INSIGHT: Drive to net zero fundamentally shifts chemical industry operating model

LONDON (ICIS)–The global drive towards net zero will fundamentally change the face of the chemical industry.

Commitments to shareholders, customers and employees to reduce greenhouse gas emissions have created a wave of new thinking and technological change. They will continue to do so.

Chemical companies know that as the cost of carbon grows, and upstream suppliers and downstream customers start to do things differently, the operating environment shifts.

The changes strike to the heart of the status quo for a sector that is challenged to sustain the carbon input for most of its products – the carbon backbone of many molecules – while dramatically reducing its carbon footprint.

The big climate change wins for the major producers will come as the process plants that need to can  run on alternative forms of energy.

In very broad terms this can be seen as part of the multigenerational shift of the sector from coal to oil to gas and to renewables. But the change this time is not driven by costs and efficiencies but by global sustainability.

If companies want to be part of a low carbon industrial future, they will have to develop new technologies and new operating models.

The CEO’s of BASF, SABIC and Linde spoke of both on Thursday as they announced the start of construction of the world’s first demonstration plant for large-scale electrically heated steam cracker furnaces.

Using renewable electricity-based technology potentially can reduce steam cracker CO2 emissions by at least 90% compared to technologies commonly used today, the partners say.

The big push to develop an electrically heated steam cracker furnace began only a few years ago and companies are racing to develop the more climate-friendly technology.

The BASF, SABIC, Linde project was conceived by BASF’s Martin Brudermuller and SABIC’s Yousef Al-Benyan in Davos, Switzerland, in January 2018. A demonstration, perhaps of how, if CEOs are committed to change and – in this instance, to collaboration – things can be done quickly.

Linde Engineering CEO, Juergen Nowicki, said on Thursday that new electric furnace steam cracker technology could be commercially available by the end 2024. The three companies have teams working jointly on the demonstration project.

It will be used to test run two heating concepts in parallel: direct electric heating of the process tubes in the steam cracker furnace and radiative hearting with heating elements placed around the tubes.

The furnace temperature will be around 850 degrees Celsius, so materials choice for the heating coils will be paramount. The demonstration furnace will process around four tonnes of hydrocarbon per hour consuming 6MW of electricity – the equivalent today of three to four large-scale electricity generating windmills.

BASF will operate the demonstration plant which is expected to come on-stream at the smaller of its two crackers in Ludwigshafen in 2023.

BASF and SABIC are investing in the project with assistance from Germany’s Federal Ministry of Economic Affairs and Climate Action. Linde is the engineering, procurement and construction partner and will commercialise the resulting technology.

Nowicki noted on Thursday that the electric heating concept was only one of many building blocks the industry needs to develop for a much lower carbon future, and that more needs to be done, and faster.

The advantages of the technology would be that heating is controlled, and precise, leading possibly to improved cracker efficiency. But could the technology run 24/7 for possibly four years? Without an adequate supply of renewable electricity, the technology will not reach its potential.

The development raises some fundamental questions that sector players have to address. Can firms collaborate effectively to drive rapid technological change? In this case, it seems as though they can.

For BASF and SABIC the commitment of Germany’s Federal Ministry of Economic Affairs and Climate Action is pivotal. (The ministry has committed €14.8m to the demonstration project.)

It signals recognition that the technological and other changes that will be required to advance the energy transition require a truly collaborative approach and support where applicable.

This recognition and support is important for BASF and SABIC in Europe. In Saudi Arabia a collaborative approach to climate action is underpinning commitment to the fact that no new projects for SABIC will be approved without compliance to carbon neutrality, according to Al-Benyan.

“If we fix this, I think we are moving into a stronger future of dealing with carbon neutrality,” the SABIC CEO added.

All relies on the availability of adequate supplies of renewable power, however, although with rising CO2 costs and taxes renewable electricity is competitive, the BASF CEO suggested. He stressed, however, that it is not available around the clock, seven days a week.

Does this mean, therefore, that the chemical industry could maybe shift its demand and possibly buffer more material, Brudermuller asked?

This presents a possible approach to chemicals manufacturing with significant ramifications not just for individual production units but for environmental impact management and the ways in which markets operate and businesses are run.

Global actions to tackle the impact of climate change are demanding a far-reaching change of thinking from sector players.

Insight by Nigel Davis