Chemicals industry: Catalyzing transformation to net-zero

15th Feb 2023

The chemicals industry contributes to almost every sector of the economy. Over 95% of manufactured products rely on chemicals. Critical in health care, agriculture, construction and transport, they’re an essential part of daily life. Products from the chemicals industry - such as components of renewable energy systems - are also key in the decarbonization strategies of other sectors. Yet, the sector is the largest industrial consumer of energy products worldwide, and the third highest industrial emitter of CO2.

The sector’s key base products are currently manufactured using energy intensive processes, and many of the technologies required to reduce emissions are not in widespread commercial use. However, the industry can reach net-zero emissions if the private and public sectors collaborate to achieve technological innovation, source clean energy, and develop sustainable carbon supply chains.

The SBTi’s Chemicals Sector Development Project aims to facilitate chemical companies setting ambitious near- and long-term science-based targets by providing new guidance and target-setting criteria, and defining global pathways for key chemical processes to align with the Paris Agreement’s 1.5°C goal.

Setting the path towards net-zero carbon emissions

During the first phase of the Chemicals Sector Development Project that concluded in 2020, we analyzed the key barriers chemicals companies face when setting science-based targets, and how the project might mitigate them. We convened an external Expert Advisory Group (EAG), composed of technical experts from industry, civil society and academia, to ensure the independence and scientific rigor of this work.

Building on these foundations, in 2022 we launched the current phase of the project to help stakeholders in the chemicals value chain align their climate mitigation plans with the latest science, considering the specific challenges facing this industry. These challenges include the dependance on hydrocarbons as feedstocks to produce key primary chemicals, the large and varied number of products made from chemicals, and the limited availability of technologies to reduce emissions.

During this phase, we have assembled a new chemicals EAG representing 19 organizations that meet on a regular basis to analyze and participate in methodological discussions. We have also released the Chemicals Sector Status Report to provide an updated examination of the climate impact of the sector and outline the SBTi’s approach to this industry. This report defines the key research questions and objectives for the SBTi to develop guidance and target-setting criteria for chemical companies to set ambitious emissions reduction targets. It also lays out the opportunities and challenges facing chemical companies in setting targets, and provides background on SBTi’s general target-setting methods. We encourage you to provide feedback on the report via our sector mailbox.

The SBTi is now continuing its stakeholder-inclusive process to develop the sector-specific guidance, pathways and target-setting criteria.

Catalyzing opportunities

The SBTi sector-specific chemicals guidance will address emissions from the manufacture of major products such as ammonia, methanol, hydrogen and high-value chemicals. Due to the interconnected nature of the industry, the full chemicals sector is going to be addressed concurrently. However, since the chemical processes that contribute the majority of the sector’s direct emissions are diverse in nature, we expect to develop several individual Sectoral Decarbonization Approach (SDA) pathways for these products.

What’s more, we will develop guidance on scope 3 accounting and target-setting for critical scope 3 sector hotspots, including:

  • Upstream emissions from purchased goods and services, and energy related emissions from fossil-based materials.
  • Emissions from the use of sold products, especially fertilizers.
  • Accounting for upstream and downstream scope 3 emissions associated with recycling of sold products, and with the capture and utilization of CO2.
  • Emissions along the value chain from the production, processing, use, and end-of-life for biobased materials.

Once the first draft of the guidance is published, we will open a public consultation period, during which stakeholders will be invited to provide feedback and comments. More information about the availability of the chemicals sector guidance will be provided in mid-2023.

Take action today

Businesses in the chemicals industry must play their part in accelerating the decarbonization of the global economy to prevent the devastating impacts of climate breakdown, and this can only be achieved by aligning their emissions reductions targets with climate science.

Learn more about how the SBTi is addressing this critical industry in the Chemicals Sector Status Report. If you have any comments or questions to the report, reach out to us at [email protected], and commit to setting a science-based target today.