The Situation of Low-carbon Development in China's Petrochemical Industry




(Source Chemical 707)
Introduction: Climate change is a deep-seated crisis facing the world, and addressing climate change has become a common challenge for all mankind. As countries gradually reach consensus on climate issues and emission reduction targets are put forward one after another, carbon neutrality has become the hottest topic at the moment, followed by not only economic and social system changes, but also a new round of global game. Petrochemical industry as the pillar and foundation of national economic development, low-carbon development is facing what kind of situation?
 Low-carbon development is an inevitable choice
  1.1 the goal of "double carbon" is a major strategic decision made by the CPC Central Committee after careful consideration.
China has always attached great importance to addressing climate change and is an active promoter and firm practitioner of climate action. In September 2020, China put forward the goal of carbon peak by 2030 and carbon neutrality by 2060. In December 2020, it was announced at the Climate Ambition Summit that by 2030, carbon dioxide emissions per unit of GDP will drop by more than 65% compared with 2005, non-fossil energy will account for about 25% of primary energy consumption, forest stock will increase by 6 billion cubic meters compared with 2005, and the total installed capacity of wind power and solar power will reach more than 1.2 billion kilowatts. Achieving carbon neutrality is an inherent requirement for my country to achieve sustainable and high-quality development, and it is a major strategic decision made by the Party Central Committee after careful consideration.
In February 2021, the State Council's ''Guiding Opinions on Accelerating the Establishment and Improvement of a Green and Low-Carbon Circular Development Economic System'' proposed that development should be based on the efficient use of resources, strict protection of the ecological environment, and effective control of greenhouse gas emissions, and coordinated promotion High-quality development and high-level protection ensure the realization of the goal of carbon neutralization.
  1.2 green and low-carbon development has become a global consensus, many countries clearly put forward emission reduction targets
So far, more than 130 countries and regions around the world have announced net zero (or carbon neutral, climate neutral) targets in the form of legislation or policy declarations. The European Union issued the ''Green New Deal'' at the end of 2019, promising to achieve carbon neutrality by 2050, and issued a roadmap of policies and measures in seven areas including energy, industry, construction, transportation, food, ecology, and environmental protection; The U.S. House of Representatives issued the Climate Crisis Action Plan in June 2020, proposing to address climate change as the country's top priority, to achieve the goal of reducing greenhouse gas emissions by 88% and zero net CO2 emissions by 2050 compared with 2010.



  1.3 Developed Countries Green Barriers Forcing China's Petrochemical Industry to Accelerate Low-carbon Transformation
Due to the advantages of technological innovation and industrial process, the green barriers of developed countries against developing countries have never stopped. On March 10 this year, the European Parliament voted to pass the "Carbon Boundary Adjustment Mechanism" (CBAM) bill. It plans to impose import tariffs on certain products from countries that have failed to take climate change actions from 2023, and it is clear that the mechanism will cover electricity. The industry and high-energy-consuming industries such as cement, steel, aluminum, oil refining, chemical, and paper are applicable to all products included in the EU carbon trading system. The EU is one of China's important trading partners. The bill covers a wide range of refining and chemical products, which is an important part of China's international trade. Its implementation will have a profound impact on China's petrochemical industry.
Compared with developed countries, China's petrochemical industry unit energy carbon emission intensity still has room to decline. After the implementation of CBAM, if we refer to the advanced technical standards of the EU industry, China's petrochemical products will have to pay additional carbon tariffs to enter the EU market, and will face the risk of increasing export costs and reducing price advantages. Studies have shown that if a carbon tax is levied at US $30/ton, the export of petrochemical products can drop by 12.39. Since May this year, the EU carbon price has exceeded US $60/ton. The petrochemical industry is the foundation of the national economy, which intersects, relates and interacts with many industries. The obstruction of exports will not only aggravate the surplus of some petrochemical products, but also trigger a chain reaction in related industries.
  2, economic development and transformation is imminent
  2.1 China is still a developing country, more efforts are needed to balance development and carbon reduction.
China is still the largest developing country in the world, and its economic development is still closely related to carbon emissions. In the next 30 years, China will not only achieve carbon neutrality, but also maintain medium and high-speed economic development, which requires that China's economic development must be decoupled from carbon emissions and enter a new era of transformation and upgrading. The economic development of the world's developed economies has been decoupled from carbon emissions. Among them, the European Union has peaked in carbon emissions in 1990. In the past 30 years, greenhouse gas (GHG) emissions have been reduced by 20% from the peak, and the comprehensive GDP has increased by about 60%. The United States peaked in carbon emissions in 2007. In 13 years, GHG emissions have decreased by 10.8 per cent from the peak, but the combined GDP has increased by about 67 per cent.
  Accelerating the Process of 2.2 Carbon Market to Drive Low-carbon Transformation of Petrochemical Enterprises
In order to more effectively promote carbon emission reduction, the state has accelerated the construction of a wider carbon trading market system, and brought more industries with high energy consumption, large emissions and relatively concentrated emission sources into the carbon trading market. In 2021, the "Administrative Measures for Carbon Emission Rights Trading (Trial)" was issued, and the power industry has entered the first performance period; in May, the "Carbon Emission Rights Registration Management Rules (Trial)" and "Carbon Emission Rights Trading Management Rules (Trial)" were issued. And the "Carbon Emission Rights Settlement Management Rules (Trial)" three documents to further regulate the national carbon emission rights registration, trading, and settlement activities, on July 16, the national carbon market was launched. It is expected that the petrochemical industry will be included in the national carbon trading market from 2022 to 2023, when petrochemical enterprises will face transformation and development, as well as rigid constraints on carbon emissions, and production and operation costs will further increase.
  3. Green concept promotes petrochemical transformation and upgrading
Great changes are taking place in the energy consumption structure of 3.1 transport sector

