IMF makes radical climate change proposal

With politicians around the world carefully avoiding the subject of climate change, financial institutions have become some of the most inventive thinkers about the most pressing subject facing humanity today.

Just a couple of days ago, the IMF released a report claiming that fossil fuels are “mis-priced” by $1.9 trillion. “Mis-priced” in this case means “subsidized” to the tune of $1.9 trillion. However, this analysis will prove controversial because $1.4 trillion of the “subsidies” result from a failure to levy taxes for the environmental damage done by burning fossil fuels. The report estimates the value of that damage to be $25/ton of carbon dioxide produced. As can be expected, the most profligate energy producers and users are the ones who are most deeply “subsidizing” fossil-based energy production. Levying appropriate taxes, according to IMF, would cut world production of GHGs by 13%.

Close to another half a trillion dollars in subsidies comes directly from governments to consumers, to cut the cost of fuels and power. The MENA nations in particular have a history of this sort of subsidy. Another 2% could be cut from GHG emissions by removing these subsidies, according to IMF, but most probably only through wrenching change for those countries’ poorest citizens.

I believe that the IMF is correct that correct pricing of the full impact of using fossil fuels is the best way to reduce GHGs fast. However, and regrettably, an international consensus on carbon pricing is a long way in the future.

Put more simply, politicians will not lead on this issue, and institutions like the IMF can act only as think-tanks. Populations become ever more detached from the problems they will face, and the focus shifts from mitigation of climate change effects to finding ways to live with them. What a shame.


Is “chemical” still the right word?

The public has a mixed relationship with the word “chemical”. On the one hand, it means solutions to the planets pressing problems. On the other, it implies an industry with a checkered past and a reputation (sometimes undeserved, but not always) for pollution and scant regard for communities.

Talk to any sustainability executive in the chemical industry and you will hear that the ultimate aim of companies that are invested in the sustainability movement is to be innovators of materials and solutions. While their company logos may reference chemicals, the description of their futures hardly mentions it.

(The word “material” is not an easy one either. A former colleague, Dr. Bob Davenport of SRI Consulting, memorably described materials as chemicals put to use — the stage beyond being a chemical is a material.)

Perhaps the day is not too far off when chemical companies start to rebrand themselves as sustainable solutions providers. Dow’s Andrew Liveris certainly seems to think so. Receiving an award recently, he mused on the word:  “ . . . Chemical—the adjective—is no longer, in my view, big or broad enough to describe the industry we love, the work we do, or the future we seek to build.” I think that Liveris is right in this view (read more about his speech in an excellent analysis by ChemWeek’s Rob Westervelt at The chemical industry is in a state of transition from commodity and specialty producer to solutions provider. It is part of the march towards a sustainable future.


Middle East on the move

Over the past 30 years of so, the companies of the GCC have proved time and again that they can strategize to produce cost-effective products that the world needs and wants. The record has been impressive, with companies like SABIC growing from nowhere to being one of the top five forces in petrochemicals.

Now this same resolute analysis of the GCC companies is being turned towards the sustainability agenda. It is only a couple of years ago that the GPCA joined the Responsible Care Charter, but if you visit the region now you can feel a palpable desire to build sustainability concepts into individual company business plans.

I was privileged to moderate a discussion on sustainability at the GPCA’s Annual Meeting last month. What struck me was the very real-world approach to sustainability and the role that chemistry and chemicals should play. There is no magical thinking. There is no “green-washing”. There is a scientific approach to the subject and a realization that the chemical industry exists to innovate to solve sustainability challenges. Most importantly, CEOs are standing behind the drive to a more sustainable future.

Cementing this feet-on-the-ground approach, the GPCA will be holding its first Sustainability Summit this December 16-18. I am honored to have a role in program development for this key meeting. Please block out the dates on your calendar and plan to be there. I’ll publish updates from time to time in this column.

Forget fracking concerns, water is taking center stage at last

I recently attended a meeting with a significant number of Texan chemical industry plant managers. I was very struck by how fast water availability is climbing up their agendas.

Until now, much of the worry of industrialists in the USA has concerned whether the full potential of hydraulic fracturing to produce shale gas, shale oil and NGLs, would be exploited. Right now, I see no reason to doubt, pace New York and its moratorium, that fracking is here to stay. Many of my preoccupations persist. Give Americans a low cost source of fuel and the tendency to waste it will only grow. But the advent of cheap gas will help the power industry reduce its carbon footprint significantly compared with burning coal. And if the endgame is still a heftier proportion of renewables and nuclear, the USA’s embrace of fracking could be very beneficial for the planet.

