Bayer Climate Program

Ecology

Environmental protection has been firmly anchored in Bayer corporate policy for many years. For Bayer, this means conserving resources and, wherever possible, ensuring that economic growth does not necessarily go hand in hand with increased resource consumption. In order to accomplish this, we rely on our effective HSE management systems, which control the implementation of our environmental protection measures and monitor compliance with our objectives. We owe our success in the area of environmental protection to the development and implementation of the latest technologies, which have also been made available to our customers through our service companies, and to our continuous search for improvements.

Highly efficient energy use

Energy use and the associated emissions are an important factor in our environmental performance. Growth in our production is generally accompanied by an increase in energy use.

Compared with the previous year, total energy use in the Bayer Group in absolute figures rose by around six percent, while the volume of products sold increased by five percent. Around a third of the rise in absolute energy use is attributable to the integration of Schering, while just under half of the increase is the result of increased energy use by the Bayer MaterialScience subgroup, which increased its production.

Volume of products sold and energy use

	2003	2004	2005	2006	2007
Volume of products sold (in million metric tons)	12,8	9,1	9,7	10,1	10,6
Energy use (in petajoules)	140,6	97,5	82,3	86,4	91,7

The total energy use for the Bayer Group of 91.7 petajoules (equivalent to 25.5 terawatt hours) is calculated from the sum of primary energy use, electricity procured and waste heat used, minus the amount of steam and refrigeration energy sold. In the reporting period there was a slight reduction in the proportion of coal used, with a corresponding increase in the use of waste (predominantly high-calorie production residues) and other primary energy sources (predominantly hydrogen from the electrolysis process). The amount of steam sold was reduced in net terms.

* includes conversion processes

Safe and reliable energy use thanks to modern power plants

In order to increase the security of our energy supply, we are collaborating with energy provider Trianel on plans for the construction of a modern and efficient coal-fired power plant in the Krefeld-Uerdingen CHEMPARK in Germany. The plant will operate on the combined heat and power (CHP) principle, which represents the state of the art and is considerably more efficient (level more than 56 percent) than older coal-fired power plants in Germany. Flue gas is cleaned far more effectively today than was possible 10 years ago thanks to modern purification plants. However, as with any combustion process, power plant operation generates carbon dioxide, as well as air pollutants such as sulfur dioxide, nitrogen oxides, particulate matter and traces of dioxins and furans. These emissions should be of course kept within all the prescribed limits for the protection of human health, and are considerably below these limits during normal operations. The environmental friendliness of the planned power plant has, however, been questioned by various community groups, which is why the project is currently under public scrutiny. We will continue to make every effort to engage in a constructive dialogue with the public and policy makers in order to present our views and arrive at a solution.

Responsible water use

The efficient use of water and the protection of water bodies is one of the key themes of an environmentally sustainable approach to business. Thanks to efforts throughout the Group, we were able once again to maintain water use at the level of the previous year despite the fact that our production volumes increased. Through a joint Bayer MaterialScience and Bayer Technology Services project, the specific cooling water consumption in the TAD plant in Dormagen was reduced by 20 percent. In the U.S. headquarters of Bayer CropScience in North Carolina we were able to cut water consumption by 16 percent through measures implemented in the areas of building management and green space irrigation.

The sites take over half of the water they need from surface water; about one third comes from underground sources (generally groundwater). At 0.76 million cubic meters per day, through-flow cooling water accounts for the largest proportion of our water use. Since this water is only heated and is not polluted during use in any other way, it can subsequently be discharged into the water supply without further treatment, provided maximum temperature limits are observed.

Net water use by source

	2003	2004	2005	2006	2007
Water use (in million m³/d)	2,14	1,29	1,24	1,20	1,23
from surface water (in %)	–	60	54	53	57
from bore holes/springs (in %)	–	33	35	35	32
from public drinking water supplies (in %)	–	5	2	2	2
from other sources, e.g. rainwater (in %)	–	2	9	9	9

Solutions for worldwide water management

The efficient use of water and water protection are key themes related to the valuable natural resource of water. The three Bayer AG subgroups are working in different areas of business on projects aimed at sustainable water management.

