Energy and Climate Protection

Strategy

• We are committed to energy efficiency and global climate protection along the value chain
• New climate protection goal: CO₂-neutral growth until 2030

Climate protection is very important to us. As a leading chemical company, we want to achieve CO₂-neutral¹ production growth from 2019 to 2030. We have articulated this commitment in our new climate protection goal, which will apply from 2019. In order to reach this target, we aim to maintain total greenhouse gas emissions from our production sites and our energy purchases at the 2018 level. Sharp increases due to the startup of large-scale plants will be progressively offset. We will compensate for additional emissions with optimization measures at existing plants and a focus on purchasing low carbon energy. When deciding on investments and acquisitions, we systematically consider the effects on greenhouse gas emissions.

Most of BASF’s greenhouse gas emissions are attributable to the consumption of energy. At sites that produce their own energy, we primarily rely on highly efficient combined heat and power plants with gas and steam turbines, and on the use of heat released by production processes. Furthermore, we are committed to energy management that helps us analyze and further improve the energy efficiency of our plants on an ongoing basis. We continuously analyze potential risks to our business operations arising in connection with the topics of energy and climate protection and derive appropriate measures.

We offer our customers solutions that help prevent greenhouse gas emissions and improve energy and resource efficiency. Around half² of our total annual research and development spending goes toward developing these products and optimizing our processes.

Our climate protection activities are based on a comprehensive analysis of our emissions. We report on greenhouse gas emissions in accordance with the Greenhouse Gas Protocol Standard as well as the sector-specific standard for the chemical industry.

Since 2004, we have participated in the international non-profit organization CDP’s program for reporting on data relevant to climate protection. BASF achieved a top score of “A” in CDP’s rating for 2018, again awarding it Leadership status. Companies on the Leadership level are distinguished by factors such as the completeness and transparency of their reporting. They also pursue comprehensive approaches in managing the opportunities and risks associated with climate change as well as emissions reduction strategies to achieve company-wide goals.

Carbon management

Since 2018, we have bundled global activities to reach our new climate goal and a long-term research and development program under the banner of carbon management. The program targets new technologies to significantly reduce greenhouse gas emissions from production at our Verbund site in Ludwigshafen, Germany. The focus here is on production processes for basic chemicals, which account for the highest share of emissions. These technologies can be transferred to other sites. Developing the technologies is time-intensive and involves uncertainties. We expect these new processes to make a significant contribution to reducing CO₂ from 2030. As well as technical progress, this will require an adequate supply of renewable energy at competitive prices and a supportive regulatory framework.

More on carbon management

Climate protection is a shared global task. We advocate climate protection by supporting initiatives to this end. In 2018, BASF actively contributed to recommendations on energy, climate and resource efficiency for state and government leaders in a working group of companies from G20 countries – the Business 20 (B20). As a member of the Alliance of CEO Climate Leaders, BASF explicitly encourages companies to step up their commitment to meeting the targets of the Paris climate accord. In November 2018, BASF also co-signed an open letter published by the Alliance calling for a pledge to increase efforts to reduce emissions, improved analysis and reporting of climate-related financial risks as well as a global carbon pricing mechanism. BASF also supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). In 2018, we started comparing our annual reporting with the TCFD’s recommendations and identifying potential action areas.

Reduction of greenhouse gas emissions per metric ton of sales product in BASF operations excluding the discontinued oil and gas business

%

Global goals and measures

We aim to reduce our greenhouse gas emissions per metric ton of sales product by 40% by 2020, compared with baseline 2002 (BASF operations excluding the discontinued oil and gas business). In absolute terms, our emissions declined slightly in 2018 compared with the previous year. We reduced greenhouse gas emissions per metric ton of sales product by 34.2% compared with baseline 2002 (2017: reduction of 35.5%). Since 1990, we have been able to lower our overall greenhouse gas emissions from BASF operations (excluding the oil and gas business) by 49.2% and even reduce specific emissions by 74.2%.

We will pursue a new goal from 2019 onward: CO₂-neutral growth until 2030. We will maintain greenhouse gas emissions per metric ton of sales product as an additional reporting indicator.

