Chemicals sector could create 29 million jobs in net-zero transition, report finds
The global chemicals sector is not yet taking action to cut its climate footprint or prepare for climate risks – despite the fact that doing so could create millions of new jobs.
That is the conclusion of a new report jointly authored by Systemiq and the University of Toyko’s Centre for Global Commons.
The ‘Planet-Positive Chemicals’ report highlights how, at present, the sector is operating in line with a climate trajectory of up to 4C of warming by 2100 on pre-industrial levels. This is far from compatible with the Paris Agreement. Less than one in five large chemistry firms have set science-based climate targets and almost all of the feedstocks used by the sector – 98% – were fossil-fuel-based in 2021, the report states. This proportion would need to drop to 18% by 2050 in a net-zero scenario according to the report.
Acknowledged in the report are the multiple challenges to decarbonising the sector at scale and pace, including poor policy support in some geographies and the fact that some key technologies such as low-carbon hydrogen and carbon capture are still maturing. There is also the sheer scale of investment needed in retrofitting existing production sites. The report prices the cost of new infrastructure and retrofits in line with the Paris Agreement at around $3trn through to 2050.
But the report emphasises that these investments are necessary if the sector wishes to avoid physical climate risks and reputational risks which may harm its social licence to operate. Moreover, the investments present innovation and job creation opportunities. Net-zero itself is presented as a growth opportunity, as demand for chemicals such as methanol and ammonia will increase amid the transition in sectors such as transport.
Outlined in the report is a roadmap for the chemicals value chain detailing the key technology, infrastructure and skills investments that need to be made in the coming years.
The report proposes that fossil fuels used for ammonia production are replaced with low-carbon hydrogen, with green hydrogen doing most of the heavy lifting. Hydrogen, it argues, is the best fit for ammonia specifically. For most other chemicals, the report outlines how firms can explore sources of carbon that are not based on virgin fossil fuels, including alternatives from plants and from captured carbon. Plastics specifically, it argues, should be derived from these sources.
The report also emphasises the need to invest in circular economy approaches. It forecasts that the total demand for chemicals globally in 2050 could be up to 31% lower with a joined-up circular economy approach consisting of reuse and recycling where possible; more efficient chemical use and switching to low-emission alternatives. It advocates for carbon capture at all stages of the product and material life-cycle including end-of-life.
In the technology and investment pathway envisioned in the report, 29 million jobs are created in fields such as carbon capture and storage (CCS) and waste management.
As well as outlining these technology roadmaps, the report urges the sector to improve its climate-related governance and risk reporting. It argues that most firms are not properly considering the physical and reputational risks they would face in a range of warming scenarios – something recommended by the Taskforce on Climate-Related Disclosures (TCFD).
Summarising the report, Sqstemiq’s managing partner Guido Schmidt-Traub said: “The chemical industry underpins every modern economy, but it must change profoundly across its entire value chain to meet the objectives of the Paris Agreement. Importantly, these changes are eminently feasible using proven technologies outlined in this report. The recommendations for policymakers, the industry, and the investment community are practical and actionable.”
Last year, ShareAction convened a $1.6trn investor coalition aimed at increasing shareholder engagement with the sector on climate-related issues including decarbonisation, cleantech support and the pollution of nature.
© Faversham House Ltd 2023 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.