain a steam
cracker portfolio in the long term, electrification would make sense, however, inBrownfield transformations are
the lowest cost option for thetransition of olefins business,whereas catalytic reforming foraromatics will retire.

light of the imperative to drive away from fossil feedstock + CCS and subsequentdecline in steam cracker portfolio, a capex efficient retrofit makes more sense.
Therefore, retrofitting with green hydrogen firing is a more capex efficient andstrategically less risky approach, especially due to the impending green hydrogen
price reductions (to 1-2 $/kg) expected towards 2030 and beyond. Several industry
players are nevertheless gearing up to commit to electrified steam crackers(e.g., BASF, Total, and Linde’s E-Furnace project in EU). This is expected to boost
innovation and development efforts, which in turn are the primary driver of cost
reduction. Thus the relative economics of electrified high temperature heat
could become superior over time. In addition, while smaller in overall energy
consumption, direct electrification of ancillary equipment (e.g., compressors) withrenewables can be used to abate some fossil fuel and steam usage. These retrofits
are commonly easier to perform and available at low cost.

Figure 32: Olefins production evolution by 2050

Steam crackers will continue to play a central role in the chemical industry
in both main scenarios
Mt/yearLC-ME

LC-NFAX
350

350
285

300

6

250

3

36

21

5

300

266
10
57

250
200

200

3

65

150

150
214

100

100

50

50

0

0

2020

2030

2040

2050

16
114

Gasification + MTX(biomass or waste)
CCU + MTX (DAC or PS)
Gas reforming + MTX
Bioethanol Dehydration
Other
Catalytic Reforming
Cracking

2020

2030

2040

2050

Refinery assets face risk of being stranded due to falling demand for transport
fuel, largely driven by road transport electrification. Aromatics production via
catalytic cracking as part of the fuel production process cannot be abated andwill retire. By 2050, burning fuel for either electricity generation or transportation
will not be socially acceptable in a net zero world. So-called hard to abate sectors,
including road transportation, aviation, shipping and energy, will transition to RES,
hydrogen, biofuels or ammonia. The infrastructure implications will be massive
for the vast oil and gas industry, both upstream and in downstream refining.
Repurposing this infrastructure will be challenging.
74.

Tail-gas from the steam cracker is abated via a methanol synthesis and MTO conversion step. Energy abatement in combination with this off-gas upgrade therefore leads to full Scope 1&2 abatement.

75.

The assumption is based on grid-connected hydrogen production via a power purchasing agreement where the capex heavy RES capacity build-out is done by another party.

84

Planet Positive Chemicals

Early-stage
disruptive
technologies
development.

The above transitions will require a very significant innovation agenda to lower
energy intensity, increase cost efficiency, and improve feedstock utilization.76
Disruptions will come as direct substitute of either existing chemical pathways(including intermediates) or in the form of new synthetic routes, subsequently
removing the need for some basic intermediaries. Four technological fields with all
the ingredients required for a significant disruption have been identified (Figure 32):77

A range of low TRL disruptions
may offer the opportunity tofundamentally change therules of the system.
Figure 33: Low TRL technology mapping in the chemical industry

Plethora of low TRL technologies are awaiting to disrupt the industry
Field of Technology
Inorganic Catalysis

Impact to the Industry

Primary chemical

CO₂ electrocatalysis
Thermochemical CO₂
conversion
Dry reforming
NH₃ electrocatalysis

Novel feedstocks& end-of-life
mitigation

Existing
downstream
chemicalNoveldownstream
chemicalNew metal catalysts
allowing multi-stepreactions (one pot)
Electrochemical
synthesis
Integration of multistepbio (cell & cell-free)/inorganic reaction
cascadesIndustrial
Biotechnology

Process
Innovation

Fermentation processes
with establishedmicroorganisms

Membrane separation(polymers or metal/ covalentorganic frameworks)
Plasma (e.g. CO₂ conversion
or gasification)

Microorganisms
digesting polymers
Synthetic biomass (fromCO₂, e.g. algae reactors)

CO₂ mineralization
Densification of
biomass/plastics waste
Microwave based plastics
separation

Cell-free system (incl.
immobilized enzymes)
Micro-organism mediatedreactions (incl. newbiodegradable polymers)
New microorganisms
Standard
microorganisms
Utilization of new
feedstocks (biogas,
syngas, formate, methanol)
instead of sugars

Sonochemistry
Mechanochemistry

Alternative Energy
ProvisionMed. temp. heat pumps(<200C)New electric heatsources (ohmic)
Geothermal
Solar thermal
Microwave heating

Synthetic biochar
synthesis

76.

This study has focused on technologies with a TRL of >7, but due to the long timeseries to 2050 the potential for breakthrough innovation to offer opportunities for faster, cheaper, more efficientemissions reduction can be neither ignored nor predicted.

77.

This overview excludes digitalization of the chemical industry, although the impact on process optimization and R&D (especially artificial intelligence when it comes to catalyst design or microorganism
optimization) is likely going to enable the innovations discussed in this section.

Planet Positive Chemicals

85

Inorganic catalysis has been a field of innovation for decades and is
expected to continue to disrupt the industry as our understanding of
the chemical processes continues to grow. The number of potential
catalysts to explore is almost infinite. Enablers, including artificial
intelligence73 and lab robotics,74 will drive faster, cheaper catalytic
screening, while nanotechnologies will provide an opportunity to increase
surface area and selectivity. Carbon dioxide conversion is expected toreceive most attention as carbon capture at scale becomes commonplace.
Electrocatalysis (e.g., to produce ammonia) will continue to be an importantarea of research given its potential impact and declining grid electricity
emissions and prices. MTX catalysts will also be an area of focus to enable
the tuning of output product ratio to match demand at scale (e.g., ethylene
vs propylene, xylene vs benzene). Another interesting alternative may be
the development of catalysts similar to MTG (methanol to gasoline) thatcan produce “green” naphtha from methanol and allow continued useof the steam cracker infrastructure in an abated fashion. More broadly,
finding new pathways to control the production ratio of the different
aromatics will be key to ensure production matches demand beyond
the currently used toluene disproportionation reaction (e.g., toluene
methylation). A special emphasis will be put on catalysts that allow multiple
reaction steps in one pot without the need for energy and cost-intensive
intermediate isolation and purification to decrease energy intensity.
Industrial biology and biochemistry are expected to become morecompetitive as the high processing costs are offset by the promise of
low energy intensive processes. From the development in mapping livingorganisms and enzymes, new routes will emerge to produce basic chemicalintermediates (e.g., ethanol, butanol), new polymers (e.g., PHAs) and targetedmolecules. The field will be boosted by its ability to use a versatile array offeedstock (raw biomass, syngas, methane etc.) and its low energy profiles.
Alternative energy provision (e.g., geothermal), as well as new formsof power integration (e.g., higher temperature heat pumps), may play a
critical role in the provision of zero-carbon heat and steam, essential
for the chemical industry. Low (< 100°C) and medium temperature(100-400 °C) heat provision accounts for more than 90% of total heat
demand across all industries.55 Heat pumps alongside solar, thermal andgeothermal heat could provide some of the lower temperatures required.
Scale-up and the need for economic as well as energy efficient heat
integration remain bottlenecks for implementation. Very high temperature
heat pumps may reach up to 200°C but require further development.75
Very high temperature heat will be created via ohmic, plasma or microwave
heating. The latter may also be used to influence the chemical reaction
itself towards new synthetic routes.
Process innovations, such as innovative chemical separations, havethe ability to lower energy requirements and fundamentally change
value chains. Examples of high-energy intensity processes include carbon
capture, water/ethanol separation via distillation, and xylene separation.

86

Planet Positive Chemicals

The promise ofjob creation.

The chemical industry at large employs 15 million people worldwide and indirectly
supported 105 million jobs in 2017.76 The future of the chemical industry heavily
depends on its ability to continue to create a pool of knowledge intensive jobs thatare invaluable to society and the economy. Demand reduction levers are expected
to create a dent in the job market for the industry; 8 million jobs fewer than in a BAU

The new chemicals system
will create 29 million direct andindirect jobs vs BAU by 2050
despite demand reduction.

demand growth scenario, the analysis suggests.8,77–83 However, this will be largely
offset by the industry’s ability to expand its span of control to other industries.
Overall, we expect the LC-ME and LC-NFAX scenarios to provide 18 and 29
million additional jobs compared to the BAU-BAU scenario respectively (Figure 34).
These additional jobs will be predominantly upstream, with 21-22 million jobs for the
production of hydrogen, RES and biomass, but the circular economy can also provide
up to 2 million jobs for the industry by 2050. The waste industry will grow from 1
million jobs in 2020 to 2 million in 2050, driven by additional collection, sorting andrecycling infrastructure, although this increase will be marginal in comparison toother industry potential.
The industry is currently facing a problematic skill gaps, which is unfortunate
timing for the ‘decade that matters’ – between now and 2030 – and could be
exacerbated if the industry does not take climate action rapidly. 84 Therefore, toattract talent from the highly educated cohort most sought after in the job market,
many of whom are actively seeking environmental and social purpose at work, thechemical industry needs to reposition itself as a climate champion and steward of
the Global Commons.

Figure 34: Sources of employment in the chemicals system 2020 vs 2050

Up to 29 million direct and indirect jobs could be created in the LC-NFAX
Scenario (+85% compare to BAU-BAU) in energy, feedstock and thecircular economy, despite demand reduction
Millions of jobs
Reuse and substitution
Waste Management

+85 %

CCS
Non-Fossil Energy and Feedstock Provision

63

Fossil Energy and Feedstock Provision

52

Chemical production

2
34

3
15

3

1

2

27

21
2050 BAU-BAU

2

37

29

11
2020

2

2

2050 LCME

22

2050 NFAX

Note: Includes ammonia for fuel and power provision.

Planet Positive Chemicals

87Chapter 6:

Chemicals
system economics– overcoming thefinancing wave.

88

Planet Positive Chemicals

Chapter summary
Net zero ammonia and methanol production cost will be competitive
with today’s cost by 2050 and potentially even be cheaper. In contrast,
the production cost of net zero olefins and aromatics could be 50200% higher than their fossil-based counterparts in 2050.
Driven by massive infrastructure needs in ammonia and methanol
production, there will be cumulative $2.7-3.2 tn investment needs by
2050, 7-9 times the current requirements. For olefins and aromatics, 2838% of capex investment will be from the waste management sector.
The market will ultimately need to change its perception of the valueof chemicals. The end user impact will result in a lower single digit %increase in production costs for most products that use the net zero
basic chemical intermediates. Therefore, in the absence of sufficientcarbon pricing to fill the price gap, re-valued and re-priced low-emissions
chemicals should be pioneered, starting in premium markets that recognize
their value and can absorb the fully loaded costs to the economy andplanet, including market externalities that society has not paid.
In the near term, a step change in policy interventions is likely required
to cushion economic shocks, incentivize preferred actions, anddisincentivize harmful actions. This may be in the form of a carbon tax
between low-emissions intensity and high-emissions intensity products, inorder to put the businesses cases for low-emissions technologies on-par or
better than the traditional technologies.
Finally, with the wider adoption of a circular economy and limitedaccess to biogenic and fossil feedstock, decoupling from a volume
based business model will likely be required, which in turn will
require the chemical industry to explore a longer-term shift to new
business models, of which three have been identified: (1) Engagement
in circular economy models, e.g. Chemicals-as-a-Service models; (2)Broadened spans of control, e.g., lateral and vertical integration of i)renewable energy ii) biogenic feedstock iii) waste feedstock and iv) endof-life disposal; and (3) Carbon negativity, where value is attached tosequestering emissions (assuming the adequate system certification ofsource and carbon destination e.g., through carbon tracking and tracing).

Planet Positive Chemicals

89

The true cost of
low-emissions
chemical products.

Achieving net zero will rely on much more expensive technologies than thoseused today, but in most regions this will not always be the case towards
2050 due to lower capex, lower feedstock cost, and lower energy cost. New
technologies for olefins and aromatics are unlikely to compete with conventional
ones even by 2050, after which the expected cost reductions due to scaling factors
lead to a very different cost baseline. However, the expected decrease in cost fromGreen ammonia and methanol
are expected to be competitiveby 2050, while the cost of
olefins and aromatics could
increase by 50-220% by 2050.

both RES and consequently hydrogen will make green methanol and ammonia
competitive by 2050. Technology costs are widely influenced by regional factors,
as the cost of feedstock (especially hydrogen but also biomass) and energy haveimportant regional variations, creating very different local economic outlooks.
For olefins, the cost of production through upgraded steam crackers will be
on average ~$100/tonne of chemical output cheaper than MTX. Cracking will
either require costly upgrades to reach net zero (e.g., hydrogen/ammonia heat orelectrification etc.) or will need more expensive feedstock (e.g., bio-oils, pyrolysis oil),which will drive cost up by ~60% on average. Shifting away from crackers to an MTX
economy will require expensive new builds and are typically lower scale, and thus
less economic, processes. Therefore, a clear shift to MTX will only occur at a global
scale if fossil is phased out as a feedstock for Scope 3 emissions, or in a high fossil
price scenario, as only a fraction of crackers will be able to feed on pyrolysis oil andbio-oils. Ethanol dehydration for ethylene production will only be competitive withthe other two technologies in North America, where ethanol is significantly cheaper
than other regions, but otherwise will likely remain more expensive. Conversely, gas
reforming cost will only marginally increase as the only upgrade needed is CCS.
For hydrogen and syngas production, CCU and to a certain extent gasification will
be increasingly competitive compared to gas reforming + CSS, which will remain
relevant in the regions where cheap gas is available. Electrolysis, gasification and
CCU will be within the same global cost range by 2050: ~$120-190/tonne of chemical
output, with regional differences. In regions where cheap RES and therefore cheaphydrogen is available, those technologies will be particularly competitive, even to gas
reforming. Gasification, while more capex intensive, might be favoured by the availabilityof cheap biomass or waste, and will be especially relevant in countries which can be paid
to process such residual feedstock, turning the economics upside done.