Efficient water use in agriculture

If the current trend continues, scarcity of water will in the next 50 years probably become the biggest problem in agriculture. Agriculture accounts for approximately 70 percent of freshwater consumption worldwide. For this reason, measures aimed at improving water management in this field merit the highest priority. At the forefront of these efforts is increasing the efficiency of irrigation. However, water collection technologies in rain-fed agriculture and improved cultivation methods also have a role to play in increasing the efficiency of agricultural water use. Bayer CropScience is examining changes to cultivation methods and crop use, and is already employing numerous measures to contribute to the efficient use of water and the protection of water resources:

Developing stress-tolerant and drought-resistant plant species
Improving plant health to facilitate improved use of water by plants
Making herbicides available that suppress other plants competing for water
Introducing integrated water protection measures in the areas of research, development and product use, such as BioBed/Phytobac®, an innovative product for the environmentally friendly cleaning of crop protection sprayers
Promoting cultivation methods that support improved water management.

Protecting water resources

Supplying adequate amounts of drinking water is becoming a problem, above all in urban population centers. One of the causes of this are antiquated, poorly maintained and leaking water pipes. For example, in London, about 700 million liters of the drinking water treated at some cost is lost every day due to leakages. Bayer MaterialScience (BMS) has developed innovative coating materials for drinking water pipes to help conserve water resources. Thanks to this coating, which is based on bms coating raw materials, durable repairs can be made to pipes considerably more quickly than was previously the case. The system has been introduced in Asia, the United States and many countries in Europe. To date, over 10,000 kilometers of drinking water pipes have been coated using this system.

Pharmaceutical residues in water

The ecotoxicological potential of our pharmaceutical products is being studied as part of a comprehensive environmental risk assessment. The results of these studies will be made available to the authorities in Europe and the United States as part of the approval process. In the case of veterinary pharmaceuticals, an unfavorable environmental risk assessment may even result in approval being refused. A European guideline setting out the requirements for environmental assessments of pharmaceuticals for human use was passed at the end of 2006. However, Bayer HealthCare has considerably more extensive expertise in this area. Thus, the first environmental risk assessments relating to pharmaceuticals for human use were submitted in the United States and Europe back in the 1990s as part of the market authorization application. Active ingredients already on the market, particularly hormones, antibiotics and contrast media, are continuously being assessed. Scientists in our company are engaged in research activities of their own that are related to the assessment of environmental risks associated with our active pharmaceutical ingredients. Based on what is currently known, there is no anticipated environmental hazard posed by contrast media, antibiotics or hormones

Use of materials and recycling

Bayer uses a wide variety of starting products and raw materials in its subgroups and service companies.

As a manufacturer of pharmaceuticals, crop protection agents and innovative materials, Bayer is in most cases not in a position as part of the supply chain to recycle products after use by the end consumer.

Wherever it is feasible in economic and technical terms, Bayer uses renewable raw materials, although these do not play a major role.

Our media services provider Dynevo, a subsidiary of Bayer Business Services, processes paper from renewable forestry. Furthermore, Dynevo is authorized to manufacture products bearing the stringent “FSC” seal of quality, awarded by the Forest Stewardship Council (FSC). This enables companies and producers to show that they support ecological, socially responsible and sustainable forestry management by using FSC-certified paper.

In the case of renewable raw materials, we take steps to ensure that they are obtained in the most environmentally sustainable manner possible. Bayer MaterialScience has developed polyols, a starting material for polyurethanes, containing up to 70 percent by weight renewable raw materials, thus making an additional contribution to the reduction of emissions.

