By PTGChemical
Burgeoning NEV industry, surging investment in degradable plastics, and rising attention in hydrogen energy and carbon emissions trading all send a clear message: China is striving for carbon neutrality. Hence, inevitable transformation in many industries, surely including the chemical industry. Actually, transformation trend of the chemical industry– i.e. moving toward a low-carbon energy structure, increasing energy efficiency significantly and boosting capability to supply high-end products – has become clear since Commitment of China’s Petroleum and Chemical Industry to Reaching Carbon Emissions Peak and Carbon Neutrality was issued on January 15, 2021.
Carbon neutrality will definitely bring challenges to the chemical industry, but for some sectors like degradable plastics, it also means huge opportunities. Tightening carbon emissions policies, an outcome of striving for carbon neutrality, will lead to sharp increases in production costs of energy chemical products. On the contrary, expenditures for manufacturing renewable products are getting lower and lower, due to fast-paced innovation in degradable, renewable, energy saving and environmental protection technologies. Around the target of carbon neutrality, the domestic chemical industry is forecast to experience three stages:
1) China aims to halt the rise of its carbon emissions by 2030, when scale of the nation’s chemical industry should have peaked, and capacity hit a record high, probably in high carbon-emission sectors at first such as the coal deep processing sector, which will come under greater pressure from production costs and government supervision, and may see more opportunities if related enterprises upgrade technologies, for example the technology to shorten production flow from coal to terminal products.
2) After the arrival of carbon emissions peak, downstream products will face severer competition in China, likely impacting Northeast Asia, Southeast Asia, and other regions. Increasing upstream supply pressure may result in overcapacity of most chemical products, including some fine chemicals. Therefore, domestic chemical enterprises will speed up expansion of international markets, and invest heavily in researching more high-end products. In addition, large companies may construct plants overseas to strengthen their scale advantages.
3) Following the carbon emissions peak may be a wide-range replacement.This mainly refers to replacing fossil-based products with products manufactured by degradable materials, not only in the fields of straws, packaging films, agricultural films and express bags, but may also in fast moving consumer goods for daily use, medical materials, etc. Replacement rate is forecast to surge to over 50% from current less than 5%.
The abovementioned forecasts are all based on carbon neutrality related policies the Chinese government rolled out (see Table 1 for details). In the future, more detailed policies will be issued to guide enterprises finding a way to achieve carbon neutrality. When making plans for carbon neutrality, domestic chemical enterprises should focus on three aspects:
* Improve utilization rate of raw materials, coal in particular
China’s energy structure features “abundant coal, insufficient oil and gas”. Major sources of carbon emissions, coal fuel, coal coking, coal to olefins, coal to aromatics, coal to oil, coal to hydrogen and coal to methanol industries develop rapidly, but at present most of them are troubled by oversupply. Efficient utilization of coal is a key way to save energy and reduce carbon emissions.
The essence of carbon neutrality is not to restrict the coal chemical industry, but to encourage companies to improve energy utilization rate by means of new technologies. Some coal chemical firms have realized this, like Shandong Hualu-Hengsheng Chemical Co., Ltd., which has possessed the clean coal gasification technology.
* Reduce consumption of electric energy and recycle carbon dioxide
The chemical industry – the largest electric energy consumer in China –uses electric energy mainly for production of chemical materials and terminal products, and absorbed 30% of the nation’s total consumption in 2020.
Given relevant policies, firms are reducing, actively or passively, electric energy consumption via upgrading related components and technologies, optimizing heat energy capture during production process, increasing utilization ratio of hydrogen atoms. Further, in some provinces, high electric energy-consuming projects are no longer examined and approved, involving areas of calcium carbide, fertilizers, chlor-alkali, yellow phosphorus, etc.
As for carbon dioxide recycling, chemical enterprises could deploy CCUS (Carbon Capture, Utilization and Storage) technology.
* Develop biodegradable materials
Some large chemical enterprises have started out in the degradable materials business (e.g. PLA, PBS, PBAT and PHA), and this area has attracted heavy investment. Other companies also willing to set foot in are wise to avoid product homogeneity. In addition, it is also a good idea for them to consider other biochemical technologies or products according to their own advantages.
