At the G7 conference in June, leaders vowed to use joint capabilities in research and innovation to decarbonize industrial sectors such as chemicals and petrochemicals. If the world is to escape the most hazardous temperature rises, the chemicals industry must catch up. Because of its extensive reach into all aspects of society, its actions are critical in enabling the world to achieve net-zero emissions.

More countries are establishing net-zero targets for 2050 in the run-up to November's international climate summit, COP26, where ambition for the next decade will be established. As a result, companies are following suit. To get there, the industry will need a lot of clean energy, a lot of trustworthy and comparable data, and a lot of money to implement innovative technology like electric crackers and green hydrogen.

Direct CO2 emissions from chemical manufacture, according to the International Energy Agency (IEA), reached 880 million tonnes in 2018 - and are rising. In 2017, European industry (including the United Kingdom) contributed 141 million tonnes. Companies recognize that increasing efficiency is no longer sufficient; transitioning to renewables is a key component of plans for 2030 and beyond.

BASF established new targets in March to reduce its global greenhouse gas emissions by 25% by 2030, from 21.9 million to 16.4 million tonnes, while building a new integrated 'Verbund' factory in China. The chemicals behemoth will gradually transition to renewable energy, investing in wind farms to do it. However, new technology for generating basic chemicals such as ethylene and propylene is expected to triple electricity usage by 2035. It plans to spend up to EUR 4 billion to achieve its goal.

Bayer, a company that specializes in crop science and pharmaceuticals, has pledged to reduce emissions directly under its control from 3.76 million tonnes in 2019 to 2.18 million by the end of 2029. These emissions (dubbed scope 1) come from activities like on-site fuel burning and vehicle fleets, while scope 2 comes from the electricity it buys.

It anticipates two-thirds of the savings to come from receiving 100% of its electricity from renewable sources. The rest will come from better efficiency (it plans to invest EUR 500 million in facility upgrades) and fuel switching. Energy managers now have a project management tool where they can enter activities and ideas so that different business functions can learn from one another. It's also looking into a proposal to use geothermal energy to heat its Leverkusen facility. Chemical process emissions, such as those produced in Bayer's crop science division, account for around a quarter of the company's existing footprint and are difficult or impossible to eliminate.

However, due to a shifting portfolio and the introduction of new technologies, Bayer estimates that by 2050, around 10% of emissions will need to be offset or collected. Climate program director Daniel Schneiders said, "reduction is really the core of our climate strategy. And the compensation of the remaining emissions only works when we really stick to our ambitious reduction targets."

Johnson Matthey (JM) plans to get 60 percent of its electricity from renewables by 2025 as part of its net-zero target in the UK. Julia Rowe, group sustainability manager, Said, "making the switch is a bit easier in some of the more western deregulated energy markets than it is in some of the other locations where we have factories. We're working on it in all locations at sensible rates, depending on the market conditions."

She adds, "for scope 1, it's a similar story, but on a slightly longer time scale. Switching facilities that currently run off natural gas for something else depends on two things – availably of an alternative energy source, and then probably a capital investment in our factories, to change equipment over to whatever the alternative energy source is."

AstraZeneca, a pharmaceutical company, plans to remove the remaining 248,000 tonnes of scope 1 and 2 emissions by 2025, after already reducing emissions by 60% since 2015. It will transition to a 100% electric car fleet and eliminate fluorinated greenhouse gas emissions at its facilities, in addition to employing renewables for energy and heat.

Hundreds of firms and organizations have joined the Science-Based Targets project, including JM and Bayer (SBTi). It was created in response to industry requests for help on aligning with the Paris Agreement's goals by the World Resources Institute (WRI), WWF, the UN Global Compact, and environmental reporting charity CDP. It relies on emissions reduction scenarios developed by the Intergovernmental Panel on Climate Change (IPCC), which were carefully chosen to avoid relying on unproven technology or on the rapid and widespread deployment of (for example) emissions removal equipment. Nate Aden at WRI, who works on the technical development of the program, said 'It's entirely focused on emissions reduction targets.'

The chemicals industry's conviction in the climate benefits of its products was a major concern in the beginning. 'For the first several years of the effort, they maintained that they would not establish science-based targets unless they were given credit for the emissions they saved.' And we declined.' Sumitomo and Sekisui, two Japanese companies, eventually broke ranks, and others followed suit. So far, 42 chemical companies have expressed interest in participating (including five based in China). Fifteen of them have targets that have been verified.

