The evolution of industry is having a major impact on the natural greenhouse effect. Over the last century, the burning of fossil fuels, such as coal and oil, has increased the concentration of atmospheric greenhouse gases (GHG). The clearing of land for agriculture, industry and other human activities has also contributed to that increase. These changes to the natural atmospheric GHG composition are having major effects on the environment and society. For example, the earth will become warmer, more evaporation and precipitation overall will occur and the sea level will rise. Taken as a whole, the range of published evidence indicates that the net costs of climate change are likely to be significant and will increase over time.
The COP21 Paris Agreement calls on all countries to keep the global temperature increase to well below 2°C and to pursue efforts to limit the increase to 1.5°C above pre-industrial levels. At COP 26, which took place in 2021, countries made bold collective commitments to curb methane emissions, to halt and reverse forest loss, align the finance sector with net zero by 2050, accelerate the phase-out of coal and end international financing for fossil fuels, to name the key achievements. However, recognising the urgency of the challenge, ministers from all over the world agreed that countries should come back in 2022 at COP 27, to submit stronger 2030 emissions reduction targets with the aim of closing the gap to limit global warming to 1.5°C.
In this context, the European Union is committed to being the first carbon-neutral economy by 2050 and will therefore define its long-term GHG emission reduction strategy. This strategy is expected to transform all sectors of the European economy. The EU has already put a price on carbon emissions through the EU Emission Trading Scheme (EU ETS), which covers 40% of EU carbon dioxide emissions and aims to achieve a reduction in the quantity of emissions. With the Fit for 55 legislation published in July 2021, the European Commission has shown its commitment to expanding the scope of the EU ETS and driving GHG reduction to the next level.
As one of the largest and most diversified industries in Europe, and as a significant emitter of GHGs, the chemical industry plays an important role in helping to achieve long-term GHG emission reductions in a European and global context.
Borealis’ governing body for addressing climate change is the Energy & CO2 Committee. For the HC and PO parts of the organisation, it develops and implements energy and CO2 emission targets, strategies and guidelines, and measures performance using key performance indicators (KPIs). The committee is headed by the EVP Base Chemicals and Operations, and comprises representatives from relevant businesses and functions. Within Fertilizers, Melamine and TEN, the Energy & CO2 Committee is headed by the business’s CEO. To align the energy management system across Borealis, a Group-level energy management team has a presence in each location.
The HC and PO organisation has set up a team to create a roadmap to reduce fossil-based CO2 emissions that result from industrial activities. The team evaluates Borealis’ progress against its 2030 ambitions (see below) as well as technologies, business challenges and innovation, and reports to the Energy & CO2 Committee. The team is led by the VP Hydrocarbon Operations and works closely with the Circular Economy team. In Fertilizers, Melamine and TEN, a GHG reduction task force has been set up to identify the full GHG reduction potential and to create a roadmap to achieve it.
Climate change is arguably the biggest threat to humans on a global scale. Borealis therefore has a responsibility to reduce its carbon footprint, as well as its products’ total life-cycle emissions. Climate change mitigation and economic success must go hand in hand to ensure that the innovations needed for global climate protection continue to be developed. Whilst it is essential to reduce emissions in the Group’s operations, Borealis is also contributing to both avoiding and reducing value chain emissions during the life cycle of its product solutions.
Borealis can play a significant role in solving society’s climate challenges by providing sustainable Polyolefin solutions. For example:
In addition, Borealis is fully committed to reducing the carbon footprint of its operations and to achieving climate neutrality by 2050 or sooner, and has developed a comprehensive climate strategy during 2021 that we will launch publicly during the first quarter 2022.
Borealis will achieve these goals by following three pathways:
For each of these areas, Borealis has set the following goals in its journey towards climate neutrality by 2050 (or sooner):
To make this transition possible, Borealis has developed robust internal pricing for CO2 emissions in PO and HC. Together with the regulatory and policy framework, this will enable sustainable investments.
Borealis also works with partners along the value chain to reduce Scope 3 emissions that occur both upstream and downstream. A real step change can only be achieved through intra- and cross-sectoral cooperation.
The Fertilizers, Melamine and TEN business is committed to Borealis’ goals on the journey towards climate neutrality by 2050. For example:
In 2021, Borealis calculated its first corporate carbon footprint following the Greenhouse Gas Protocol, using 2020 data on Scope 1, 2 and 3 GHG emissions:
To calculate its emissions performance, Borealis uses a broad range of emission factors, which are a means to calculate the GHG emissions for a given source. Each EU member state has a national inventory of emission factors, which means that, for example, natural gas use in Austria would have the specific Austrian emission factor applied to it. Other emission factors are standard factors from scientific literature, from inventories or are measured by a certified laboratory. All EU ETS emission factors are permitted and approved by the relevant authorities.
