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- Herausgeber: Wiley-VCH
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
Discussing the technological supremacy of the chemical industry, including pharmaceuticals, and how it will adopt a leading position to solve some of the largest global challenges humans have even seen, this book details how the industry will address climate change, aging populations, resource scarcity, globality, networks speed, pandemics, and massive growth and demand. Following a detailed introduction to some of the megatrends shaping our world over the forthcoming decades, the book goes on to provide several scenarios of how the world could look by 2050, including 'business as usual' and a 'sustainable' one. Chapter 3 gives a comprehensive overview of the current status, while providing a short historical review of the chemical industry, its origins, achievements and fundamentals. The following chapter reviews the potential impact of each of the selected megatrends on the industry, while Chapter 5 proposes how it could look by 2050. Several features of the chemical industry are presented and discussed, including the industrial relevance from an economical, technological and profitability point of view. The largest chemicals markets in absolute and per capita bases and the areas and countries with largest growth potential for chemicals, pharmaceuticals and feedstock. This chapter also reviews the impact of climate change on the chemical industry from a feedstocks and products point of view and, more specifically, the potential costs in reducing CO2 emissions. A final, concluding chapter summarizes the forthcoming megatrends and potential challenges, opportunities and the outlook for the industry as a whole.
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Seitenzahl: 493
Veröffentlichungsjahr: 2013
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Table of Contents
Related Titles
Title Page
Copyright
Preface
Acknowledgments
Introduction
Methodology
Chapter 1: Global Megatrends by 2050
1.1 Social Megatrends
1.2 Economic Megatrends
1.3 Political Megatrend
1.4 Energy Megatrends
1.5 Climate Change
1.6 Wild Cards
1.7 Accelerators – Information Technology and “Singularity”
1.8 Appendix: Climate Change
Chapter 2: The World by 2050
2.1 “A Much Larger, Wealthier, Healthier, and Sustainable World”
2.2 Status of the World – 2010
2.3 The World in 2050
Appendix: Roadmaps to a World of 4000 g of CO2 per Capita per Day
Chapter 3: The Chemical Industry in 2010
3.1 Chemical Industry: Economic Relevance
3.2 Chemical Industry: Technological Relevance
3.3 Industry Relevance: Profitability
3.4 Feedstocks and Energy
3.5 Major Sectors and Products of the Chemical Industry
3.6 Industry Structure and Companies
3.7 Safety
3.8 Background
3.9 Conclusion
3.10 Summary – Industry Major Features and Upcoming Megatrends
3.11 Major Features of the Chemical Industry
Bibliography
Chapter 4: Impact Assessment of the Global Megatrends on the Chemical Industry
4.1 Introduction
4.2 Megatrends with the Highest Impact into the Chemical Industry (Global & Area Level)
4.3 Megatrends with the Highest Impact in the Industry (Area Level) – (Figure 4.4)
4.4 Megatrends with the Highest Impact into the Different Features of the Industry
4.5 Major Results for the Chemical Industry Globally
4.6 Major Results for the Chemical Industry in the ADV Economies
4.7 Major Results for the Chemical Industry in the BRIC Economies
4.8 Major Results for the Chemical Industry in the REST Economies
Chapter 5: The Chemical Industry by 2050
5.1 Introduction
5.2 Feature 1: The Relevance of the Chemical Industry
5.3 Feature 2: Inputs – Feedstocks
5.4 Feature 3: Outputs – Products
5.5 Feature 4: Climate Change – Greenhouse Emissions – CO2 Emissions
5.6 Feature 5: Industry Structure
5.7 Feature 6: Social Awareness
Appendix – Climate Change
Chapter 6: Conclusion
Appendix
Index
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The Author
Rafael Cayuela Valencia
Holzmoosrütistr. 6
8820 Wädenswil
Zurich
Switzerland
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Preface
The aim of this book is to produce a comprehensive overview of how our world and the chemical industry could look by 2050, by completing a detailed and structured assessment of how the upcoming megatrends could influence our world and the chemical industry during the next decades.
During the last century the world has seen the largest and longest period of wealth creation in human history, with our world living standards reaching their highest levels. During the next decades, that trend is not only going to continue but also accelerate. The world will go through another period of unprecedented economic and social wealth creation. In a world with more than nine billion people and an expected gross domestic product (GDP) four times larger than today, the world by 2050 will host the wealthiest society in human history.
During the next decades the world will be in the midst of one of its largest and most radical transformations. Our societies, economies, political systems, and even the way we work, communicate, and live may be altered. New economic superpowers, like the BRIC (Brazil, Russia, India and China) will become reality, with China and India becoming the two largest economies in the world. New industries and new and large economic players will appear, while many others will quickly loss relevance. The potential improvements in human progress and wealth creation, with millions of people leaving poverty forever, are simply outstanding and fascinating. The world per capita GDP will treble from current levels up to $30 000 by 2050 (2009 based) while the world average life expectancy will move from 67 years in 2010 to 75 in 2050. The potential progress in all fields of human life will be simply enormous. The change will be gigantic, the speed frantic and the need for change will be unquestionable. However, all this positive progress will not come for free and without caveats.
During this journey, our world will be confronted with some of the largest challenges humanity has ever seen. Energy scarcity and climate change might be the most obvious and radical, but not the only ones. Strong global demand across all industries, significant changes in the way we live, communicate, and organize our societies, at national and international level, will also pose significant challenges. Life expectancy and medical progress will reach unseen levels across the world, a factor that might have the potential to alter all aspects of our life to levels never seen or even thought of before.
