America in Transition

This year, U.S. energy priorities have shifted toward ensuring secure access to affordable domestic fossil-fuel-based energy, even as global momentum for decarbonization remains strong.

For the refining and chemicals sectors, this creates a dual challenge: delivering a stable and affordable fuel supply in the near term, while continuing to invest in and deploy low-carbon solutions to stay competitive in a net-zero future. Against this backdrop, our keynote panellists from ESF North America 2025 discussed the balance between immediate domestic priorities and longer-term global decarbonization commitments.

1. No one-size-fits-all approach to the energy transition – The energy transition is not linear; it is complex and multidimensional. Dow is exploring a wide range of opportunities across its assets, customers, and markets to decarbonize its products and services. This approach enables partners further down the value chain to reduce their Scope 3 emissions. Today, Dow is one of the largest consumers of renewable energy in the industry, with over 1,000 GW-hours of renewable power under contract. The company is also actively pursuing projects focused on decarbonized hydrogen as a fuel source, as well as nuclear energy, with a project currently underway in Texas. As the United States advances toward domestic manufacturing, energy resilience, and “energy dominance,” the development of technologies such as advanced small modular reactors (SMRs) becomes critically important.

2. The lifeblood of industrial transformation – Steam remains the heart of the process industries, and decarbonizing steam production is therefore the lifeblood of industrial transformation. Securing reliable, firm sources of low-carbon steam is essential to ensuring both sustainability and operational continuity.

3. Preparing for deeper troughs and higher peaks – Today, we are spending significant time trying to keep up with developments hour by hour, day by day, and week by week. As an industry already characterized by volatility on the conventional side, the transition space—heavily reliant on strong and consistent regulatory support—is even more vulnerable to uncertainty. Since the start of the year, we’ve seen major shifts in the economics of renewable diesel and biodiesel, with significant bio-based capacity idled or taken offline. Conventional capacity reductions, particularly on the West Coast, have further disrupted supply-demand balance. In this landscape, flexibility is crucial for adapting to deeper troughs and higher peaks.

4. What’s that marginal barrel? – As regulatory policy evolves in unpredictable ways, feedstock flexibility has become essential for optimizing supply chains and maximizing margins. Success requires a full value-chain perspective covering feedstock sourcing, characteristics, processing specifications, unit constraints, and regulatory compliance. Ultimately, the goal is to capture the marginal barrel, which is now shifting week by week as final policy guidance continues to evolve at federal, state, and local levels.

5. Customer demand for decarbonized products remains robust – Despite a complex political environment, including slowing incentives and shifting policies, Dow continues to see strong demand and a growing pipeline of customers seeking decarbonized products to meet voluntary Scope 3 reduction goals. With limited supply available, there is a clear opportunity to monetize decarbonized products amid this supply-demand imbalance.

6. Decarbonization across the value chain – Dow is implementing approaches that enable selection of decarbonized options across its product portfolio and supply chain. This includes choosing low-carbon feedstocks, intermediates, and finished goods, and integrating them into a cohesive, geographically flexible, carbon-accountable supply chain. By tracing and assigning decarbonization attributes to product flows, Dow supports customer sustainability goals while monetizing embedded carbon reduction value.

7. Balancing energy abundance, cost, and voluntary market growth – Today’s energy landscape is increasingly focused on abundance and affordability. Voluntary carbon markets will play a critical role in scaling low-carbon products, but cost sensitivity remains a key challenge, especially for end consumers outside mandated markets. Long-term engagement depends on the perceived and actual value of carbon reduction and environmental benefits.

8. The power of policy – While voluntary markets can augment demand, policy remains the primary driver of growth for low-carbon alternatives. This is evident in California’s Low Carbon Fuel Standard (LCFS), where renewable diesel and biodiesel now represent a dominant share of the diesel pool, making petroleum diesel increasingly difficult to source in the state.

9. A less rosy RVO revert? – While an equilibrium is expected under the revised Renewable Volume Obligation (RVO), there is no guarantee it will align smoothly with supply realities. A more conservative reversion remains possible, creating potential dislocations between supply, demand, and regulatory credit frameworks.

10. RD vs. SAF trade-offs – A clear trade-off is emerging between renewable diesel (RD) and sustainable aviation fuel (SAF). RD is more mature, particularly on the West Coast where policy and incentives have driven adoption. SAF remains in an earlier stage of market and policy development, despite growing strategic importance.

11. SAF tailwinds – With reduced technology risk, emerging supportive policies in select states, and strong feedstock synergies with renewable diesel, SAF is gaining momentum. These tailwinds are strengthening its long-term viability.

12. Customer commitment is key – Despite strong tailwinds, SAF scale-up depends on airlines and end users committing to long-term offtake agreements. These commitments are essential to justify the capital-intensive investments required for production and facility conversion.

13. Line of sight – Regardless of the investment, companies require clear visibility on returns. In the absence of long-term regulatory certainty or stable policy frameworks, capital allocation remains constrained.

14. Critical components in Canada – Dow’s Fort Saskatchewan Path2Zero ethylene cracker expansion project demonstrates how aligned conditions enable major investment decisions. Alberta provides policy stability, targeted incentives, strong infrastructure, and CCS-enabling conditions. Once operational, the project will decarbonize approximately 20% of Dow’s global ethylene capacity, highlighting the scale achievable when critical factors align.