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Demystifying Chemical Sector Decarbonization

  • Date: 25 June 2024
  • Author: Cihang Yuan

When people think about decarbonizing the chemical sector, they often imagine a daunting task. It’s true that this industry has long been considered “hard to abate,” and the complexity of the processes involved has historically proven a significant challenge. Helping to pave the way toward a solution to these obstacles, the Renewable Thermal Collaborative’s (RTC) new Chemical Sector Assessment has laid out a clear and achievable roadmap for decarbonizing the chemical sector. While implementing these solutions may not be simple, the solutions themselves are fairly straightforward. Chemical companies, downstream corporate consumers, and policymakers must act together today to transition the chemical sector onto a net-zero pathway.


The chemical sector is integral to our daily lives, producing many essential materials—such as fertilizers for our food and the plastics we use every day. It’s also a major contributor to industrial greenhouse gas emissions, responsible for about 20% of the US total.

Despite the complex and intricate nature of chemical products and their production processes, the emissions are concentrated in three basic chemicals, which are then used to create specialty chemicals and consumer products. The most emissions-intensive processes for producing the three critical basic chemicals are 1) steam methane reforming (SMR) and the Haber-Bosch process for producing ammonia—primarily used in fertilizers; 2) steam cracking to create the high-value chemicals (HVCs) essential for making plastics; and 3) SMR for producing methanol, a common chemical for fuel and industrial feedstock. Looking ahead, the demand for products from these three basic chemicals is expected to grow significantly, highlighting the urgent need to revolutionize production processes to meet decarbonization goals.

To lay out the path forward, The RTC’s Chemical Sector Assessment outlines a two-pronged approach to decarbonize emissions from both fuel and chemical feedstock by prioritizing low-carbon feedstocks—like clean hydrogen and biobased feedstock—and utilizing complementary technologies, such as electrification, thermal storage, and carbon capture, utilization, and storage (CCUS). These solutions can reduce emissions in the chemical sector by over 60% by 2050.

  • Low-Carbon Feedstock: Companies should invest in upgrading facilities and infrastructure to use electrolytic hydrogen and biobased feedstock. They should also begin exploring sourcing options and entering into long-term agreements to ensure economic viability as low-carbon feedstocks become more accessible.
  • Electrification and CCUS: Electrification, paired with CCUS and thermal storage, offers an effective alternative. Investing in heat pumps for low-temperature processes, preheating, and thermal storage today is crucial. As technologies for electrifying high-temperature processes like SMR and Steam Cracking improve and become more affordable, they should be integrated into production.

Implementing these solutions will not only reduce greenhouse gas emissions but also offer broader health and economic benefits. By adopting a low-carbon feedstock and electrifying SMR and steam cracking, chemical companies can enhance health outcomes, spur domestic job growth, and drive the economic revitalization of surrounding communities. By adopting a holistic “System Value Framework” approach, which actively engages local communities and incorporates community benefits in investment decisions, chemical companies can address existing burdens while delivering tangible benefits to the communities in which they operate.

The report laid out a clear call to action for all stakeholders.

For chemical companies: Decarbonizing basic chemicals presents a major business opportunity. Demand for ammonia is projected to triple and methanol double, largely driven by new applications as low-carbon fuels and feedstock. Chemical sector companies must seize this moment by investing in facility modifications and infrastructure today to support long-term net-zero solutions.

For companies that have value chains in the chemical sector: This report can help these organizations map their chemical footprints, collaborate with high-impact suppliers on targeted decarbonization solutions, and join forces with other corporate consumers to leverage collective buying power and accelerate decarbonization.

For policymakers: They should create financial incentives for upgrades and infrastructure, streamline permitting processes to support project deployment, and establish target demand-side support policies for the chemical sector to adopt clean hydrogen and other low-carbon feedstocks. These policy incentives are critical to helping the chemical sector overcome the cost and infrastructure barriers to deploying decarbonization solutions.

Immediate action from all stakeholders will be essential to driving the chemical sector toward a sustainable future. With new insights from the Chemical Sector Assessment, the RTC is helping chemical companies identify important near-term actions, facilitating downstream customers to have meaningful conversations with their chemical suppliers, and advocating more policy support for low-carbon feedstock and renewable thermal technologies.

To learn more about the RTC’s chemical sector work, please reach out to Cihang Yuan for details.


Cihang Yuan is Senior Program Officer, Climate and Renewable Energy at World Wildlife Fund.

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