Thanks to an improved technology, the oxygen depolarized cathode method for the recovery of chlorine from hydrochloric acid, we are able to reduce electricity consumption by approximately 30 percent compared with the conventional diaphragm method. Since 2003, Bayer MaterialScience has been operating a large-scale plant at the Brunsbüttel site in Germany with an annual capacity of 20,000 metric tons which utilizes this new technology. As from 2008, the first world-scale facility using this technology – with an annual capacity of 215,000 metric tons – will come on stream at the Shanghai site in China.

Commitment to maintaining biological diversity

Bayer CropScience acknowledges the objectives of the “Convention on Biological Diversity” (CBD) and is an advocate for their implementation. As part of our program for product stewardship, all Bayer products are reviewed throughout the product lifecycle with regard to their environmental impact on the habitats of individual animal and plant species. Bayer CropScience’s agricultural technologies contribute to increased efficiency and agricultural productivity, which for many years has prevented natural habitats from being turned into agricultural land. In addition, Bayer CropScience promotes integrated crop protection. This permits the sustainable intensification of agricultural production and includes concrete measures aimed at protecting the environmental functions in agriculture such as water and soil protection and establishing and maintaining natural habitats. Integrated crop protection on the individual farm also contributes to the maintenance of biodiversity across the entire landscape as required by the Convention on Biological Diversity.

Thanks to an internal approval procedure, the possibility of new investments in production sites being realized in any area which is protected by the laws of the country concerned due to its natural uniqueness, diversity of species or other similar factors is excluded. The minimum distances between the site and the protected areas as stipulated by the permit authorities are complied with in all cases.

Reduction of greenhouse gas emissions through process optimization

Protecting the global climate is one of the greatest challenges of our time and a fundamental aspect of our corporate responsibility. Therefore, as part of our Group-wide Bayer Climate Program (see Focus Issue Climate Change) we have set ourselves the target of significant successive reductions in the greenhouse gas emissions from our production facilities. To this end, Bayer Technology Services has developed a new management tool for energy-efficient and climate-friendly production, known as the “Bayer Climate Check.” This tool allows us to evaluate not only production plants but also raw materials, energy sources and logistics. By the end of 2009, Bayer intends to have systematically analyzed 100 production plants worldwide, which account for 85 percent of the greenhouse gas emissions, to identify the potential for reducing emissions. Catalogues of measures and optimization methods are being identified by means of a climate impact analysis based on the Six Sigma management method.

One example of the numerous candidates for process optimization is the central thermal waste air incineration plant at the Dormagen CHEMPARK site in Germany, which was fitted with innovative energy-saving equipment in 2007. The two central elements of this plant are the “regenerative thermal reactor,” which recycles the combustion energy generated, and a high-efficiency waste heat boiler to feed the heat generated into the site’s supply grid. A lowering in gas consumption by 90 percent combined with improved steam generation means an annual reduction in co2 emissions of 18,000 metric tons.

CURRENTA is also involved in climate protection. For this purpose, the service company has launched the “Climate Protection Program – Efficiency Class A++.” The objective is to reduce CURRENTA’s own emissions of carbon dioxide by at least 200,000 metric tons per year in the period from 2005 to 2012. In implementing this program, the chemical park operator is primarily backing the know-how of its employees, e. g. by means of special measures aimed at improving energy efficiency as part of the company’s suggestion plan. With its “100 plus 100 Climate Projects” campaign, CURRENTA aims both to reduce energy consumption and increase the efficiency of energy generation. Numerous measures from all sectors have already been put into action, particularly at the energy supply and waste management plants at the Leverkusen, Dormagen and Krefeld-Uerdingen CHEMPARK sites in Germany. To supplement the program, cooperation is being sought with external research institutions. CURRENTA intends to use the climate protection program to reconcile economic success with environmental protection and the interests of society. Increasing energy efficiency ensures that the CHEMPARK sites remain competitive, thus increasing job security, while at the same time making a significant contribution to improved environmental protection by optimizing the use of resources.

