3.4.1 Structure and economic contribution
The chemicals and pharmaceutical sector contributed to 5% of the EU’s GDP in 2011 (Eurostat; 2013). Key economic contributions are delivered by 2 key groups: Manufacture of basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber in primary forms (NACE C20.1), and Manufacture of pharmaceutical preparations (NACE 21.2), which accounted for 70% of total production value. Key economic indicators for the chemicals and pharmaceutical sector are summarised in Table 3.39.
Table 3.39 Key economic indicators on sector division and group level for EU 28 in 2012
Description
NACE (Group)
Number of enterprises
[n]
No. of persons employed
[n]
Turnover [mil EUR]
Value added [mil EUR]
Productio n value [mil EUR]
Manufacture of chemicals and chemical products
C20 28,306 1,096,562 552,704 106,210 486,986 Manufacture of basic
chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber in primary forms
C20.1 8,886 549,289 348,952 61,631 313,064
Manufacture of pesticides and other agrochemical products
C20.2 623 25,977 15,077 3,002 11,470
Manufacture of paints, varnishes and similar coatings, printing ink and mastics
C20.3 4,100 133,767 40,817 10,501 35,993
83 Description
NACE (Group)
Number of enterprises
[n]
No. of persons employed
[n]
Turnover [mil EUR]
Value added [mil EUR]
Productio n value [mil EUR]
Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations
C20.4 8,283 199,056 61,394 14,232 54,531
Manufacture of other chemical products
C20.5 6,104 164,880 78,465 16,843 64,463 Manufacture of man-made
fibres
C20.6 310 23,593 8,000 n/a 7,464
Manufacture of basic pharmaceutical products and pharmaceutical preparations
C21 4,072 479,333 227,879 83,808 206,066
Manufacture of basic pharmaceutical products
C21.1 900 49,577 29,795 11,150 28,810
Manufacture of pharmaceutical preparations
C21.2 3,172 429,756 198,084 72,658 177,256
Source: 2012 Eurostat data
The sector has over 28,000 enterprises in the EU generating €552 billion of revenues. Over 65% of organisations in the chemicals sector are microenterprises, while 70% of pharmaceutical organisations are SMEs; however, both industries are dominated by large enterprises, which contribute 65% and 78% of value added, respectively.
3.4.2 Subsector share of energy consumption
Table 3.40 provides an estimated overview of the share of energy consumption between subsectors in the manufacture of chemicals and chemical products (NACE 20) in EU28. The petrochemicals and basic inorganic subsectors account for 72% of the energy use in the chemicals sector and reflect the high energy requirements to produce the primary feedstock for the downstream subsectors (polymers, specialty and consumer chemicals).
84
Table 3.40 Estimated EU28 chemicals and pharmaceuticals sector share of energy demand in 2012
Subsector Description NACE
(Group) Category Estimated share of final energy demand
[kTOE] [%]
Petrochemicals C20.1 Energy intensive 26,596 47%
Basic inorganic C20.1; 20.5 Energy intensive 14,147 25%
Polymers C20.1; 20.6 Non-energy intensive 6,791 12%
Specialty chemicals C20.2; 20.3 Non-energy intensive 4,527 8%
Consumer chemicals C20.4 Non-energy intensive 1,132 2%
Pharmaceutical products C21 Non-energy intensive 3,39566 6%
Total energy demand for chemicals and pharmaceuticals sector for EU28 (2011):
56,58867 100%
Source: CEFIC, 2013; US EPA, 200568,69
3.4.3 Key products
3.4.3.1 Petrochemicals (NACE 20.1)
The petrochemical subsector produces the organic building blocks of the chemical industry, which feed the production of many consumer and industrial products. The organic chemicals with the largest production volume in the EU are ethylene, propylene, butadiene (olefins), methanol (alcohols), benzene, toluene and xylenes (aromatics).70
Because the petrochemical subsector covers numerous products, the manufacturing processes will vary from one product to another. Sometimes the same products will use different raw materials, technological processes, or equipment. As such, energy is used in varying amounts. Nonetheless, the petrochemical subsector is defined by two major energy intensive processes: “cracking” (either steam or catalytic), which is the process where large hydrocarbon molecules are broken down into smaller ones; and “reforming”, where heat, pressure and/or catalyst are used to restructure hydrocarbons (e.g., converts naphtha to benzene, toluene and xylene). There are approximately 55 petrochemical plants in the EU with steam crackers and reformers.71
3.4.3.2 Basic inorganics (NACE 20.2; 20.5)
The industrial inorganic chemical industry manufactures a variety of products, such as chlor- alkalis, sulphuric acid, sulphates; and fertilizers (potassium, nitrogen, and phosphorus products). Many of these products are used as reagents or feedstock in high-tech industries, pharmaceuticals or electronics, as well as in the preparation of inorganic specialties such as catalysts, and pigments.
