Road to Net-Zero
Decarbonizing the supply chain
For many years now, decarbonization has been a hot topic. It is impossible to go to a chemical conference or attend a company presentation without hearing the words “carbon”, “sustainability”, and “greenhouse gases” echoing around the hall. However, recently we hear these words accompanied by mentions of “scope 3” and “LCA” and other specific terms. As regulations around GHG emissions tighten across the world, companies across all industries are going beyond the borders of their own factory and office walls to curb emissions, and the measures and processes they implement to achieve this are increasingly sophisticated.
Manufacturers now generally have a good understanding of their direct scope 1 emissions, such as fuel combustion or refrigerant leaks within their plants, with many companies laying out a clear path forward to further reducing these emissions.
Scope 2 emissions, the indirect emissions from the generation of purchased electricity, steam, heating, or cooling etc., have also been relatively well documented and assessed. However, scope 3 emissions, the indirect emissions that occur along a company’s value chain, are perhaps the most difficult to measure and manage, as they depend on many factors outside the direct control of the manufacturer. According to Together for Sustainability, scope 3 emissions account for around 70% of a chemical company’s total emissions on average, but this can be up to 90% in some cases. As Gabriele Unger, general manager at Together for Sustainability, explained: “Even if a company’s own emissions might be well under control, they may still use supplies that have huge carbon footprints.”
Together for Sustainability (TfS), a member-driven global initiative focused on raising CSR standards throughout the chemical industry, has seen its membership grow rapidly from six members when it was founded in 2011, to 47 members today. This is a sign that the chemical industry has realized that its scope 3 emissions, in particular, will require extensive industry-wide collaboration and partnerships if they are to be successfully reduced. TfS’ membership extends not only to manufacturers but distributors like Azelis and IMCD.
Singaporean manufacturers are now investing significantly in Lifecycle Assessments (LCAs) for their products, often with the use of sophisticated digital tools as the value chain can be long and complex. Wei Chee Liew, South and Southeast Asia managing partner at ERM, a pure-play sustainability consultancy, explained how LCAs are driving demand for his services in Singapore: “A high-demand area is lifecycle assessment and carbon footprinting due to the changing nature of traditional value chains. We are being asked to help redefine carbon footprints from an end-to-end perspective for new value chains with recycled feedstock”.
“Recycled plastics could be used as an alternative to fossil fuels in plastic production. Additionally, biomass sources like wood chips, rice husks, and palm oil waste can be transformed into potential chemical feedstocks or even biofuels. The government has even issued a tender for a feasibility study on importing regional feedstocks into Singapore, illustrating its commitment to reducing the use of fossil fuels.” Wei Chee Liew, South & Southeast Asia Managing Partner, Environmental Resources Management (ERM)
There are many challenges in the reduction of scope 3 GHG emissions, even for the most committed chemical companies. One challenge is the lack of transparency in value chains, which makes GHG emissions particularly difficult to quantify and reduce. Many players along the value chain may not measure or report their emissions data correctly, if at all, and in long and complex value chains there may be a myriad of elusive emission sources that are easy to miss.
Furthermore, the complexity of the global chemical sector value chain can make it difficult to harmonize calculation approaches and compare results. Generic standards are a basis for these calculations but are not sufficient due to the lack of specificity for key aspects in the chemical industry.
The GHG Protocol, created by the World Business Council for Sustainable Development and the World Resources Institute, establishes comprehensive global standardized frameworks to measure and manage GHG emissions from private and public sector operations, value chains, and mitigation actions. The GHG Protocol identifies 15 categories of scope 3 emissions, including ‘scope 3.1’, which covers emissions from the production of purchased goods and services. The council identified Scope 3.1 emissions to be the most relevant Scope 3 category for chemical companies. This is due to both the large size of expected emissions and the amount of influence chemical companies have on scope 3.1 emissions.
According to the International Energy Authority, the chemical sector is the largest industrial energy consumer and the third largest industry subsector in terms of direct CO2 emissions. This is largely because around half of the chemical subsector’s energy input is consumed as feedstock – fuel used as a raw material input rather than as a source of energy. Given the scale and importance of the chemical industry in Singapore, this is an area of great concern.
Singapore’s chemical industry has a few aces up its sleeve too. The industry benefits from being highly localized, with Jurong Island being home to over 100 petroleum, petrochemical, and chemical companies in a land area of only 32 km². Vickrem Vijayan, Singapore head of energy commercial at Sembcorp Industries, a Singaporean energy company, explains how this can be used to the industry’s advantage: “By aggregating demand, we can invest in more energy-efficient systems. For example, we can build a co-generation plant instead of putting in individual boiler systems to produce steam and power. The same goes for wastewater treatment, whereby we can aggregate waste streams from various plants and have a centralized wastewater treatment facility.”
Local companies, like Apeiron Bioenergy, founded in 2007, can offer alternative bio-feedstocks such as used cooking oil methyl ester (UCOME). This provides a greener alternative compared to virgin feedstocks from fossil fuels as it is produced from used cooking oil that has been repurposed. Chris Chen, co-founder and director, Apeiron Bioenergy, said: “Our core product, UCO, saves a significant 84% in greenhouse gas emissions compared to fossil fuel-based alternatives.”
“The chemical industry is also part of the solution towards sustainability, climate change, and the energy transition as the world will need chemicals and advanced materials for solar panels, electric vehicles, etc.”
Josephine Moh, Vice President and Head, Chemicals & Materials, Singapore Economic Development Board (EDB)
Digitalization will play a big role in gathering and analyzing the huge amounts of emissions data required across the value chain. Andreas Kappler, who heads the vertical management chemical & pharma ASEAN division at Siemens, shared some thoughts: “If you want to improve, you need to measure and collect data. Today’s emissions are partially estimated based on industry averages with the result that improvements in your supply chain will not be reflected in your product carbon footprint (PCF), meaning you cannot leverage this competitive advantage immediately.”
Singapore’s chemical industry can also benefit from its experienced trade organizations, such as the Singapore Chemical Industry Council (SCIC) and Association of Process Industry (ASPRI), to facilitate collaborations and partnerships between various stakeholders and the government, which will be crucial if Singapore’s chemical sector is to achieve its emissions targets. We have already started to see this in action with investments, and research initiatives. Pedro Vasconcelos, CEO of the renewable energy company EDPR APAC, shared one such example: “GIC, Singapore’s sovereign wealth fund, invested a billion euros in EDPR, making it the second largest shareholder after EDP. GIC’s financial prowess combined with EDPR’s strategic and operational capabilities forms a strong duo.”
The Singaporean government and local energy providers have to consider a wide range of solutions. As it is, the city state’s diminutive geography limits its ability to decarbonize its chemical industry in the same way as other nations might. “It is unlikely that there is a single solution for Singapore, it will likely need a combination of factors,” explained Chevron’s Singapore country chairman Law Tat Win.
Unlike many countries in the region, Singapore’s CO2 emissions per capita have been steadily decreasing since their peak in the mid-1990s. The World Bank reports a decrease in emissions from 11.1 t/y of CO2 per capita in 1994 to 7.7t in 2020. In light of this track record, the government appears committed to continuing this trend until net-zero is finally achieved.
“The strategic and longer-term pressure confronting the industry today is on reducing its carbon footprint. The silver lining here is that we see every stakeholder from governments to end users coming together to intensify efforts on more sustainable practices.”
Rob Boudestijn, President, Vopak Singapore
Article header image by Saman at Unsplash