Climate neutral roadmap for the Finnish chemical sector

Chemical industry is a significant demand driver for energy. The Chemical Industry Federation of Finland creates a realistic but ambitious path for future emission reductions in their roadmap which is a part of the sectors transition pathway. The roadmap aims to cover all sources of emissions to map all the potential for emission reduction. Thus, the work focuses on direct scope 1 process emissions, indirect scope 2 energy emissions and scope 3 emissions where the raw materials emissions in the value chain have been identified as a main and most significant emission source. The roadmap includes multiple paths to a future chemical industry with separately examined energy, raw material, investment, and technology needs resulting development of emission reductions and positive impacts in the value chain. It is noted that there is no silver bullet and a combination of many technologies and feedstocks are needed to reduce the domestic carbon footprint and reach the nature positive climate neutral chemical industry goal by 2045 – which is the Finnish chemical industry’s own target.

Current and target state

The Finnish chemical industry used 20.3 TWh of energy in 2022: 15 TWh of heat and 5.3 TWh of electricity. The chemical industry used 21.7 million tons of raw materials, of which around 17% is recycled and renewable materials. Since the first roadmap in 2019 chemical companies have made significant progress with climate work. Today, a majority of the chemical companies are involved in the global Responsible Care program and have set own company level climate targets. These companies cover 97% of the sector’s production and 96% of the industry’s energy consumption.  Total direct emissions were 3.5 Mt CO2, and the indirect emissions from purchased energy 1.1 Mt CO2 on 2022, which means that between 2015 and 2022 greenhouse gas emissions have decreased 25% in the chemical sector.

The Finnish chemical industry has competence, products, and solutions that make it possible to reduce greenhouse gas emissions on a global scale

In 2023, turnover in Finland’s chemical industry was primarily generated from oil products, which accounted for 51% of it, followed by chemicals and chemical products at 29%, pharmaceuticals at 12%, and plastic and rubber products at 8%.  The chemical industry value chains are huge and complicated. According to the roadmap update, the current scope 3 emissions are estimated to be approximately 60 Mt CO2.

Main solutions

To achieve major emission reductions, the key is to make it possible for chemical industry production to use zero-emission energy and shifting to renewable and recycled feedstocks. All side streams (energy, materials and heat) need to be utilized as efficiently as possible. It is essential to take in to use new raw material sources, such as sustainable biobased materials, circular and synthetic raw materials. New raw materials are particular needed for reducing scope 3 emission. According to the scenario analysis, the chemical industry needs to electrify its production in order to cut direct emissions. This will increase the use of electricity fourfold as well as reduce emissions from energy use. The energy sector integration is crucial in particular for large projects and plants.

Typically, the chemical industry processes require both high temperatures and pressure generated via incineration. This means that a fuel switch to low carbon and fossil free fuels is needed (e.g. natural gas, biogas, biomass and hydrogen). Power-to-x and CCS/U technologies will also be playing an important role. Some processes can also be adjusted and improved by using catalytic solutions. An accelerated circular economy of raw materials, chemical recycling, biotechnology and hydrogen economy are also necessary to implement the changes. One key finding is that without green growth, production volumes are likely to decline in a climate-neutral chemical industry scenario. However, there is significant potential for green growth, primarily based on synthetic raw materials which would lead to end products such as green ammonia and CCU-derived products.  While the market potential is remarkable, numerous uncertainties still exists preventing green growth. For example challenges such as legislative barriers, and a lack of incentives for these new products needs to be addressed.

Meanwhile, estimated investment needs in new technology, innovation projects, pilots and demonstrations will increase annually by an average of 40% even without green growth. Green growth would accelerate investments significantly. Investments are also means to develop and accelerate new competence, attracting top talent while increasing national potential for exports.

Needs and requirements

The roadmap points out that policies that support the decarbonisation of energy production and electrification of industry as well as innovative and flexible financing mechanisms for pilot and demonstration projects are needed. The raw material revolution requires harmonisation of legislation, clear support of circular carbon and alternative raw materials to replace virgin fossil raw materials. The role of public procurement in boosting the competitiveness of low-emission products and technologies is further highlighted. Moreover, the policies should support the creation of a market environment where low-carbon solutions can compete and thrive. Incentives for new products which are based on alternative raw materials are needed. Additionally, it is necessary that the legislation and policies support stable availability of cost competitive low carbon and carbon neutral electricity in the future.

Future and positive impacts

The Finnish chemical industry has a further strengthening role in providing solutions that have the potential to reduce greenhouse gas emissions globally through exports. The roadmap estimates that the future handprint impact could be up to thirteen times bigger than the industry’s current carbon footprint.