Global demand for plastics could peak in just seven years as countries impose bans and taxes to curb plastic pollution, putting billions of dollars of petrochemical investments along the Gulf Coast at risk, according to a new report.
The annual increase in demand for plastics is expected to fall from 4 percent a year to less than 1 percent starting in 2027, according to a report released Friday by Carbon Tracker, a nonprofit financial think tank focused on the risk of climate change, and environmental services firm Systemiq.
“Remove the plastic pillar holding up the future of the oil industry, and the whole narrative of rising oil demand collapses,” said Kingsmill Bond, a Carbon Tracker energy strategist and the report’s lead author, in a statement.
The report follows decisions by some oil majors to pull or delay investments in petrochemicals, particularly after the coronavirus pandemic wiped out global demand for crude and petroluem products.
Saudi Aramco, the world’s biggest oil company, this week said it is abandoning plans to build a $20 billion crude-to-chemicals plant in Saudi Arabia, according to Bloomberg. And BP this summer announced a deal to sell its global petrochemicals business to British petrochemicals company INEOS for $5 billion.
“As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction,” BP CEO Bernard Looney said in a statement announcing the deal in June. “(The BP-INEOS) agreement is another deliberate step in building a BP that can compete and succeed through the energy transition.”
Nevertheless, BP said it expects petrochemicals to drive 95 percent of world oil demand growth in the coming years. At the same time, the International Energy Agency put that figure at 45 percent. To meet this expected demand, oil and gas companies are investing $400 billion to build new petrochemical plants, much of it along the Gulf Coast.