C&EN’s World Chemical Outlook 2022

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Air Liquide, Air Products, ExxonMobil, and Shell are all considering adding carbon capture to their hydrogen production operations at the port in Rotterdam, the Netherlands.

The chemical industry has a special relationship with carbon capture (CC): it’s both a potential customer and a key technology supplier. That dynamic will put chemical firms at the center of the CC market in 2022 and the years beyond as new, flexible technologies become real, functional, carbon dioxide–capturing products.

Many chemical plants release CO₂ as part of the reactions they employ. No amount of energy efficiency or renewable power can abate such process emissions, though better routes are in the works for some transformations. At the same time, CC is a chemical process. Chemical firms have a lot of the needed know-how, and the start-ups coming to market are full of chemists and chemical engineers.

The most mature CC technology today dissolves CO₂ in aqueous amine solutions. That approach works well on the huge, consistent gas volumes that come from power plants and natural gas purification facilities. But chemical plants often have many small pipes venting a wide variety of gas mixtures.

CC firms are developing technology to meet that need. In late 2021, Carbon Clean launched a modular CC unit small enough to deploy several at different locations around a chemical plant. Aker Carbon Capture has a modular offering as well. Both systems use next-generation amines.

Other firms are rolling out next-generation CC systems based on membranes, cryogenics, and solid sorbents.

According to Emma Martin-Roberts and coworkers at the University of Edinburgh, CC will need to provide up to 15%—5.6 billion metric tons per year by 2050—of the global CO₂ reductions needed to avoid the worst effects of climate change.

Investments are starting to pour in. More than 100 new CC projects were announced in 2021, up from 18 in 2019, according to an analysis by Samantha McCulloch of the International Energy Agency. That roster is led by facilities that capture CO₂ from the production of hydrogen and biofuels.

In 2022, expect to see CC to become part of the chemical industry’s social license to operate. Also expect even more project announcements, both for chemical plants and for other hard-to-abate heavy industries like steel and cement.

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An investment arm of Koch Industries has funneled more than half a billion dollars into battery companies since November 2020.

Companies working in clean technology raised huge amounts of money last year. Some investors believe the environment is ripe for even bigger numbers in 2022.

The consulting firm Cleantech Group reports that industrial biotech businesses, which include companies, like Impossible Foods, that are focused on plant-based proteins, raised $2.4 billion during the first three quarters of 2021, more than in all of 2020. Energy storage companies raised $7.9 billion, more than in 2019 and 2020 combined.

Ian Hayton, Cleantech’s biomaterials and biochemical analyst, says there’s a clear upward trend, driven by public policies promoting environmentally friendly technology and consumer pressure to produce products more sustainably.

Koch Industries in November 2020 formed an investment arm, Koch Strategic Platforms, in part to take advantage of the momentum of clean energy companies. The group has invested more than half a billion dollars into nearly every aspect of the battery life cycle. The transition toward electric vehicles will spur more investment, according to Koch Strategic Platforms managing partner Jeremy Bezdek. “We’re at that pivot point for the growth of this industry,” he says.

For industries that need a fuel other than electricity, Michael Finelli, a Solvay executive who sits on a committee that selects the chemical company’s venture investments, says hydrogen could be a viable clean fuel. He estimates that 500 hydrogen start-ups have launched in the past 18 months. “We don’t know who the winners are going to be, but there will be winners,” Finelli says.

That implies that there will also be losers. At some point, says Joško Bobanović, who oversees an industrial biotech investment fund at the venture capital firm Sofinnova Partners, obsolete technologies will fall by the wayside and true advancements will rise to the top. Investors will lose money on failures, but that’s no reason to bet against clean technology, he says. “This is just the beginning. We are just scratching the surface in terms of investment amount.”

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Carlsberg binds its cans together with an adhesive instead of using plastic rings.

In recent years, the plastics industry—shamed by the public over the amount of discarded plastic landing in oceans and waterways—has mobilized to do something about the waste problem it helped create.

But the plastics industry’s environmental impact doesn’t end at solid waste. The business also has a substantial greenhouse gas footprint. According to a recent report from the consulting firm Wood Mackenzie, the roughly 360 million metric tons (t) of plastic produced in 2021 generated about 1.2 billion tof carbon dioxide equivalent emissions.

If the industry changes little—what the report calls the base case—plastics production will grow by 90% by 2050. Emissions will grow 75%, to 2 billion t. “We see a slight carbon efficiency improvement in the industry in the base case,” says Guy Bailey, head of intermediates and applications at Wood Mackenzie and one of the report’s authors. Such efficiencies will come from incremental improvements, such as newer equipment and novel catalysts.

However, the report envisions that more aggressive interventions by plastics makers and their customers could lead to a “peak plastic” scenario, in which the market for plastics produced from fossil fuels grows 30% by 2040, then starts to contract. Under that scenario, emissions max out at about 1.5 billion t in 2035 and by 2050 sink to the levels of today.