Figure 36: Levelized production cost of chemical products

By 2050, olefins and aromatic will cost 1.1-3x more than today, ammonia is
expected to see cost decline by 2050 supported by fall in hydrogen prices,
for methanol cost will dependant on reliance to CCS or CCU$/tonne chemical produced
Ammonia-4%

Methanol

449

425

396

295

2020

LCME

LCNFAX

2020

LCME

2050

90

Propylene

+47%

+79%

-26%

469

Note:

Ethylene

509
LCNFAX

965

2020

2050

+56%

2,004

2,225

1,387

LCME

LCNFAX

2050

2020

LCME

LCNFAX

2050

2020

1,702

2,092

1,094

798

(1) 2020 and 2050 levelized cost are blended average across all relevant technologies.

Planet Positive Chemicals

Butadiene+44%

1,430 1,551

1,415 1,461

BTX

LCME

LCNFAX

2050

2020

LCME

LCNFAX

2050

Overall, the analysis suggests that green ammonia and methanol will becompetitive by 2050 and that the cost of olefins and aromatics could increase by
44-79% in a LC-ME scenario and even more in a LC-NFAX scenario (Figure 36).
The increase in production cost is directly linked to the increase in technology
cost discussed above, which would affect olefins and aromatics. While the mosteconomic scenario will quite probably be preferred by industry, it will remainincredibly challenging for individual players without radically different businessmodels or financial mechanisms to support the transition.
The shift in infrastructure will require the largest financing effort the industry has
ever experienced. By 2050, cumulative $2.7-3.2 tn capex need to be invested (LCME and LC-NFAX), equivalent to ~$0.11 tn /year between now and 2050 (Figure 37).
Given the maturity of most technologies today and the typical lifetime of such assets,
this represents a significant risk for the industry. The transition will likely require newinvestment tools and partnerships (e.g., blended finance), especially in region where
the cost of capital is the highest.

Figure 37: Cumulative investments per chemical

The chemicals value chain will need to deploy an incremental $2.7-3.2
trillion capex by 2050 to achieve net zero, 51-70% of which is for ammonia$ trillion-55%

Waste management

1.91

Ammonia

1.94

1.91

1.77

Methanol

0.47

Ethylene
Propylene

0.91

0.19

TolueneButadiene

1.33
0.28

0.86

BenzeneXylene

+66%

0.33

0.28

0.50
0.22
0.07

BAU-BAU

BAU-ME

LC-ME

LC-NFAXAmmonia & derivatives

0.80

BAU-BAU

BAU-ME

0.86

0.33
0.09

0.13

LC-ME

LC-NFAX

Non-ammonia chemicals

Note: BAU-BAU production only considers incremental capex for scaling unabated technologies (e.g., grey ammonia and black methanol production).

By 2050, out of the total capex needed for chemical production, roughly one
third needs to be invested in retrofit and two thirds in greenfield production
to achieve net zero. Maximizing the value of existing assets will remain the mosteffective short-term strategy. However, the lion’s share of investment will support
additional capacity and necessarily lead to new build plants. Most of the expenditure
will come from the need to enable ammonia (60-70% for LC-ME and LC-NFAX
respectively). As ammonia becomes the strategic fuel of the shipping industry andbroader enabler of a sustainable global economy, investment in electrolysis will
represent the vast majority of capital expenditure by 2050. While the cost of thistechnology is expected to decrease significantly with scale, first movers are likely tohave a significant advantage in a market driven by climate urgency, due to demand for
low-emissions products.

Planet Positive Chemicals

91While ammonia investment stays consistent at $1.9 tn across scenarios, thenon-ammonia system costs vary considerably. The LC-ME scenario costs slightly
less than the BAU-BAU scenario, meaning that abating the non-ammonia system via
supply and demand side measures is more economically efficient than unmitigatedscaling of the emissions intense system. LC-ME is 55% lower than BAU-ME, meaningthat circularity in the non-ammonia system results in a halving of incremental
abatement expenditure. The cost of methanol production is the main variable, withcircularity efficiencies reducing total methanol production investments by ~$0.6 tn.
Conversely, the fastest abatement approach to net zero (LC-NFAX) requires ~$0.6
tn additional cumulative incremental investment than the most economic approach(LC-ME) for methanol production build out, which is largely the price of establishinga carbon negative non-ammonia system.
$0.3 tn in waste management infrastructure investment (~10% of incremental
system capex) will be required to achieve net zero in the two main scenarios,
representing a significant investment for non-ammonia chemicals (23-38%) justto mitigate scope 3 downstream and waste leakage. The cost of infrastructurefrom adjacent industries, including waste, CCS and RES, represents a major
challenge for the chemicals industry. What’s more, the fully loaded cost of
CCS infrastructure, including transport and storage (CO2 capture is included in
production cost), will actually be much higher than the figure stated because it

only represents the chemical system’s share. The full cost of this infrastructure will
typically need to be shared between multiple industries if not countries. Similarly,
investing in waste management to collect, sort, recycle, landfill or incinerate
plastic will be critical. The $0.3 tn represents only a fraction of the total costneeded to manage all waste streams, as it excludes waste streams which are notderived directly from the chemicals industry (e.g., organic waste, paper waste).
The chemicals industry is unlikely to be able to finance this transition alone, andthis creates a major risk as the delivery will necessarily be performed by external
sectors. The industry therefore needs to strategically position itself to ensure
its transition is not jeopardized by the slow development of other hard to abate
sectors, such as steel, cement and aluminium.

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Planet Positive Chemicals

Who will pay forlow emissions
chemicals?

The market will ultimately need to shift its perception of the value of chemicals.

The downstream impact fromthe cost increase in basic
chemical intermediates will
result in a low single digit %increase in production costs
for most consumer products.

Analysis of the downstream price increases caused by the higher production

The downstream impact will result in a low single digit percentage increase in the
production costs for most consumer products, therefore re-valued and re-priced
low-emissions chemicals should be pioneered in premium markets that recognize
their value and can absorb the true costs.

costs of net zero emissions chemicals suggest that the impacts on consumers
will be limited (Figure 38). An analysis was conducted using Leontief’s inverse
matrix for two countries – the US (2012 data) and Japan (2015 data) – using publicly
available government data to estimate the ripple effect of cost increase on the
production cost of consumer products.85,86 The analysis, which assumes cost
increase is passed along the value chain without inflation or absorption, and withoutchanging the demand size shows, that a 100% cost increase of the basic chemicalintermediates would have a 3.2% (US) and 0.7% (Japan) cost increase on softdrink manufacturing, 1.1% (US) and 1.0% (Japan) cost increase on passenger car
manufacturing, and a 0.9% (US) and 0.6% (Japan) cost increase on food (Figure 38).
and Appendix). It was concluded that the effect on the consumer would be lower
than most people would assume but still noticeable. It is important to remember thatthe cost of the transition for the consumer will not be limited to the chemical cost
increase, as the transition costs of other sectors (e.g., steel, cement, transportation)
will be added, the magnitude of which requires a dedicated cross-sectorial analysis.

Figure 38: Analysis of the economic impact on the end consumer

Large upstream cost increases of 100% have modest impact
on consumers of only 1-3%

How does this translate to the end consumer?

A 100% average cost increase
across all basic chemicals by
2050 would lead to …

Soft drinks:
Final good
production cost
increase

0.7-3.2%

Cars:
Final good
production cost
increase

1.0-1.1%

Food items:
Final good
production cost
increase

0.6-0.9%

Note: Economic analysis using Leontief's inverse matrix (input output tables) for Japan (2015 data) and US (2012 data) based on publicly available data from respective government and only
representative of the industry structure of those respective countries; assuming the cost increase is passed down to the next player in the value chain, in which no one absorbs or
inflates the cost increase, or changes production volumes; assuming the cost of imported products are impacted similarly; cost increases shown here include all direct and indirect costrepercussion in the manufacturing of consumer goods (e.g., the impact includes not only ethylene used in the PET bottles or car parts directly, but also ethylene (plastic) used in theequipment used to manufacture bottles or car parts etc.) but exclude distribution and retail sectors

Planet Positive Chemicals

93

Policy will still
accelerate
the scaling of
low-emissions
chemicals.
While the chemical industry
should not wait to establish
net zero emissions chemicals
markets, policy interventions
such as carbon pricing would
support the mainstreaming of
low-emissions technologies.
Establishing net zero emissions
chemicals markets will
necessarily create market
opportunities and shortfalls.

The chemical industry should not wait for the right policy environment toovercome the economic barriers associated with low emissions chemicals.
Industry pioneers should focus on establishing premium consumer markets(e.g., for certain products, industries or regions) to seize first mover advantage.
The risk for the industry is to wait for technologies to be cheaper and less risky toinvest in. The demand for Scope 1-3 net zero from a broad range of policy, value
chain, and multi-lateral bodies, such as the IPCC, is here to stay and will only getstronger. There is a long-term but clear demand signal in the chemical industry
and, while this market is niche today, it is rapidly growing and demand arguably
already outstrips supply. While the eight basic chemical intermediates are all highlycommoditized, net zero basic chemicals could be considered highly differentiatedvalue-added products by downstream customers willing to pay a “green premium”.
Formalizing this demand into offtake agreements may de-risk projects and thus
help unlock the required capital outlay from the chemical industry.
First movers in the chemical industry should not wait to establish net zero
chemicals markets in the near future, irrespective of policy environment.
While there is investment risk around which technologies will win out in the
future, this analysis aims to bring increased clarity around which high TRL (≥7)
technologies can be scaled with lower risks. Moreover, while the increased
product cost per tonne is not trivial, the impact on consumer prices is limited.
Therefore, in light of i) the clear pressure for low-emissions chemicals markets,ii) the potential guaranteed demand for such differentiated products, iii) the
increased clarity around production technologies, and iv) analysis suggestingthat the commercial impact on customers is limited, first movers in the chemicalindustry should not wait to establish net zero chemicals markets in the near future,irrespective of policy environment. In taking these early steps, companies canplace themselves at a significant advantage regarding market capture, intellectual
property, talent attraction, brand, cost optimization, and scale.
A step change in policy will help to re-engineer economics in the medium term
to overcome systemic intransigence, incentivize mainstreaming of net zerotechnologies, and disincentivize the most actively harmful activities.
The global chemicals system is currently confronted by a tension between shortterm and long-term risk that is causing systemic intransigence. On one hand, thelong-term risks of inaction – in the form of global warming, environmental pollution
and damage to human health – threaten the system’s fundamental license tooperate and progressively erode its net value proposition to society. On the other,shifting from a stable, profitable, low-risk model of production to less mature, more
expensive technologies and business models requires placing capital at risk without
the certainty of recovering that investment. Industry pioneers who embrace thisinevitable future first, risk being economically punished for their leadership in thenear-term, while laggards embracing the status quo may be rewarded with profit for
not acting. There is a strong temptation to be in the middle of the pack, waiting forsome technologies to be proven out further before deploying capital, but this risks all
stakeholders waiting for others to make the first move: thus nobody moves.

94

Planet Positive Chemicals

Figure 39: Estimated carbon tax required to support the chemical industry’s transition to net zeroCarbon price are likely to be a necessary tool but have huge variance with time,
technology and regions and will necessarily create market distortion regionallyThe paradox: a higher carbon price would
be needed today than in the 2040s

85

A carbon price is a necessary solution but need to be complemented by other tools,$/tonne CO₂ abated, Most Economic Scenario-93%
Setting an average carbon price will
be unlikely to offset cost

Setting an average carbon price will
provide market opportunities

Max
500

Technologies

53

Regions6

Chemicals
2020-2030

2031-2040

Min
0

Gasification
[500]

MTX
[220]

Electrolysis
+ CCU
[170]

Cracking[90]

Gas
Reforming[30]

Electrolysis
[20]

Max
100

Min
0
India, Europe,
Russia[85]

Africa, RoW,
Japan
[35]

North America,
Middle East
[55]

Lat. Am.,
China
[15]

Min
0

Max
150

2041-2050

Olefins[135]

Methanol
[100]

BTX
[90]

Ammonia[35]

Note: Calculation performed for LC-ME Scenario. Carbon Tax was calculated as ratio of Delta between LCOX and Delta of emissions along scope 1&2&3. Plants were compared against levelized
greenfield cost and emissions of initial technology plant in that given region in the year of plant construction. Cases were the new plant was cheaper than the old plant were assigned 0 $/t CO2
tax. Plants with higher emissions vs. the initial tech were ignored.

A global carbon price would be the most appropriate incentive to support thechemicals system to transition collectively to low-emissions technologies, butestablishing it will necessarily create market opportunities and shortfalls (Figure 39).
•

As in all sectors of the economy, a high carbon price is required
to overcome the excessively high-cost gap between conventional
technologies and net zero technologies. However, our analysis suggeststhat by 2050, the carbon price needed for the chemical industry 78 could be
93% less than what would be required today, dropping from $85/t of CO2eq to$6/t of CO2eq. Concretely, that means the industry has even less incentive tostart the transition today than it will in the future, and in an economically driven
world, the status quo is thus likely to continue for the lion’s share of the market.
As such, policy makers should rapidly encourage the development of carbon
markets for the industry and aim for a high carbon price as quickly as possible
to shift the market.
•

While a carbon price is essential, there is no single and fair carbon pricethat will incentivize all technologies across all geographies. Carbon pricefor chemicals can vary from $15 to $85/t of CO2eq globally. Ammonia, and tosome extent methanol, will be easiest to align with net zero pathways from an
economic perspective because of the low carbon price requirements for gas
reforming, electrolysis and CCU. However, olefins and aromatics will remainmuch more challenging, despite effort from regulators, due to the muchhigher carbon price needed for cracking and MTX. As a result, a carbon pricemechanism might have a distorting effect on markets where some chemicalroutes are more heavily supported by policy over others (e.g., MTX).

