Plastics in the ocean: time to act boldly

Plastics ending their lives in the ocean is a subject that is getting more and more attention from all kinds of stakeholders in the chemical industry. It’s time to get out in front of this issue, rather than wait for the outcry over plastics stewardship to overwhelm one of the world’s vital industries. In this regard, there are some very positive signs from the industry, NGOs and true sustainability startups:

– The World Plastics Council is one of the few industry bodies able to develop both commitment and simple messages to stakeholders around the world. The group’s central theme of “No plastics to landfill, no plastics to water” is easy to understand and easy to sign up to. The keep element now will be to see how the commitment is translated into actions across the globe. The WPC is meeting in Dubai this week, and will be reviewing solid progress towards its aims;

– Among individual companies, Dow, Nature Works, Procter & Gamble, Nestle Waters, and Coca-Cola, stand out by joining the Nature Conservancy’s Trash Free Seas Alliance. It takes courage to associate yourself with such a venture, which tries to recover plastic from the seas and stop plastics from ever reaching the seas, when many of the stakeholders you will be talking to consider you to be the problem. It is very encouraging to see companies engage in open conversation to solve a problem, rather than hunkering down into denial that the problem exists.

But it may be that outsider startups with totally different perspectives from today’s major commercial companies, who end up having a profound effect on the aim to keep plastics out of the world’s waters. One celebrated example is a Canadian company, called Plastic Bank, which was recently shortlisted for a Sustainia Award. Put simply, Plastic Bank turns apparently worthless, discarded plastic into a currency that can be used by the world’s poor to help build wealth while tackling a major environmental issue. It is a perfect 3P approach to a growing problem. As David Katz of Plastic Bank put it:

“I’ve figured out our new business. It’s called The Plastic Bank. We make plastic waste a currency to help the world’s most disadvantaged people. I’ve come to realize that the problem with plastic waste is that people see it as waste. But if we can reveal the value in plastic, we can make it too valuable to throw away. If we can reveal value in people, we can unleash the potential of the world’s most disadvantaged and give them a platform to improve their lives. That’s my vision. It’s a triple bottom line social enterprise. We reveal value in plastic and it will have a domino effect on the world.”

There is clearly a message for chemical companies here. Can you invent a triple bottom line social enterprise like this one, or will industry efforts be limited by current models and thinking? The further the sustainable agenda develops, the more apparent it is that current business models alone are not up to the task of solving the world’s major challenges.

What, exactly, are you exporting?

I found that this video from the BBC — http://www.bbc.co.uk/news/magazine-26124988 — has resonance for the global chemical industry.

The interviewer investigates the fact that, during the most severe drought in California’s recorded history, farmers are using precious water to grow crops for export to China. Isn’t this the same as exporting California’s precious available water to a foreign country? What are the sustainability implications of such trade?

I think that the answer lies in reflecting on the Profit, Planet, People paradigm that defines the quest for sustainability. It clearly makes sense for Californian farmers to grow alfalfa for China at a profit. But it makes less sense for the planet to engage in long-range transportation of low value goods, and it makes even less sense to the local community to neglect local needs in favor of global economic pressures. To paraphrase an English saying, “Sustainability begins at home”.

The implications of this story are huge. Should the Middle East be using scarce water in chemical processes to serve China’s insatiable demand for commodity plastics. Are not plant relocations in the chemical industry in part just a way of exporting carbon emissions away from carbon-conscious parts of the world to regions where the issue is not at the forefront of public discourse? Is there a case to be made for reducing the shipping of chemicals, especially commodities, from one region to another, when all aspects of production are taken into account?

This story illustrates very clearly that all three of the pillars of sustainability have to be assessed to reach a truly sustainable decision. The dominant force in this story is the profit pillar. Counterbalance that pillar with the other two, and you might well reach a different decision about your next business move.

Europe struggles with renewable energy target

Reports that Jose-Manuel Barroso, the President of the European Commission, is considering withdrawing support for an extension of the EU’s renewable energy target beyond 2020 have caused a lot of discussion in Europe and beyond.

