How Fashion and Furniture Can Lead Toward a Market for Lower-Emissions Polyester
By evaluating the polyester value chain we can understand pathways to a climate-differentiated chemicals market
Take a look at the label on your favorite shirt — chances are that it is made with polyester. With an annual production volume of approximately 73 million tons, polyester comprises over half of the global textile fiber production and grew 15 percent from 63.3 million tons in 2022. This growth is driven by increasing demand from the fashion and apparel, furniture, and home furnishing (e.g., carpet) industries. The rise of polyester-based fast fashion, among other demand drivers, is creating large-scale challenges for managing waste as well as mitigating the emissions from making, using, and disposing of these products. While demand reduction solutions play a key role in managing waste and growth challenges, there is a market opportunity for sustainably made polyester products to cut emissions further.
The carbon footprint of a polyester t-shirt over its lifecycle is 20.6 kg of CO2e. With over a billion t-shirts sold every year in the United States alone, the emissions stack up quickly, and there is growing consumer concern as they seek out eco-friendly and ethical options. Notably, companies like Nike and Patagonia are setting targets for using recycled polyester and other responsibly-sourced materials in their products.
From fashion to furniture — stitching together the steps that make the polyester value chain
Fossil fuel products such as naphtha and ethane are processed to make chemical derivatives that are further processed into polyester. PET (polyethylene terephthalate) resin is the intermediate chemical made in the manufacturing process, forming the base for polyester used not only in textiles, but also in making soda bottles and other plastic products (Exhibit 1). Due to its complex production process, PET’s emission footprint over its lifecycle can be twice as much as that of other plastic resins.
Incentivizing emissions reductions is a challenge for the chemicals sector due to low commodity margins, capital constraints, and the size, cost, and complexity of the various solutions. Many technologies that produce chemicals with lower emissions are currently cost prohibitive, and the industry has little to no financial incentive to make these investments. An emissions-differentiated market with guaranteed offtake will enable consumers to choose lower-emissions products, while providing financial incentives for producers to invest in emissions-reduction initiatives. One example of successful market creation is sustainable aviation fuel (SAF), which has enabled fuel producers and airlines to competitively transact low-emissions jet fuel. RMI studied the polyester value chain as a case study for piloting a similar differentiated market for the chemicals sector.
Zeroing in on the polyester value chain for piloting an emissions-differentiated market
The chemicals industry is incredibly diverse and there are thousands of chemicals made globally. While each chemical has its own unique value chain, a pilot chemical value chain can act as a blueprint to replicate market differentiation mechanisms for other chemicals. We selected polyester after evaluating it alongside polyvinyl chloride (PVC), polypropylene (PP), and propylene glycol. Polypropylene is used to make car interiors, propylene glycol is in the antifreeze that keeps our car engines running in winter, and polyvinyl chloride is commonly used in home flooring. We selected polyester due to its outsized role in the consumer-facing, climate-aware fashion and furnishing industries, and the value chain’s intersection with adjacent industries sets it up to be easily replicated across markets (Exhibit 2). On the flip side, polypropylene’s market share is spread to many end products/consumers, propylene glycol has a comparably niche market, and PVC is becoming increasingly regulated — making these 3 options potentially challenging for a near-term pilot.
Unpacking how the dollars flow and where emissions are generated in making a polyester t-shirt
There are four distinct stakeholder groups in the polyester value chain: upstream chemical producers, PET suppliers, polyester textile weavers, and retailers of polyester textile products. These stakeholders see different product market prices, costs of production, and emissions intensities, which must be understood to identify opportunities for differentiated market creation and enable stakeholders at each step of the value chain to remain competitive in the market (Exhibit 3).
Additionally, defining a low-emissions product determines where and how many emissions-reduction technologies will be deployed. Almost 25 percent of the polyester value chain’s emissions are created when PET resin is extruded into polyester fiber and spun into yarn. Emissions in this process mainly come from electricity use (Scope 2 emissions). PET suppliers can reduce emissions primarily through renewable energy procurement and show reductions through normalized accounting of all input emissions. Upstream chemical manufacturers also contribute upward of 25 percent of emissions through the production of xylenes, glycols, naphtha, and other chemicals needed to make polyester (Scope 1 emissions). Technologies such as defossilized polyester from bio-based feedstocks, carbon dioxide utilization, fuel-switching, electrification, and recycling can significantly reduce emissions in the manufacturing of polyester precursor chemicals. Together, these stakeholders can mitigate over half of all emissions in the value chain if incentivized by defining and creating demand for lower-emissions PET or polyester.
Low-emissions polyester is great for the planet, and there are ways for it to be profitable too
There is an exponential increase in cumulative value added (from $1.60 to upward of $11 per t-shirt) when polyester fabric is transformed into finished apparel at retail stores. Consumer products with unique and real sustainability claims often experience faster revenue growth. Climate- and community-conscious retailers can play an influential role in creating demand signals for differentiated polyester products. These stakeholders can enable this by participating in voluntary mechanisms such as buyers alliances. A buyers alliance aggregates demand for a low-emissions product and provides a pricing signal to producers for how much the purchaser is willing to pay for the product. This has been successfully demonstrated in the Sustainable Aviation Fuel market through the Sustainable Aviation Buyers Alliance (SABA) in which businesses, airlines, and producers align on pricing and demand for low emissions jet fuel.
Feedstock suppliers and producers of primary chemicals and chemical derivatives can drive emissions differentiation through innovation and operational improvements. In the first few steps of the value chain, large capital investment is often needed to design and retrofit chemical processes to make low-emissions polyester. Chemical producers can provide differentiated and comparable product emissions data through several industry-backed emissions accounting tools. Incentives and policies such as production subsidies, investment and production tax credits, and investment loans or regulation such as the Emissions Trading System (ETS) in the EU can enable these stakeholders to adopt emissions reduction solutions and meet the demand for differentiated polyester products.
A path forward to pave the way for a differentiated chemicals market
In addition to innovation in technology, policy, and procurement models, another key factor for differentiated markets is product standards and certifications. Today, standards exist that cover recycled content, product carbon footprint, safety, and other attributes. These must be harmonized, piloted, and improved to facilitate alignment between buyers on key sustainability criteria and an approach to sustainability evaluation.1
Overall, consumer trends point positively towards the case for an emissions-differentiated polyester market, and the higher margins of premium apparel suggest that voluntary action could be successful in this value chain. In our upcoming articles of this four-part series, we will explore the opportunities and challenges of voluntary and policy-based mechanisms, chart their implications for the polyester value chain and sector more broadly, and share insights from our engagement with organizations across the supply chain leading the way on creating markets for differentiated chemicals.
Work is still needed to incentivize market development and investment in emissions reduction levers in the chemicals sector, and solutions will likely span voluntary corporate action and policy mechanisms. This work is essential to meeting emissions reduction targets in a growing sector that is foundational to the products we count on daily. The future of the chemicals sector is carbon differentiated, and companies across all parts of the value chain can lead the way.
1 Global Recycling Standard assesses recycled content, SCS Global Services evaluates product carbon footprint, and OEKO-TEX and bluesign evaluate the safety of dyes, finishes and chemicals that go into polyester.
