INSIGHT: EPCA ’21: fuel, feedstocks and funding top industry agenda

LONDON (ICIS–The chemical industry needs a lateral approach if it is to meet sustainability targets was a take-away message from this year’s European Petrochemical Association (EPCA) annual meeting.

The 55th annual conference ran from 5-7 October, once again held on a virtual platform in the wake of the pandemic, with the challenge of how to balance business as usual against the EU Commission’s Green Deal.

THE ENERGY TRANSITION
Securing a supply of affordable clean energy must be a part of the solution, according to industry consensus, but how this is done proves more of a challenge.

Covestro Chief Technology Officer (CTO) Klaus Schafer highlighted  that it would require more than Germany’s entire existing electricity consumption to power current levels of national chemical production for a year.

He advised that rather than relying on state guidance, Covestro has taken the initiative to confirm its own long-term purchase power agreements (PPAs) to ensure a green supply of electricity in a bid to cut emissions from production.

Prior to the pandemic, Covestro agreed to the world’s largest offshore energy supply deal with Danish supplier Orsted, for supply of up to 100 megawatts (MW), and has since signed two further deals to fuel production in Belgium and China.

The capacity to take action is echoed across the industry, with BASF CEO Martin Brudermuller advising that plans to power the German industrial bellwether’s primary site in Ludwigshafen in part are under way.

“I have now bought half a wind park. I did not ask for subsidies, and I did not ask for help, just space,” said Brudermuller, urging legislators to take care of the grids and ensure a supply of sustainable energy.

“I would not even tap into public funds but if you look at the number of parks it is not enough to decarbonise industry, so how can we get enough renewable energy to decarbonise our production?”

While a change in fuel source would reduce emissions, it would also be more costly, with Brudermuller arguing that electrifying steam crackers would cause production costs to increase by 20%.

“Who is buying that higher cost? We have to close the loop, stuff that is CO2-free has a higher cost, and goods will be more expensive, and so the consumer has to engage in new way of living. If we don’t close that loop it will not be an economic exercise, it will not work,” he said.

Brudermuller also stated that Europe needed to evaluate its position in relation to other global markets, and plan accordingly.

“We do need to go a little faster than the rest of the world….we have to talk about how fast is that pace, what are priorities, how and what do we need to be successful here,” he said.

BEYOND ENERGY AND FINANCING THE FUTURE
While finding enough of the right fuels is certainly pivotal to reducing emissions, Schafer argues that “this is only one side of the coin”.

As a producer of intermediate materials, such as polycarbonate (PC) and polyurethane (PU), legislation surrounding single-use plastic is less relevant to Covestro, but this has not deterred the company from thinking about circularity.

“Customers of Covestro produce mattresses, which last 15-20 years, or headlamps for cars which exist for the life of a car, around 15 years, insulation in construction, around 30-40 years depending on the building, and fridges which have a 15-year lifespan,” he said.

“We are working on getting these materials back, which have evolved over the decades…now design for recyclability is important for the future, and producers need to keep that in mind when designing these products.”

As well as discussions around chemical recycling, Covestro is involved in initiatives to recycle large PC water containers and projects to dissolve mattresses back to monomer and converting hydrochloric acid (HCL) into chlorine in China, as well as sourcing bio-based benzene and phenol.

This appetite to find solutions has been recognised by the Commission with vice president Frans Timmermans’ head of cabinet Diederik Samsom indicating that it is looking to significantly increase the amount available in the innovation fund.

“The innovation fund is a great instrument, and it would be great if we had more funding helping in the first stages when it is high risk, but even if you do…I take a decision on investments even if they are not economical, as I think they may be in the future,” said Brudermuller in response to this news.

It could be that a stronger framework for private investment bridges the gap between private industry and public funding, as previously overlooked heavy industry takes steps to decarbonise.

International Accounting Standards Board (IASB) Chairman Andreas Barckow said that installing a cohesive universal framework for green investing is in the pipeline as demand far outweighs supply, and that policy is not necessary to stimulate further demand.

“If you put money into something green, you get an incentive and there is an uptick in the market. That was proving to be a disservice to industries we want to see decarbonise. Money should go to those industries that need to transition, and the chemicals industry is a key example of that,” said Barckow.

“It will end up as a convention: if you cannot demonstrate that the energy is green, you will probably have to pay an uptick in pricing. There will be real economic effects, not theoretical consequences, but something companies will feel, so customers will also feel.”

Insight by Morgan Condon