TfS white paper explores new approaches to counting carbon in chemical sector

A WHITE paper released by global chemical initiative Together for Sustainability (TfS) has identified several improvements in corporate greenhouse gas (GHG) accounting that they say if implemented will help encourage decarbonisation across the chemical sector. 

Worth an estimated US$5trn, the chemical industry is responsible for a vast range of products that society relies on in daily life. But by its very nature, the sheer size of the industry also means it emits an estimated 3.3bn t/y of GHG emissions, and is the largest industrial consumer of both oil and gas. This is because fossil fuels are used as energy sources and feedstocks for many chemical products. 

While switching to electricity to power systems is one way to help decarbonise the industry, it is not enough, says TfS, and more needs to be done to transform the way emissions are reported, specifically those that fall under Scope 3 of the Greenhouse Gas (GHG) Protocol – an initiative launched in 1998 and now seen as the cornerstone of corporate GHG emissions reporting. 

Under the protocol, GHG emissions are categorised into three distinct Scopes:

• Scope 1 emissions are direct emissions created by owned or controlled sources. Importantly for the chemical industry, this includes boiler and furnace emissions, transportation emissions, and chemical production emissions from owned or controlled processes 
• Scope 2, or indirect emissions, stem from the purchase and use of electricity, steam, heating, and cooling. Although Scope 2 emissions physically occur at the facility where they are generated, they are accounted for in an organisation’s GHG inventory as an energy use 
• Scope 3 emissions are all indirect emissions that occur in the upstream and downstream activities of an organisation. They can include emissions from the extraction and processing of raw materials used in manufacturing, and in the case of many chemical companies, that material is a fossil fuel.

With 15 subcategories to contend with, and a lack of transparency in value chains, Scope 3 emissions are more challenging to detect, record and report. But for many businesses, these emissions account for more than 70% of their carbon footprint, so firms are beginning to eye up the potential of reducing them as a route toward reaching net-zero targets. 

“Companies want to reduce CO2, but they also need to have clear guidance and also a fair playing ground, so that they can show the progress been made in reducing emissions,” said Peter Saling, director for sustainability methods at BASF and co-chair of the TfS GHG emissions programme.  

Saling explained that it was while working on the Product Carbon Footprint (PCF) Guideline, that TfS identified several improvements to the commonly used GHG Protocol accounting standards that would help incentivise decarbonisation across the industry’s supply chain. 

“That was the starting point for us,” Saling said. “And after its completion, we felt in a comfortable position to put forward the white paper to make suggestions for the changes and adaptations needed to benefit the efforts in GHG reductions for the chemical industry.” 

Of the improvements identified, three key modifications stood out: reporting involving biogenic carbon sources produced from natural sources such as trees, agricultural crops, and food waste; mass and energy balance (MB) – the integration of biomass, recycled materials (such as kitchen waste) and energy sources into production of chemicals by using chain of custody approaches instead of traditional fossil feedstocks; and recycled materials and content.  

“Using biogenic carbon sources as an example, the current approach for calculating carbon emissions for purchased goods and services in the corporate accounting doesn’t consider the carbon removed from the atmosphere in the so-called category 3.1,” Saling said. 

The Scope 3 Category 1 (Scope 3.1) category includes all upstream (ie cradle-to-gate) emissions from the extraction, production and transportation of products purchased or acquired by the reporting company in the reporting year. 

Because the GHG protocol uses the so-called 0/0 approach, this means that the benefit of biogenic materials is firstly not accounted in the scope where it appears (Scope 3.1) and secondly, in the case of recycling, not considered at all. 

“Our recommendation is to adopt the more meaningful approach that considers the carbon uptake at the beginning of a life cycle and, depending on the end-of-life process, the consideration of the emissions as well (the -1/+1 approach),” Saling said. “The carbon removed by the purchased goods and services of a company is then factored accordingly. This approach will allow companies to showcase the benefits of products containing biogenic carbon and enable them to claim carbon removal through these materials in their emissions reporting.” 

Mass balance (MB) is another strategy TfS would like to see implemented. MB is designed to trace the flow of materials through a complex value chain. 

According to the white paper, multi-input single-output systems necessarily need varied raw materials with different footprints to produce the desired output. MB accounting makes it possible to track the amount and sustainability characteristics of circular and/or bio-based material in the value chain and attribute it based on verifiable bookkeeping. 

MB is a well-known practice that is used in other industries such as the Forest Stewardship Council for wood, Fair Trade, Better Cotton Initiative, and the energy sector. When consumers buy “green” or “clean” electricity, they cannot be certain that the electricity they use in their homes has come directly from renewable sources, but the overall share of green energy in the grid rises as demand increases. Similarly, as the chemical industry transitions to renewable sources for its feedstocks, eventually every molecule a consumer receives will be from a sustainable source. 

The drawback with MB is that it can be subject to greenwashing as there is a risk that a raw material with a low carbon footprint is attributed to the output, while the higher footprints of the other raw materials are neglected. But Saling said there are ways to help prevent this from happening. “Certification schemes and transparency would be a clear way forward to avoid greenwashing in this instance,” Saling said. 

Ultimately, to gain trust from investors and consumers, transparency across the value chain is of utmost importance says Saling, and to achieve this, high-quality primary data from suppliers will help to improve GHG reporting. “The chemical sector needs new opportunities which are important to move the industry forward, and for that, a fair accounting and reporting system is needed,” Saling said. “The white paper represents a significant step forward in our collective efforts to build on the GHG protocol and address the challenges of carbon accounting in the chemical industry.”