You can read an excellent and detailed commentary on the matter at http://www.carbonbrief.org/blog/2014/01/european-commission-president-could-sacrifice-renewable-energy-target-for-personal-legacy/. The whole issue shows just how complex it can be to craft a renewable target that works with your overall GHG emission reduction targets.

The struggle in this case is between the UK’s desire to investigate nuclear power to reduce its GHG emissions, and the European Union’s targets for renewable energy production as a part of an emission reduction strategy. The current legal framework allows countries with a large commitment to renewables, like Germany, to subsidize renewable energy generation heavily, since it meets an overall EU objective. The UK, meanwhile, which desperately needs to rebuild its nuclear power stations, is not allowed to favor nuclear power over renewables, because of the EU target. Barroso appears to favor abandoning the renewable energy target and to concentrate on the EU’s two other objectives: to reduce overall emissions, and to improve energy efficiency.

No doubt the EU, as usual, will cobble together a compromise solution to the conundrum. But there is a real issue here: is it really possible to put the brakes on GHG emissions without expanding the share of nuclear power in the generating mix? If you took all of the research that is going into wind and solar and dedicated it to making nuclear power safer, would you get a faster reduction in emissions? The answer is probably “yes”, but at the same time, private funding an expansion of nuclear power is probably a non-starter in many countries after the Fukushima incident, and antipathy to nuclear power is only growing in key areas, like Germany and Central Europe. Even in the USA, we are witnessing something of a dis-investment in nuclear power as companies put their faith in shale gas.

Perhaps the introduction of the “small modular reactor” or SMR in the USA, will provide a rethinking of nuclear policy and nuclear power implementation. SMRs are prefabricated nuclear reactors with about one third the generating capacity of today’s mega units. The advantages are that they can be fabricated and shipped to a site relatively quickly with much lower capital and construction costs, and the power produced can more easily be integrated into the existing grid. You can learn more about SMRs at the upcoming Electric Power Expo in New Orleans, from 1 to 3 April this year (see the conference program at http://www.electricpowerexpo.com/conference-grid/?track=a0HC000000SL0SxMAL#sessiona0FC000000jMK24MAG.

Meanwhile, the EU is demonstrating, whether it wishes to do so or not, that concentrating on one single approach to emissions reduction can ultimately prove counter-productive and expensive. Let’s see if the renewable energy target is finally extended. My guess is that it will not be.

 

 

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Regulation or Responsible Care?

A recent chemical spill — of a compound used to clean coal, leaking from an old, rusty tank located near the Elk River in West Virginia state in the USA — has set off a debate here about regulation and the chemical industry.

The spill contaminated the water supply for 300,000 people in this state, in which the inhabitants are famous for their pioneer spirit, independence, and opposition to “big government” http://www.nytimes.com/2014/01/19/us/chemical-spill-muddies-picture-in-a-state-wary-of-regulations.html?src=me&_r=0.

There is a strong feeling among many Americans that there is already too much regulation of industry in general, and of the chemical and energy industries in particular, and that this is a brake on business development and economic growth. Many Americans don’t want the government to be able to tell you what you can and cannot make or what risks you can take to make it.

At the same time, even the most fervent free-market pioneer can feel outraged by the lack of stewardship that allows this kind of accident to happen to the detriment of fellow citizens. The chemical industry should be outraged by the effect of this lapse on the reputation of the industry generally.

Right now, you will hear the chemical industry being tongue-lashed in blogs and in the traditional press for its lack of responsibility. Yet, this is one of the few industries globally with a code to help it avoid such problems. It is the program of continuous improvement in environment, health and safety called the Responsible Care Charter.

Responsible Care was a visionary program that began 25 years ago and which has had a dramatic effect in improving process safety, product stewardship and communication with local communities. It has been embraced by chemical companies large and small as a mechanism for improving their EH&S performance.

Unfortunately, the company that leaked the chemicals into the Elk River, the unlikely-named Freedom Industries, does not seem to be a signee to Responsible Care. It is currently seeking bankruptcy protection, rather than face up to better communication with the public and higher standards for its operations http://www.businessweek.com/articles/2014-01-19/freedom-industries-chapter-11-filing-reveals-owners-strategy.

