In this list

Sustainable petrochemicals: Markets explore multiple routes to a greener future

Petrochemicals | Olefins | Polymers

Platts Global Polyolefins Outlook

Commodities | Crude Oil | Electric Power | Electric Power Electricity | Energy Natural Gas | Energy Transition | Natural Gas

Market Movers Europe, Dec 4-8: Oil markets weigh OPEC+ cuts, economic factors; power sector watches for cold weather

Oil | Energy Transition | Energy

APPEC 2024

Energy Transition | Emissions | Carbon

COP28: Article 6 adoption progress shaky as parties disagree on removals, methodologies


Platts European Methanol Assessments

Agriculture | Grains | Crude Oil | Energy Transition | Emissions | Natural Gas | Oil & Gas

Commodity Tracker: 6 charts to watch this week

For full access to real-time updates, breaking news, analysis, pricing and data visualization subscribe today.

Subscribe Now

Sustainable petrochemicals: Markets explore multiple routes to a greener future

  • Featuring
  • Benjamin Brooks    Abache Abreu
  • Commodity
  • Petrochemicals
  • Topic
  • Energy Transition Environment and Sustainability

Recycled plastics have been around for years as a premium option for those aiming to reduce their environmental footprint while continuing to use these materials which, due to their remarkable versatility, have become ever more entrenched in daily modern life.

But despite steady growth, this segment has always been a relatively niche part of the ever-expanding petrochemicals market. Now, however, the growing urgency of the global drive toward net-zero and the energy transition is encouraging companies to innovate even more in the quest to provide premium sustainable petrochemicals. This in turn is driving rapid growth in demand for the feedstocks to produce them, and resulting in an ever-tighter market.

Chief among these innovations are chemical plastic recycling and bio-plastics – which refers both to plastics that are made using bio-feedstocks or plastics that are biodegradable at the end of their lifecycle. Over recent years, traditional petrochemical companies have been announcing sizeable investments into research and production of these types of plastics left, right and center. Carbon reduction efforts are also taking off, although low-carbon petrochemical markets are nascent and yet to see liquidity of any significance.

Over 7.8 million mt/year of capacity was certified for bio-polymer production across the globe at the end of 2021, according to ISCC data, and over 1.4 million mt/year of chemical recycling capacity is expected to start up by 2025, according to S&P Global Commodity Insights research. While this pales in significance compared to the overall size of the plastics market – production is estimated at over 300 million mt/year – what is eye-catching is the rapid pace of growth, and the number of established petrochemical companies that are getting behind it.

Legislation, growing public awareness and companies' voluntary adoption of ESG principles will likely continue driving growth in demand for green petrochemical solutions. According to the Ellen MacArthur Foundation, a UK-based circular economy proponent, companies representing 20% of all plastic packaging produced globally have a commitment to recycled and recyclable plastic, and to decrease their reliance on virgin (fossil fuel-derived) plastics.

However, there are major challenges to overcome.

Addressing feedstock supply issues will be key to driving scalability, greater competition and further technological innovation across the supply chain

Hurdles to overcome

Inadequate feedstock availability is an important one, whether that be sourcing post-consumer plastic waste, for either mechanical or chemical recycling, or sourcing of first-, second- or third- generation feedstock for bio-polymer production.

For recycled plastic, this means navigating complex waste collection systems that are inconsistent not just across different regions, but even within the same country. For bio-plastics, petrochemical companies will need to compete for bio-naphtha – the primary feedstock – with the gasoline blending and agriculture markets.

Addressing feedstock supply issues will be key to driving scalability, greater competition and further technological innovation across the supply chain.

Recycled plastics

The supply and demand imbalance in the recycled plastic markets has become an all too familiar issue over the pandemic years. Supply of post-consumer waste has fallen because the drop in tourism and large-scale events has reduced demand for on-the-go products. Meanwhile, government and industry commitments to recycle plastics have continued to pile on demand, particularly in markets such as consumer goods, automotive and construction.

End-2021 data from CalRecycle revealed that only seven out of the 69 beverage manufacturers in California met the first recycled content threshold in 2020, ahead of the implementation of a state bill requiring a minimum of 15% post-consumer recycled polyethylene terephthalate, or PET, to be used in beverage bottles from January 2022. Part of the issue is that there is just not enough material.

Reclamation capacity in the US would need to increase by at least 50% from current capacity to meet announced recycled PET commitments by companies operating in the US, according to a 2021 study by the American Institute for Packaging and the Environment.

This problem is not specific to the US. Global recycled plastic prices followed a strong upward trend throughout 2021, as a result of growing demand, acute supply shortages and shipping disruptions that have cut off vital sources of supply like Southeast Asia from the demand centers of Europe and the US.

Recycled plastics premium


The key petrochemical feedstock for bio-plastic production is bio-naphtha, which can be used as a direct substitute for fossil-based naphtha.

Current European bio-naphtha supply is estimated at 150,000-250,000 mt annually, with expectations for supply to double or even surpass 1 million mt/year in the coming years, according to the NOVA Institute. Even in the most bullish scenario, bio-naphtha supply would not meet demand growth expectations.

Bio-polymers were seen as a green solution to inadequate supply in recycled markets. But now, a solution is needed to address the shortage in bio-polymers

As a result, bio-naphtha is commonly priced at steep premiums against its fossil alternatives, which can range between double to three times the price of the Platts naphtha CIF NWE benchmark.

Bionaphtha prices

Moving forward, the petrochemicals markets are going to have to attract this key sustainable feedstock in the face of much competition – from the food industry and fuels – if it is to scale up and supply sufficient quantities of bio-polymers.

Bionaphtha producers

Low-carbon solutions

For some, bio-polymers were seen as a green solution to inadequate supply in recycled markets. But now, a solution is needed to address the shortage in bio-polymers.

Several petrochemical producers are stepping up carbon-reduction efforts in sectors such as methanol, olefins and polymers, including PET. Solutions include using renewable energy in cogeneration power plants, scaling up bioproduction, carbon capture, utilization and storage technology, and shifting away from fossil fuel-based feedstocks to lower-carbon alternatives like hydrogen.

But the results so far are well short of the mark. More coherent policy frameworks, particularly in emerging petrochemical hubs, will be needed to lower investment barriers for these new technologies. Industry efforts will be needed to standardize how the carbon intensity of specific petrochemical products is measured and reduced – or offset in carbon credits markets. Further standardization and liquidity would boost competition and technological innovation, and facilitate the formation of prices and benchmarks that ultimately would determine the direction and pace of change through the energy transition.

There are multiple routes to a greener future for petrochemicals and they will need to be explored simultaneously for the industry to truly go green. To reach the stage where a plastic bottle, for instance, is made from part recycled content, part bio content and part low-carbon certified material, all of these markets will require efforts to drive commoditization on a global scale.

This piece was first published in February 2022 under the special report Breaking Barriers to Accelerate Energy Transition