10 January 2023
The decisive decade to limit climate change impact is here, and the chemicals sector is playing an increasingly critical role in the global transition to net zero. Generating $US4.7 trillion in global sales annually,1 the chemicals sector provides essential components, materials and technologies used as inputs in ~96 per cent of manufactured goods globally.2 Delivering on net zero ambitions at the scale and pace needed requires partnership across businesses, communities, investors and governments. The chemicals sector’s existing role in all major industries, such as agriculture, construction and energy, creates fertile ground for cross-sector partnerships to commercialise and create value in important net zero innovations.
Often overlooked, chemicals today are important sustainability enablers. Chemical products and derivatives are being used for energy efficiency, decarbonisation and circularity across the world. For example, epoxy resins, which are petrochemical-derived, are used to manufacture blades for wind turbines. They are also used in the aerospace and automotive sectors, including in electric vehicles, to improve fuel efficiency as a lightweight material that is also durable. Polystyrene is another example – a petrochemical-derived plastic which is used as an input into building insulation and reduces energy consumption for HVAC systems.
Beyond its role as a sustainability enabler, the chemicals sector is embracing change and taking steps to do its part for net zero. Globally agreed commitments to tackle climate change are increasing in both extent and rigour. Many investors are also making sustainability targets a pre-cursor to capital access. These dynamics are creating challenges and opportunities for the industry.