BASF

BASF is the largest chemicals company in the world by sales. Its products are found everywhere, from lubricants to beauty care and from plastics to cleaning products. The company, headquartered in Ludwigshafen, Germany, has more than 110,000 employees worldwide working in six integrated chemicals complexes and 232 production sites in more than 90 countries. This adds up to a substantial environmental impact that includes annual greenhouse gas emissions on par with that of Bolivia.

BASF incorporated sustainable development in its strategy in 1994, published its first environmental and safety goals in 1997 and then voluntary global environmental and safety targets in 2003. In 2019, BASF set a global carbon dioxide target, which was transformed into the current target in 2021.

The company has been working to reduce its carbon emissions and has slashed them in the past 30 years, while at the same time operations have grown organically and through acquisition. 

In 1990, BASF’s emissions were 40.1 million metric tons of carbon dioxide equivalent per year, almost as much as the Philippines emitted at the same time. Current emissions amount to 20.8 million t/y CO2e, down from 21.9 million in 2018. The sources of the emissions are split evenly between energy production and chemical production. 

Goal

The company’s long-term goal is worldwide net-zero CO2 emissions (scopes 1 and 2) by 2050 with an intermediate goal of a 25% reduction to 16.4 million t/y of CO2e by 2030, in effect cutting emissions in half by the deadline. The 2030 goal exceeds the European Union’s target of minus 55%. It plans on spending up to €1 billion by 2025 to reach its climate target and €2 billion to €3 billion more by 2030.

Challenges

The sheer scale of BASF’s operations is a challenge to achieving its goal. Its portfolio of products is in the tens of thousands. In addition, there is a natural expectation within the company of growth over time, as well as the ongoing construction of a new chemical complex in China. 

Its plants require vast quantities of energy to function. BASF Group purchases and generates in house about 14.7 terawatts of electricity per year, of which 6 TW are used by the company’s main site at Ludwigshafen alone. The majority of this electricity is generated thermally by burning natural gas. 

New technologies are central BASF’s emissions goal of net-zero CO2 by 2050, the company told Sustainability InSite. The intention being to replace fossil fuels such as natural gas with electricity generated from renewable resources. BASF is collaborating with several partners to pioneer many of these technologies, which are currently in the pilot stage.

“Broad scale-up of these technologies will only be fully realizable after 2030,” the company said. “In order to accelerate the avoidance of CO2 emissions prior to that date, BASF also continues to systematically implement continuous improvement processes for existing production plants. In addition, BASF will progressively switch to renewable sources to meet its electricity needs and intends to invest in wind parks to facilitate this.”

Another cornerstone of BASF’s approach is the steady substitution of fossil-derived raw materials with renewable materials and waste feedstocks, including post-consumer plastic waste.

The firm aims to double its sales generated from circular economy products—made of materials that can be regenerated and that minimize disposed waste—to $20.5 billion by 2030.

Non-financial Disclosure

Since 2004 BASF has reported is activities to the CDP Climate Change program. For a more complete overview of its non-financial disclosure frameworks, click here

(a)BASF reports separately on direct and indirect emissions from the purchase of energy. Scope 1 emissions encompass both direct emissions from production and generation of steam and electricity, as well as direct emissions from the generation of steam and electricity for sale. Scope 2 emissions comprise indirect emissions from the purchase of energy for BASF’s use. (b) Emissions of N2O, CH4 and HFC have been translated into CO2 emissions using the Global Warming Potential, or GWP, factor. GWP factors are based on the Intergovernmental Panel on Climate Change (IPCC) 2007, errata table 2012 for the 2018 and 2020 reporting years, and IPCC 2014 for the 2021 reporting year. HFC (hydrofluorocarbons) are calculated using the GWP factors of the individual components. (c)Market-based approach. Under the location-based approach, Scope 2 emissions were 3.362 million metric tons of CO2 in 2020 and 3.670 million metric tons of CO2 in 2021. (d)Includes sales to BASF Group companies; as a result, emissions reported under Scope 2 can be considered twice in some cases. (e)Emissions are reported separately from Scope 1 and Scope 2 in accordance with the Greenhouse Gas Protocol. (f)The comparative figure for 2020 has been adjusted to reflect updated data.
BASF operations202120202018 (baseline)
Scope 1b
CO2 (carbon dioxide)17.23416.86017.025
N2O (nitrous oxide)0.4180.6090.677
CH4 (methane)0.0340.023f0.027
HFC (hydrofluorocarbons)0.0340.031f0.091
SF6(sulfur hexafluoride)0.00100
Scope 2c
CO22.4643.2794.067
Total20.18520.802f21.887
Offsetting000
Total after offsetting20.18520.802f21.887
Sale of energy to third parties (Scope 1)d
CO20.9470.845f0.773
Total21.13221.647f22.660
Use of biomasse
CO20.0910.024n/a

Reduction Measures

BASF is carrying out a number of measures to reduce its carbon footprint and mitigate its environmental impact. In 2021, the company launched its Net Zero Accelerator unit to develop low-CO2 production technologies, circular economies – one such is ChemCycling, a project focused on plastic waste that is not recycled mechanically – and increase the use of renewable energy. 

