Petrochemicals – components derived from oil and gas that are used in all sorts of daily products such as plastics, fertilisers, packaging, clothing, digital devices, medical equipment, detergents and tyres – are becoming the largest drivers of global oil demand, in front of cars, planes and trucks, according to the International Energy Agency.
Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030 and nearly half the growth to 2050, adding nearly 7 million bbls/d by then, the IEA said on Oct. 4. They are also poised to consume an additional 56 billion cubic metres of natural gas by 2030, and 83 bcm by 2050.
Petrochemicals are particularly important given how prevalent they are in everyday products, the IEA said. They are also required to manufacture many parts of the modern energy system, including solar panels, wind turbines, batteries, thermal insulation and electric vehicles.
“Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves,” IEA executive director Fatih Birol said in a statement.
“Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends. In fact, our analysis shows they will have a greater influence on the future of oil demand than cars, trucks and aviation.”
Demand for plastics – the key driver for petrochemicals from an energy perspective – has outpaced all other bulk materials (such as steel, aluminium, or cement), nearly doubling since 2000. Advanced economies currently use up to 20 times more plastic and up to 10 times more fertiliser than developing economies on a per capita basis, underscoring the huge potential for global growth.
After decades of stagnation and decline, the United States has re-emerged as a low-cost location for chemicals production thanks to the shale gas revolution, the IEA noted. The U.S. is now home to around 40 percent of the global ethane-based petrochemical production capacity. Meanwhile, the Middle East remains the lowest‑cost centre for many key petrochemicals, with a host of new projects announced across the region.
Petrochemical products provide substantial benefits to society, including a growing number of applications in various cutting-edge, clean technologies critical to sustainable energy systems. However, the production, use and disposal of petrochemical-derived products present a variety of climate, air quality and water pollution challenges that need to be addressed.
“While substantial increases in recycling and efforts to curb single-use plastics are underway, especially in Europe, Japan and Korea, the impact these efforts can have on demand for petrochemicals is far outweighed by sharply increasing plastic consumption in emerging economies,” the IEA said.
The IEA’s report, The Future of Petrochemicals, outlines an “ambitious but achievable pathway” to reduce the environmental impacts of petrochemicals where this becomes the only growing segment of global oil demand. “Despite near-tripling in plastic waste collection by 2050, the limited availability of cost-effective substitutes for oil feedstock means that oil demand for petrochemicals remains resilient” under this scenario, the IEA said.