Science Based Targets initiative (SBTi) released clear-cut Net Zero guidance for the global chemicals industry

New from Science Based Targets initiative (SBTi): Clear-cut net-zero pathways for the global chemicals industry 

The newly published SBTi Chemical Sector Pathways and Implementation Criteria gives chemical companies a long-overdue, practical roadmap to slash greenhouse gases.

Figure : Caprolactam plant, © Adobe Stock – Aleksei

Why this matters?

• The chemicals sector underpins almost every manufactured product, starting from building materials to fertilizers, electronics to packaging. Approximately 95 % of manufactured goods rely on chemicals.

• It is also the largest industrial energy consumer and the third highest industrial source of global greenhouse gas emissions.

• Until now, SBTi had not published sector-specific implementation guidance for chemical sector. This makes the release of the SBTi Chemical Sector Pathways & Implementation Criteria a milestone.

Link to access guidance : SBTi Chemical Sector Pathways & Implementation Criteria

Scope of target setting guidance :

The pathways include science-based decarbonization trajectories for the most emission-intensive activities in the chemicals sector, including:

1. Pathways for the most emissions-intensive primary chemicals, including ammonia, methanol and high-value chemicals.

2. A pathway for nitrous oxide emissions generated in the production of nitric acid.

3. A pathway for non-primary chemicals production.

4. A pathway for reducing use-phase nitrous oxide emissions from the application of nitrogen fertilizers.

5. A pathway to increase the use of alternative feedstocks used in the production of chemicals.

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So what does SBTi criteria says about bio-based feedstocks?

SBTi recognizes the role of biomaterials as a legitimate pathway for reducing the carbon intensity of chemical production and encourages their uptake as part of a broader, multi-pronged decarbonization plan :

• The criteria explicitly mentions the 'use of alternative feedstocks' (which can include bio-based materials) as one of the pathways for decarbonization in the chemical sector.

• The documentation also indicates that chemical-sector companies can set targets that incorporate the shift from fossil-based feedstocks to non-fossil feedstocks (which would include bio-based materials) as part of their decarbonization strategy.

• The inclusion of alternative feedstocks is offered as a complement to other emissions reduction levers such as energy efficiency, process optimization and reduction of use-phase emissions (e.g. nitrogenous fertilizers).

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What caveats are required to be taken care of when using bio-based materials as feedstocks under SBTi criteria?

• While “alternative feedstocks” are included, the pathways guidance itself doesn't guarantee that all bio-based feedstocks are sustainable. The environmental benefit depends on how bio-based feedstocks are sourced i.e. whether biomass cultivation displaces forests or triggers land-use change.

• Switching to bio-based feedstock changes the emissions profile upstream (raw-material sourcing), which means companies must have strong supply-chain data, traceability, and accounting systems in place(biogenic vs fossil carbon).

• The criteria sets out multiple pathways (energy efficiency, process emissions, emissions from nitrogen based fertilizer production and use, feedstock substitution). Relying solely on biomaterials may not be sufficient, especially for chemicals with very high emissions intensity so upstream feedstock substitution should be combined with other interventions.

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India ranks as the 6^th largest chemical producer globally and 3^rd in Asia, contributing 7% to the nation's GDP. The Indian chemical industry, valued at approximately INR 21,50,750 crore (US$ 250 billion) in 2024, is projected to expand to US$ 300 billion by 2028 and reach Rs. 86,03,000 crore (US$ 1 trillion) by 2040. Its proximity to the Middle East, a key source of petrochemical feedstock, allows India to leverage economies of scale. The government's emphasis on creating dedicated integrated manufacturing hubs under the Petroleum, Chemicals, and Petrochemicals Investment Regions (PCPIR) policy is anticipated to draw investments up to INR 20 lakh crore (US$ 276.46 billion) by 2035.

Indian chemical manufacturers can set up and operate chemical manufacturing units without prior licensing approval, provided they comply with applicable environmental, safety, and labor regulations.

Only a limited list of hazardous or strategic chemicals due to risks related to toxicity, explosiveness, national security or environmental harm remain licensed and tightly regulated under specific laws.

Hence, oversight for the de-licensed segment primarily occurs through environmental clearances, consent to operate, safety audits and compliance reporting, rather than entry-level licensing.

What these new standard development means in practice for Global and Indian chemical sector companies now?

• Companies can now set near-term and long-term targets grounded in realistic, sector-specific emissions pathways improving credibility and reducing 'greenwashing' risk.

• Companies will require investment in emissions data measurement and monitoring systems, supply-chain transparency, process redesign, potentially experimentation with new feedstocks or technologies and cross-value-chain collaboration.

• Use of carbon credits for core emissions reduction remains out — so companies must rely on actual reductions in energy use, process emissions, feedstock changes and supply-chain decarbonization.

• Organizations must track developments around SBTi V2.0’s finalization, and prepare for compliance no later than 2028 (for new targets).

>>Some facts to be considered before diving into the newly released chemical sector pathways : Several chemical companies in past had set and received validation for SBTi targets well before the release of the Chemicals Sector Pathways. Before the release of new chemical sector pathways criteria, SBTi allowed chemical companies to set targets using cross-sectoral methods, mainly:

a) Absolute Contraction Approach (ACA), or

b) Sectoral Decarbonization Approach (SDA)

Examples of some leading companies include:

• Evonik Industries AG: Near-term SBTi targets for reducing scope 1 and 2 greenhouse gas emissions by 25 % by 2030 from a 2021 base year. Temperature alignment (based on scope 1 and 2 targets): Well-below 2°C.

• Yara International ASA : Committed to set targets (yet to be validated), including ammonia and fertilizer production, prior to sector-specific guidance. Temperature alignment (based on scope 1 and 2 targets).

These methods were not tailored to chemical production chemistry but were accepted by SBTi for target validation. What is different now is not eligibility, but rigor and comparability:

• Earlier targets could mask process emissions (e.g., N₂O, feedstock carbon).

• Production-specific levers (ammonia cracking, nitric acid abatement, feedstock shifts) were not explicitly required.

• Two companies with identical SBTi “tags” could have very different real-world mitigation approaches.

  
  

The new SBTi Chemical Sector Pathways and Implementation Criteria intends to close this gap by anchoring targets to activity-level production pathways, & making process emissions and feedstocks unavoidable in target design.

Further reading: “The avoidable super greenhouse gas from fertilizer, nylon and vitamin B3 production” by Industry Decarbonization examines nitrous oxide (N₂O) emissions as a critical, yet solvable, climate blind spot in chemical manufacturing. (Source: Industry Decarbonization, authored by Hanno Böck, Sep 2023).

The question for the chemicals industry is no longer whether decarbonization is possible but whether it will be pursued with the rigor that science now clearly demands.

Verdantika continues to closely track the evolution of SBTi’s Corporate Net Zero guidance draft v2.0, along with any updates to the published sectoral pathways. Companies preparing to set or refine SBTi-aligned targets are welcome to engage with us for technical and strategic support.