Scope 1 and EU-ETS
Scope 1 involves direct emissions originating from Borealis’ own sites and include power and steam generation (before furnaces) and flaring. These make up a large part of Borealis’ Scope 1 emissions. In 2021, Borealis produced 3,878 kilotonnes of EU ETS CO2 equivalent emissions. This is less than the 4,050 kilotonnes in 2020 due to production reduction as a result of COVID-19 and unforeseen stops, primarily of ammonia plants. For 2021, Borealis has set a target to emit no more than 4,527 kilotonnes of EU ETS CO2 equivalent emissions. Nitrous oxide (N2O) emissions from nitric acid plants decreased to 750 tonnes in 2021, compared to 1,143 tonnes (ETS) in 2020, due to a reduction in nitric acid production of 162 kilotonnes and improvement of the N2O catalyst.
Scope 2
Scope 2 involves indirect CO2 equivalent emissions caused by Borealis’ externally generated electricity consumption, external steam and energy supply that is purchased and brought into the Group’s facilities from other sources. It is expressed as market-based or location-based emissions, as defined in the Greenhouse Gas Protocol (an international standard for the calculation of greenhouse gas emissions).
Scope 3
Scope 3 involves other indirect emissions in the value chain. For Borealis, the following Scope 3 categories according to the Greenhouse Gas Protocol are material and therefore included in the calculation:
Not all categories are mature and significant for HC and PO and the Fertilizers, Melamine and TEN part of the organisation. Borealis will therefore only report categories 1, 2, 3, 4, 5, 10, 11, 12 and 15.
1) At the time of publication of this report, no final data is available for Scope 2 market-based and Scope 3 emissions in 2021.
As Borealis transitions to being climate neutral, a big lever will be circular and bio-based material. Borealis has therefore opted to calculate Scope 3 category 12 (end-of-life treatment of sold products), based on the recycled and biogenic content of the products it produces. Taking this conservative but fully transparent approach, Borealis is assuming the burden of recycling and emissions in its own circular transition.
A major part of Borealis’ Scope 3 emissions is in category 15 (investments). This includes Borealis’ financial stake in Borouge, as a result of which 40% of Borouge’s Scope 1 and 2 emissions are taken into account. Borouge’s Scope 3 emissions are extrapolated from Borealis’ Scope 3 emissions, excluding category 15. A similar approach is taken for Borealis’ financial stake in Baystar™ (Texas).
The figures below are the outcome of the first assessment for HC and PO. Validation and verification of the data is ongoing.
1) At the time of publication of this report, no final data is available for Scope 2 market-based and Scope 3 emissions in 2021.
The 2030 renewable energy goal is an important part of the journey towards climate neutrality by 2050 or sooner. To achieve the 2030 goal of 50% renewable electricity, Borealis will use a combination of on-site investments where possible, as well as long-term contracts known as power purchase agreements (PPAs). The projects targeted are as close as realistically possible to the Borealis locations where the power is consumed. Borealis believes that more renewable power will be needed going forward if industries such as the petrochemical industry are to electrify further.
Energy consumption accounts for a significant proportion of Borealis’ total costs and for around 55.2% of its GHG (ETS) emissions. Process emissions (emissions resulting from a chemical reaction) from ammonia production represent 37% of GHG ETS emissions and flaring losses and N2O emissions represent a further 7.8%.
Borealis has the ambition to implement improvements that reduce absolute primary energy consumption by 20% by 2030, against a 2015 baseline. The Group’s Energy Roadmap sets out a sequence of different activities, starting with establishing a baseline. In the roadmap towards the ambition, HC and PO have realised energy savings of 4.5% (3,000 GWh) towards 2030, compared to the 2015 baseline.
The baseline for any energy efficiency improvement is to implement and comply with ISO 50001, combined with continuous leadership engagement from key teams. Borealis’ initiatives include energy teams at each production location that drive the location’s energy planning process, increase awareness, act as a forum for energy issues and ensure ISO 50001 compliance.
To progress beyond this baseline, all Borealis locations run energy screening programmes every four years, often with third-party support, to evaluate their energy performance and identify improvement opportunities.
