It is interesting to watch the pivot between recycled versus virgin polymer to the carbon footprint of the various options as outlined in the chart below. We are assuming that the numbers in the chart are averages as there is a sizeable range for everything. As we note in today's daily report, ethylene feedstock will impact the carbon footprint of ethylene and consequently, the footprint of polyethylene – HDPE made from ethane based ethylene in the US where the ethylene producer is recycling hydrogen back into the furnaces, will have a much lower carbon footprint than HDPE made from naphtha based ethylene in Europe, for example. On the recycling side, there will also be a range based on transportation costs for collection and sorting and then distribution to a customer.
Source: PKN Packaging News, November 2021
One chart that the polymer industry wants to show, and we are surprised we are not seeing more of yet, compares the carbon footprint of polymers versus alternative packaging materials – virgin and recycle – as generally, the polymers win and by quite a wide margin.
Source: Natural Gas Intelligence, November 2021
We show another chart above that details how to decarbonize the LNG business and as we have noted in prior work and covered in yesterday’s ESG and Climate report, we see this a critical to get broader acceptance for LNG as a key transition fuel. We also see this as a huge opportunity for the US, to be lost or gained based on policy and support (or lack thereof) from Washington. The US has some of the lowest potential costs for carbon abatement and abundant natural gas reserves and could take a lead in supplying the world with low carbon LNG while creating investment in the US and helping the trade balance. This week we saw Freeport LNG announce plans for CCS at its LNG facility in Texas and we would expect other LNG sellers to do the same. Separately we would expect them all to look upstream to their natural gas suppliers in the US and apply pressure to lower the carbon and equivalent footprint of supply – focused on wellhead emission reduction and lower carbon options for pipeline compression and NGL fractionation. But the opportunity could be lost if the natural gas E&P companies are discouraged from investing because of ESG shareholder pressure – the last thing the US needs is an incentive to export more natural gas without the incentive to produce more – then the US runs out.