66 ICF assumption: Energy costs per unit sales for pharmaceuticals are assumed to be 1% (US EPA; 2005), which is similar to consumer chemicals (CEFIC, 2013). As such, pharmaceutical subsector energy consumption was estimated by applying ratio of energy consumption to production value for consumer chemicals to pharmaceutical subsector production value.
67 Eurostat; 2013
68 European chemistry for growth: Unlocking a competitive, low carbon and energy efficient future; CEFIC; 2013
69 Energy efficiency improvement and cost saving opportunities for the pharmaceutical industry; US EPA, 2005
70 European chemistry for growth: Unlocking a competitive, low carbon and energy efficient future; CEFIC; 2013
71 Methodology for the free allocation of emission allowances in the EU ETS post 2012: Sector report for the chemical industry; Ecofys, 2009
85
The energy consumed to produce different inorganic products can vary significantly; however, a few products dominate energy consumption, such as ammonia and chlorine production.72 Ammonia is produced in the Haber process where nitrogen and hydrogen, is formed by reacting natural gas and steam at high temperatures, react in the presence of an iron catalyst to form ammonia. There are approximately 42 ammonia plants in the EU.73 Chlorine (and caustic soda) is produced through electrolysis where an electric current is passed through a brine solution. There are approximately 70 chlorine manufacturing locations in the EU.74 3.4.3.3 Polymers (NACE 20.1; 20.6)
Polymers are large molecules formed during three basic reaction types, polymerisation, polycondensation and polyaddition. The primary operations/processes are 1) preparation; 2) reaction; and 3) separation of products.
Depending on the product, assorted combinations of heat, pressure and catalysts are used during the reaction stage to alter the chemical bonds that hold monomers together, causing them to bond with one another forming chains of monomers. The most widely used feedstock in polymer production is ethylene and propylene which, once reacted, make polyethylene (PE) and polypropylene (PP), respectively.
3.4.3.4 Consumer chemicals (NACE 20.4)
The manufacture of soaps, detergents, perfumes involve a broad range of processing and packaging operations. For soaps, the primary process steps are: 1) saponification (hydrolysis of an ester, under basic conditions (e.g., 80oC)); 2) drying; 3) amalgamator (mixer, in which the soap pellets are blended together with fragrance, colorants and all other ingredients; 4) rolling mills (to blend and create a uniform texture); and 5) cutting/pressing (to create final shape). Similar to soap, detergents are produced through a combination of agglomeration, spray drying, dry mixing steps. Perfume production involves two main steps. The first step, extraction, is primary energy consumer and involves the removal of oils from plant substances by steam distillation, solvent extraction, etc. Step two involves blending the collected oils with other substances based on predetermined formulas.
