Reducing Scope 3 GHG Emissions: Our Strategic Goals and Initiatives: LyondellBasell
Tackling climate change is a paramount challenge that our world currently confronts, and we recognize the need for collective efforts and a sense of urgency. As a leading figure in our industry, we play a crucial role in instigating change. We fully endorse the goals of the Paris Agreement, which aim to limit the global temperature increase to well below 2°C above pre-industrial levels, and we strive to go even further by pursuing efforts to restrict the rise to 1.5°C.
We are dedicated to reducing greenhouse gas (GHG) emissions throughout our global operations and value chain. Moreover, we are committed to developing solutions that align with our customers' climate aspirations and facilitate the transition to a low carbon world. We firmly believe that achieving net-zero emissions for scope 1 and scope 2 by 2050, along with establishing a credible pathway to 2030 for scopes 1, 2, and 3, is pivotal for the long-term success of LyondellBasell.
In December 2022, we amplified our ambitions by accelerating our interim targets for 2030, in line with the latest scientific findings. We increased our target for GHG emissions reduction in scopes 1 and 2 to 42% by 2030 and established a target of 30% reduction for scope 3 emissions during the same period, using a 2020 baseline as reference. To validate our 2030 goals, we submitted a commitment letter to the Science Based Target Initiative (SBTi). This initiative encourages organizations to set emissions reduction targets based on scientific principles, thus fostering ambitious climate action in the private sector.
As part of our approach, we have pledged to source at least 50% of our global electricity from renewable sources by 2030. Additionally, we will collaborate with our utility suppliers to decrease the carbon intensity of the electricity and steam we procure.
Significantly, as other companies within our value chains increasingly establish their own scope 3 goals, we believe that our heightened climate ambitions will provide us with a competitive advantage. By being an early adopter, we aim to provide low carbon materials that meet the growing demand across our value chains, thereby reducing our overall carbon footprint.
OUR GOALS
Our aim is to achieve net zero greenhouse gas (GHG) emissions from our global operations by 2050.
We are committed to reducing absolute GHG emissions in scopes 1 and 2 by 42% by 2030.
Our target is to decrease absolute GHG emissions in scope 3 by 30% by 2030.
By 2030, we will procure a minimum of 50% of our electricity from renewable sources.
OUR APPROACH
We will integrate proven solutions to enhance the efficiency of our manufacturing processes and transition to less carbon-intensive fuels.
We will explore opportunities in electrifying our processes and adopting carbon capture technology.
Collaborating with utility suppliers, we will increase our utilization of renewable and low carbon energy through power purchase agreements.
Through collaboration, we will accelerate the scaling up and deployment of innovative technologies to achieve net-zero carbon chemical processes by 2050.
We will advance the use of circular and renewable-based feedstocks and engage with suppliers to reduce scope 3 emissions.
Climate impacts will be integrated into our business processes and strategy.
We will engage with governments and industry peers to advocate for effective policies aligned with the Paris Agreement and our global climate ambitions.
The role of public policy
We firmly believe that public policy plays a crucial role in transitioning to a low carbon economy. The achievement of our climate ambitions relies on key enablers, including:
Stable positions and policies that transcend political cycles, along with the development of necessary infrastructure and technologies to support the transition to net zero.
Policies that incentivize the development of affordable and reliable low carbon energy for industrial operations, rewarding investments in carbon-reducing technologies and supporting infrastructure development.
Promotion of carbon capture and storage infrastructure at a scale that enables the storage of technically unavoidable GHG emissions or when other solutions involve high economic or social costs.
Support for significant increases in renewable electricity production and grid capacity upgrades to meet the higher electricity demand associated with process electrification.
Encouragement of the further development of affordable, reliable renewable energy and baseload generation from non-emitting sources.
Acceleration of emerging technologies that reduce emissions from carbon-intensive manufacturing, including processes and infrastructure for cost-effective use of CO2 at scale in producing high-value chemicals.
Endorsement of a carbon pricing scheme that effectively facilitates the transition to a net zero economy. A global carbon price is considered the most efficient, fair, and uniform way to scale down GHG emissions. In the absence of a global carbon price, we support regionally implemented cap-and-trade programs.
