Sustainability in Petrochemicals

Publication Overview

This report investigates a unique combination of these industry drivers on the historic, current and future status of the petrochemical industry to gain insight into the sustainability of petrochemicals. Three categories of petrochemicals are subject to analysis, namely methanol, olefins and ammonia/urea. For each of these petrochemicals, the following series of studies are formed and analysed in aggregate to gain insight in to the sustainability prospects of the industry:

Publication Summary

• Petrochemicals are an important building block of a huge range of products that underpin modern daily life and economic activity.
• The potential to sustainably produce methanol, olefins and ammonia/urea has been investigated.
• As well as its use as a fuel, methanol may be used as a feedstock for a wide range of downstream products. It has a healthy and growing global market, particularly in China. Efficient, sustainable production of methanol could drive the decarbonisation of the petrochemicals industry.
• Olefins are crucial intermediates in the manufacture of a vast range of products. Ethylene and propylene are basic petrochemicals used primarily to manufacture plastics, while butadiene is used to create a variety of synthetic rubbers. Driven by population and fast economic growth, the manufacturing of such basic materials has moved from Europe and North America to East Asia, and so has the demand for olefins.
• Biomass and wind-sourced methane-to-olefin routes, while more costly, showed potential to decrease carbon emissions compared with the conventional naphtha-cracking route. Unabated coal-to-olefins exhibit a higher environmental impact, though the application of carbon capture and storage (CCS) would reduce these emissions markedly.
• A reduction in crude oil demand associated with transport fuels seems quite possible in the medium-term future, which would lower feedstock costs, improve their competitive advantage and, consequently, shift olefin production back towards heavier hydrocarbons.
• The use of ammonia to produce fertilisers is essentially driven by the demand for agricultural products. Combining hydrogen, derived from natural gas, with airborne nitrogen is the traditional process for ammonia production. Consequently, ammonia production and hence fertiliser production has traditionally been driven towards the cheapest source of natural gas. At the same time, food security issues incentivise local fertiliser production, leading to a tension between these two drivers, i.e. to produce fertilisers where natural gas is cheapest or where they are in greatest demand. Increasingly, the cost of the primary feedstock dominates, leading to production at otherwise stranded sources of natural gas or, in the case of China, where there is cheap coal.
• Of the alternative routes to ammonia production investigated, the biomass-based route was found to be the most environmentally attractive, followed by electrolysis based on wind power. However, given sustainability concerns, stakeholders, when consulted, felt uncomfortable proposing biomass as a resource to produce petrochemicals.
• While there are several promising options to decarbonise petrochemical production, there is no panacea. Each of the options are disadvantaged by barriers relating to cost, resource availability/depletion, water usage or, in the case of bio-based feedstocks, creating competition with other critical industries such as agro-industry and food security.
• A cost-effective process using hydrogen from a low-carbon source would offer an excellent opportunity to decarbonise petrochemical production.
• A unique challenge to the petrochemical industry is the need to decarbonise heat. While options exist to decarbonise electricity, heat is more difficult to decarbonise.
• The implementation of CCS has potential to lower carbon emissions in the production of petrochemicals and, clearly, CCS with thermal power plants would greatly assist in lowering the emissions associated with electricity generation.
• With carbon capture and utilisation (CCU), on the other hand, care must be taken to account for net emissions associated with the life cycle of any products. For example, one route to methanol production is via hydrogenation of captured CO2: even though the hydrogen may come from a low-carbon source, depending on the end product of the process, the CO2 utilised is ultimately very likely to be released to the atmosphere. Similarly, urea may be produced from ammonia and captured CO2, where again the CO2 would also eventually be released.
• Given that the petrochemical industry will remain dependent on fossil fuels for some time, a strong policy and regulatory framework is required. Stakeholders consulted suggested carbon prices and emissions performance standards were the most popular policy options.
• The global nature of trade for petrochemicals necessitates a global approach to the application of policies or regulation. The need for a level playing field was considered essential.
• High levels of international trade create the potential for ‘carbon leakage’. The application of carbon pricing or emissions performance standards would need to be carefully managed.
• Given the 25 to 40-year economic lifetime of plants, technology lock-in can be a significant barrier to short and medium-term decarbonisation. A good example of this is the investment in coal-based petrochemical production in China. Even with a 2°C-consistent CO2 price, the environmentally sustainable production of petrochemicals in China over the first half of this century appears challenging.