Company case study: Linde

Linde is an investee company in our Global Sustain Paris Aligned strategy. This case study considers how, in our view, the company is contributing towards achieving the goals of the Paris Agreement on climate change.

We see Linde as a leading industrial gases company, with an important role to play in fostering a cleaner, less polluted planet. Along with gradually reducing its own greenhouse gas (GHG) emissions, the company is also facilitating its customers’ decarbonisation journeys.

Hydrogen: current and future applications

Linde is a market-leading supplier and distributor of hydrogen – a gas long identified as a viable source of clean fuel. In upcoming years, hydrogen is likely to be adopted in a broad array of industries (particularly as the price of low-carbon hydrogen is expected to fall). While Linde’s hydrogen production operations currently have a notable carbon footprint, this should shrink as it produces larger quantities of low-carbon blue and green hydrogen.

Hydrogen generates no GHG emissions when used as an energy source. At the moment, it is predominantly used in ammonia production and oil refining, but the scope of its application looks set to broaden significantly over the next few decades. For example, hydrogen fuel cells are expected to become more widespread in heavy-duty transportation and as a source of energy for several industrial processes.

“The distribution of hydrogen is complex and specialised, and Linde has built up sophisticated knowledge and experience in the area.”
 

The distribution of hydrogen is complex and specialised, and Linde has built up sophisticated knowledge and experience in the area. Most importantly, it owns extensive infrastructure dedicated to the production of hydrogen. It is therefore well placed to benefit from an increase in demand for hydrogen.

Part of the problem, but also part of the solution 

Linde’s carbon emissions are material: the company’s Scope 1 and 2 emissions amounted to 38.1 million metric tonnes in 2023¹. A significant proportion of its carbon emissions come from its hydrogen production plants. 

While noteworthy, Linde’s GHG emissions should not eclipse the positive environmental impact of its products. For example, Linde supplies oxygen to the steelmaking industry, leading to significant energy savings. Even more crucially, as a key supplier of hydrogen, Linde helps its customers desulphurise diesel fuel (which is highly polluting). 

Carbon capture and storage

Linde’s carbon capture and storage solution (CCS) plays a key role in its decarbonisation efforts. A recently agreed project between Linde and OCI, a large fertiliser manufacturer, illustrates the use of CCS in the ammonia industry and the technology’s positive impact. Linde’s CCS system will capture the carbon released from the hydrogen production process; this will enable it to supply OCI with blue hydrogen as a feedstock for ammonia production. In turn, cleaner ‘blue ammonia’ will be produced. 

“Linde’s CCS technology lowers its Scope 1 GHG emissions and therefore brings down the Scope 3 GHG emissions of its customers.”  
 

Linde intends to work with partners to permanently sequester the carbon. It estimates that from this project alone 1.7 million tonnes of carbon will be captured per year². Linde’s CCS technology lowers its Scope 1 GHG emissions and therefore brings down the Scope 3 GHG emissions of its customers. The company is collaborating with a number of partners on carbon capture projects; for example, it plans to jointly build, own and operate a carbon capture and liquefaction facility with Heidelberg Materials.

Contributing to a cleaner future 

Linde has implemented targets to reduce its own GHG emissions. Its goal to reduce its GHG emissions by 35% by 2035 (‘35 by 35’) has been validated by the Science Based Targets initiative (SBTi)³. The company has made progress towards meeting this target: as of 2023, the company had reduced its GHG emissions by 4.5% from a 2021 baseline⁴.

“Linde’s goal to reduce its GHG emissions by 35% by 2035 (‘35 by 35’) has been validated by the Science Based Targets initiative.”  
 

Linde targets an increase in the amount of low-carbon energy it uses by 2028. By the same year, it aims to devote one-third of its R&D budget to decarbonisation⁵. The company is actively working towards reducing its Scope 1 and 2 GHG emissions. It discloses its Scope 3 GHG emissions and has committed to set a Scope 3 reduction target in the near term⁶.

In 2023, 43% of the electricity consumed by Linde came from low-carbon sources, further reflecting the company’s commitment to shrinking its carbon footprint. Indeed, in the UK almost all of its electricity came from renewable sources in 2023⁷. 

We have regularly engaged with Linde about its climate strategy and have encouraged it to align all its direct and indirect climate targets with the 1.5°C goal set out in the Paris Agreement. We hope that in due course the company will implement a net zero GHG target. 

The information provided should not be considered a recommendation to purchase or sell any particular security.

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¹ Linde, ‘2023 Sustainable Development Report’, (linde.com), July 2024.
² Linde, ‘Linde to Invest $1.8 Billion to Supply Clean Hydrogen to OCI’s World-Scale Blue Ammonia Project in the U.S. Gulf Coast’, (linbde-engineering.com), February 2024.
³ Science Based Targets initiative, ‘Targets dashboard’, (sciencebasedtargets.org), April 2024.
⁴ Linde, ‘2023 Sustainable Development Report’, (linde.com), July 2024.
⁵ Linde, ‘2023 Sustainable Development Report’, (linde.com), July 2024.
⁶ Linde, ‘2023 Sustainable Development Report’, (linde.com), July 2024.
⁷ Linde, ‘2023 Sustainable Development Report’, (linde.com), July 2024.