Since 2006, we have been using the Greenhouse Gas (GHG) Protocol method to report our greenhouse gas emissions on a portfolio-adjusted basis. That means that we apply the situation of the year under review to the previous years i.e. we add the emissions of the acquisitions to the previous years and subtract the emissions of the divestments

Total greenhouse gas emissions (sum of direct and indirect emissions*)

	2004	2005	2006	2007
Greenhouse gas emissions (in million metric tons)	7,42	7,40	7,52**	7,60

* The indirect emissions for reporting years 2004, 2005 and 2006 were calculated for the first time in 2007. For the previous period, emissions could only be estimated and not calculated accurately because the impact on this figure of the LANXESS spin-off is not precisely calculable due to the nature of the data available. Portfolio- adjusted in accordance with the GHG Protocol.
** The sum of the partial amounts of direct and indirect greenhouse gas emissions does not add up to 100 percent owing to rounding-up effects.

Direct greenhouse gas emissions include those from power stations and from waste incineration and production plants. Among these are emissions resulting from the generation of energy that we supplied to third parties (especially LANXESS). Compared with the previous year, direct emissions (expressed as CO₂ equivalents) increased by approximately one percent. The direct greenhouse gas emissions of 3.89 million metric tons CO₂ equivalents in 2007 breaks down as follows: 97.9 percent co2, 1.7 percent nitrous oxide (N₂O) and 0.4 percent partially fluorinated hydrocarbons (HFCS)

* portfolio-adjusted in accordance with the GHG Protocol

Indirect emissions result from purchases and sales of electricity and steam (excluding steam from waste heat) from the individual Bayer production sites. Greenhouse gas emissions associated with the generation of electricity and steam result in the vast majority of cases from the burning of fossil fuels such as coal, oil and gas. Typically, CO₂ accounts for over 99 percent of the total greenhouse gas emissions measured in CO₂ equivalents from these combustion processes. Therefore, when calculating indirect emissions, we focused solely on CO₂ emissions. In the reporting year, indirect emissions increased by approximately one percent over the previous year.

Although reporting of other indirect greenhouse gas emissions is optional according to the GHG Protocol (Scope 3 emissions – emissions resulting from the company’s activities at sites belonging to third parties) owing to the huge amount of effort required in compiling the data, we are preparing to report them in the future. A “climate footprint” is being compiled as part of our Climate Program, which also includes upstream greenhouse gas emissions.

* portfolio-adjusted in accordance with the GHG Protocol

These and many other measures to increase efficiency during the reporting period have resulted in the absolute level of greenhouse gas emissions (converted into CO₂ equivalents) increasing by only one percent compared with 2006, despite a significant increase in production volumes (+ five percent).

Emissions trading

Since Bayer operates its own power stations for power generation, the Group was involved in European emissions trading with 11 of its plants in 2007. Emissions of 2.5 million metric tons of CO₂ were balanced by emissions allowances for 2.6 million metric tons.

In the United States, the Bayer Corporation is a voluntary participant in emissions trading on the Chicago Climate Exchange (CCX) with some of its power stations and undertook to reduce its greenhouse gas emissions by a total of six percent in the period from 2003 to 2010, with 2000 as the base year.

Emissions of ozone-depleting substances

We have undertaken to monitor the use of substances that have a damaging impact on the Earth’s ozone layer. The ozone depletion potential of our emissions is presented as a relative quantity in terms of the guide substance trichlorofluoromethane (CFC-11) as the sum of CFC-11 equivalents. In the last few years, we have been able to achieve significant reductions in ozone-depleting substance emissions. Between 2004 and 2006 this reduction was primarily attributable to the sites at New Martinsville, United States and Vapi, India. However, in 2007, our emissions of ozone-depleting substances rose again by about 12 percent compared with the previous year owing to a significant increase in the production of crop protection products at the Bayer CropScience site in Vapi, India.

