PolicyPRIMARY CHEMICALS Global chemicals production is highly concentrated, with China contributing 44%508 of the total production worldwide in 2023, followed by the EU and US. This underscores the importance of implementing effective and tangible policies to advance a comprehensive policy framework aimed at reducing industry emissions in key production regions. Implementing standardized carbon accounting frameworks, clear scope definitions and consistent system boundaries is essential for promoting transparency and accountability. These measures are key to ensuring accurate emissions reporting and adherence to industry-wide guidelines. Initiatives such as the International Council of Chemical Associations’ (ICCA)509 sustainability programmes emphasize the importance of standardization and collaboration among industry players to share best practices, particularly in adopting low-carbon technologies and alternative feedstocks. The ICCA, representing more than 90% of global chemical sales, recently announced the launch of three high-level ambitions on the sound management of chemicals and waste for the industry. By 2030, the industry aims to provide access to product safety and sustainability data, support chemical management systems in 30 countries, and guide product portfolios towards sustainable solutions. Primary chemicals industry policy summary TABLE 17 Policy type Policy instruments Key examples Impact Market-basedCarbon price Canada’s Carbon Pricing510Firms are incentivized to adopt energy-efficient practices to minimize carbon tax payments. This leads to increased operational efficiency and potential cost savings over time. Border adjustment tariffProposed US Border Carbon Adjustment511US chemical companies will benefit from a more level playing field, as foreign competitors will face similar carbon costs. This may spur US firms to invest more in decarbonization to maintain their export competitiveness. Product standard California Safer Consumer Products Regulations512The regulation encourages the chemical industry to phase out harmful substances and develop safer, greener alternatives in products. Mandate-basedDirect regulations REACH Regulation in the EU513Chemical companies are required to evaluate and reduce the risks of substances they produce or import. This leads to better safety and environmental practices in chemical production, significantly reducing hazardous chemicals. Direct regulations Toxic Substances Control Act (TSCA) in the US514By regulating the manufacturing and use of toxic chemicals, the TSCA leads to a reduction in harmful chemical releases into the environment. It protects ecosystems and public health. Government targets Germany’s Climate Action Plan 2050515The ambitious emission-reduction targets (61-62% by 2030) compel the chemical industry to adopt low- carbon processes such as electrification, hydrogen use and circular economy models. This accelerates industry-wide decarbonization. Incentive-basedSubsidies Germany’s Carbon Contracts for Difference (CCfD)516The CCfD helps cover the cost difference between conventional chemical production and low-carbon alternatives like green hydrogen or carbon capture. This incentivizes companies to make investments in these expensive but essential technologies. Direct R&D funds/grantsEU’s Horizon Europe Program517Funds from this programme encourage the development of sustainable technologies, such as recycling of chemical waste and energy-efficient processes. Net-Zero Industry Tracker: 2024 Edition 117

Net Zero Industry Tracker 2024