The Green Transformation: Strategies to Achieve Net Zero in the Household and Personal Care Industry

Reduction of Energy and Process-Related Emissions: Supply contracts for green electricity offer a short-term and cost-effective way to reduce emissions, but usually contribute less to the cradle-to-gate PCF reduction of ingredients. The purchase is made in the form of certificates or guarantees of origin. These are important to ensure that when the certificate is purchased, renewable energy is actually produced accordingly and fed into the grid, thereby supporting the company’s sustainability goals. The share of green electricity at BASF is currently 26% globally (2024). (13) The generation of green process heat through the electrification of processes and the generation of green steam using heat pumps or e-boilers are to be realized in the medium to long term, as they require investment. Direct CO₂ emissions from energy and chemical plants can be captured with investments in carbon capture technology. The CO₂ is either stored in underground reservoirs (carbon capture and sequestration, CCS) or can be converted with hydrogen back into valuable chemicals such as methanol resulting in e-methanol (carbon capture and utilization, CCU). These processes are particularly advantageous for CO₂ point sources with high CO₂ content in the exhaust stream, such as power plants or in ethylene oxide production. The TfS guideline contains methodological instructions for calculating PCFs of products manufactured using green electricity and CCS/CCU.

Reduction of Feedstock-Related EoL Emissions: Since biogenic CO₂ emissions are climate-neutral, the use of bio-based raw materials is a central strategy to avoid fossil emissions. New processes that use non-fossil carbon enable a reduction of fossil end-of-life emissions under scope 3.12 by substituting the use of fossil resources. This is referred to as defossilization as opposed to decarbonization, as carbon itself cannot be replaced in products, but the use of fossil carbon can.

Figure 2. Renewable carbon sources replacing fossil resources.

According to scenarios for net-zero emissions by 2050, (14) biomass alone will not be sufficient to meet the chemical industry’s demand for non-fossil carbon sources. Therefore, renewable carbon in line with the circular economy must also be obtained from recycled waste and CO₂ from flue gases through CCU. A certain share of fossil resources will likely continue to be used, provided that the corresponding CO₂ is permanently removed through CCS.For the green transformation of raw materials, it is necessary to integrate high-volume renewable raw materials into chemical value chains. For example, bio-naphtha, biomethane, and e-methanol can be processed in petrochemical plants just like their fossil counterparts as drop-ins. However, improved conversion technologies are still required to produce platform chemicals of sufficient quality from the mentioned renewable sources. Examples include gasification and pyrolysis of mixed waste streams, depolymerization of recycled plastics, and fermentation of starch.

Reduction of Emissions during the Application Phase: Research and development by companies enable the saving of energy and resources in the application through innovations such as enzymes for cold washing and ingredients with higher material efficiency. This is at least as important as reducing the companies’ own emissions. Since the behavior of end consumers is crucial, targeted consumer education can have a positive effect. In the long term, it is necessary to advance the decarbonization of domestic hot water generation to sustainably reduce these emissions.

The Advantage and Disadvantage of Integrated Production

Chemical companies develop a wide portfolio of products in highly integrated plants. These products not only serve the household and personal care market, but also various industries and markets, such as packaging, automotive, and construction. These sectors have different requirements, standards, and willingness to pay for climate-friendly products. Integrated production has advantages because it saves costs and emissions: BASF estimates savings of about 5.7 million tons of CO₂ annually through its production ‘Verbund’. (15) On the other hand, this means that individual reduction measures affect almost the entire product portfolio, resulting in a ‘dilution effect’. If green electricity or steam, bio-naphtha, or the raw material of an advanced supplier with a low PCF is fed into the network of a site, almost all products of this site receive an incremental reduction. However, since the product volume is very high, the effect on the PCF of individual products is only marginal. For example, BASF produces 6.1 million tons of products annually at the integrated site in Ludwigshafen (Germany). (16) Why is this a problem? An incremental reduction of the PCF is too small to be recognized as value by all customers. For reduction measures to be economically viable, the positive effects must be concentrated on products whose markets and customers have incentives to bear the additional transformation costs (costs per ton of reduced CO₂).