Reaching such a goal will require a sharp reduction in plastics consumption by streamlining, or even eliminating, plastic packaging in some applications. The Wood Mackenzie report says such changes may reduce plastics demand 13% by 2050.

Companies are starting to take small steps in this direction. Walmart, for example, eliminated the plastic window on the cardboard box for a line of dolls, opting to put a picture of the toy on the box instead. The brewer Carlsberg is gluing together six packs of beer cans instead of binding them with plastic rings. Some firms are choosing different business models altogether. PepsiCo aims to expand its SodaStream make-it-yourself beverage business in an effort to circumvent the production of 200 billion plastic bottles by 2030.

Achieving peak plastic will also require the industry to adopt biobased feedstocks, as it has with polylactic acid polymers. It will also require a sharp scale-up in chemical recycling of plastics using routes such as pyrolysis and depolymerization, Wood Mackenzie says.

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The United Nations Environment Assembly could form an international science policy panel on chemical pollution this year.

UN Environment Programme turns 50

A half century ago, delegates from around the world gathered in Stockholm for the first high-level global conference on the environment.

The influential 1972 United Nations Conference on the Human Environment highlighted the importance of a healthy environment to people’s well-being and marked a key step in the development of international environmental law. At the gathering, governments announced an agency to oversee and coordinate international action to protect and clean up the environment, the UN Environment Programme (UNEP).

For the past 50 years, UNEP has played a pivotal role in developing treaties to protect stratospheric ozone and biodiversity. It has been central to agreements to control greenhouse gas emissions, international shipments of hazardous waste, and the manufacture and use of persistent organic pollutants. And UNEP is deeply involved in implementing global sustainable development goals. Those 2015 goals grew from principles adopted at the 1992 UN Conference on Environment and Development in Rio de Janeiro, when UNEP marked its 20th anniversary.

This June, the UN’s top governing group, the General Assembly, is convening a 50th anniversary conference in the Swedish capital. The meeting, Stockholm+50, is focused on what UN organizers call the “triple planetary crisis” of climate change, the increase in pollution and waste, and the loss of nature and biodiversity.

Plan for treaty on plastics may get green light

The UN Environment Assembly (UNEA) will vote in February on whether to negotiate a global agreement to keep discarded plastic out of the environment. The US plastics industry and environmental and health groups back the creation of such an accord, though whether it would cover the entire life cycle of plastics or more tightly focus on keeping plastics out of the environment has not been decided.

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The United Nations says 8 million metric tons of plastic ends up in the world’s oceans each year.

Plastic additive to face scrutiny for global restriction

Governments will decide this year whether an additive widely used to protect plastics from degradation by ultraviolet light should be globally restricted or banned.

The substance is UV-328, a benzotriazole UV stabilizer. Because the additive is not bound to the polymers in which it is used, it can migrate into the environment. UV-328 spreads globally via plastic debris carried by oceans, according to the UN. Consequently, the chemical is found in the environment far from where it is produced and used, including in the Arctic. Researchers have also detected UV-328 in breast milk.

The European Chemicals Agency classifies UV-328 as persistent, bioaccumulative, and toxic. Last January, an international panel of scientific experts determined that UV-328 is persistent, is bioaccumulative, and has the potential for long-range environmental transport and adverse effects in humans or the environment.

Countries that are partners to the Stockholm Convention on Persistent Organic Pollutants will decide at a meeting, tentatively scheduled for June, whether to restrict or ban the chemical’s production and use.

UN could form science advisory group on chemical pollution

UNEA is expected to decide in February whether to establish a science policy body on chemicals and waste. The group would be modeled on the UN Intergovernmental Panel on Climate Change. Nearly 1,900 researchers from around the world have signed a petition calling for the formation of an Intergovernmental Panel on Chemical Pollution that would conduct scientific assessments and advise policy makers.

The European chemical industry is bracing itself for a tough 2022. The European Union is drafting new legislation for curbing greenhouse gas emissions and producing sustainable chemicals, known collectively as the European Green Deal. The European Chemical Industry Council (Cefic), a trade association, says the new policy will leave the industry facing unbearable costs. The sector is at a “crucial crossroads,” the group states.

A study by the consulting firm Ricardo Energy & Environment, commissioned by Cefic, shows that up to 12,000 chemical substances could be in the crosshairs of two legislative proposals intended to help implement the Green Deal.

Ricardo concludes that about one-third of the substances would have to be substituted or reformulated, potentially erasing about 12% of the European chemical sector’s annual sales. Cefic suggests that incentives will be needed to create markets for replacement chemicals.