It is also clear that the prospect of cheap energy is beginning to attract downstream manufacturing investments of all kinds into the USA. It is here that water availability could prove the rate limiting step for many new plants. The drought in the southern USA has made the topic of water availability much more visible to industry and to the public. Serious questions are rising to the fore:

– Whose water is it anyway? Both industry and communities lay urgent claim to water. There are different levels of claim on water resources. Who should have what fair share will become a key question in the years ahead if the effects of global warming grow and more extreme weather patterns result.

– How much water does a process actually consume? Water footprinting is still in its infancy in the USA. Efforts to reduce and recycle are often gleams in the eyes of plant managers. Understanding how much water is used and where it flows has never been more urgent.

– Will the new planned plants get the water permits they need? It will likely not be energy availability, but water that moves to the top of the agenda as local, state, and federal authorities decide on who gets what.

The whole topic of water will become one that obsesses us in the future. If you want a good overview of the issues and how to tackle them, a paper presented at our Global Chemical Industry Sustainability Summit by Patrick Bael of DSM can provide a good guide to the issues. Please contact me at to request a copy — a handling charge will apply.





“What gets measured, gets managed.” Let’s hope so . . .

10 chemical companies and the WBCSD have released guidelines for accounting and reporting of GHGs, This is a great step forward — AkzoNobel, Solvay, BASF, DSM, DuPont, Evonik, Mitsubishi Chemical Company, Sabic, Dow, and Umicore deserve great credit.

A common language to be used in assessing a chemical company’s GHG footprint is a very valuable thing. Until now, several big companies had appeared to have different standards for measuring the same thing. And communicating with the public has been even more confusing, since the industry has been anxious to show not only its own GHG profile reduction, but the effect on total world GHGs of not having a vibrant chemical industry. With a concerted effort, the industry will now be able to tell a single, concerted story to the world about the industry.

Interestingly, the single standard will enable companies to compete on sustainability performance for this aspect of their business, which is a major step in boosting the whole sustainability agenda in the chemical sector. Even better, the consumer will slowly but surely be able to see the transparent standard emerging for how the industry measures its GHG performance, without getting confused about where GHG savings are being made.

The efficacy of this sort of collaborative work cannot be underestimated. Kudos to the noble 10 chemical companies who devoted the time and effort to make this possible.


Feedback on ECOgrade degradable plastic bags

Many thanks to Ed Weisberg, Senior VP of Marketing and Business Development with GXT Green. I featured some information on their ECOgrade plastic bags last September, Since then, GXT continues to make great progress, including winning approval for the new bags in the Indian market. Ed writes:

“I recently read your blog entry of Sept 17th regarding GXT Green’s ECOgrade bag as an alternative to paper or plastic.  We appreciate the recognition of our solution, and your observations.   

You raise some questions about our claims being verified. I would like to point you to the page on our site which contains third party certifications and testing, I trust that this will provide you with the details that you are looking for.   

In your article, you note that natural resources are still being claimed for a disposable product. I want to clarify that it is true that our bags will use some amount of natural resources (albeit less than plastic or paper) if they are disposed of or littered.  However, ECOgrade bags can be recycled with other plastics, without damaging the recycle chain, which would minimize natural resource use. Furthermore, they use less energy, less oil-based HDPE, and less energy to manufacture. Therefore, even if disposed, they have a much smaller environmental impact than paper or plastic. The same is true when compared to  reusables unless those bags are used an average of 200 times (not considering energy used to wash them and keep them bacteria free).  

You refer to the bag ban in Delhi as an example of bag bans that are being instituted internationally. We are proud that ECOgrade photodegradable bags have been adopted in India as an alternative to the single use carryout plastic bag.  This is based on extensive third party certification in India, and confirmation that our bags address the environmental challenges. We are currently ramping up our manufacturing plants there to support the needs of that country. By manufacturing locally, we also are able to preserve thousands of jobs in India that would have been eliminated if single use carry-out bags were banned without consideration of our alternative to plastic.”


