Discussion paper: How can we achieve a smooth defossilisation of the Swiss chemical sector?
APRIL 2024
HANS-PETER MEYER, CHRISTIAN HOLZNER
To slow down climate change, it is essential to reduce greenhouse gas emissions quickly and significantly. In Switzerland and worldwide, most emissions come from the use of fossil fuels such as oil, natural gas, and coal.
The energy sector is therefore at the centre of climate protection measures. However, fossil resources are also important raw materials in the chemical industry. To achieve climate neutrality and at the same time improve security of supply, it is important to aim at the most comprehensive defossilisation possible in all sectors and processes.
Defossilisation is a major technical and economic challenge. It harbours risks, but also opportunities for innovative companies that develop alternatives to fossil fuels. In the energy sector, solutions are available for replacing fossil fuels, such as the switch to renewable energies and electrification. This contrasts with the chemical industry, for which it is much less clear today how fossil raw materials can be replaced.
This is why SATW would like to understand the effects of defossilisation on the value chains of the Swiss chemical industry and identify courses of action for the relevant players in Switzerland. To this end, SATW is planning a forum at which representatives from industry, associations, administration, as well as research can exchange and discuss their experiences, integrating them into a comprehensive overview The findings from these activities will be published by SATW.
1 The D istinction between Defossilisation and Decarbonisation
Defossilisation denotes replacing fossil raw materials and energy sources such as oil, natural gas, and coal with renewable alternatives. This means that no additional carbon enters the global cycle, and the economic system becomes climate neutral.
Decarbonisation, on the other hand, means not using any carbon compounds in energy supply and industrial processes and avoiding all carbon dioxide (CO2) emissions.
The chemical sector cannot be completely decarbonised because organic chemistry is based on carbon, which is contained in all its products and molecules. However, it is possible to defossilise the chemical industry by using renewable, biogenic raw materials and CO2 from the air (Carbon Capture and Utilisation, CCU) as carbon sources or by recycling carbon-containing materials.
Figure 1 provides an overview of approaches to defossilisation in the chemical sector and in energy supply.
2 The Transformation to a fossil-free Energy Supply
Fossil fuels are currently the world's most important fuels for heating and mobility. However, according to the International Energy Agency (IEA), they will reach their maximum demand before the end of this decade because they are increasingly being replaced by renewable energies 1
In Switzerland, petroleum-based fuels accounted for almost half of the total energy consumption in 2022. Together with natural gas, the fossil share was almost 60 per cent. 2 However, Swiss consumption of petroleum fuels has been falling since the 1970s. For a long time, this effect was offset by increasing fuel and gas consumption, which has stabilised only in recent years. Overall, there has been a downward trend in fossil fuels since around 2010.
The Climate and Innovation Act, which was approved in a referendum in June 2023, stipulates that Switzerland must no longer emit any greenhouse gas emissions from 2050 onwards (net zero target). Although defossilisation in the energy sector is a financial tour de force, the necessary methods, technologies, and solutions are known and ready for use. Safe and proven energy sources such as photovoltaics, wind, geothermal energy, and possibly also new nuclear reactor concepts are available. Additional renewable synthetic energy sources are needed for mobility (especially heavy goods transport, ocean shipping and air transport) and certain industrial applications to achieve the net-zero target.
1 IEA (2023), World Energy Outlook 2023, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2023, Licence: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)
2 Federal Office of Energy BFE (2023), Swiss overall energy statistics 2022, https://www.bfe.admin.ch/bfe/de/home/versorgung/statistik -und-geodaten/energiestatistiken/gesamtenergiestatistik.html
New production and supply chains must be established for these synthetic fuels. Various scenarios and studies by the federal government, 3 the energy industry, 4 research, 5 and academia, 6 conclude that the transformation to a climate-neutral, affordable, and secure Swiss energy system by 2050 is feasible.
3 A challenging Situation in the Chemical Sector
The chemical sector is the largest industrial energy consumer and the third largest industrial CO2emitter on a worldwide scale. 7 The chemical industry is responsible for 14 per cent of global oil consumption and 8 per cent of natural gas consumption, as 90 per cent of organic chemicals are produced from oil and natural gas. The rest is obtained from coal and biomass. The consumption of fossil resources in the chemical sector has been increasing in relative and absolute terms for years.
