Scope 3 emissions, critical yet elusive for measurement, present a daunting task for the chemicals sector, ranking globally as the third-largest emitter among industries.
While the straightforward tracking of Scope 1 and 2 emissions—direct emissions from owned sources and indirect emissions from purchased energy—poses minimal challenges, Scope 3 emissions encompass indirect emissions across a company’s value chain, proving more complex to monitor.
A Deloitte report highlights that Scope 3 emissions in the chemicals industry, accounting for 75% of total emissions, emanate primarily from three sources: purchased goods and services, emissions embedded in product use (like fertilizers or refrigerants), and end-of-life product emissions from landfill, incineration, or recycling.
In 2022, the chemicals sector emitted 186 million metric tonnes of CO2e, marking a 6% increase since 2013, as reported by the Environmental Protection Agency (EPA).
To align with a net-zero scenario by 2050, the International Energy Agency (IEA) underscores the need for the sector’s emissions to “decouple” from production by 2030. This demands substantial modifications or substitutions of production processes with low-carbon alternatives to achieve a 15% reduction in emissions by 2030 relative to current levels.
The industry’s pervasive impact underscores its global importance, generating an estimated annual revenue of US$4.7 trillion, per McKinsey.
Maria Valentina Giraldo Martinez, co-chair of Together for Sustainability’s (TfS) Scope 3 Greenhouse Gas (GHG) emissions programme, emphasizes that addressing Scope 3 emissions is pivotal for achieving net-zero goals, necessitating comprehensive emission reductions throughout the entire value chain, not just within operational boundaries.
However, challenges persist in tracking Scope 3 emissions. Deloitte’s analysis of 250 publicly traded chemical companies reveals that while over half report Scope 1 and 2 emissions, only 30% report Scope 3 emissions. This disparity is attributed to the complexities of monitoring emissions beyond direct control, compounded by the chemical industry’s intricate supply chains and the diverse array of chemicals—over 42,000 in US commerce alone.
Accurately gathering emissions data from suppliers remains a hurdle due to varying reporting standards and data availability. Many companies resort to industry-average data or input-output databases for emission estimates, further complicating Scope 3 tracking efforts.
Peter Saling, director of sustainability methods at BASF and leader of TfS’ Scope 3 GHG Emissions Programme, emphasizes the critical role of suppliers in reducing Scope 3.1 emissions—those associated with purchased goods—and downstream emissions in the chemical value chain. He stresses that enhancing product carbon footprint calculations hinges on collaborative efforts with suppliers.
Regulatory pressures are driving chemical companies towards emission reduction solutions. Increasingly, regulators worldwide—from the EU to New Zealand—are mandating full carbon footprint disclosures, including Scope 3 emissions, heightening accountability across the value chain.
Despite global standards like the Greenhouse Gas Protocol, which outlines Scope 3 reporting requirements, chemical companies face challenges in applying these guidelines effectively. Industry-specific guidance remains inadequate, necessitating adaptation of general standards to meet sector-specific needs.
TfS’ Scope 3 GHG Emissions Programme seeks to address these gaps by offering guidelines for consistent carbon footprint determination, emission source identification, and strategic emission reduction in the chemical sector. Their Product Carbon Footprint (PCF) Guideline aims to standardize calculation approaches, potentially benefiting other industries reliant on chemical products.
Looking ahead, enhancing upstream PCF data exchange among suppliers remains a priority. TfS’ PCF Exchange solution facilitates carbon footprint calculations, fosters data exchange, and provides training to drive Scope 3 GHG emission reductions.
In conclusion, Peter Saling stresses that the chemical industry must expedite emission reductions to retain consumer trust and adapt to evolving regulatory landscapes amid the urgent global challenge of climate change.