In a world with more than nine billion people and the host of the wealthiest and most advanced society in human history, our world energy demand under the “business as usual” (BAU) scenario will not only be enormous, but might also be impossible, and even when possible it might not be sustainable. The world average CO2 emissions per capita per day will move from 12,000 grams a day in 2010 to 28,000 grams by 2050. However, in order to avoid climate change, our world will need to learn to live with just 4,000 grams of CO2 per capita per day; equivalent to a 30 km drive per day (based on a car with CO2 emissions of 130 g per km). Under the “BAU” scenario the world energy demand could triple from 12 million tonnes of oil equivalent in 2010 to 35 million tonnes by 2050. Crude oil demand could also more than double from 87 million barrels a day in 2010 to 247 million barrels a day by 2050.
The enormous growth experienced during the last century, in economic terms, energy demand, and population, among others, suggests that similar or higher levels of growth during the next decades might not be attainable or sustainable this time. The world will need to face a gigantic energy and emissions diet, cutting CO2 emissions to the current levels of a citizen in India.
The chemical industry, as the key enabler of human progress and a building block of many other industries, will again be called into duty. In a world with a GDP of more than $US 280 trillion (2009 dollar) the chemical industry not only has the potential to quadruple by 2050 but, more importantly, it will again have the opportunity to unleash its full potential. During the next decades we will see how China consolidates its role as the largest chemical maker in the world, how the Indian chemical industry will blossom to levels never seen before and how the pharmaceutical industry in the BRIC economies will simple explode with a humungous 1595% growth. The per capita demand for pharmaceuticals in the BRIC economies is expected to grow from $30 in 2010 to $444 by 2050.
The chemical industry is not new to this sort of challenge. It has been enabling human progress and innovation through chemicals and pharmaceuticals for centuries. This industry enabled the first and second industrial revolution and, most recently, all the miracles of the last century's economic growth; the longest period of wealth creation in human history. The chemical industry has been improving living standards and quality of life since its origins, and indeed our current life standards would not be possible without it.
The enormous challenges that climate change and the expected vast economic growth will present, will not only affect directly the chemical industry as an industry itself, but will also force the industry to excel in what it does best: technology and innovation. The industry will soon be called into duty again, forcing it to transition again from a manufacturing and operational model into an innovation model.
This book is intended to provide a logical and comprehensive framework to understand and assess the potential impact of upcoming megatrends in the chemical industry. It is not intended to provide critical solutions or answers to very complex topics, but to provide the right level of understanding, fundamentals and concern, pointing the industry towards its major megatrends. In other words, this book is not intended to be the end, but just the beginning. A starting point and an area of reflection; a book that aims to stimulate proper debate across the chemical industry, other industries, and our society.
I believe, our world is poised to enter another period of unprecedented wealth creation, human progress and change. The challenge will be enormous for our society and for the chemical industry, but the rewards will be equally large and satisfactory. By 2050 the world will have not only the privilege to host the wealthiest and most advanced society in human history, but also the enormous responsibility to leave a sustainable world for the generations to come. At this time there are no answers or solutions, sometimes not even questions, but that is expected to change very quickly and soon.
The stakes are high, very high, and our society and the way we live depend on it. The challenges and rewards are enormous, the responsibility gigantic, and the clock is ticking fast. However, it is in adversity where the best of mankind and the chemical industry has always been seen; and it is my firm conviction that the chemical industry, as a catalyst of human progress and innovation, will be at the core of the solution. There is no other way, and that will be the case.
In this current world, severely affected by perhaps the second largest economic recession in our history after the great depression, I hope this book brings a fresh opportunity to start shifting our focus from the short term to the long term, gearing our attention toward much brighter horizons and the industry into more innovative paradigms. During the next decades our world has the potential to host the wealthiest society in human history, pulling hundreds of millions of people out of poverty; however, if the upcoming concerns are not properly and timely addressed, our generation will move from regretting what has been lost during the last economic crisis, into appreciating what we had and perhaps might not be able to have again.
The world will overcome the current financial crisis and the different economic challenges, as always, but what we may have in front of us might be something as unexpected to some as unbearable to others. The world is on the verge of its most fascinating challenge, the potential for human progress and economic growth is tremendous, however, at stake is the way we live and work, not only today but also tomorrow.
A call for attention to the future will soon reach us, perhaps as soon as the world economy comes back on track, and with that call the world will be confronted with a huge potential and enormous challenge. This shift from the financial crisis to the sustainability of our world and a bright economic future will reach us very soon; and with it, the chemical industry will be called into service once more. I am confident the industry will again be at the forefront of the solution, as always. This time I just hope we will not forget it too soon.
Enjoy the challenging journey into a better world through better chemistry.
Rafael Cayuela Valencia
Acknowledgments
To my parents, Rafael and Maria Carmen, who taught me that with perseverance, curiosity, honesty, and care for others everything is possible.
This book would not be possible without the personal and professional collaboration and support of a vast number of people; people who have helped me over the years to become who I am. This book is a result of years of reflection, study, and learning about the chemical industry and its different relations and interactions with our society, economy, and world. It is not intended to be an end point that provides ultimate solutions and conclusions but rather a starting point. A book for learning, reflection, and debate; and ultimately a call for action.
Professionally, I would like to thank The Dow Chemical Company, who gave me the incredible opportunity to learn about the chemical industry from one of the best chemicals companies in the world, working with some of the most talented people in the industry. A place from where I have great memories and friends. The large Dow family with its people, heritage, and passion to strive is something I will appreciate for the rest of my life. After one year working for Dow Chemical, The Chemical Industry News Magazine and Chemical Market Intelligence (ICIS) conducted a survey among young fresh employees in the chemical industry which gave the opportunity to my friend and colleague Mr. Vladimir Jacobson and I to express our complete fascination for working in the chemical industry and for Dow Chemical. Dow's global footprint and working environment, its people and its clear commitment to improve and bring value to its employees, shareholders and society, is something we have never stopped appreciating. Ten years on from that interview, we both remain committed to this fascinating industry, passionate about it and willing to vindicate its proper role in society.