Perhaps the Responsible Care commitment is sometimes seen as too expensive. But the effect of a failure, like that in West Virginia, has been to reopen the debate about chemical industry regulation.

How sweet it would be if the entire chemical industry got behind Responsible Care and meant it. Many of the debates about how to regulate the industry would wither away as chemical producers showed true responsibility for their actions. 

Yet history tells us that industries rarely self-regulate effectively. You have only to look at the finance industry since 2000 to see that opportunism tends to win out over responsibility. What a shame it is for an industry that had the foresight to create Responsible Care, that incidents like the West Virginia spill are destined to see a tightening of regulation.

Water: Fair shares for all?

I live in the US Southwest, in the incredibly-beautiful desert state of New Mexico. Living here makes you intensely water conscious. In my city of Santa Fe, we watch anxiously to see if the surrounding mountains are receiving any snow cover in the winter. We watch even more anxiously to see if summer thunderstorms will create wild fires that threaten our homes and livelihoods. In the past few years, I am told by neighbors (I am a newcomer) that snow cover has been unusually light, and there have been some serious fires, both here and in surrounding states.

So it was particularly depressing to read a lengthy New York Times article on the Colorado River (http://www.nytimes.com/2014/01/06/us/colorado-river-drought-forces-a-painful-reckoning-for-states.html?hpw&rref=us), which is an important source of water for New Mexico. The article says that the flow of the river is declining, and within a couple of years, we may well see its available water being rationed. The perils confronting the Western US as a result of this decline in its only major river are exacerbated by a surge in population in some of the states in this region.

But the Western US is not alone in confronting a water shortage. Many other states are waking up to the threat of reduced water supply combined with a rise in population. Texas is one of them, and it is a hub of the oil and gas and petrochemical industry worldwide. To me, it is not clear that any concerted planning is occurring to confront the years of drought that might lay ahead.

Shale gas discoveries, and the low gas prices they have spawned, have made many in the US chemical processing sector, including petrochemical production, rather blasé about the need for energy conservation. If something is cheap, Americans generally will use it carelessly and in excess. The much heralded renaissance of the US petrochemical industry is founded on cheap energy, and, to some extent, and unfortunately, on commodity products (see my blog).

Water availability gets much less coverage, but I believe it could turn out to be a potent threat to that very same US petrochemical renaissance. Over the coming years, we may well see very cheap process economics where energy is concerned, with galloping inflation where water is concerned. Desalination may go some way to improving supply, but investment in this source of new water will probably wait on government policy and action, and will bring its own problems — largely related to the concentrates produced in the process.

The broader question, which is being tackled by a few brave chemical companies, is to determine the fair share of the available water that should be drawn off by the chemical industry. DSM, a signature to the UN CEO Water Mandate, has been considering this question longer than most. In a paper delivered at one of Chemical Industry Roundtables’ conferences, the company tackled this very issue (http://chemroundtables.com/wp-content/uploads/2012/08/DSM-@GCIS-2012.pdf). To make progress on this issue, you need to look at the available freshwater, your own water footprint, the number of months when your water footprint availability starts to exceed the available water running off from various sources. Then you have to set boundaries on your consumption. It is a complex calculation, but it is possible to do.

And it is important to do. In an era of drought, what should be industry’s call on water compared with ordinary citizens? Who should recycle and economize first? These difficult questions will rise to head the list of sustainability concerns in the years ahead in the all-important US chemical industry. But is the industry any where near to being able to answer them?

The never-ending war on GHGs

I was very struck by Brad Plummer’s blog at wapo.st/19SIJ1C (Washington Post), about the ability of the US to hit its greenhouse gas emission targets (cutting GHGs by 17% from 2005 levels) by 2020. It is well worth reading.

Plummer shows that hitting the targets is not out of the question, but that the engine of economic growth creates constant upward pressure on emissions.