Actions to improve energy efficiency fall into one of three levels known as levers, which will deliver increasing optimisation. The three levels of actions are as follows:
Borealis’ main sources of energy are electricity, heat (primarily from steam), natural gas and fuel gas. The Group documents, tracks and follows up on all sources of energy each month, for every location.
In 2021, Borealis’ total primary energy consumption was 21,730 GWh, compared to 22,340 GWh in 2020. This represents a decrease of 610 GWh compared to the previous year. This was the result of lower production as a result of COVID-19 and unforeseen stops of cracker and ammonia plants. In total, 278 GWh of steam were sold.
Data on all of Borealis’ energy consumption is collected as it is metered, then converted into the equivalent in primary energy using the Group’s environmental data management tool. This allows Borealis to summarise different energy sources using one consumption figure, enabling comparability across plants and production lines, and providing the Group with better information for identifying technological improvement opportunities.
To achieve its climate neutrality goal, the Group drives innovation in the value chain to reduce Scope 3 emissions and increase carbon circularity.
Examples of the Group’s partnership approach and innovation include:
In the second half of 2021, Borealis kicked off the development of its Sustainability Strategy. This refreshed strategy will reflect upcoming legislative changes, such as the EU Fit for 55 package, as well as increased expectations from external stakeholders, in particular the need to support the Group’s customers on their journey towards climate neutrality via Borealis’ product solutions.
The new climate strategy and updated targets will be communicated to external stakeholders as soon as they are finalised and approved by the Executive Board and the Supervisory Board, which is planned for Q1 2022.
Borealis conducted an in-depth analysis of its corporate emissions and its product portfolio. This included the identification of the levers to significantly mitigate emissions in the future.
For Scope 1 and 2 mitigation, the preferred technologies have been identified. Depending on the geographical location, market, the availability of end-of-life products and the legislative framework, the options assessed may include mechanical or chemical recycling and the reuse of CO2. The Group selected its preferred technologies based on the required product quality, the supply of feedstock, market demand and economic and technological feasibility. Borealis also identified circular and biogenic carbon as important levers for reducing its Scope 3 emissions. Borealis has also identified opportunities with technologies with multiple readiness levels and is evaluating opportunities to work with partners to further develop innovative technologies, as it has with Qpinch technology (see below). Along with the technological options, Borealis has created a financial pathway to drive the transition, partly supported by subsidies and government grants to engage in innovative technologies. Collaboration along the value chain has also been identified as a lever for improving the Group’s carbon footprint.
Borealis’ innovative technologies and product offering will enable others to operate more sustainably, most notably by enabling the more efficient production and transportation of energy from renewable sources to energy consumers. For example, the European energy transformation will be facilitated by Borealis Borlink, e-mobility at large will be driven by the Group’s capacitor films, and Quentys has the potential to revolutionise the solar energy industry, by making applications more affordable, reliable and durable.
Borealis also offers solutions that improve energy and resource efficiency during the product manufacturing phase itself. This results in significant CO2 emissions reductions. For example, Borealis Nucleation Technology grades reduce production cycle times, Daploy™ enables light weighting through foaming of polypropylene and Borstar® allows for significant downgauging in the production of packaging and pipes.
The first-ever application of the unique Qpinch heat recovery technology at commercial scale was achieved in 2021, with the technical completion and start-up of a new demonstration unit. Located in an existing Borealis low-density polyethylene production plant in the Port of Antwerp, the heat recovery unit will test the technology’s capabilities as well as its scale-up potential for Borealis’ plants in other parts of the world. The unit will also enable Borealis to save approximately 2,200 tonnes of CO2 per year. The open-innovation collaboration, first announced in 2018, is especially advantageous because it allows Borealis to take steps towards its climate ambitions while increasing production efficiency and maintaining cost competitiveness. For Borealis, this project marks the largest potential application to date based on the results of open innovation. The project has received ecology funding support from the Flemish government.
To identify ways to improve energy efficiency, Borealis finalised energy screenings in Stenungsund (Sweden) and Porvoo (Finland). Subsequent actions are prioritised based on their benefit to the planet, in the form of environmental benefits, people (for example, through improved working conditions) and profit (such as the ability to generate cost savings). The prioritisation is also based on factors such as a risk and opportunity assessment, including social, environmental and economic aspects, total cost of ownership, internal rate of return and organisational capacity.
Examples of energy efficiency actions taken during 2021 included:
During 2021, the Group successfully extended its compliance with the energy management standard ISO 50001:2018. A series of internal audits was undertaken to prepare for certification of the energy management system.
Borealis’ energy and climate objectives for 2022 are to:
