Components of chemical company Paris climate alignment

Panel: 5. Business models, finance and investment

Author:
Nate Aden, World Resources Institute, USA

Abstract

The chemicals sector plays a central but complex role in the transition to a low-carbon economy, not least because of the current ubiquity and increased demand for chemicals in low-carbon and energy-saving technologies. IEA Energy Technology Perspectives data indicate that current CO2 emissions from the chemical and petrochemical sectors are the third largest industrial sector source of emissions behind cement and steel. While chemical products are expected to contribute to the well-below 2°C outcome described in the 2015 Paris Agreement, greenhouse gas (GHG) emissions related to chemicals production will need to be reduced to maintain global emissions budgets consistent with climate stabilization this century. Energy efficiency improvements, fuel switching, technical innovation, and new business models offer cost-effective opportunities for chemical company emissions reductions. Leading chemical companies are setting science-based emissions reduction targets (SBTs), but the sector has yet to turn the corner on its total GHG emissions growth. This paper identifies barriers to broader chemicals sector climate action and resources for supporting increased mitigation ambition.

SBTs are a keystone metric for companies to integrate energy efficiency and other GHG mitigation options into aggregated public targets for low-carbon transformation. As of December 2019, seventeen chemicals companies have committed to setting SBTs via the Science Based Targets initiative, and seven of these companies have publicly-approved SBTs.[1] These targets are a starting point for developing sector resources.

[1] Note that this list does not include pharmaceutical manufacturers or oil and gas companies. Chemicals companies with approved targets include: Borregaard AS, International Flavors & Fragrances Inc, Novozymes A/S, Royal DSM, Sekisui Chemical Co Ltd, Sumitomo Chemical Co Ltd, and Syngenta.

Watch presentation