Plastics are a key driver of demand for petrochemicals - chemicals and products made from crude oil and natural gas. By 2050, the demand for oil in connection with plastics consumption could exceed that of road passenger transport. Replacing oil, natural gas and coal is a gigantic and disruptive task, as old and established industrial and economic interdependencies will have to be unbundled and replaced in a short space of time This transformation harbours the risk of unexpected side effects and bottlenecks 8 .
Due to a slightly better environmental balance of natural gas, it has largely replaced coal as a raw material in the chemical industry. Crude oil is still an essential raw material to produce plastics. The consumption of fuels, most of which are also obtained from the naphtha fraction of crude oil, is decreasing with the increasing electrification of transport.
This will have an impact on the extraction of crude oil and the production of plastics. An alternative for the part of the chemical industry that is not linked to fuel production would be liquefied petroleum gas (LPG), which is a small part of natural gas production. The declining demand for fuel will result in refineries being reorganised to produce chemicals. 9 There is now an entire range of technologies with different catalysers 10 able to improve the conversion of oil into chemicals.
The key field of action for defossilisation is organic chemistry, the chemistry of carbon compounds. The carbon embedded in products and intermediate products accounts for around two thirds of the carbon footprint, while emissions associated with production only account for around one
3 https://www.bfe.admin.ch/bfe/de/home/politik/energieperspektiven-2050-plus.html
4 https://www.strom.ch/de/energiezukunft-2050/startseite
5 https://blogs.ethz.ch/energy/secure-renewable-switzerland/
6 https://scnat.ch/en/publications/uuid/i/5eca5222-206f-5922-8168-97a73b4a6e1e-Swiss_Energy_System_2050_Pathways_to_Net_Zero_CO2_and_Security_of_Supply
7 Mapping global flows of chemicals: from fossil fuel feedstock to chemical products. Peter G. Levi, Jonathan M. Cullen. Environmental Science and Technology (2018) 52:1725-1734
8 https://www.satw.ch/de/news/fuer-eine-defossilierung-ohne-nebenwirkungen
9 Why the future of oil is in chemicals, not fuels. Alexander H. Tullo. CE&N (2024) Vol 97, issue 8
10 NCCR Catalysis: A Swiss research programme in the field of catalysis and sustainable chemistry, https://www.nccr-catalysis.ch/, https://www.youtube.com/watch?v=2elC9hBQp4A
third. 11 This is why the chemical sector cannot be completely decarbonised. Instead, the aim is to defossilise it by replacing fossil fuels with renewable carbon sources.
One approach is to switch to biogenic raw materials such as wood or agricultural products. However, these are limited and are far from sufficient to cover the current and expected future demand for carbon in the chemical industry. The reasons for this are the global decline in agricultural land, the low efficiency of biomass production with photosynthesis, the lack of phosphorus and competition with other biomass uses such as timber.
For this reason, chemicals based on biogenic raw materials are only suitable for complex and highquality products; they are not suitable for primary chemicals and mass products. In addition, existing petro-refineries cannot simply be converted to biogenic raw materials, as there are significant differences in the processes and the need to adapt the plants.
In addition to defossilisation, switching to locally sourced and renewable raw materials would have the important advantage of reducing dependence on imports of fossil resources and improving security of supply.
4 The Production of drugs as an Example
The supply of drugs - especially generic medicines - has been a problem for some time. Of these low-molecular organic compounds, up to 600 products such as Propofol™ (muscle relaxant for intubation), fentanyl (painkiller) or Synthocinon™ (agent for the induction of labour) were at times unavailable or difficult to obtain. 12
Well over 90 per cent of pharmaceutical raw materials and reagents come from petrochemical sources. This shows how important a reliable supply of petrochemical products is and remains for medicines and other organic chemical products.
Figure 2 shows the production of the painkiller paracetamol - a generic drug that was temporarily unavailable during the coronavirus pandemic - as an example for thousands of other drugs. Alongside pyridoxine, acetylsalicylic acid and ascorbic acid, paracetamol is one of the best-selling overthe-counter medicines. Over 100,000 tonnes of paracetamol are produced worldwide every year and Switzerland requires 190 tonnes of this active ingredient annually.
11 A simplified exploratory scenario for CCU-based supply of embedded carbon for the global chemicals and derived materials sectors. F. Kähler & M. Carus (2022) Editor RCI https://renewable-carbon-initiative.com
12 Hecht et al. Biocatalysis in the Swiss Manufacturing Environment Hecht et al. Catalyst (2020), 10, 1420; doi:10.3390/catal10121420
Figure 2: The production of paracetamol, a compound without an asymmetric carbon atom, is an example of an active ingredient that is produced from a petroleum-based starting material - phenol in this case. In 1980, around 80 per cent of active pharmaceutical ingredients (APIs) were still manufactured in the EU. This figure has fallen to less than 20 per cent. The figures for Switzerland are likely to be comparable, although the focus in Switzerland is on the manufacture of therapeutic proteins, cell therapies and other innovative treatments.
