The Future of Petrochemicals

Towards a more sustainable chemical industry

Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves. Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends.
Dr Fatih Birol, Executive Director, IEA

Petrochemical products are everywhere and are integral to modern societies. They include plastics, fertilisers, packaging, clothing, digital devices, medical equipment, detergents, tires and many others. They are also found in many parts of the modern energy system, including solar panels, wind turbine blades, batteries, thermal insulation for buildings, and electric vehicle parts.

The Future of Petrochemicals takes a close look at the consequences of growing demand for these products, and what we can do to accelerate a clean energy transition for the petrochemical industry.

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Key findings from The Future of Petrochemicals

Demand for petrochemicals is surging ...

Already a major component of the global energy system, the importance of petrochemicals is continuing to grow. Demand for plastics – the most familiar group of petrochemical products – has outpaced that of all other bulk materials (such as steel, aluminium or cement), and has nearly doubled since 2000.

	Steel	Cement	Aluminium	Plastic	Ammonia	GDP
1971	100.000	100.000	100.000	100.000	100.000	100.000
1972	108.281	106.449	106.682	109.960	104.500	105.440
1973	120.156	113.798	117.506	126.693	104.500	112.512
1974	121.875	114.006	127.636	146.614	113.544	115.918
1975	110.954	113.831	117.709	149.801	120.378	117.646
1976	116.006	122.699	122.334	133.068	138.230	124.344
1977	115.879	129.221	133.553	156.574	150.607	129.624
1978	122.995	138.277	136.965	169.721	163.373	134.626
1979	128.318	141.422	141.071	183.267	172.891	139.804
1980	123.249	143.167	149.097	203.187	178.956	142.985
1981	121.777	143.744	146.151	199.602	187.065	145.593
1982	111.091	143.851	130.197	203.187	184.505	146.907
1983	114.261	148.548	134.762	209.960	195.474	150.811
1984	122.334	152.559	152.218	229.880	215.208	157.264
1985	123.824	155.570	149.243	246.215	221.106	162.484
1986	122.977	163.337	149.379	259.761	221.331	167.814
1987	126.684	170.786	160.059	276.494	231.164	173.847
1988	134.365	181.291	179.260	299.602	241.244	181.676
1989	135.372	186.258	184.252	319.522	241.404	188.780
1990	132.701	188.056	187.062	329.482	236.954	195.745
1991	126.351	191.589	190.939	349.801	227.962	198.397
1992	123.955	199.589	189.001	362.948	226.990	201.612
1993	125.310	209.278	191.909	386.454	222.615	205.242
1994	124.890	222.100	186.093	402.789	227.476	211.303
1995	129.568	234.259	190.939	443.028	243.030	218.040
1996	129.193	242.041	201.601	459.363	255.181	226.477
1997	137.609	249.660	210.324	492.829	250.321	235.417
1998	133.884	249.660	219.047	526.295	252.751	241.153
1999	135.769	259.387	228.739	549.402	260.042	249.466
2000	145.999	269.114	235.524	592.829	262.472	261.372
2001	146.460	282.084	235.524	622.709	255.181	267.592
2002	155.711	299.916	252.970	639.442	264.903	275.337
2003	167.068	329.097	271.386	679.283	267.333	286.530
2004	184.135	355.036	289.801	705.976	284.345	301.505
2005	197.501	380.975	309.186	749.402	296.497	315.860
2006	215.501	424.746	328.571	765.737	303.787	332.621
2007	232.741	455.549	367.340	815.936	315.939	350.570
2008	228.923	462.033	384.786	855.777	298.927	360.657
2009	212.258	494.457	360.555	815.936	308.648	359.032
2010	244.104	531.744	405.140	832.669	320.800	377.922
2011	261.506	588.485	435.187	895.618	335.381	393.439
2012	266.107	619.287	446.817	929.084	311.078	406.402
2013	284.070	659.816	463.294	958.964	349.963	420.075
2014	287.659	677.649	489.464	995.618	340.242	434.691
2015	287.659	664.680	489.464	1033.672	352.393	449.143

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... and will continue to grow

Advanced economies, such as the United States and Europe, currently use up to 20 times as much plastic and up to 10 times as much fertiliser as developing economies such as India and Indonesia, on a per capita basis. This underscores huge potential for growth worldwide.

