Chemical Makers Plug in to Renewable Energy

About half of BASF's Scope 1 and 2 emissions come from its plants' energy demand, said Marcos Gomez, director of renewable energy for BASF North America.

The company is converting its energy supply, especially electricity, from fossil fuels to renewable sources as a core component of its plans to significantly reduce greenhouse gas emissions by 2030. This includes direct emissions (Scope 1) and indirect emissions from energy purchases (Scope 2).  

BASF is one of several chemical manufacturers increasing its use of renewables to meet regulatory requirements, satisfy consumer expectations and hedge against geopolitical volatility.  These factors have pushed decarbonization in the chemical sector from an aspirational pursuit to an imperative, said Cristina Pellegrino, a global industry lead at sustainability consultancy ERM International Group. 

A Perfect Storm for Renewables

Chemical manufacturers are changing the way they power, configure and operate assets due to several factors.  

Energy security, supply chain resilience and volatile energy and feedstock costs have been growing concerns over the past few years, and this trend has been exacerbated by the disruption in the Gulf, Pellegrino said. In addition, downstream customers have set ambitious product-level emissions targets, driving demand for lower-carbon chemicals.

Also, while the U.S. has rolled back many environmental standards, the EU has tightened greenhouse gas regulations under its emissions trading system, the rollout of its Carbon Border Adjustment Mechanism, or CBAM, and more stringent permitting and disclosure requirements, Pellegrino explained.

“Rather than slowing progress, this environment is reinforcing the business case for ‘no regret’ initiatives such as energy efficiency, process electrification, fuel switching and on-site renewable generation, which help reduce exposure to geopolitical shocks while supporting decarbonization goals,” she said.

The Transformation Imperative

While many chemical companies have continually worked to improve energy efficiency over the years, there is a shift today in the nature and scale of decarbonization strategies. More companies are looking beyond incremental savings and deploying transformative technologies, such as low-carbon process solutions, electrification of heat, alternative feedstocks and extensive integration of renewable energy, said Pellegrino.

BASF and Lanxess, for example, are embracing the shift to renewable energy, as demonstrated by recent announcements of long-term power purchase agreements, or PPAs, and use of renewable energy certificates, or RECs, as well as investments in projects to produce renewable electricity and to use it to generate steam. PPAs allow chemical process plants to lock in renewable energy supply without owning the generation assets outright. Mechanisms such as RECs, which serve as a vehicle for assigning ownership of renewable energy that enters the utility grid, allow companies to purchase renewable energy even if it is not physically located near the facility. These strategies can help companies hit near-term emissions targets while managing cost and supply risk. 

BASF is building a “diversified renewable energy portfolio” through purchase of green electricity and by investing with partners in renewable power assets, such as offshore wind projects and solar energy. Direct investments increase independence from energy markets and allow the company to actively shape the energy transition and decarbonization of the company’s operations, explained Gomez. Purchasing of green electricity, on the other hand, allows more flexibility than fixed investments. Gomez explained that the combination of “make and buy” supports renewable energy capacity expansion and allows the company to increase use of renewable electricity while also maintaining supply security and cost-competitiveness. 

At BASF, renewable energy use is expected to reduce Scope 2 emissions by up to 3.2 million metric tons of carbon dioxide by 2030, Gomez said. The company expects additional emission reductions of up to 0.6 million metric tons of Scope 1 CO₂ emissions using low-emission steam generation. He noted that electricity from renewable sources as a share of total electricity consumption for BASF globally rose significantly from 26% in 2024 to 36% in 2025.

Renewable energy is also important for reducing BASF’s Scope 3.1 emissions related to purchased goods and services, particularly raw materials. 

“We work closely with suppliers to encourage the use of renewable energy in upstream production processes, thereby lowering the product carbon footprint of the raw materials we purchase,” Gomez explained. “Our long-term target is to achieve net zero for our Scope 1, Scope 2, and Scope 3.1 emissions by 2050.” 

