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NEW YORK (ICIS)–Scope 1 and 2 emissions are
the ‘easy’ parts to address on the road to net
zero greenhouse gas (GHG) emissions – reducing
the emissions you produce (Scope 1) and the
emissions from the energy you consume (Scope
2). The heavy lifting will come from Scope 3
emissions – all the rest that come from
upstream and downstream that indirectly impact
the value chain.
Scope 3 is the hardest to both control and
measure but will also have the greatest impact
on overall emissions reductions. For the
upstream part, a key aspect is ensuring the raw
materials you buy, including the way they get
to you, are also low carbon or carbon neutral.
That is where substantial momentum is building.
Chemical companies are increasingly being asked
by customers about the carbon footprint of
their products, which not only takes into
account the direct emissions emitted to make
that product and the energy required, but the
carbon footprint of the raw materials used to
make it.
Regulatory pressure on Scope 3 emissions
disclosures is building as well – particularly
in Europe and the US.
BROADENING OF INTEREST IN CARBON
FOOTPRINTSSwitzerland-based
Clariant is seeing a broadening of its customer
base seeking carbon footprints of the products
they buy.
“Even six months ago I would have said
consumer-facing customers are more likely to be
asking for product carbon footprints but we’re
seeing it now across all industries,” said
Richard Haldimann, chief technology and
sustainability officer at Clariant, in an
interview with ICIS.
“For tenders that are going into purely
industrial applications and where you might
think that the product carbon footprint is not
going to play a significant role, we still have
customers asking for this, for us to
participate in a tender,” he added.
Clariant aims to cut Scope 1 and 2 greenhouse
gas (GHG) emissions by 40% and Scope 3
emissions by 14% by 2030 – targets validated by
the Science Based Targets initiative (SBTi). It
is one of the few chemical companies that have
outlined a Scope 3 emissions target.
Source:
Clariant
Germany-based Covestro in March announced a
target of achieving net zero Scope 1 and 2 GHG
emissions by 2035, with a 60% reduction by
2030. The company plans to set targets for
Scope 3 emissions some time in 2023. Scope 3
emissions comprise about 80% of Covestro’s CO2
footprint.
“Our biggest lever to reduce emissions is the
inputs [Scope 3], along with the process energy
[Scope 2],” said Thomas Toepfer, chief
financial officer of Covestro, in an
interview with ICIS.
“If you want to be a relevant player,
especially in Europe and the US, you have to
move towards CO2 reductions or you will not be
an accepted corporate citizen. We want to be at
the forefront,” he added.
SCOPE 3 THE LARGEST PART OF EMISSIONS
PICTUREOn the journey to net
zero GHG emissions, measuring and reducing
Scope 3 emissions is critical as it is by far
the largest part of the overall emissions
picture.
“For manufactured products, typically 60-80% of
the total emissions will be Scope 3. When you
start addressing Scope 3, you’re addressing the
biggest part of your emissions,” said Arne
Kaetelhoen, co-founder and CEO of life cycle
assessment (LCA) company Carbon Minds, in an
interview with ICIS.
For chemical companies, Scope 3 typically
represents the majority of total emissions.
US-based Dow
estimates its 2021 Scope 1 emissions were
28.3m tonnes of carbon dioxide (CO2) equivalent
and Scope 2 emissions were 5.7m tonnes. That
compares to estimated Scope 3 emissions of
77.6m tonnes, or 70% of the total. Of Scope 3,
which includes upstream as well as downstream
emissions, over 50% was from purchased goods
and services.
Dow had collected climate data from around 100
suppliers, representing 31% of its 2020 raw
materials spend, and is targeting engagement
with around 350 suppliers in 2022 and 500 in
2023, asking these suppliers to disclose carbon
emissions data and reduction plans.
The company plans to use the data to improve
the accuracy of measuring its own Scope 3
emissions along with its ability to take action
and track progress toward its emissions
reduction goals.
Dow is targeting a 15% reduction in net carbon
emissions by 2030 from a 2020 baseline en-route
to net zero by 2050.
The magnitude of the challenge in Scope 3 is
evidenced by the fact that very few chemical
companies have outlined targets for these
emissions thus far. They have predominantly
focused on goals for reducing Scope 1 and 2
emissions.
Driving down Scope 1 and 2 emissions to net
zero is itself a big challenge, requiring
substantial capital expenditures (capex).
Dow plans to allocate around
$1bn/year in capex – about a third of its
total capex budget – to decarbonising its
plants from now through 2050.
Companies running world-scale crackers such as
Dow will require significant capex to get to
net zero. Other companies producing mostly
specialties, intermediates and engineering
plastics may need less.
