The chemical industry is indispensable to the modern world, providing raw materials for various critical sectors. However, its reliance on fossil fuels and energy-intensive processes makes it a significant contributor to greenhouse gas (GHG) emissions. Globally, the chemical industry accounts for approximately 5% of the world’s GHG emissions and is considered a "hard-to-abate" sector, making its decarbonisation essential for achieving net-zero targets.

In countries like India, the chemical, petrochemical, and fertiliser industries contribute around 5% of the nation’s total GHG emissions, amounting to approximately 160 million tonnes of CO₂ equivalent annually. This blog explores the multifaceted strategies and innovative approaches required to decarbonise chemical manufacturing, paving the way for a sustainable and prosperous future.

The Importance of Sustainability

Traditional chemical manufacturing processes have a lasting environmental impact due to high emissions, excessive waste, and significant resource consumption. This necessitates a shift towards sustainable practices to mitigate these adverse effects and steer the chemical industry towards a more environmentally responsible future.

Sustainability in the chemical sector has evolved beyond mere regulatory compliance into a comprehensive, strategic approach. This transformation is marked by key milestones and a growing awareness of environmental and social responsibilities.

Evolution of Sustainability in the Chemical Sector

• 1960s-1970s: Initial focus on safety and pollution control.  
• 1980s: Introduction of voluntary frameworks aimed at continuous improvement in environmental, health, safety, and security (EHS&S) performance.  
• 1990s-2000s: Emphasis on regulatory compliance and cost reduction.  
• 2010s: Growing focus on climate change, social responsibility, and carbon emissions.  
• 2020s: Drive towards creating value for society, generating revenue through sustainable practices, and addressing climate and social issues.

Innovation: The Cornerstone of Sustainable Chemical Manufacturing

Innovation is crucial for sustainable chemical manufacturing. By utilising renewable raw materials, advancing green chemistry, and implementing decarbonisation strategies, the industry can reduce its environmental footprint while maintaining profitability. Additionally, innovations in energy efficiency and process optimisation play a vital role in minimising resource consumption and enhancing operational efficiency.

1. Renewable Raw Materials

By adopting renewable, recycled, and alternative feedstocks, manufacturers can minimise reliance on fossil fuels and lower carbon emissions. Below are key categories of sustainable raw materials driving this transformation:

• Bio-based Feedstocks: Derived from renewable biological sources such as plants, algae, and agricultural waste, these feedstocks are set to play a key role in sustainable chemical manufacturing.  
• Recycled Feedstocks: These involve using post-consumer and post-industrial waste materials to produce new petrochemical products. Chemical recycling can convert plastic waste into valuable feedstocks, reducing plastic pollution and aligning with green chemistry principles.  
• Alternative Feedstocks: These include unconventional raw materials like carbon dioxide (CO₂) and methane. Converting CO₂ into chemicals is a groundbreaking approach to sustainable chemical manufacturing.

2. Green Chemistry

Green chemistry is defined as the design of chemical products and processes that reduce or eliminate the use and generation of hazardous substances. Implementing green chemistry principles helps design safer chemicals and processes from the outset, reducing environmental and health risks. Key applications include:

• Use of Catalysts: Improving reaction efficiency and reducing waste.
• Waste Reduction: Employing atom economy and by-product reutilisation.
• Safer Chemicals and Products: Producing non-toxic alternatives and biodegradable materials.
• Energy-Efficient Synthesis: Using microwave-assisted synthesis to minimise energy consumption.
• Green Solvents: Utilising green solvents or solvent-free systems.

3. Decarbonisation

Decarbonisation involves reducing GHG emissions linked to the reliance on fossil fuels for production and transportation. The chemical sector is considered hard-to-abate due to its energy-intensive nature, complex global value chain, reliance on fossil fuels, and GHG emissions from chemical reactions. Key strategies include:

• Electrification: Electrifying high-temperature processes can reduce the industry’s carbon footprint, lower costs, and stabilise power grids.  
• Green Hydrogen: Using green hydrogen produced from renewable energy.  
• Carbon Capture, Utilisation, and Storage (CCUS): Employing CCUS to store or sequester CO₂, use it directly, or convert it into chemicals.  
• Renewable Energy Sources: Transitioning from fossil-based fuels to renewable energy sources like solar, wind, and biomass to power operations.  
• Energy Efficiency: Improving energy efficiency through the adoption or retrofitting of energy-efficient boilers, heat recovery systems, and process optimisation.

Integration: Building a Sustainable Supply Chain

Integration in the chemical sector through the creation of a cohesive and sustainable supply chain is pivotal for enhancing efficiency and reducing environmental impact. By fostering collaboration across the value chain, companies can streamline operations, minimise waste, and ensure the responsible sourcing of materials.

1. Supply Chain Sustainability

Supply chain management is fundamental for handling the entire production flow of goods or services to maximise quality, delivery, customer experience, and profitability. This shift is driven by increasing environmental regulations, rising consumer demand for eco-friendly products, and the industry’s commitment to minimising its carbon footprint. Building a sustainable supply chain includes:

• Supplier Selection and Evaluation: Selecting suppliers that align with your company’s environmental and social responsibility goals.
• Supplier Code of Conduct: Establishing guidelines aligned with internationally recognised principles, such as the United Nations’ Global Compact and International Labour Organisation (ILO) conventions.  
• Sustainable Sourcing and Procurement: Developing bio-based products as sustainable alternatives to conventional raw materials.  
• Supplier Scope 3 Mapping: Addressing Scope 3 emissions, which account for 70–75% of total GHG emissions in the chemical industry.  
• Risk Management: Assessing supplier climate change risks to ensure a resilient supply chain.  
• Technology: Leveraging AI-powered platforms like the Oren Sustainability Hub to engage with and assess your suppliers' performance based on various ESG parameters.

