National manufacturing of sodium chlorite using clean energy
Cutting emissions by reducing imports while addressing Scope 2 emissions through the use of clean electrical energy.
Brazil’s Sabará Group develops technological solutions and high-performance raw materials for various market segments. In 2018, the company inaugurated the first industrial sodium chlorite plant in Latin America at its industrial complex in Santa Bárbara D'Oeste (here referred as ‘SBO’), as part of its BioE business unit focused on the industrial water treatment market.
With the project, the company sought to concretize domestic production of sodium chlorite, which at the time was only available on the international market. As a result, Sabará Group now produces sodium chlorite in different solution concentrations, meeting market demands and able to inject up to 28,000 tons/year of the product into the market.
In addition, the Group established GHG emission targets approved by the Science Based Targets initiative (SBTi), by committing, after updating the target in 2022, to reducing its absolute GHG emissions by 42% by 2030, using 2020 as the base year.
To reduce GHG emissions in Sabará Group's SBO industrial complex, Sabará Group has implemented the following steps:
1. Partner to implement sustainability best practices into design
From the initial design of the plant, the company knew it would need to build a sustainable process, so it sought to partner with a company and industrial designers that could bring best practices and allow the plant to gain ISO and other certifications from the start, all while identifying disruptive industry 4.0 technologies.
2. Leverage green finance for funding
The company first funded the process with its own capital. Later, because of the environmental benefits of the project, Sabará Group became the first industry in the chemical sector in Latin to issue Green Bonds linked to the implementation of this industrial plant.
3. Adopt clean-source electricity to reduce scope 2 emissions
Since the beginning of its sodium chlorite production, the SBO industrial complex’s electrical energy consumption represented the largest portion of Sabará Group's electricity consumption. As such, this change in the unit's consumption profile made its entry in the Free Energy Market possible. Thus, the company was able to negotiate the supply conditions alongside the electricity purchase contract, with a contractual clause being added to guarantee that this electricity would come from renewable sources. Additionally, in 2022 Sabará Group aimed to ensure that the source of this electricity, in addition to being renewable, was also clean, meaning it did not burn fuels like biomass for energy. As a result, the purchase of I-REC allowed SBO to certify that all electricity consumed by this unit came from wind sources in 2021 and in 2022, from hydroelectric sources. It is worth highlighting that the option to guarantee the use of energy from a clean source is a continuous action, requiring annual maintenance.
4. Use local suppliers to reduce imports
Another challenge Sabará Group faced was sourcing local suppliers for raw material, but once the company commenced local production, it was natural to start working with local suppliers as well. Simultaneously, manufacturing and supplying sodium chlorite locally at the SBO complex made it possible to reduce imports of this product, which until then was only available on the international market, originating mainly from China. Furthermore, the potential to reduce emissions through the national manufacture of sodium chlorite is a perennial action with a useful life proportional to that of the industrial plant itself, positively impacting the local market by providing an alternative that was previously unavailable.
Targeted emissions sources:
Category 1: Purchased goods and services
Category 4: Upstream transportation and distribution
Category 9: Downstream transportation and distribution
The adoption of clean-source electricity at the SBO industrial complex has meant that, since 2020, more than 80% of Sabará Group's electricity consumption has come from clean sources, resulting in a reduction of around 91% in the company's Scope 2 emissions between 2020 and 2022, from 207.1 tCO2e in 2020 to 66.0 tCO2e in 2021 and 19.0 tCO2e in 2022;
The considerable reduction in Scope 2, among other projects, allowed Sabará Group to reach its SBTi approved science-based target in 2022 of 42% reduction in its absolute Scope 1 and 2 emissions by 2030, with emissions of 206.54 in 2022 (Scope 1 & 2) compared to 388.35 in 2020 (Scope 1 & 2) resulting in a 46.81% reduction;
As a result of the reduction in imports, SITAWI's Independent Post Emission Report estimates that through the production of BioE's first semester of operations alone (with 931.9 tons produced from July to December 2019) it was possible to reduce 1,292.75 tCO2e in emissions from the sodium chlorite logistics chain, which was calculated using the GHG Protocol;
Using the GHG Protocol methodology, it was estimated that in 2022 each ton of sodium chlorite manufactured and sold domestically avoided from 68% to 83% of the GHG emissions in transportation compared to logistics from France and China (two of the largest countries exporting those products to Brazil). This calculation only refers to the logistics process and was made using the amount of CO2e spent with transportation of raw materials to produce sodium chlorine in the SBO factory in 2022 versus the amount of CO2e spent if those tons of sodium chlorine were imported both from France and China in the same year.