Covestro, which produces polyurethanes,
polycarbonate and coatings materials, in March
announced it will spend €250-600m by 2030
in a bid to achieve net zero Scope 1 and 2
emissions by 2035.
Of course, chemicals companies’ Scope 1 and 2
emissions become part of their customers’ Scope
3 emissions through the products they sell.
FOCUS ON SUPPLIER CARBON
FOOTPRINTSMeasuring and
comparing carbon footprints of raw materials
and products is a monumental challenge and
critical for chemical companies to meet the
sustainability goals of their customers.
ICIS recently partnered with Carbon Minds to
launch
Supplier Carbon Footprints, which provides
carbon emissions data for 71 bulk chemicals and
plastics by supplier, plant and region on a
global basis.
“This is a huge step forward for chemical
companies in managing Scope 3
emissions. It will provide the information
to create supply chains with lower climate
impacts and find the right suppliers to achieve
this goal,” said Kaetelhoen from Carbon Minds.
As companies see the climate impact of their
supply chains and compare suppliers’ carbon
footprints, “changing just one supplier could
make an immediate and significant difference to
Scope 3 emissions”, said Alison Jones, strategy
director at ICIS.
Companies can also engage existing suppliers
and help them implement sustainability
initiatives, Kaetelhoen pointed out.
For companies looking to quantify and reduce
their Scope 3 emissions, getting a more
complete picture by product and actual plant
location is vitally important.
“It’s always the life cycle perspective,
including the entire upstream supply chain. For
example, if you look at a polymer, the
production process uses energy and has some
direct emissions – together, this would be
Scope 1 and 2,” said Kaetelhoen.
“But the far bigger part of the emissions
picture will be upstream Scope 3 – how the
input materials for this polymerisation process
are produced, the oil or gas that comes out of
the ground and the transportation in between.
The sum of these emissions is what we call the
carbon footprint of this product,” he
explained.
Ultimately, these chemicals and polymers and
their carbon footprints flow downstream to end
market consumers, including brand owners and
fast moving consumer goods companies (FMCGs)
that are becoming hyper-focused on carbon
impact.
“If you look at the entire life cycle, the
emissions of your supplier are your emissions.
If the end-consumer facing company decides they
need to improve this and has market power,
everyone in the supply chain has to do it,
because if there’s only one weak spot in the
supply chain, the end product will still have a
lot of emissions,” said Kaetelhoen.
Chemical companies seeking to stay relevant
through the next decade must be able to
evaluate their suppliers’ carbon footprints as
well as benchmark their plants and products
versus competitors globally.
“The status quo is that this data for many
chemicals is typically only available on a
country average level. The problem is that in
the same country you might have the dirtiest
producer and the cleanest producer in the world
sitting right next to each other. In this case,
the country average can be almost meaningless.
This is what we are changing,” said Kaetelhoen.
There can be wide ranges in the carbon
footprints of the same chemicals, depending on
process technology as well as feedstock.
“If you compare not only the most
emission-intensive producer, but also the
average producer to the cleanest producer, it’s
a substantial difference across all the
chemicals that we cover,” said Kaetelhoen.
CHALLENGES IN CALCULATING SCOPE 3
EMISSIONSAnother challenge in
evaluating Scope 3 emissions is that companies
use different methodologies and data sources.
Often primary data (from suppliers) is not
readily available.
“We can now imagine hundreds of companies
starting to calculate their carbon footprints.
Some have specialised people and others don’t.
At the moment, it’s a huge mess. People use
different technology, different methodologies,
different data sources. And right now, primary
results are not comparable,” said Kaetelhoen.
The data from Supplier Carbon Footprints, while
secondary data, is methodologically consistent,
allowing for fair comparisons, he pointed out.
Carbon Minds also plans to adapt its carbon
footprint model to new low-carbon process
technologies as they are implemented.
“Our aim is to always model the current status
of the chemical industry as precisely as
possible. If in the future a non-negligible
amount is produced based on a certain new
technology, we need to keep up with it and
include the impact,” said Kaetelhoen.
BASF, CLARIANT MAP OUT CARBON
FOOTPRINTSHighlighting the
importance of measuring carbon impact, the
world’s largest chemical company –
Germany-based BASF – has completed a massive
project to measure carbon footprints for its
entire product portfolio. The company uses
20,000 raw materials to make 45,000 chemicals
produced in 700 plants around the world.
The analysis includes the carbon used right up
the chain to the exploration, production and
refining of oil and conversion to naphtha or
other upstream chemical feedstocks.
