Pragmatic solutions for a modern industrial policy
Tank storage facility at BASF in Ludwigshafen. Credit: BASF SE
Daphne Vlastari, Head of Communications and Government Relations, UK & Ireland
| BASF
Recent headlines about the chemical industry are concerning, but they should serve as a call to action for government, business, and stakeholders to secure the future of this foundational sector – often described as the ‘mother of all industries’.
At BASF, one of the world’s leading chemical companies, we believe that a key part of the effort to secure sustainable growth for the sector comes from creating a policy framework that enables the industry’s transition away from virgin fossil resources toward sustainable alternatives, such as bio-based feedstocks.
In a period of intense global competitive pressure and recognising the scale of the industry’s challenge, regulation must not only support this transformation, but do so in a way that is flexible and forward-looking, allowing companies to scale and accelerate when market conditions permit.
Reducing dependence on virgin fossil raw materials
At BASF, we want to reduce not only our greenhouse gas emissions but also our dependence on virgin fossil raw materials.
However, there is no single solution to substitute this fossil feedstock for carbon-based materials. Many BASF value chains start in syngas plants or steam crackers, where fossil resources, mostly natural gas and naphtha, are converted into hydrogen and carbon monoxide or important basic chemicals such as ethylene and propylene. These are used to create thousands of products in BASF integrated sites such as our Ludwigshafen Verbund site in Germany.
Already, BASF is investing in alternative raw materials that can be fed into our existing infrastructure and processes. For example, by incorporating renewable, organic carbon into our business models and product portfolio, we are creating an important lever for progress in climate protection.
This carbon, whether it comes from plants and animals or microorganisms and agricultural residues, is used to manufacture plastics, fibres and chemicals, for example. This replaces traditional fossil carbon sources such as naphtha, which is based on crude oil.
The role of sustainable feedstocks is critical
Switching to alternative, more sustainable feedstocks is critical to the transition of the chemicals industry. But it cannot be achieved overnight: demand for products with a more sustainable profile, as well as availability of sustainable feedstocks, are both important determinants.
To bridge this gap, BASF uses the mass balance approach. This means that, depending on availability and demand, we feed renewable or recycled raw materials into our production process and can calculate and allocate their share in a specific product. To ensure that these allocations are reliable, they are certified by independent third parties.
In complex chemical value chains, creating entirely separate biobased production lines is rarely economical or fast. BASF instead integrates renewable feedstocks (e.g., biomethane, bio‑naphtha) into its existing sites and attributes those inputs to downstream products using a mass balance chain‑of‑custody, verified by independent schemes such as ISCC PLUS and REDcert².
BASF has pioneered this approach, often referred to as Biomass Balance, which helps reduce fossil resource use and product carbon footprints.
At a time of increased competitive pressures, tools like mass balance allow the chemicals sector to move at the same pace as our customers in enabling their green transformation. As the amounts of bio-based feedstocks can be scaled up as customer demand increases, this allows not only for a more flexible approach but one that can be quickly deployed. It does not require new infrastructure to be built, nor does it incur product reformulation costs to account for changes in raw materials. It is a drop-in solution.
The impact is tangible. BASF’s coatings business, which provides solutions to the automotive industry, is offering around 250 mass‑balanced products. This is equivalent to an 8 million kg CO₂ reduction in 2024, while maintaining the products’ performance requirements and without the need for costly reformulation.
An enabling policy environment for sustainable feedstocks
An enabling political framework should support the chemical industry’s transition into a multi-raw-material system that requires acceptance of a flexible mass balance approach. Such a system should develop incentives for recycled and bio-based feedstocks. It should also establish a cascading use for bio-based feedstocks that incentivises using biomass as a carbon source for the production of materials. In addition, it should remove hurdles for Carbon Capture and Utilisation exploitation.
A very welcome step forward has already been taken with the UK government's Budget provisions around the acceptance of mass balance for chemical recycling in the context of the plastics packaging tax. To reflect the scale of the industry’s transformation, a broader discussion around mass balance is needed, particularly its acceptance across policy instruments and for both recycled and renewable or bio-based feedstocks. The upcoming Defra Circular Economy Growth Plan provides an important opportunity for such a discussion.
Similarly, the UK has the opportunity to capitalise on its strong innovation ecosystem, including UKRI-funded projects such as Flue2Chem, to create the new value chains that the chemicals industry and its customers will need in a net-zero world. This means identifying how new supply chains can be developed, minimising the barriers and challenges they face, as well as ensuring new technologies can be scaled up – from lab to pre-scale up facilities and then to scale up and further deployment.