3.4.3.5 Specialty chemicals (NACE 20.2; 20.3)
Resin, pigment and additive agents are generally major components of paint. There are two main process steps; the first involves mixing the components to form a paste. If the paint is to be for industrial use, it usually is then routed into a milling machine, which is a large cylinder that agitates tiny particles of sand or silica to grind the pigment particles, making them smaller and dispersing them throughout the mixture. In contrast, commercial use paint is processed in a high-speed dispersion tank, which agitates the mixture and blends the pigment into the solvent.
Pesticides are manufactured by the chemical reaction of two or more raw materials (organic or inorganic) in the presence of solvents, catalysts and reagents. Manufacturing can vary from a one-step reaction, followed by packaging the product, or multi-step reaction, followed by fractionation, separation, drying, and packaging. Alternately, production can occur through formulation, with no reaction occurring. Instead raw materials are mixed, blended, diluted with solvents, inert materials, pigments, and packaged.
3.4.3.6 Pharmaceuticals (NACE 21)
The three key steps in pharmaceutical production are: 1) research and development; 2) conversion of natural substances to pharmaceutical substances; and 3) formulation of final products. Step 2 is the primary energy consuming stage, where chemical synthesis, extraction,
72 European chemistry for growth: Unlocking a competitive, low carbon and energy efficient future; CEFIC; 2013
73 For a study on composition and drivers of energy prices and costs in energy intensive industries: the case of the chemical industry – Ammonia; Centre for European Policy Studies, January 2014
74 Best Available Techniques (BAT) Reference Document for the Production of Chlor-alkali; JRC, 2014
86
and fermentation processes can be used to produce the pharmaceutical substances. Chemical synthesis involves: reaction; separation; crystallization; purification; and drying stages.
Extraction uses precipitation, purification, and solvent extraction methods are used to recover active ingredients from natural sources. Fermentation involves seed preparation; fermentation;
and product recovery.
Chemical synthesis is used to produce antihistamines, cardiovascular agents, and hormones, while enzymes and digestive aids, allergy relief medicines, insulin, anti-cancer drugs, and vaccines are types of products developed through extraction. Fermentation is typically used to manufacture steroids, antibiotics, and vitamins.
3.4.4 Energy metrics
3.4.4.1 Energy intensity based on sector energy cost
Table 3.41 provides an indication of the sector’s energy intensity for selected EU Member States expressed in 2 ratios75 from 2008 - 2012. Based on the 5 year trend of the energy intensity ratios, it has remained flat, consistent with the longer term intensity trend discussed in Section 3.4.5. The chemical and pharmaceutical sector ranks 6th most energy intensive sector in comparison with the 8 industrial sectors evaluated in this Study in terms of energy cost spent per value added generated.
Table 3.41 Energy cost intensity ratios per unit of VA and Turnover generated for selected MS *
Ratio 2008 2009 2010 2011 2012
1 Energy cost/ Value Added
13% 12% 11% 12% 12%
2 Energy cost/
Turnover
3% 3% 3% 3% 3%
Source: ICF analysis on EUROSTAT SBS, accessed Dec 2014
* Note: Data covers Czech Rep, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Lithuania, Hungary, Austria, Portugal and UK
3.4.4.2 Energy intensity of key processes
The chemicals subsector is characterised by the considerable use of fossil fuels and biomass for energy and feedstock. The bulk of energy and feedstock use occurs in a few key production processes. Steam cracking; ammonia production; and chlorine production, which occur in the petrochemicals and basic inorganics upstream manufacturing subsectors, are estimated to account for over 30% of energy use in the chemicals and pharmaceutical sector76. Table 3.42 presents a summary of the energy intensities associated with each manufacturing subsector.
Table 3.42 Chemicals and pharmaceutical sector energy intensities
Product EU
NACE (group)
Energy use77 (MJ/€ sales)
Energy use78 (GJ/tonne)
Petrochemicals C20.1 12.5 15
75 (1) Ratio of energy cost per unit of value added and (2) Ratio of energy cost per unit of turnover, i.e. the monetary value paid by manufacturers on energy products for every unit of value added or turnover generated by the sector.
