Decarbonizing the Industrial Gases Sector

These companies must electrify their equipment for producing air gases, known as Air Separation Units, and shift their remaining assets which use steam produced from coal or gas over to electric power. 

For their electric ASUs, these must be powered with as much renewable energy from wind and solar as possible. This can be either onsite, or sourced through the grid through instruments such as power purchase agreements (PPAs).

It is vital that this renewable energy supply is additional to what is already in existence so that it contributes incrementally to more renewable energy, rather than soaking up existing clean power that's already in use elsewhere. This avoids inadvertently increasing fossil fuel generation on the grid as new energy demand comes online.

100% of electricity demand must be supplied on an hourly basis with renewable energy generated on the same grid as consumption. This also incentivises investment in energy storage solutions.

These companies also produce large amounts of hydrogen, but most of that uses gas as a feedstock. Green hydrogen, made with renewable energy, is an important solution to the decarbonization of many industries, from steel to transport. As major producers, industrial gas companies must prioritise green hydrogen over more carbon-heavy production.

Reality: Despite the potential to produce hydrogen from renewable energy, 95% of production today is gray hydrogen — produced from natural gas or coal via steam methane reforming (SMR) or coal gasification, without capturing CO2 emissions. SMR requires substantial heat, which is typically supplied by burning fossil fuels, leading to direct CO2 emissions from the combustion process. Blue hydrogen uses fossil gas and carbon capture and storage (CCS) — still involving significant emissions, methane leakage, and significant concerns over actual rates of carbon capture. All major industrial gas companies produce hydrogen but have varying levels of ambition towards truly green hydrogen.

Reality: Carbon Capture and Storage (CCS) is used to capture emissions from heavily polluting industries, and is embraced by many as a get-out-of-jail-free card to soak up hard to abate emissions. CCS is costly, energy intensive and unproven. It neither captures 100% of carbon emissions, nor does it tackle upstream emissions from fossil fuel extraction or continued reliance on fossil fuels. Many CCS projects fail to capture emissions at scale or are used for enhanced oil recovery — effectively increasing fossil fuel extraction. Industrial gas companies both provide CCS as a service to other industries, and use it themselves for blue hydrogen production.

Reality: Many companies, industrial gases included, claim to enable significant avoided emissions (also referred to as Scope 4) through their technologies and products that help customers reduce their carbon footprints. Guidelines from the Greenhouse Gas Protocol and World Resources Institute set out that such claims should: provide transparent methodologies; avoid cherry picking beneficial products but ignoring problematic ones; disclose data quality and uncertainties; disclose full inventories of Scopes 1, 2, and 3 emissions alongside avoided emissions claims, and should not use avoided emissions to adjust these inventories. Unfortunately most avoided emissions claims, including those from Linde and Air Liquide, fall short of this standard, meaning they could be seen as greenwashing without better substantiation.

Reality: Most industrial gas giants have net zero targets that rely on CCS, “low-carbon” energy which includes nuclear and biomass, and also on policy shifts to enable progress. Meanwhile, they continue expanding fossil fuel infrastructure, especially for blue hydrogen, and are stalling on moving away from fossil fuel derived electricity from the grid. Moreover, our investigation into Linde suggest they may be significantly under-reporting their emissions, calling into question their net zero targets and trajectory.