Working and learning from some of the greatest business minds in the chemical industry has not only been a great honor but also a fascinating experience. I could spend several pages mentioning some of the supervisors, mentors, and friends at Dow who have guided me through the different steps of my already fascinating career in the chemical industry. People like Mr. Pedro Suarez, Mr. Julio Hernando, Ms. Martina Bianchini, Ms. Isabelle Driessens, Mr. Guido de Witt, Mr. Luis Quismondo, Mr. Rene den Breeker, Mr. Frank Morgan, Mr. Alfonso Escudero, Mr. Markus Wildi, Mr. Niklas Meintrup, Mr. Chris Easdown, Ms. Carol Dudley, Mr. Torsten Kraef, Mr. Romeo Kreimberg, Mr. Juan Luciano, Mr. Celso Goncalves, Ms. Sarah Opperman, Mr. Ken van der Wende, Mr. Craig Arnold, Mr. Ralf Irmert, Mr. Frans Hordies, Mr. Peter Kaestner, Mr. Marco Levi are only some of those that have helped and guided me. All taught me something special and I had great experiences working with and for them. I truly admire each of them for their dedication, leadership, and genuine desire to create a positive influence beyond themselves. Thanks to all of you for your support, teaching, and this incredible journey. You all know why.
Special thanks also to Mr. Frank Morgan and Mr. Juan Luciano, two outstanding Dow leaders, had the vision to give me this fascinating challenge. As an economist by education, writing about the chemical industry has been one of the most challenging things I have ever done. Considering the enormous respect and admiration the chemical industry provokes in me, writing about its future has been given me many sleepless nights and many days dreaming. Please consider this book as a small contribution to the chemical industry. An industry often misunderstood and always undervalued.
This manual may not have the answers you were looking for, but I hope it will still give you some of the questions you wanted to hear. In that sense I would also like to thank Mr. Tim Nash, Dean of the Northwood University and Mr. Bill Busby from the Dow/Northwood MBA program for their passion in educating and pushing us to our highest potential. Tim's contagious and brilliant mind has been a constant source of inspiration, an example to follow and a real friend.
Outside Dow Chemical, Mr. Sam Vasegui has been without doubt the catalyst of this project, the visionary who guided me and supported me to dare to go beyond my limits and my own expectations. Sam's delicate presence, often disguised one of the most powerful voices and minds I have ever come across. I thank him for his vision and trust.
Personally, I would like to thanks my parents, Mari Carmen and Rafael for their love, strength, and humble and optimistic approach to life. There are no words or acts to thank them enough. Thanks also to my brother Elias Cayuela for its love, unconditional support and inspirational approach to life. Thanks also to my broad family, including my friends Camilo Bel, Francesco Zanchi, David Carrion, Virginia Canovas, Alexander Perez, Carlos Serrano, David Valverde, Irene Molina, Juan Carlos Herrera, Matteo Rosso, Merari Abigail Escalante, Bernadette Unterkircher, Laurence Conrad, Moreno Volpi, Romeo Volpi, Flavio Volpi, Silvia Rosatto and Rafael Rosatto for your time, your patience, your inspiration and love. You all know why and you all deserve to be here.
Introduction
The purpose of this book is to provide, for a certain set of assumptions and megatrends, a solid understanding and overview of how the chemical industry and our world could look by 2050.
Due to the obvious complexity and difficulty in making such a projection we will provide a very simple and robust framework of analysis, with the aim that every reader can be aware of our assumptions and eventually could replicate this analysis with his own assumptions, expectations, and realities.
This book is not intended to provide a concrete and unique view of the industry by 2050, but a frame of solutions and questions, based on a certain set of assumptions and megatrends. The ultimate purpose is to create a solid understanding of the principles, fundamentals, and guidelines under which the chemical industry operates, with the premise that trends and circumstances might change, but the framework would not.
For a group of selected megatrends and different sets of assumptions we will present different scenarios and alternatives for the chemical industry. In some cases we will provide one or several scenarios, however, on other occasions we might end up by providing a set of questions or some open scenarios.
Therefore, this book is not intended to offer a final view of the industry, but more a directional one. It is intended to be a starting point, providing different trends and scenarios. Basic scenarios that are intended to create awareness and to stimulate appropriate debate across the industry and society. The speed of change in the world in which we operate and live these days will make it almost impossible to make an accurate forecast for a 40 year period. However, we feel very confident the framework of analysis that we will use should still be applicable for decades to come and directionally our study may still be valid in the foreseeable decades.
In Chapter 1 we will present some of the most pervasive megatrends that will impact our world and chemical industry during the next decades. We will review trends in several different areas, such as social, economic, political, energy, and climate change. For each of these megatrends we will also review several small trends, their interconnection and their connection with other megatrends.
Chapter 2 will present a projection of how the world could look by 2050, based on the previous megatrends. Two scenarios will be presented. In the first, the so-called business as usual (BAU) scenario, we will see how our world could look by 2050 if no major human action takes place and no changes are applied to the expected megatrends. This scenario will present staggering improvements in wealth and living standards across the world, quadrupling the world gross domestic product (GDP) and pulling millions of people out of poverty. Unfortunately, and as we will see later, this scenario might not be sustainable from an energy and emissions perspective. In the second scenario, we will present a sustainable world, a world that will still preserve all the positive aspects of the previous scenario but will manage to avoid climate change and the potential for energy and resources scarcity. For both scenarios we will review some of the fundamental pillars for our society with high impact on the chemical industry. In that sense three fundamental pillars have been selected. The social pillar that includes population and economic conditions; the energy pillar that will establish energy demand projections, including oil and gas; and the sustainable pillar that refers to different measurements for climate change.
