ICIS: Decarbonization Demand Boosts Petrochemical Product Market

Recently, ICIS London released a report showing that the global efforts to achieve carbon neutrality society are creating opportunities for the growth of demand for chemicals. ICIS states that this growth goes beyond the connection between the chemical industry and past economic activities, industrial production, and gross domestic product. Therefore, traditional methods for measuring industrial and overall economic performance can still provide empirical models for predicting demand growth for major polymers and key petrochemical products in the future, but they are increasingly unable to reflect the entire situation.

ICIS stated that the reason for this change is the accelerating decarbonization rate in the main demand areas of the chemical industry. The shift of customers towards more climate friendly and circular business models has impacted their demand for plastic and petrochemical products. Customers will seek different products, sometimes even more identical ones, but with different manufacturing methods. Chemicals and polymers are driving forces for decarbonization. Material substitution signifies that the industry will produce chemicals in a more environmentally friendly manner and provide polymers that help save energy, reduce weight, and improve durability. This is the key to decarbonization in the upstream and downstream industries.

ICIS believes that, taking the construction industry as an example, large petrochemical product manufacturers have not overlooked the potential to use more chemicals in construction. In fact, in sustainable development plans of various countries, more polymers and composite materials will be used in infrastructure and buildings. For example, ceramic tiles may be replaced by low-cost, lighter weight vinyl products. A portion of global cement demand may be replaced by polymer concrete. This is a more climate friendly product, but it requires system development to be widely used. Plastic can replace the use of more steel and wood in traditional architecture.

At the annual meeting of the Gulf Petrochemical Association held in Riyadh, Saudi Arabia last year, Amin Nasser, President and CEO of Saudi Aramco, stated that the more intense the energy transformation, the greater the importance of petrochemical products to the oil, natural gas, and other industries. For more than 60 years, material substitution has been a major feature of global economic development, but efforts to achieve a carbon neutrality society foreshadow a fundamental change in the way basic materials are manufactured, raw materials, used and ultimately carbon friendly. Chemical manufacturers are aware of how they are affected by the energy transformation and are therefore promoting recycling and other initiatives, which will change their product portfolio and business practices. Saudi Arabia is a country rich in oil and gas resources, committed to producing a large number of new petrochemical products and plastics. This is part of the country’s efforts to achieve a future commitment to lower carbon emissions. Saudi Aramco’s goal is to convert up to 4 million barrels per day of liquid hydrocarbons into chemicals by 2030. Saudi Arabia is promoting the development of public and private partnerships to promote the growth of consumer industries and the development of more climate friendly areas such as construction and infrastructure. The country has ambitious hydrogen and material recycling plans.

A recent research report released by Shell and Deloitte emphasizes that as the pace of achieving net zero emissions accelerates, there is a great opportunity for the global construction industry to change its material usage. This report is based on the views of over 100 executives and experts in the industry, which accounts for 37% of global carbon dioxide emissions, of which 16% are specific carbon emissions, namely carbon dioxide emissions from material procurement and manufacturing, logistics, and construction activities. If the global carbon neutrality goal is to be achieved, the materials used in buildings must be changed. This highlights the potential market for finding new uses in energy-saving applications for low-carbon products and for different polymers or petrochemical materials. The report shows that developing low-carbon technologies and alternative materials is the key to reducing emissions in the industry. Shell stated that its goal is to become the preferred partner for building decarbonization and looks forward to collaborating with the industry to drive faster action. This measure may be to sell more low carbon dioxide emitting petrochemical products to the construction industry, thereby driving petrochemical producers further towards a low-carbon future.

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