As noted here last week, a new report by the International Energy Agency describes a future for petrochemicals that oil and gas companies should find comforting and challenging (OGJ, Oct. 15, 2018, p. 18). Demand for liquid hydrocarbons as chemical feedstock will expand enough to ensure oil-market growth, IEA believes, even as oil use for transportation subsides. The extent of the consumption shift depends, among other things, on how aggressively governments respond to environmental problems associated with chemical manufacture, including air emissions of greenhouse gases and traditional pollutants, pressure on water supplies, and water pollution.
Last week’s commentary highlighted plastic waste at sea as an issue subject to exploitation by activists disposed toward extreme remedies. Public alarm legitimately is growing about immense “islands” of plastic debris in the Pacific and plastic particles in the water column. If pressure groups follow the strategy they use against fossil energy on the issue of climate change, they’ll try to amplify that concern into support for curtailment in the consumption and manufacture of plastics. Oil companies should resist the inevitable obstructionism, now central to climate politics. They can do so by preemptively addressing environmental problems associated with chemical manufacture before governments succumb to persuasion by groups whose preferred way to limit environmental consequences of human activity is simply to limit human activity.
IEA’s report recommends ten policies for governments, five related to chemical production and five to use and disposal. Oil and chemical companies might find in the proposals initiatives through which they can protect the environment along with their business. If they wait for governments to act, both will suffer.
For chemical production, IEA suggests:
• Direct stimulation of investment in research and development of sustainable chemical production and limitation of associated risks. The aim should be to unlock finance in areas with potential for sustainable returns but with low likelihood of attracting independent private investment.
• Establishment and extension of plant-level benchmarking schemes through public-private cooperation on energy performance and carbon-dioxide emission reduction, with fiscal incentives for adoption.
• Pursuit of effective regulations to cut CO2 emissions. The regulations should include “support to avoid the impact of asymmetric regional pricing pressures and targeted support to spur the creation of initial niche markets where necessary.”
• Requirements that industry meet stringent air quality standards through installation of air-pollution control technologies, fuel shifts, and improved fuel quality.
• Fuel and feedstock prices that reflect actual market value. Fuel subsidies designed to facilitate clean-energy access, such as for LPG for cooking, should be “precisely targeted” and should not inhibit shifts toward alternative chemical feedstocks.
Concerning chemical use and disposal, the IEA report recommends:
• Reduction in the reliance on single-use plastics other than for essential functions for which substitution isn’t possible. Policies can include deposit-return systems for reusable goods such as beverage containers or fiscal instruments, such as a revenue-neutral consumption tax, the proceeds from which could be used for plastic-pollution prevention and mitigation.
• Improvement in waste management worldwide to increase recycling and to reduce plastic waste “leakage.” For example, disposal in landfills of recoverable waste might be prohibited or taxed, and separation and collection of recyclable wastes can be improved.
• Increased consumer awareness “about the multiple benefits of recycling consumer goods, the environmental ills associated with poor waste management, and the most effective policy interventions.”
• Incentives for designers and manufacturers downstream of chemical producers to adopt designs that make optimum use of materials, enable reuse, and facilitate closed-loop recycling.
• Extension of producer responsibility beyond production to appropriate aspects of the use and disposal of chemical products. For example, fees might penalize the limited recyclability of a material or actions that complicate waste separation.
Some of the recommendations fall within the sole realm of government. Many if not most of them, however, can be adapted into voluntary move by companies motivated to preserve environmental values and work that improves lives.