The Decarbonization Imperative
In this book, authors Michael Lenox and Rebecca Duff delve deeply into the challenge of climate change using a sector-based approach. They provide a comprehensive view of technological disruptions to gauge the likelihood of shifting markets and accelerating transformative change. While other books address climate challenges similarly, this one stood out to me due to its primary focus on the United States economy. I was eager to test my assumptions and believed I could gain valuable insights from the American innovation imperative and the authors analysis of policy interventions and strategies that could propel us toward decarbonization by 2050.
As we move on from the preface, let's get into the content and explore the insights the authors have to offer on climate change, technological disruptions, and the pathway to decarbonization, specifically for the petrochemical industry, which is placed within the industrial sector.
“Markets are where technology and innovation find their value expressed”
A look at the industrials sector
Steel, cement and petrochemicals, the so called hard to abate sectors are at the centre on chapter four, as they are responsible for 65% of global scope 1 CO2 emissions from the industrial sector and 20% of the total global carbon emissions. Over the last decade emissions have flattened out due to energy efficiency improvements and fuel-switching from coal to natural gas, as its price has come down. Optimizing operations and reducing cost have been the main drivers for this sector, there has been ampere incentive for manufactures to innovate or adopt low carbon technologies. As long as oil and gas prices are low, and regulatory pressure absent, there is little incentive for change.
The petrochemical industry has experienced two decades of robust growth, primarily driven by demand from developing countries such as China. While this growth trajectory is expected to continue, the upcoming decades will present more significant challenges due to a slowdown in China's economy and escalating global concerns regarding circular economy practices.
Projections indicate that the petrochemical industry's demand growth could account for 45% of the total increase in global oil demand. The shale-oil boom has facilitated new capacity additions, positioning the United States to outpace the Middle East and China in petrochemical production. Despite advancements, carbon emissions from petrochemical production in the United States have risen by 33% since 1990, even though energy intensity has improved by 39%.
Steam cracking process presents the most substantial opportunity for reducing carbon emissions in the industry. This can be achieved by transitioning the energy source for steam cracking to electric or biomass fuels, or by replacing the thermal-driven cracking process with an electrochemical one.
Carbon Capture, Utilization, and Storage (CCUS) emerges as a pivotal technological innovation for mitigating residual emissions after the industry transitions from coal to gas and improves energy efficiency. Although alternative feedstocks and recycling are anticipated to play a secondary role in the transition, these options are essential for achieving true decarbonization.
Potential Influencers
Subsidize innovation
Power electrification by renewables
Price carbon
Create tax incentives
Spur demand for green substitudes
The Path forward for industrials sector
To drive the petrochemical industry towards a more sustainable future, efforts should be intensified to accelerate the electrification of production processes and the generation of decarbonized electricity. Research and development in alternative technologies are crucial, and international coalitions of public officials and private corporations are recommended to lead the way forward. Additionally, encouraging the substitution of materials in downstream markets is essential. As a final measure, reliance on Carbon Capture, Utilization, and Storage (CCUS) technologies, supported by governmental intervention, may be necessary to achieve comprehensive decarbonization.
This concerted approach underscores the importance of innovation, collaboration, and strategic policy interventions in addressing climate change and ensuring the petrochemical industry continues growth within a sustainable framework.