78.

Average across all technologies, all regions, and all chemicals.

Planet Positive Chemicals

95•Therefore, a tailored framework of regional or national carbon prices per
basic chemical intermediate is likely needed to make most sense to ensure
fair distribution of incentives. The required carbon price can vary from $15
to $85/t of CO2eq between regions of the world. This range is mainly driven by a

few factors, including the cost of RES and hydrogen, but most importantly by thedifferent production mixes in each region.79 That range could be even larger if amore granular analysis was made. As a result, it is unlikely that a global carbon
price would make sense if single countries were to incentivize the production ofchemical in their territory.
•

A low future carbon price risks distorting the market and disincentivizing,for example, the production of aromatic and olefins. A low carbon pricecoupled with new zero emissions production technology buildout could also leadcertain chemical streams to become economically unviable. This could directly
affect demand and shift consumption toward more affordable or carbon-friendly
molecules (or resins in the case of polymer), assuming substitution allows. Thisis especially true for aromatics and to some extent olefins, which on average
require higher carbon prices. The decline in fuel production for aromatics, coupledwith setting a low carbon price, might result in a disincentive to build on-purpose
aromatic production.80 Similarly, if MTO is allowed to control olefins production
ratios, a different carbon price might incentivize the production of ethylene overpropylene, leading to a market distortion and artificially phasing out propylenebased chemicals or ethylene-based substitute where possible.

Who pays? It is the role of governments to overcome market failure throughpolicy interventions such as carbon tax, but they will need to arbitrate on anational or regional level to determine who ultimately pays for the increased
costs of production: investors or the public, with historical precedentsuggesting the public in the long term. Society has long been free riding on market
externalities such as emissions and pollution, and has not paid enough dividendback to nature by absorbing the true cost of non-harmful production models. On
the surface, the debate over who should pay this increased cost is a discussionof consumers versus corporations, but ultimately it is between consumers andinvestors. Both groups have long benefited from un-costed impacts on nature, thus
both should be required to pay the dividend owed.
The balance between consumers and investors needs to be determined byeach country’s government as the ultimate arbiter to maximize the well-beingof its people. This will manifest very tangibly in forms such as sales tax and capitalgain tax. Carbon price will also not transfer directly through to consumers, similar
to the limited impact the increase in chemical price will have on the customer
downstream discussed above. Ultimately, materially efficient strategies are unlikely
to be prioritized by the consumer and more direct regulation will often be needed tocatalyse circularity in addition to supply side interventions such as carbon tax (e.g.,in the case of plastic, recycling targets and recycled content targets). Irrespective of
how this is applied, consideration must be given from a just transition perspective inorder to protect financially challenged consumers.

79.

Regions producing larger amount of ammonia compared to others will in this analysis require a lower carbon price (e.g. Africa, Latin America, North America); in contrast regions producing more olefins
will require a higher carbon price (e.g. Europe and China).

80.

Interestingly, aromatics are also the set to have a lower cost in 2050 than conventional technologies and therefore (see previously in this chapter) might cancel each other out.

96

Planet Positive Chemicals

Disruptive
approaches tovalue creation.

Engaging in the new circular economy would enable the chemicals
system to overcome its volume-based business model by participating
in service-based and reuse type offerings. Currently, ownership ofchemicals usually ends at point of sale to customers, after which no further
value is derived by the chemicals sector. However, in a circular, resource
efficient system there are a range of reuse models that would require

Decoupling the chemicalindustry from a volume-based
growth model will require
disruptive approaches to value
creation. Three approaches
have been identified: 1)
Engaging in circularity, 2)broadening spans of control,and 3) carbon negativity.

retained ownership of the chemical through the consumer use phase,
coupled with a service component. The below section on Chemicals-asa-Service describes some approaches to how industry can engage in thisvolume-decoupled model.

Chemicals-as-a-Service

Chemicals-as-a-Service (CaaS) describes a set of business models
that shift value creation from volume-based sales to a stronger focus
on service and utility provision (Figure 40). By placing the function andperformance of the chemical at the center of the commercial agreement,
rather than the volumes, service-oriented models can lead to a more
efficient use of chemicals that translates into environmental and economic
benefits.87,88 As such, CaaS models can drive the green transition of theindustry. The model incentivizes producers to extend responsibility andeffectively engage in the management of the lifecycle of chemicals while
incorporating circular economy strategies. Depending on the type anddesign of the respective model, CaaS models are characterized by acloser supplier-customer relationships as well as stronger partnership andintegration approaches to the provision of solutions. These are enabled
by new technologies and emerging policies that increasingly focus on
resource efficiency and sustainable lifecycle management.89

Planet Positive Chemicals

97Figure 40: Overview of chemical-as-a-service business models

Chemical-as-a-service is not a silver bullet but provides a wide diversity of
relevant leverage points to facilitate the transition in specific sub-sectors
WHAT ARE VIABLE MODELS TO OFFER CHEMICALS-AS-A-SERVICE?
PRODUCT-ORIENTED MODELS

Business Model
Category

Addition of (circular) services to existingchemical products

PRODUCT-ORIENTED MODELS

Services that yield process and product delivery
improvements (might include performancecompensation)

1) Molecule andmaterial leasing

2) Take-backschemes3) Chemical
Management Services

4) Process equipment
as-a-Service

A financial model where
the supplier remains
the owner of thechemical but payment
is based on volumes,
typically coupled withrecovery schemes

The supplier recovers
chemicals and for reuse,typically in partnerships
and/or enabled by digitaltechnology recovery
schemesA service provider supplies
and manages thecustomer’s chemicals,potentially incl. non-core
activities andprocesses being outsourced
to a specialized third party

The equipment, process
and delivery of chemicals(i.e. technology) is offered
as a service

Types of Business
ModelsPRODUCT-ORIENTED MODELSManagement of total product (systems) to deliver
outcomes instead of volumes6) Ecosystemsolutions5) Chemical
Leasing
The functions performed by
the chemical serve as theunit of payment andchemical suppliers andusers work together to
optimize chemical use infulfilling the function

Equipment, technology,
service expertise andchemicals are bundled in
one system solution andpayment is based on
performanceof this system

There are 6 types of CaaS business models in the chemicals industry, all differentiating in the way utility is delivered

Examples
BASF battery metalleasing

BMW/Alba/BASF
closed-loop automotive
plastics recycling
Renault/Veolia/ Solvay
battery recycling

PPG Optima Solutions
Chemical Management
Ecolab Global Chemical

Linde hydrogenplants-as-a-Service

BASF Coatings-as-a-Service
based on number of cars

Aker Carbon
Capture-as-a-Service

SAFECHEM COMPLEASE

BASF Xarvio Precision
farming-enabled
Crop-yield-as-a-Service
CWS Hygiene-as-a-Service

Jotun Hull Performance
Solutions

Several example are being established across industries and illustrate impact potential
Potential**Relevance: occurrence in themarket and potential applicability.
Efficiency: estimated environmental

Relevance

Relevance

Relevance

Relevance

Relevance

Relevance

Efficiency

Efficiency

Efficiency

Efficiency

Efficiency

Efficiency

ImpactImpactImpactImpactImpactImpactimprovements through the model
on /plant process level. Impact:
overall estimated impact onTake back schemes, chemical leasing and ecosystem solutions show the highest impact on industry

industry in terms of potential
penetration and efficiency

HOW DOES THIS APPLY TO DIFFERENT PRODUCTS?
Petrochemicals
Other
inorganics

Basic
Industrial gases
inorganics

Polymers

1

4

Fertilizers
Plastic
polymers
Man-madefibresSynthetic
rubber2
1

pesticides,
Crop protection (incl.
herbicides, etc.)

Dyes & pigments
Paints/coatings/inks

Speciality
Solvents
chemicals

43

Adhesives & sealants
Lubricants
Water treatment

Consumer

Disinfectants & detergents
Perfumes/cosmetics

Applicability

1

None

MediumOutcome-based
precision/smart agriculture
models emerge andagrochemical companies shift
to becoming solution providers

High

2

None

Take-back schemes are
initiated andpolymer/fibre producers
leverage their increasing
recycling capacities

Medium

3

High

None

A shift to performance-based
Chemical Leasing models could
enable new value-based models
for speciality and increase
resource efficiency

Sources: SYSTEMIQ analysis based on 15 expert interviews, UNIDO (2020), UNEP (2019), OECD (2017), Federal Environment Agency (2018), Lay et al. (2014), European Commission (2009).

98

Planet Positive Chemicals

Medium4

High

Process-oriented models are
already widely applied and exist
since decades, providing basis
for shifting to outcome-basedmodelsThere are three main categories of CaaS model, product-oriented, process-oriented
and results-oriented, within which there are six viable archetypes, each with differing
applicability, efficiency and impact on the industry (Figure 40). The applicability of
CaaS to product categories depends significantly on the type and properties of thechemical product, the application process, and economic criteria.90,91•

Product-oriented CaaS models are mostly applicable to high value recoverable
materials and receive most attention in short-term company strategies aimed
at securing feedstock in closed loops models. Take-back schemes show great
potential to have an impact on the industry, with polymer and synthetic fibre
producers in increasing competition over secondary feedstocks. Cooperationbased models with producers, chemical companies, and waste managementcompanies engaging in partnership in closed loop take-back schemes are
emerging (see the take-back schemes examples in Figure 40).

•

Process-oriented CaaS models are already widely applied in the industry,
especially where non-core processes can be more efficiently performed bychemical suppliers. Chemical companies extend value creation through services
tied to the equipment and process execution. Chemical Management Services
in sectors such as the automotive industry or water treatment are widely applied,
providing the basis for more ambitious performance-based business models(see Chemical Management Services examples in Figure 40).

•

Result-oriented CaaS models represent the most disruptive approach due toincorporating a performance-based compensation mechanisms in the businessmodel (see examples in Figure 40). In Chemical Leasing models, lifecycle
management, cost internalization, performance guarantees, and close supplieruser relationships lead to a more efficient resource use. However, these models
mostly apply to low-volume, high-value speciality chemicals. It is expected that
another type – Ecosystem Solutions – will become more and more relevant in thewider industry to solve sustainability problems based on closer partnerships aswell as shared expertise and technology.

Agrochemicals (fertilizer and crop protection), speciality chemicals and polymers are
the three most attractive product areas for CaaS, based on an estimated applicability
and impact potential. A high-level impact estimation shows that these models, if
scaled in these three product categories, could yield an overall reduction of virginmaterials by 57 Mt (7%) and corresponding downstream emissions abatement of 255
Mt CO2eq (16%). Secondary effects include an increase in high-quality recyclates forpolymers and synthetic fibres (34-45%) from take-back schemes.
In addition to the volume reduction and abatement potentials, producer lifecycle
management technologies yield important environmental benefits as leakage isreduced. This is especially true where inefficiencies in the application process exist.
The United Nations Industrial Development Organization (UNIDO) has shown with
its Chemical Leasing programme that this business model can yield significant
benefits.91 It is being actively promoted as a model for emerging markets, as
environmental pressure points are reduced and economic benefits can be achieved.
Already nine governments have signed the joint declaration, facilitating knowledge
exchange and supporting the implementation of Chemical Leasing projects.92

Planet Positive Chemicals

99

Figure 41: Shift in value chain roles in the chemical industry and adjacent sectors

In a net zero system, the chemical industry will require a broader span ofcontrol through a framework of vertical/lateral integration, greenfield build
out, and partnerships to own areas that will become “core business
Oil & Gas Industry
Provide Fossil
Carbon Sources for
Feedstock and
Fuelreduction levers

Upstream Chemical
Industry
Manufacture Basic
Chemical Products

Downstream Chemical
Industry
Manufacture
Functional Chemical
Products

New role
Downstream
Industries

Consumers

Wastemanagement

Waste
disposalFeedstock
management:material & carbon
circularity throughrecycling

Carbon capture& utilization orsequestration

Continued roleLess relevant2020 value chain roles
2050 potential value chain roles

Upstream Chemical
Industry
Secure bio, DAC, point
source feedstock
access
Upstream Chemical
Industry

Upstream Chemical
Industry
Manufacture Basic
Chemical Products

Downstream
Chemical Industry
Manufacture
Functional Chemical
Products

Downstream
Industries

Consumers

Engage in renewableenergy generation

Increasingly stringent environmental regulations, sustainability demands, andcustomer centricity are driving the chemical industry towards a new phase in which
digitalization, resource efficiency, and environmental impact form the central pillars
of future operations and value creation.93 Pioneers show that service-based value
creation is a feasible model with promising impacts on the sustainable use of chemical
products as well as lifecycle emissions and pollution (see for instance Jotun,94
SAFECHEM,95 Ecolab,96 Yara97 or BASF98). Chemical end users increasingly indicate
interest in engaging in such models to strengthen the efficient management andapplication of chemicals, supported by the technology and expertise of the chemical
supplier. Yet, uncertainty remains with respect to the long-term viability and scalabilityof these models across different product categories and end-use sectors.
A widespread adoption of CaaS models is currently limited by external barriers, butthese can be overcome through changing framework conditions for these models(e.g., policy, digitalization, and the increasing need for value chain integration). CaaS
models are complex and require bold leadership by industry decision makers as
new forms of collaboration, internal capabilities to deliver the service provision, andtechnological innovations must be built and pursued. Progressive companies are
already showing that this is feasible, but policy support incentivizing dematerializedbusiness models will be required. Policymakers should assess the environmental
potential of CaaS business models in the chemical industry and enable collaborativemodels, support on-the-ground implementation, and set suitable incentive schemes.
At the same time, the increasing internalization of the costs of negative externalities(e.g., through a carbon tax) will increasingly favour dematerialized business models.