	Demand
Korea	98.9
Canada	98.6
Saudi Arabia	86.8
United States	81.3
Western Europe	62.2
Japan	54.4
China	45.1
Mexico	32.9
Brazil	27.8
India	9.3
Africa	5.5
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Petrochemicals are all around us

  • Plastic packaging for food and other commercial products can be made from a range of petrochemical products, including polyethylene and polystyrene

  • Globally, more than half of ammonia is converted to urea, which is in turn mainly used as a fertiliser used to increase crop yields and boost food production

  • Synthetic rubber is a major component of tires for cars, trucks and bicycles, and is mainly derived from the petrochemical butadiene

  • Many of the laundry detergents and items of clothing in our washing machines are derived from petrochemicals, such as surfactants and polyester fibre



Developing economies lead growth

Although substantial increases in recycling and efforts to curb single-use plastics are expected to take place, especially in Europe, Japan and Korea, these efforts will be far outweighed by developing economies sharply increasing their shares of plastic consumption (as well as its disposal).

The difficulty in finding alternatives to petrochemical products for many applications is another factor underpinning the robust overall demand growth.



Petrochemicals are rapidly becoming the largest driver of global oil demand

The growth in demand for petrochemical products means that petrochemicals are set to account for over a third of the growth in oil demand to 2030, and nearly half to 2050, ahead of trucks, aviation and shipping. Petrochemicals are also poised to consume an additional 56 billion cubic metres of natural gas by 2030, equivalent to about half of Canada’s total gas consumption today.


And new dynamics in oil and gas are driving global competition

After two decades of stagnation and decline, the United States has returned to prominence as a low-cost region for chemical production thanks to the shale gas revolution. Today, the United States is home to around 40% of the global ethane-based petrochemical production capacity. However, the Middle East remains the low cost champion for key petrochemicals.

	CAPEX/OPEX	Feedstock	Process energy
Ethane - Middle East	176.4160051	85.36585366	42.86355773
Ethane - United States	176.4160051	210.9756098	54.40809889
Ethane - Europe	176.4160051	312.195122	107.0134331
Methanol-to-Olefins - China	143.6787791	820.7	94.74650387
Naphtha - United States	244.0629091	825.4545455	5.82145754
Naphtha - Middle East	244.0629091	861.8181818	2.310764821
Naphtha - China	244.0629091	872.7272727	15.28610046
Naphtha - Europe	244.0629091	880	51.28480239
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The Clean Technology Scenario (CTS)

Despite the substantial benefits they provide – including a growing number of applications in various cutting-edge, clean technologies critical to a sustainable energy system – the production, use and disposal of petrochemical-derived products poses a variety of sustainability challenges that urgently need to be addressed.

The Future of Petrochemicals introduces a scenario that outlines an alternative path for the chemical sector that helps achieve several UN Sustainable Development Goals. The Clean Technology Scenario, or CTS, explores opportunities to mitigate air and water pollution, and the water demand associated with primary chemical production, alongside the over-arching goal of reducing CO2 emissions. The assumptions related to pollutants and other aspects of the future energy system are in line with the IEA’s Sustainable Development Scenario.

Environmental impacts decrease across the board

In the CTS, air pollutants from primary chemical production decline by almost 90% by 2050, and water demand is nearly 30% lower than in the Reference Technology Scenario (RTS), the base case for projections in The Future of Petrochemicals.

The CTS also emphasises waste management improvements to rapidly increase recycling, thereby laying the ground work to more than halve cumulative ocean-bound plastic waste by 2050 compared to the RTS.


Annual pollutants from chemical production in the
RTS CTS

With a dramatic reduction in direct CO2 emissions

In the CTS, a 45% reduction in direct CO2 emissions is attained in 2050, relative to current levels, despite demand for primary chemicals increasing by 40%. Emissions are 60% lower in the CTS than in the RTS by 2050.

	Process emissions, CTS	Energy-related emissions, CTS	Additional emissions, RTS	Cumulative emissions reductions, CTS (right axis)
	0.218678896	1.259780649	0.012462899	0
	0.239074135	1.384895762	0.032706596	0.089953026
	0.20137683	1.376469597	0.146545142	0.339834091
	0.180224152	1.349849651	0.269562481	1.180868824
	0.153862931	1.2263209	0.484175329	2.898290316
	0.128972942	1.043533956	0.745739732	5.819443365
	0.093482242	0.856300071	1.007363944	10.04352991
	0.07029094	0.743969691	1.160810922	15.25146038
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But a broad range of efforts are required

The transition to the CTS is led by carbon capture, utilisation and storage (CCUS), coal to gas feedstock shifts, and energy efficiency.

The contributions to emission reductions of plastic recycling and reuse and alternative feedstocks are less pronounced.