In Chapter 3 we will introduce the chemical industry, its history, players, products, and recent status in many critical areas. The idea is to provide a comprehensive summary of the chemical industry, its structure and major features, with the assumption that not all readers may necessarily be knowledgeable about this industry. Even for those already in the chemical industry, certain aspects of this chapter may be interesting and revealing, like those related to its history, products, players, or even its total size and characteristics. As a proud and senior member of the industry, I still find it amazing how little some of us know about our own industry, its history, wonders, roots, and its full positive potential in society. Writing this chapter was an enormous source of personal pleasure and enrichment, a chapter where I kept learning about the complex and fascinating history of our industry. This is a chapter that I recommend to anyone working in the chemical industry or with interest in it.
In Chapter 4, we will review the potential influence of the expected megatrends on the chemical industry. For that purpose we will develop a simple framework of analysis, a framework that we will use for this and further assessments within the book.
Using this framework we will start to assess the impact of the upcoming megatrends on the chemical industry and, ultimately, on the chemical companies of the future. We will review some of the major impacts, the key trade-offs and synergies, however, and for obvious reasons, we will not be able to review all possible interactions.
In the belief that the presented and used framework of analysis may also be valid for different companies within the chemical industry, this framework will be made available for our readers. The idea being that the readers can adapt the model to their own companies, beliefs, and assumptions. After all, our projections are based on some pre-selected numbers of megatrends. Under this premise, we believe that by providing the model to our readers, each will be in the best position to judge our assumptions and projections, while having the option to make their own ones.
In Chapter 5 we will provide an overview of the future of the chemical industry by 2050, by reflecting on the potential impact of each of the megatrends on the major features of the chemical industry under the two defined scenarios: BAU and a “sustainable” world. For each scenario we will present qualitative and quantitative statements about the industry, its major companies, the potential areas of growth, as well as areas of concern and focus. For the first scenario (BAU) we will review how large our chemical industry could become, its energy demand, emissions, major areas of growth, and its key players. Sometimes a modified BAU scenario will also be presented, where the author will introduce some minor changes while remaining as conservative and realistic as possible.
For the second, sustainable scenario we will reflect on the challenges and opportunities the chemical industry will be confronted with when operating in a sustainable way with reduced greenhouse emissions, however, under this second scenario, answers and solutions will tend to be more vague and open. Indeed this is an area that could provoke significant amount of research and innovation during the next decades.
In this chapter we will also provide some conclusions and recommendations for the chemical industry of the future. Considering the enormous area the chemical industry covers – from petrochemicals to polymers, industrial gas, crops, fertilizers, pharmaceuticals, and so on – the aim of this chapter is to provide generic and broad recommendations to the industry, highlighting major changes, areas of focus, growth, or concern. In this chapter, as in some of the previous ones, we do not expect to come with clear answers and solutions, but more with certain generic reflections and guidelines. Guidelines that should be placed into the context of different companies and sectors of the chemical industry.
Finally, in the conclusion we will summarize some of the major opportunities and concerns for the chemical industry in its transition to 2050. The chemical industry is poised to experience significant changes in the next decades, from massive growth, to changing demand, technologies, locations, feedstocks, and even the way it operates and interacts with its different stakeholders. However, and despite the massive changes and challenges expected in these areas, it is in its capacity to innovate and to enable other industries and higher living standards that it will experience the major transformation. Innovation will be by far the major area of focus and attention, as the chemical industry will be required to be at the forefront of the solutions that will save our endangered world.
While the chemical industry has learned to mitigate the negative aspects of change – like the associated cost or potential concerns of the new challenges – the reality is that the upcoming decades with their associated challenges will bring an enormous opportunity for the chemical industry to unleash its full potential, create unprecedented levels of wealth and transform itself into the industry of the new century. The industry will be on the brink of its second revolution; its transition from a manufacturing model into an innovation and growth model. We expect an industry more focused on innovation and value creation, versus its cost, operating efficiency and all sort of other concerns. In other words, an industry more focused on the numerator than on the denominator.
Before concluding this introduction we would like to acknowledge that despite the recent developments in the world economy the world is poised to follow its growth course. The so-called “financial meltdown” in the USA with the Lehman Brothers collapse in November 2008 and the current European sovereign debt crisis have triggered several years of economic slowdown globally, and perhaps one of the longest and deepest economic recessions since the great depression of 1929.
At this time there are still many unresolved issues and concerns on both sides of the Atlantic. High levels of debt and unemployment across the world, especially in the US and Europe, with the potential default of Greece, Portugal, Ireland, and even Italy or Spain, our world still seems economically “ill”, digesting all excesses from the last decades. Weak economic data around the world, growing concerns on the robustness of the Chinese economy and on the long term sustainability of the high levels of debt in the US and Europe do not present a very optimistic outlook for the years to come. In the medium term, the outlook seems much more positive, but in the short term the reality is that the current economic recession might have stolen five to ten years of economic growth.
This economic slowdown has certainly shifted the focus away from the medium to the short term, and from some of the most challenging upcoming megatrends, like climate change and energy efficiency, to the current financial and economic issues. However, this shift will be just temporal, and some of the key issues of our world will come to the forefront of the global debate very soon, as soon as the financial crisis starts to get resolved.
As this book focuses on the long term, we will cover none of the current developments, despite the severity and potential short term influence, see Figure 1. The current slowdown may also have delayed some of the upcoming megatrends, but we do not expect it to have changed the structural and long term relevance of those.
Figure 1 Real GDP growth: black, world economy; blue, advanced economies; brown, emerging and developing economies.
World Economic Outlook (September 2011) © IMF, 2010.
Our world is poised for an unprecedented period of growth in the decades to come, growth that will result in the largest and wealthiest population in human history, and this seems still to be the case. Unfortunately, this growth will not come for free, and significant challenges and opportunities lie ahead. Energy and resource scarcity and climate change will test our capacity to innovate and even put some of our most optimistic projections at risk.
The current economic slowdown is having severe influence in the short term, as well as causing structural changes in the medium term, however, we still believe that in the long term the upcoming megatrends will still apply, as they always did.
