Whether or not governments aggressively pursue energy sustainability, petrochemicals constitute an important growth market for oil and natural gas. Work should start now to prevent activists from sabotaging the business.
In a report published this month on the future of petrochemicals, the International Energy Agency examines two possible scenarios. With existing and announced policies, the chemical business accounts for about one third of the 10 million b/d growth in oil demand projected for 2030 and nearly half—almost 7 million b/d—of the growth expected by 2050. From the 2017 level, demand for primary chemicals grows in this scenario by 30% to 2030 and by nearly 60% to 2050.
Sustainable scenario
IEA bases its other scenario on United Nations sustainable development goals designed, according to the UN, to “end poverty, protect the planet, and ensure prosperity for all.” A measure of the ambition is the target for chemical-industry emissions of carbon dioxide in 2050, which is 60% lower than in the reference scenario. Meeting the UN goals, according to IEA, would require the chemical industry to cut emissions by 45% by 2050 while increasing output of primary chemicals by 40%. With these assumptions, the need for oil feedstock for primary chemicals is 5% lower than in the reference scenario in 2030 and 13% lower in 2050.
Under both sets of assumptions, plastic consumption replaces road-passenger transport by 2050 as the largest component of per-capita oil demand in the US, the European Union, China, and India. Although oil demand for chemical feedstock in 2050 is 3 million b/d lower in the aggressive-sustainability scenario than in the reference case, it’s still higher than current levels. In the more-sustainable scenario, chemical feedstock’s share of oil demand grows to 26% by 2050 from 12% in 2017. In the reference case, the chemical feedstock share of 2050 oil demand is 16%.
Petrochemical manufacture thus contributes increasingly to future demand for oil as traditional uses—especially transportation—subside. The extent that this becomes so depends mainly on governmental policies related to environmental sustainability, including those governing not only greenhouse-gas emissions but also other environmental problems associated with chemical manufacture. They include emissions of air pollutants such as sulfur oxides, nitrogen oxides, particulates, carbon monoxide, and volatile organic compounds; increasing pressure on water supply; and water pollutants.
All those problems need attention. Especially important politically, however, is water pollution. Public concern about plastic at sea is rising fast—and for good reason. The IEA estimates 10 million tonnes/year of plastic waste leaks into oceans. An estimated 80% of it comes from land rather than fisheries and ships—half of that from just five countries: China, Indonesia, the Philippines, Thailand, and Vietnam. “Islands” of plastic debris have formed in the Pacific, covering a total area estimated at as much as 1.6 million sq km—three times the size of France. Plastic particles—microplastics—are accumulating below surface and entering food chains.
For many years, the chemicals industry has directly addressed environmental problems associated with its products—supporting, for example, recycling and the development of “green chemistry.” The oil and gas industry now should integrate its environmental programs with those of a business increasingly crucial to its markets. The transcendent reason to do so is that partnering will strengthen a proper effort and improve environmental performance overall.
Preempting activism
A more-pragmatic but still important motive is to preempt political activism, which inevitably will try to steer legitimate public concern toward extreme responses, such as forced curtailment in the use of plastics. Activism usurps mediation of climate change with an impracticable campaign against hydrocarbon energy. Working together, the oil and chemical industries can avoid comparable resistance to their work by addressing problems before they become uncompromising political causes.
The IEA report suggests policies useful to industry decision-making about a world needing further benefit from chemicals but also less environmental consequence. More on that topic will appear here next week.