Supply Chain Systems

Figure 3. Chain of custody models according to ISO 22095.

A solution for concentrating sustainability attributes is the Chain-of-Custody (CoC) mass balance. ISO 22095:2020 is a global and horizontal standard that describes the requirements for implementing CoC models. CoC models offer different levels of traceability and transparency of the flow of raw materials in the supply chain, and differ in the physical presence of attributes in the end product. Mass balance is a model in which materials or energies with gray (fossil) and green (sustainable) attributes are mixed according to certain criteria. This takes place in integrated production, during transport in pipelines, or storage in tanks. Mass balance encompasses several methods, each applicable to particular production processes. In the so-called credit-based mass balance with non-proportional attribution, sustainability attributes of energy and raw material inputs are assigned to defined products (outputs), in other words, they are flexibly attributed. The ratio of gray to green attributes averaged over all inputs is identical to that averaged over all outputs, but is typically different for individual products. A certification system with third-party verification is used to independently confirm the correct accounting of green attributes, exclude double counting, and correctly calculate process losses.The credit mass balance works according to the following logic: For a certain part of the product portfolio, the customer wishes to substitute fossil raw materials with sustainable alternatives. The amount of fossil raw materials used for a specific product volume is calculated, and this amount is then substituted at the beginning of the production chain. To make this substitution, which is paid for by the respective customer, accessible to the customer, the attribution must be made to the specific sales products. Otherwise, the dilution effect would apply, and the effect could not be made accessible at customer level. Alternative mass balance models that refer to averaged values (such as the so-called “rolling average”) are neither suitable for broadly integrated production systems nor for raw materials with limited availability.

The RSPO MB system for sustainably produced palm (kernel) oil and the mass balance in biofuel markets have been in use for a long time. The mass balance CoC for bio-attributed products from renewable raw materials is now also widely used in the chemical industry. (17), (18) Recently, a certification system was established that combines the shares of ‘renewable’ materials from various CoC systems and presents them in a label for end consumers. (19)

The CoC model Book and Claim (B&C) is an option to share sustainability attributes between companies without the need to physically transport energy or materials. B&C systems are the most commonly applied method for tracking green energy, as Energy Attribute Certificates (EAC), such as guarantees of origin (GoOs), can be transferred and traded separately from the physical energy flow.

The TfS guideline contains instructions for calculating PCFs with mass balance for raw materials, and takes into consideration green electricity certificates. The developing standard ISO/WD 14077 (20) defines guidelines and requirements for methods to include various CoC in life cycle assessment (LCA).

Mass-balanced products can thus significantly contribute to reducing CO₂ emissions, for example, when renewable/bio-based raw materials are used. Their physical and chemical properties remain unchanged, making them ideal ‘drop-in’ solutions. Production takes place in existing integrated plants, ensuring optimal costs for CO₂ avoidance.

Conclusion and Outlook
Superficially, the indirect (scope 3) emissions in a company’s value chain may be expected to decrease on their own if all suppliers pursue their own transformation goals. However, there are two reasons why this effect does not occur in the medium term:1) Suppliers achieve their own medium-term goals through measures in plants and value chains that are not in the value chain of the other company. For example, BASF has reduced its scope 1 and 2 emissions by 22% since 2018, largely achieving its 2030 target of -25%. However, this does not affect all products to the same extent.

2) Suppliers achieve slower progress in reduction than the company itself requires according to its scope 3 reduction goals. From practical experience, many suppliers in the chemical industry are still on a learning curve to determine their PCFs and develop suitable reduction measures.

The development of capacities for green energy and renewable raw materials for the green transformation to Net Zero can therefore benefit greatly if companies concentrate CO₂ reduction through a mass balance CoC model on customers and markets where economic incentives or regulation exist.

Standards for calculating PCFs and corporate carbon accounting set the rules for the flexibility allowed in attributing green attributes. We advocate for the openness of industry standards/regulations to market-based instruments such as the mass balance CoC in current revisions. By anchoring clear rules that are widely accepted by suppliers and brand owners, effective reduction measures for the transformation can unfold their potential more quickly.