76 European chemistry for growth: Unlocking a competitive, low carbon and energy efficient future; CEFIC; 2013
77 Ibid (CEFIC (2013) intensities are presented for illustrative purposes only, since final fuel use includes heat related input into combined heat and power installations, which is excluded from Eurostat energy demand statistics)
78 Aggregated estimate based on ICF site assessments
87
Product EU
NACE (group)
Energy use77 (MJ/€ sales)
Energy use78 (GJ/tonne)
Basic inorganic C20.1; 20.5 12
Polymers C20.1; 20.6 3.25 3
Specialty chemicals C20.2; 20.3 2
Consumer chemicals C20.4 0.75
Pharmaceuticals C21 0.7479
Source: CEFIC, 2013; ICF
As expected, petrochemicals and basic inorganics have the highest energy intensity within the chemicals subsector. Unlike downstream manufacturing, which requires energy to support reactions and mechanical processes (e.g., drying, mixing, rolling), upstream production requires significant quantities of energy (heat) to break and transform organic and inorganic molecules. For example, polymer production is approximately 5 times less energy intensive per unit of production than petrochemical.80 This compares reasonably with CEFIC (2013) results, which note a fourfold difference in energy intensity between polymers and petrochemicals when assessed per unit of sales.81
Based on the sector energy demand energy presented in Table 3.40 and production values in Table 3.39, the overall sector energy intensity is estimated to be 0.08 kTOE/€ (million) in 2011.82
3.4.4.3 EU final energy consumption for chemical and pharmaceutical production
Figure 3.37 presents the average fuel mix for EU chemical and pharmaceutical plants in 2012.
79 Calculated based on estimated energy demand Table 3.40 and production value Table 3.39
80 Ibid
81 European chemistry for growth: Unlocking a competitive, low carbon and energy efficient future; CEFIC; 2013
82 PRODCOM statistics are incomplete and alternate sources of production data are limited; as such, production value has been used as a proxy for sector output.
88 Figure 3.37 Fuel mix profile for EU chemical and pharmaceutical sector
Source: EUROSTAT, accessed Dec 2014
3.4.4.4 Energy end use profile
Based on the estimated share of energy consumption amongst the chemical and pharmaceutical sector, and the fuel mix profiles, the following figures present an aggregate energy use profile for the primary energy sources, including electricity, natural gas, total petroleum products (i.e., oil), coal, and other categories.83
Figure 3.38 Figure : Electricity use profile
Source: ICF International
83 Based on ICF energy efficiency studies within the chemicals sector Gas 32%
Electricity 56%
Solid fuel 5%
TPP 4%
Other 3%
89 Figure 3.39 Natural gas use profile
Source: ICF International
Figure 3.40 Total petroleum product (e.g., oil) use profile
Source: ICF International
Figure 3.41 Figure : Coal use profile
Source: ICF International
90 Figure 3.42 Figure : Energy use profile for other sources; i.e., biomass
Source: ICF International
3.4.5 Projection of energy consumption trend
The following details are an extracted summary of the sector profile in Annex 1.
