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Chemical industry consortium targets joint investments, acceleration of net-zero technologies, projects

19 October 2021 IHS Markit Chemical Expert

A consortium including some of the world's largest chemical companies is to transition a low-carbon technologies knowledge-sharing initiative into a standalone company that will share early-stage risks and invest in the development and upscaling of technologies aimed at cutting the industry's GHG emissions.

The chemicals sector is currently responsible for around 5% of total GHG emissions, but worldwide product demand is expected to quadruple by 2050, the firms said.

The Low-Carbon Emitting Technologies (LCET) initiative, formed in 2019, will become a standalone entity by 2023, according to Saudi chemical giant Sabic, an LCET member. State-controlled Sabic said it has entered an agreement with the World Economic Forum (WEF) and other companies in the sector to transition the LCET initiative into a project development company (PDC).

The PDC "will be designed and developed by an inclusive stakeholder primacy collaboration" between Sabic, Air Liquide, BASF, Clariant, Covestro, Dow, Mitsubishi Chemical, DSM, Sibur, Solvay, and the WEF, according to Sabic.

"The joint undertaking represents the LCET initiative's seminal transition from a knowledge-sharing platform to the implementation vehicle as envisioned at its 2019 founding, and on course with its original mandate to accelerate GHG reduction in the chemical production value chain," it said.

The WEF-hosted collaboration is designed to foster creative partnerships and enable "pre-competitive cooperation, especially on common challenges to the industry to drive sustainable solutions and collectively solve challenges on the path to carbon neutrality," Sabic said.

"As the LCET initiative moves into the critical implementation stage, it will demonstrate the groundbreaking innovation that our industry can achieve through collaboration," said Sabic CEO Yousef al-Benyan, who is also LCET co-chair.

Cracking, ammonia decarbonization

Already, LCET teams have identified technical principles and specific measures that can convert traditional operating models into net-zero production methodologies, Sabic said. The PDC will target the two value chains that are the largest sources of chemical GHG emissions: olefins production via steam cracking, and ammonia production based on dedicated hydrogen generation from methane or water.

A research and development hub for the processing of plastic waste is being developed, and Sabic, BASF, and Linde are collaborating on the world's first electrically heated steam cracker furnace, it said. Hydrogen generation in low-carbon processes, the use of CO2 and biomass as feedstock, and the overall electrification of chemical operations will be addressed by the PDC, it added.

"The transformation toward climate neutrality is a must. Therefore, we need to translate climate targets now into concrete measures," said BASF Chairman Martin Brudermüller. "We collaborate in the LCET initiative to jointly accelerate breakthrough technologies."

Deploying the new technologies on a commercial scale bears significant economic risk, according to Sabic. While chemical companies continue advancing their efforts individually, the transformation of the entire chemicals sector "will require massive capital investment, regulatory support, and further coordination between financial partners, innovators, academic institutions, governments, and civil society," it said.

The LCET initiative aims to foster alliances, structured potentially as joint ventures or start-up companies, to prioritize and innovate to share knowledge and reduce investment risks, it said.

The initiative will also open new ways to finance net-zero solutions, enable sharing of expertise, and encourage more producers, technology providers and value chain partners to join in meeting the Paris agreement and UN 2050 sustainability goals, it added.

--Original reporting by Mark Thomas, Chemical Week.

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