SBTi chemical sector pathways explained part 1: what chemical manufacturers need to prepare for

The Science Based Targets initiative (SBTi) has just published new pathways and supporting criteria for the chemicals sector, offering chemical manufacturers the practical tools needed to lead the net-zero transformation.

The new criteria apply to emissions from a range of different production processes in the chemical value chain, including production of primary chemicals, base chemicals, intermediate chemicals, specialty chemicals, pharmaceuticals, consumer chemicals, and chemical recycling operations.

What makes this significant: Unlike broad cross-sector approaches, these pathways account for the energy-intensive nature of chemical processes and the technological realities of deep decarbonization. They provide both mandatory requirements (particularly for nitrous oxide emissions) and optional pathways that can replace existing SBTi methods with more tailored approaches.

The business imperative: Given that the chemical sector is the third largest industrial source of carbon dioxide (CO₂) emissions and the largest industrial consumer of energy products, reducing GHG emissions in this sector will be crucial in meeting global climate goals while being economically competitive in the growing green economy. Early adoption of these pathways signals climate leadership to investors, strengthens stakeholder confidence, and positions companies ahead of converging regulatory requirements. 

The 8 pathways, simplified

SBTi's Chemical Sector Pathways recognize that chemical production is too diverse for a one-size-fits-all approach. Instead of a single sector pathway, the framework provides eight activity-specific routes that address different segments and emission sources across the industry.

Mandatory pathway: Nitric acid N₂O emissions

What it requires: Chemical companies producing nitric acid must reduce nitrous oxide (N₂O) emissions to no more than 0.5 kg N₂O per tonne of nitric acid produced within their first target cycle.

Why it's mandatory: N₂O has a global warming potential 265 times higher than CO₂, making even small quantities significant contributors to climate impact. The technology to abate these emissions exists and is cost-effective—companies can achieve 90%+ reduction using selective catalytic reduction or non-selective catalytic reduction technologies.

Implementation: Companies currently above the 0.5 kg threshold must set specific targets to meet this benchmark within five years. Those already below this level can include any remaining N₂O emissions in their company-wide scope 1 targets.

Optional pathway: Ammonia production emissions

This pathway provides science-based emissions-intensity trajectories for ammonia production, recognizing ammonia as one of the chemical sector’s largest sources of greenhouse gases. It covers all heat, process, and electricity-related emissions associated with producing hydrogen, nitrogen, and the ammonia molecule itself—regardless of whether these occur within a company’s scope 1, 2, or 3. Companies may select one of two pathways depending on product use: ammonia for non-energy applications (such as fertilizers) or ammonia produced for both energy and non-energy purposes. The 2030 and 2050 emissions-intensity values reflect deep decarbonization enabled by low-carbon hydrogen, electrified processes, and carbon capture technologies. Companies using this pathway must forecast their ammonia production volumes for the target year and align their reduction commitments with the emissions-intensity levels defined in the SBTi guidance.

Optional pathway: Methanol production emissions

This pathway establishes emissions-intensity reduction trajectories for methanol produced for non-energy uses, addressing a major global chemical building block with substantial upstream and process emissions. It encompasses all heat, process, and electricity-related emissions associated with producing hydrogen or syngas, synthesizing methanol, and—where relevant—capturing or processing supplemental CO₂ used as feedstock. The pathway enables companies to model decarbonization through low-carbon hydrogen, advanced syngas production routes, CCS, or CO₂-based methanol synthesis. Companies must estimate their future methanol production volumes and commit to meeting the SBTi’s intensity benchmarks for 2030 and 2050, ensuring alignment with a 1.5°C pathway.

Optional pathway: High-value chemicals (HVC) production emissions

This pathway provides emissions-intensity benchmarks for the production of major high-value chemicals—such as ethylene, propylene, and aromatics—which are typically produced through highly energy-intensive processes like steam cracking. It covers all heat, electricity, and process-related emissions from HVC production, including cases where the same process also generates co-products; under the SBTi guidance, all emissions from the shared process must be allocated to the HVCs alone for target-setting purposes. The pathway reflects the decarbonization potential from electrified cracking, low-carbon heat sources, process redesign, and efficiency improvements. Companies must forecast HVC production volumes in their target year and commit to meeting the intensity reductions laid out for 2030 and 2050.

Absolute reduction pathways

Non-primary chemical production covers the vast majority of chemical manufacturing not captured by the intensity-based pathways—including intermediate chemicals, specialty chemicals, and pharmaceuticals. This pathway requires absolute emission reductions: 4.8% by 2030, 39.9% by 2040, and 94.6% by 2050 from 2020 levels.