Methodology
With such a complex, subjective, and broad topic as the future of our world and the chemical industry by 2050, the aim of this book is to provide the most realistic, factual, and logical set of projections. Projections that are easily replicable, trackable, and understood by anyone. Indeed some of our own projections and calculations will be intentionally very basic in nature, so that they can be easily validated, appearing logical, and simple to our readers.
Despite the fact that sometimes we will present scenarios that might be difficult to believe, we will always try to provide enough argumentation and context to these. Some of the upcoming projections may certainly defy our understanding and current views of the world, we are aware of and can expect this. However, none of them are expected to defy our common sense and logic. Indeed all scenarios and projections are expected to be easily explainable and ready to be validated with previous and recent historical examples.
The ultimate purpose of this approach is to create a set of conservative and realistic projections that are factual, logical, and usable. Despite that, none of our projections are intended to be considered as 100% accurate, rather more directional. Therefore the purpose of these projections is to highlight some of the major expected trends for the chemical industry, offering sometimes more questions than answers, but certainly enabling the industry to start looking into the right areas and to stimulate objective debates around a very complex topic.
For this purpose, most of the book projections will be based on three major projections: the latest World bank and UN data and projections for 2050 and beyond on several social indicators, like population, demographics, urbanization ratios or life expectancy; and the Economic Projections from PriceWaterhouseCoopers (PWC) on how the world economy will look by 2050.
From PWC we will use their GDP projections, while we will calculate our own GDP per capita values, based on the World Bank population projections. PWC's 2050 GDP projections are based on the 2009 US$ international dollar. In order to better understand PWC's economic projections, see the Box below for their long term economic growth model.
Mr. John Hawksworth, chief UK economist for PWC has granted access and use of the latest GDP projections till 2050, not without warning us that these projections have to be considered as directional and not like completed prophecies.
These three projections will be the bases of our long term projections for 2050.
In this area, and before moving forward, we would like to warn our readers that on some occasions we have been forced to use different sources for some specific data points or certain years. This might create some logical confusion and frustration, when the reader will come across two different numbers for the same year or for the same item, depending on the source. However, please be aware that unfortunately sometimes we have been forced to use different sources, when data or the same source were not available.
We would encourage our readers to focus more on the trends rather than on the specifics, after all we are looking into projections for 2050.
Box: PWC's Long-Term Economic Growth Model
The model used to project long-term economic growth in this paper is described in detail in our earlier series of “The World in 2050” reports. The model is a standard one in the academic research literature in which economic growth is driven by four main factors feeding into an aggregate production function:
Technological progress, including “catch-up” effects for emerging economies that vary according to their state of institutional development and stability;
Demographic change, in particular the growth rate of the working age population;
Investment in plant, machinery, buildings, and other physical assets, which contribute to the long-term growth of the capital stock in the economy; and
Trends in education levels, which are critical to the quality of the labor force and its ability to make the most of new technologies.
The assumptions used in this model reflect a broad range of research by bodies such as the IMF and the World Bank, as well as leading academic economists. While any such assumptions are subject to many uncertainties, we believe that the baseline economic growth scenario used in this paper is plausible.
Exchange Rate Projections
Purchasing power parity (PPP) exchange rates are assumed to remain constant over time in real terms, while market exchange rates converge gradually over time to these levels in the very long term (due to faster productivity growth in the emerging economies relative to the developed economies).
When making the different projections to 2050, the book will start by using those from the World Bank and PWC as our major base, extrapolating the current value of the selected variables into the future. Sometimes, especially for projections of energy demand emissions under the “sustainable scenario”, we will introduce further adjustments and modifications.
For instance, considering our projection for the chemical industry by 2050, we will argue that, if in 2011 the chemical industry amounted to a certain percentage of the World GDP, in 2050 that percentage may be similar. Additionally, and to test the validity and robustness of such an assumption, we will start looking at that percentage in the past, so we have a feeling into the validity of the current ratios. Once that second validation is completed, and in accordance with our principle and desire to remain as conservative and realistic as possible, this projection will be deemed a valid one. This projection will then be subject to further adjustments when considering the emergence of new economies, new technologies, climate change, and so on, but in any case all modifications and assumptions will be explained and documented. We expect this approach will be transparent and straightforward for our readers, while it certainly serves our purpose to create awareness and identify major industry trends, rather than getting very concrete on very complex forecasts based on very complex analysis.
Additionally, and when looking into the future of the world and the chemical industry by 2050, we have segmented the world into three major areas; the advanced (ADV) economies, the “BRIC” (Brazil, Russia, India and China) economies and the REST. In the ADV group we have included the four largest economies: USA, Europe 27, Japan, and Canada. Hereafter, we will refer to Europe as meaning Europe 27. The REST includes all other countries not in the ADV or BRIC groups, which is certainly a large oversimplification, and following updates will start looking deeper into the REST group. However, for this analysis this division will serve our purpose; especially when considering that the ADV and BRIC economies together accounted for almost 70% of the world GDP in 2010 and 75% of the chemical industry.
The REST group is very large with a very heterogeneous set of countries, including such different ones as Switzerland, Norway, Iceland, Argentina, Mozambique, Morocco, Kenya, and Tanzania, just to mention a few. Furthermore, some of the REST members, such as Mexico, Indonesia, Turkey, Vietnam, or South Africa will also be subject to a tremendous growth during the next century. In future updates we will start looking into some of these countries, starting to decompose the REST group into its different members, after all some of these countries will have an enormous growth potential during this new century.
In terms of data and sources, this book has tapped into a multitude of experts, organizations, consultants, and analysis. Considering the broad scope of the presented megatrends and the complexity of the chemical industry, it is almost impossible to list all sources, however, some of the most important ones are listed below.