LafargeHolcim, a cement manufacturer, is one of 20 firms (about half of which are in Asia and Latin America) that have committed to 2030 targets. The minerals and fuel it utilizes to create cement account for 75% of its emissions. These will be reduced by, for example, substituting and recycling building and demolition debris to reduce the principal component of cement, clinker. It's also building new plants across its network, utilizing robotics, artificial intelligence, predictive maintenance, and digital twins. These advancements should increase the efficiency of its facilities by 15-20% compared to conventional plants.

According to modeling by Camilla Oliveira of Agora Energiewende, a think tank based in Berlin, Germany, new technologies such as chemical recycling of plastics, power to heat (using excess renewables), and green hydrogen can all make a significant dent in the sector's emissions. While carbon feedstock will be required even in a world without greenhouse gases, she claims that 'it is conceivable to reform the sector by employing sustainable feedstock with carbon extracted from the atmosphere which creates chances for climate positive initiatives.'

Steam crackers, another significant source of pollutants, can also be electrified. By 2023, BASF, Sabic, and Linde hope to have an electric-steam cracker demonstration plant up and running.

Merck KGaA has established goals for 2030 and 2040 to achieve climate neutrality. These were created over the course of a year. Technology, according to the German firm, will be crucial. 'We cannot achieve them by just avoiding carbon emissions – you cannot just do less. We need to develop scientific solutions and new technologies which will help to create fewer emissions or which will capture emissions, or which can neutralize emissions,' says Petra Wicklandt, Merck's head of corporate affairs.

New technology, on the other hand, is typically more expensive than burning fossil fuels. Even if it's informal, like in Merck's case, internal carbon price helps the equation.

For all capital projects, Bayer utilizes pricing of EUR 100 per tonne (except those which only reduce emissions from electricity). 'When we set this as the internal price, we looked at our own abatement curves as well as market external carbon pricing, such as in [the EU emissions trading scheme (ETS)].' But we wanted to put in a price that really moved the needle,' Schneiders explains. The EU ETS has more than doubled in price since then, reaching EUR 55 per tonne. 'We will re-evaluate it next year, and I don't think that we will reduce it,' he adds.

However, BASF recently stated in a webinar for the chemicals business that carbon pricing is insufficient. To incentivize transition, carbon contracts for difference – which would pay the incremental cost of new technologies over and above the carbon price in a national trading system – are required. A mechanism like this would require funding, and there are a few ideas on how to pay for it, but all of them would require broad political support.

For scope 1 and 2 emissions, many of the corporations establishing objectives have what they perceive to be reliable data. Scope 3's challenge is to reduce emissions across the entire value chain, from raw materials to product disposal. Apart from cement manufacturers, these account for the lion's share of emissions for most companies. Scope 3 emissions of one firm are scope 1 and 2 emissions of another, and therefore decarbonization can be pushed up and down supply chains. Companies whose scope three emissions account for more than 40% of their total emissions must set a distinct "ambitious and measurable aim" in each of 15 areas, according to SBTi.

JM's eLNO nickel-rich advanced cathode materials portfolio is expected to be carbon-neutral by 2025, with the company's first plant in Poland running fully on renewable energy from the outset. To reduce transportation emissions, the company is forming a European supply chain and working with suppliers to align their carbon reduction goals with its own.

Bayer is leading a group of 31 chemical companies working on new supply-chain sustainability criteria and supplier evaluations. Schneiders said 'We are thinking that more and more we will use scope three emissions – our supplier's carbon footprint – as evolving criteria in the procurement process. We want to engage with suppliers to adopt the same targets we set ourselves so that they (for example) also switch to 100% renewable electricity, and we will help them there, for example, how to deal with green power purchase agreements.'

He adds 'for small suppliers, it could be a burden to have new criteria here. We don't want to lose our suppliers here but to take them with us on the path. Because overall, there's no wind for us when we change supplier and the supplier sells the same stuff (with a high carbon footprint) to other customers.'

GSK and AstraZeneca, both aiming to create new asthma inhalers with reduced carbon propellants, have set aggressive aims to reach net-zero (GSK by 2030, AstraZeneca by 2025). GSK estimates that the usage of its metered dosage inhalers accounted for a third of its annual CO2 equivalent scope three emissions of 15.9 million tonnes. However, acquired products and services are the largest source of scope three emissions for both organizations, accounting for over 13 million tonnes of greenhouse gas emissions. The ultimate goal is to eliminate those emissions (by working with suppliers to reduce scope 1 and 2 emissions).

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