Nitrogen fertilizer use-phase emissions address the scope 3 category 11 emissions from N₂O released when synthetic fertilizers are applied to agricultural fields. Companies selling nitrogen-containing fertilizers must reduce these downstream emissions by 1.3% annually for near-term targets and achieve a 17% reduction from 2020 levels by 2050.

This pathway acknowledges that fertilizer manufacturers have limited direct control over application practices but can influence outcomes through product innovation, application guidance, and farmer engagement programs.

Alignment pathway: alternative feedstocks

Rather than setting emission reduction targets, this pathway establishes minimum requirements for sourcing non-virgin fossil feedstocks. Companies must demonstrate progress toward using alternative carbon sources—including bio-based materials, carbon capture and utilization (CCU), and recycled content.

2030 targets: 14% alternative feedstocks (excluding mechanical recycling) or 19% (including mechanical recycling).
‍2050 targets: 42% alternative feedstocks (excluding mechanical recycling) or 55% (including mechanical recycling)

What qualifies: Bio-based feedstocks from agricultural or waste sources, CO₂ captured from industrial processes or the atmosphere, and chemically recycled materials that provide carbon molecules for new chemical production. Mechanical recycling may be included based on company-specific circumstances.

Applicability: This pathway applies to companies where carbon-based chemical production represents at least 5% of their total scope 1, 2, and 3 emissions, ensuring focus on companies where feedstock transition can make a meaningful climate impact.

What this means for your company

Implementing SBTi's chemical sector pathways requires a systematic approach to assess applicability, establish baselines, and develop implementation roadmaps. Here's how to navigate this process:

Step 1: Identify which pathways apply to your operations

Start by mapping your chemical production activities against the pathway definitions. Primary chemical producers making ammonia, methanol, or high-value chemicals can use the intensity-based pathways. Nitric acid producers must evaluate the mandatory N₂O pathway regardless of other activities. 

If you are a buyer of any of these products, these pathways will also impact you, as your supplier’s production processes will contribute to your Scope 3 emissions. 

Multi-product facilities may use multiple pathways simultaneously—for instance, a petrochemical complex might apply HVC pathways to its olefin units, the alternative feedstock pathway to its polymer production, and non-primary pathways to specialty chemical manufacturing.

‍Pharmaceutical and specialty chemical companies will primarily use the non-primary pathway, but should evaluate whether they have any primary chemical production or significant carbon-based feedstock usage that triggers other requirements.

Step 2: Assess current emissions intensity vs pathway requirements

For intensity-based pathways, calculate your current emissions per tonne of product using the SBTi's specific boundary definitions. 

Example calculation for ammonia: Include all emissions from hydrogen production (whether produced on-site or purchased), nitrogen production, the Haber-Bosch process, and associated energy consumption. Divide total emissions by ammonia production volume to determine your baseline intensity.

Gap analysis: Compare your current intensity to the pathway trajectories. If you're above the pathway, calculate the reduction rate needed to achieve compliance by your target year.

Step 3: Understand scope 1/2/3 boundary implications

SBTi's chemical pathways expand traditional operational boundaries to ensure comparability between companies with different levels of vertical integration. This principle fundamentally changes how you account for emissions when setting intensity-based targets.

Example of Ammonia Production: Let's say you operate an ammonia synthesis facility using purchased hydrogen and nitrogen:

Traditional Scope Accounting:

• Scope 1: Direct emissions from your Haber-Bosch ammonia synthesis process
• Scope 2: Purchased electricity for your operations
• Scope 3.1: Emissions from purchased hydrogen and nitrogen (reported separately)

SBTi activity boundary for the Ammonia pathway:

All of the following are included in your ammonia intensity metric (tonnes CO₂ per tonne ammonia):

• Emissions from hydrogen production (whether you produce it or purchase it)
• Emissions from nitrogen production (whether you produce it or purchase it)
• Emissions from your ammonia synthesis process
• All associated energy consumption across these steps

Practical implications for your company: You'll need emissions data for purchased feedstocks and intermediate chemicals, not just your direct operations. This requires:

• Enhanced supplier engagement: Request product-specific carbon intensity data from feedstock suppliers (hydrogen, naphtha, methanol, etc.) Here's our complete guide on Product Footprinting that can help you get started.
• Boundary documentation: Clearly map which purchased inputs fall within each pathway boundary vs. the general Scope 3
• Multi-pathway coordination: If you produce multiple chemicals (e.g., both ammonia and HVCs), ensure you're not double-counting shared inputs
• Data collection systems: Build infrastructure to track:
  - Feedstock volumes by type and source
  - Supplier-specific emission factors were available
  - Default factors from industry databases (as fallback)