For all sorts of energy data and analysis, we have made extensive use of data from the 2011 Statistical Review of the World Energy from British Petroleum, as well as data and analysis from the US Energy Information and Administration (EIA) and from the International Energy Agency (IEA). From these bases, and using PWC and World Bank projections as a base, we have done multiple projections on oil, gas, CO2 emissions and other energy sources on absolute and per capita bases.
From the IEA, as the world's leading organization on energy issues, we have also used some of the latest projections and scenarios for world energy demand and CO2 emissions by 2030 and 2050. We have devoted special attention to the scenarios relating to the most sustainable scenario, such as 550 and 450 ppm of CO2 emissions.
For the chemical industry we have used data from different international chemical associations, including the American Chemistry Council (ACC), the European Chemical Industry Council, (CEFIC), the International Council of Chemical Associations (ICCA) and the European Federation of Pharmaceutical Industries and Associations (EFPIA). We have also used chemical related data from several generic consultancy firms like McKinsey or Deloitte and Touch as well as some specific to the chemical industry, like IHS (CMAI), Platts, ICIS, or Dewitt. Additionally we have consulted some others and international organizations like OPEC, IMF, OCDE, the European Commission, Eurostat, World Economic Forum, and so on. For some of the chemical companies data we have used multiple sources, including corporate information from corporate annual reports and web pages, as well as data from specialist magazines and many different industry leaders.
As a result, we will present a set of scenarios and projections for the chemical industry as a whole and for each of its major features. In the first chapters we will assess how the upcoming megatrends will affect the world and the chemical industry, while in the later ones we will start providing concrete and factual scenarios about how the world and the chemical industry could look by 2050.
On some occasions we will present two alternatives, one from a prestigious industry expert or organization, and another based on our own calculations, using the methodology explained above. In other cases we will present only one scenario, either from a well known organization or expert, or from our own study, and on some occasions no projections will be available. For some topics, the scenarios will indeed remain open and with a question mark for future follow ups and evaluations.
As previously mentioned, the purpose of this book is to present a logical and conservative view on how our world and the chemical industry could look by 2050, providing enough data and rationale to take the right considerations and decisions. Most of our projections will be tested with the results learnt from the last decades and centuries, evaluating our performance in these areas during similar periods during the last century.
After all, most of the upcoming projections might be wrong, but at least we should feel confident this book provided the right rationale and argumentation; and the projections are conservative and well documented. Therefore let me wish you a safe and pleasant reading into a better world through better chemistry.
Chapter 1
Global Megatrends by 2050
This chapter introduces in great detail some of the major mega trends our world will face during the next decades: such as social, political, economical, energy, and climate change and accelerators such as information technology. This chapter provides multiple analysis, illustration, data and logical argumentation, and background for each of these megatrends. It includes the latest updates on climate change and energy projections by the OPEC as well as the latest assessment and projections on “Shale Gas” and Nuclear Energy.
I never think of the future, it comes soon enough.
Albert Einstein
During this chapter we will review some of the major global megatrends expected to shape the world during the coming decades.
In that sense we have identified six major megatrends: social, economic, political, energy, climate change, and wild cards. Although most are interconnected we will first review them individually and then consider their potential interrelations. Additionally, information technology has also been recognized as a key accelerator and enabler of change; an accelerator that has the potential to affect all the previously selected megatrends. Figure 1.1 shows the different megatrends and the hierarchy among them.
Figure 1.1 The major global megatrends and the hierarchy among them.
The forecasted changes in world population and economic growth, will be the major drivers for change in the next decades, not only influencing our world, but also all other megatrends. Meanwhile information technology will have the potential to influence and accelerate all megatrends.
For each of the megatrends we will also explore several subcategories, and their interrelation with each other and with the rest of them, especially with the two major ones, the social and economic megatrends.
For the social megatrend we will review three fundamental aspects, the increase in population, the change in demographics, and the changes in urbanization. With an expected population of nine to eleven billion people, a much more elderly population, higher life expectancy, and more people moving to live in the cities, social megatrends will set the basis for most of the other trends.
For the economic megatrend we will review the economic projections for the world and its largest economic areas, as explained in the methodology. In this sense we will look at the projections for the Gross Domestic Product (GDP) on both an absolute and a per capita basis globally and for the key selected areas. For that purpose we have divided the world into three major areas: the “Advanced” group (ADV) consisting of the four largest economies in the world – USA, Europe (European Union 27), Japan, and Canada, key members of the G8; the BRIC group consisting of Brazil, Russia, India, and China; and all the remaining countries (REST). This is certainly a large oversimplification, and in later updates we will start to look more deeply at the REST group. However, for this analysis this division will serve our purpose; especially when considering that the ADV and BRIC economies together accounted for almost 70% of the World GDP in 2010, and 75% of the chemical industry.
The REST group is a very large group with a very heterogeneous set of members, ranging from countries like Switzerland to Iceland, Angola, Norway, or Argentina. Indeed some of its members, such as Mexico, Indonesia, Turkey, Vietnam, Korea, or South Africa, among many others, are also expected to have a tremendous growth potential in this century.
Finally, we will also look at the projected movements in foreign direct investments (FDI) for the predefined areas. In a world of 9 billion people, the world GDP is expected to grow from the current 63 trillion in 2010 to $280 trillion (purchasing power parity (PPP) based on dollar 2009), according to the consultancy firm PriceWaterhouseCoopers (PWC). https://spreadsheets.google.com/ccc?key=0AonYZs4MzlZbdC1fandTcXJ0OG9WYW5mZ1NOT1VaTHc&hl=en.
This massive economic growth implies an equally massive redistribution of wealth on absolute and per capita bases, where the so-called BRIC economies will be the largest beneficiaries. China is expected to become the largest economy in the world and India the third, while the USA will be the second and Europe the fourth.
