How big is the pressure on carbon emissions in the chemical industry?

The total carbon emissions of the chemical industry are limited but the intensity is outstanding: at present, China's annual carbon dioxide emissions reach 10 billion tons, of which the chemical industry emissions are less than 500 million tons, far less than the major emissions of electricity, steel, cement, etc., from the total point of view, the chemical industry is not the first to bear the brunt. However, from the perspective of intensity, the emission per unit income of chemical industry is higher than the average level of industrial industry; In addition, different regions face differentiated pressure due to different economic structure, energy structure and development level. In the process of decomposition of total emission control targets in regional and industry dimensions, the chemical industry may face development shackles from carbon emissions in some regions.

Industrial process emissions are important sources of carbon emissions: carbon emissions can be roughly divided into two categories from the generation mechanism, energy-related emissions and industrial process emissions. The former is mainly the carbon emissions caused by the direct combustion of fossil energy; The latter is not related to energy consumption, but to emissions from specific chemical reactions, such as the decomposition of limestone in the production of cement glass, and the conversion of synthetic gas to hydrogen. With the advancement of renewable energy alternatives in the future, energy-related emissions will be greatly reduced, and process emissions may become the core factor determining the carbon emission pressure of products. At present, the process emission of cement accounts for about 75% of the total process emission in China and is the main source of process emission. However, the unit process emissions of the chemical industry can not be underestimated, the process emissions of carbon 1 and carbon 2 main products can reach more than 50% of the whole process emissions, and its core comes from the conversion process of hydrocarbon, that is, the reaction of CO and water to produce hydrogen, and the disadvantage of coal with the lowest hydrogen content is the most obvious. One ton of coal-based olefin process emissions can reach 6 tons of CO2, if the current EU price of 40 euros/ton of CO2 emissions will be internalized, will account for nearly 20% of the product price. Because of the "defects" of the raw materials themselves, the coal chemical industry has the "original sin" of high emissions, which can also explain why the market listed the coal chemical industry as the object of supply-side reform in the previous period. However, we believe that the necessity of industrial upgrading under carbon neutrality is beyond doubt, but it is not a stroke of death, and leading enterprises with advance layout to improve efficiency and reduce emissions have sufficient living space and development initiative.

Leading companies have the right to development under the carbon neutral goal: Even without a "carbon neutral" framework, leading companies are actually constantly building a capacity base for reducing consumption and emissions. The problem of emission in the process of energization is actually the utilization rate of carbon atoms, that is, the utilization rate of raw materials; Although it is difficult to reverse the reaction mechanism in the short term from the disadvantages of coal chemical industry, the unnecessary loss of carbon atoms can be minimized by improving the utilization efficiency of materials, including syngas, which comes from a deep understanding of the process. For example, Hualu has realized the high-load and long-period operation of the device, and the interconnection of the three platforms has improved the utilization rate of synthetic gas. For example, Baofeng Energy invested 1.4 billion yuan in the construction of solar water electrolysis project last year, coupled with the hydrogen demand of coal chemical industry to reduce process emissions. Seeing that the measures taken by advanced enterprises are not aimed at the current policy, but have consciously carried out advance layout, and they are still the most vitality and the right to development in the short, medium and long-term dimension in the future.

1. Chemical industry in the context of carbon neutrality

Carbon neutrality is undoubtedly one of the most topical topics in the capital markets these days. In fact, the proposal and landing of China's carbon reduction target is not a sudden attack, but has experienced a continuous process of advancement. "Reaching the peak" is not achieved overnight, and "neutralization" is not built in a day. In 2009, China for the first time put forward the quantitative target of reducing carbon dioxide emissions per unit of GDP by 40% to 45% in 2020 compared with 2005. From intensity targets to total targets, from peak to net zero, the evolution of emission reduction targets to higher levels of difficulty has witnessed China's long-term and sustained investment in addressing climate change. In September 2020, at the General debate of the 75th session of the United Nations General Assembly, China put forward the goal of reaching a carbon peak by 2030 and achieving carbon neutrality by 2060. This is not only China's solemn commitment to shoulder the responsibility of a major country to achieve the ambitious goal of addressing climate change and leading global climate governance, but also has a profound impact on the development trend of domestic industry and investment logic. The benefits of carbon neutrality on emerging industries, including new energy, are simple to understand, but the impact on traditional industries is difficult to generalize, especially for the high-energy-consuming industry in the traditional sense of chemical industry, which is interpreted by the market as another round of supply-side reform, but who is the object of "reform"? Especially recently, Inner Mongolia announced that in addition to some exempted projects, it will no longer approve modern coal chemical projects during the "14th Five-Year Plan" period, which has intensified the market's concerns about the future of the chemical industry, especially the coal chemical industry. We believe that the characteristics of carbon emissions in the chemical industry can be summarized as follows: 1) the total amount of emissions is limited but the intensity is prominent. 2) The emission pressure of coal chemical process is relatively large, but leading enterprises with advance layout of efficiency improvement and emission reduction have sufficient living space and development initiative.