100

Planet Positive Chemicals

Broadening spans of control through vertical expansion andintegration (build, buy or partner) will be required to secure access to:i) renewable energy / green hydrogen generation; ii) renewable carbon
feedstock sourcing i.e. biogenic and waste feedstocks; and iii) end-of-life
disposal i.e., CCUS, all of which present synergies and new potential
revenue streams (Figure 40).
1.

Participate in renewable energy/green hydrogen generation. The
net zero chemicals system is highly energy intensive. There is a up toa 6-fold increase in demand for (renewable) electricity, either directly
through electrification or indirectly via green hydrogen production.
Therefore, securing means of direct generation will improve
production economics across the chemical product slate, and thechemical industry should explore approaches to acquire or establish
its own generation capabilities.

2. Sourcing non-fossil feedstocks. As explored previously in thisreport, there is a need to shift from an almost entirely fossil-based
feedstock system to renewable feedstocks, such as biogenic,
direct air capture, point source carbon, waste, and green hydrogen.
Capturing feedstock production sources during this transition will bea core differentiator for future chemical industry system players. The
particular feedstock mix will depend on multiple factors but will be
primarily driven by geography.
3.

Partnerships with end-of-life disposal players e.g., CCUS,
as previously discussed.

Carbon negativity: As discussed in Chapter 4, value may be derived fromcarbon negativity (assuming an adequate system certification of source
and carbon destination e.g., through tracking and tracing).

Planet Positive Chemicals

101Chapter 7:

Urgent action
is required now –10 recommendations
to transform the system

102

Planet Positive Chemicals

Chapter summary
Given the urgent need to shift climate trajectory articulated by the IPCC
AR6 III and the relatively low agility of the chemicals system to change
operating models, 10 immediate actions are recommended to catalyse
the system transition.

Planet Positive Chemicals

103Figure 42: 10 recommendations to the chemical industry

10 recommendations to the chemicals system

Establish a demand side coalition of players
downstream of the chemicals industry toformally signal demand for low-emissions
chemicals (and end of use abatement)

2. Establish global charterof transition principles
Align system stakeholders on
a common pre-competitive approachto the transition including:

These niche market technology
demonstrations can then act as pathfindermodels for scaling into the mass market
Guaranteed offtake agreements
can then de-risk investment into supply side
joint ventures, in doing so unlocking capital
Can also prove cost impact on
end consumer is low

3. Chemical industry to
advocate for a net zero
enabling policy framework

System 2050 vision & “acceptable
pathways playing field”
North/south transition & just transition
Simplification, standardization of chemical
portfolio & system input standards
What not to do: reduce or ban harmful
products and activities e.g. production ofharmful or non-recyclable products and stop
new fossil production installation post 202X
Commit to purchase low-emissions and“circular by design” system inputs fromother hard-to-abate sectors e.g. circular gridand transportation infrastructure,green steel in turbines

Restructure system economics to makesupply side business case work (e.g.
through carbon tax/price/EPR)
Translate global charter into
national policies
Support enabling upstream anddownstream circularity policy, e.g.
mandatory recycled content targets andintegrate it with industrial emissions
reduction policy frameworks
Advocate for streamlining of renewableenergy capacity rollout across countries
Seek accreditation of carbon negativity
to incentivize commercialization

4. Scale circularity
Implement elimination and design for recycling
Scale out reuse models and educate consumers to adopt them
Scale up best practice collection and sorting including separation at source

Scale mechanical recycling: subsidise best in class technology, introduce
mandatory recycled content quotas
Scale chemical recycling: as complementary not competing formechanical feedstock, and low-emissions from the start

Operations

5. Switch from fossil to renewable feedstock
Industry procurement functions secure waste, point source and biogenic
feedstocks (as most readily available)

Industry scale up in-house green hydrogen production consider
investment in Direct Air Capture technologies

Accelerating the Transition

New Governance

1. Establish first movers
coalition(s) to seed markets
for net-zero chemicals

Industry vertical integration or greenfield rollout of renewablegeneration capacity

6. Retrofit legacy infrastructure
Industry players to develop infrastructure transition roadmaps
Dedicate capability to project mange execution of these roadmaps, including
building out relationships with the multitude of stakeholders required e.g.
CCS providers, energy industry, policy makers

Focus on capex efficient approaches i.e. targeting older, less-efficient
infrastructure due for replacement or infrastructure requiring partial/
smaller scale infrastructure retrofits. This could include e.g. greenhydrogen fired crackers or CCS on gas reforming

7. Abate end of use chemicals
Unabated incineration is not compatible with the 2020s facing a 1.5 degree
scenario, let alone the 2050s, thus establishing a rapid and policy enforced
roadmap for CCUS on all incinerators is essential

Accrediting carbon negativity will potentially allow the costs of thisabatement technology to be offset with commercial returns on an either
voluntary or policy enforced basis

System is currently data protectionist and given high levels of product and value chain complexity, extremely hard to analyze or understandCreating digital information about the entire chemicals system at each stage of the value chain around product, inputs, life cycle, outputs, impact
on planetary boundaries/SDGs etc. then disclosing and storing this information publicly in a standardized format will create unprecedented transparency

Innovation

This can allow the broad multitude of system policy makers, data players, startups, coalitions and service providers act more effectively in the transition

9. Fast track critical innovations to commercial scale
High investment risk, unclear investment cost, long lead time and high failure rate lead to low willingness to invest into key transition technologies
Therefore, fast track critical innovations to commercial scale: plastic to plastic methanol to olefins and aromatics processes, gasification, processelectrification, cracker retrofit, carbon capture, hydrogen rock cavern storage, freen hydrogen electrolyzer technology.
Depending on the TRL, different interventions are needed, e.g. for MTA further catalysis research is required to increase the selectivity of the reaction
while commercial scale electric crackers need to be constructed and tested to overcome first-of-a-kind technology learnings and drive down costs.

Finance10. De-risk large-scale financial investment

104

Financial industry allocate adequate volumes of capital to the chemicals system transition along the value chain
Establish financial intermediaries & invest in developing the expertise to deploy capital
Develop the financial mechanisms and products to de-risk large scale investment in new or early stage technologies and bring them quickly to mass
market, possibly including concessional capital within the development agenda
Establish with industry a robust and investible project pipeline of Joint Ventures between peers and supply chain actors for lower risk co-investment activities to establish track record and bring investment costs down

Planet Positive Chemicals

Three key system enablers

Data

8. Digitize the value chain and disclose key environmental system dataRole of the
Chemical Industry:

Supply and demand•

De-risk supply side technology investments by forming a precompetitive
industry coalition 81 to precipitate a pipeline of competitive joint ventures that
demonstrate technology operations and economics. This can create a trackrecord, prove out the economics and models, bring prices down, and lead tomass market tipping points.

•

Reinforce future demand by engaging with a first movers coalition via longterm offtake contracts with the above-mentioned competitive joint ventures.
Demands for low carbon chemicals from brand owners and financial
institutions are clear as long as the cost increase of end-user products islimited. Therefore, consolidating demand for these chemicals can de-risk
investment into supply side technologies by guaranteeing the market.

•

Invest in the key technologies highlighted in this report (i.e., MTO/MTA,
gasification, carbon capture, biobased feedstock utilization, chemical
recycling, cracker retrofit/upgrade, process electrification) as most likely
technologies needed in the Scope 1-3 net zero world.

•

Embrace the scale out of the circular economy as a means of preserving
the chemical industry’s license to operate, prepare for a cap in demand, andpursue new revenue streams decoupled from purely volume-driven sales, as
described in the new roles section below.

Pursue new roles•

Invest in and secure non-fossil carbon source as a new feedstock. This will bea rare value creation opportunity for the upstream chemical industry that haslong been regarded as a commodity supplier.

•

Drive rollout of green hydrogen generation capacity (potentially as a directowner given its importance in the future of methanol and ammonia production)
to enable a net zero global economy.

•

Seek new revenue sources by turning the chemical industry Scope 1-3
negative. Scope 1-3 decarbonization activities do not need to stop at net zero.
The chemical industry can provide value to society with chemical products
while also reducing atmospheric carbon dioxide levels. This will require close
coordination with the end-of-life sector (e.g.; incinerators) to ensure that Scope
3 emissions downstream are abated.

81.

The Low Carbon Emitting Technologies coalition hosted by the World Economic Forum is the incumbent coalition in this space and offers significant potential to fulfil this role, depending on thedevelopment of its governance and operation.

Planet Positive Chemicals

105Policy & governance•

Pioneer a global transition charter to align the broader stakeholder
community around how to approach the transition.

•

Advocate for mandates on non-virgin fossil based and recycledcontents percentages.

•

Advocate for a carbon tax to level the playing field for pioneer chemicals players
in order to accelerate the development of a low carbon chemicals market.

•

Advocate for support in transition investments and the government purchaseof products based on low carbon chemicals.

Other enablers•

Support digitization of the value chain and disclose key system data.

•

Collaborate with the financial community to articulate financing need, develop
business cases, and establish the performance track record of technologies
and infrastructure to unlock large scale investments.

•

Actively engage with nations in the Global South with abundant renewableenergy sources to explore greenfield production opportunities that will bringtechnology, expertise and capital into these markets.

•

Support the transition of other hard to abate sectors by seeking low-emissions
materials for infrastructure build out, for example green steel.

Role of theConverters,
Brands andRetailers•

Establish 1st movers demand coalition and engage with the chemical industry
via offtake contracts to drive investment into low-emissions production.

•

Accelerate the scaling of circularity upstream, leading to the eliminationof unnecessary chemicals and adoption of reuse models, and support
substitution where appropriate.

•

Drive design for recycling by demanding mandatory recycled content in all products.

•

Send strong demand signals for carbon negativity upstream to the chemicalindustry and downstream to incinerators.

Role of theEnergy Sector•

Engage with the establishment of a global charter on transition principles.

•

Own the controlled and responsible rollout of renewable energy such that it iscircular by design and in harmony with sustainable existing and future land uses.

•

Support the scale up of green hydrogen production, storage and transportation
at a global level.

•

Pioneer CCS rollout to achieve scale and affordability before the end of the2030s to de-risk the transition.

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Role of Feedstock
Producers & Other
Industries•

Biogenic feedstock producers should seek to scale supply where possible
and make it available to chemicals producers on a fair basis, while at all times
maintaining careful control over the sustainability of its production methods
and avoiding any adverse impacts on land use or biodiversity.

•

Other industries will need to focus on capturing Scope 1&2 emissions as point
source CO2 and identifying a suitable destination for this carbon. Allowing thechemical industry to use this carbon will require careful infrastructure planningand coordination within industrial clusters as well as long term agreements.

Role of the
Waste System•

Optimize collection and sorting infrastructure at a local and national level,
including separation of waste at source by the public and businesses, with aparticular focus on organic matter separation to avoid landfill methane generation.

•

Optimize mechanical recycling and scale out best practices, including leading
technologies such as robotic sorting and artificial intelligence, for more effective
waste recognition and leverage enhanced system data where possible toincrease recyclate yield and quality.

•

Scale out chemical recycling alongside the chemical industry in acomplementary fashion.

•

Ensure landfilling is high quality and, where possible, biologically stabilized toreduce methane emissions.

•

Ensure all incinerators are fitted with CCUS as soon as possible and thatincinerator emissions are accounted for transparently.

Role ofGovernments,
Policy Makers
and Regulators•

Establish a carbon tax framework at a national or regional (e.g., E.U.) level thatconsiders local variance in product economics. Identify inelastic product markets
to legislate as carbon taxable to act as beachheads for carbon tax application,
while ensuring a just transition by protecting any financially vulnerable consumers
within these markets.

•

Ensure the decommissioning of legacy assets within the chemicals value chain is
conducted responsibly from an environmental and material efficiency perspective,
and in accordance with just transition principles.

•

Increase the scale of concessional capital available for chemicals production
rollout in developing markets and the Global South, and enshrine global charter
principles in the development policy agenda to seed low-emissions production
abroad if conditions for local low-emissions production is not favourable.

•

Explore regulatory action on the most harmful practices if no action is taken as weapproach the 1.5 degrees carbon budget threshold.

•

Legislate for mandatory recycled content in plastics products to scale recyclate markets.

•

Enforce Extended Producer Responsibility schemes, coupled with banning unabatedincineration, as soon as CCUS has achieved sufficient technological maturity.

•

Incentivize collection and sorting systems and harmonize these at a regional level.

•

Reduce the international trade in waste exports so that waste is dealt with locallyand does not slip to countries with the weakest governance (i.e., via supporting
further strengthening and implementation of the Basel Convention).

Planet Positive Chemicals

107Role of Financial
Services Industry•

Allocate adequate volumes of suitably risk-orientated capital to financethe transition.

•

Develop capital deployment infrastructure, intermediaries, and legal entities,
as well as cultivating the talent required to deploy it successfully.

•

Construct a suitable suite of financial products to finance the transition allalong the maturity cycle from concept pre-seed development to large scale
infrastructure debt financing. Identify gaps in the maturity cycle.

•

Collaborate with development capital to finance Global South transition.

•

Co-develop a pipeline of joint ventures for investment with the chemicalindustry, establishing the metrics and key performance indicators to build
their track record and enable subsequent mainstreaming of investment.

Role of theConsumer•

Engage with circular economy models, such as new delivery models
as offered by retailers and fast-moving consumer goods engaging in direct-toconsumer offerings.