Emissions of volatile organic compounds

Our goal is to continue to further reduce emissions of volatile organic compounds (Our goal is to continue to further reduce emissions of volatile organic compounds (VOCS). VOCS are organic chemicals that contribute to the formation of smog or ozone. Thanks to targeted reduction programs, we have made good progress in reducing these emissions. Of particular note were measures to improve the recovery of solvents and reduce losses during warehousing and loading. In 2007, VOC emissions throughout the Group remained at almost the same level as in the previous year. The slight increase is attributable to the commencement of operations at a new plant and the increase in production volume at the Vapi site in India.

Other air emissions

Other important emissions include carbon monoxide, nitrogen oxides, sulfur oxides and particulate matter from production and incineration processes. Among the factors that contributed to a reduction in carbon monoxide emissions was the modernization of the central waste air incineration plant at the Dormagen site in Germany in October 2007. At the Leverkusen site in Germany, we renewed the filters used to remove particulate matter from the waste air, thus reducing particulate emissions in this location by approximately 50 percent.

Other important air emissions (in 1,000 metric tons per year)

	2003	2004	2005	2006	2007
CO	-	1,9	1,7	2,2	2,0
NOx	6,7	4,3	4,3	4,0	4,0
SOx	5,9	4,2	4,5	3,8	3,6
Particulates	0,9	0,5	0,3	0,2	0,2

Wastewater management

Wastewater includes production wastewater, water from waste air treatment plants, contaminated cooling water, sanitary wastewater and rainwater that has come into contact with chemicals or combustible materials. Wastewater does not include non-contaminated wastewater such as through-flow cooling water. The total amount of wastewater discharged during the reporting period was 218,500 cubic meters (m³) per day, which amounts to 79.8 million m³ per year. This represents an increase of almost eight percent over the previous year. Of the total amount of wastewater generated, 71 percent was purified in a wastewater treatment plant, while 29 percent was discharged untreated into surface water due to the low level of contamination.

Emissions into wastewater

	2003	2004	2005	2006	2007
Phosphorus (in 1,000 metric tons per year)	0,58	0,76	0,74	0,81	0,99
Nitrogen (in 1,000 metric tons per year)	3,44	0,89	0,58	0,73	0,68
Total organic carbon (TOC), (in 1,000 metric tons per year)	6,40	2,20	1,49	1,49	1,77
Heavy metals (in metric tons per year)	29,4	28,2	11,6	8,0	8,9
Inorganic salts (in 1,000 metric tons per year)	1.598	–	797	843	825

The reasons for the recent rise in phosphorus emissions (by around 22 percent) include an increase in production and the growth of production processes involving the use of phosphorus compounds. The fact that nitrogen emissions (nitrates and ammonium nitrogen) fell by approximately seven percent compared to the previous year is due to reduced discharges from the Bürrig Waste Management Center at the Leverkusen site in Germany. The first phase of the cascade aerator, which commenced operation in the fall of 2007, will further improve the removal of nitrogen from the water.

Emissions of organic compounds into wastewater (total organic carbon, toc) increased in the reporting period by approximately 19 percent compared with the previous year. The increased emissions are among other factors attributable to the temporary suboptimal operation of the wastewater treatment plant at a Bayer CropScience site in the United States, as well as to an increase in Bayer CropScience production in Germany.

There was also an increase in the total amount of heavy metals released into the environment during the reporting period. This was above all due to the fact that we were demolishing obsolete production plants and therefore does not represent any general trend. As a result of water being used to damp down dust during the demolition work, an increased quantity of heavy metals was fed into our wastewater disposal facilities. In contrast, emissions of inorganic salts fell slightly during 2007.

Waste generation

The total amount of waste generated increased significantly in 2007 due to the increase in construction and demolition work at Bayer sites, which resulted in increased amounts of construction waste such as rubble and excavated material. Production waste accounted for a far smaller proportion of the increase in waste.

