Authors: Peter Levi and Araceli Fernandez Pales*
We live in a world dependent on chemicals. Fertilisers are used to increase agricultural yields. The cosmetics and pharmaceutical industries are reliant on the chemical sector for their key ingredients. And packaging – much of which is used for food and beverages – accounts for the largest share (36%) of global plastic demand, including synthetic textiles. At the current rate of production, Europe alone produces enough plastic packaging to encase the Eiffel Tower in plastic the thickness of a shopping bag every six seconds.
This demand for chemical products has a direct impact on energy demand (and consequently CO2 emissions). The sector accounts for approximately 11% and 8% respectively of the global primary demand for oil and natural gas.
More than half of the energy inputs to the sector are consumed as “feedstock”, or raw material. Feedstocks undergo a complex series of chemical transformations and ultimately leave the sector embedded in chemical products – for example the million or so plastic bottles consumed every minute around the globe.
The figure below lays out the path that fossil fuel feedstocks take through the chemical and petrochemical sector. A large proportion of oil gets converted into high value chemicals within the chemical sector, with refineries supplying around a third directly. The dominant feedstock for both ammonia and methanol is natural gas, although coal is also used in China. Collectively, these primary chemicals form the building blocks for thousands of intermediates, eventually ending up in fertilisers, plastics and other chemical products.
The total mass of chemical products leaving the sector is larger than the quantity of feedstock entering it. This is because in addition to feedstock (mainly composed of carbon and hydrogen), several chemical products contain other elements (mainly oxygen, nitrogen and chlorine) that are added and substituted at various points in the supply chain.
Partly as a result of this dependence on energy as feedstock, the chemical sector is the largest industrial energy consumer – but only the third largest source of industrial CO2 emissions after iron and steel and cement. In addition, further CO2 and other air pollutants can be released during the use of certain chemical products, such as fertilisers and cleaning products. Also, plastics and fertilisers can cause devastation to marine life when they leak into water courses, without effective management of waste and agricultural practices.
There are alternative pathways to producing chemicals, including recycling of thermoplastics and increased use of alternative feedstocks such as water, CO2 and bioenergy. These alternatives have the potential to reduce demand for primary chemicals made from fossil fuels, cutting both energy use and CO2 emissions. For example, for each tonne of polyethylene being recycled, roughly one tonne of ethylene demand can be avoided, saving the equivalent of at least 1.5 tonnes of oil.
Together with traditional routes equipped with carbon capture, the untapped potential of these alternative routes to decouple chemicals production from CO2 emissions is high. Global recycling of plastic was estimated to reach only 18% of all non-fibre plastic waste in 2014. Meanwhile, bioplastics only make up about 1% of the plastic produced around the world, each year, and electrolytic routes are still at the pilot project phase. Clearly there is much scope for progress. In theory, the chemical sector could do without fossil fuels entirely, though carbon and hydrogen in its feedstock will remain a necessity, whatever their origin.
Finding alternatives is key, because demand for fertilisers and plastics is set to grow as people live longer and enjoy better standards of living. The global transition towards a more sustainable future will rely on outputs from the chemical sector. For example, increasing the use of plastics in vehicles can support strategies to reduce their overall weight – ultimately reducing fuel consumption. Modern insulation materials that reduce the demand for heating and cooling in buildings also rely on products from the chemical sector.
Given the strong link between chemicals and fossil fuels and the potential for sustainable alternatives, what does the future hold for chemicals? Which technologies, strategies and policies could enable the sector to develop sustainably? What will be the consequent impacts on energy demand? The future of the chemical sector – as for the energy system as a whole – is uncertain. At the same time, a future without chemical products seems unlikely.
These questions and challenges will be examined in a forthcoming publication – “The Future of Petrochemicals.” This is the third report from the IEA that focuses on “blind spots” of the global energy system, following the “The Future of Trucks,” which was released in July 2017, and more recently “The Future of Cooling.”
Araceli Fernandez Pales, IEA Energy Analyst
Azerbaijan seeks to become the green energy supplier of the EU
Recently, Georgia, Azerbaijan, Hungary and Romania signed an agreement to build a strategic partnership regarding green energy. According to the document of the text, these four countries will be working together to develop a 1,195 kilometer submarine power cable underneath the Black Sea, thus effectively creating an energy transmission corridor from Azerbaijan via Georgia to Romania and Hungary. For Europe, this is a golden opportunity that must be seized upon.
