Industries face significant emissions-reduction and decarbonization challenges, but there is a clear path forward through strategic adoption of process optimization and new technology integration
The chemical process industries (CPI) and associated value chains are as diverse as the products they manufacture. For every unique chemical, dozens of energy sources, supply chains, industrial processes and logistics networks are essential in transforming chemicals from formula to finished product. These processes take energy, and lots of it. In the U.S., chemical production and refining — including processes, energy use (heat and electricity) and fugitive emissions — contributed roughly 11% of the total U.S. greenhouse gas (GHG) emissions in 2021 [1]. Globally, chemical manufacturing accounts for 6% of all anthropogenic emissions. Just a handful of chemical processes — including ammonia, nitric acid, methanol, olefins, aromatics and chlor-alkali — account for 65% of the entire sector’s emissions [2].
Chemical engineering and processing facilities can become positive players in emissions mitigation and adaptation via the following avenues:
- Creating new ways of designing materials with circularity in mind
- Developing new processes and materials to help adapt to a changing climate and reduce anthropogenic emissions
Sector decision-makers need a clear roadmap to overcome sector-specific challenges and identify the most impactful short- and long-term solutions to drive decarbonization goals and remain competitive in a heavily regulated market.
Decarbonization needs and solutions
Restructuring chemicals into useful materials takes a variety of procedures, such as heating and cooling, process transformation and day-to-day facility operations. It all takes a lot of energy — generally electricity, steam, natural gas (as fuel and feedstock), chilled and hot water, hydrogen and other commodities (Figure 1). No chemical engineering process is alike, so planning supervisors interested in emissions reduction via electrification, for instance, should expect to conduct a thorough electrification feasibility study optimized to their specific electrification and decarbonization contexts. Even within the same process and facility, there will be variations in approach, so a granular feasibility analysis is essential to complete on an asset-by-asset or production/process-line basis.
FIGURE 1. Whether sourced from steam, electrical heating or natural gas, heat — and the energy required to create it — should be at the forefront of any feasibility assessments for potential process electrification
Factors that will impact the feasibility of electrification or other decarbonization approaches include the following.
Energy needs. The power and thermal needs across the CPI vary wildly from a few megawatts to hundreds of megawatts. Electrification and decarbonization potential are dependent upon several factors, including the degree of efficiency already achieved in processes and whether or not a facility can gain access to the additional electrical capacity needed to electrify various processes.
Process type, temperature levels, and integration dependency with other production assets. As a general rule, the higher the temperature, the more energy is required to conduct essential chemical processes. Higher energy also means opportunities for energy recovery throughout facilities, providing new opportunities for energy inputs from otherwise wasted heat. Additionally, as process temperature increases, the availability of decarbonization technologies is likely to decrease.
Local energy limitations. Most electricity consumed in chemical manufacturing and petroleum refining is purchased from the grid, but a small proportion is generated from onsite power plants. Close to 96% [3] of the electricity generated onsite at industrial facilities is from combined heat and power systems (CHP), which generally use natural gas as a fuel source. In contrast, other manufacturers depend on purchased grid electricity, pipeline gas and fuel transport.
Nascency of infrastructure availability. Depending on where a facility is located, local power grids may not have the capacity to accommodate new or increased energy loads that may come online as facilities electrify operations. Delays in permitting for renewable energy assets or new pipelines could also be a challenge.
Pathways for decarbonization
Chemical manufacturing and petroleum refining facilities tend to operate continuously 24 hours a day, 7 days a week. Since CPI companies have high and continuous energy demands, it is imperative to electrify incrementally in alignment with maintenance and asset depreciation cycles. Upgrades typically occur every 2–5 years and require at least a three-year lead time for planning and financing purposes. These assets have long depreciation cycles and undergo strong financial considerations. Industrial chemical processes incur significant capital expenses from process changes, asset replacement, green premiums paid on sustainable feedstocks and fuel supplies and infrastructure upgrades. For instance, the total cost of ownership for electrification over 20–25 years will be dominated by operational expenditures (OpEx), not capital expenditures (CapEx).
In the big picture, decarbonization of the chemical and refining industry hinges upon addressing the intermittency of renewable electricity generation. A low-carbon power grid would enable the chemical industry to reduce GHG emissions by at least 35% [2]. The remaining 65% of heat-based and direct emissions could be mitigated by using low-carbon electricity for heat, utilizing clean hydrogen as a fuel and reducing agent, and wide deployment of carbon capture, utilization and storage (CCUS).