In general, we are constantly striving to reduce the amount of waste we generate. Bayer CropScience continually reviews its primary and shipping packaging in terms of reduction potential. In 2007, for example, the weight of the 5-liter HDPE (high-density polyethylene) bottles used was reduced by 10 percent. Solutions are implemented in stages worldwide, as is evidenced by the introduction in 2007 in Guatemala and partly in Brazil of the 10 percent weight-reduced 1-liter bottle that had already been in use in Germany earlier.

The volume of hazardous waste generated grew slightly over the previous year. The construction of a new facility in Knapsack, Germany, led to a larger amount of hazardous rubble being produced. The volume of such waste at the Lower Rhine sites fell, however, owing to reduced demolition work.

* non-hazardous waste defined according to local laws

The rise in the quantity of hazardous waste generated by production since 2004 can be attributed to the increase in sales volumes of 16 percent and a change in the product mix.

Erzeugung gefährlichen Abfalls in der Produktion

Waste management

The amount of waste disposed of increased significantly during the reporting period in parallel with the amount of waste generated. The increase in construction waste is a plausible explanation for the rise in the volume of waste landfilled: Landfilling is often the only option for construction waste because of its high mineral content.

We make our know-how in the area of waste management available to external partners. For example, the German Agency for Technical Cooperation (GTZ) contracted CURRENTA to dispose of approximately 100 metric tons of the pesticide DDT and DDT-contaminated construction materials from Tanzania. The contaminated material is being transported to Germany by sea and incinerated in an environmentally friendly manner in the hazardous waste incinerator at the Dormagen CHEMPARK.

Waste disposed of according to means of disposal*

	2005	2006	2007
Total amount of waste disposed of (in 1,000 metric tons per year)	848	654	931
Removed to landfill (in %)	52	44	48
Incineration (in %)	28	32	26
Recycling (in %)	18	22	23
Waste that cannot be definitively categorized according to one of the above disposal methods (in %)	1	3	3
Landfilling of hazardous waste (in 1,000 metric tons per year)	211	134	101

* only waste generated by Bayer

The significant drop seen again in the amount of hazardous waste removed to landfills in the reporting period (down almost 25 percent compared with the previous year) is primarily due to the fact that while the total amount of rubble generated increased, a much lower proportion of it was classed as hazardous.

Reportable environmental incidents and transport accidents

Every single accident is one accident too many. However, despite our comprehensive safety precautions, not all incidents can be prevented. After increasing in the previous year, the number of reportable environmental incidents nonetheless fell back to the 2005 level. During the past year, there were three environmental incidents in the Group which were subject to Group mandatory reporting requirements.

In Dubai (United Arab Emirates), a warehouse containing approximately 100 metric tons of Bayer MaterialScience (bms) products burned down completely. The warehouse had been rented by bms and was operated by an external contractor. The products destroyed in the fire included polymers and polymer precursors for the production of paints, adhesives and coatings.
During a shipment to the port of Kiel in Germany, 200 liters of toluene diisocyanate leaked from an unsealed tank. The product was cleaned up under controlled conditions.
During shipment from Los Angeles to the Bayer CropScience site in Kansas City, United States, there was a leakage of 17 metric tons of 2-chlorobenzyl chloride. Several residents adjacent to the rail line were evacuated as a precaution. The rail company assumed responsibility for clean-up work along the rail line.

We recorded 10 transport accidents during the reporting period. These include accidents occurring during the distribution of our raw materials, intermediates and products, insofar as the shipment was ordered by us. In 2007, two drivers were killed, while another suffered injuries. Nine of the accidents involved truck shipments, while one involved a rail shipment. Only the incident involving a rail shipment to Kansas City resulted in substances being released into the environment.

Bayer analyses accidents and incidents carefully and takes appropriate steps wherever possible to prevent these types of incidents in the future.

Reportable environmental incidents (number per year)