According to the International Monetary Fund, “Europe’s energy systems face an unprecedented crisis. Supplies of Russian gas—critical for heating, industrial processes and power—have been cut by more than 80 percent this year. Wholesale prices of electricity and gas have surged as much as 15-fold since early 2021, with severe effects for households and businesses. The problem could well worsen.”
For this reason, Europe should switch as soon as possible to green energy supplies, so that they will rely less upon Russian gas and oil in the wake of the Ukraine crisis. This will enable Europe to be energy independent and to fulfill its energy needs by relying upon better strategic partners, such as Azerbaijan, who are not hostile to Europe’s national security and the West more generally.
By having this submarine power cable underneath the Black Sea, Azerbaijan can supply not only Hungary and Romania with green energy, but the rest of Europe as well if the project is expanded. Israel, as a world leader in renewable energy, can also play a role in helping Azerbaijan become the green energy supplier of the EU, as the whole project requires Azerbaijan to obtain increased energy transmission infrastructure. Israel can help Azerbaijan obtain this energy transmission infrastructure, so that Azerbaijan can become Europe’s green energy supplier.
According to the Arava Institute of the Environment, “Israel, with its abundant renewable energy potential, in particular wind and solar, has excellent preconditions to embark on the pathway towards a 100% renewable energy system. Accordingly, Israel has already made considerable progress with regard to the development of renewable energy capacities.” The Israeli government has been pushing hard for a clean Israeli energy sector by 2030. Thus, Israel has the technical know-how needed to help Azerbaijan obtain the infrastructure that it needs to become the green energy supplier of Europe following the crisis in the Ukraine.
Given the environmental conditions present in Azerbaijan, which has an abundance of access to both solar and wind power, with Israeli technical assistance, Azerbaijan can help green energy be transported through pipelines and tankers throughout all of Europe, thus helping to end the energy crisis in the continent. In recent years, Europe has sought to shift away from oil and gas towards more sustainable energy.
With this recent agreement alongside other European policies, these efforts are starting to bear fruits. In 2021, more than 22% of the gross final energy consumed in Europe came from renewable energy. However, different parts of Europe have varying levels of success. For example, Sweden meets 60% of its energy needs via renewable energy, but Hungary only manages to utilize renewable energy between 10% and 15% of the time. Nevertheless, it is hoped that with this new submarine power cable underneath the Black Sea, these statistics will start to improve across the European Union and this will enable Europe to obtain true energy independence, free of Russian hegemony.
Energy Technology Perspectives 2023: Opportunities and emerging risks
The energy world is at the dawn of a new industrial age – the age of clean energy technology manufacturing – that is creating major new markets and millions of jobs but also raising new risks, prompting countries across the globe to devise industrial strategies to secure their place in the new global energy economy, according to a major new IEA report.
Energy Technology Perspectives 2023, the latest instalment in one of the IEA’s flagship series, serves as the world’s first global guidebook for the clean technology industries of the future. It provides a comprehensive analysis of global manufacturing of clean energy technologies today – such as solar panels, wind turbines, EV batteries, electrolysers for hydrogen and heat pumps – and their supply chains around the world, as well as mapping out how they are likely to evolve as the clean energy transition advances in the years ahead.
The analysis shows the global market for key mass-manufactured clean energy technologies will be worth around USD 650 billion a year by 2030 – more than three times today’s level – if countries worldwide fully implement their announced energy and climate pledges. The related clean energy manufacturing jobs would more than double from 6 million today to nearly 14 million by 2030 – and further rapid industrial and employment growth is expected in the following decades as transitions progress.
At the same time, the current supply chains of clean energy technologies present risks in the form of high geographic concentrations of resource mining and processing as well as technology manufacturing. For technologies like solar panels, wind, EV batteries, electrolysers and heat pumps, the three largest producer countries account for at least 70% of manufacturing capacity for each technology – with China dominant in all of them. Meanwhile, a great deal of the mining for critical minerals is concentrated in a small number of countries. For example, the Democratic Republic of Congo produces over 70% of the world’s cobalt, and just three countries – Australia, Chile and China – account for more than 90% of global lithium production.
The world is already seeing the risks of tight supply chains, which have pushed up clean energy technology prices in recent years, making countries’ clean energy transitions more difficult and costly. Increasing prices for cobalt, lithium and nickel led to the first ever rise in EV battery prices, which jumped by nearly 10% globally in 2022. The cost of wind turbines outside China has also been rising after years of declines, and similar trends can be seen in solar PV.