My takeaway is that, at least in the USA, there is no evidence that a decoupling of industrial growth from GHG emissions is on the horizon. We have to hope that technology and innovation will produce the breakthroughs needed to make the decoupling a reality.

Stark message has broad implications

“Human beings consume more than the Earth can regenerate.” That stark nine-word sentence was delivered by BASF’s VP of Corporate Brand Management, Dr. Baerbel Arnold-Mauer, at the GPCA Sustainability Conference held in Dubai on 17-19 December, 2013. It has some far-reaching implications for the future of the chemical industry.

Even with all the attention that sustainability has garnered as a business proposition, the statement still has the ability to shock. For it is not a statement about a future state of the planet: it is a statement of present-day fact. Population growth is outstripping resources, whether those resources are fresh water, food, minerals, or energy. Yet, for the most part, discussions focus on the future, rather than the present, and industry often shows a startling lack of urgency in redefining its priorities for the challenges of the future, let alone the present. It is as if the world is trusting that some 11th hour solution to these major problems will become emerge, perhaps by wishful thinking.

Major chemical companies across the world are in the vanguard of rethinking the present and the future. They are redefining their strategies away from being suppliers of commodities towards being suppliers of solutions that help other industries become more sustainable. Dr. Arnold-Mauer’s BASF is truly at the forefront and has reworked its entire business plan for this new present and future.

But Dr. Arnold-Mauer’s comment raises a fundamental question in my mind: What will happen to today’s commodity chemicals and plastics businesses? The answer is not entirely obvious to me, even though there are some clear implications of her statement.

For example, a future chemical community that is focused on solving problems for other industries is unlikely to invent the non-recyclable, non-compostable, non-biodegradable plastic bag as an important product line. Increasingly valuable raw materials are unlikely to find their way into products that end-consumers treat as little more than fodder for landfills. At the same time, the chemical industry has billions of dollars of assets in the ground to provide those very commodities at the lowest possible cost, thus perpetuating the throw-away society.

The conclusion I have reached is that the age of indiscriminate consumption will lurch and sputter to an close in the next 10 to 20 years. More costly feedstock will combine with consumer pressure in the developed world to cause a radical departure from traditional consumption patterns. Chemicals and plastics that do not solve problems for the environment and society will slowly be phased out. Those that create problems of their own will be anathema. Recyclability or biodegradability will be designed-in attributes. A new agreement of the meaning of hazard and toxicity will help chemical industry solutions to pressing problems to gain acceptance.

To make this happen, however, there is a missing step. Currently-non-costed inputs and outputs of processes must be given values, using market mechanisms, so that companies have an imperative to shed their lowest-cost commodity mindsets and invest in the most sustainable solutions.

At the GPCA Sustainability Conference, it was suggested that chemical companies should conduct studies of their businesses as if a price existed for carbon emissions and other “externalities”, thereby getting a more comprehensive picture of their sustainability performance. As far as this author is concerned, that process needs to start now.

Factors in the future of sustainability. Will the future work?

Tomorrow afternoon, I shall be participating in a panel at the Ecochemex conference. It will probe the future of sustainability in the chemical industry. This has led me to ponder not so much what will happen, but what is really necessary to advance a real sustainability agenda.

I see four factors that are very necessary to the future. Do you agree with them and do you think that they will be achievable in a reasonable timeframe, say, 20 years:

– We have to start costing all inputs and outputs to our processes and products. We have to cost our GHG emissions, our water consumption . . . everything. Without costing inputs and outputs, our commitment to sustainability will be scattered and largely lip-service. Our chemical companies need to start doing e-P/Ls, and soon.

– We need a technological leap. Chemicals are the enabler of a greener future, but no matter how much your chemicals reduce the impact of other people’s products on the environment and your society, you need also to reduce your own environmental impact. Current available technology is not capable of reducing, say, greenhouse gas emissions from the chemical industry, if reasonable consumption growth rates are maintained. Technological breakthroughs, many of them potentially based on new catalysts, are urgently needed. The amount of turnover invested by the leading companies needs to rise.