BioE is the only manufacturer of sodium chlorite in Latin America, a fundamental compost for the water treatment market;
Improve the local market and local economy;
Guarantee local products with high standards of quality, safety, and clean production;
Guarantee a compliant supply chain for our clients;
Reputational benefits from meeting the SBTi approved science-based emissions reduction target.
General costs for the implementation of the sodium chlorite plant at the SBO unit;
Costs of starting a local business and running a new plant;
Costs of opening new market and opportunity search;
Cost of acquiring an I-REC to certify the origin of the electricity consumed, ensuring that it comes from a clean and renewable source.
Impact beyond climate and business
The entire development of the project was based on sustainability, enabling gains in areas that can be related to various SDGs, like SDG 7 (Affordable and Clean Energy), once the project of the new factory included the review and improvement of the electrical function, allowing it to start purchasing electricity on the Free Electricity Market and negotiate with the producers and distributors of electrical energy; SDG 6 (Clean Water and Sanitation), due to the nature of the products produced in the new plant, once it’s produced locally it contributes to the local sanitation market, as well as the company’s efforts to invest in research to improve products and its concern for the safety of people and the environment. The products allow companies to reduce their waste and have safer processes, among other benefits, which contribute to SDG 9 (Industry, Innovation and Infrastructure) – as the first factory of its kind in Latin America, the Group brought technologies to the country and growth to the local market, including the hiring of employees; SDG 12 (Responsible Consumption and Production), by designing a chemical plant that doesn’t produce chemical waste in its processes; and finally, SDG 13 (Climate Action) by substituting imported sodium chlorite with a locally produced solution, it reduced GHG emissions with the transportation of the product (a calculation with the 2022 base year GHG Protocol sheet showed that each ton produced at the Group factory can avoid from 68% to 83% of emission from transportation) and guarantee a clean, safe and efficient process (once the factory emissions are low – 54.43 tons in 2022 – and the Group compensate all its the non-avoided emissions).
Typical business profile
Medium and large industries.
Manufacturing exclusively imported products domestically requires the company to be mature in terms of management, as well as investing in its growth and product diversification
Entering the Free Energy Market and purchasing energy from clean sources through I-REC requires a suitable energy consumption profile, generally pertinent to medium and large consumers, as well as the availability of resources
Cargo transportation companies
Industrial segments such as water treatment, sugar and alcohol, the beverage industry, energy market, leather, textile, paper and cellulose, among others that may use sodium chlorite, especially in Brazil and Latin America
Companies supplying electricity in the Free Energy Market
I-REC issuing and trading companies
Key parameters to consider:
Availability of suppliers
Connection to the national integrated system
Investment capital in new technologies and equipment
Energy consumption profile to enter the Free Energy Market
Continuity of action to acquire electricity from clean sources, requiring annual maintenance.
Implementation and operations tips
Despite the challenges of setting up a factory from scratch, the production method of the BioE plant was initially tailor made and designed for sustainable production. The company also needed access to foreign design companies willing to build the plant with this challenge, which resulted in a patented production method. Since these decisions were made at the beginning of the process, the benefits are reaped to this day and will certainly continue.
Other main challenges included securing financing for the project. Green financing was still new in Brazil at the time. Despite being the first company in the chemical industry to launch a Green Bond, the initial investment came from equity capital. It’s important to note that this investment represented a significant step for Sabará Group, considering it’s a medium-size family company without the extensive resources of a large, global corporation.
Nowadays, Brazilian banks are gradually gearing up for this type of investment and financing; however, some challenges persist when it comes to highlighting the advantages of green financing for small and medium-size enterprises (SMEs) in the country.
In addition to the benefits already mentioned in relation to GHG emissions, other opportunities also emerged in the production line, such as the use of production waste by transforming it into line products.
When it comes to sustainability, Sabará Group emphasizes the importance of analyzing opportunities and considering both short and long-term benefits as being of equal importance.