	Contribution
Alternative feedstocks	6
Plastic recycling	9
Energy efficiency	25
Coal to natural gas	25
CCUS	35
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Plastics pollution in oceans

When plastic waste finds its way into the ocean, it breaks down into small pieces that are commonly ingested by marine life. As the mass of larger debris – including containers, bottle caps, crates and old fishing gear – continues to degrade over time, the quantity of microplastics could increase significantly. This is an urgent environmental problem garnering much attention around the world.

Although plastic recycling plays a comparatively smaller role when it comes to emission reductions, improved waste management infrastructure – a necessary pre-requisite for the recycling increases in the CTS – lays the groundwork to drastically reduce plastic pollution from today’s unacceptable levels. In the CTS, cumulative ocean-bound plastic waste more than halves relative to the RTS. This excludes the impact of complimentary efforts to remove plastic waste from the oceans.

	CTS Annual leakage	Additional annual leakage in the RTS	RTS cumulative leakage	CTS cumulative leakage
2010	7.975	0	51.8375	51.8375
2011	8.088704331	0	59.8125	59.8125
2012	8.202870026	0	67.90120433	67.90120433
2013	8.317712285	0	76.10407436	76.10407436
2014	8.43338561	0	84.42178664	84.42178664
2015	8.549991509	0	92.85517225	92.85517225
2016	8.667586755	0	101.4051638	101.4051638
2017	8.884250806	0	110.0727505	110.2894146
2018	8.549411476	0.592194473	118.9570013	118.838826
2019	8.214572145	1.198757989	128.0986073	127.0533982
2020	7.879732815	1.826369543	137.5119374	134.933131
2021	7.544893484	2.479066453	147.2180398	142.4780245
2022	7.210054154	3.099093516	157.2419997	149.6880786
2023	6.875214823	3.711279808	167.5511474	156.5632935
2024	6.540375493	4.32451913	178.137642	163.103669
2025	6.205536162	4.933093139	189.0025366	169.3092051
2026	5.870696832	5.534655194	200.1411659	175.1799019
2027	5.535857501	6.121849031	211.5465179	180.7157594
2028	5.201018171	6.70396335	223.2042245	185.9167776
2029	4.86617884	7.286257941	235.109206	190.7829565
2030	4.53133951	7.869051505	247.2616428	195.314296
2031	4.196500179	8.452079247	259.6620338	199.5107961
2032	3.861660849	9.028118866	272.3106132	203.372457
2033	3.526821518	9.602876252	285.2003929	206.8992785
2034	3.191982188	10.17908706	298.3300907	210.0912607
2035	2.857142857	10.75613298	311.70116	212.9484036
2036	2.7	11.1554574	325.3144358	215.6484036
2037	2.542857143	11.55062076	339.1698932	218.1912607
2038	2.385714286	11.94373308	353.2633711	220.576975
2039	2.228571429	12.33555984	367.5928185	222.8055464
2040	2.071428571	12.72538828	382.1569497	224.876975
2041	1.914285714	13.1126118	396.9537666	226.7912607
2042	1.757142857	13.4864505	411.9806641	228.5484036
2043	1.6	13.8535605	427.2242574	230.1484036
2044	1.442857143	14.21717167	442.6778179	231.5912607
2045	1.285714286	14.57681222	458.3378468	232.876975
2046	1.128571429	14.93213648	474.2003733	234.0055464
2047	0.971428571	15.27401101	490.2610812	234.976975
2048	0.814285714	15.60890274	506.5065208	235.7912607
2049	0.657142857	15.94015967	522.9297092	236.4484036
2050	0.5	16.26769033	539.5270117	236.9484036
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Effecting the transition: top ten policy recommendations

To achieve a sustainable chemical sector, an interdisciplinary approach is needed throughout the value chain – from primary chemical production to waste management. There is no single or simple solution. In tackling environmental challenges, policies need to maximise co-benefits and ensure sustained impact.

Production

  1. Directly stimulate investment in RD&D of sustainable chemical production routes
  2. Establish and extend plant-level benchmarking schemes for energy performance and CO2 emission reductions targets
  3. Pursue effective regulatory actions to reduce CO2 emissions
  4. Require industry to meet stringent air quality standards
  5. Fuel and feedstock prices should reflect actual market value

Use and disposal

  1. Reduce reliance on single-use plastics other than for essential non-substitutable functions
  2. Improve waste management practice around the world
  3. Raise consumer awareness about the multiple benefits of recycling
  4. Design products with disposal in mind
  5. Extend producer responsibility to appropriate aspects of the use and disposal of chemical products

Download the Report Read the press release Read the executive summary Watch press webinar

The Future of Petrochemicals is the third IEA report that focuses on "blind spots" of the global energy system, following the The Future of Trucks and The Future of Cooling that was released in May 2018.