Role of Innovators
and Academia•

Deliver demand signal through self-education and behavioural shift.

•

Conduct separation of waste at source.

•

Develop optimizations and efficiencies within carbon capture technology,
gasification, MTX, electrification of processes, carbon storage, electrolyzers,
and associated green hydrogen transportation and storage technology.

•

Use artificial intelligence and big data capabilities to map the chemical
products in the global value chain in order to identify where the most harmful
and largest volumes of novel entities are escaping from the system withregards to chemical type, region, step in value chain, impact, root cause, etc.

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Figure 43: Transition timeline of action in the critical decade to 2030

Transition during the critical decade
Immediate
Organize,strategize,
announce
Quick wins

Short term

Medium-Term

Internal projects to planroadmap of actions to 2030
Launch initiatives and entities
dedicated to transition

All brownfield infrastructure projects up
for renewal and greenfield capacity areabated technology
System level KPIs, governanceand targets established

1.5 degrees
passed atcurrent rate

Risk of 2
degree +globalwarming
scenario
mitigated

2029

2030

Action plan to net zero defined with proof
points shown

2023

2024

Operations

New Governance

Establish 1stMoversDemandCoalition

2025

Develop supply side JV
pipeline to deliver
low-emissions chemicals

2026

2027

Create optimal policy and market
conditions to scale low-emissions
chemicals markets

Quick wins

Establish Global Charter of Transition Principles

Defineobjectives

State draft
principles

1st wavecommitments

2028

Charter maturation and signatory expansion

Industry and adjacent sectors
advocate for carbon tax, extended
producer responsibility and GHG
and circularity policy integration.

Legislate and regulate against
the most harmful activities

Scale upstream circularity

Collection & sorting, mechanicaland chemical recycling scale out

Transition
demandsignal forrenewable
feedstocks

Procure/secure renewable
feedstock sources e.g. bio
circularity policy
integration.

Transition
demandsignal for new
production
technologies

Industry players andvalue chain conductdetailed transition
pathway planning

Begin buildout of first wave of greenfield
production technology

Deploy capital into first wave of major
infrastructure retrofit projects
Apply CCUS to incinerators

Key system enablers

Digitize value chain and disclose key system data

Fast track innovation into MTX, gasification, electrolyzers, electrification & capture tech

Allocate
capitalin plans

Establish required
infrastructure andresourcing Design products

Unlock investment into low-emissions
production technologies
Establish track record and investment
metrics to scale capital deployment

Planet Positive Chemicals

109

Conclusion
This report aims to highlight the vast potential for the chemical industry to build afundamentally new social contract while creating unprecedented value for the global
economy and society as it transitions to a net zero future, rather than put additionalpressure on the industry’s licence to operate. While the industry has set up various
initiatives at the company or industry level to work toward achieving Scope 1&2
emissions targets, it is important to recognize that these efforts are not nearlysufficient, and that they do not address the Scope 3 emissions which represent thebulk of emissions most relevant for society. The analysis demonstrates that bringing
demand within an acceptable range is a pre-requisite for the industry, and that inparallel it must develop CCUS, a new feedstock supply chain, vast renewable energy
sources, and a balanced zero emissions technology portfolio to mitigate transition
risk. Failure to do so is likely to have dramatic consequences.
This report aims to present honest yet feasible pathways that offer industry leadersand decision makers the insights needed to navigate the transition to net zero
emissions in the ‘decade that matters’ between now and 2030. Acknowledging
the structural changes and enormous infrastructure shift required, the report also
highlights that there is an opportunity for the chemical industry to provide additional
value to society through circularity and by broadening its span of control over new
industrial territories. Along this journey toward a new chemical industry lies thepotential for the industry to act as a carbon sink, or a carbon management vehicle.
With the proximity of a 1.5-degree world, this is a once-in-a-century opportunity
and the industry cannot afford to miss it. In essence, the vision for a 2050 chemicalindustry requires investment and innovation today, or risk rapidly following an
irreversible business-as-usual trajectory.
Safeguarding the global commons is special mission for the chemical industry, given
its role across all nine planetary boundaries, and represents an opportunity for theindustry to pioneer a lasting vision. Through the products of every-day life, radical redesign of the system will affect almost every single human being on the planet. It is
hoped that this vision will catalyse action so that the chemical industry, value chain,policy makers, financial community, innovators, civil society and academia will join
forces to achieve this critical transition and build a planet positive chemical system.

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111

Appendix: Scope, Approachand Methodology
A high-level overview of this work’s scope and approach is elucidated here. A moredetailed methodology can be found in the accompanying Technical Appendix.

General Overview

Drawing upon an optimized simulation model, the intent of this work is to identify andoutline the key conditions required for the chemical industry to reach net-zero GHG
emissions between 2020 and 2050 along circularity-enabled pathways. The report was
prepared by the Center for Global Commons at the University of Tokyo and SYSTEMIQ,
with support from University of Cambridge and a panel of seven global experts.
The deterministic model built for this project quantifies five metrics: (i) tonnage offeedstock consumed and chemicals produced, (ii) energy consumption, (iii) GHG
emissions, (iv) costs,82 and (v) net jobs growth. The uniqueness of the project lies
in a powerful modelling approach; the construction of a dynamic optimized supply
model which can respond to different inputs (e.g., cost, carbon abatement, feedstock)drawing from ~50 production technologies. While environmental pollution and theimpact on the health of human and other species are both of major concern, theyremain out of scope of this work and are covered in other studies.3,99
The report is constructed around three main scenarios, which were identified as most
relevant from among the 60 the model calculated This will offer decision makers ameans by which to understand the economic, environmental and social implicationsof building a planet centric chemical industry in alternative futures. The intent is not toprovide a blueprint or a master forecast for the sector to achieve this objective. Rather,it aims to showcase a series of possible scenarios towards an objective in order toguide discussion, and ultimately demonstrate the key enabling levers across scenarios
required to (i) maximize recycling and substitution while minimizing demand for virgin
production of chemical products, and (ii) reduce GHG emissions associated with the
production of said demand and end-of-life treatment of its downstream products.
These scenarios are not roadmaps, as roadmaps are a programme of sequential
activities to be completed by specified individuals in order to bring abouttransformation. An exploration of what could be included in such roadmaps –enablers - is discussed at the end of the report where we present recommendations
and propose the most important roles for different players in and connected to thechemical industry. We conclude by considering how different intervention strategies
available to stakeholders can drive impact towards a net zero world and be supported
from both investment and regulatory points of view.

82.

Including capital expenditure and operational expenditure.

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Scoping a large
share of thecomplex chemicalindustry

In Scope. Our techno-economic pathway analyses consist of eight key commodity andbasic chemical intermediates83 including: ammonia, methanol, ethylene, propylene,
benzene, toluene, xylene, and butadiene. Those eight chemical products were chosenon the basis that they are precursors to a large array of chemical products used acrossmultiple industries and account for significant footprints of the entire chemicals
sector: 2/3 of energy used, ~50% of Scope 1 & 2 GHG emissions, and 40% of annual
volume produced. Two key derivatives of ammonia: urea and ammonium nitrate – both
fertilisers – were additionally modelled as they represent the largest growth in demand
for ammonia and the lowest emission factors upon application, respectively.
Out of Scope. The remaining Scope 1 & 2 GHG emissions and volumes from thechemical industry are largely accounted for in three main categories of products:
chlorine, soda ash, and downstream derivatives of the eight key chemicalintermediates we cover. While these other chemicals are beyond the scope consideredwithin this work, much can be inferred from our work on the eight primary chemicals
about the fate of these out-of-scope chemicals in a net zero chemical industry, either
because they are downstream of the primary chemicals and/or will benefit from macro
trends outside of the chemical industry (such as grid decarbonization).
These other chemicals can be described as belonging to one the following categories:
Already-electrified processes: the combined production of chlorine andsodium hydroxide (caustic soda) consume almost 1% of global electricity
production today via a well-established electrolysis process. Industrial
air separation via cryogenic distillation to produce nitrogen, oxygen
and argon are similarly electrified. The production emissions of thesechemicals are dominated by these Scope 2 emissions but will fall to 0
upon grid decarbonization.
Calcination processes: sodium carbonate production and calcium carbonate
calcination produce process CO2 emissions. These can be abated via CCS.
High temperature processes: oxides production require hightemperatures (>800 °C). Both the electrification of and the use of greenhydrogen in these processes are at lower TRLs but can be feasible withfurther technological advances.
Downstream processes: most processes downstream of the eight major
chemicals are low-to-medium temperature processes that can be electrified
relatively easily if not already done so (e.g., polymerization reactions, finechemical synthesis), and therefore will have reduced emissions when
the grid decarbonizes. The overall carbon footprint of these downstream
products will also naturally benefit from their chemical precursors (eight
primary chemicals) being produced with reduced emissions.

83.

In parts of this report, ‘olefins and aromatics’ will be used to refer to the grouping of ethylene, propylene, benzene, toluene, xylene and butadiene, while ‘aromatics’ refers only to benzene, toluene
and xylene.

Planet Positive Chemicals

113Modelling Supply
and Demand GHG
reductions

For each chemical we look at defining pathways to maximize resource-efficiency
and minimize absolute emissions of Scopes 1, 2 and 3 by 2050 from the perspectiveof changes in both demand and supply. A key assumption of the modelling is that
resource-efficiency through materials circularity is a pre-requisite enabler to optimize
the size of the chemical industry and thus reduce demand for virgin chemical products(see section 3.2). It is therefore critical that both angles (e.g., demand and supply) areconsidered simultaneously and married together in our analyses.

Appendix Figure 1: Demand and supply methodology to achieve net zero Scope 1, 2&3

Both resource efficiency and cleaner production technologies will be
required to reach net-zero by 2050
Annual Emissions of Chemical X, Mt/year

Demand2020

BAU Growth

Demand2050 BAUBAU projection takenfrom IEA report

New
Reduction and Polymer or
Applications Substitution Monomer
Recycling

Demand analysis looks at new applications
required for Global Commons Stewardship
Framework sustainable transformations, offset
by circular demand reduction levers

Net-ZeroSupplyNet-Zero
Production

Offsets0
Final

Techno-economic
analysis on net-zeromanufacturinglevers

Note: Polymer and monomer recycling include mechanical recycling, depolymerization and solvent recycling (or dissolution/purification recycling)

The approach taken by the project can be broken down into two general phases:
demand modelling that are then met by optimized supply (production) scenarios.
This logic has several major implications but the most notable is that demand is
calculated independently from supply, the results of the supply model calculations
will therefore not be used to refine demand projections. In practical terms, it meansthat over supply, under supply, or an increase in production cost calculated by the
supply model, which would be expected to have an impact on demand, will not affectit in order to simplify model logic.

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Demand for each chemical in a 2050 post-transformation world is the combination of
the following:•

Business-as-usual demand from IEA projections for 2020 to 2050.

•

New sources of demand for new applications in a net zero world (e.g., ammonia forshipping, electrification, new energy infrastructure, solar and wind development,
electric mobility, etc.) based on existing net zero pathways for relevant sectors.

•

Circularity levers, defined in this report as including both demand reduction
and resource efficiency shifts (elimination, reuse, recycling and substitution), in
existing applications are taken into account where relevant for four industrial
sectors: agriculture for fertilizer; packaging, transportation, construction andtextiles for plastic materials; and transportation for fuel additives. Maximum
potential was assessed in the above to offer a low demand (or high implementationof circular levers) sensitivity for each corresponding chemical referred to as highcircularity (HC). To translate the sensitivity of those levers, as well as different
levels of ambition, a high demand (or low implementation of circular levers)
sensitivity was also created referred to as low circularity (LC).84

While our model examines all scenario combinations, the supply scenarios discussed
in this report are drawn from the high demand scenario (low implementation of thecircularity levers) which display the most interesting view of the future.

Appendix Figure 2: Circular levers considered in this study

Main circular levers were examined along five key industrial sectors:
agriculture, transportation, packaging and household goods, textiles andbuildings and construction
Fertilizers

Methanol, olefins and aromatics

Fertilizers

Agriculture

Precision agriculture

Reuse
N/a

Diet change

Transportation

Packaging elimination

Vehicle lifetime
extension

Organic farming

Recycling
N/a2

Fertilizer switchfrom urea toammonium nitrates

Food waste reduction

Packaging andfast-moving goods

Substitution1

New delivery model(e.g. refill)

Paper

Mobility-as-a-service

N/a

Bio-basedcompostablematerials (e.g. PHA)

Fuel additive
obsolescence

Mechanical recycling
Depolymerization

Construction

TextilesMore efficient building spaces for offices and households

Bio-based materials(e.g. wood)

Waste elimination
upstream

Man-madecellulosic fibers
substitution(e.g. lyocel, viscose)

Solvent-based
recycling technologies3

Note: (1) Substitution encompasses all materials which are not made from the 8 chemical intermediaries in scope for this project. Materials of substitution might still arguably be made by thechemical industry (e.g., bio-based compostable materials) (2) The production of ammonium nitrates from wastewater treatment and nitrogen recovery was considered in the supply model.
Composting was not considered (3) other chemical recycling technologies such as pyrolysis and gasification were considered in the supply model as they produce basic chemicals

84.

The high demand scenario corresponds to the implementation of 50% of most circularity levers, except for packaging levers which was set at 70-80%, and based on penetration market rates by
2050, elimination of fuel additives, and development of mechanical recycling, for which the same level of ambition is assumed in both scenarios.

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115

Supply scenarios to meet the high demand scenarios for each chemical by net zero
manufacturing technologies are assessed:•

Techno-economic assessment of net zero production technologies for eachchemical (TRL ≥ 7 only). Less mature technologies (TRL < 7) are discussed
separately and qualitatively only.85•

Broader system implications and how to consider them cross-chemically:
technology maturity of key enabling technologies (e.g., CCS, green hydrogen),resource limitations (e.g., electricity, green hydrogen build-out, biomass and fossil
sources).86 See section 3.3 for details.