By 2020, we want to have introduced certified energy management systems (DIN EN ISO 50001) at all relevant production sites.¹ Taken together, this represents 90% of BASF’s primary energy demand. This is one of the ways in which we intend to identify and carry out improvements in energy efficiency, reducing not only greenhouse gas emissions and saving valuable energy resources, but also increasing the BASF Group’s competitive ability. From 2019 onward, we will maintain this goal as a reporting indicator to track our progress in introducing energy management systems.

The introduction and implementation of the energy management systems is steered by a global working group. All energy efficiency measures are recorded and analyzed in a global database and made available to BASF sites as best practices. Currently, more than 150 measures are being pursued to reduce energy consumption and increase competitive ability. Further sites across all regions were certified in accordance with ISO 50001 in 2018. These include the Verbund site in Geismar, Louisiana, as well as another 19 sites in Brazil, India, Malaysia, Thailand, France and the Netherlands, among other countries. At the moment, 64 sites are certified worldwide, representing 73.0% of our primary energy demand.

Certified energy management systems (ISO 50001) at BASF Group sites worldwide, in terms of primary energy demand

Energy supply and efficiency

• Verbund system as important component of our energy efficiency strategy

Gas and steam turbines in combined heat and power plants enable us to fulfill more than 70% of the electricity demand of the BASF Group. Compared with separate methods of generating steam and electricity, we saved 13.1 million MWh of fossil fuels and prevented 2.6 million metric tons of carbon emissions in 2018. The Verbund system is an important component of our energy efficiency strategy: Waste heat from one plant’s production process is used as energy in other plants. In this way, the Verbund saved us around 18.5 million MWh in 2018, which translates to 3.7 million metric tons less CO₂ released into the environment. With combined power and steam generation as well as our continuously enhanced Energy Verbund, we were thus able to prevent a total of 6.3 million metric tons of carbon emissions in 2018.

We were able to further optimize the resource and energy consumption of our production in numerous projects around the world in 2018. For example, a new boiler was installed at the McIntosh site in Alabama to generate steam from production residues that were previously disposed of externally, saving primary energy. Process improvements at many additional sites have also led to savings in steam, electricity and fuel.

We also rely on locally available sources to supply our sites with energy. We are continuously exploring the use of renewable energies. The focus here is on the purchase of electricity. It only makes economic sense to replace highly efficient internal electricity and steam generation using natural gas once renewable energies offer the necessary supply security and are available at competitive prices.

Our research also contributes to increasing the efficiency of technologies for the use of renewable energy sources.

Energy supply of the BASF Group 2018

Carbon footprint and climate protection products

• Reporting on greenhouse gas emissions along the entire value chain
• Customers’ use of climate protection products sold in 2018 avoids 640 million metric tons of CO₂ equivalents

BASF has published a comprehensive corporate carbon footprint since 2008. This reports on all greenhouse gas emissions along the value chain and shows the volume of emissions prevented through the use of our climate protection products. We plan our climate protection activities along the value chain based on our corporate carbon footprint.

Through various measures to reduce our raw material and energy requirements, the emission of greenhouse gases associated with producing the raw materials was decreased by a total of around 142,000 metric tons in 2018.

Greenhouse gas emissions along the BASF value chain in 2018⁴

Million metric tons of CO₂ equivalents

Our climate protection products help us offer solutions to our customers to avoid greenhouse gas emissions over their entire lifecycle as compared with reference products. According to the systematic sustainability analysis we conduct on our portfolio – using the Sustainable Solution Steering method – such products are referred to as “Accelerator” solutions as using them contributes positively to climate protection and energy as compared with reference products. Two examples are Luprosil^® and Lupro-Grain^®, propionic acid-based preservatives that enable feed grains to be stored for up to 12 months after harvesting without being dried. An Eco-Efficiency Analysis shows that in addition to ecological and economic advantages, these can reduce greenhouse gas emissions by an average of 85% per metric ton of feed.

An analysis of 22 climate protection product groups revealed that customers’ use of products sold in 2018 helps to avoid 640 million metric tons of CO₂ equivalents. Every product makes an individual contribution in the value chain of customer solutions. Value chains are assessed in terms of BASF’s economic share of the respective customer solution. On average, 5% of the emissions avoided were attributable to BASF in 2018. The calculation of avoided greenhouse gas emissions took into account the chemical industry standards of the International Council of Chemical Associations (ICCA) and the World Business Council for Sustainable Development (WBCSD).

Prevention of greenhouse gas emissions through the use of BASF products

Million metric tons of CO₂ equivalents