The GDP per capita of the BRIC countries will increase by a factor of 4 to 16, depending on the country, while the REST countries will triple theirs. However, and despite this formidable growth, the ADV economies will still have much higher GDP per capita than the BRICs or the REST, double that of the BRICs and quadruple that of the REST.
This projected strong global growth will enable the creation of a huge global middle class, unique in human history. Indeed by 2050, more than 50% of the world population, that is to say a staggering 4.5 billion people, will be considered as middle class, with a GDP per capita similar to those that we can see in Europe or the USA in 2011.
This large economic growth in the BRIC economies has attracted significant amounts of FDI, during the last decades. This trend will continue for decades to come. However, the ADV economies, and especially the USA, with still increasing populations will keep their dominant position as the largest recipients of FDI.
In the political megatrends we will review multiple parallel trends. On the one hand, the projected global economic growth, especially in the BRIC economies, will serve to enhance their relevance and political power. In this section we will review how this change in the world balance of power could alter some of the existing international organizations and how some new organizations might be required. On the other hand this massive economic growth will continue to foster the creation of large corporations, hereafter referred to as corporate mega-economies (CME). In 2007, 50% of the largest world economies were companies, if we measure companies by revenue. Globalization has offered companies the opportunity to grow much faster than their country, creating CMEs, companies that can be much larger than countries, while growing much faster than them.
In a completely different area, the fast development of social networks since 2004 has created new ways of communication between citizens, citizens and business, and citizens and governments. Social media have enabled millions of people across the world to get connected, allowing them to share, learn, and discuss about all sorts of topics globally. This new form of communication has grown tremendously fast in recent years, especially in the BRIC economies, reaching more than 3 billion users globally in 2011. Social networks have created a new and very powerful way for citizens to make their voices heard, allowing them to share their views and opinions on any issue, including governments and companies. They have contributed to the globalization of people's ideas and thoughts, giving back to the citizens the power to influence in the short term and real time. They have probably changed the way social stakeholders communicate, and this change may no longer be reversible. Social networks may not only have the power to improve the quality of democracies, but also to accelerate the transition of more countries into more democratic models.
Finally, on the political side, Governments' roles are expected to remain very prominent globally. With the current economic recession, after the collapse of Lehman Brothers in 2008 and the current European sovereign debt issues during 2011 and 2012, governments have been forced to take an even larger role. Initially stimulating their economies with large stimulus packages and high intervention into the economy, and currently, especially in Europe, with much broader government intervention. This includes controlling government expenditure, accelerating reforms in the banking and labor system, promoting industry consolidation and M&A (mergers and acquisitions), while controlling the movement of labor, capital, and goods.
Most of the largest economies have put together large stimulus packages, regulations, and action plans to stimulate the economy. The realization that Governments might need to have a role when their economies slow down, will actually match the fact that companies are becoming larger and larger. In a scenario where companies are not only much bigger than countries, but actually keep growing faster than them, the need to better understand and monitor companies' activities will require very strong governments. That, in combination with the fact that governments will still have a large share of the economy, makes us believe that Governments will continue to have a very dominant role in our societies.
For the energy megatrend we will review the key lessons from the last energy transitions, learning about how, when, and why they occurred. Looking into the future we can still envision a world based on fossil fuels, however, the tremendous expected growth in energy demand, in combination with the need to reduce greenhouse emissions, makes the need for additional and cleaner energy sources more obvious.
In a world of 9 billion people in 2050 compared with almost 7 billion in 2010, and an estimated GDP per capita of more than $30 675 (2009 dollar) versus $9219 in 2010, global crude oil demand under the business as usual “BAU” scenario for 2050 could move from the current 87 to 247 million barrels a day.
In other words, by 2050 crude oil demand could treble versus 2010 demand, at observed energy efficiency ratios. Despite the fact that this figure might be completely unattainable based on today's understanding of crude oil reserves, and also illogical based on the expected need to transition from fossil fuel to cleaner energies due to climate change, the reality is that, looking at history, this would not be the first time that crude oil demand has doubled or trebled during a similar period of time.
Most recently, and during the last 50 years, world crude oil demand almost trebled from 30 million barrels in 1960 to 85 million barrels in 2010; although we should acknowledge that the energy ratio, measured in terms of barrels per day versus absolute GDP in trillion US dollars, went down from 5 in 1960 to almost 1 in 2010. So, theoretically, we could also argue that if the world were able to achieve again such an improvement in its efficiency ratio, crude oil demand could stay at around 60 to 90 million barrels a day by 2050.
All these topics will be reviewed and discussed at length in the section on energy megatrends, including the long term feasibility of crude oil and natural gas, their comparative economics versus other sources, and the potential impact into climate change and the chemical industry.
In the section on the climate change megatrend, we will present the basic background and fundamentals behind it, its major contributors, and potential scenarios. The complexity behind climate change is tremendously high, not only because it is a global issue that requires coordinated action from all countries and industries, but also because the potential solutions imply severe reductions in greenhouse emissions in sectors where they are critical, not only for the economy and society today but also for the future projected economic growth. In 2010 the World per capita CO2 emissions were 4.4 mt (metric ton) annually or 12 000 g of CO2 per day, with large differences across countries. The USA with 19.2 mt of CO2 per capita was among the highest emissions, China with 4.6 mt and India with 1.2 mt were among the lowest.
According to studies from the International Energy Agency (IEA), if the world would like to keep the projected economic growth for the next decades while avoiding the potential negative impacts of climate change, the world carbon productivity will need to be increased drastically. In other words, the World per capita CO2 emissions should be reduced from the current 4.4 mt annually or 12 000 g a day in 2010 to 1.5 mt annually or 4000 g per day by 2050. To further complicate this issue, the World will need to accomplish this massive reduction in an environment where, according to our own projections for the “BAU” scenario, the World per capita CO2 emissions could reach 10 Mt or 28 000 g per day by 2050.
