Transforming China’s chemicals industry

China is the world’s largest producer and consumer of chemical products. China’s chemicals industry accounts for 20 per cent of the total national industrial emissions and 13 per cent of the country’s total CO2 emissions. This report from the Rocky Mountain Institute (RMI) and Energy Transitions Commission (ETC) analyses the specific path of China's chemicals industry to achieve the zero-carbon scenario. The zero-carbon transformation of the chemicals industry is of great significance to the national goal of carbon neutrality and the low-carbon transformation of the global chemicals value chain. It suggests that methods for the zero-carbon transformation of China’s chemicals industry include industrial structure optimization, energy structure change (including feedstock and fuel switch), energy conservation, resource recycling, and Carbon Capture Utilisation and Storage (CCUS)

The report further identifies the challenges and advantages faced by China’s chemicals industry, the three main challenges being: the overall demand for major chemical products in China will continue to increase, chemical production in China is highly dependent on coal (with a much higher carbon intensity than other fuels and feed stocks) and existing production assets are relatively young with a potential high risk of stranded assets due to rapid transformation. Whilst, the three major opportunities are that; China has a strong capability in technology integration and a large market scale (enabling rapid scale-up of new technologies), the key players in China’s chemicals industry are mainly state-owned (with the ability and resources to lead the overall industry), and the large-scale and integrated pattern of China’s chemicals industry allows the optimal utilization of resources and energy to achieve economies of scale. The report also gives policy suggestions that facilitate the decarbonisation pathways of China’s chemicals industry.