5 Relevant players are active in Switzerland
Over 50 per cent of Swiss exports come from the chemical and pharmaceutical industry, which is far more than any other industrial sector. By comparison, the second strongest sector, the machinery industry, only has a share of 13 per cent. The chemical industry is at the beginning of countless value chains and lays the foundation for many other industries with its products. It is therefore in the interests of Switzerland, which is poor in raw materials, to plan defossilisation particularly carefully and innovatively.
In Switzerland, companies are active along the entire value chain, except for the extraction of fossil raw materials, of which there are no known significant deposits. In contrast, Switzerland is a hub for global commodity trading, where raw materials are purchased abroad and resold abroad (transit balance) without intermediate storage in Switzerland.
From commodity traders to producers of high-quality fine chemicals and active pharmaceutical ingredients, everyone contributes to the gross domestic product (Table 1). This also means that all the necessary market and process knowledge is available to conduct a solid analysis and recommendation regarding defossilisation of the chemical sector.
Chemical value chain stages
Examples of Swiss companies
Raw materials: oil, natural gas, coal Vitol, Glencore, Mercuria Energy Group, Avernergy, Carbura, Swiss Gas Industry Association, Provisiogas
Organic basic chemicals: ethylene, propylene, methanol, benzene, toluene...
Cressier refinery
Petrochemical products: Solvents, plastics... AVA-Biochem, Biosimo, Ineos
Speciality chemicals: fluoropolymers, flame retardants, dyes, finishing chemicals...
Fine chemicals: flavours & fragrances, agrochemicals, optically active intermediates...)
Active pharmaceutical ingredients: small molecules (API)
Archroma, BASF (Switzerland), Clariant, Dottikon, Sika, SSE
Arxada, Givaudan, Syngenta, Agrosustain, Corden Pharma, Siegfried
Bachem, Lonza, Novartis, Roche, Sandoz
Table 1: There is a direct link between the raw materials sector, basic chemicals, and active pharmaceutical ingredients. This table lists examples of companies based in Switzerland. Basic chemicals are refinery byproducts that are gradually built up in chemical synthesis steps into ever larger molecules, right up to the optically active and complex organic compounds used in the life science industry.
6 Forum on the Defossilisation of the Swiss Chemical Industry, organised by SATW
To identify suitable ways of defossilising the chemical value chains from a Swiss perspective, SATW would like to bring together representatives from industry, associations, administration, and research to exchange experiences and engage in discussion in order to shape our join future.
The planned forum event is intended to highlight important challenges, risks and solutions for the stakeholders involved (see table 1) and address the following issues, among others:
- Where does the oil and petrochemical industry see the greatest risks in a transition from fossil to renewable raw materials? How will the environment change and what alternative raw materials are available in sufficient quantities?
- Are there any dependencies and insights from other sectors, especially energy supply? What opportunities exist for cross-industry collaboration, and would a joint approach make sense?
- What adjustments to processes and methods in the chemical value chain are necessary for defossilisation? Are innovative solutions available or currently being researched? For example: which new processes from biotechnology, electrochemistry or photochemistry have potential and should be further developed?
The results of the forum will be documented and published by SATW in consultation with the participants. We will shortly be inviting interested participants to the forum. If you are interested in the topic, we would be delighted to hear from you.
Contact: Hans-Peter Meyer, Expertinova AG, SATW Board Member, Head of the Scientific Advisory Board, mailto:meyer@expertinova.com
Authors and project team: Rita Hofmann, Christian Holzner, Hans-Peter Meyer, Nicole Wettstein
April 2024
About SATW
The Swiss Academy of Engineering Sciences SATW is the most important network of experts for engineering sciences in Switzerland and is in contact with the highest Swiss bodies for science, politics and industry. The network is comprised of elected individual members, member organisations and experts.
On behalf of the federation, SATW identifies industrially relevant technological developments and informs politics and society about their importance and consequences. As a unique expert organisation with high credibility, it conveys independent and objective information on technology – as the basis for establishing well-founded opinions. SATW also promotes the interests and understanding of technology in the population, including young people in particular. It is politically independent and non-commercial.