“We have an enormous challenge ahead of us,” Martin Brudermüller, president of Cefic and chairman of BASF, the world’s largest chemical maker, says in Cefic’s statement. Brudermüller’s goal for 2022 is to work with the EU to develop a road map to sustainable chemical production that the industry can afford. The industry wants Europe to create a timeline and a pathway for developing the desired substitutes.

One challenge for the European chemical sector is that many chemicals—and the products they are made into—are traded globally, says Qamreen Parker, a research analyst at the consulting firm Wood Mackenzie Chemicals. Alongside time to adjust to new regulatory standards, the industry will be looking for a level playing field so that all products made in and imported into Europe adhere to similar standards. “Care needs to be taken to avoid driving production to locations that don’t require the same standards,” she says.

The chemical industry does have a heavy environmental footprint, Parker says, but regulators must remember that it also supports sustainability. “We will not be able to electrify the transport fleet or build solar panels to provide it with power without an engaged chemicals sector,” she says.

Despite nationwide power outages and tightening controls on industry expansion, China’s chemical sector is reaping profits. In 2022, leading firms will seek to align with the country’s low-carbon policies by boosting efforts to upgrade products and decrease energy consumption.

From about June to September, power companies responded to surging coal prices and the Chinese government’s effort to reduce energy consumption by cutting output. Thousands of chemical makers were forced to suspend or lower production. In October, the central government put a halt to the power outages.

In spite of the upheaval, China’s chemical sector earned $105 billion in profits in the first 10 months of 2021, more than double the profits generated in the same period in 2020, according to the National Bureau of Statistics of China. In contrast, profits across the country’s industrial sector overall rose by a more modest 42%.

In part because of strong export market demand and loosening monetary policy, profitability in China’s chemical sector should remain high going forward, says Ye Yingmin, president of the Beijing-based consulting firm Chem1.

At the same time, policies to control investment in products that require a lot of energy to make—including many basic chemicals—should benefit existing chemical companies by capping new supply. In recent weeks, both the central and provincial governments released regulations that either ban such investment or require that any new investment be in facilities that replace existing production capacity.

Chinese companies focused on energy efficiency in both their products and processes already seem to be making gains. For example, Hengli Group, a private company that emphasizes highly efficient polyester production, had 2020 sales of about $80 billion, putting it at number 3 out of 500 in a sales ranking released on Nov. 30 by the China Petroleum and Chemical Industry Federation. Hengli, which was previously ranked 15 by the trade group, beat state-owned conglomerates like China National Offshore Oil Corporation and ChemChina.

About 100 new firms, many focused on high-end specialties, entered the ranking, mostly replacing basic chemical producers. The rise of these firms is due primarily to their investment in products necessary for low-carbon development, China Chemical Industry News reports. This trend should continue in 2022, Ye says.

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The US Environmental Protection Agency is developing rules to mitigate the risks of pigment violet 29 and other chemicals.

The US Environmental Protection Agency faces another year jam-packed with chemical risk assessments and deadlines under the Toxic Substances Control Act (TSCA). Behind schedule and severely understaffed, the EPA’s Office of Chemical Safety and Pollution Prevention is under pressure to evaluate and propose rules to mitigate risks for chemicals already marketed in the US, an effort required by 2016 amendments to TSCA.

The first 10 assessments for high-priority chemicals were 6 months late. The EPA completed them in 2020 under former president Donald J. Trump’s administration. Facing lawsuits over several of those assessments, the chemical office, now under the leadership of Michal Freedhoff, is revising them to consider exposure to chemicals from air, water, and other pathways that the EPA initially disregarded. For 6 of the 10 chemicals, the agency is using ambient air and surface-water data to evaluate risks to communities near industrial facilities.

At the same time, the EPA is developing rules to mitigate the risks it finds for the 10 substances. Likely to be first are rules for current uses of asbestos, a group of cyclic aliphatic bromide flame retardants, and pigment violet 29. The agency must evaluate the risks of former uses of asbestos, such as in construction materials in older buildings, by Dec. 1, 2024, according to a court agreement.

The solvent 1,4-dioxane is likely to be finished last, Freedhoff said during an event in June 2021 commemorating the fifth anniversary of TSCA reform. The EPA is overhauling its 1,4-dioxane assessment to determine whether drinking water and air pose unreasonable risks to the general population. It is also considering occupational exposures to 1,4-dioxane that were previously excluded.

As the EPA struggles to reevaluate those first 10 chemicals, it faces a December 2022 deadline, with the possibility of a 6-month extension, to complete risk assessments for the next 20 high-priority chemicals. Deadlines for manufacturer-requested assessments of four chemicals are also looming.

Additionally, the EPA is revising rules that ban the processing and distribution of five persistent, bioaccumulative, and toxic chemicals that are also already on the market. Those rules were finalized in January 2021, shortly before Trump left office. The agency expects to release new rules in 2023 but in the meantime has put enforcement of one of them on hold. That rule bans phenol, isopropylated, phosphate (3:1), also known as PIP (3:1), which is used as a flame retardant, plasticizer, and additive in electronics, cars, and other consumer products.

