Energy transition
Our greenhouse gas (GHG) emission reductions are driven by a rigorous energy transition program, consisting of the following elements:
- Reduction of total energy consumption through energy efficiency improvement measures
- Energy transition to more energy from renewable sources, via increasing the amount of purchased and self-generated renewable electricity, and the amount of consumed renewable fuel and heat
- Driving smart electrification, combined with energy efficiency improvements that enables a shift to the use of electricity from renewable sources instead of fossil fuels
Examples of projects that we started or implemented in 2021 on these energy transition drivers are described below.
Energy efficiency improvements
Our energy efficiency improvement (on primary energy) was 6.0% versus 2020, above our target of an average annual improvement of 1%. This is mainly due to a portfolio of rigorous energy saving projects and product volume and product mix changes.
Energy efficiency1
Projects finalized in 2020 began delivering full benefits in 2021, adding up to approximately 20 kt of CO2eq reduction on the 2021 emissions. Most projects also deliver additional benefits such as cost savings or water savings. Examples of projects resulting in lower energy use are improvements of steam and hot oil systems (such as leakage repairs, condensate return, heat recovery on furnaces and insulation) at various locations (~6 kt CO2eq reduction); the replacement of steam-driven chillers by electricity (partially renewable) operated in Jiangshan (Jiangsu province, China), contributing ~7 kt CO2eq; and the replacement of low-efficiency chillers in León (Spain), contributing ~1 kt CO2eq reduction). Besides improving heating and cooling equipment, we also increased the efficiency of our compressed air and nitrogen systems at various locations through leakages repair and equipment upgrades. Another focus area is heat integration, which we applied on various locations such as Lalden (Switzerland), Village-Neuf (France) and Dalry (UK).
In 2021, we further strengthened our approach to replace aged and low-efficiency cooling by state-of-the-art machines, applying — ahead of local legislation — low global warming potential (GWP) refrigerants in, for example, Xinghuo (Shanghai province, China), Jiangshan (Jiangsu province, China), Laiwu (Shandong province, China) and Seclin (France). We installed solar panels at our location in El Salto (Mexico) to enable a local transition to renewable electricity. Besides improving the efficiency of our equipment, we also apply innovative solutions with new technologies. An example is the installation of an industrial heat pump in Exton (Pennsylvania, USA) where heat from a cooling machine is used to pre-heat boiler feed water.
Renewable energy
We are a proud member of the Climate Group’s RE100, comprising leading companies that have committed to sourcing 100% of their electricity from renewable sources at the earliest possible opportunity. Our commitment is to source 75% of our electricity from renewable sources by 2030 at the latest and 100% at the earliest possible opportunity.
Renewable Electricity
In 2021, we once again made significant steps toward achieving our purchased renewable electricity target. The percentage of purchased electricity from renewable sources increased globally from 60% in 2020 to 72% in 2021, equaling a GHG emission reduction year-on-year in purchased non-renewable electricity of 52 kt CO2eq.
Progress on purchased renewable electricity in Europe and North America
For our operations in Europe, we maintained 100% renewable electricity through existing agreements combined with pre-production guarantees of origin (GOs) from the Power Purchase Agreement (PPA) in Spain. The wind park of the latter PPA commenced operations in late 2021 while the solar assets are currently under construction. Furthermore, a new hydro agreement for 2022 was concluded in Switzerland to replace a contract that terminated at the end of 2021.
In the US, a third PPA was concluded in 2021 adding to the two PPAs already in place. The first is already operational and produces electricity from wind, while the assets for the other two are yet to be built and will provide solar-powered electricity. The production from the first agreement combined with pre-production renewable energy certificates (RECs) from the other agreements means we had 100% coverage (of continuing operations) of purchased electricity from renewable sources in the US in 2021.
Progress on purchased renewable electricity in China
For 2021, we concluded two renewable electricity contracts in China. This provided 91% renewable electricity for Laiwu (Shandong province, China), and 32% and 17% renewable electricity respectively for Jiangyin and Jiangshan (Jiangsu province, China). In addition, we concluded purchasing agreements to provide renewable electricity in 2022 for all four sites in Jiangsu province which will cover a significant portion of their demand.
Renewable electricity in the rest of the world
Besides Europe, North America and China, three-quarters of our purchased electricity in Brazil is from renewable sources, and we have several local renewable electricity contracts at smaller sites around the world. The amount of non-renewable electricity in the rest of the world represents less than 5% of our total purchased electricity.
Working on renewable heat
Besides taking significant steps to increase our amount of purchased renewable electricity, we also look for opportunities for the broader use of renewable energy sources. Certain sites across DSM already recover waste streams for production of renewable heat while others are in an exploratory phase. Besides the already concluded sustainable biomass cogeneration project in Sisseln (Switzerland), our hydrocolloids site in Chifeng (Inner Mongolia, China) replaced its self-produced steam based on coal with purchased steam produced from local biomass residues. The Chifeng biomass plant is a cogeneration system that supplies steam to our DSM site and other industrial park users via a long-term contract with ENN Energy, while the electricity is sold to the grid. By introducing this contract, Chifeng was able to avoid ~25 kt CO2eq in 2021 (its first fully operational year), of which around 9 kt CO2eq is a structural improvement from 2020 to 2021.
In alignment with external guidance and experts, we established the foundation for the sustainability criteria of our purchased renewable fuels and heat. Use of biomass for thermal energy is guided by strict sustainability criteria, where the primary focus is on the use of local waste and residues as feedstock for the (co)generation of energy (including organic solid/liquid waste, agricultural residues and forestry management residues). Besides the feedstock used, we also set criteria on carbon payback times, minimum GHG reduction potential and management of soil health, water and biodiversity impacts. The new set of criteria aims to ensure that any step taken in this direction supports the responsible transition toward decarbonized operations and to further expand sustainable renewable energy consumption in DSM.
Primary energy is energy that has not yet been subjected to a human engineered conversion process. It is the energy contained in unprocessed fuels.
Final (consumed) energy is the energy that is consumed by end-users. The difference between primary energy and final consumed energy is caused by the conversion process between the two as well as any transmission losses.
