Petrochemicals set to be largest driver of oil demand: IEA
New Delhi: Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and almost half the growth to 2050, adding nearly seven million barrels of oil a day by then, the International Energy Agency (IEA) said on Friday.
This means oil demand growth is shifting to petrochemicals, away from motor fuels.
The rising use of plastics is poised to consume an additional 56 billion cubic metres (bcm) of natural gas by 2030, and 83 bcm by 2050.
Petrochemicals — components derived from oil and gas that are used in all sorts of daily products such as plastics, fertilisers, packaging, clothing, digital devices, medical equipment, detergents and tyres — are becoming the largest drivers of global oil demand, in front of cars, planes and trucks, according to a major study by the IEA.
To address these challenges, the IEA’s Future of Petrochemicals report outlines a clean technology scenario, which provides an alternative future in line with key UN Sustainable Development Goals, such as climate action, responsible consumption and life below water, among others.
The scenario provides an ambitious but achievable pathway to reduce the environmental impacts of petrochemicals: air pollutants from primary chemicals production decline by almost 90 per cent by 2050; direct CO2 emissions reduce by nearly 60 per cent; and water demand is nearly 30 per cent lower than in the base scenario.
It also emphasises waste management improvements to rapidly increase recycling, thereby laying the groundwork to more than halve cumulative, ocean-bound, plastic waste by 2050.
In the clean technology scenario, petrochemicals become the only growing segment of global oil demand.
Despite near-tripling in plastic waste collection by 2050, the limited availability of cost-effective substitutes for oil feedstock means that oil demand for petrochemicals remains resilient.
The IEA’s report was developed with input from governments, industry and other key stakeholders, and seeks to bring the sector the attention it deserves in the global energy policy debate.
It also provides ten key policy recommendations to build a more sustainable and efficient petrochemicals industry.
“Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves,” IEA’s Executive Director Fatih Birol said.
“Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends. In fact, our analysis shows they will have a greater influence on the future of oil demand than cars, trucks and aviation.”
Demand for plastics — the key driver for petrochemicals from an energy perspective — has outpaced all other bulk materials such as steel, aluminium, or cement, nearly doubling since 2000.
Advanced economies currently use up to 20 times more plastic and up to 10 times more fertiliser than developing economies on a per capita basis, underscoring the huge potential for global growth.
The dynamism of the petrochemical industry is also driving new trends around the world.
After decades of stagnation and decline, the US has re-emerged as a low-cost location for chemicals production thanks to the shale gas revolution, and is now home to around 40 per cent of the global ethane-based petrochemical production capacity.
The Middle East remains the lowest cost centre for many key petrochemicals, with a host of new projects announced across the region.
Petrochemical products provide substantial benefits to society, including a growing number of applications in various cutting-edge, clean technologies critical to sustainable energy systems.
However, the production, use and disposal of petrochemical-derived products present a variety of climate, air quality and water pollution challenges that need to be addressed.
While substantial increases in recycling and efforts to curb single-use plastics are underway, especially in Europe, Japan and Korea, the impact these efforts can have on demand for petrochemicals is far outweighed by sharply increasing plastic consumption in emerging economies, said the IEA.