In the discussion about a company’s greenhouse gas emissions, a distinction is made between scope 1, 2 and 3 emissions, where scope 1 refers to all direct emissions from owned or controlled sources; scope 2 to all indirect emissions from the generation of purchased energy, electricity, heat, and steam; and scope 3 to all indirect emissions not included in scope 2 that occur in the value chain of the reporting company, including both upstream and downstream emissions. While scope 1 and even scope 2 emissions are relatively straightforward to calculate, scope 3 emissions are notoriously more elusive to grasp, as they are generated across the value chain. This makes it necessary to gather information and to collaborate along that value chain.
“Calculating scope 3 emissions is challenging for us as a chemical company,” explains Dr. Torsten Heinemann, Head of Innovation and Sustainability at Covestro. “This is because such emissions are generated both upstream, when we purchase raw materials and downstream, after we sell our products. Because of this, measures to reduce scope 3 emissions impact our suppliers as well as our customers and will require a transformation of the entire supply chain,” he added.
Covestro’s scope 3 emissions make up 80% of its total greenhouse gas emissions, with the raw materials it purchases being responsible for the greatest share. In the path to reduce its greenhouse gases emissions by 10 million tonnes by 2035 and to neutralise scope 3 emissions by 2050, Covestro has identified four levers to drive down emissions.
Requiring suppliers to reduce scope 1 and scope 2 emissions
The first is to require the company’s suppliers to reduce its scope 1 and 2 emissions, which in turn count towards Covestro’s scope 3 emissions. The material manufacturer said ‘many’ of its raw materials have already set their own targets for scope 1 and 2 emissions reduction. Covestro also mentioned a recent deal with Encina for supply of chemically recycled raw materials as a way to reduce its scope 3 emissions. Other short-term measures include electrification, improving efficiency, and carbon capture and storage (CCS) in supplier production processes.
Making a profit of circular solution materials
The second lever involves achieving an improved business case for products made from non-fossil raw materials. Recycled plastics and bioplastics in particular are still not cost competitive with products made from virgin plastic. Closing that gap would give Covestro a financial incentive to use more fossil-free materials in its CQ product portfolio, for example.
Investment in projects with smaller carbon footprint
Covestro's third lever to reduce scope 3 emissions are its Make projects. These are investment projects in which Covestro manufactures alternative raw materials with a smaller carbon footprint. These projects include, for instance, manufacturing bio-based aniline or Covestro's Evocycle CQ technology for recycling mattresses.
Miscellaneous
The fourth lever encompasses different factors that help reduce scope 3 emissions, for instance, increasing recycling rates to reduce emissions from waste incineration, and changes to logistics and primary energy extraction. In addition, Covestro will accelerate innovation processes through digital research and development and artificial intelligence.
“Our scope 3 targets are both ambitious and realistic supported with a concrete implementation plan,” said Dr. Markus Steilemann, CEO of Covestro. “This is an essential building block of our climate strategy. Completing our climate neutrality targets is another major milestone in aligning all of our activities with our vision of becoming fully circular. In this way, we are demonstrating once again that we take a leading role in transforming the chemical industry,” he concluded.