P A S S P O R T�T�O YOUR FUT�URE

June 2030

Dear colleague,

Congratulations. We are delighted to present your useful PASSPORT

pre-reading materials.

These four short reports address some of the major threats and

opportunities confronting our community, industries and our way of life in

Australia. They are essential reading for you.

Each report by different authors addresses the four key drivers we identified only two decades

ago in 2010 in the lead up to the Prepare 2030 Forum. You will recall that excellent session in

Melbourne, Australia where for the first time we came together and moved from passive talk-

fests to robust, frank discussion and integration into future plans, especially for the plastics and

chemicals sectors and the consequences for all receiving sectors. It was a formative event and

some useful new relationships were formed!

Our timing was excellent. It had been hard for many of us to venture beyond our comfort zones

and embrace confronting drivers. But many of the key issues were becoming clearer at the time

and the daring ‘Prepare 2030 - Passport To Your Future’ certainly freed us from our short-term

incremental approaches. Some were off the mark, some were controversial and others speculative,

but the document achieved its objective of opening our minds on opportunities and threats!

As predicted there have been some major shifts. Thankfully through smart thinking, planning and

cooperation we have survived where others have floundered. We are the envy of many around

the world for our civil and productive society, stable government and partnership approach.

Thank you for your part in this journey and we look forward to working with you in the future.

Margaret Donnan

CEO - Plastics and Chemicals Industries Association

IMPORTANT READING Your Passport:

PREPARE 2030 – ThREATs AND OPPORTuNITIEs

Plastics and Chemicals

Industries Association

PO Box 211, Richmond, VIC, 3121

Ph: +61 (03) 9429 0670

Fx: +61 (03) 9429 0690

Author: Richard Collins - April 2010

Project Manager: Helen Millicer

hmillicer@pacia.org.au

www.pacia.org.au

Resource Allocation Assessment

Businesses everywhere are keenly awaiting their Resource

Allocation Assessment for 2030-35 – if the National

Resource Allocation Commission (NRAC) doesn’t lift

our quota on key non-renewable resources we’ll need to

rethink our expansion plans.

The primary concern of course is our hydrocarbon allocation.

Best thing industry ever did post-peak oil in 2012 was win

consensus from governments to quarantine hydrocarbons

from being wasted as transport fuel. 1 Oil and gas, despite

our feedstock diversification projects, remain the basis

for so many high-value plastics and chemicals products

fundamental to our lifestyle and sustainability. Diversification

of energy sources has been vital. 2

It’s hard to predict NRACs centralised alignment priorities

in the next five-year plan as it balances supply of rationed

resources with strategic national production goals. We do

know it supports “higher order uses” for materials and is

looking for at least Factor 10 (tenfold) resource efficiency

improvements before it will support a sector.

Hark back 20 years and it was an unfettered free market,

then along came the resource pinch. 3 I remember that New

Scientist special in 2007 warning about peak phosphorus,

uranium, platinum, silver, indium – some German materials

chemist estimated even zinc could be used up by 2037 if we

all consumed at the rate of the US. 4

China also convinced us central authorities could create

and sustain economic miracles. Of course it started in 2009

buying phosphorus mines globally, locking up long-term LNG

contracts with Australia and building strategic oil reserves. As

resources got tight and the population boomed, governments

became nervous – and now we’re waiting for NRAC.

Efficiencies and alternatives

Our cities and society have totally changed in 20 short

years. Renewables, alternative materials and closed loop

systems are mainstream now. No more waste with one-cycle

products, for example.

Fortunately our company diversified early into bioplastics

based on cellulose and safflower oil substitute 5, and ramped

up oleochemical alternatives in our detergents and personal

care items. As renewable resources, both are exempt from

NRAC, but they are only partial replacements for hydrocarbons

and they come at a cost, raising the price of everything from

building materials to solar paints and toothpaste.

The replacement of metal oxide catalysts in plastics with

organic options has opened the way to endless recycling,

where previously plastics could only be rebirthed once. 6

This technological breakthrough also underpinned our

comprehensive take-back scheme for all types of plastics.

Indeed new business models have firms leasing the plastic

polymer and collecting it at the end of life. All this has of course

informed product design, such as minimising unidentified

blended plastics and customer-provider relationships.

In hindsight we wish we had got into landfill mining

opportunities earlier – for a while they were a gold mine of

petroleum-based resources.

There have been fewer alternative inputs on the chemicals

and pharmaceuticals front, though green chemistry

continues to work on organic and renewable compounds.

Finally, our recycled water has at least given us a nice

competitive advantage when it comes to water security,

footprint labelling and the potential embodied water trade.

