The market potential for sustainable chemicals is enormous

ICIS: Market size will expand from $340 billion in 2023 to $570 billion in 2028

Recently, ICIS released a report on the sustainable chemicals industry, indicating that despite increasing global economic uncertainty, the sector has demonstrated unique resilience. Although facing market downturns, demand for sustainable chemicals remains stable with significant future potential, while also encountering challenges such as slow development progress.

Strong Demand Resilience

Elser, head of Accenture's chemicals business, pointed out that despite the current tough economic environment, demand for sustainable chemicals continues to show strong resilience and is expected to accelerate in the coming years.

Elser noted that post-pandemic shifts in the global economic landscape have led to reduced capital expenditure, ongoing contraction of European manufacturing, escalating trade tensions, and an unclear market recovery outlook. However, within the chemical sector, demand for sustainable products stands out notably.

Accenture defines sustainable chemicals as those used in producing environmentally friendly products, as well as traditional products aligned with sustainability trends, such as materials required for solar photovoltaics and electric vehicles. Clear demand from end-users, along with commitments from brands and original equipment manufacturers, is driving progress across the entire value chain.

Promising Market Outlook

In terms of market size, the sustainable chemicals industry holds considerable promise. Accenture forecasts that, driven by proactive measures from end-users like L'Oréal (committed to using 95% bio-based ingredients by 2030) and H&M (targeting 100% sustainable packaging by 2030), the market for related chemicals will grow from $340 billion in 2023 to $570 billion in 2028.

Consumer surveys also send positive signals: Accenture’s 2023 survey found that 51% of respondents were willing to buy more eco-friendly products; PDI Technology data shows that the proportion of U.S. consumers willing to pay a premium for green products increased from 66% in 2022 and 68% in 2023 to 80% in 2024, indicating price premiums have already formed in certain sustainable chemical sub-segments and that the market is undergoing positive transformation.

Ongoing Development Challenges

However, the sustainable chemicals industry still faces numerous difficulties. Compared to industries like steel, sustainable chemicals lag behind in upstream and downstream investment and end-user demand. Weak European manufacturing, slower-than-expected growth in the electric vehicle market, and downsizing in Germany's automotive sector are all constraining industry development. Prolonged market downturns have led companies to cut spending, making new capital investments difficult to advance. Additionally, some consumer brands have postponed their sustainability goals and lowered targets for recycled content in packaging.

Elser emphasized that although the approaching 2030 decarbonization targets will stimulate demand growth, the chemical industry—being asset-intensive—is unlikely to undergo abrupt transformations. Small and medium-sized producers represent potential positive drivers, but the window of time available for companies to build new capacity is narrowing. Despite limited large-scale new projects, businesses could assess market demand through incremental approaches such as adopting sustainable raw materials and retrofitting existing facilities, leveraging existing assets to test and expand markets, which may help close supply gaps.

The sustainable chemicals industry harbors opportunities amid challenges, with resilient and promising demand laying the foundation for future development. How to overcome bottlenecks and seize market opportunities will become a critical issue for industry participants.