The above was taken into consideration in five simulation supply pathways that
explore how shifting key variables would impact the model outcomes, given that themodel is not deterministic.
These five scenarios were: (1) BAU (to serve as a baseline in a non-net-zero world) (2)
Most Economic (ME), (3) Fastest Abatement, (4) No New Fossil after 2030 (NFAX),
and (5) Strictly No New Fossil.

Appendix Figure 3: Main supply pathways described in this reportThree main supply pathways offer a combination of pragmatismand greatest variance in system operation
Scenario

Scenario Description

Key Assumptions
Low implementation of circularity levers.

Business-AsUsual Scenario(BAU)

No emissions reduction mandate.
No commitments made by the
public and private sector areachieved by 2050.

Conventional technologies allowed to continue to persist and even built
anew to meet increasing demand.
If low-emissions technologies are built, it will only be because they haveachieved cost competitiveness with conventional technologies.
New production capacity ultimately optimized for lowest cost per year.

Most Economic
Scenario(ME)

The chemical sector is committed toachieving net-zero by 2050 within its
own scope and is doing so in themost economic fashion possible.

No New built
Fossil after
2030 Scenario(NFAX)

The chemical sector is committed toachieving net-zero by 2050 within its
own scope and is doing so in themost emissions-abating fashion
possible, with a strict ban on evenabated use of fossil feedstocks after
2030 to avoid scope 3 emissions.

Low implementation of circularity levers.
Industry-wide net-zero mandate by 2050.
Phase out of existing conventional technologies by 2050 and new builds
of conventional technologies no longer allowed after 2025.
New production capacity ultimately optimized for lowest cost per year.
Low implementation of circularity levers.
Industry-wide net-zero mandate by 2050.
Phase out of existing conventional technologies by 2050 and new builds
of conventional technologies no longer allowed after 2025.
No new plants with fossil feedstocks or energy provision of any kind canbe built after 2030, even if process emissions of chemical production areabated (e.g., with CCS).
New production capacity ultimately optimized for largest GHG emissions
abatement available for scopes 1+2+3 upstream per year.

85.

There is historical evidence that energy and industrial technologies take many decades to become a large player in a market. But the urgency of the climate crisis may accelerate scaling up oftechnologies and result in shorter timelines compared to what has been witnessed so far, making lower TRL technologies important to consider at least qualitatively.

86.

In this work, sources have two fates of consumption: either as ‘feedstock’ or as ‘energy source’. ‘Feedstock’ is referred to as any raw material whose constituent atoms are either partially or
wholly embedded into the target chemical molecule after the reaction (therefore constituting the bulk of the mass of the chemical produced) with any remaining non-embedded atoms usually
released as process emissions or side-products. ‘Energy source’ is referred to as any raw material or source that is consumed for the primary purpose of providing thermal energy to drive theconversion of feedstock to target chemical. It is important to note that several materials can serve as both ‘feedstock’ and ‘energy source’.

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After observing the results from these five scenarios, it was concluded that the focus
of discussion would be given to the BAU scenario, Most Economic (ME) scenario,
and No New Fossil after 2030 (NFAX) scenario. In sum, they provide the optimal
combination of real-world pragmatism coupled with the greatest variance in system
operation, and therefore can provide the greatest level of illumination for readers.
In addition to these three supply scenarios, there is a high degree of uncertainty
around two key input assumptions across the board. For these, sensitivity analyses
were built in order to offer the opportunity to derive insights on the nature and size ofthese key swing factors that could shift the outcome of our model.
i.

Applying a more stringent ramp up on CO2 storage availability. A ramp up

curve on CO2 storage availability is already implemented by default in the model.

The sensitivity tests an even more stringent ramp up (i.e., slower, therefore

less CO2 storage availability), as this may be pertinent in the event that any of

the following occur and slow scale-up: lack of transport and storage logistics;
engineering challenges in ensuring no leakage at storage site; long lead-times
and high project failure rates; engineering challenges around retrofitting existing
plants with CO2 capture units.

ii.

Lowering future fossil feedstock costs. A set of higher fossil prices is
implemented by default in the analysis. Performing the sensitivity towards lower
fossil prices addresses the two fundamentally different views on whether fossil
fuel prices will increase or decrease in the future. This would be pertinent in lightof competing driving factors, including, among others: shifts in the volume of fossil
supplies in a net-zero world; changes in the degree to which fossil resources areshipped; efforts to lower upstream emissions in the extraction processes; andshifts from high-cost locations to low-cost regions.

As the extent to which circularity levers will scale is also uncertain, bringing bothdemand and supply scenarios together offers a further opportunity to study a different
demand scenario as a sensitivity, where high demand is the model default and low
demand is a sensitivity.

Key Parameters

Emissions: The emission scopes considered for the supply model in thisreport cover the chemical sector’s emissions following a cradle-to-gateapproach. How and when these scopes are taken into consideration for
optimization is outline below.
•

Scope 1&2: it includes emissions starting at the factory gate (Scope
1 and 2 of chemical processes), before transport to the end user.
It excludes all emissions from downstream processes or further
chemical transformation (e.g., polymerization).

•

Scope 3 upstream: includes resource extraction. Fossil feedstock
associated emissions are based on extraction and accounts forfugitive methane. Biomass associated emissions are calculated on
a carbon basis. Waste and recirculated carbon Scope 3 upstream
emissions are 0 (given associated emissions are already accounted forelsewhere in the model).

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117

Appendix Figure 4: TRL≥7 technologies considered in this study

Combining a least two of the three strategies (1) feedstock switch,(2) carbon switch and (3) CSS will be a pre-requisite to achieve net zeroEnd-of-use CCS-equippedincineration is required toachieve carbon neutrality

Energy Source

Green
Hydrogen

RES

Same asFeedstockEnd-of-use CCS-equipped incineration is optional2 but can lead to carbon negativity

Naphtha/Ethane fed
H₂-fueled steam crackers
Coal Gasification

Pyrolysis fed H₂-fuelled
Crackers
Municipal solid waste
Gasification

Biomass-fed H₂ fueled
steam crackers

Carbon Capture
Utilization
Direct Air Capture

Co-feedstock relevant
for other processes(gasification, CCU, DAC)Electric Naphtha/Ethane
Crackers
Electric fossil gas
reforming

Pyrolysis fed electric
Crackers

Biomass Digestion
Biomass Gasification
Biomass-fed Electric
Crackers
Ethanol Dehydration

Carbon Capture
Utilization
Direct Air Capture

Electrolyser
Co-feedstock relevant
for other processes(DAC, CCU)

Naphtha/Ethane fed
steam crackers
Catalytic Reforming(refineries)
Propane dehydrogenation
Coal Gasification
Fossil gas reforming

Pyrolysis fed steam
crackers

Biomass-fed steam
crackers

N/A

Co-feedstock relevant
for other processes

FossilWaste1

Biomass3
Carbon Feedstock

Captured CO₂

Green Hydrogen
Hydrogen Feedstock

Note: (1) Depending on the original feedstock, waste is between fossil and carbon negative feedstocks(2) Optional CCS would lead to the industry being carbon negative(3) Includes biomass waste (e.g. from organic from municipal solid waste, forest residues or agricultural sector)•

Scope 3 downstream: Emissions associated with end-of-life aresubsequently calculated and therefore are not used in the optimization
model. Rather, end-of-life Scope 3 downstream emissions are calculated
based on a dynamic modelling of waste management flows at theend-of-life per industry.6,8 They are therefore used to inform the view on
how different end-of-life treatment options come into play in order fortrue net-zero to be achieved. Scope 3 downstream from downstream
industries, product manufacturing and product use phase are excluded.

Achieving Scope 3 net zero emissions will require compensating emissions
which cannot be abated. It includes (i) emissions from fossil feedstock
extractions remaining by 2050, (ii) emissions from CCS units (at chemical
production sites and/or incinerators given capture yield is assumed 95%),(iii) emissions from fertilizers at end-of-life (e.g., N2O), and (iv) emissions fromopen burning of waste, which is assumed to remain a small practicein certain countries by 2050.

118

Planet Positive Chemicals

Appendix Figure 5: Carbon accounting methodology

Carbon accounting includes Scope 1, 2, and most relevant Scope 3

Scope
Main
assumptions

Feedstock
Scope 3 Upstream

Chemical Industry
Scope 1 + 2

Manufacturing
and use Phase

In scope

In scope

Out of scope

Fossil upstream emissions areconstant over time
Biomass, DAC upstream emissions
are calculated solely based oncarbon content
Waste or waste-based resources,
point source have no upstream
emissions (already accounted
for elsewhere)

Only includes the emissions
associated with the productionof the chemical studied
Exclude emissions associatedwith downstream chemicalindustries (e.g. derivatives,
polymerisation)

N/A

End-of-use
Scope 3 downstream
In scope
Includes fertilizer emissions (e.g. N₂O)
Includes emissions associated with
waste management (collection, sorting,recycling) which are decreasing overtime in all scenarios except BAU due
to grid decarbonisation
Assumes end-of-use is a mix ofrecycling, incineration, landfill, open
burning, leakage
Incineration includes energy recovery
and by 2050 in all scenarios except
BAU, incinerators are equippedwith CCS

Modelling
net zerologic

If scope 1+2 carbon abatementfrom two technologies is the same,models optimize based on scope 3
upstream emissions

Model optimized technologies
based on cost and/or carbon
abatement to reach net zero
scope 1+2 emissions

Scope 3 downstream emissions arecalculated post optimization

Remaining
emissions inneeds ofcompensation

Scope 3 upstream emissions fromleft over fossil feedstockin the system

Scope 1+2 emissions fromresidual CCS (capture rate95%) installed at chemical
production sites

Fertilizer emissions (e.g. N₂O)
Emissions from residual CCS (capture
rate 95%) installed at incinerators
Emissions from waste open burning

Considerations to reach net zero:
Net zero scope 1 and 2 is achievable with negligible amount of compensation required
All scenarios require compensation to reach net zero scope 3 emissions due to fertilizers, fossil upstream and waste open burning.
Banning fossil from energy and feedstock sources is the only alternative to minimize compensation required

Note: According to the GHG protocol scope 3 definition, is included in this report scope 3 categories 1 (raw materials), 4 (transport) and 12 (end-of-life).

Geography: Global demand for chemical intermediates was consideredin aggregate – that is to say, without local or geographical distinction.
Production, on the other hand, begins by being geographically distributed
based on today’s production distribution and is expected to remain at least
partially so; the degree to which this could occur is explored in our model.
Global production was broken down into 10 (sub-)continental regions: North
America, Latin America, Europe, Russia, Africa, Middle East, China, Japan,
India, and the Rest of Asia and Pacific. We employed country-level focus on
Russia, China, India and Japan due to differences between their political andeconomic landscapes and those of their neighbouring sub-continents.
The significance of this regional view is two-fold:•prices and associated emission factors of various technology inputs
have regional differences that ultimately result in region-specific costs
and emissions of chemical production on a per tonne basis;87•

the present-day location and technology type of plants producing theseeight chemicals is the starting line from which all future infrastructurechanges towards net-zero production must begin.

87.

Note that in some cases where data was not available for all 10 regions (e.g., power price projections), 4 regional data sets (Europe, China, India, USA) were used as proxies and assumptions
derived thereof for the other 6 regions.

Planet Positive Chemicals

119

Time: The model considers 2020 as its baseline year and runs between
2020 and 2050 – the deadline by which it seeks to reach net zero – withannual incremental steps.
While conventional, unabated technologies are allowed to be deployed by
the model in the BAU supply scenario right up until the year 2050, they are
only allowed as new builds in all the other (i.e., net-zero) supply scenarios
up until the year 2025. This achieves two objectives. Firstly, it captures the
key assumption in our model that external drivers will kick in to incentivize
the net zero transition by 2050 (e.g., in the form of a carbon tax; note that avalue for the carbon tax is not baked into the model but rather is assumed
will exist through the forbidding of conventional technologies). Secondly,
it nevertheless captures the new fossil-based plants that have beencommitted, financed and are already under construction between the years
2020-2025, therefore maintaining a level of realism.
New technologies that offer some forms of emissions abatement are each
designated a start date from which the model thereafter considers thetechnology available and therefore ready for deployment. In order to ensurea realistic rate of penetration into the market, a controlled but neverthelessgenerous technology ramp-up rate of 20% (of the given technology’s
previous year’s global capacity) is implemented as a cap.
The start dates of large-scale key abated technologies are as follows:•

2020: Methanol-to-olefins•

2025: Green hydrogen, CCS, gasification, methanol-to-aromatics,
hydrogen-fuelled steam cracking, methanol-to-aromatics•

2030: Direct air capture, electric steam cracking, electric gas reforming

Note that cost reductions across time that reflect technology learning
are implemented for key technologies, most notably green hydrogen andgasifiers. These are performed on a fixed year by year cost decline based on
external resources and are not dependent on levels of deployment (i.e., notlearning rate based approach).
Plant fate: With an annual global demand volume from 2020 through to 2050
to meet, a 2020 view on regional production capacity of all chemicals today,and various technology options available to kickstart the road to net-zerochemicals production, the model brings together all of the above informationin one place through a simulation of production capacity on a per plant basis.

