New Business Models Perspectives for Chemical Industry Competitiveness Russel Mills

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New Business ModelsPerspectivesforChemical
Industry Competitiveness Russel Mills

• HLG Chemicals Innovation WG Brussels 1st
  October 2007

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Overview of Topics

• Priorities
• Integration (Product Market Site)
• Global perspectives
• transitioning to lower carbon (avoiding past
  mistakes)
• Deployment at scale
• Bio feedstock examples
• Ultra resource efficiency
• Market driven businesses
• Additional New Business Models

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1. Priorities
Same sustainability challenge Whether old or new
business model

• A balancing act People Profit Planet
• People
• Working out how Chemistry can best enable
  resolution of key societal issues
• Profit
• Focusing on areas where EU industry has long term
  competitive advantage
• Planet
• Linking above to critical global challenges

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SusChem visionary projects all embrace new models
these sustainability priorities
1. Priorities

• Focus on areas of significant societal impact
• Demonstrate extent to which SusChem can
  positively impacts major areas of society

F3 factory Faster and more flexible future
production
The smart energy home
Chemicals and energy from biological materials
and processes
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1. Priorities

• For a global industry
• maximise
• cooperation
• where
• Society cares
• Global impact
• Competitiveness
• issues manageable

• Mitigating climate change
• More efficient scarce resource use
• Promoting helpful performance standards
• Developing lower risk services
• etc.

Opportunities for triple win
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2. Integration product level
Feedstock Ethane, Propane Butane, Naphtha
Oil Gas
Steam
Power
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2. Integration market level
Petroleum
Minerals
Biomass
By-products waste streams
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2. Integration site level

• Maximise use of shared resources
• Minimise supply chain costs
• Reduce transportation of hazardous products
• Better use for by-products waste

The Value Park concept extends such thinking to
downstream customers innovation partners
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Example
2. Integration
Only ¼ of what goes in comes out as goods and
services can Chemistry in Europe do better?
(Source World Resource Institute)
Better or alternate uses of by-products such as
energy recovery from high calorific hydrocarbon
waste is specific example
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3. Global Perspectives
Transition to a lower carbon economy is EU
priority
However CO2 is global issue and new approaches
need global solutions
Indexed to Japan 1.0
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3. Global Perspectives
These global perspectives not apparent from
fossil fuel use .. Bigger growth from
poorer/less efficient
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3. Global Perspectives
Europe
Russia/CIS
China
North America
Middle East
Other Asia
Source CRU / Hydro. 1000 t
Africa
Oceania
South America
Critical that new chemistry business models
learn from mistakes of other industries
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3. Deployment at Scale

• Polyethylene from sugar cane
• Dow and Crystalsev JV in Brazil
• Integrated 350,000 metric TPA as of 2011
• Substantial CO2 savings due to switch to
  sustainably produced (renewable) biomass feedstock

. but logical location due to resource base
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3. Deployment at Scale

• Epichlorohydrin from glycerine
• 150, 000 tpa plant in China now under
  construction
• Due on-line in 2010
• Utilizes glycerine a by-product of biodiesel
  production process
• Creates significant cost
  environmental advantages vs.
  conventional process technologies
  

. but EU would be logical location if ..
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3. Deployment at Scale
Most second gen biofuel research is EU driven
- most production plans demo plants are
outside EU
. but EU would be logical location if ..
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3. Deployment at Scale
Most CCS production plans demo plants are
planned for EU
EU likely to lead aided by effective PPPs
Carbon Capture Sequestration at scale
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4. Ultra resource efficiency
From batch to continuous (plus Process Intensific
ation gains)
Reducing waste, space, energy, defects etc.
.. Confirms need to stimulate product AND process
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4. Ultra resource efficiency
Dow 10-Year Energy Reduction Goal Set in 1994
Savings based on Dow weighted average natural gas
price each year
Actual 21 through 2004
24 Million Tons CO2 saved
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5. Market driven businesses

• Meeting the needs of the current without
  compromising the future
• Is this achievable without compromising our
  current lifestyle?

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5. Market driven businesses
for some businesses all can agree on market
benefits
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5. Market driven businesses
Platinum nanoparticle catalyst for fuel cells
Ensuring best risk management processes
accelerate best technology options
in other markets - critical that Regulators
create a supporting framework for the products
consumers need
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5. Market driven businesses
Consumers create the markets for more
sustainable technologies
supports lead market thinking
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5. Market driven businesses
EU remains logical place to make more
contentious products more enviro-friendly
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6. Additional New Business Models

• EU is largest quality consumer market
• Opportunity to lead global markets with ever
  increasing quality offerings
• Growing service requirements in some cases allow
  product replacement
• SafeChem solvent service
• Integrated building products
• Automotive system offerings (coatings, adhesives
  etc.)
• Increasing downstream customer focus
• Higher speed response to market changes
• etc.

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Summary

• Making new business models sustainable
• New models must still respect old economics
• Integration remains key to chemical industry
  sustainability
• Global perspectives can not be ignored
• Deployment at scale drives transition to lower
  carbon
• Resource efficiency increasingly of value
• Market driven approaches remain essential

Most of above benefit from improved PPPs