BASF has developed a Product Carbon Footprint
(PCF) tool to show customers how they can
reduce their Scope 3 carbon footprint through
the use of products made, for example, with
recycled feedstocks or green energy.
In June, BASF announced a
range of chemical intermediates with carbon
footprints well below the global market
average.
The company aims to help its supply chain as
well as competitors develop a consistent
approach to carbon measurement for a level
playing field. It is sharing its proprietary
PCF digital solution and methodology to third
parties active in software through licensing
agreements.
“Although there are standards, there is room
for interpretation of the standards. There is
uncertainty about how you allocate emissions –
for example when multiple products emerge from
the same process – so if we want to benchmark
companies we need more standardisation,” said
Jan Schoeneboom, team lead, lifecycle
assessment at BASF, in an interview with ICIS
last year.
Ultimately, he believes, a consistent
algorithmic allocation will be required for
every company that participates in carbon data
exchange along the value chain, based on
consensus methodology.
“We realise we are quite a leader in this area
of product carbon footprint quantification, but
it will not be any good for us if we just keep
this for ourselves. This is because the
measurements will not be comparable, and hence,
not useful along the value chain,” said
Schoeneboom.
After providing carbon footprint transparency
to customers since earlier this year, BASF is
now working with them to develop tailor-made
low carbon and net zero carbon products.
In March, BASF and Henkel
announced an initiative to replace fossil
carbon feedstock with renewable feedstock for
most products in Henkel’s European Laundry
& Home Care and Beauty Care businesses over
the next four years.
Fossil feedstock for around 110,000 tonnes/year
of ingredients will be substituted with
renewable feedstock using BASF’s certified
biomass balance approach, resulting in the
avoidance of around 200,000 tonnes of CO2
emissions, according to the companies.
Clariant in April concluded a project to
calculate its own product carbon footprints
which includes Scope 3 plus its own Scope 1 and
2 emissions mapped onto the products. It is now
working to make this information available to
its customers to help them calculate their own
Scope 3 emissions, said Haldimann.
The accuracy of the carbon footprints of the
products naturally relies on the accuracy of
the carbon footprints of the raw materials.
“As is the case for the whole chemicals
industry, we still have a lot of gaps. The
databases are only covering a fraction of the
chemicals,” Haldimann pointed out.
Clariant has product specific carbon footprints
for at least 97% by weight of all the raw
materials included in its products, he noted.
While methodologies may differ, transparency
for customers is critical.
“We always prefer primary data… but it’s also
about recognising that not all primary data is
created the same. We should also be aiming for
transparency – understanding methodologies and
really working with suppliers and customers to
support that transparency,” said Liam
McCarroll, director of sustainability at
US-based chemical distributor Univar Solutions,
in an interview with ICIS.
“It’s important to them, as well as important
to us. It’s not just about the number – it’s
about how that number is achieved,” he added.
Univar will work with suppliers to put forward
products that contribute to more sustainable
solutions, he noted.
IMPORTANT TO START
NOWWhile not all information is
available today to fully measure Scope 3
emissions, it is still important to get ahead
of what is no doubt going to be a big priority
for customers as they work to meet their
sustainability goals.
“There are a significant number of challenges
remaining for an accurate measurement of Scope
3 emissions, but it doesn’t mean that we should
not work towards reducing our Scope 3 already
with what we have,” said Haldimann.
“We are fully aware and are working to improve
the quality of Scope 3 data, but we believe
that it’s critical and mandatory that we work
with what we have and start now rather than
wait until we have the highest precision,” he
added.
Thus far there is no common agreement on how to
best measure Scope 3 emissions in the chemicals
industry, he pointed out.
The second part of ICIS’ in-depth look at
carbon footprints in the chemicals sector will
be published on Thursday.
Insight article by Joseph
Chang
Additional reporting by Will
Beacham
For more information on Supplier Carbon
Footprints launched by ICIS in partnership with
Carbon Minds, visit
here
Thumbnail picture source: Shutterstock
06-Jul-2022
MUMBAI (ICIS)–India needs to build 25 scalable
green hydrogen projects and five national
hydrogen hubs by 2025 for energy security and
would require $360m in financial support from
the government, according to the India Hydrogen
Alliance (IH2A),
The proposed 25/25 National Green Hydrogen Hub
Development Plan is being pushed by IH2A, a
coalition of firms, with Indian petrochemical
major Reliance Industries Ltd (RIL), steel
major JSW Steel and US-based Chart Industries –
global manufacturer of equipment used in the
hydrocarbon and industrial gases industries –
as lead members.
NITI Aayog, a public policy think tank of the
Indian government is also a member of the IH2A.