We will present a case study, where we could observe the enormous challenges our society will have to reduce greenhouse emissions, even when government, industries and society are committed to achieve it. The reality is that this cannot be achieved in the short term due to lack of suitable technology or still massive growth. This example will show that carbon productivity (the amount of GDP produced per unit of carbon equivalents) of 10 times vs. today's levels is very complex to attain, especially in the short term. All these aspects, and more, will be reviewed at length in the section on the climate change megatrend.
In the final section on the accelerators, we will review how the exponential growth in computer power and the potential arrival of the so-called “singularity”, or convergence of human brainpower and computational power, could accelerate most of the previously introduced megatrends. By 2025, computer power is expected to surpass human brainpower, and by 2045, computer power is expected to become much higher that the total brainpower of all humans. The exponential growth in computer power will serve to accelerate technological developments in many fields – from robotics, to medicine, energy, artificial intelligence, biotechnology, or chemistry.
“Singularity” could have the potential to further accelerate most of the presented megatrends. To illustrate that, let us consider perhaps one of the most intuitive and impacting consequences of the application of higher computational power into our world: longer life expectancy.
Higher computational power will have tremendous impact on machinery, robots, biotechnology, forecasting modeling, medicine, and many other disciplines. Realizing all the enhancements in all these disciplines could result in extension of life expectancy to much higher levels that those contemplated in our current forecast. The United Nations has estimated that by 2050, life expectancy will increase from the current 67 to 75 years.
According to some key members of this “singularity” way of thinking, human life could be extended to well above by 2050, and eventually to 150 years by 2100. Obviously, if such a scenario becomes true, or even if it perhaps applies to a part of the world population, the consequences for our world will be massive. To the point that these scenarios will not only affect most of our population, demographics, or economic scenarios, but will also actually influence the way we live, work, and understand life itself.
For obvious reasons at this stage we have decided not to consider information technology and singularity as megatrends but as accelerators. However, we think both information technology and singularity have tremendous potential to become megatrends and are areas that should be carefully monitored and followed up in the next decades.
Finally, and for illustrative purposes, we will present some of the most radical scenarios, like global pandemics, nuclear wars, and other similar events, not because we expect or desire them but just to share the risk and uncertainties embedded in the exercise of making long term forecasts. Looking into such a long period of time is indeed a very complex exercise with plenty of uncertainties, which is why we will consider the most realistic and logical scenarios and megatrends. Certainly we recognize the potential for more radical scenarios but we will not consider these at this time.
1.1 Social Megatrends
A 9 billion people World, with much larger, wealthier, healthier, and older population moving into cities.
We must learn to live together as brothers or perish together as fools.
Martin Luther King Jr.
Social megatrends are in our opinion one of the main and most far-reaching of the megatrends we will review. Social trends will be one of the drivers of change for all other megatrends. In that sense, social megatrends will be explored from three major angles: changes in the absolute number of population; changes in age and geographical distribution of population (demographics); and changes in the ways of living (urbanization).
1.1.1 Population Growth
The unprecedented period of wealth, peace, and prosperity experienced during the last century – world GDP grew from US$ 2.5 trillion in 1900 to US$ 32 trillion in the year 2000 – set the conditions for an incredible population growth. Indeed, the world population increased almost fourfold in the same period, from 1.6 billion people in 1900 to 6 billion in the year 2000 (Figure 1.2).
Figure 1.2 (a) World population.
Source: Population Division of the Department of Economic and Social Affairs of the united Nations Secretariat. “World Population Prospects. The 2007 Revision” http://esa.un.org/unpd/ppp/index.htm(b) World GDP.
Source: Historical Statistics of the World Economy 1–2003 AD. Mr. Angus Maddison and PriceWaterHouse “The World by 2050”
Although economists will always argue which factor comes first, population or economic growth; most will agree on their positive correlation. Depending on which factor we consider as the leading one, we could analyze and measure growth in an absolute (total GDP) or qualitative (GDP per capita) way, but in the next years both factors will come together (Figure 1.4).
Although we will be reviewing economic trends in more detail in Section 1.2, we should acknowledge the fact that our world has been blessed with formidable and unprecedented economic growth during the last century, growth that has enabled our population to more than treble during that period, from 1.6 billion in 1900 to 6 billion in 2000 and 6.8 billion in 2010 (Figure 1.2).
According to the United Nations “normal” scenario, the world population will continue growing at a similar pace in the next decades, reaching 9 billion. The UN also consider “low” and “high” population scenarios with 10.7 and 7.4 billion people, respectively, by 2050, however, for this book and further analysis, we will stay with the UN base scenario of 9.1 billion people by 2050 (Figure 1.3).
Figure 1.3 UN world population scenarios. Blue line, base scenario; yellow, “low” scenario; green, high scenario.
(Source: Population Division of the Department of Economic and Social Affairs of the united Nations Secretariat. “World Population Prospects. The 2007 Revision” http://esa.un.org/unpd/ppp/index.htm)
A 9.1 billion people projection by 2050 and a 50% growth might seem a very impressive growth and large number, however, if we look at our most recent history, we can observe that our world population has already grown at this pace before in the 1900–1950 period, or even at a much higher rate between 1950 and 2000, when the world population grew by a staggering 137%, from 2.5 to 6 billion (Figure 1.3).
Therefore, and despite the large size and growth rate projected by the UN, the milestone of 9 billion people by 2050 seems quite attainable and realistic. Indeed we could even argue the high-end scenario could become a more realistic one in the next decades, especially when considering that the world population had already reached the 7 billion milestone in 2010, and that the world economy will continue growing fast during the next decades.
In any case the combination of population and economic projections will have a tremendous impact on our world and all the other megatrends. The massive increase in population and economic growth will create formidable challenges and opportunities for those countries, industries, and companies able to understand and profit from them.