Recognition of the need for public support in developing hydrogen production and transport capabilities in our operational regions, considering the growing competitiveness of low carbon hydrogen irrespective of its mode of production.
In the year 2023, we will provide further details about our approach to climate advocacy, including our stance on participation in trade associations.
Governance of our climate goals:
Acknowledging the paramount importance of the issue, our climate strategy is deeply ingrained in our overall business strategy and overseen by top-level management within our company. The Board of Directors takes the lead in our commitment to sustainability and ensures oversight of our environmental, social, and governance (ESG) profile, which encompasses climate change and related matters.
At the management level, our CEO assumes responsibility for our ESG profile, engaging in regular reporting and discussions on key topics and initiatives with members of the Executive Committee. This committee consists of senior executives who guide the various businesses and functions of LyondellBasell. Each function plays a role in identifying relevant opportunities, managing associated risks, and contributing to our comprehensive sustainability program, considering the impact of climate change on our operations. The Executive Committee includes our Executive Vice President of Sustainability and Corporate Affairs, who is specifically accountable for sustainability strategy and ESG reporting.
In 2022, we elevated our Director of Global Sustainability to the position of Vice President and Chief Sustainability Officer (CSO). The CSO is entrusted with the management of sustainability programs, strategy, and reporting.
During the same year, we conducted a review of our climate strategy and established a dedicated organization responsible for executing our 2050 net zero goal and interim targets for scope 1 and 2 emissions. This organization is fully integrated within our business structure and reports directly to business executive leadership, ensuring the seamless integration of climate considerations into our overall business strategy. Additionally, in response to our commitment to reduce scope 3 emissions within our value chain, we are creating an internal network comprised of representatives from various business units across the company. This network aims to address and diminish our scope 3 emissions, recognizing the diverse sources of these emissions.
OUR GOAL: ACHIEVE NET ZERO GHG EMISSIONS FROM OUR GLOBAL OPERATIONS BY 2050
To achieve our target of net zero scope 1 and scope 2 emissions from our global operations by 2050, we have developed a strategy focused on six key approaches:
We are dedicated to reducing greenhouse gas (GHG) emissions throughout our global operations and value chain. Moreover, we are committed to developing solutions that align with our customers' climate aspirations and facilitate the transition to a low carbon world. We firmly believe that achieving net-zero emissions for scope 1 and scope 2 by 2050, along with establishing a credible pathway to 2030 for scopes 1, 2, and 3, is pivotal for the long-term success of LyondellBasell.
In December 2022, we amplified our ambitions by accelerating our interim targets for 2030, in line with the latest scientific findings. We increased our target for GHG emissions reduction in scopes 1 and 2 to 42% by 2030 and established a target of 30% reduction for scope 3 emissions during the same period, using a 2020 baseline as reference. To validate our 2030 goals, we submitted a commitment letter to the Science Based Target Initiative (SBTi). This initiative encourages organizations to set emissions reduction targets based on scientific principles, thus fostering ambitious climate action in the private sector.
As part of our approach, we have pledged to source at least 50% of our global electricity from renewable sources by 2030. Additionally, we will collaborate with our utility suppliers to decrease the carbon intensity of the electricity and steam we procure.
Significantly, as other companies within our value chains increasingly establish their own scope 3 goals, we believe that our heightened climate ambitions will provide us with a competitive advantage. By being an early adopter, we aim to provide low carbon materials that meet the growing demand across our value chains, thereby reducing our overall carbon footprint.
OUR GOALS
Our aim is to achieve net zero greenhouse gas (GHG) emissions from our global operations by 2050.
We are committed to reducing absolute GHG emissions in scopes 1 and 2 by 42% by 2030.
Our target is to decrease absolute GHG emissions in scope 3 by 30% by 2030.
By 2030, we will procure a minimum of 50% of our electricity from renewable sources.
OUR APPROACH
We will integrate proven solutions to enhance the efficiency of our manufacturing processes and transition to less carbon-intensive fuels.
We will explore opportunities in electrifying our processes and adopting carbon capture technology.
Collaborating with utility suppliers, we will increase our utilization of renewable and low carbon energy through power purchase agreements.
Through collaboration, we will accelerate the scaling up and deployment of innovative technologies to achieve net-zero carbon chemical processes by 2050.