The concept of green development promotes the technological progress of new energy vehicles, which makes the public's acceptance of electric vehicles increase rapidly. From 2014 to 2020, the sales of new energy vehicles rose from 75000 to 1.367 million, achieving leapfrog development. In 2020, the General Office of the State Council issued the "New Energy Vehicle Industry Development Plan (2021-2035)", pointing out that by 2035, pure electric vehicles will become the mainstream of new sales vehicles, public sector vehicles will be fully electrified, and fuel cell vehicles will be commercialized. application. According to the 2020 edition of the China Petroleum Economic Research Institute's "2050 World Energy Outlook", the number of new energy vehicles in my country will reach 80% in 2050.
Globally, sales of electric vehicles increased by nearly 70 per cent annually from 2015 to 2020, with light passenger electric vehicles accounting for about 3.3 per cent of sales in 2020. In its "2050 Net Zero Emissions: A Global Energy Roadmap", the IEA proposed that under the global net zero emissions scenario, the sales of electric vehicles in 2030 will be about 18 times that of today, reaching 57 million. The concept of green development promotes the energy consumption structure in the transportation field, and the petrochemical industry will also be transformed and upgraded.
  3.2 the rapid development of renewable energy industry, laying the foundation for green energy use in petrochemical industry
By the end of 2020, the total installed capacity of renewable energy power generation in China will reach 0.93 billion kilowatts, accounting for 42.4 percent of the total installed capacity, an increase of 14.6 percentage points over 2012. Among them, 0.37 billion kilowatts of hydropower, 0.28 billion kilowatts of wind power, 0.25 billion kilowatts of photovoltaic power generation and 29.52 million kilowatts of biomass power generation have ranked first in the world for 16, 11, 6 and 3 consecutive years respectively. During the "13th Five-Year Plan" period, the average annual growth rate of non-fossil energy power generation was 10.6, and the proportion of China's total power generation increased from 27.2 in 2015 to 33.9 in 2020.