Sustainability expressed in the language of business

One of the great problems of getting business to take the sustainability movement seriously is that the language that sustainability professionals use is not the language of business. Often, it sounds like the language of philanthropy, calling on business to do good, and to invest in ideas that are not always rooted in science or profit, but more in sociology. Business leaders meanwhile are committed by their number one duty: to maximize profits for shareholders. Now, however, the language of sustainability and the language of business are starting to converge.

The key word in the new vocabulary is “risk”. That one word covers a multitude of ideas, but it is a great way of thinking about sustainability.

Talk to many chemical executives and you will find that they do not believe in man-made global warming. Starting a discussion about greenhouse gases from this angle will often take you nowhere. But start the discussion from the point of view of the vulnerability of coastal plants to flooding and freakish weather conditions, and you are immediately in the territory of managing business risk, which is a natural vocabulary for the commercial community. And that natural vocabulary takes you to the same outcomes that the sustainability community wants — limiting use of resources, protecting communities, acting to prevent hazards of all kinds.

A short interview on this subject with Tom Burke, Environmental Policy Advisor to Rio Tinto, published by The Ethical Corp., makes stimulating reading. Note that Burke expects to see climate change as a growing issue, not just because of renewed political interest in the subject, but also because businesses will start to manage the risks associated with the threat. Note also the growing interest in tomorrow’s big challenge — water management.

Read the interview here:

More companies need “zero” goals

It is interesting to see such a forthright declaration of an intention to reach zero emissions and zero harm as the one that DuPont’s Building and Construction business has released — This is exactly the sort of goal that sustainability maven, John Elkington, has been encouraging through his new book, Zeronauts.

Is this sort of zero goal attainable for other chemical end-use sectors? This is a good topic to explore in the coming weeks. Maybe zero is a more attainable goal that many of us have supposed.

Obama surprises with climate commitment

After a general election campaign in which environmental issues received almost no attention, it was heartening, but very surprising, to hear President Barack Obama give such prominence to fighting climate change in his 2nd Inaugural Address. He commented:

“We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.

Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms.

The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries – we must claim its promise.

That is how we will maintain our economic vitality and our national treasure – our forests and waterways; our croplands and snowcapped peaks.”

For those of us who believe in the imminent threat of human-made global warming — and I suspect we are a minority in the chemical industry — this is a heartening statement. But can this broad, but determined, goal become a reality?

Obama may have the wind at his back. As long as the price of natural gas stays low, the shift to this fuel to power reviving US industrial production will bring with it big cuts in CO2 emissions compared with burning coal or oil. The reductions could be up to 50% according to some estimates. And the share of coal and oil fuels in the US mix has started to fall already.

But great care will have to be taken to ensure that the gains are preserved — starting with careful regulation of fracking to capture any escaping methane, which is itself a more powerful greenhouse gas than carbon dioxide.

While the shift to burning gas will bend the curve of CO2 emissions, consolidating those gains would probably require a new coalition in the legislature which I think is unlikely to emerge. Truly to reform the US’ relation to GHG producing materials would almost certainly require disadvantaging them by levying taxes on them. But once you start down that road, you hit a lot of obstacles. First you have to get the legislation written and passed. But what do you do then to influence other countries so that your own progressive thinking does not disadvantage your own industrialists? A future of import tariffs on others’ carbon production is just not feasible.

Overall, I think that Obama will have some success in elevating the discussion of GHGs and will fire up the public to want to bend the GHG curve in the USA. But four years is not enough to take the type of global action that true change will require, even given the power and influence of the USA.

Let’s hope that the next president is also as determined as Obama seems to be, and that the public’s attention on this subject proves sustained.


Klean Industries – Dow collaboration shows promise for many reasons

We noted in previous columns that, according to McKinsey research, consumers equate “recyclability” with “green”. They know that recycling must be a good thing. But when it comes to understanding what recycling encompasses, and the different options available, consumers are generally not informed.

So the new collaboration between Canada’s Klean Industries and Dow ( may prove to be especially important. It could both benefit society by keeping plastics out of landfills, and educate the public about how plastics can be reused for energy purposes. Klean has technology that makes energy recovery from plastics very attractive and has proved its technology at a plastics-to-oil recycling plant in Japan. The plant uses PET, PVC and the more common PE and PP.

It is good to see a chemical industry major being involved with this technology which offers great prospects to a difficult recycling problem. But what is also needed is more education of the public of how plastics and energy form part of the same chain. With that education in place, I believe that plastics recycling can become a much better understood and prized activity worldwide.