Celtic Renewables: Middle East turmoil is a wake-up call for the chemicals industry

The closure of the Hormuz Strait has triggered a significant supply disruption, causing the prices of essential petrochemical feedstocks to soar and threatening the stability of the global chemical industry. This geopolitical crisis has led to a doubling of butanol prices and a quadrupling of acetone prices, directly impacting the production of cosmetics, household cleaners, and pharmaceuticals. The situation highlights the urgent need for the sector to transition from fossil fuel dependency to sustainable, bio-based alternatives to ensure long-term economic resilience.

Iran’s closure of the Hormuz Strait in early March, following military strikes by the US and Israel, has choked off global oil and gas supplies, sending energy and feedstock prices spiralling. Bettina Brierley, Chief Commercial Officer at Celtic Renewables, emphasized that while energy prices often dominate the headlines, the chemical industry is a massive consumer of petrochemicals derived from these fuels. Manufacturers and consumer goods firms rely on hydrocarbons and solvents like acetone and butanol for thousands of products, ranging from plastics and medicines to household cleaning supplies. The current disruption marks the second major fossil fuel supply shock in four years, following the 2022 invasion of Ukraine, exposing the extreme vulnerability of global supply chains to regional instability.

Since hostilities began in late February, the price of fossil-derived butanol has doubled, while acetone has quadrupled, forcing manufacturers to pass these higher costs on to consumers. Brierley suggests that chemical producers now face a choice between maintaining a 'business as usual' dependency on volatile fossil fuels or switching to sustainable bio-based alternatives. She noted that the industry's reliance on fossil-derived chemicals is a relatively recent development from the 1950s; prior to that, fermentation processes were standard for converting sugars and starches into essential solvents. This historical context suggests that a return to bio-based feedstocks is a viable path for modern manufacturing.

Celtic Renewables is addressing these challenges at its biorefinery in Grangemouth, Scotland, where it uses ABE fermentation to transform locally sourced waste materials into bio-acetone and bio-butanol. By utilizing waste from the food and drink industry, such as whisky pot ale and rejected potatoes, the company provides a low-carbon alternative that bypasses vulnerable long-distance supply chains. Brierley argues that shifting to bio-based chemicals is no longer just an environmental imperative to meet CO2 regulations, but a strategic move to strengthen national manufacturing capabilities and economic resilience. This transition supports job retention in the UK and offers a buffer against the unpredictable geopolitical events that continue to disrupt the global oil and gas markets.