It started a partnership with Siemens Energy for the purpose of accelerating the commercial implementation of new technologies designed to lower greenhouse gas emissions in chemical production.

The company identified its 10 most carbon-intensive processes. These are generating steam for its steam cracker – a process that uses natural gas – and the production of ammonia, acrylic acid, caprolactam, nitric acid, syngas, toluene diisocyanate, hydrogen, ethylene oxide and methylene diphenyl diisocyanate.

Grey-to-green Power

Switching to renewable electricity for processes and facilities. The company launched BASF Renewable Energy GmbH on Jan. 1, 2022, January 1, 2022. The subsidiary’ role is to supply BASF Group Europe with renewable electricity, electricity trading in Europe and global consulting for BASF and its Group companies in the field of renewable energies. 

BASF estimates that current power use at the Ludwigshafen site would need to be triple or quadruple in order to fully implement new, low-carbon electricity-based production processes. To meet this demand, the company is investing in its own power assets, especially for wind power.

To date, BASF acquired a 49.5% stake in Vattenfall‘s Hollandse Kust Zuid, the world’s largest offshore wind farm; signed a 25-year supply contract for 186 megawatts of capacity from Ørsted’s Borkum Riffgrund 3 offshore wind farm; and signed another 25-year power purchase agreement with Engie to supply renewable electricity across a number of European sites.

“One thing is clear: The transformation will require significantly more energy from renewable sources.” 

Power-to-steam

Installing electric heat pumps and compressors to use waste heat from chemical plants for steam production. The company made an agreement in March 2021 with Saudi Arabian chemical company SABIC and industrial gases and engineering company Linde to develop and demonstrate a multi-megawatt plant at BASF’s Ludwigshafen site, which currently uses 20 million t/y of steam generated by natural gas. If the project is approved, startup is slated for 2023. They have applied to the European Union Innovation Fund and the German Federal Ministry for the Environment’s Decarbonization in Industry for funding.

New Technologies

Examining a number of technologies to reduce CO2 emissions, including an electrically heated steam cracker furnace, CO2-free production of hydrogen and storage processes for CO2

Seventy percent of emissions from the European chemicals industry are from hydrogen and methanol, two essential chemical building blocks.

The company is exploring substituting fossil fuel-derived feedstock with olysis oil made from waste plastics and tires. Its goal is convert 250,000 tons of plastic waste into oil thermally rather than mechanically by 2025. To do this, it has developed a catalyst for cracking and hydrogenating plastic that cannot normally be mechanically recycled into an oil that is 99.9% carbon and hydrogen.

BASF signed a memorandum of understanding in 2021 with technology partner Quantafuel and Remondis, a waste and water management company, to assess a joint investment in a pyrolysis plant for plastic waste. 

However, this oil would displace less than 5% of the company’s total fossil fuel consumption, according to calculations made by Chemical & Engineering News.

Other critics of the technology think using pyrolysis is unsustainable. Sonja Haider, senior business adviser at the Swedish environmental group International Chemical Secretariat, is one of them. She thinks chemical recycling is only viable under limited circumstances and requires a lot of energy. 

BASF’s pyrolysis yield is about 70%, which is similar to mechanically recycling plastics.

The company says, “In our ChemCycling project, our technology partners use the pyrolysis process to extract pyrolysis oil from mixed plastic waste or used tires, which were not previously recycled. We can feed this pyrolysis oil into our Verbund as an alternative to fossil raw materials and use it to make new products. These have exactly the same properties as products manufactured from fossil feedstocks. We use a certified mass-balance approach to allocate the percentage of recycled content to the end product.

Environmentalist and chemist Professor Michael Braungart is critical of BASF’s efforts. Braungart, founder of the environmental consulting firm EPEA and professor of ecodesign and ecoeffectiveness at Leuphana University Lüneburg, thinks BASF needs to do more than recycle plastics.

“BASF is very busy trying to be more efficient at reducing its environmental footprint, whereas to be truly sustainable, BASF and the wider chemical industry must ask far more fundamental questions and deploy systems that benefit the planet, such as making products by taking CO2 out of the atmosphere,” Braungart said.

BASF says: “CO2-free chemical production is the future. And BASF wants to be among thefirst there. It all starts with transparency, which is why we provide our customerswith Product Carbon Footprints (PCF) – the carbon footprint associated withproduction per kilogram of sales product – for each of our 45,000 sales products.Furthermore, we help our customers develop strategies to reduce their carbonfootprint, to use resources more efficiently, and to manufacture products in amore environmentally friendly way. We expect that demand for such emission-freeor emission-reduced products will exceed supply in the medium term, and thattheir market value will more than compensate for the higher production costs. Ittherefore also makes good economic sense to take a leading role here. That iswhy we want to be among the first to provide as many products as possible fromour portfolio with a reduced carbon footprint in large volumes by the end of thedecade. This differentiates us, increases our competitiveness and enables growthabove market.”