Harnessing Solar and Wind Energy 

BASF has recently invested in projects in Texas, where the combination of available land, strong wind and consistent sunlight lend themselves to large-scale renewable energy projects, said Gomez. Last September, BASF announced the start of operations at its Liberty Energy Project in Dayton, Texas, which is a combined solar photovoltaic and battery energy storage system with its partner X-ELIO, a global sustainable energy developer. BASF will source 48 MW from this project as part of a 12-year PPA, which, along with other PPAs, is expected to supply all the purchased power at BASF’s Freeport site from renewable sources. Other supply agreements provide renewable energy for BASF’s Freeport and Pasadena, Texas, sites. 

Additionally, BASF announced in January that it had signed a 15-year agreement with BP Energy Retail Company for the purchase of RECs covering capacity of approximately 47 MW from Swift Current Energy’s Castle Gap Wind project located in Central Texas. 

Lanxess Bets on a Diversified Renewables Mix

Specialty chemicals company Lanxess also is looking to renewable energy for both near-term emissions reduction and long-term, net-zero ambitions. The company is aiming to reach climate-neutral Scope 1 and 2 emissions by 2040, with an interim target of reducing these emissions by 42% by 2030 from 2021 levels. Renewable energy will play a key role in meeting those targets, said company spokesperson Mike Mackin. 

“Because more than 75% of the company’s Scope 1 and 2 emissions are tied to energy use, renewable electricity is one of the most impactful tools for reducing its footprint,” he said. “Lanxess has already reached 22% low-emissions electricity globally and is scaling this through long-term contracts and electrification of operations.”

Mackin said that direct renewable energy sources, like PPAs and on-site renewable energy generation, are used where possible because they provide greater long-term cost stability, improved resilience and stronger alignment with physical emissions reductions. This approach is complemented by RECs, which provide a verified method for tracing renewable energy use, so that the company can source renewable electricity for its facilities even in regions with limited direct access to generation. 

The company continues to expand PPAs, such as the agreement announced in January for hydroelectric power supply in Germany, and in the U.S., a 2024 announcement of a contract with a local utility provider using clean energy to reduce emissions for Lanxess sites in Arkansas.  

On-site generation and alternative energy sources, such as biomass-based steam and solar installations, also are expanding, said Mackin. For example, the company completed conversion of its site in Jhagadia, India, to biomass and solar energy in 2025, and conversion is underway at other sites in India, according to the company’s 2025 sustainability report. The company plans to gradually electrify its steam production and reported that it has produced zero-emissions steam in Jhagadia, India, and Porto Feliz, Brazil, for more than five years. 

Ongoing efforts to improve energy efficiency also help reduce greenhouse gas emissions. For example, an energy-efficiency project noted in the 2025 report was a heat-recovery system for a thermal oxidation furnace at a plant in Brunsbüttel, Germany, that uses recovered heat to produce steam. Other examples are projects such as replacing equipment motors with more energy-efficient versions and using better insulation in facilities to lower energy consumption.

Mackin noted that the company aims to decarbonize while recognizing that the most effective technologies may be different for operations in different geographies, depending on the local infrastructure, economics and what resources are available. He explained that Lanxess’ strategy includes a diversified mix of renewable electricity, biomass-based heat and emerging technologies, such as renewable hydrogen. 

Building Resilience for the Long Haul

Chemical producers are adopting a range of decarbonization technologies to fit their process and location-specific constraints. Renewable electricity from wind, solar and hydropower is the most widely adopted strategy, although intermittency is a challenge, Pellegrino said. However, chemical process manufacturers are increasingly turning to energy storage, such as batteries or thermal storage, for improved reliability. In the U.S., although recent federal policy shifts have emphasized fossil fuels, nuclear and geothermal, actions at the state level continue to create favorable conditions for large-scale wind and solar projects, said Pellegrino. 

“In practice, no single renewable solution fits all chemical operations. Most producers are adopting a portfolio approach, combining renewable electricity, selective fuel switching, energy efficiency, electrification and hydrogen, integrated into site-specific transformation and long-term energy procurement strategies,” she said.