The chemical and pharmaceutical sector contributed to 5% of the EU’s GDP in 2011.84 There are over 30,000 enterprises in the EU generating >€175 billion of value added. Both industries are strong and successful players in the world market. In 2011, the chemicals and pharmaceuticals sector accounted for 19.4% of total industrial energy consumption in the EU.85
3.4.5.1 Chemicals
The chemicals sector incorporates the manufacture of numerous products, including base chemicals (e.g., plastics, polymers, fertilizers, industrial gases); specialty chemicals (e.g., paint, ink, dyes); and consumer chemicals (e.g., soaps, detergents, cosmetics). Germany, France, the Netherlands, Italy, UK, Spain and Belgium constituted 85% of EU chemicals sales in 2011.86 Production in the chemicals sector grew by 0.6% per year between 2000 and 2012;
however, the average was strongly impacted by production declines during the economic recession in 2008 and 2009.87 In 2013, the sector reported zero growth88, with declines in petrochemicals, offset by growth in basic inorganics, polymers, consumer chemicals and specialty products. Nonetheless, the EU has remained the world’s top exporter and importer of chemicals (38.1% of global trade in 2012), with future growth anticipated. Global demand for chemicals is forecast to grow on average by 4.5% annually until 203089, driven by population growth in emerging markets, and rising demand for chemicals in industrialized countries (i.e., demand from automobiles, electronics, textiles, construction industries). The EU is a key exporter, and is expected to support this need (e.g., Germany predicts that its chemical exports will grow by 2.6% annually on average to 2030).90
84 Manufacture of chemicals and chemical products statistics - NACE Rev. 2; Eurostat, 2013a
85 Ibid
86 The European chemical industry. Facts & Figures 2013; Cefic, 2013
87 Ibid
88 Chemicals Trends Report; Monthly Summary, March 2014; Cefic, 2014
89 VCI; 2012; Basic chemicals production 2030
90 VCI; 2012b; The German Chemical Industry in 2030 A summary of the VCI Prognos study
91 3.4.5.2 Pharmaceuticals
Pharmaceutical products include drugs intended for human or veterinary use. Germany, Italy, UK, Ireland and France accounted for 66% of EU-28 total production. Between 1990 and 2010, the pharmaceuticals sector has grown by an average 5% per year91, with the recession creating little impact in 2008/2009. In 2012 Europe accounted for 26.7% of world pharmaceutical sales92. Although there are various threats to growth, including leakage of research/production activities overseas, and counterfeiting of medicines, demand is anticipated to grow to address population growth (emerging markets), the composition of the population (EU), higher risk of pandemics, emergence of new diseases, etc.
3.4.5.3 Sector projection summary
Overall, EU production in the chemical and pharmaceutical sector is assumed to increase through 2050 to meet anticipated global demand for products. Although, pharmaceutical sector growth trends have been historically greater than the chemicals sector, it accounts for only 25% of total sector revenues; consequently, future trends assume a conservative growth rate ranging from 1.1 to 1.3% per year through 205093. Table 3.43 presents the anticipated sales trend for the sector. In 2050, sales are assumed to be nearly 60% greater than 2010 levels.
Table 3.43 Projected sales trend of chemicals and pharmaceuticals in EU (billion €)
2011 2012 2015 2020 2025 2030 2035 2040 2045 2050 Sales
(bil €)
672* 672 707 754 800 848 896 947 1,000 1,056
*Based on Eurostat statistics
In EU-28, final energy consumption in the chemical and pharmaceutical sector decreased by 4% in 2011 compared to 2000.94 This reflects continuing efforts by the sector to improve energy efficiency by reducing its fuel and power energy consumption per unit of production.95 However, the rate of improvement has been decreasing as plant-level efficiency is maximised, making it more difficult to make further improvements. This is illustrated by the sector reducing its energy intensity by approximately 4% per year between 1990 and 2000, but between 2000 and 2010 the rate has dropped to approximately 1% per year96. Reflecting this trend, it is assumed that sector intensity will decrease by 0.5% per year through 2020, and then by 0.25%
through 2050 as further incremental process efficiency improvements are made to improve margins, and meet existing legislative requirements (e.g., EED, IED). Table 3.44 presents the anticipated energy intensity trend through 2050.
Table 3.44 Projected energy intensity trends for chemicals and pharmaceuticals
2011 2012 2015 2020 2025 2030 2035 2040 2045 2050 Energy intensity
(kTOE/ million €) 0.081 0.081 0.080 0.079 0.079 0.078 0.078 0.077 0.076 0.076
*Base year energy intensity determined from Eurostat (2013)
Figure 3.43 illustrates the BAU projection trend (energy consumption and production) for manufacture of chemicals and pharmaceuticals in EU28 over the period 2012 to 2050.
