Clear strategy to lower emissions

We are taking a three-pronged approach to achieve our target:

1. Launch climate protection projects (medium-term target):

Over the next few years, several measures will significantly lower greenhouse gases.

For example, we are switching the energy supply in Jhagadia to a mix of biomass and solar power. This is expected to cut our CO₂e emissions by a further 150,000 metric tons from 2024. As of the reporting date, the percent of renewable energies at the Jhagadia site was 37 %, while the Nagda site achieved around 88%. We already operate a highly efficient cogeneration plant entirely with biomass in Porto Feliz, Brazil. We are also planning to phase out the use of coal-based energy at our major production sites in Germany. 

Through these projects and other measures, we want to decrease our CO₂e emissions to 2.3 million metric tons by 2025.

2. Break the link between emissions and growth (long-term target):

LANXESS is growing. But despite increasing production, emissions of greenhouse gases in our individual business units are set to shrink. In addition to technological efficiency, changes to governance instruments also play a significant role, with the impact on the company’s carbon footprint becoming an investment criterion for organic growth and acquisitions. This gives business units that achieve better than average reductions in greenhouse gas emissions a direct financial advantage. In 2020, the Board of Management and the Supervisory Board also decided that the reduction in CO₂e will be used as an assessment criterion for the compensation system for managers and the Board of Management in the future.

3. Strengthen process and technological innovations (long-term target):

We are revising many of our existing production processes in order to go climate neutral by 2040. For example, we will continue to improve our composite structures, e.g. when it comes to heat exchange between plants and air purification. However, other procedures must first be developed on a large industrial scale. We will therefore focus our research activities more closely on climate-neutral process and technological innovation.

By implementing the above measures, we want to decrease our annual emissions to less than 300,000 metric tons by 2040. We plan to neutralize the remaining emissions via appropriate offsetting measures. In this way, we will not only make a significant contribution to climate protection in the years to come but also become an even more sustainable partner for our customers.

“Net Zero Value Chain” program: Clear strategy to lower indirect emissions 

In 2022, LANXESS also developed a clear strategy to lower indirect emissions and launched the Net Zero Value Chain program. This aims to make the entire LANXESS supply chain climate-neutral. The indirect emissions in the upstream and downstream supply chain (Scope 3) are to be eliminated by 2050. The “Net Zero Value Chain” initiative is based on three pillars: 

• Transition of raw materials purchasing to increasingly sustainable raw materials that are bio-based, originate from a recycling process or are produced with renewable energy.
• Greater consideration of carbon footprint when selecting means of transport.
• Expansion of our range of climate-neutral products and solutions with a low carbon footprint.

In the coming years and decades, climate change will have significant global consequences for companies’ business activities. This year, LANXESS therefore continued to work on an extensive risk analysis, based on three climate categories. We perform this scenario analysis globally for all locations and assess the risks that could arise in the short, medium and long terms.

Uncertainty over emissions trading

In Europe, 14 of our plants and sites are subject to European emissions trading. Trading with CO₂ emissions rights, known as certificates, is intended to reduce emissions of the environmentally harmful gas CO₂ costeffectively. Because all of our plants covered by emissions trading are state-of-the-art and compete at the international level, we expect to receive enough certificates from free allocation to cover the expected CO₂ emissions by the end of the third trading period in 2030. At present, however, we cannot precisely estimate the effects of changes to the EU emissions trading system planned under the Green Deal.

Since 2021, the introduction of the Fuel Emissions Trading Act (n-ETS) has resulted in additional costs, which suppliers include in the natural gas price. We cannot yet precisely estimate further costs due to the Scope expansion planned from 2023.

In 2022, our absolute Scope 1 emissions were significantly lower than the previous year’s level, among other things this is due to the change in our portfolio. Moreover, the transition from coal to biomass at our Indian sites continues apace and is making a major contribution to the reduction of the CO₂ figures. This is countered by the full-year consolidation of the sites from the acquisitions of Emerald Kalama Chemical and Theseo, which were only included pro rata in 2021. Because of our altered portfolio, the transition to biomass and increased sales, the specific Scope 1 emissions also decreased year-on-year.

For continuing operations, Scope 2 emissions are also significantly below the previous year’s level. This development is based mainly on the deconsolidation of the HPM business unit, but also a lower production volume.

The specific figure continues to decline due to the portfolio change and the increased sales.

In 2022, we also registered significantly lower Scope 3 emissions due to the portfolio change and a declining production volume.

In 2022, absolute and specific VOC emissions decreased again due to the deconsolidation of the HPM business unit.