Editorial comment
The UK’s Prime Minister, Rishi Sunak, has recently come under pressure for setting out changes to the government’s green commitments. The headline announcement was to delay a ban on the sale of new diesel and petrol cars by five years to 2035, bringing the UK into line with the EU.
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Despite the review of the country’s green policies, Mr Sunak insists that the UK’s net zero target for 2050 remains in place. He claims that honesty and pragmatism are required and that he is now offering a “realistic path” to net zero (although the government’s own climate adviser has labelled the plan “wishful thinking”).
Whether this policy change is an example of the politicisation of climate change (Mr Sunak’s Conservative party is currently behind in the polls and seeking to create dividing lines with opposition parties ahead of a general election next year) or a more rational and realistic approach to the problem that we all face, it is a clear illustration of how strategies to meet net zero targets are likely to alter and evolve over the course of the next couple of decades.
In the downstream oil and gas industry, there is general consensus that petrochemicals are expected to contribute the most to oil demand growth leading up to 2030. A new report from ING suggests that this sector is also facing its own net zero challenges that will require greater cross-sector effort.1 Direct carbon dioxide emissions from the petrochemicals sector grew by 41% between 2010 and 2020, despite the fact that carbon intensity has stagnated over the past few years. To reach net zero emissions by 2050, the sector’s direct emissions need to decrease by 12% between 2020 and 2030, and then be reduced even faster with maturing low-carbon technologies.
The report outlines a number of pathways that petrochemical companies can take in their attempts to decarbonise. These include using bio-based feedstock to replace fossil feedstock in the production of petrochemicals; recycling plastics and enhancing circularity; steam cracking electrification; synthetic petrochemicals with clean hydrogen; and using carbon capture and storage (CCS) to reduce emissions from petrochemicals production.
All of these decarbonisation pathways require significant investment to support the scale-up of technologies. ING’s report notes that while mounting demands to decarbonise from investors and end-users will facilitate the change, stronger policy is also required. It points towards both incentives and restrictions that are in place among many governments to accelerate the decarbonisation of the petrochemicals sector. ING’s ESG Researcher, Coco Zhang, along with Senior Sector Economist, Gerben Hieminga, and Energy Transition Research Assistant, Teise Stellema, said: “Efforts from the EU and US show that policymakers are serious about tackling the environmental challenges associated with the petrochemicals sector. But more is needed to spur investment to the level outlined by the UN and to ensure a long-term structural change towards sustainable petrochemical production.”
- ZHANG, C., HIEMINGA, G., and STELLEMA, T., ‘Decarbonisation of petrochemicals needs more cross-sector effort’, ING, (17 July 2023).