Electrification requirements
When considering electrification, it is important to balance sustainability and cost goals in the context of the production process, regional grid emissions and infrastructure, commodity availability and immediate capital or operational needs at the facility. Companies must align long-term decarbonization ambitions with a facility’s capital investments or major procurement decisions (electricity, energy source or feedstocks).
Certain CPI processes conducted in dryers, crackers and furnaces can be readily electrified. For process temperatures below 250ºC, electrified assets such as heat pumps, vapor recompression, resistive heaters and boilers can directly replace gas-fired technologies. These process-heating technologies have widely proven use cases across a vast portion of the chemical and refining industry, with the potential to decarbonize 30–50% of the energy use in chemical sub-sectors like pharmaceuticals, household chemicals, coating and adhesives and agrochemicals.
However, high-temperature electric heating above 400ºC has not yet reached market viability. Chemical processes like steam cracking, methane steam reforming and gasification are examples of core chemical processes that are difficult to electrify, because they involve significant direct emissions resulting from heavy fossil-fuel energy inputs (as both feedstock and fuel). High energy demands (usually in the form of extreme heat required for chemical manufacturing and refining processes), coupled with complex reaction pathways and feedstock constraints provide limited decarbonization options for many traditional chemical manufacturing and refining industries. For example, an estimated 58–70% of chemical processes rely on fossil fuel feedstocks, and even if low-carbon technologies were implemented, expected demand for chemicals would still result in an overall increase in sector-wide emissions [4]. In some cases, switching from fossil fuels to biomass, biogas, biomethane, synthesis gas (syngas) or green hydrogen blending can allow companies to continue using gas-fired assets while lowering their footprint. Currently, the only viable option for decarbonizing most high-energy processes requires burning fossil fuels with CCUS and clean energy procurement.
When looking at technologies and processes specifically, upgrades can sometimes be made to electrify assets. This requires shifting from a traditional return on investment (ROI) and internal rates of return (IRR) mindset, which are industry concepts commonly deployed when retrofitting and conducting like-to-like replacements. Conversely, electrification could be considered like a greenfield project. The processes and equipment associated with electrification represent entirely new systems and infrastructure, which often need to be built from the ground up — sometimes literally.
Looking at a 15- to 25-year time horizon can help companies integrate new technologies and feedstocks more beneficially from both an emissions and cost standpoint. However, navigating the moving parts on such a distant timeline can be a daunting process. Partnering with knowledgeable sustainability consultants familiar with the various contexts facing chemical engineering and manufacturing companies can help accurately estimate the CapEx and OpEx of different technology and procurement options.
In other cases, direct electrification can be achieved by replacing fossil-fueled systems with process changes, including the following examples:
- Natural gas process compressors allow for more efficient movement of gas through pipelines
- Steam cracker furnaces that replace fossil-fuel combustion with hydrogen combustion or direct electrical heating
- Target separation processes to remove impurities and byproducts from a reaction
- Hydrogen electrolyzers as a direct replacement for fossil-fuel-intensive steam methane reforming
Securing power supply
If buying additional power capacity from the grid is not feasible, installing on-site renewable-power production or on-site fossil-fuel generation with CCUS and clean energy procurement serves the dual purpose of energy security and decarbonization. Some clean-energy procurement pathways are more suitable for long-term and reliable clean electricity, especially if electrification is being considered as a primary path to decarbonization, including:
- Corporate power purchase agreements (PPA) are long-term contracts where a company directly buys electricity from a renewable energy producer at a pre-determined price, enabling corporations to secure a stable source of clean energy to meet their sustainability goals while potentially reducing energy costs
- Virtual power purchase agreements (vPPA) give companies the right to “claim” renewable energy produced by a project without physically receiving the electricity generated
- Green retail/tariff mechanisms allow chemical manufacturers to voluntarily purchase renewable energy from local utilities, enabling customers to reduce their carbon footprint with renewable energy certificates (RECs) and support grid-level clean energy development
Ensuring facilities’ electricity supply is clean can help guarantee decarbonization benefits. For most facilities and applications, onsite photovoltaic (PV) and community solar can only be leveraged to produce a small proportion of the site’s electrical loads (Figure 2). However, given the higher proportion of onsite thermal demand, exploring cogeneration with alternative fuels like ammonia, hydrogen and biomass may also be an option for some companies. Some alternative fuels can also be used as direct feedstock replacements while leveraging existing processes like gasification, electrolysis, pyrolysis and CCUS to produce primary chemicals like ammonia, methanol, ethylene, olefins and hydrogen.
