Petrochemicals becoming largest driver of global oil demand – IEA

5th October 2018 By: Simone Liedtke - Creamer Media Social Media Editor & Senior Writer

Petrochemicals are becoming the largest drivers of global oil demand, ahead of cars, planes and trucks, a study undertaken by the International Energy Agency (IEA) has revealed.

Petrochemicals, which are components derived from oil and gas that are used in all sorts of daily products such as plastics, fertiliser, packaging, clothing, digital devices, medical equipment, detergents and tyres, are set to account for more than a third of the growth in global oil demand by 2030, and nearly half the growth to 2050.

This, the study pointed out, will add nearly seven-million barrels a day of oil demand by then.

The study, titled ‘The Future of Petrochemicals’ is part of a new IEA series focusing on “blind spots” of the global energy system, namely issues that are critical to the evolution of the energy sector but that receive less attention than deserved.

The report is among the most comprehensive reviews of the global petrochemicals sector, according to the IEA, and follows other reports in the series, including the impact of air conditioners on electricity demand, the impact of trucking on oil demand and the role of modern bioenergy in the renewables sector.

Petrochemicals are particularly important given how prevalent they are in everyday products, the IEA noted.

“Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves,” said IEA executive director Dr Fatih Birol.

“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, and has nearly doubled since 2000.

Advanced economies currently use up to 20 times more plastic and up to ten times more fertiliser than developing economies on a per capita basis, underscoring the huge potential for global growth, the IEA stated.

The dynamism of the petrochemicals industry is also driving new trends around the world. After decades of stagnation and decline, the US has re-emerged as a low-cost location for chemicals production as a result of the shale gas revolution, and is now home to around 40% of global ethane-based petrochemicals 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.

ENVIRONMENT

Birol explained, however, that the production, use and disposal of petrochemical-derived products presents 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 under way, 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.

To address these challenges, the report outlines a clean technology scenario (CTS), which provides an alternative future in line with key United Nations Sustainable Development Goals, such as climate action, responsible consumption and life below water, besides others.

The scenario provides an ambitious but achievable pathway to reduce the environmental impacts of petrochemicals, which include air pollutants from primary chemicals production declining by almost 90% by 2050, direct carbon dioxide emissions reducing by nearly 60% and water demand nearly 30% lower than in the base scenario.

It also emphasises waste management improvements to rapidly increase recycling, thereby laying the groundwork to more than halve cumulative, ocean-bound, plastic waste by 2050.

 

In the CTS, petrochemicals become 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, the IEA said.

 

The IEA’s report was developed with input from governments, industry and other key stakeholders and seeks to bring the sector the attention it deserves in the global energy policy debate.

It also provides ten key policy recommendations to build a more sustainable and efficient petrochemicals industry.