Oil in the Future
Peak oil… this is a concept that is perennially on the horizon, but has yet to actually be witnessed. The term was first coined in the 1950s and has continuously proven the adage of ‘high prices are the cure to high prices’ to be true, as peak production has yet to occur.
Credit: Gemini Imagen 3 AI model
However, peak consumption on the other hand might be a different story. There is growing evidence that oil consumption in China, the world’s largest market, has peaked. Driven largely by the great urbanization of the 1bn+ population, there are some markers that suggest China’s purchases of black gold has peaked and will enter a phase of decline. Looking at the raw data suggests that not only is China’s transportation sector becoming more green (1), and their renewable energy (2) and carbon-free electricity generation (3) is leading the world and then some, not to mention its current demographic status resulting in a population that is getting smaller after peaking in 2022 (4), and you can see this is plausibly the case.
While the future of the transportation and energy markets may be headed in the wrong direction if you’re an oil company CEO, there are other markets that are continuing to grow their oil use, and show no sign of slowing down. One of the most critical and necessary of these is the petrochemical market, responsible for so much of the material stuff that every individual encounters on a daily basis, from plastics to paints and coatings. Decarbonizing this sector of the economy has, to this point, not seen the same level of investment as other sources of fossil fuel demand has.
Challenge of Decarbonizing Petrochemicals
Decarbonizing the petrochemical supply chain has many challenges. Alternative sustainable feedstocks often lack the energy density of petroleum, leading to higher production costs and technical hurdles to convert the feedstock into something more commercially valuable. There’s also the critical part of developing an efficient supply chain capable of moving tons (literally) of stuff from where it is to where it needs to go. The oil supply chain has had the benefit of honing their processes over a century to produce the well-oiled (pun intended) machine that we all benefit from today.
Credit: Gemini Imagen 3 AI model
This is where innovative solutions like those offered by Lakril Technologies come into play. Lakril’s proprietary catalyst technology enables the production of bio-based acrylic acid, a critical component in paints, coatings, adhesives, and numerous industrial applications. By leveraging underutilized capital equipment, Lakril achieves a significant reduction in life cycle emissions—more than 40%—for acrylic acid production. This innovation is crucial, as millions of metric tons of acrylic acid are produced annually, contributing to substantial emissions that to this point, have not had a decarbonized commercially viable alternative for. By decarbonizing this material, Lakril will validate their unique approach and be able to develop their platform to address other fossil fuel-derived materials and further their impact to all types of supply chains across the globe.
Lakril Technologies Co-Founder and President Chris Nicholas
In Conclusion
Today, nearly 2 out of every 3 barrels of oil is currently used in transportation to power a vehicle or energy generation to power the grid. And while this is a big piece of the pie, it’s quite likely that the last barrels of oil will be consumed in the commodity chemical space. Evergreen’s recent portfolio company addition, Lakril, is making sure that this timeline happens sooner rather than later, and we at Evergreen are thrilled to be a part of the journey.