Biobased Feedstocks

One of the company’s main focuses areas of carbon reduction is the introduction of biobased and renewable feedstocks, in addition to fossil feedstocks. BASF has been steadily increasing the amount of renewable feedstocks in chemical processes. In 2019, about 5.3% of the raw materials the company purchased worldwide were from renewable sources, derived from substances such as vegetable oils, fats, grains, sugars and wood. In 2021, the company bought about 1.3 million tons of renewable raw materials. 

Renewable raw materials are mainly based on vegetable oils, fats, grains, sugar and wood. They are used to produce a range of ingredients from detergents and cleaning products or active ingredients for cosmetics.

BASF also uses biomethane, which can come from a variety of sources such as livestock waste and landfill, and bionaphtha as an alternative to fossil resources. 

“The biomass-balance approach allows us to allocate the amount of renewable resources used to a wide variety of end products,” the company told Sustainability InSite. “Especially for the lubricants industry, a series of additives and base stocks with reduced carbon footprints have been created using the mass balance approach.”

Two examples from the BASF portfolio on biomass balanced products that bring sustainability benefits for the lubricants industry are the high-performance water-soluble polyalkylene glycol base stocks and the polyisobutene portfolio.

In the case of the company’s PAG, BASF says it can achieve an 81% product carbon footprint reduction compared with the standard equivalent by using biomethane as feedstock in a biomass balance approach. This reduction can be passed on to the application phase.

Efficiency

Optimizing energy efficiency of processes. Automating Ludwigshafen’s nitric acid plant is expected to save 145,000 t/y of CO2 equivalent. To identify and implement energy efficiency, the company introduced certified energy management systems according to DIN EN ISO 50001 at all relevant production sites.

BASF’s major chemicals facilities operate under a system called verbund, which the company regards as a key component of its energy efficiency strategy. Verbund complexes use byproducts from one process as the starting materials for others, including not only substances but also heats and steam. Verbund saved about 18.7 TWh in 2020, which equates to 3.8 million tons less CO2 released into the atmosphere.

Offsetting

We have bundled our global activities to reduce greenhouse gas emissions in our carbon management. We only consider external offsetting measures as a temporary stop-gap if our activities do not make the desired contribution to reducing emissions. By 2025, we plan to invest up to €1 billion to achieve our climate protection targets. Additional investments of up to €3 billion are to follow by 2030.”

Other Measures

New digital application to calculate the product carbon footprint for 45,000 sales products. The company has been calculating these values since 2007 for internal use and will now offer the information on selected products for customers.

The aim of the application is to contribute to establishing a common product carbon footprint  standard for the chemical industry and increase the availability of qualitative and consistent primary data sets, the company told Sustainability InSite.

Initiatives and Industry Associations

BASF is a member of a number of initiatives to reduce carbon-intensive products from the value chain, including Operation Clean Sweep, which aims for zero pellet loss for plastics manufacturers, processors and distributors, logistics and recycling companies. It is also:

  • Cofounder of the Alliance to End Plastic Waste
  • Supports the Paris Agreement 
  • Co-chaired the B20 task force on Energy, Climate & Resource Efficiency and Sustainability
  • Member of the Alliance of CEO Climate Leaders
  • Founder member of the CEO Climate Dialogue 
  • Member of the UN Caring for Climate initiative
  • Member of the World Business Council for Sustainable Development Signed the Paris Pledge for Action
  • Wrote open letter “A call to climate action” in UN Global Compact-Accenture CEO study
  • Wrote open letter of the European Chemical Industry Council (Cefic) to the European Council, European Commission and European Parliament
  • Business proposals in view of a 2015 international climate change agreement at COP 21 in Paris
  • Supports an initiative of the French business associations MEDEF, Afep and Cercle de l’Industrie asking for adoption of an ambitious agreement 

Carbon Pricing

The company believes global carbon pricing is the most efficient and effective way to achieve global climate protection governed by an international treaty at the G7 or G 20 level. The company says it has been actively engaged in this direction. 

Also critical to success are prices for renewable energy. Substituting fossil fuels is only economically feasible at production costs of 4 to 5 cents/kWh. Consequently, there is an urgent need to expand supply and reduce the levies and fees on electricity prices. In addition, globally comparable carbon pricing – or at least at G20 level – is needed to ensure that climate-friendly processes are competitive internationally.”

ESG Ratings Performance

Sustainable environmental, social and governance ratings agencies agencies look at BASF favorably. The company is often considered to be a benchmark in the chemical industry. The company is found on a number of the most important ESG indexes. 

RankingBASF ratingLast update
CDP
- Climate
- Forests
- Water
     
A- (Leader)
A- (Leader)
A- (Leader)
Dec. 7, 2021
FTSE4GoodIncluded in the FTSE4Good Index SeriesJune 22, 2021
ISS ESGPrime StatusMay 25, 2021
MSCI ESGAApril 21, 2021
Sustainalytics ESG Risk25.8 points (among top 10% in diversified chemicals)May 21, 2021
Vigeo Eiris59 pointsNov. 24, 2021

Conclusion

Considering how large BASF is, it could make a substantial contribution to the mitigation of climate change by reducing its carbon emissions. It recognizes that offsetting is a short-term solution and that reducing emissions is a 360-degree endeavor, which involves not just institutional behavioural change but innovative technology.