Clean energy transition: chemicals report

Could clean energy drive chemicals industry growth?

Sustainability could support industry, but not all markets can access support

If you want to take the temperature of international trade or global market sentiment, the chemicals industry is a good place to start, thanks to its role as a provider of core elements of a significant proportion of other industries.

Chemicals are vital in medicines and soaps, fertilisers and plastics, rubber compounds and high-tech silicon chips, and more. This means any challenges or barriers to growth felt by chemicals could also impact industries from pharmaceuticals to agriculture, consumer durables to electronics and even automotive.

So, when we look at the chemicals industry through the lens of clean energy transition, we see an interesting and uniquely valuable picture.

The first point we should note is that several governments have recently passed legislation targeted at cleaning up the industry. The EU’s Chemicals Strategy for Sustainability is part of the European Green Deal. Further EU regulation, including REACH, also targets the most toxic or potentially polluting chemicals and directs manufacturers and suppliers to clean up and find alternatives.

Industry support is out there, with initiatives to support the development of advanced silicon chips in China, the US and the EU, for example. But not all markets, or even sub-sectors, can rely on such initiatives.

However broader directives, that focus specifically on lower greenhouse gas emissions in a bid to achieve Net Zero also apply. Chemicals producers consume significant amounts of fuel in energy intensive processes, such as in the production of ammonia for example. Fuels and hydrocarbons are also used as part of feedstocks.

Not all chemicals companies are the same and not all face the same challenges, depending on where they are located and what they produce. This is clearly shown in the insights provided by our industry specialists across the world who provided an entire spectrum of views when asked to share the outlook and opinions of the industry in their local markets.

The key message is that there are growth opportunities for the industry, especially if it can capitalise on growing demand by both consumers and business customers for green and sustainable products. However, the path ahead is strewn with rocks, with the greatest challenges likely to come from the costs associated with energy transition, increasing regulation and supply chain issues.

It is a constantly evolving picture. Industry players can’t afford to be left behind, but should proceed with care, alert to the potential of costly risks.


Download our report: Clean Energy Transition: Chemicals report


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