The plan focusses on creating green hydrogen
projects and hubs that can grow to
gigawatt-scale in three years.
Twelve industrial decarbonisation projects in
chemicals, refinery and steel industries; three
heavy-duty transport projects; three hydrogen
blending projects in city gas distribution
(CGD) networks; and seven waste-to-hydrogen
municipal projects would be built under the
plan.
Five states – Gujarat and Maharashtra in
western India and Karnataka, Kerala and Andhra
Pradesh in southern India -– were identified as
potential hubs for the projects.
At these hubs, multi-sectoral demand for green
hydrogen can be produced and used without
building expensive new infrastructure in the
next three years, according to IH2A.
As part of the plan, IH2A proposes building a
green chemicals and ammonia fertilizer hub in
Gujarat producing 8,000 tonnes/year of green
hydrogen.
The Bellary-Nellore belt spanning the two
states of Karnataka and Andhra Pradesh can be
developed as a green steel and chemicals
corridor producing 5,000 tonnes/year of green
hydrogen, the industry body stated.
The government’s $360m capital outlay would go
into electrolyzers and equipment for the green
hydrogen projects, it added.
In a separate report, the Indian government
think tank, the NITI Aayog has proposed that by
2030, the refinery and fertilizer sectors
should be mandated to use 50% and 100% green
hydrogen, respectively.
The report – Harnessing Green Hydrogen:
Opportunities for Deep Decarbonisation in India
released on 30 June – has proposed that the
government should set up hydrogen corridors and
provide grants for the production, storage and
export of green hydrogen.
In February, India announced a target of
producing 5m tonnes/year of green hydrogen by
2030.
The Indian government is currently in the
process of holding consultations with
stakeholders and is expected to launch a
comprehensive green hydrogen mission which
could announce purchase obligations for various
industries, according to media reports.
Focus article by Priya Jestin
06-Jul-2022
MADRID (ICIS)–OPEC’s secretary general
Mohammad Sanusi Barkindo died late on Tuesday
in his home country of Nigeria, the crude oil
producing cartel said on Wednesday.
On Tuesday, Barkindo had delivered a speech to
the Nigeria Oil and Gas (NOG) conference in
Abuja, Nigeria.
A spokesperson for OPEC confirmed to ICIS
Barkindo’s passing at the age of 63.
OPEC, headquartered in Vienna, published a post
on social network Twitter at 8:06 local time on
Wednesday: “OPEC Secretary General, Mohammad
Sanusi Barkindo, passed away yesterday
[Tuesday] in his home country Nigeria.
“He was the much-loved leader of the OPEC
Secretariat and his passing is a profound loss
to the entire OPEC family, the oil industry and
the international community.”
06-Jul-2022
SINGAPORE (ICIS)–Watch ICIS Editor
Jonathan Chou discuss current developments in
Asian PVC market and its outlook.
Asia’s spot prices on general downtrend
since late April
Asia to see improved spot availability
despite upcoming turnaround
Demand may remain muted
Visit the ICIS Coronavirus
topic page for analysis of the
impact on chemical markets and links to latest
news.
06-Jul-2022
SINGAPORE (ICIS)–Click here to see the
latest blog post on Asian Chemical Connections
by John Richardson.
The China Beige Book, the independent economic
analysis service, has found that:
China services and manufacturing businesses
saw a slowdown in the second quarter from the
first quarter, reflecting the prolonged impact
of COVID controls.
· Orders for domestic consumption and
overseas export mostly fell during Q2. Orders
for textiles and chemicals processing were
among the worst affected.
This is in line with what our contacts have
been saying and what the ICIS polyolefins data
appears to be indicating. Based on the
January-May numbers 2022, the outlook for full
year polypropylene (PP)) and high-density
polyethylene (HDPE) demand seems to have
deteriorated.
We worry that China’s options for turning its
economy around in 2022 are narrowing.
At least in low-density PE (LDPE), as we
discuss in, the outlook has not got any worse.
This is small consolation, as it had already
become bleak before May. Our latest worst-case
scenario is that LDPE demand may decline by 8%
this year.
LDPE stands out from the other grades of
polyolefins because China CFR LDPE price
spreads over CFR Japan naphtha costs have held
up very well this year. In PP, HDPE and
linear-low density PE (LLDPE), spreads have hit
record lows.
Why LDPE appears to be different is because
supply has been reduced, thereby keeping prices
relatively high, because ethylene vinyl acetate
(EVA)/LDPE swing plants have swung to more EVA
production as EVA demand seems to be booming.
The EVA price premiums over LDPE are at or
close-to record highs, depending on the ICIS
price assessment.
