The Science Based Targets Initiative (SBTi) released the second draft of the chemicals sector guidance, with the final version of the ‘Chemicals Sector Target-Setting Criteria’ expected to be released by July 2025. Find out what the guidance expects, who would be affected and how you can prepare.
The use of fossil fuel feedstock, extensive energy consumption and contribution to a wide range of sectors make the chemical sector the third largest industry subsector in terms of direct CO2 emissions.
Given the chemical sector’s significance, the SBTi has proposed sector-specific guidelines to reduce emissions across the industry. A second consultation survey is currently open until 10 January 2025, inviting feedback from impacted businesses before opening applications to pilot the new guidance.
As a sector that is generally hard to abate, the draft guidance provides sector-specific criteria and frameworks, aiming to set ambitious but achievable targets for chemical companies. While the guidance has yet to undergo a pilot phase, your company can already understand how it would be impacted by the guidance and begin to adopt its requirements and recommendations.
Who will be impacted?
The guidance and its criteria will apply to any company that manufactures a product within the scope of the below chemical types:
Key elements of the draft guidance
If you would like to adhere to the proposed guidance, you will have to adjust some of your current emissions inventory practices, as well as your decarbonisation strategies to meet the SBTi’s sector-specific targets.
Scope 1 and 2 emissions
Captured CO2 emissions:
Captured CO2 sold as a product would be accounted for under ‘use of sold products’ (Scope 3, Category 11) by the emitting company (seller). The emissions associated with the capturing process would be accounted under Scope 2.
N2O emissions from nitric acid:
Nitric acid producers whose N2O emissions fall under Scope 1 are expected to calculate the average N2O emissions intensity in units of kg N2O/tonne of nitric acid across all their operations. If N2O emissions occur in the use of a sold product, as is the case for nitrogen-based fertilisers (e.g. ammonium nitrate and urea), the seller will have to have a separate target in place for reducing N2O emissions.
Scope 3 emissions
Use and end-of-life treatment of sold products (Scope 3, Categories 11 and 12):
The SBTi expects companies to estimate the emissions that occur during the use- and end-of-life phases of their products, ranging from pharmaceuticals to food additives and personal hygiene. The SBTi advises companies to map out the downstream activities across their value chain for more accurate footprint estimations and consider emissions of products that enter wastewater systems, end up in landfill or are incinerated once disposed.
Intermediate products (Category 10):
Companies producing and selling intermediate products must account for the emissions from further processing, even when the exact end-uses are not known. For example, a chemical manufacturer sells phenol to company that uses the product to produce and sell bisphenol to a packaging manufacturer, who, in turn, uses the bisphenol to create plastic bottles. The original phenol seller would have to report the process emissions from each of the following downstream production stages.
Although secondary data is acceptable, the SBTi guidance suggests using primary data where possible, meaning chemical companies will have to liaise more closely with their suppliers and buyers to gain an accurate picture of their emissions.
Recycling processes:
The SBTi expects companies to account for emissions from recycling processes, such as pyrolysis, to promote greater circularity. Companies will need to consider how much emissions could reduce by switching from virgin materials to recycled materials and preventing waste from going to landfills.
Carbon capture and utilisation (CCU):
The seller of captured CO2 from flue gas must account for emissions from CCU processes under ‘use of sold products’ (Scope 3, Category 11). The buyer, on the other hand, accounts for these emissions under ‘purchased goods and services’ (Scope 3, Category 1).
Bio-based materials:
Companies that use bio-based materials as feedstocks must account for both net biogenic and non-biogenic emissions. This includes emissions from land use changes, land management, and the processing of biomass into usable products. Additionally, any sourced biogenic material must not be associated with deforestation, which aligns with similar requirements from the SBTi’s Forest, Land and Agriculture (FLAG) guidance.
Sector-specific pathways
The guidance provides specific decarbonisation pathways for primary chemicals like ammonia, methanol and high value chemicals such as ethylene, propylene, benzene, butadiene, acetylene, and hydrogen. These tailored pathways consider the unique emissions profiles and technological challenges of each chemical.
How to get started
The first step is to assess whether the draft guidance is relevant to your operations and if you will be required to set sector-specific targets. Though still a draft, you can already ensure your carbon footprinting capabilities can provide the necessary data for these targets, such as calculating the N2O emissions intensity from nitric acid production.
As the targets landscape evolves, your internal team can:
- Assess if your existing data collection methods meet the proposed requirements or if further data will need to be captured.
- Ensure you are setting up efficient processes to engage with suppliers and customers to gain the correct type and granularity of data.
- Identify data gaps in terms of production, supplier or customer data, as well as emission factors.
- Map out the downstream activities of your product and the emissions that will need to be accounted for.
- Consider the additional targets you may need to set and their respective footprinting requirements.
The SBTi will soon invite companies to participate in a pilot test of the new guidance. This is a unique opportunity for your company to test the new target-setting criteria and provide feedback.
How the Carbon Trust can help
Since 2015, the Carbon Trust has assisted businesses in setting their science-based targets. We can help your company navigate the sector-specific target requirements, strengthen your carbon accounting methods and engage suppliers. Our team has extensive expertise in developing footprinting models and product-specific carbon footprints that align with the Greenhouse Gas Protocol and the additional guidance from the Science Based Targets initiative.
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