To achieve carbon neutrality, a comprehensive call to action and engagement across sectors is essential. We need to embrace innovation, risk, and collaboration in ways that challenge current paradigms, from how we structure our businesses and view intellectual property to the design and functionality of our products. Most importantly, we cannot wait for others in different sectors to advance first before taking decisions and de-risking our future investments. Taking steps now in concert with sectors, sharing the risk, is critical.
The chemical industry plays a particularly important role in creating building blocks that can be used across value chains. For this reason, chemical companies must take a leadership role in driving decarbonisation more broadly. They must not only adapt their businesses, but also prioritise coordination and offer transparent insight into their strategy so others can track and plan accordingly.
Laying out both short- and long-term plans for securing decarbonisation is critical, and chemical companies should take into account the following considerations:
1. Identify clear interim targets and immediate actions.
Although achieving carbon neutrality is a long-term journey, companies should set clear goals and actions from day one to ensure accountability.
For example, at Sabic, we have outlined our planned pathways to 2050 in our Carbon Neutrality Roadmap. For the first phase of our roadmap, which runs until 2030, we set a goal of reducing our direct (scope 1) and indirect (scope 2) emissions by 20%, relative to 2018 levels, with progress detailed in our annual sustainability reports. We also detailed immediate investments, including those focused on improving the energy efficiency of our assets. Already, electric compressors and pumps are already being installed to reduce greenhouse gas (GHG) emissions, with long-term plans in place for the electrification of wider assets. We are also securing renewable electricity supplies, including for our polycarbonate facility in Cartagena, Spain, which is set to become the world's first large scale chemical production site to run entirely on renewable power.
2. Commit to driving the solutions that don’t exist yet.
Achieving carbon neutrality will require new technologies and processes. Companies must lay out their plans to explore potential solutions and must commit to investing significantly in innovation today.
The second phase of our carbon neutrality journey will focus on bringing Sabic to a net-zero end state between 2030 and 2050, which will require significant advancement of innovative technologies at scale and across both our existing asset base and growth. To prepare, we are advancing initiatives such as our First Adopter Program, which charts a course for the commercial implementation of our foundational decarbonisation technologies (electrification, CCS, and H2) within our olefin cracker assets this decade. Its aim is to ensure that Sabic is poised for roll out across our footprint, with a clear understanding of the cost, performance, and infrastructure required.
3. Prioritise the partnerships and innovations that can expedite the transition.
To achieve decarbonisation, companies must ensure their efforts align with and accelerate the wider industry’s sustainable transformation. This requires cutting-edge partnerships and external infrastructure.
For example, we are currently building the world’s first large-scale electrically heated steam cracker furnace with BASF and Linde. Set to go online later this year, the ‘e-cracker’ will use renewable electricity to provide the heat in an industrial furnace, potentially resulting in the reduction of at least 90% of CO2 emissions of crackers when compared to conventional crackers. We are also evaluating other longer-term avenues to securing carbon neutrality, including dispatching the world’s first commercial shipment of independently certified blue ammonia to South Korea and receiving the world’s first independent certifications recognising blue ammonia and blue hydrogen production, opening new market opportunities for using ammonia as a clean fuel in the future.
4. Acknowledge the challenge of tracking Scope 3 emissions.
Setting targets for Scope 3 emissions comes with challenges given the chemicals value chain represents the third-largest industrial subsector source of GHG emissions, on top of the lack of consensus on prioritised categories to address. However, analysis of Scope 3 emissions can help companies identify hot spots along the value chain and uncover opportunities to improve their sustainable offerings and position in the market. This analysis can also help strengthen relationships with customers across the value chain that have sought Scope 3 data for their own disclosures.
At Sabic, we began by enlisting expert personnel, resources, data management and quality processes to comprehensively examine all relevant categories. Our efforts were acknowledged by limited assurance on overall Scope 3 emissions for 2020, becoming the first company in the industry to do so, and continue to grow in this area. In addition, we recently joined Together for Sustainability, a procurement-driven initiative that will help increase transparency in upstream value chains and support further reductions in Scope 3 emissions.
The Road Ahead
When faced with potentially daunting challenges, companies can choose caution, measured actions, and incremental change. Or they can move forward with a clear roadmap that recognises the opportunity ahead, through new business models, new modes of value and differentiation, and growth in new markets and applications. By choosing the latter path, I am proud to say Sabic is embracing innovation and collaboration within our industry, and across sectors and value chains, to take our ambition into a reality.