– License to operate will depend more heavily on taking a fair share of fresh water for the chemical industry, and on better water stewardship than now. It has to: Humankind relies on water availability. Industry has to provide solutions in a hurry to its insatiable demands.

– Renewables have to play a bigger part in the future. And that means renewable energy and renewable chemicals. I think that we shall look back in 20 years and be shocked at the percentage of “renewable” sources in our energy and chemical mix. Relying for too much longer on renewables being a single-digit percentage of the future is a mistake.

Send me your views. What do you think are the must-haves of a sustainable future? what will sustainability be in 2033?

Coca-Cola makes responsible moves — on obesity and bottles

The chemical industry has sometimes exhibited righteous outrage at Coca-Cola’s demands for alternatives to PET bottles. Moving to a 30% plant-based bottle (i.e., Coke’s commitment to using a bottle made with renewables-based glycol by 2020) doesn’t make thermodynamic sense, it is said. Coke’s whole strategy is about winning market share, not about sustainability, they argue. After all, Coke has little business lecturing the chemical industry on bottle composition when it fills those bottles with sodas that have few nutritional benefits, and which have been linked to the rapid global rise in obesity rates.

But Coca-Cola’s commitment to sustainability took a new and very positive turn a couple of weeks ago, when the company launched its new global commitments to fight obesity. The four commitments apply to 200+ countries in which Coke operates. They are:

  • Offer low- or no-calorie beverage options in every market;
  • Provide transparent nutrition information, featuring calories on the front of all of our packages;
  • Help get people moving by supporting physical activity programs in every country where we do business;
  • Market responsibly, including no advertising to children under 12 anywhere in the world.

Are these commitments just window dressing or real sustainable thinking? They hardly sacrifice sales for the common good, and redirecting consumption to other less-sugary Coke drinks may actually be more profitable than the original product. Children under 12 hardly have a lot of buying power, so withdrawing advertising from them is not likely to hit the bottom line.

I think that Coke’s commitments are sincere and welcome. It needs to act on the obesity phenomenon in order to sustain its business for the future among healthy consumers, and much as a chemical company will innovate to meet a client’s sustainable-development needs, so Coke is doing the same thing with everyday foods and drinks.

Now about those bottles . . . yes, they raise Coke’s market share, but as a pillar of an overall sustainability strategy, they have some logic if the thermodynamics make sense. The chemical industry needs to have a seat at the table in determining what those bottles will look like and be composed of, rather than distracting attention from Coke’s efforts to deal with wide social issues like obesity. And the industry needs to take some credit for the development of sugar-alternative food additives that are making Coke a more sustainable company.

The consumer side of the equation will matter more and more

All too often, large industries, like chemicals, mining, metals, pulp and paper and electric power, see the world from a producer’s viewpoint. What matters to them is low cost production. It is safe to assume that the habits of six and a half billion consumers worldwide will stay roughly the same. Over the medium term demand trends will always be maintained. Or will they?

There are signs in both the power and the chemical markets that big industrial consumers are starting to harness technologies to disrupt the markets, in much the same way as they harnessed IT to disrupt office life just a couple of decades ago.

Take a look at the power markets. As part of their sustainability drives, big companies, like Wal-Mart, GM, Ford, Apple and Verizon, are building renewable generation capacity at their facilities. Each announcement might look small, but taken together they could cause a rethink of the old supply-demand models on which generation companies have relied for decades. Add in the effects of big military installations going off-grid in order to reduce costs and protect themselves against catastrophic failures in the system (e.g. hacking attacks), and the effect could become very significant.

The same is true of chemical industry players. It matters to the supply-demand equation if Coke and Pepsi change their bottle requirements from PET to a renewable feedstock-based product. It matters if consumers reject plastic bags at supermarkets.

I believe that the effects of these disruptions over the next five years will be greater than industry players are expecting. It is time to re-examine business models that have stood the test of time before they become less accurate as predictors of the future. The adjustment will be painful for many, but will lead to a more agile, more sustainable relationship between producers and consumers. It all starts with a focus on the consumer’s behavior as well as the production costs.