We will advance the use of circular and renewable-based feedstocks and engage with suppliers to reduce scope 3 emissions.
Climate impacts will be integrated into our business processes and strategy.
We will engage with governments and industry peers to advocate for effective policies aligned with the Paris Agreement and our global climate ambitions.
The role of public policy
We firmly believe that public policy plays a crucial role in transitioning to a low carbon economy. The achievement of our climate ambitions relies on key enablers, including:
Stable positions and policies that transcend political cycles, along with the development of necessary infrastructure and technologies to support the transition to net zero.
Policies that incentivize the development of affordable and reliable low carbon energy for industrial operations, rewarding investments in carbon-reducing technologies and supporting infrastructure development.
Promotion of carbon capture and storage infrastructure at a scale that enables the storage of technically unavoidable GHG emissions or when other solutions involve high economic or social costs.
Support for significant increases in renewable electricity production and grid capacity upgrades to meet the higher electricity demand associated with process electrification.
Encouragement of the further development of affordable, reliable renewable energy and baseload generation from non-emitting sources.
Acceleration of emerging technologies that reduce emissions from carbon-intensive manufacturing, including processes and infrastructure for cost-effective use of CO2 at scale in producing high-value chemicals.
Endorsement of a carbon pricing scheme that effectively facilitates the transition to a net zero economy. A global carbon price is considered the most efficient, fair, and uniform way to scale down GHG emissions. In the absence of a global carbon price, we support regionally implemented cap-and-trade programs.
Recognition of the need for public support in developing hydrogen production and transport capabilities in our operational regions, considering the growing competitiveness of low carbon hydrogen irrespective of its mode of production.
In the year 2023, we will provide further details about our approach to climate advocacy, including our stance on participation in trade associations.
Governance of our climate goals:
Acknowledging the paramount importance of the issue, our climate strategy is deeply ingrained in our overall business strategy and overseen by top-level management within our company. The Board of Directors takes the lead in our commitment to sustainability and ensures oversight of our environmental, social, and governance (ESG) profile, which encompasses climate change and related matters.
At the management level, our CEO assumes responsibility for our ESG profile, engaging in regular reporting and discussions on key topics and initiatives with members of the Executive Committee. This committee consists of senior executives who guide the various businesses and functions of LyondellBasell. Each function plays a role in identifying relevant opportunities, managing associated risks, and contributing to our comprehensive sustainability program, considering the impact of climate change on our operations. The Executive Committee includes our Executive Vice President of Sustainability and Corporate Affairs, who is specifically accountable for sustainability strategy and ESG reporting.
In 2022, we elevated our Director of Global Sustainability to the position of Vice President and Chief Sustainability Officer (CSO). The CSO is entrusted with the management of sustainability programs, strategy, and reporting.
During the same year, we conducted a review of our climate strategy and established a dedicated organization responsible for executing our 2050 net zero goal and interim targets for scope 1 and 2 emissions. This organization is fully integrated within our business structure and reports directly to business executive leadership, ensuring the seamless integration of climate considerations into our overall business strategy. Additionally, in response to our commitment to reduce scope 3 emissions within our value chain, we are creating an internal network comprised of representatives from various business units across the company. This network aims to address and diminish our scope 3 emissions, recognizing the diverse sources of these emissions.
OUR GOAL: ACHIEVE NET ZERO GHG EMISSIONS FROM OUR GLOBAL OPERATIONS BY 2050
To achieve our target of net zero scope 1 and scope 2 emissions from our global operations by 2050, we have developed a strategy focused on six key approaches:
- Energy efficiency: Implementing initiatives such as flare gas recovery, heat integration, and process optimization to reduce the energy demand of our operations.
- Fuel Switching: Increasing the utilization of lower carbon-intensive fuels, including hydrogen, to replace higher carbon fuels in our operations.
- Electrification: Transitioning our processes from fossil fuels to low carbon or renewable electricity sources.
- Carbon Capture and Storage/Utilization (CCS/CCU): Implementing technologies to capture and store or reuse CO2 emissions generated by our operations.
- Emerging technologies: Investing in and utilizing innovative technologies for producing olefins, chemicals, and polyolefins with lower carbon footprints, including circularity-focused technologies like our MoReTec advanced recycling technology.
