Manufacturing chemicals is highly energy-intensive, often resulting in substantial CO\u2082 emissions. The carbon-based nature of many chemicals means they can emit CO\u2082 or methane when incinerated or decomposed <\/strong>during waste management, complicating the chemical industry\u2019s efforts to achieve net-zero. Although there are steps to create greener solutions \u2013 such as achieving energy efficiency, CCS, switching to green energy and advanced recycling -these measures alone will not get the industry to net zero<\/strong>.<\/p>\n\n\n\n One solution to close the gap is the use of sustainable feedstocks, such as biomass and CO\u2082<\/strong>. However, this approach is not without challenges, particularly when it comes to matching the right feedstocks and conversion technologies with the right products in the right regions of the world<\/strong>.<\/p>\n\n\n\n The chemical industry is crucial due to its role in supplying products to other industries such as the automotive and construction<\/strong> industries \u2013 two of the highest emitters of global GHG emissions.<\/p>\n\n\n\n Our research shows that two broad moves can help address approximately one-third of the chemical industry\u2019s total GHG emissions by 2030<\/strong> (Exhibit 1). What\u2019s more, both moves involve low CO\u2082-equivalent (CO\u2082e) abatement costs, have no substantial downsides, and are widely accepted by the public and regulators<\/strong>.<\/p>\n\n\n\n Nevertheless, as attractive and important as these measures are, they are not sufficient to reach net-zero emissions in chemicals or to offset emissions from currently practiced end-of-life activities, such as waste incineration<\/strong>.<\/p>\n\n\n\n Furthermore, our research shows that those that adopt only these options will often still depend on others to reduce their own emissions, particularly upstream players. This consideration is relevant because many upstream players aim for large-scale reductions only by 2040 or 2050<\/strong>. For chemical companies that serve markets in which customers have committed to aggressive decarbonisation targets (such as automotive and consumer goods), additional action is required to meet customers\u2019 near-term demand for low- or zero-CO\u2082e options.<\/p>\n\n\n\n Two paths to reduce emissions include capturing and sequestering CO2<\/sub> emissions at the source via carbon capture and storage (CCS)<\/strong>, and switching to non\u2013fossil fuel feedstocks<\/strong>, such as biomass or CO2<\/sub>, which can be converted into chemical feedstocks and intermediates. For major sources of CO2<\/sub> emissions, such as large crackers<\/strong>, CCS is often one of the clearest and most economical ways to substantially cut emissions (for crackers, the only alternative is electrification). According to our analysis, however, CCS alone addresses only 30 to 50 percent of total emissions<\/strong>.<\/p>\n\n\n\n That said, CCS cannot address end-of-life emissions in chemicals<\/strong>, which could affect players that want or need to offer net-zero products. In addition, CCS is unsuitable for smaller sources of emissions<\/strong> and depends on access to CO2<\/sub> transportation and storage infrastructure, which is frequently lacking. This means that although CCS could be an important technology to bend the overall industry emissions curve, players that want to quickly move to net zero will need additional technologies.<\/p>\n\n\n\n Chemical companies can further reduce emissions by adopting new feedstock routes, such as plant biomass or mechanical-chemical CO\u2082 capture and conversion, known as \u201crecarbonisation\u201d practices<\/strong>. These methods use atmospheric CO\u2082 instead of fossil-based carbon, offering early adopters a competitive edge due to increasing demand and supply build-up times.<\/p>\n\n\n\n Two processes can be used to extract CO2<\/sub> from the atmosphere and turn it into chemical feedstocks: biomass and CO\u2082-to-X<\/strong>. The latter is a term that refers to CO\u2082 conversion into products, such as methanol and ethanol<\/strong>, that can be used to synthesise a large number of chemical products.<\/p>\n\n\n\n To create competitive advantage, players can invest in novel technologies and feedstocks<\/strong> for which the economics are likely to become attractive \u2014 despite many uncertainties \u2014 and integrate themselves into the supply and customer sides through investments and long-term agreements. For chemical players, this approach has potential benefits for the environment and society. Making the right decisions today could mean the difference between staying competitive in the years to come or falling behind.<\/p>\n\n\n\n ***<\/p>\n\n\n\n Tom Brennan<\/a><\/strong> is a Partner at McKinsey & Company<\/strong><\/p>\n\n\n\n Wen Chyan<\/a><\/strong> is an Associate Partner at McKinsey & Company<\/strong><\/p>\n\n\n\n Maximilian G\u00f6bel<\/a><\/strong> is an Engagement Manager at McKinsey & Company<\/strong><\/p>\n\n\n\n Per Klevn\u00e4s<\/a><\/strong> is a Partner at McKinsey & Company<\/strong><\/p>\n\n\n\n Tapio Melgin<\/a><\/strong> is a Partner at McKinsey & Company<\/strong><\/p>\n\n\n\n Clara Pakari<\/a><\/strong> is an Engagement Manager at McKinsey & Company<\/strong><\/p>\n\n\n\n Markus Pley<\/a><\/strong> is an Associate Partner at McKinsey & Company<\/strong><\/p>\n\n\n\n Axel Spamann<\/a><\/strong> is a Partner at McKinsey & Company<\/strong><\/p>\n\n\n\nRecarbonisation through feedstock evolution is needed<\/strong><\/h3>\n\n\n\n
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<\/figure><\/div>\n\n\nDon\u2019t rely on your upstream suppliers<\/strong><\/h3>\n\n\n\n
The limitations of CCS<\/strong><\/h3>\n\n\n\n
Sustainable Feedstocks: Biomass and CO\u2082-to-X<\/strong><\/h3>\n\n\n\n
Harnessing the power of plants: Biomass<\/strong><\/h3>\n\n\n\n
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Long-term sustainability and scalability: CO2<\/sub>-to-X<\/strong><\/h3>\n\n\n\n
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