“The IEA highlighted almost two years ago that a new global energy economy was emerging rapidly. Today, it has become a central pillar of economic strategy and every country needs to identify how it can benefit from the opportunities and navigate the challenges. We’re talking about new clean energy technology markets worth hundreds of billions of dollars as well as millions of new jobs,” said IEA Executive Director Fatih Birol. “The encouraging news is the global project pipeline for clean energy technology manufacturing is large and growing. If everything announced as of today gets built, the investment flowing into manufacturing clean energy technologies would provide two-thirds of what is needed in a pathway to net zero emissions. The current momentum is moving us closer to meeting our international energy and climate goals – and there is almost certainly more to come.”
“At the same time, the world would benefit from more diversified clean technology supply chains,” Dr Birol added. “As we have seen with Europe’s reliance on Russian gas, when you depend too much on one company, one country or one trade route – you risk paying a heavy price if there is disruption. So, I’m pleased to see many economies around the world competing today to be leaders in the new energy economy and drive an expansion of clean technology manufacturing in the race to net zero. It’s important, though, that this competition is fair – and that there is a healthy degree of international collaboration, since no country is an energy island and energy transitions will be more costly and slow if countries do not work together.”
The report notes that major economies are acting to combine their climate, energy security and industrial policies into broader strategies for their economies. The Inflation Reduction Act in the United States is a clear example of this, but there is also the Fit for 55 package and REPowerEU plan in the European Union, Japan’s Green Transformation programme, and the Production Linked Incentive scheme in India that encourages manufacturing of solar PV and batteries – and China is working to meet and even exceed the goals of its latest Five-Year Plan.
Meanwhile, clean energy project developers and investors are watching closely for the policies that can give them a competitive edge. Relatively short lead times of around 1-3 years on average to bring manufacturing facilities online mean that the project pipeline can expand rapidly in an environment that is conducive to investment. Only 25% of the announced manufacturing projects globally for solar PV are under construction or beginning construction imminently, according to the report. The number is around 35% for EV batteries and less than 10% for electrolysers. Government policies and market developments can have a significant effect on where the rest of these projects end up.
Amid the regional ambitions for scaling up manufacturing, ETP-2023 underscores the important role of international trade in clean energy technology supply chains. It shows that nearly 60% of solar PV modules produced worldwide are traded across borders. Trade is also important for EV batteries and wind turbine components, despite their bulkiness, with China the main net exporter today.
The report also highlights the specific challenges related to the critical minerals needed for many clean energy technologies, noting the long lead times for developing new mines and the need for strong environmental, social and governance standards. Given the uneven geographic distribution of critical mineral resources, international collaboration and strategic partnerships will be crucial for ensuring security of supply.
How is Venezuela benefiting from the sale of Petroleum Coke to India
Production and Supply of Venezuelan Oil
Venezuela, a nation on South America’s northern coast, has long been recognised for its oil output and demand; in 2016, Venezuela produced 2,355,423,55 barrels of oil per day, putting it 12th in the world. Venezuela, a nation where oil continues to have a dominating and fundamental role in fortunes. Oil sales account for more than 99% of export revenues and one-quarter of GDP. In 2013, the price of oil barrels sold by Venezuela was $100 per barrel, but it dropped to $30 per barrel in 2016. Venezuela has supplied oil to several nations, including the United States, China, and others. In 1959, India established diplomatic ties with the nation. Only a few nations, such as India and Venezuela, trade in a single commodity, and that is exactly what the relationship between India and Venezuela is. Although 75% of India’s oil imports come from the Middle East area, the Middle East has provided just 59% of oil since 2014, which is 16% less than in 2017 as the remainder was supplied exclusively by Venezuela, which can be seen as a result of the diversification strategy by the Indian government. Although the Indian market has been critical for the Northern country in Latin America because it is the second-largest cash-paying customer yet when the United States imposed sanctions on Venezuela in 2019, Venezuela was forced to look to other countries such as Russia and China when it ceased oil exports to India.