In September, the EPA delayed enforcement of the PIP (3:1) ban until at least March 8, 2022, “to ensure that supply chains are not disrupted for key consumer and commercial goods.” Importers, distributors, and retailers of electronics and other consumer products claimed that identifying PIP (3:1) in those articles will take years because of the complexity of the global supply chain. In October, the EPA proposed to delay enforcing the ban until Oct. 31, 2024. It will need to finalize that proposal to make the 2024 date effective.

In 2022, the EPA will also need to address concerns about its New Chemicals Program. The program was the focus of a congressional hearing in late October after a group of EPA scientists filed complaints with Congress and the agency’s inspector general. The whistleblowers claim that program managers downplayed safety concerns to get new chemicals onto the market quickly to please the chemical industry.

Freedhoff told lawmakers at the October hearing that the program staff is undergoing scientific integrity training. She also noted that the office is understaffed: it has less than 50% of the resources needed to approve new chemicals.

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CordenPharma is expanding a production facility for high-potency solid drugs in Plankstadt, Germany.

Solid growth and sizable investments will continue in the pharmaceutical services sector as contract manufacturers of active pharmaceutical ingredients (APIs) and drug intermediates move into a third year of navigating the unpredictable impact of the pandemic.

“Aside from what you can’t predict, it’s a very good time to be in contract services,” says Wayne Weiner, who heads the consulting firm PharmaTech Solutions. “It doesn’t seem the funding will dry up for biotechs, which are really driving a lot of the innovation.” And biotech innovators without production assets are increasingly bringing drug candidates to market themselves rather than licensing to larger drug companies, thus generating longer-term contracts with service firms, Weiner says.

But James Bruno, president of another consulting firm, Chemical and Pharmaceutical Solutions, sees a red flag. “I think we are going to be short on capacity all year,” he says. “Everybody seems to be booked.”

Managers at service firms agree that capacity constraint is a concern, and they point to continued investment in new capacity in response. Hovione, CordenPharma, and Pharmteco are among the companies with plans to add small-molecule API capacity.

Hovione is expanding on both sides of the Atlantic; the Portuguese firm is 2 years into a 3-year program that is expected to increase overall capacity by 25%. CordenPharma will expand clinical-scale peptide production in Frankfurt, Germany, and solid-dose drug output in Plankstadt, Germany. Pharmteco is expanding API production in South Korea and is adding capacity at a newly acquired cell and gene therapy site in France.

While service providers are likely to continue broadening their offerings beyond small-molecule API production in 2022, services for the emerging cell and gene therapy industry will develop on a parallel track and attract only a handful of the largest traditional firms. Cell and gene therapy is getting a lot of attention, Bruno says, but most of the investment in the drug services sector will continue to be in small-molecule production.

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Exscientia is transitioning from being an artificial intelligence service provider to being an AI-based drug discovery firm.

The pharmaceutical industry marked several breakthroughs in the deployment of artificial intelligence in 2021, positioning AI to make significant advances in drug discovery labs in 2022.

AI software developers and service companies that are pursuing their own drug discovery leaped forward last year. Insilico Medicine, which received $255 million in venture funding, announced that it used AI to identify a novel drug target and develop an investigational small-molecule therapy to treat idiopathic pulmonary fibrosis. The company also hired dozens of pharmaceutical research chemists. Exscientia, an AI technology firm with three clinical-stage drug candidates, received $225 million in venture funding and expanded its drug discovery research staff as well.

AI developers plan to bring candidates to preclinical or clinical stages this year.

Regina Barzilay, a computer science professor at the Massachusetts Institute of Technology and colead of the Machine Learning for Pharmaceutical Discovery and Synthesis Consortium, anticipates solid traction for AI in 2022 based on recent advances in technology. “We see a significant merge between chemistry and biology,” Barzilay says. Scientists are developing AI engines that can work with both the structure and the bioactivity of drug targets—functions that heretofore have been performed separately—enabling researchers to learn from smaller data sets, she says.

Hugo Ceulemans, scientific director for discovery data sciences at Janssen Research & Development, points to two breakthroughs in AI for drug discovery at DeepMind, a sister company of Google, that pave the way for progress in 2022. They are the introduction of AlphaFold 2, which uses AI to generate high-quality, 3D protein structures, and the development, announced last month, of a machine-learning model that suggests a molecule’s characteristics by predicting the distribution of its electrons.

Ceulemans, a project leader at the Machine Learning Ledger Orchestration for Drug Discovery, a pharmaceutical industry consortium working on data management for AI, says large drug companies are headed into 2022 committed to developing AI engines in the lab. “The question is no longer whether we will use AI,” Ceulemans says. “It will be where we are going to use it next.”