And LDPE film price premiums over C4 LLDPE film
have also reached record highs in China in
2022. The two resins compete for many of the
same end-use markets. LLDPE supply is much
longer.
So, it is not just the economy that LDPE
players in China have to worry about, but these
other dynamics as well. This may be the third
year in a row of negative LDPE demand growth in
China because of these other factors – and now
an economy that could see a recession.
Meanwhile, as with the other grades of
polyolefins, LDPE exporters to China need to be
also concerned about a potential significant
fall in China’s LDPE imports. Our worst-case
scenario sees China’s net imports in 2022 some
500,000 tonnes lower than in 2021.
We are sorry it is so gloomy, and, hopefully,
conditions will pick up. But hope is not a
strategy. The chemicals industry needs to
prepare for worst-case outcomes.
Editor’s note: This blog post is an opinion
piece. The views expressed are those of the
author, and do not necessarily represent those
of ICIS.
06-Jul-2022
LONDON (ICIS)–The UK chemicals industry is
battling the quadruple challenges of Brexit,
COVID-19, the cost of living crisis and the war
in Ukraine, according to Stephen Elliott, CEO
of UK trade group the Chemical Industries
Association.
UK chemicals facing Four Horsemen of the
Apocalypse: Brexit, COVID-19, cost of living
crisis, war in Ukraine
UK no longer has access to Horizon Europe
programme with EU scientists
UK suffering academic brain drain
Disagreement over Northern Ireland protocol
threatening free chemicals trade
Around 60% of UK chemicals exports go to
EU, 75% imports from EU
UK chemical exports to EU are recovering
Consultation on extending UK REACH
registration deadline published today
Main deadline may be delayed from October
2023 to October 2026
CIA wants to diverge from “worst excesses”
of future EU REACH developments
UK chemicals CEOs report that it is more
difficult now to pass on energy price increases
to customers
Signs that previously robust demand is now
faltering
UK CEOs expect sales to fall in Q3 2022 for
the first time since 2020
Interruptions to German chemical supply
could impact UK supply chains
In this Think Tank podcast, Will
Beacham interviews Stephen
Elliott, CEO of the CIA.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organising regular updates to help
the industry understand current market trends.
Register here.
Read the latest issue of ICIS
Chemical Business.
05-Jul-2022
LONDON (ICIS)–The isopropanol (IPA) market is
seeing weak demand across regions, resulting in
little interest in Asian import volumes despite
the increase in trade flow between Asia and
Europe earlier this year.
Europe IPA report editor Nick Cleeve speaks to
Asia-Pacific editor Julia Tan and US editor
Larry Terry about global market conditions and
the key influences on this commodity.
* Podcast recorded 29 June before European
propylene July contract price
settled at decrease of
€120/tonne.IPA is a solvent
used in many industrial and consumer products
and as an extractant. Applications include
cosmetics, personal care products (hand
sanitizers), de-icers, paints and resins,
pharmaceuticals and inks and adhesives.
05-Jul-2022
TORONTO (ICIS)–Canadian midstream energy
company Inter Pipeline has successfully
commissioned a 525,000 tonne/year polypropylene
(PP) plant at its Heartland Petrochemical
Complex (HPC) complex in Alberta province, it
said in an update on Tuesday.
The PP plant has been producing pellets since
late June, using polymer grade propylene (PGP)
from a storage cavern at the company’s Redwater
olefinic fractionator in Alberta.
HPC includes a propane dehydrogenation (PDH)
unit, due to start up in Q3. PGP from the PDH
unit will be the primary source of feedstock
for the PP plant.
The feedstock options from both the storage
cavern and on-site PGP production would ensure
“exceptional reliability” for customers, Inter
Pipeline said.
It did not comment on investment costs.
Thumbnail shows rope made out of
polypropylene. Image by Shutterstock.
05-Jul-2022
LONDON (ICIS)– Senior analyst Ajay Parmar
explains how increased refinery runs during a
period of poor demand has weakened the naphtha
market.
Petrochemical margins remain weak,
especially in Asia
Naphtha gasoline blending demand expected
to remain poor over summer
Strong refinery margins lead to increased
runs, add excess naphtha supply to market
05-Jul-2022
LONDON (ICIS)–Senior analyst Ajay Parmar
highlights how strong refinery margins and lack
of OPEC+ supply capacity will support the oil
market over the summer
Record refined product prices will support
oil demand in the near term
Rising interest and persistently high
inflation will soften oil demand growth from Q4
onwards
Most OPEC+ producers are at or near maximum
capacity, leaving few options for supply
increases in the coming months
05-Jul-2022
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