- Low Carbon Energy: Reducing emissions associated with our purchased electricity and steam by sourcing renewable energy and collaborating with utility suppliers to lower the carbon intensity of our energy sources.
OUR GOAL: REDUCE ABSOLUTE SCOPE 1 AND 2 GHG EMISSIONS 42% BY 2030
To achieve our 2030 target of reducing absolute scope 1 and 2 GHG emissions by 42%, we have developed a comprehensive strategy that encompasses various projects and initiatives categorized under the following levers:
- Organic growth and divestitures: Factoring in emissions reductions from organic growth as well as divestitures of assets.
- Previously announced closures: Considering the emissions reductions resulting from the closure of assets as previously announced.
- Additional emissions: Accounting for the emissions generated by our new PO/TBA plant in Channelview, Texas, which commenced operations in March 2023.
Furthermore, we have made plans to close the Houston refinery by the end of December 2023, as communicated in April 2022. This closure is expected to lead to a reduction of more than 3 million metric tons of scope 1 and scope 2 emissions annually.
Leveraging Strategies to Reduce Scope 1 and Scope 2 Emissions by 2030
Electrification:
As part of our comprehensive approach to achieving our 2030 target and our long-term net zero goal for scope 1 and scope 2 emissions by 2050, we are focusing on electrification. Our 2030 strategy involves reducing the reliance on fossil fuels in our utilities by electrifying our steam production. By coupling this electrification with renewable or low carbon electricity sources, we can effectively decrease the carbon footprint associated with the energy produced on-site. We recognize the significance of process electrification, especially in our olefins plants, which account for a significant portion of our scope 1 and 2 emissions.
Fuel Switching:
Fuel switching is another crucial element in our strategy to achieve our 2030 target and our net zero goal for scope 1 and scope 2 emissions. This approach entails replacing higher carbon-intensive fuels with low carbon intensity fuels, including hydrogen, in our operations. We are actively assessing various sources of hydrogen, both internal and external, to reduce GHG emissions from our fuel usage. Internally, we are exploring the production of hydrogen through reforming gases from our processes and on-purpose hydrogen production. Externally, we are collaborating with partners like Air Liquide, Uniper, and Chevron to evaluate the potential establishment of a low carbon hydrogen and ammonia production facility in the U.S. Gulf Coast. Additionally, our collaboration with Evonik will enable us to transition away from coal and replace it with high-pressure steam produced from natural gas, further reducing our carbon intensity.
Carbon Capture, Storage, and Utilization:
We strongly support the development of infrastructure for carbon capture and storage (CCS) to facilitate emissions reduction in processes where no other economically viable alternatives currently exist. CCS can be combined with hydrogen production from natural gas to produce blue hydrogen. Recognizing the importance of economically feasible CCS infrastructure and its role in enabling a supply of blue hydrogen, we are conducting feasibility studies at key manufacturing sites in Europe and the U.S. to explore the deployment of carbon capture equipment linked to storage infrastructure under development. Additionally, we see potential in the utilization of CO2 as an alternative to permanent storage. Collaborating with various stakeholders, we aim to advance CO2 utilization approaches to reach technological and commercial maturity. CO2 utilization not only reduces scope 1 and 2 emissions through capture but also has the potential to reduce scope 3 emissions by converting captured CO2 into higher value chemicals as a substitute for fossil-based feedstocks.
Projected Progress and Capital Expenditures:
We anticipate a temporary increase in scope 1 and 2 emissions in 2023 due to the commissioning of our PO/TBA plant. However, a significant portion of our emissions reduction efforts is expected to occur in the latter half of the decade, aligning with the turnaround schedules of our manufacturing sites. The realization of these projects also depends on key enablers, such as the construction of necessary infrastructure. Our long-range plan incorporates estimates of the capital expenditures required to achieve our emissions reduction goals. While these investments are not expected to significantly impact our overall capital allocation strategy or represent a major portion of total capital expenditures in the next three years, we will evaluate, pursue, and prioritize GHG emission reduction investments based on each project's return on investment.
OUR GOAL: ACHIEVE 50% OF ELECTRICITY FROM RENEWABLE SOURCES BY 20306
Renewable electricity plays a crucial role in our efforts to reach net zero scope 1 and scope 2 emissions by 2050.
