Chemicals

Why take action?

The chemicals industry is the largest industrial energy consumer and the third highest contributor of carbon emissions worldwide. In addition to having a leading role in industries such as health care, agriculture, construction and renewable energy systems, it is also key to the plastics value chain. Chemical manufacturers have a crucial role to play in limiting global warming to 1.5ºC. Leading global chemicals companies have begun to set science-based targets that meet the sector-agnostic SBTi criteria while sector-specific resources are in development.

Developing a target-setting guidance for companies in the chemicals sector

From May to July, 2024, the SBTi held a public consultation for experts to provide feedback on the draft resources developed as part of the project. Read the first public consultation feedback report. Following this consultation period, a team of experts carefully reviewed the feedback received and updated the draft. The updated draft is now undergoing a second consultation from November 12, 2024 to January 10, 2025.

The SBTi convened an Expert Advisory Group (EAG) that meet on a regular basis to participate in methodological discussions. It also published the Chemicals Sector Status Report which provides an updated examination of the climate impact of the sector and describes how the SBTi is working to enable stronger climate action from this critical industry.

The project Terms of Reference (TOR) detail SBTi’s plans, topics to be addressed and timelines for the development of the sector-specific criteria for chemical companies to set 1.5°C-aligned near- and long-term science-based targets.

Aligning the chemicals sector with 1.5°C

The chemicals industry faces challenges on its path to decarbonization, largely due to the wide variety of products, the use of hydrocarbons as feedstocks and the industry’s many subsectors. Additionally, it is expected that demand for chemical products will continue to rise. It is therefore difficult to establish a single, comprehensive method for chemicals’ companies to set science-based targets.

To spur further action, the SBTi has launched a project to develop sector-specific criteria and supplementary resources for corporates in the industry to set ambitious decarbonization targets.

The Chemicals Sector Target-Setting Criteria Draft proposes three new Sectoral Decarbonization Approach (SDA) pathways covering primary chemicals, and includes criteria applicable to all companies in the sector. Primary chemicals - i.e. ammonia, methanol and high value chemicals (HVC), which comprises ethylene, propylene, benzene, toluene and xylene - represent around 70% of direct emissions from the industry.

Avoided GHG emissions generated from the use of products from the chemicals industry are outside the scope of the SBTi and will not be considered as part of this project. Avoided emissions fall under a separate accounting system from corporate inventories and do not count toward science-based emission reduction targets.

Project participants

This project is being developed by the SBTi with support of Guidehouse. Stakeholder involvement is possible via the following groups:

Expert Advisory Group (EAG): Composed of technical experts from academia, research, non-profit, multilateral organizations and companies interested in setting science-based targets and contributing to the project execution. The project’s EAG currently consists of individuals from the following organizations:

• Air Liquide
• Air Products
• BASF
• Borealis
• Braskem
• CEFIC
• Center for Green Market Activation
• Dow Chemical
• Eastman
• ECOS (Environmental Coalition on Standards)
• Indorama Ventures
• Institute for Sustainable Communities (ISC)
• Institutional Investors Group on Climate Change (IIGCC)
• LANXESS
• Lund University
• LyondellBasell
• Nutrien
• OCP Group
• ShareAction
• Transition Pathway Initiative (TPI)
• University of Exeter
• University of Sheffield
• WRI
• World Wide Fund for Nature (WWF)
• Yara

Please note that the composition of the EAG may change over time, and this list will be updated as needed. EAG members volunteer in a personal capacity to provide technical advice over the duration of the project. While their expertise helps guide the development process, final content decisions rest solely with the SBTi. As a result, the final output does not necessarily represent or imply endorsement by individual EAG members or their employers.

Public consultation: All stakeholders are encouraged to provide feedback on each project component during the second round of public consultation that is taking place from November 12, 2024 to January 10, 2025.

Pilot testing: Companies will be able to apply to voluntarily pilot the implementation of the draft Chemicals Sector Guidance.

These opportunities will be promoted on the SBTi website, newsletter and social media platforms.

Financial support

Financial support for the initial phase of the project was provided by the following organizations.

• Air Liquide
• Air Products
• BASF
• Indorama Ventures
• LyondellBasell
• Nutrien
• Yara

Development process

The project is being built on the outcomes of the scoping phase. The guidance is being developed to align with the SBTi’s Corporate Net-Zero Standard. Additionally, emissions reduction pathways will be developed based on the principles of SBTi’s SDA. The goals of the project are as follows:

• Develop sub-sector SDA pathways for high-impact products.
• Identify best practices for emissions accounting, with a focus on critical scope 3 categories for the industry.
• Provide guidance on addressing the impact of the circular economy (e.g. recycling) in accounting and target-setting.
• Set expectations for scope 3 target setting in high impact categories by chemical companies.