Venezuela, India, and Petroleum Coke
Petroleum coke which is a carbonaceous substance produced during the oil refining process. Venezuela has supplied petroleum coke to a number of nations, including China and Bolivia. Even before Covid19, the biggest exporter of Petroleum Coke from Venezuela was Bolivia, and by 2020, Venezuela was the world’s 107th largest exporter of Petroleum Coke. Although the Supreme Court has banned the use of Pet Coke in the states of Haryana, Uttar Pradesh, and Rajasthan in 2017, the CPCB (Central Pollution Control Board) directed for its use in all states, despite the fact that a tonne of Pet Coke is more expensive than coal and produces more energy when burned, and Pet Coke can also be used as a replacement for coal because when Pet Coke is turned into fuel, the calorific value is at 8000 Kcal/Kg, which is twice the Kg which is twice the value of average coal which is used in the generation of electricity, not only that but Pet Coke also has a low volatile matter and when evaporated there are no losses, it is also easy to transport when compared to the liquid fuels. For the first time, Indian companies started to import significant volumes of Petroleum coke from Venezuela since the beginning of 2022, as for the past couple of months and since March 2022, India has been suffering from electricity shortage due to coal crisis, as there has been a surge in coal prices globally to record high prices ever since the Russia-Ukraine war began, many countries such as India and even many of the developed countries in Europe have also been suffering because of the conflict as Russia which controls the Nord Stream which supplies gas to Europe has been shut down by Russia giving excuses such as “maintenance of the pipeline” this conflict could be disastrous for countries like UK, Germany and many other which directly depend on the Russian gas supply to not just run factories but which also helps to keep people homes warm enough, many countries are worried that this may lead to a winter recession in European countries and due to this many countries have started to open their coal plants, in times like these the supply of Pet Coke from countries like Venezuela to countries like India could be a major helping factor and for the past few months, Indian companies have been importing significant amounts of Pet Coke from Venezuela in massive quantities, as using Pet Coke can be beneficial for India as the Russia Ukraine war, which is affecting so many countries, with the supply of Pet Coke, India will not have to rely on the supply of coal to run its energy plants. Many cement factories in India got 1,60,000 tonnes of Pet Coke between April and July, with another shipment of at least 80,000 tonnes sent in August. Prior to buying from Venezuela, the Asian behemoth had to depend on nations such as the United States or Saudi Arabia.
Both countries understand that if Venezuela continues to export huge amounts of Pet Coke to India, it will benefit not only India but also the South American country because when India used to import oil from Venezuela, India was the second largest importer of oil for Venezuela, and now if India starts importing the same amount of Pet Coke from Venezuela, it could provide relief to the country that has been suffering for the past three years ever since the USA has pu The nation has been selling Pet Coke at a $50-$60 discount compared to the US stuff. Venezuela has been stockpiling Pet Coke for a long time because it may help the Latin American country solve its infrastructure woes and is making strides by supplying not only to the Indian market but if Venezuela could supply more to the global markets as it has been producing more than 25 million tonnes of Pet Coke on a daily basis. If the commerce between Petroleum Coke continues, India will not have to depend on any country such as the US or Russia, since the Russia-Ukraine conflict has made it difficult for countries such as India to side with any of the nations, and for Venezuela, it will assist the country to grow its economy again.
Context and Practice of International Politics: Experience in 2022 and Expectations from 2023
The dramatic events of 2022, centred on the military-political conflict between Russia and the West over the Ukrainian issue, are...
Blue Economy Offers Opportunities for Sustainable Growth in Tunisia
With support from the World Bank, in June 2022, Tunisia launched its first report on the status of the blue...
Global growth forecast to slow to 1.9% in 2023
Senior UN economists warned on Wednesday that intersecting crises are likely to add further damage to the global economy, with...
War games will take place off Durban between South Africa, China and Russia
South Africa’s government has finally shown its colours by inviting Russia and China for war games next month, London’s ‘Daily...
The Status of Crimea between Russia and Ukraine: The Reason Why China Stands to Neglect
The status of Crimea is a contentious issue between Russia and Ukraine. In 2014, Russia annexed Crimea from Ukraine, a...
The Indian Drone Industry is Growing Leaps & Bounds
Iranian drones have wreaked havoc in war-stricken Ukraine. When it comes to drones until a few years back it was...
Countering Terrorism: 2023 and Beyond
Pakistan has carried three significant issues from 2022 into 2023. These include political instability, a dwindling economy and resurging terrorism....
International Law4 days ago
Undemocratic United Nations and Global Peace
East Asia3 days ago
Nepal-China Relations and Belt and Road Initiative
South Asia4 days ago
Food Insecurity: The Current Crisis
Central Asia4 days ago
Putin’s USSR 2.0 project to be undermined by his satellites
Americas4 days ago
The World is Entering A Period of Transformation: Can the West lose?
World News3 days ago
High-level CIA visit to Kyiv comes at critical juncture in war
Eastern Europe3 days ago
Why there is New Escalation in Ukraine War?
Africa3 days ago
Sergey Lavrov Embarks on Geopolitical Lecturing Tour to Africa