FIGURE 2. Power-purchase agreements (PPAs) enable companies to secure renewable energy supply to their facilities to cover a portion of a site’s electrical load
Emerging technologies, such as small modular reactors and thermal energy storage, are gaining attention as promising clean energy solutions. Whether through onsite or virtual power generation, assets such as cogeneration systems, onsite wind and solar and modular reactors can be seamlessly integrated into microgrids as distributed energy resources (DERs) [5]. When integrated thoughtfully with the grid, these assets enhance both energy resilience and efficiency. For example, integrating advanced heat recovery systems and thermal energy storage can capture excess heat or electricity produced during low-demand periods and release it when demand peaks, helping to balance the grid and reduce dependence on fossil fuels.
Incentives for decarbonization
Federal incentives and tax credits have historically encouraged various decarbonization projects in the U.S. [6], supporting initiatives related to electrification, CCUS, clean hydrogen and so on. However, in a rapidly evolving political and economic landscape, chemical manufacturers and petroleum refiners must stay abreast of potential changes in state and federal incentive programs. It is here where an external partner knowledgeable of the political landscape is essential to helping to navigate through electrification journeys.
Other tools to assist in electrifying include vertical-specific programs, such as:
- The National Renewable Energy Laboratory (NREL; Applewood, Colo.; www.nrel.gov) REopt tool helps users evaluate the economic viability of DERs for a building, campus or microgrid and identify sizes and dispatch strategies to help save on energy costs and achieve decarbonization goals [7]
- The U.S. Department of Energy’s Onsite Energy Technical Assistance Partnerships (TAPs) helps industrial facilities and other large energy users identify and implement technology options for achieving site-specific energy objectives [8]
The chemical manufacturing and refining industries face significant emissions-reduction and decarbonization challenges, but there is a clear path forward through strategic adoption of new technologies, process optimization and clean energy integration. The diverse energy needs and complex processes of chemical production demand bespoke approaches, from electrification and renewable energy sourcing to carbon capture and clean hydrogen solutions. With careful planning and investment — combined with expert analysis and counsel from third-party consultants — companies can reduce emissions while maintaining competitiveness in a highly regulated market environment. As the industry moves toward a net-zero future, leveraging federal incentives, emerging technologies, and energy efficiency measures will be crucial in transforming chemical manufacturing into a key player in global climate mitigation efforts. Ultimately, the sector’s ability to adapt and evolve will shape its role in creating a more sustainable and resilient chemicals and refining sector. ■
Edited by Mary Page Bailey
Acknowledgement
All images provided by author
References
1. U.S. Dept. of Energy, Pathway to Liftoff – Decarbonizing Chemicals and Refining, Liftoff Reports, https://liftoff.energy.gov/industrial-decarbonization/chemicals-and-refining.
2. Eryazici, I., Ramesh, N. and Villa C., Electrification of the chemical industry — materials innovations for a lower-carbon future, MRS Bulletin, Vol. 46, February 2022, pp. 1,197–1,204.
3. Niemeyer, K. and Kelly, M., Right Onsite: Accelerate deployment of onsite clean energy technology in the industrial sector, American Council for an Energy-Efficient Economy, Summer Study on Energy Efficiency in Industry, 2023.
4. Mallapragada, D., others, Decarbonization of the chemical industry through electrification: Barriers and opportunities, Joule, Vol. 7, Issue 1, January 2023, pp. 23–41.
5. U.S. Dept. of Energy, Distributed Energy Resources for Resilience, https://www.energy.gov/femp/distributed-energy-resources-resilience.
6. Reuter, H., Wymer, J. and Thompson, J., Decarbonizing U.S. industry: Progress and opportunities, Clean Air Task Force, August 2024, https://www.catf.us/2024/08/decarbonizing-us-industry-progress-opportunities/.
7. National Renewable Energy Laboratory (NREL), REopt Renewable Energy Integration & Optimization, www.reopt.nrel.gov/tool.
8. U.S. Dept. of Energy’s Better Buildings Solution Center, Onsite Energy Technical Assistance Partnerships (TAPS), https://betterbuildingssolutioncenter.energy.gov/onsite-energy/taps.
Author
Jason Bell is the managing director, Americas for ENGIE Impact (1460 Broadway, 12th Floor, New York, NY 10017; Phone: 1-800- 767-4197; Website: www.engieimpact.com). He has over 20 years of industry experience, with expertise in the energy transition, business planning, plant and operations management and more. He holds degrees in energy and business management.
Further reading
1. Electrification of Industrial Facilities, Chem. Eng., April 2023, pp. 28–33.
2. Incremental Electrification Drives Sustainability, Chem. Eng., April 2023, pp. 34–38.
3. Public-Private Partnerships Spur Decarbonization Efforts, Chem. Eng., August 2024, pp. 12–16.