2. Circular Economy

The principles of a circular economy are critical, and chemical companies are integrating these values into their long-term strategies and operational processes. Circular economy principles offer a transformative solution by shifting from a linear take-make-dispose model to one that prioritises reuse and recycling. Key strategies include:

• Eliminate: Designing out waste and pollutants from the initial phase.  
• Circulate: Extending the life cycle of products and materials through reuse, repair, and recycling.  
• Regenerate: Setting up processes that benefit the environment rather than harm it.

3. Life Cycle Assessment (LCA)

LCA is a crucial tool for evaluating the environmental impact of products and processes within the chemical industry. By analysing the entire life cycle of a product—from raw material extraction through production, usage, and disposal—LCA helps organisations identify opportunities to reduce environmental footprints and enhance sustainability. Key applications include:

• LCA as a Product Design Tool: Evaluating environmental impacts of various design options during product development.  
• Eco-design and Circularity: Minimising environmental impacts throughout a product’s life cycle.  
• Regulatory Compliance: Ensuring adherence to environmental regulations during the design phase.

Incentives: Encouraging Sustainable Practices

The chemical industry is increasingly adopting sustainable practices, driven by a combination of financial incentives, regulatory frameworks, and evolving customer expectations. These factors collectively promote environmental responsibility and guide the sector toward more sustainable operations.

1. Sustainable Finance

The chemical sector has a significant opportunity to lead sustainability efforts across various industries aiming to cut emissions. Achieving a decarbonised economy will require considerable capital investments, particularly through green finance.

• Green Bonds: Chemical companies have started to adopt green finance frameworks to support projects that are environmentally and socially beneficial.
• Sustainability-Linked Loans (SLLs): These loans are more flexible because they can be used for general corporate purposes, whereas green bonds are tied to specific investments aimed at environmental benefits.
• Investment: Many investment institutions and private equity firms are eager to invest in companies with strong ESG performance to expand their green portfolios.

2. Regulations and Customer

The chemical industry is experiencing a significant shift toward sustainability, driven by stringent government regulations and evolving customer expectations.

• Government Regulations: Governments worldwide are tightening regulations to promote decarbonisation and enhance ESG disclosures. Notable examples include the CSRD and the CBAM in the European Union, as well as the BRSR in India.
• Customer Demand: Customers, especially those in the EU and North America, are increasingly requiring chemical manufacturers to disclose ESG data or obtain ESG ratings, such as EcoVadis, to ensure transparency and sustainability in their supply chains.
• Industry Collaboration: Programs such as Together for Sustainability (TfS) is an industry-leading initiative driven by a global network of 43 chemical companies. Each TfS member is dedicated to building sustainable chemical supply chains, regulatory requirements, and responding to the needs and expectations of society.

The Future Outlook

The sustainable transformation of India’s chemical manufacturing industry requires a holistic approach that includes feedstock diversification, decarbonisation, and circular economy principles. By integrating fossil-based, bio-based, recycled/reused, and CO₂-based materials, the industry can enhance supply chain resilience and economic stability.

1. Key Strategies for a Sustainable Future

• Collaboration and Knowledge Sharing: Collaboration between industry stakeholders, government bodies, and research institutions is essential for driving innovation and sharing best practices.  
• Technological Advancements: Investing in research and development to promote green chemistry principles, renewable energy sources, and carbon capture technologies.  
• Policy and Regulatory Support: Governments should establish clear policies, provide financial incentives, and enforce environmental regulations to create a conducive environment for sustainable practices.  
• Stakeholder Engagement: Engaging with consumers, investors, and local communities to raise awareness, build trust, and foster a culture of sustainability.  
• Sustainability Reporting: Assessing current initiatives, policies, and performance baselines is essential. AI-powered SaaS platforms like the Oren Sustainability Hub streamline ESG and GHG data collection, analysis, and reporting.

2. Challenges and Obstacles

• High Costs: Initial investments in sustainable technologies and green certifications can be a barrier, especially for SMEs.  
• Technological Disparities: The gap in technological advancement between Indian companies and their global peers remains a challenge.  
• Regulatory Frameworks: Inconsistent enforcement of regulations in India can lead to disparities in compliance and environmental performance.

Conclusion

Decarbonising the chemical industry is both an environmental necessity and a strategic priority. By adopting renewable raw materials, green chemistry, and decarbonisation technologies such as electrification, green hydrogen, and carbon capture, manufacturers can significantly reduce emissions while maintaining competitiveness.

Sustainable supply chains and circular economy principles will further drive efficiency and resilience. While challenges like high costs and regulatory complexities remain, collaboration, innovation, and policy support can accelerate the transition.

By prioritising sustainability, the chemical sector can drive economic growth, meet global climate goals, and ensure a cleaner, greener future for generations to come. The road to decarbonisation is complex, but with commitment, innovation, and strategic action, a net-zero future is within reach.