Japan Accelerates Petrochemical Industry Consolidation and Low-Carbon Transition
2026-5-22
ICIS released a report on May 15 stating that amid population decline and structural overcapacity, the Japanese government and leading petrochemical enterprises are speeding up low-carbon transformation and vigorously developing a circular economy.
According to the report, unstable raw material supplies caused by recent geopolitical tensions in the Middle East have forced Japanese petrochemical firms to cut operating rates. Industry statistics show that the average operating rate of Japan’s ethylene cracking units dropped to 50% in April. The raw material supply crisis has further driven the industry to shift toward producing olefins using bio-based feedstocks such as bioethanol.
To boost economic growth and build a circular economic system, the Japanese government issued a JPY 1 trillion circular economy development plan in April. It aims to build a world-class resource recycling industrial hub by 2030, and has rolled out mandatory targets for plastic waste recycling to gradually replace waste incineration with resource recovery.
Major domestic Japanese petrochemical companies are restructuring their businesses by phasing out inefficient and loss-making capacities to balance carbon neutrality goals and operational profits. Idemitsu Kosan, Asahi Kasei, Mitsui Chemicals and other enterprises have shut down outdated chemical facilities, scaled back output of basic chemicals, and stepped up investment in green energy and sustainable fuel projects. Multiple firms have reached industrial consolidation agreements to integrate ethylene production capacity in the Kansai region and retire old cracking units, cutting the number of domestic operational cracking units from 12 to 8.
Meanwhile, Japanese enterprises are actively developing technologies for bio-based olefin production and planning large-scale projects to manufacture olefins from bioethanol, targeting commercial operation within several years. These moves will help the industry cut carbon emissions, reduce heavy reliance on petroleum feedstocks, and advance the overall structural upgrading of the petrochemical sector.
According to the report, unstable raw material supplies caused by recent geopolitical tensions in the Middle East have forced Japanese petrochemical firms to cut operating rates. Industry statistics show that the average operating rate of Japan’s ethylene cracking units dropped to 50% in April. The raw material supply crisis has further driven the industry to shift toward producing olefins using bio-based feedstocks such as bioethanol.
To boost economic growth and build a circular economic system, the Japanese government issued a JPY 1 trillion circular economy development plan in April. It aims to build a world-class resource recycling industrial hub by 2030, and has rolled out mandatory targets for plastic waste recycling to gradually replace waste incineration with resource recovery.
Major domestic Japanese petrochemical companies are restructuring their businesses by phasing out inefficient and loss-making capacities to balance carbon neutrality goals and operational profits. Idemitsu Kosan, Asahi Kasei, Mitsui Chemicals and other enterprises have shut down outdated chemical facilities, scaled back output of basic chemicals, and stepped up investment in green energy and sustainable fuel projects. Multiple firms have reached industrial consolidation agreements to integrate ethylene production capacity in the Kansai region and retire old cracking units, cutting the number of domestic operational cracking units from 12 to 8.
Meanwhile, Japanese enterprises are actively developing technologies for bio-based olefin production and planning large-scale projects to manufacture olefins from bioethanol, targeting commercial operation within several years. These moves will help the industry cut carbon emissions, reduce heavy reliance on petroleum feedstocks, and advance the overall structural upgrading of the petrochemical sector.