Dow’s New Climate Plan Doesn’t Yet Align With Paris Agreement
(Bloomberg) -- Dow Inc. has a new climate plan to cut emissions, reduce plastic waste and increase recycling rates. But the targets set in an announcement Wednesday don’t align with the Paris climate agreement that has become a widely used benchmark for global progress.
Like other companies responsible for large emissions, such as oil giants Royal Dutch Shell Plc and BP Plc, Dow has set itself on a path to be carbon neutral by 2050. Since 2006, Dow has managed to cut 5 million metric tons of annual carbon emissions even while growing in size. In its new plan, the company is committing to cut another 5 million metric tons of annual emissions by 2030.
Last year, however, Dow produced 125 million metric tons of emissions across its entire supply chain from raw materials to product use, according to its own sustainability report. That puts the manufacturer of chemicals and plastics in the same league as a mid-sized fossil fuel producer such as Occidental Petroleum Corp., which generated 85 million metric tons of emissions in 2018. By cutting 5 million metric tons in the next decade, Dow would reduce its annual emission by about 4% from current levels.
“Why are we putting these targets out there? Both for a license to operate and also to continue to thrive,” Dow’s Chief Financial Officer and president Howard Ungerleider said in an interview. “Thirty-seven thousand women and men at Team Dow also want to be a part of something bigger.”
For nations and large companies alike, climate ambitions and emissions reductions are increasingly measured against the 2015 Paris agreement that calls for holding the rise in global average temperature below 2 degrees Celsius, with a stretch goal of 1.5 degrees C. Nongovernmental groups like the World Resources Institute have established a framework, known as science-based targets, for assessing emissions cuts against the Paris goals.
“Dow is moving in a direction of increased ambition,” said Nate Aden, who leads WRI’s work on the chemicals industry. “But 5 million metric tons is, frankly, a drop in the bucket for Dow. It is clearly not sufficient for aligning with the Paris agreement.”
Cutting emissions isn’t easy for all sectors of the economy. Most of the climate impact from a software company like Microsoft Corp., with 21 million metric tons of emissions in 2018, tends to come from the use of electricity. There are cheap, zero-carbon alternatives in solar and wind power. Dow’s major product is made by converting fossil fuel into plastics, and there’s no zero-carbon alternative available at scale.
Still, there are at least 21 chemical companies, including Syngenta AG and Novozyme A/S, which have set science-based targets—and Dow isn’t one of them. A crucial step for setting science-based targets is taking responsibility for so-called Scope 3 emissions, which are produced by a company’s suppliers and customers. About 70% of Dow’s total annual emissions are classified as Scope 3, and the company’s plan sets no explicit goals to reduce those emissions in the near term.
“We always can do more, right?” said Ungerleider, responding to the issue of Scope 3 emissions targets. “If we’re going to continue to be a successful company, we absolutely must be a part of the solution.”
Addressing these Scope 3 emissions will be a long-term challenge, particularly since Dow’s goal to reach carbon neutrality by 2050 includes eliminating emissions from suppliers and customers.
Mary Draves, Dow’s chief sustainability officer, said the company will look into accounting for “product benefit” as a way to meet its carbon-neutral goal. The way it could work is that Dow will measure the emissions benefits from, say, the use of its plastic as an insulating material in houses. Dow could then, in principle, reduce its Scope 3 emissions by the amount of energy use saved from the insulation.
Aden of WRI said that most chemical companies believe this kind of product benefit should count toward their net carbon impact. In practice, though, there aren’t any standards to calculate emissions savings.
Draves said Dow will announce later this year partnerships to figure out Scope 3 emissions and product benefit.
Dow also announced on Wednesday that it will enable the collection of 1 million metric tons of plastic waste by 2030. By 2035, the company will only sell packaging material that is reusable or recyclable.
“That’s a laudable goal,” said Aden. “Just having a plastic recycling goal from a company such as Dow is a meaningful gesture that can start the movement in the right direction among its peers.”
©2020 Bloomberg L.P.