Chemicals 5.0 on the rise has been saved
Chemicals 5.0 on the rise
Europe as a strategic blueprint for the world
Chemical customers are both driving and shaping demand, as they increasingly seek more sustainable and/or circular products. To succeed in this new customer-centric environment, chemical companies must become not only more sustainable and embrace the hydrogen economy but also more agile and open, building the capability to develop innovative solutions.
- Chemicals gaining importance for oil and gas companies
- Hydrogen economy and the chemicals industry
- The circular economy transformation
- Responding to rising customer expectations
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Chemicals gaining importance for oil and gas companies
Chemicals have always been part of the oil and gas portfolio. But with increasing pressure to reduce hydrocarbon emissions, the growth of petrochemicals has started to outpace demand growth of other market segments. Oil and gas companies are under mounting pressure to not only further develop their chemicals business but also transform it to address new social, political, and customer-driven requirements to achieve a more sustainable future.
The European Green Deal of 2019 is but one of several ambitious plans globally to reduce greenhouse gases (GHGs) and reach carbon neutrality. While many chemicals companies have taken responsibility to reduce emissions, the sector is one of the largest emitters of GHGs. The transformation required of them will be an opportunity to demonstrate how oil can be used in a responsible way to create sustainable products.
Hydrogen economy and the chemicals industry
Given the EU’s ambitious decarbonization objective to achieve net-zero emissions within the next 30 years, companies will need to step up. Hydrogen presents an opportunity for significant progress, as it allows for decarbonization through “energy systems coupling” or sector coupling. And it helps to manage seasonality and variability of renewable energy sources. This means that demand for hydrogen will rise dramatically, and industry and government will have to work together to ensure a reliable, sustainable, and competitive supply. The main challenge for the EU chemicals industry will be to shift from unabated hydrogen derived from fossil fuels to low-carbon hydrogen. Numerous projects across Europe already aim to connect electrolyzers and low-carbon hydrogen with industry users and set up countrywide hydrogen infrastructures. Plans are also underway to establish Europe’s first large-scale green ammonia project in Norway.
The circular economy transformation
Mounting pressure from regulators, nongovernmental organizations (NGOs), and customers is putting the circular economy front and center. Recycling is gaining further support, exerting greater pressure on industry to find more sustainable solutions for global plastic consumption. For plastics producers this means two things: One, feedstock generated from various mixed plastic waste containing additives and colorants must be converted to plastic goods with the same quality as before. Second, to operate successfully in a circular economy, polymer producers will have to rethink their business models and position in the value chain. Because this business model spans a variety of activities—from production to re-use, the future of the chemical industry depends on companies working together to form, orchestrate, and position circular economic networks.
Responding to rising customer expectations
Future success in the circular economy will be closely linked to the customer. Digitalization is helping the chemicals industry generate value by ensuring efficient and effective customer interactions, and by enabling new, value-generating business models that are “fit for purpose” from the customer perspective. A key factor for customers is compliance with recycling quotas and raw materials traceability. Chemicals companies that can grow and transform their businesses to more sustainable, customer-centric products could drive toward higher margins and profits. They may also play a critical role in advancing the industry’s sustainability agenda.