It is interesting to contrast Linde and LyondellBasell with Air Products and Dow. Air Products and Dow have transitioned away from the more generic messaging around broad objectives, and while they still have them, have started talking about concrete plans and spending aimed at lowering carbon emissions. Dow has a project on the books that will lower the emissions of existing capacity while Air Products is talking about greenfield low carbon investments at this point. Many of the commentators and climate activists are calling for concrete plans as opposed to broad objectives and we suspect that most of the narrative will move that way across energy and materials.
Source: Linde 3Q21 Earnings Release Presentation, October 2021
The industrial gas companies have the dual challenge of needing to lower their manufacturing footprint as well as their transportation footprint as they have substantial truck fleets. In the Linde slide, it is interesting to note that the company only commits to CCS in the 2028 to 2035 timeframe. Given that Linde is part of the Houston hub proposal (as is LyondellBasell) this may give some hint as to how far off the project looks to the participants. On this basis, Dow would likely have a lead with its low carbon polyethylene from Canada and possibly some first-mover advantage.
Source: Linde 3Q21 Earnings Release Presentation, October 2021
We suspect that companies who cannot show real investments and facility conversions to back up their 2030 or 2040 claims will come under increasing investor and activist pressure over the next 6-12 months and the best thing that could happen for the industry would be for COP26 to agree on a mechanism for global carbon pricing that was acceptable in the US. A realistic and high enough future price on carbon would quickly turn the vagueness in the LyondellBasell and Linde slides above into more definitive action points.
