Energy & Greenhouse Gas Emissions

The business of chemistry transforms natural raw materials from earth, water and air into valuable products that enable safer and healthier lifestyles. Materials made by the chemical industry enable energy-saving and renewable applications, including solar panels and wind turbines, electric and fuel-efficient vehicles, high-performance building materials, advanced batteries, energy-efficient lighting and more.

Chemical manufacturers use energy in two ways: for fuel and power and as feedstocks, otherwise known as raw materials. The business of chemistry is energy-intensive; in fact, it is the second largest manufacturing user of energy (fuel and nonfuel). Within the chemical industry, this is especially the case for basic chemicals, as well as certain specialty chemical segments (e.g., industrial gases). The largest user of energy is the petrochemical and downstream derivatives business.

8%

Decrease in Greenhouse Gas Intensity from Responsible Care companies since 2017

Composition of Energy Requirements

Person Plugging in Their Electric Vehicle (EV) for Charging

Fuel & Power

The business of chemistry operates by creating complex chemical reactions. The industry consumes energy to generate heat, steam, pressure and electricity used in manufacturing processes. Natural gas is the largest source of fuel and power for the chemical industry.

The chemical industry purchases electricity and some steam from electric utilities or other suppliers. The chemical industry is also a leader in the use of combined heat and power (CHP), a highly efficient process for generating heat and electricity on-site and has pioneered catalytic technologies that let facilities produce more with less energy.

Derivation of Petrochemical Feedstocks

Feedstocks

In addition to air, water, minerals and plants, the business of chemistry uses large quantities of hydrocarbon feedstocks. While the majority of chemical feedstocks are energy sources, such as natural gas, natural gas liquids (NGLs) and naphtha, increasingly biobased and recycled content feedstocks are being used.

These petrochemical feedstocks are the foundation of chemistry of plastics, pharmaceuticals, electronic materials, fertilizers, and thousands of other products that improve the lives of a growing and prospering population.

The feedstock data show that natural gas liquids (NGLs), such as ethane, play a large role in meeting the industry’s feedstock needs. Combined with natural gas directly used as a feedstock, it accounts for more than half of the total. Heavy liquids, such as naphtha, also play a major role. Although coal and biomass can be used as hydrocarbon feedstocks, petroleum and natural gas account for 99% of feedstocks for the business of chemistry. Natural gas liquids are predominant and are followed by naphtha and other heavy liquids. Besides methanol, natural gas is directly used as a feedstock for ammonia and carbon black. Once the dominant source of petrochemical feedstocks, the use of coal has dropped dramatically in the U.S. over the past century. Feedstock use is concentrated in bulk petrochemicals and in fertilizers.

There are several methods of separating or “cracking” these chains found in fossil fuels. Natural gas is processed to produce methane and natural gas liquids (NGLs). Natural gas liquids include ethane, propane, and butane and can be produced via natural gas processing or through the petroleum refining process. Petroleum is refined to produce a variety of petroleum products, including naphtha and natural gas liquids. Naphtha and NGLs are processed in large vessels called crackers, which are heated and pressurized to crack the hydrocarbon chains into smaller ones. These smaller hydrocarbons are the gaseous petrochemical feedstocks used to make the products of chemistry: olefins (ethylene, propylene, and butylene) and aromatics (benzene, toluene and xylenes). The seventh petrochemical feedstock, methane, is directly converted from the methane in natural gas and does not undergo the cracking process.

Feedstock Competitiveness

The chemical industry in the U.S. predominantly uses NGLs as feedstocks. In Europe and Asia, however, most producers use naphtha, a petroleum refinery product. The price of naphtha is highly correlated with the global price of oil. The price of natural gas liquids in the U.S. is linked to U.S. natural gas prices. As a proxy for feedstock competitiveness, we use the ratio of the global oil benchmark price (Brent) to the U.S. natural gas benchmark (Henry Hub).

As a rough rule of thumb, when the ratio is above 7, U.S. natural gas-based chemical production is globally competitive. When the ratio falls below 7, U.S. production is relatively disadvantaged.

Since 2010, when the development of shale gas in the U.S. was underway, the ratio has averaged 23, making the U.S. among the lowest cost regions globally to produce some chemical products. As a result, the there has been new investment in U.S. chemical manufacturing to benefit from this energy advantage.

U.S. Natural Gas Based Petrochemicals Remain Competitive

Greenhouse Gas Emissions

Declining Emissions

Carbon dioxide emissions represent the majority of greenhouse gas (GHG) emissions from the business of chemistry. Nitrous oxide, methane and some other gases account for the balance. Carbon emissions of the business of chemistry, including the indirect carbon value of purchased electricity, account for less than 5% of total U.S. emissions.

Per unit of output, U.S. chemical industry GHG emissions have declined significantly since 1990 due to a range of enhancements and improvements, including one-time process changes reducing nitrous oxide emissions, more effective catalysis, upgrades in industrial and process technologies, fuel switching (e.g., natural gas instead of coal), and education and training for employees.

ACC estimates industry-wide data for Scope 1 (emissions that occur from sources that are controlled or owned by an organization) and Scope 2 (indirect emissions, i.e., purchased electricity, steam, etc.) emissions. Separately, ACC’s Responsible Care^® program collects data on energy efficiency and greenhouse gas intensity.

Improving Energy Efficiency

The U.S. chemical industry has achieved significant energy efficiency gains. The fuel and power energy consumed per unit of output is half that of 1974.

Improvements in energy efficiency are essential for the business of chemistry to maintain its competitive edge in domestic and world markets. Since energy costs remain a major cost to the industry, there is a clear incentive for energy efficiency efforts.