The chemical industry‘s development toward net zero emissions is lagging behind

Currently, global carbon reduction and climate change mitigation present a mixed picture. On one hand, for the first time since 2021, the International Energy Agency (IEA) has observed that growth in energy-related carbon dioxide emissions continues to decouple from global economic growth, with emission increases outpaced by GDP growth. In 2024, CO? emissions reached 37.8 billion tons, up 0.8% year-on-year, while the global economy grew by over 3%. On the other hand, last year the world experienced 12 consecutive months in which average temperatures exceeded pre-industrial levels by 1.5°C. To limit global warming to within 1.5°C, the Intergovernmental Panel on Climate Change (IPCC) estimates that greenhouse gas emissions must fall by 43% by 2030—current progress toward net zero remains far from sufficient. Notably, the global chemical industry's net-zero development is currently lagging.

The American Chemistry Council (ACC) assessed that its members reduced greenhouse gas emission intensity by 14% between 2017 and 2023—a solid achievement—but this trend may not continue. In 2024 and 2025, due to macroeconomic uncertainty in the chemical sector and weak demand, some companies have shelved clean ammonia projects and withdrawn from clean hydrogen initiatives. This month, Dow Inc. postponed a nearly $9 billion carbon-neutral steam cracker and derivatives project, citing macroeconomic volatility. Overall, chemical companies are cutting capital expenditure budgets and implementing cost-saving measures to brace for impending tariff pressures and potential economic recession, leading firms to withdraw from net-zero projects. At the 40th World Petrochemical Conference held earlier this year in Houston, Mark Eramo, Co-Head of S&P Global Commodity Insights, stated: "The conversation around energy transition has been ongoing for years, but now the word we hear is 'pragmatism.' Many companies want to invest in solutions already available in the market, leverage technologies currently accessible for investment and deployment, and advocate for policies that support such investments."

Nearly all participants agree that net-zero project costs remain too high. Dow CEO Jim Fittering noted: "Customers are willing to pay a premium for low-emission products, but not at any cost. Producers must operate within these constraints." He pointed out that, from a cost perspective, blue hydrogen is more feasible than green hydrogen. Eramo emphasized that the 2030 target is approaching quickly, and with just over two decades left to achieve net zero, chemical companies must make practical, viable investments. "An overcapacity downturn looms over the entire chemical industry. If chemical companies cannot earn adequate returns, how can they justify making the next round of investments, especially under the context of energy transition?" Eramo asked.

Currently, among Chemical & Engineering News' Billion-Dollar Club companies, 77% have committed to achieving carbon neutrality or net zero by 2050, and 90% have set interim emission reduction targets for 2030—though these targets have declined to varying degrees. Since tracking began last year, 2030 targets have not increased, while net-zero commitments have dropped by one percentage point. Among regions, Europe, the Middle East, and Africa (EMEA), with 29 companies, is the only region where 100% of companies are committed to achieving net zero for both direct and indirect emissions by 2050, up from 97% last year. The Asia-Pacific region (excluding China) has a commitment rate of 86%, down from 98% the previous year. The Americas, with 31 companies, show a commitment rate of 68%, a 2% decline year-on-year.

It should be noted that chemical producers face a major challenge regarding indirect emissions caused along the supply chain—Scope 3 emissions—which lack transparency. Over 75% of chemical companies’ emissions fall under Scope 3, with approximately 50% originating from upstream value chains and 26% from downstream. Chemical producers cite complex value chains, lack of accurate data reporting, limited resources, and absence of industry-specific guidance as key barriers to reducing Scope 3 emissions.

In 2024, the U.S. Securities and Exchange Commission (SEC) decided not to include Scope 3 emissions in its new standardized climate-related disclosure rules. However, even without requiring Scope 3 disclosures, the SEC estimates its new regulations could still increase compliance costs for chemical companies by $750,000 annually. For an industry already under significant decarbonization pressure, this means additional financial burdens.