Chemical industry needs to prepare for climate change disruption

Climate change could seriously disrupt the chemicals industry and have already caused hundreds of millions in damage, according to Lux Research's new report: 'In the Path of Destruction: Preparing for Climate Change in the Chemical Industry'.

“Increasing levels of CO2 from human-made sources will amplify climate-related risks for the chemical industry. Coastal storms, inland flooding, extreme temperature, and drought will all have wide-ranging consequences,” explains lead report author, Kristin Marshall, Senior Research Associate at Lux. “Serious impacts will include damage to capital assets, disruptions to transport and raw materials availability, and impacts on labor productivity and safety.”

Beyond requiring mitigation steps, these climate impacts will also drive structural changes to industry production. Marshall continues: “Our review of the climate change adaptation strategies found that there is no completely effective solution except to move out of the path of destruction.” The need to adapt will make small-scale, decentralised operations a growing part of the chemicals industry, even in the face of worse economics, as the impact of climate changes intensifies.

Companies do not have to be situated along coasts to be exposed to climate risk given threats to production and logistics. The financial implications are already significant, costing hundreds of millions in damage and lost earnings. In the long term, small-scale decentralised manufacturing, such as fermentation or electrochemical production, will enable companies to operate across multiple smaller facilities, reducing exposure of the supply chain to climate risk.