The Sustainability Value Chain
Opportunities in a circular economy
More than a passing trend, sustainability is an overall disruptive force creating new needs in the economy and the chemical industry has an opportunity to integrate itself along greener value chains. Take hydrogen, for example; chemical and energy companies can supply materials for electrolysis, run electrolysis plants, or provide hydrogen storage. The need for chemicals used in EVs, for membrane technologies used in water treatment, for lubricants that increase the lifespans of machinery leading to less waste, for materials used in smarter agriculture, for lighter building materials that improve energy use, among many other examples, are already being answered by the chemical industry.
At the next phase, green chemistry can also offer solutions to the problems it is partly responsible for, for instance by commercializing plastic recycling solutions or capturing and converting CO2 into syngas or benzene. Climate action is creating its own economic value chain and, as any economic contributor, it can lead to job creation and GDP growth. The Global Commission on the Economy and Climate projected that bold climate action can generate over 65 million new low-carbon jobs by 2030 globally. In Singapore, Minister Grace Fu expects that agri-tech and waste management could lead to 55,000 new jobs in the next 10 years.
For a sector closely associated with the oil industry, the chemical industry is making radical steps to redefine itself. British specialty chemicals player Croda already replaced its feedstocks with renewable raw materials in a proportion of 60% globally, and 65% in Singapore. In the next decade, it aims to bring these numbers to 75% globally. At its Delaware plant in the US, Croda produces 100% bio-based surfactants from bioethanol. With the technology to replace fossil fuels already in place, Croda looks at opportunities to broaden the scale of such operations to Singapore: “We are exploring different routes with partners in Singapore to bring this technology here - whether by licensing our technologies, investing directly, or finding captive users to make up for the great volumes such a plant would require,” said Babu Alagappan, managing director at Croda Singapore.
In a world exhausted by CO2, bio-renewables such as virgin wood, energy crops, agricultural residues, municipal solid waste, and industrial co-products, and waste become the next frontier feedstocks in chemical production. Even though these feedstocks still use materials from the natural world, they don’t lead to a net increase in CO2 levels because they take CO2 out of the atmosphere and return it when they are burnt. However, biomass renewable feedstocks beg their own sustainability questions, and sometimes controversies, too.
In 2019, the European Commission classified palm oil, which is a feedstock for bioenergy, as a “high risk” crop, factoring in the loss of biodiversity, indirect land-use change, and GHG. Based on the directive, the EU wants to phase out palm oil by 2030. This decision caused a backlash from palm-oil producing countries Indonesia and Malaysia, which together account for over 80% of the world’s palm oil production. The dispute was taken to WTO. Such issues make it imperative for chemical companies like Croda to take its palm oil derivatives from certified (RSPO) sources.
Roger Marchioni, Asia director for chemicals and polymers at petrochemicals company Braskem, believes that the material composition of the raw material alone does not make it green. As a leader of bio-polyethylene (PE), Braskem uses sugar cane as a feedstock, converting the plant into ethanol and then plastics: “Not any source of ethanol can contribute to a circular economy. Braskem’s Brazilian sugar cane does not compete for land with other crops because it is grown in typically inauspicious fields. Also, the farming is mechanized so that labor conditions are also very controlled. Then, to close the loop on circularity, the second challenge is to recycle the product,” he explained.
Companies like SUEZ have long understood that sustainability and resource management involves more than getting rid of waste; they aim at becoming a leading environmental company by finding economic value in waste. Through innovative projects like waste-to-energy plants, SUEZ transforms Hong Kong’s food waste into electricity fed into the city’s power grid. In 2020, the French multinational inaugurated the first plastics recycling plant in Thailand, a circular polymer plant with a capacity to transform 30,000 tons of plastics packaging waste into post-consumer recycled plastics (PCR) per year.
Growing urban waste, by some argued to increase by 70% by 2050, demands that waste is brought back into the economy. For Neste, waste, and residues make up to 80% of renewable raw material inputs and the company is investing to make that 100% by 2025. Looking to grasp a bigger share of waste and residue streams, Neste acquired Dutch animal fat trader Demeter, as well as Mahoney Environmental (a US-based collector of used cooking oil). Neste is also looking to expand the range of its raw materials to agricultural and forestry residues, as well as municipal solid waste, and is working on the technologies to process these.
Known as the world leader in biodiesels, Neste is forging a presence in the world of renewable polymers and chemicals, having already produced the world’s first industrial-scale volumes of bio-based polypropylene (PP) and polyethylene (PE) from liquified waste plastic: “Chemical recycling will complement conventional mechanical recycling of plastic and enable upcycling of those plastic waste streams that cannot currently be recycled, such as colored, multilayer and multi-material plastic packaging,” said Kenneth Lim, general manager and site director at Neste Singapore.
“Recycled or renewable plastics are by default more expensive than virgin plastics, with greater energy use, more time and resources spent on collection, segregation and processing. I believe the market will eventually come to a price equilibrium between virgin and recycled plastics, but we are still in the early stages in this journey.”
Wim Roels, CEO, Borouge
Making room for green plastics
Chemical recycling (pyrolysis) and mechanical recycling technologies create a new range of green plastics that, rather than using bio-based feedstocks, are based on re-polymerized virgin plastics. Besides the technologies for processing plastics, recycling needs to happen at different points in the value chain, from waste collection to the consumer. For instance, Borouge collaborates with local farmers and recyclers in India to make sure its agri-films are collected after the harvest season.
On the regulatory front, more than 60 countries introduced bans or levies in the last five years to restrict single-use plastics. “The world is becoming more aware of the implications of not doing enough regarding climate change and resource management,” said Steve Clark, CEO of SUEZ Asia.
As part of its green agenda, China made a U-turn on its waste policy: formerly processing a big part of the world’s recyclable waste, China has now banned imports of most waste plastics. More countries will follow; for instance, Thailand wants to eliminate all plastics waste by 2030.
Sobers Sethi, senior vice president, Nouryon Emerging Markets and China, observed greater reception for green products in the last 12 months on the consumer side, even in emerging markets: “What we notice at a general level is that the young, well-educated populations in emerging markets are much more environmentally aware, so many of our customers in emerging markets are ready to try on sustainable solutions.”
More plastic producers commercialize green plastics, either recycled or made from renewables. Saudi Arabian multinational SABIC launched its Trucircle portfolio of renewable polyolefins made from recycled mixed plastic in Japan. Also in Japan, Borouge is marketing Borealis’ first renewable PP. Wanting to differentiate its sustainable food packaging products from others, MCAP (Mitsui Chemicals Asia Pacific) launched a new sustainable packaging website in 2021. The Japanese company also offers mono-materials 90% PE/ PP to make these products more recyclable.
However, green plastic solutions are a small part of producers’ portfolio, reflecting the niche demand of the market. Even if the market boomed, the availability of renewable feedstocks is insufficient for wide-scale production and current production processes are complex and expensive. Roger Marchioni, Asia director for chemicals and polymers at Braskem, thinks virgin and green plastics come with wildly distinct value propositions, which do not make them interchangeable: “Even when all three components - renewable resources, mechanical recycling and chemical recycling - are met successfully, green plastics will not 100% replace virgin plastics,” he said.
Image courtesy of CHUTTERSNAP on Unsplash and Neste