my country's entire industrial chain integrated manufacturing has strongly promoted the continuous decline in the cost of wind power and photovoltaic power generation. In the past 10 years, the average cost per kilowatt of onshore wind and solar power generation has dropped by 30% and 75% respectively, and the industrial competitiveness has continued to improve. In recent years, the country's new electricity consumption is mainly supplied by clean electricity such as photovoltaic and wind power. According to statistics, in 2020, the power generation of grid-connected scenery will be 466.5 billion and 261.1 billion kWh respectively, accounting for 9.7 percent of the new electricity consumption in the whole society.
 Technology brings green opportunities for petrochemicals
Technology will change people's lives and help people provide the potential to deal with challenges such as climate change. There is huge room for development of low-carbon, zero-carbon and negative-carbon technologies in the next 30 years.
  The rapid iteration of 4.1 technology puts forward higher requirements on the transformation and research and development speed of petrochemical industry
In the digital and information age, the speed of technological development in various industries is accelerating, and many new technologies and new fields can even achieve a generation of technology replacement in a few years. Countries and enterprises at the forefront of emerging technologies may preemptively complete the development and application of new technologies, while followers may always be in a backward state of choosing directions. Under the background of the "double carbon" goal, the petrochemical industry should seize the opportunity to transform rapidly in the window period. On the contrary, once the pace of transformation is slowed down and the traditional technology continues to expand, it will not only miss the opportunity to seize the market, but also lose the advantage of the same starting point.
  The convergence and synergistic development of knowledge and technology across 4.2 industries is driving the potential
The focus of the petrochemical industry has shifted from the increase in total scale and total production capacity to the upgrading of industrial structure, low-carbon development and technological innovation. The market demand for differentiated, functional, high-end and environmentally friendly products, technologies and services has increased. In the era of rapid technological iteration and increasingly stringent policies and regulations, the integration and collaborative development of knowledge and technology between industries is particularly important. Seemingly unrelated fields are increasingly converging, and the convergence of technologies such as artificial intelligence (AI), biotechnology and materials production will be enhanced to enable rapid breakthroughs and user-customized applications. These cross-border technology platforms can provide the basis for rapid innovation and promote various possibilities.
  4.3 low-carbon development puts forward reform requirements for petrochemical technology and process design
Low-carbon development is not only a major transformation in the field of energy supply, but also a low-carbon transformation of all end-use energy technologies and equipment. All energy-related technologies and equipment will have a new generation of fundamental changes that adapt to low-carbon and zero-carbon. Low-carbon will mean comprehensive technology and market leadership. In the future, renewable electricity will become the most competitive primary and terminal energy, and many links in industrial processes will be replaced by electrification, such as various heating furnaces that directly use fossil fuels. For the petrochemical industry, with the continuous progress of renewable energy technology in the power industry and the continuous decline of green power costs, electrification will be an important starting point for process energy to carbon, and the corresponding infrastructure, process technology, engineering equipment, etc. need to be adjusted and improved around the new electrification.
  The 4.4 and petrochemical industry has an urgent need for advanced and low-cost low-carbon, zero-carbon and negative-carbon technologies and equipment.  

The petrochemical industry has a long industrial chain, and all links in the industrial chain are faced with the goal of promoting carbon emission reduction and achieving low-carbon development through technological innovation, including the technologies used in the industry's own production process, such as carbon capture, utilization and storage (CCUS), hydrogen production technology, biomass chemical technology, waste chemical recycling technology and advanced energy-saving technology, as well as technologies from external related industries, such as green electricity supply. As most of the low-carbon technologies independently developed in China are still in the demonstration or even conceptual stage, there is still a gap with the international leading level in the industry. In 2020, the United States will account for 43% of the world's 21 large-scale CCUS commercial operation projects, while China will still rely on imports for renewable power-related equipment such as hydrogen storage materials and wind/light. The importance of technological innovation will be fully reflected in this process. In short, China's petrochemical industry is facing the dual challenges of development and carbon reduction. On the one hand, my country's "double carbon" goal is clear, and various national ministries and commissions actively promote the implementation of carbon neutralization actions in all walks of life. As an industry with high carbon emissions, the petrochemical industry is urgent to achieve green and low-carbon development. On the other hand, with the development of economy and the change of market demand, the demand for chemicals and new materials will continue to grow rapidly, which will promote the rapid growth of production capacity, and carbon emissions will increase accordingly. In order to realize the coordination and mutual promotion of carbon reduction and development of China's petrochemical industry, it is bound to go through a complex process of policy, technology, market and social change, in which the research and breakthrough of low-carbon, zero-carbon and negative-carbon technologies are fundamental. In the future, technological progress and technological innovation may bring about disruptive changes. Only by effectively combining technology and industry can the petrochemical industry achieve green and low-carbon development. (Author: Wang Hongqiu Xuejing Song Qianqian Mu Yanjun; Unit: China Petroleum and Petrochemical Research Institute)

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