We have a shared responsibility to protect the environment. This belief is reflected in our higher purpose as an industrial gas company — to produce products that improve the environment and make our customers' processes better. Our products enable our customers and their downstream users to reduce or avoid emissions of CO2. In 2018, we enabled the avoidance of 55 million metric tons of CO2 emissions, equivalent to the CO2 emitted from 12 million cars and almost double our direct and indirect CO2 emissions.
We are also committed to improving our own performance by operating efficiently, incorporating environmental considerations into the design of our facilities and products, effectively managing environmental risks, and transparently communicating our environmental performance. While our resource consumption and emissions may increase due to growing customer demands for our products, our efficiency and environmental improvements enable us to make our customers' processes and products better without proportionally expanding our environmental footprint.
We established four environmental sustainability goals for 2020; each uses operating performance from 2015 as the baseline year:
- Save energy by reducing use intensity by 2.5% for ASUs, and 1.5% for HyCOs
- Reduce GHG emissions intensity by 2%
- Conserve water and lower use intensity by 5%
- Improve efficiency and reduce CO2 emissions related to distribution by 10%
These goals reflect the environmental parameters of greatest importance to Air Products.
Understanding Our Footprint
Management of climate change represents a significant potential for business growth. Air Products is also focused on managing its climate risks.
As a solution provider, our strategy for responding to climate change is straightforward—identify opportunities where our core technology and product strengths bring cost-effective solutions that enable our customers to reduce their overall supply-chain environmental impact, while using innovation and efficiency improvements to reduce GHG emissions and the potential cost impacts of a carbon-constrained energy supply on our operations. This approach is reflected in our Climate Change Policy Statement.
Climate Change Policy Statement
Climate change, energy consumption and water use are inextricably linked. Looking ahead, the world’s population is expected to grow to over nine billion people by 2050, while their needs for energy, water and food will increase even faster. For these reasons, maximizing the efficient use of the earth’s resources while minimizing environmental impacts is vital.
Air Products’ long-standing strategy for responding to these challenges is straight forward. We enable our customers to reduce their environmental impact by providing cost-effective technologies and products that improve their energy and water efficiency and reduce emissions to the environment. At the same time, we strive to reduce energy and water consumption, as well as emissions, in our own operations through efficiency improvements and technological innovations. We are making real progress in these areas, as demonstrated by our environmental sustainability targets and related cost savings.
In 2016, Air Products established a goal to reduce GHG intensity 2% by 2020 from a 2015 baseline. This goal was set based on past performance, operational changes, and industry benchmarks. We also evaluated techniques for establishing a science-based target. However, due to the nature of our business and heavy reliance on energy, thus far, we have been unable to develop a credible, economically viable, and achievable target.
Performance against our goal is calculated by totaling Scope 1 and 2 emissions normalized to production for the reporting year, and then dividing by this same ratio for the baseline year. This results in a dimensionless value that shows year-on-year changes, but does not disclose production levels, which are company confidential.
In 2018, our Scope 1 GHG emissions, which are primarily related to HyCO operations, were 17.3 million MT, representing a 5% increase from the prior year. Our Scope 2 emissions, which are due in large part to emissions related to the electricity stream we consume in our ASUs, were 10 million MT in 2018, which was a 3% increase from 2017. Our Scope 3 emissions were 5.2 million MT and rose by 6% to the prior year due primarily to increased energy consumption.
The increased emissions were due to a significant increase in industrial gas production, particularly in Asia, where our ASUs are often driven by steam produced from coal because electricity is not available. In 2018, our GHG emissions intensity declined by 1.5% compared to 2015, and we are on track to meet our 2020 goal.
Energy Conservation and Efficiency
Energy consumption is the most significant variable in the cost of our production processes. We carefully track and manager energy purchases, and our conservation programs are focused on continually improving energy efficiency across our plants, particularly larger facilities.
Our energy consumption in 2018 was 50.8 million MWh, representing a 7% increase from 2017. The increase was a result of our growth that was driven by rising customer demands, particularly in Asia and India.
Of our electricity purchases in 2018, 23% was from renewable sources. This is an increase of 5% from 2017 due to our higher use of renewable energy in Europe, as well as increasing the amount of renewable energy we use that is available on the girds in certain regions where we operate.
In 2018, our ASUs realized a 2% reduction in energy intensity from a baseline year of 2015. Our HyCO units improved energy efficiency by 0.9%. These successes were realized through higher plant utilization; increased production at new, larger and more efficient facilities; and hundreds of facility improvement projects involving changes to equipment and manufacturing processes. For example, equipment replacements at one ASU in the western U.S. saved over 2,000 MWh of electricity and over $500,000 in costs.
Water conservation is critical to the health and sustainability of our planet. Experts project a 40% shortfall between water demand and fresh water supply by 2030, and by 2050, nearly three billion people will live in water-stressed areas.
Air Products cannot operate facilities around the world without adequate water supplies, and this reality drives us to be good stewards of water.
We use water primarily for cooling, to make hydrogen using the SMR process, and to provide steam and water to our customers. The steam is a co-product of our SMRs and has a significant energy efficiency advantage when compared to steam generated from boilers. Because of these uses, our water consumption is tied closely to energy use; therefore, improvements in energy efficiency can also conserve water. We also use water for safety systems (i.e., fire suppression) and cleaning, but these do not have a material impact on our water consumption.
Air Products has established a goal to reduce water consumption by 5% on an indexed basis by 2020 from a 2015 baseline. We achieved this goal in 2017 and continued to improve water efficiency during 2018, reducing our water intensity by 8% in 2018, for a total reduction of 18% since the baseline year.
Our consumption of water, on an absolute basis, increased to 16.7 million gallons in 2018 due to increased production required to meet our customers needs, globally.