The petrochemical production industry has long been a cornerstone of East Asia’s industrial prowess. Built on decades of investment, complex supply chains and a strong manufacturing base, the sector has helped fuel the region’s economic ascendancy.

Yet as the global economy begins its gradual but determined pivot towards decarbonisation and renewable energy, East Asia's petrochemical giants now find themselves straddling two competing imperatives: the need to sustain legacy industries that still generate vast revenues, and the opportunity and pressure to realign with a lower-carbon future.

Unlike upstream oil extraction, petrochemicals are more typically transformed into a vast array of products, from plastics and packaging to synthetic fibres and fertilisers. But their carbon footprint is substantial, not only in the energy-intensive processes used in cracking and reforming hydrocarbons, but also in the embedded emissions of the products themselves. As such, petrochemicals are increasingly under scrutiny in the broader climate conversation.

At the same time, there is growing recognition that the petrochemical sector has a paradoxical role to play in the energy transition. Many of the materials and technologies underpinning renewable power systems, including solar panels, wind turbine blades and batteries, are heavily reliant on high-performance polymers and chemical components derived from petrochemicals. This complex relationship means East Asia’s petrochemical industry is not merely a problem to be solved, but potentially a partner in decarbonisation, if it can adapt fast enough.

Demand and sustainability

The dual nature of the sector presents a dilemma. On one hand, demand for petrochemical products remains high, driven by consumer markets, infrastructure projects and growing renewable power capacity. On the other, the very success of these products, in particular plastics, has become an environmental flashpoint, leading to policy interventions and shifting consumer expectations.

Because of this, leading East Asian producers across China, Taiwan, South Korea and Japan have already begun to respond. Investment in advanced recycling technologies, bio-based feedstocks and carbon capture at petrochemical plants is accelerating. But progress is uneven and complicated by much of the region’s dependence on coal-based chemical production routes in some areas, which are notably more carbon-intensive than natural gas-based alternatives.

In many parts of East Asia, coal-to-chemical processes – particularly in the production of methanol and olefins – remain economically competitive and deeply embedded in local supply chains. While these operations support local employment and industrial activity, they also represent a significant emissions challenge. Transitioning away from coal without disrupting regional economies will require coordinated action, significant capital and political will.

Petrochemicals in the renewables supply chain

Despite the environmental challenges, petrochemicals play a foundational role in renewable energy systems. High-performance plastics are integral to the encapsulation and insulation of solar photovoltaic (PV) modules. Wind turbine blades are typically manufactured using composite materials derived from petrochemical resins and fibres. Even battery enclosures and separators in electric vehicles and grid storage systems are reliant on advanced polymers.

Moreover, as the global push for electrification gathers pace, demand for lightweight, durable and corrosion-resistant materials is expected to rise sharply – all of which are areas where petrochemicals have an established and evolving role. This demand therefore, is expected to be particularly pronounced in offshore wind and utility-scale solar installations, where reliability under harsh conditions is critical.

Thus, East Asia’s petrochemical sector featuring names such as Sinopec, Formosa Plastics and Zhejiang Petrochemicals finds itself enmeshed in a form of green paradox.

The materials it produces enable the very infrastructure needed to reduce global carbon emissions, yet the process of making those materials remains a high emitter. The challenge, then, is not to sideline petrochemical production altogether, but to decarbonise its inputs and outputs while leveraging its contribution to renewable growth.

Progress is already visible in several directions, particularly in Japan, China and Taiwan. Innovation in green hydrogen, a potential feedstock for more sustainable petrochemicals, is gaining traction. Mitsubishi and Sumitomo in Japan are known to be recently active in this sector which, by using renewable-sourced electricity to split water molecules, green hydrogen could replace fossil fuels in the production of ammonia, methanol and other base chemicals.

For East Asian producers, access to competitive green hydrogen could prove transformative, allowing them to maintain product output while sharply reducing carbon intensity.

Similarly, the emergence of circular economy models is prompting a rethink of how plastics and other chemical products are used and re-used. Chemical recycling in which waste plastics are broken back into their constituent monomers is being explored across the region, although the technology remains expensive and energy intensive at scale. Nevertheless, integration of recycling into existing petrochemical clusters is being trialled, and in some cases already implemented, with an eye toward both compliance and competitiveness.

Integration also extends into power supply. Co-location of petrochemical complexes with renewable energy sources, particularly solar and wind, is being explored by leading names in industry to reduce the carbon footprint of the energy used in chemical synthesis. However, the sheer scale and baseload nature of petrochemical power demand makes full decarbonisation of energy inputs a daunting task in the short term.

East Asia on the global petrochemical stage

Internationally, East Asia’s position as both a major producer and exporter of petrochemicals thus makes its transition particularly consequential. Countries across the region are key suppliers of resins, polymers and intermediates for global manufacturing. As Western markets begin to demand greener supply chains, East Asian producers will face mounting pressure to provide verifiable environmental credentials.

Carbon border adjustment mechanisms, evolving ESG regulations and shifting trade norms are already forcing regional producers to weigh the cost of inaction. Those that invest early in clean technology and process innovation may not only avoid punitive tariffs, but also gain first-mover advantages in emerging low-carbon markets.

The region’s industrial policy, long focused on strategic sectors, will also play a decisive role. Public-private partnerships, investment incentives and cross-border collaboration will be essential in driving innovation, upgrading ageing infrastructure and maintaining competitiveness in a carbon-constrained global economy.

Tipping point on transformation

To this end, East Asia’s petrochemical industry stands at a critical juncture. Its vast infrastructure, technological know-how and central role in manufacturing make it indispensable. Yet its environmental footprint and dependence on fossil-based feedstocks place it in the crosshairs of climate strategy.

Rather than being a contradiction, the sector’s twin role in both emissions and solutions offers a pathway forward. By investing in cleaner production processes, embracing circularity and actively supporting the growth of renewable technologies, East Asia’s petrochemical producers can become agents of industrial transformation.