To reduce industry carbon emissions, collaborating with partners across the chemical value chain will be crucial to developing holistic and sustainable solutions
Synopsis
The chemical industry is crucial in building a sustainable global economy. Ninety-six percent of all manufactured goods are directly touched by the business of chemistry. The industry provides critical materials to other major industries, so even as the world faces the challenge of reducing greenhouse gas (GHG) emissions to “decarbonize,” it is not desirable to “dematerialize,” but rather to use materials most efficiently to sustain and advance the human condition.
The chemical industry, however, also emits greater than two gigatons of greenhouse gases per annum globally. The US chemical industry’s GHG footprint is itself over 200 million metric tons of carbon dioxide equivalent (MtCO2e) per annum. The industry’s inherent growth adds to the challenge. Growth alone will, absent abatement solutions, lead to a doubling of industry GHG emissions in about 30 years.
To accelerate their pace of lower-carbon innovation, chemical and material producers will need to embrace new technologies, get closer to end markets, and take a lead role in working within—and across—value chains to deliver lower-carbon products and solutions.
Lowering carbon emissions is not only a challenge but also an opportunity, potentially opening pathways for chemical companies to capture additional value. The expertise that resides within the chemical sciences will also be required to solve challenges associated with reducing the adverse effects of climate change. If successful, reducing GHG emissions in chemicals will also have the added benefit of reducing scope 3 emissions of all downstream customers.
Demand for more sustainable products is increasing as chemical customers look to achieve their environmental, social, and governance (ESG) ambitions. This is impacting the buying decisions of those customers to include elements such as emission intensity, end-of-life recyclability, and ecosystem connections. Developing a sustainable product portfolio will be at the heart of a successful chemical company, especially in end markets where the impact of scope 3 emissions is the largest, such as consumer, transportation, construction, and electronics.
To take advantage of this opportunity, chemical companies should actively work within their supply chains and with end-market customers to ensure their offerings are positioned to support sustainability targets. Their goal should be to bring increasingly low- and no-carbon products to market, which will help ecosystem partners transition to lower emission solutions and drive long-term growth.
Achieving net-zero emissions across the chemical value chain will require not only capital investment and business transformation, but also new types of partnerships with key stakeholder groups. Chemical companies, through a coordinated effort across the value chain, can make great strides in developing a circular economy. They are in a unique position to aggregate demand (for postconsumer waste, alternative fuels, etc.) and supply (of advanced recycled materials, clean hydrogen, etc.), thereby eliminating fossil-based inputs and reducing emissions.
There will be opportunities for new business models, and entirely new markets may be formed as the result of a more circular, lower-emissions economy. In fact, companies that are “sustainability leaders” are four times more likely to be recognized as innovation leaders in separate, independent rankings. Indeed, there is great potential for chemical and materials companies to join those ranks.
The chemical industry has a “trifecta” opportunity to lower their scope 1 and scope 2 emissions and downstream end-market scope 3 emissions.
Courtesy Deloitte. By David Yankovitz, Robert Kumpf and Aijaz Hussain. Article available here
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