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Planet Positive Chemicals

For any given year, five possible actions can be taken for a given amount of
production capacity:
A. Decommission a plant from year X-1 to year X.
B. Retrofit a plant from one technology type to another technology typeon the same site.
C. Decommission a plant + build a new plant with another technology
on the same site.
D. Build as a new plant, independent of existing sites.
E. Retain plant from year X-1 to year X on the same site.
A is triggered if demand in year X is lower than supply of year X-1. B and C
are directly compared according to the optimization variables described
for that particular scenario. The sum of B + C effectively constitutes atechnology switch and occurs following a forced technology switch rateof 5% of the previous year’s production capacity of a given chemical.
This forced rate of switching from conventional to emissions-reduced
production technologies along the 2020-2050 timeframe therefore
suggests an industry consensus to reach net-zero by 2050. D is triggered tofulfil any remaining demand in that year. E occurs naturally to a proportionof production capacity as a sum effect of steps A-D.

Planet Positive Chemicals

121

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Studies. 104 (2018).
91. United Nations. Chemical Leasing - Function to impact:
A performance-based business model for sustainablechemicals management. https://chemicalleasing.
org/sites/default/files/BOOK-DIGITAL-FINALedition2-140221.pdf (2020).
92. Uruguay joints the joint declaration on Chemical
Leasing! – Chemical Leasing. Chemical Leasing https://chemicalleasing.com/news-uruguay-joints-the-jointdeclaration-on-chemical-leasing/.
93. Future of the chemicals value chain in Europe. Deloitte
Deutschland https://www2.deloitte.com/de/de/pages/
energy-and-resources/articles/future-of-the-chemicalsvalue-chain.html.
94. Jotun Hull Performance Solutions. https://www.jotun.
com/ww-en/industries/solutions-and-brands/hullperformance-solutions/overview/.
95. Saecker, S. Chemical Leasing in Practice: The Business
Case of Safechem. 16 (2020).
96. Ecolab Launches New Global Chemical Organization.
https://www.ecolab.com/news/2021/07/ecolablaunches-new-global-chemical-organization.
97. Yara digital farming | Yara International. Yara https://www.yara.com/crop-nutrition/digital-farming/ (2018).

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around/ (2021).

Planet Positive Chemicals

127

Glossary
Abatement Cost

Bio Energy with Carbon Capture and Storage (BECCS)

The cost of reducing CO2 emissions, usually expressed

A carbon negative technology that combines biomass energy

in US$ per tonne of CO2.

generation with carbon capture technology. Note that BECCS
is distinct from BiCRS (biomass carbon removal and storage)

Additives

which describes a range of processes that use plants and

Plastic is usually made from polymer mixed with a complex

algae to remove CO2 from the atmosphere and store that CO2

blend of materials known as additives. These additives, which

underground or in long-lived products.

include flame retardants, plasticisers, pigments, fillers, andstabilisers, are used to improve the different properties of theBenzeneplastic or to reduce its cost.

A colourless aromatic organic compound that is widelyused as an intermediary in the production of substances like

Agrochemicals

plastics, resins, nylon etc.

Chemicals employed in the field of agriculture and can include
pesticides and fertilizers.

Bio-Based Chemicals
Chemicals that are wholly or partly derived from biomass.  

Ammonia
Gas that is made up of nitrogen and hydrogen (NH3). It has

Bioethanol Dehydrationa host of different uses, including as an intermediary in the

A process through which ethylene is produced fromproduction of fertilizers, refrigerants and explosives.

bioethanol.

Aromatics

Biomass or Biogenic Feedstock

Ring-shaped, hydrocarbon molecules with conjugated double

Organic matter, i.e. biological material, available on abonds. The most important examples include benzene,

renewable basis. Includes feedstock derived from animals or

toluene and xylene (together BTX).

plants, such as wood and agricultural crops, organic wastefrom municipal and industrial sources, or algae.

Autothermal Reforming (ATR)
A method of gas reforming using oxygen to combust part ofBrownfield Production

the input methane within the reformer to directly provide heat

Brownfield production refers to scenarios where organisations

for the reforming reaction. It therefore does not require anutilise existing assets for production activities. In this report,

external steam input and no external heater due to the heat

this refers to existing assets in the chemicals sector like steam

released in the oxidation process. The ATR process therefore

crackers and steam methane reformers.

only has CO2 in the process stream and hence lower capture
costs compared to SMR.

Business-As-Usual, Most Economic (BAU-ME)
The context wherein growth of the chemicals sector continues

Baseline

in line with expected business-as-usual demand growth and

The baseline (scenario) serves as a primary point ofchemicals are produced using the most economic methods

comparison for an analysis. In this study, the outputs of theavailable to achieve net zero.

BAU scenario are referred to as the baseline.
Butadiene
Basic Chemical Intermediates

A gaseous hydrocarbon that is primarily used in theChemicals that are manufactured in order to be converted into

production of synthetic rubber.

another substance.

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CAPEX (Capital Expenditures)

Cellulosic Fibres

Funds used by an organization to acquire or upgrade assets

Fibres that are structured from cellulose and that aresuch as property, buildings, technology or equipment.

produced by dissolving natural material like wood pulp.
Examples include hemp and lyocell.

Carbon Capture and Storage (CCS)
Use of carbon capture technology to extract CO2 from

Chemicals as a Service (CaaS)

potential system emissions streams, followed by transport and

Describes a set of business models that shift value creation

storage of CO2 long term in underground saline aquifers orfrom volume-based sales to a stronger focus on service anddepleted oil and gas fields on a permanent basis.

utility provision. There are three main categories of the CaaS
model are product-oriented, process-oriented and results-

Carbon Capture and Usage (CCU)

oriented.

Use of carbon capture technology to extract CO2 from potential
system emissions streams and to then use it. In the context ofChemical recycling

this report to make methanol from CO2 and hydrogen.

While the term is used in different ways, in this report,
chemical recycling refers to processes that converts the

Carbon Emissions / CO2 Emissions  plastics waste into pure polymer or breaks the polymers

We use these terms interchangeably to describe

into individual monomer. Since these technologies remove

anthropogenic emissions of CO2 into the atmosphere.

demand for primary production, these were considered aspart of the circularity levers in the demand model. Note that

Carbon Emissions Vector

other technologies like pyrolysis and gasification, that return

The net-direction of carbon flow, either from the ground to thethe polymer to other hydrocarbon products that can thenair or air to ground. The source of carbon in the ground is fossil

serve as building blocks or feedstock to produce polymers

which ultimately leads to CO2 emissions in the atmosphere.

again are considered as supply technologies for primary

Taking carbon from air can be via CO2 captured through DAC

polymer production and not considered as chemical recycling

or by the use of biomass (which has used CO2 in the air during
its growth). Carbon underground can for example be via CCS•

Dissolution / Solvent Based Recycling: Dissolutionof waste incineration emissions or permanent storage in thedescribes a process where plastic waste is dissolved in aform of plastic in controlled landfills.

solvent-based purification process to separate polymers
from additives and contaminants. Note that dissolution

Carbon Offsets  

is often referred to as “physical recycling” rather than

Reductions in emissions of CO2 or greenhouse gases made bychemical recycling since the chemical constitution of the

a company, sector or economy to compensate for emissions

polymer remains intact throughout the process.  

made elsewhere by the entity.
•

Depolymerisation: Depolymerisation is a chemical

Carbon Price & Carbon Tax

process that utilises different combinations of chemistry,

A government-imposed pricing mechanism, the two main

solvents and heat to break up the polymer into monomers

types being either a tax on products and services basedor shorter fragments. It is thus the reverse process ofon their carbon intensity, or a quota system setting a cap

polymerisation under application of chemical solvents.  

on permissible emissions in the country or region andallowing companies to trade the right to emit carbon (i.e.,

Chemical Reforming

as allowances). This should be distinguished from some

Chemical process wherein naphtha is converted into high-companies’ use of what are sometimes called ‘internal’ oroctane liquid products called reformates.

‘shadow’ carbon prices, which are not prices or levies, but
individual project screening values.

Circularity
Circularity is a measure of resource efficiency, i.e. the degree

Catalytic Reforming

to which (re)used materials replace new virgin materials.

A process used in refineries to upgrade fuel by converting
naphtha into hydrocarbons with a high-octane rating. It leads
to branching and cyclisation of hydrocarbons and produces
significant amounts of aromatic by-products which are often
isolated for BTX production.

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129Circular Economy Models

Direct Air Capture (DAC)

Economic models that ensure the recirculation of resources

The collective term for various technologies which use

and materials in the economy, by recycling a larger share ofchemical processes to separate CO2 from the atmosphere.

materials, reducing waste in production, producing products
and structures of a lighter weight, extending the lifetimes ofThis term does not carry any implications regarding thesubsequent treatment of the CO2 – it may be utilised or stored.

products, and deploying new business models based around

Direct Air Carbon Capture & Storage (DACCS) specificallythe sharing of cars, buildings, and more.

refers to post-capture subsurface sequestration as the explicit
end of life destination. Direct Air Carbon Capture & Utilisation

CO2eq
Also referred to as CO2 equivalent, this is a standard unit ofmeasurement used to measure the environmental impact of
one tonne of a greenhouse gas vis a vis one tonne of CO2.

(DACCU) refers to utilisation of captured CO2 after capture.

In this report, DAC refers almost exclusively to DACCU in theform of methanol synthesis derived from DAC CO2.
Digestion

Contamination

Fermentation of biomass with high water content (e.g. manure) toContamination occurs in waste disposal when certain non-form biogas (a mixture with high concentration of CO2 and CH4).

target materials are placed in a waste stream. In a recycling
waste stream for instance, these non-target materials

Downstream

include organic waste, other chemicals, or polymer mixtures.

Solutions or interventions applied post-consumer. In the non-Contamination alters the physico-chemical properties of theammonia chemicals sector, this includes collection, sorting,secondary raw material.

mechanical recycling, chemical recycling and disposal.

Controlled Disposal

Disposal

A potential carbon neutral, high quality method of landfilling,

The end-of-life deposition of waste materials. Disposal routes

wherein carbon is disposed off in a controlled manner in aare defined in this study as incineration with energy recovery,

landfill, regulating the amount of methane released throughlandfilling.  

this process.
Electrolysis  
Closed Loop Recycling

A technique that uses electric current to drive an otherwise

Closed loop recycling describes the recycling process in

non-spontaneous chemical reaction. One form of electrolysis

which the output (recyclate) is included in a product of theis the process that decomposes water into hydrogen andsame sub-system (i.e. packaging) and which in turn can beoxygen, taking place in an electrolyser and producing “green

recycled again.

hydrogen”. It can be zero-carbon if the electricity used in theprocess is zero-carbon.

Compostable (materials)
Materials, including compostable plastic and non-plastic

Electrolyser

materials, that are approved to meet local composability

Apparatus through which electrolysis is carried out.

standards (for example, industrial composting standard EN
13432 where industrial-equivalent composting is available).  

Elimination
Practices that reduce unnecessary plastic packaging directly,

Demand Side

through reduced production at source or through innovative

Refers to the growth of interventions that influence theproduct design and solutions.

demand of chemicals by end-consumers or allied sectors.
Embedded Carbon Emissions
Dehydrogenation

Lifecycle carbon emissions from a product, including

A process that describes the removal of hydrogen from a

carbon emissions from the materials input production andmolecule leading to the formation of a double bond. Examples

manufacturing process.

include propane dehydrogenation producing propylene.
End-of-Life (EOL)
End-of-life is a generalised term to describe the part of thelifecycle following the use-phase. This is often used in thecontext of End-of-Life disposal or End-of-Life emissions.

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EpoxyGas Reforming

A class of adhesive that is produced from epoxy resins.

A process wherein hydrogen is produced through the heatingof a methane source, like natural gas. Steam methane

Ethanol Dehydration

reforming (SMR), autothermal reforming (ATR) and gas heated

A process whereby ethanol is dehydrated in the presence ofreformers (GHR) are technologies of gas reforming with slight

sulfuric acid to produce ethene.

differences in technical setup.

Ethylene

Global Commons

A hydrocarbon gas that plays a key role in the production ofThis is normally used to describe “common” resources, which

chemicals like polyethylene.

any one nation does not have jurisdiction over and are hence“common” to the broader global community.

Ethyl Vinyl Acetate (EVA)
A thermoplastic that is often used as a resistant adhesive,

Global South

including in the production of solar panels.

Refers to lower- or middle-income countries in Africa, Asia,
Oceania, Latin America and the Caribbean.

Extended Producer Responsibility (EPR)
Schemes that enable producers to contribute to the end-of-life

Green Premium

costs of the products they place on the market.

The additional cost a consumer is willing to pay for a “green”
or environmentally friendly solution vis a vis one that is not.

Feedstock
Any bulk raw material – virgin or secondary – that is theGreenfield Developments

principal input for an industrial production process.

Refers to developments that have been made fromscratch and are entirely new. They do not rely on or are notFischer-Tropsch process

constrained by any existing (brownfield) constraints during

This is the process wherein carbon monoxide, hydrogen/their development.

water gas is converted into liquid hydrocarbons in thepresence of metal catalysts, heat and pressure. It is primarily

Greenhouse Gases (GHGs)

used to produce liquid fuels from coal and/or natural gas.

Gases that trap heat in the atmosphere. Global GHG emission

Fluoropolymer

contributions by gas – CO2 (76%), methane (16%), nitrous oxide(6%) and fluorinated gases (2%).

A polymer that has a flourine atom included in its structure.
Examples include polyvinyl flouride (PVF), which is used

Green Hydrogen Firing

as a flame retardant surface in photovoltaic cells, as well

Using green hydrogen to power plants like steam crackers.

as polytetrafluoroethylene (PTFE), used as water repellent
coating material.

Haber Bosch Process (HB)
The process wherein nitrogen and hydrogen are combined in

Fugitive Emissions

the presence of an iron catalyst to produce ammonia.

Any unintended release of gas or vapour from anthropogenic
activities such as the processing or transportation of gas or

Hydrogen production

petroleum.
•
Gas Heated Reforming (GHR)

Green Hydrogen: Hydrogen manufactured using
renewable energy exclusively by electrolysing water.

