$759 Billion Required for a Net-Zero Petrochemicals Sector by 2050

Petrochemicals could be made with almost no carbon emissions by investing an extra $759 billion by 2050, according to a new report from research firm BloombergNEF (BNEF). Electrification and carbon capture and storage are likely to play a central role in reducing emissions from the production of high-value chemicals, or HVCs, which are key feedstocks used to make plastics and many manufactured goods. HVCs are responsible for up to 2% of global emissions, equivalent to aviation, and double the aluminium industry’s contribution.

Governments and corporate net-zero commitments are pushing the petrochemicals industry to cut its emissions by 2050. Despite facing a more complex decarbonization path than any other sector, petrochemicals players’ net-zero targets cover more of the global manufacturing capacity than other heavy emitters like steel and cement. The report “Decarbonizing Petrochemicals: A Net Zero Pathway” outlines a pathway to low-emissions chemicals and describes how a combination of falling carbon capture and storage (CCS) and electrification costs could reduce emissions to net zero, even while total production grows significantly.

BNEF estimates that new clean capacity and retrofits for lower emissions will cost the petrochemicals industry an additional $759 billion compared to business-as-usual capacity growth. This is roughly 1% of the $172 trillion estimated by BNEF to be needed to decarbonize the global energy sector by 2050. Decarbonizing chemicals will be capex-intensive, but it is crucial for all new capacity and retrofits beyond 2030 to be net-zero, to avoid the risk of stranding assets over their long lifetimes.

By 2050, CCS could be the cheapest option for net-zero petrochemicals and abate the emissions of 40% of HVC production. Another 35% would rely on new electrified cracker designs, which could provide the only net-zero production route that is cost-competitive with conventional steam crackers. Bioplastics, which are the only commercially available net-zero route today would capture only 2.5% of the market by 2050, due to high costs and a lack of sustainable biomass.