91 EC; 2011; EU industrial structure 2011 Trends and Performance
92 Efpia; 2013; The Pharmaceutical Industry in Figures
93 Similar to Cefic Roadmap (2013) projected trends (continued fragmentation scenario)
94 Eurostat; 2013c; Energy, transport and environment indicators; Luxembourg: Publications Office of the European Union
95 The European chemical industry. Facts & Figures 2013; Cefic, 2013
96 Ibid
92 Figure 3.43 BAU projection for manufacture of chemicals and pharmaceuticals in EU
3.4.6 Projection of energy saving potential
Figure 3.44 presents the energy consumption projections from 2011 through to 2050 under the BAU, technical and economic scenarios97 from the modelling outputs of IEEM.
A total of 99 ESOs which are technically feasible to the sector were accounted for in the modelling process. The projected savings under the technical98 potential scenario is 16.5 million TOE (25% saving) in year 2030 and 18 million TOE (22% saving) in year 2050 with reference to the BAU projections.
A total of 49 ESOs were included under economic scenario 1, resulting in a projected saving of 2.7 million TOE (4% saving) in year 2030 and 6.4 million TOE (7.9% saving) in year 2050 with reference to the BAU projections.
An additional 17 ESOs, i.e. a total of 66 ESOs, were included under economic scenario 2, resulting in a projected saving of 3.2 million TOE (4.9% saving) in year 2030 and 7.4 million TOE (9.3% saving) in year 2050 with reference to BAU projections. The additional savings for economic scenario 2 are mainly attributed to the following additional ESOs:
■ High efficiency burner (boiler)
■ Inter-plant process integration
■ High efficiency non-packaged HVAC equipment
■ Premium efficiency control with Adjustable Speed Drives (for pumps and motors)
■ Advanced boiler controls
■ Process heat recovery to preheat makeup water
97 The economic scenario 1 assumes an uptake of ESOs which fulfils the less than 2 year simple payback criteria, whereas the economic scenario 2 assumes an uptake of ESOs of less than 5 year simple payback.
98 Under the technical potential scenario, it is assumed that all technically feasible ESOs relevant to the sector is implemented regardless of economic viability.
- 200 400 600 800 1,000 1,200 1,400
- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
2011 2012 2015 2020 2025 2030 2035 2040 2045 2050
Production [bil EUR]
Energy consumption [kTOE]
Production BAU energy consumption
93
The full list of Energy Saving Opportunities are listed in Annex 3. The list of ECOs under economic scenario 1 and 2 is presented in Annex 4.
Figure 3.44 Projected economic and technical potential scenario energy use for the chemical and pharmaceutical sector
The following energy saving opportunities listed in Table 3.45 represents approximately 66%
of the overall sector energy saving potential.
Table 3.45 Projected sector energy saving opportunities with highest technical potential Energy saving
opportunities
Description
2030 Technical potential (kTOE/a)
2050 Technical potential (kTOE/a)
% of total sector technical potential (2030 / 2050) More efficient
low grade waste heat recovery technologies (emerging)
Technology is available to take advantage of even the low grade waste heat, which remains after other more efficient uses of waste heat have been exhausted. Organic Rankine Cycles can be used to produce power from heat as low as 80°C, and hence are a “new heat sink” to utilize this waste heat.
1946 2182 12% / 12%
Improved catalyst
Catalysts are continually being improved to increase process performance and reduce energy consumption.
1627 1869 10% / 11%
30,000 40,000 50,000 60,000 70,000 80,000 90,000
2 0 1 1 2 0 1 5 2 0 2 0 2 0 2 5 2 0 3 0 2 0 3 5 2 0 4 0 2 0 4 5 2 0 5 0
Annual Energy Consumption (kTOE)
BAU Consumption Technical Scenario Consumption Economic Scenario 1 Consumption Economic Scenario 2 Consumption