A special type of gas reforming where the gas is pre-reformed
and pre-heated prior to an ATR type reformer.

•

Blue Hydrogen: Hydrogen manufactured through steam
methane reforming to split natural gas then sequester theGasification

CO2 through CCS.

Gasification is a process where mixed, end of life materials areheated in the presence of limited oxygen to produce syngas•

Grey Hydrogen/ Fossil Hydrogen: hydrogenthat can be converted into polymers again. Compared to waste

manufactured through natural gas reforming or coalincineration, the combustion is stopped before the carbon

gasification without any carbon capture.

would be fully oxidized to CO2.

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131

Incineration

Lyocell

Also referred to as waste-to-energy, this involves the burning

A synthetic fibre produced from wood pulp and used in theof waste with recovery of generated energy. Waste-to-energy

production of a wide range of fabrics.

schemes use, among other sources, plastic waste as a fuel to
Low Circularity, Most Economic (LC-ME)

generate electricity.

Scenario wherein limited levers related to circularity are
Inorganic Catalysis

utilised, controlling demand and where this demand is met

Catalysis involves the use of suitable metals to enable orby producing chemicals through the most economic routeaccelerate chemical reactions.

available to achieve net zero.

IPCC Carbon Budget

Low Circularity, No New Fossil Production Capacity

An assessment by the Intergovernmental Panel on Climate

Installed After 2030 (LC-NFAX)

Change that lays out the amount of additional CO2 that can be

This scenario optimises for fastest abatement (i.e. a new plantreleased into the atmosphere to limit global warming to 1.5

is built based on most carbon abated and not lowest cost),

degree Celsius. The IPCC has ascertained that from 2020, anwith the added lever that after 2030, no additional fossil fueladditional 510 GT of CO2 can be released in order to meet thecapacity will be installed in the chemicals system.

1.5 degree Celsius target with a 50% probability.

MethanolLandfill

A colourless, odourless liquid that has a range of uses,

A low cost, readily available and commonly used method of

including as an intermediary in the production of chemicals

disposal wherein collected waste is deposited in the groundlike acetic acid and formaldehyde. This also includes green

at designated sites. Certain managed landfills include sites

methanol, or methanol made from green hydrogen.

where waste is controlled through daily, intermediate andfinal cover, thus preventing the top layer from escaping

Mechanical Recycling

into the natural environment through wind and surface

Operations that recover end of use plastics via mechanicalwater. However, leakage is common from those landfills thatprocesses (grinding, washing, separating, drying, re-are not managed in this way.

granulating, compounding), without changing the chemical
structure of the material.

Leakage
Materials that do not follow an intended pathway and ‘escape’Microplastics

or are otherwise lost to the system. Litter is an example ofExtremely small pieces of plastic formed by the breakdown ofsystem leakage.

larger pieces of plastic waste.

Levelised Cost of X (LCOX)

Methanol to Aromatics (MTA)

A measure of the average net present cost of a given good

A method of producing aromatics (BTX) from methanol

such as carbon captured from CCU/CCS or electricity

without the use of fossil fuels.

generated by a power plant over its lifetime. For example, the
LCO of electricity (LCOE) is calculated as the ratio between

Methanol to Olefins (MTO)

all the discounted costs over the lifetime of an electricity-

A process of converting methanol to ethylene and propylene.

generating plant divided by a discounted sum of the actual
Methanol to X (MTX)

energy delivered.

Term referring to both MTO and MTA.
License To Operate
Typically refers to the clearances and permissions required

Mismanaged waste

to operate in a certain sector. More specifically, in this report,

Collected waste that has been released or deposited in athis refers to the steps the chemicals sector would needplace from where it can move into the natural environment

to undertake to allow it to operate while also fulfilling its(intentionally or otherwise). This includes dumpsites andenvironmental obligations.

landfills that are not managed by applying daily cover toprevent waste interacting with the air and surface water.
Uncollected waste is categorised as mismanaged waste.

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Monomers

Open-Loop Recycling

Building blocks of polymers. Monomers react with each other

Process by which polymers are kept intact, but the recyclate

to form larger molecules called polymers.

leaves the sub-system to be converted into another type of
product (e.g. park benches, fibres) and is unlikely to be recycled

Municipal Solid Waste (MSW)again due to the degraded quality and/or material properties.

According to the EU Landfill Directive, municipal solid waste
is defined as “waste from households, as well as other waste

Operating Expenses (OPEX)

which, because of its nature or composition, is similar to waste

Expenses incurred during the course of regular business,from households”. In the scope of this study, it includes all

such as general and administrative costs, sales and marketing,residential and commercial plastic that is collected by or on

or research and development.

behalf of municipal authorities and thus excludes industrial
packaging waste. MSW-RdF refers to “Refuse-derived fuel”,

Petrochemicals

which is a dried and treated form of municipal waste.

Chemicals made from oil and natural gas and with a plethora
of uses, including the manufacture of plastics.

NaphthaA hydrocarbon mixture typically derived from the distillation

Planetary Boundaries

of crude oil and which consists of a range of hydrocarbons.

A concept developed in 2009, it identifies nine processes that

It has a variety of uses, including as an intermediary in theare critical to the stability of the Earth’s system and places

productions of olefins.

“boundaries” in each of these systems within which humanity
should operate.

Negative Emissions
Term coined by the IPCC used to define activities that remove

Plastic

CO2 from the atmosphere.

A synthetic material made from a wide range of organic
polymers.

Net-Zero
Used in the report to describe the situation in which the energy

Point Source Carbon Capture

and industrial system as a whole or a specific economic sector

CCUS attached to a single, identifiable entity from which CO2

releases no CO2 emissions – either because it doesn’t produce

originates. This is in contrast to of Direct Air Capture which

any or because it captures the CO2 it produces to use or store.

isolates CO2 from the atmosphere.

zero”) should be extremely limited and used only to compensate

Point Source Emissions

for residual emissions from imperfect levels of carbon capture,

Any emissions that are discharged or emitted from a single,

unavoidable end-of-life emissions, or remaining emissions fromidentifiable source. This includes effluents from a drain or

the agriculture sector.

emissions from a refinery.

New Delivery Models

Polyethylene Terephthalate (PET)

Services and businesses providing utility previously furnishedA synthetic resin made from ethylene glycol and terephthalicby short-lived plastic in new ways, with reduced material

acid, widely used to make polyester fibres.

In this situation, the use of offsets from other sectors (“real net-

demand.
Polyurethane (PUR)
Novel Entities

A synthetic resin formed of hydrocarbon chains linked by

In the context of the Planetary Boundaries Framework,

urethane (carbamate) links and used, for instance, in theNovel Entities relate to those entities that are “novel” from a

production of flexible foams.

geological perspective and run the risk of endangering the
Earth’s systems, e.g. plastic pollution.

Polyvinyl Chloride (PVC)
A synthetic resin produced from vinyl chloride which has aOlefins

host of applications, including the manufacture of piping.

A chemical compound consisting of carbon and hydrogen
wherein one or more pairs of carbon atoms are linked together
by a double bond. Olefins are commonly used as building
blocks for many commonly used chemicals like plastics andinclude ethylene, propylene and butadiene.

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133

Polyhydroxyalkanoates (PHA)

Residual Emissions

Naturally occurring polyesters that are produced by certain

All GHGs that are emitted from a system after all reasonablemicroorganisms that can be used in the production ofsteps have been taken to abate the emissions of GHGs.

biodegradable plastics.
Reuse models
Polystyrene (PS)

Replacement of single-use packages with reusable items

A synthetic resin consisting of styrene monomers and used inowned and managed by the user or by services andthe production of foam.

businesses which provide the utility (New Delivery Models).

Polypropylene (PP)

Science Based Targets Initiative (SBTi)

A polymer consisting of propylene monomers and used in a

The Science Based Targets initiative, wherein companies canrange of applications including in the production of plastic

set near term, long term and net zero targets based on thecontainers, furniture and car parts.

best available science. The SBTi is a collaboration between
the World Resource Institute, World Wildlife Fun and UN

Polyethylene (PE)Global Compact.

A polymer consisting of ethylene monomers, and includes
low-density polyethylene, used in packaging film and cable

Separation of Waste at Source

insultation, and high-density polyethylene, used in the

The collection of individual components of solid waste (suchproduction of plastic caps and construction films.

as plastic) separated into different collection containers by
the user, in order to recover the material or to facilitate its

Process Emissions

collection and disposal. Separate collection of plastic waste is

CO2 and other greenhouse gases emissions generated asa precondition for high-quality recycling as contamination withconsequence of a chemical reaction other than combustion

other materials is limited.

occurring during an industrial process.
Sequestration
Propylene
A hydrocarbon that plays a key role in heating substances as

Removal or separation of CO2 such that it is no longer freely
moving in the atmosphere.

well as in fuelling the plastics and energy sectors.
Scope 1 emissions
Pyrolysis

Refers to emissions from resources that a company owns andPyrolysis is the thermal process of heating up plastic under thecontrols directly.

absence of oxygen. It converts polymers into a range of simplerhydrocarbon compounds in the form of liquid pyrolysis oil.

Scope 2
Refers to indirect emissions that are emitted due to the

Pyrolysis Oilelectricity purchased by an organisation in the conduct of its

The hydrocarbon by product produced after the heating ofoperations.

plastic waste in the absence of oxygen (pyrolysis). Can have arange of applications, including as a feedstock in new plastic

Scope 3production.

Refers to all emissions that do not fall under the ambit of
Scope 1 and Scope 2 and can be linked to an organisation’s

Refineries

value chain. There exist 15 categories of Scope 3 emissions

A production facility wherein raw materials are refined andand can range from emissions generated due to theupgraded using chemical processes. In this report, referencetransportation and distribution of an organisation’s goods tois normally made to oil refineries, where crude oil is upgraded

those emitted due to its disposal at the end of life of the goods.

to form petrochemical intermediaries.
Steam Crackers
Renewable Energy Sources (RES)Petrochemical process wherein long chain hydrocarbon

Refers to energy renewable production technologies including

molecules are mixed with steam and heated to break down into

wind, solar and hydro.

smaller chain hydrocarbon molecules, like olefins and BTX.

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Steam Methane Reforming (SMR)

Toluene Disproportionation

Process in which methane from natural gas is heated, withIn this process two toluene molecules are converted into

steam, usually with a catalyst, to produce a mixture of carbon

one benzene and one xylene molecule via a process calledmonoxide, CO2 and hydrogen.

transalkylation.

Sorting

Tipping Points

Physical processing techniques and processes to separate

A tipping point describes the moment when mass adoption ofmaterials in waste streams. Sorting is typically performed

a given technology beyond early adopters is achieved.

in Material Recovery Facilities (MRFs) or specific Plastic
Recovery Facilities (PRFs). Sorting can be performed

Upstream Solutions

automatically with sorting technologies or manually.

Solutions applied pre-consumer. This includes design forrecycling (D4R); reductioneduce levers such as eliminate,

Sustainable biomass / bio-feedstock / bioenergy

reuse (consumer) and reuse (new delivery model); andIn this report, the term 'sustainable biomass' is used to

substitution levers such as paper, coated paper, anddescribe biomass that is produced without triggering any

compostable plastic.

destructive land use change (in particular deforestation), isgrown and harvested in a way that is mindful of ecologicalUrea

considerations (such as biodiversity and soil health), and has

A nitrogen, carbon and hydrogen-based molecule that is used

a lifecycle carbon footprint at least 50% lower than the fossil

either directly as a fertiliser or as chemical intermediate tofuels alternative (considering the opportunity cost of the land,

produce a wide range of fertilisers.

as well as the timing of carbon sequestration and carbon
release specific to each form of bio-feedstock and use).

Virgin plastic
Virgin plastic is the polymer resin produced directly from the

Syngaspetrochemical feedstock.

Or synthesis gas, it is composed primarily of carbon monoxide,hydrogen and CO2 and is used in the synthesis of various

chemicals.

ViscoseA substitute for silk, which is produced from cellulose and isused in the production of rayon fibres.

System Cost
Total system cost comprises of cumulative capex and opex at

Waste Feedstock

each stage of the value chain for the respective scenarios andIncludes waste material that can be used as an input in industrial

periods, including production and waste management of bothprocesses after conversion into hydrocarbon products.

plastics and substitute materials. System costs are fundedthrough both capital investment and from profits generated.

Wastewater
Run-off from wastewater treatment plants that contains

Supply Side

elevated levels of nitrate which can be used for ammonium

Refers to the growth of interventions that influence thenitrate production.

production of chemicals by suppliers.
XyleneSustainable Aviation Fuel (SAF)

Aromatic compound that is primarily used as a solvent in the

Aviation fuel produced from sustainable sources, but whichrubber, paper and leather industries. Xylene is the umbrella

have very similar characteristics to traditional jet fuel.

term for isomers ortho-, meta-, para-xylene. Within thisreport, xylene refers to para-xylene which is the by far mostTechnology Readiness Level (TRL)

commonly used xylene as starting material for PET synthesis.

Describes the level of matureness a certain technology hasreached from the initial idea to large-scale, stable commercial

Zero-carbon Energy Sources

operation. The IEA reference scale is used.  

Term used to refer to renewables (including solar, wind, hydro,
geothermal energy), sustainable biomass, and nuclear.

TolueneAromatic compound. Main uses stem from blending into thegasoline pool, producing isocyanate for polyurethanes, andthe onward production of benzene and xylene.

Planet Positive Chemicals

135September 2022

PlanetPositive
Chemicals
Pathways for the chemical industry
to enable a sustainable global economy

This research was
funded by Mitsubishi
Chemical Corporation