We have made significant strides towards our renewable energy procurement goal. Renewable energy is a key component of our strategies for 2030 and 2050, and we prioritize power purchase agreements (PPAs) as the preferred method to decarbonize our electricity supply. These strategic projects not only drive our progress in reducing greenhouse gas emissions but also offer scalability and support investment in new renewable energy infrastructure. PPAs also serve as a sound business decision, protecting us against potential market volatility.
In 2022, we successfully signed eight renewable electricity PPAs in the United States and Europe, surpassing 50% of our 2030 target. These projects encompass both wind and solar energy, with a majority located in Texas. Notably, the Tarragona Solar Project in Spain represents our first physical PPA project at a LyondellBasell manufacturing site. Operations for this project are expected to commence in Q3 2023, providing approximately 5 megawatts (MW) of renewable energy capacity. Overall, these PPAs represent around 933 MW of renewable energy capacity, generating electricity equivalent to the annual consumption of approximately 380,000 households.
In March 2023, we established five long-term solar power PPAs with Grenergy. These 15-year contracts involve the supply of solar energy from the La Cereal solar farm project in Spain, set to be operational by the end of 2025. These agreements contribute approximately 141 MW of solar energy capacity, equivalent to the annual electricity consumption of around 90,000 European homes. With these PPAs, we have achieved 70% of our goal to procure at least half of our electricity from renewable sources by 2030. Once these projects are operational, they will reduce our company's scope 2 emissions by more than 1 million metric tons per year.
Additionally, we are actively identifying and implementing solutions to secure low-carbon energy through ongoing projects. These initiatives aim to supplement our renewable electricity supply at sites in North America and Europe. They involve collaboration with our current utility suppliers to decrease the carbon intensity of the energy we procure and the assessment of emerging technologies for deployment at our facilities.
OUR GOAL: ACHIEVE A 30% REDUCTION IN ABSOLUTE SCOPE 3 GHG EMISSIONS BY 20307
Our scope 3 goal is based on the best available scientific knowledge, and we are actively seeking validation from the SBTi (Science-Based Targets initiative).
Developed in line with the latest SBTi guidance, our scope 3 goal covers two-thirds of our total scope 3 emission inventory. We are currently in the process of seeking validation for this goal from the SBTi. To achieve reductions in scope 3 emissions, several strategies are crucial:
Exiting the refining business: We will cease the sale of refined products such as gasoline, diesel, and jet fuel, as well as discontinue the procurement of raw materials, including crude oil. This strategic move will lead to a total reduction of approximately 40 million metric tons of scope 3 emissions annually.
Increased use of circular feedstocks: We are actively increasing the utilization of renewable bio-based and recycled feedstocks. This aligns with our commitment to produce and market a minimum of 2 million metric tons of recycled and renewable-based polymers annually by 2030.
Collaboration with suppliers: By engaging with our suppliers, particularly those who provide feedstocks and raw materials, we can gain a better understanding of the product carbon footprint associated with the materials we procure from them. This enables us to explore collaborative opportunities to reduce emissions. We also rely on the product carbon footprint guidance provided by Together for Sustainability to foster alignment in scope 3 accounting practices throughout the value chain.
Transition to lower carbon intensive fuels: Shifting to the use of fuels with lower carbon intensity in our operations has the potential to reduce both scope 3 emissions and our scope 1 and/or scope 2 emissions.
Collaboration with logistics providers: We are actively engaging with our logistics suppliers to gain deeper insights into the emissions linked to the transportation of our products to customers. We are also reviewing opportunities to optimize our distribution routes to minimize GHG emissions. Our participation in the development of the Global Logistics Emissions Council (GLEC) guidance for the European Chemical Industry, as part of the Smart Freight Centre, demonstrates our commitment to improving emissions reporting accuracy and optimizing logistics operations.
Calculating scope 3 emissions can be complex as the industry's understanding of emission sources and appropriate methodologies continues to evolve. Guidance for calculating and addressing scope 3 emissions is currently being developed across various industries, including the chemical sector. We actively participate in sector initiatives aimed at enhancing the consistency and accuracy of scope 3 emission estimates and reporting, such as the SBTi Chemical Industry Guidance and Together for Sustainability's Product Carbon Footprints.
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