1 UK Industry Taskforce on Peak Oil and Energy Security http://peakoiltaskforce.net/download-the-report/2010-peak-oil-report/

2 Dow 2009, Energy Policy for America http://news.dow.com/dow_news/pdfs/dow_energy_plan.pdf

3 CSIRO Limits to Growth 30 Year Review http://www.csiro.au/resources/SEEDPaper19.html

4 New Scientist, May 2007 ‘Earth audit’

5 CSIRO Crop Biofactories Initiative

6 WME magazine, April 2010

Driver 1: Resources and Materials

From: Resource Security Manager

To: CEO

Re: Resource Allocation Assessment 2030-35

Environment metrics

It is time to update the market on our annual performance

and risk metrics, as per the 2015 Australian Stock Exchange

integrated reporting rules. We have good news and threats.

Our governance is sound. The Carbon Visibility System

extends up the supply chain, we’ve secured climate insurance

and we meet the ASX’s mandatory extreme weather buffer of

storing 75% of three month’s material use.

Our public reputation is high in comparison to others

providing valuable good will in our ‘licence to operate’.

We easily meet the Eco-foot international benchmark for

the industry, particularly water intensity (per unit of output),

air emissions quality and the percentage of design-for-

environment features in our products. Carbon intensity

remains a problem on the global benchmark (see below).

It is amazing to realize how many of these requirements

were evident back in the 2010s.

Our opportunities pipeline is strong. Nano-reinforced plastics

are recognised as the sustainable structural material, providing

greater flexibility in a more extreme climate, easier transport

and recycling – and best of all they can be cheaply replaced.

Smart paints and heat-sensitive window tints are raising

building performance, plus our solar energy generating paint

line, Solaris, is leading the market.

Increasingly hot weather is impacting health, lifestyle and

spread of disease thereby increasing challenges and demand for

pharmaceuticals. 7 Speculation has continued for 20 years on

the climate risks around our geo-engineering options, including

spraying of sulphate particles into the atmosphere to mitigate

the greenhouse effect. 8

Finally, increasing urban density means less construction per

head of population, despite population growth. And it’s still

too soon to know how agriculture will fare in Australia in the

medium-term. The rise of urban permaculture and vertical

farming has offset some of the lost sales in broadscale farming.

Carbon accounts

Mixed news here, unfortunately. While year on year we have

successfully reduced our total CO2 equivalent emissions,

our carbon intensity is still too close to the level stipulated

in the 2018 Cape Town Treaty restricting movement of

greenhouse pollution. 9

Finance markets have seen this as a business risk since the

UN ratified a scheme developed by business of industry-by-

industry greenhouse targets rather than national ones.

We have not been idle. Plant B is now highly automated for

world’s best practice energy efficiency, and our external

energy partner has the entire site substantially off-grid

thanks to the neighbourhood quad-generation power

plant (power, heat, cooling, hot water) and biogas from

the Western Treatment Plant for the city’s sewage. Our site

location has premium value because of this secure supply,

however other sites have less reliable supply and diminished

productivity due to weather events interrupting transmission.

The real problem remains our Scope 5 emissions right up the

supply chain. Australia continues to rely on fossil fuels for

65% of its energy because successive governments vacillated

under pressure for low cost energy and put so much faith in

carbon capture. China and Korea now dominate low-priced

renewable technologies, the US and India lead on innovation

– Australia just didn’t diversify far enough or early enough, so

our inputs are carbon-heavy.

We’re hoping hydrogen will re-level the playing field and cut

our risks and costs.

Driver 2: Climate and Environment

From: Climate and Environment Officer

To: CEO

Re: Market briefing for 2029/30

7 Australian Medical Association report, 2005, ‘Climate Change Health Impacts in Australia’

8 The Royal Society Report, Sept 2009 http://royalsociety.org/Geoengineering-the-climate/

9 US EPA issued an “endangerment ruling” listing CO2 as a pollutant, Dec 2009

Overview

Decades ago, several chemical companies called for major

change and identified mega challenges: water, renewable

energy and conservation and agricultural productivity.

For 25 years CAP has been the centrepiece of emerging

markets, underpinned by China’s economic gravitation, a rising

middle class across the region and Australian natural resources.

Ever since the World Trade Organisation failed after the first

Resources War in 2017, CAP has been the pre-eminent regional

bloc and is now closing in on the EU and North America in

successfully addressing the three areas of mega challenges.

There had been warning signs of the fracture: geo-politics

changed with the American Recession of 2009 and the

standoffs at the Copenhagen Accord that year; localism

grew in tandem with resource constraints and rising oil/

energy/carbon costs; ‘Fortress Europe’ introduced its carbon

tariff 10 and REACH chemical controls, and the US its Quality

Goods Control Act targeting emerging economies. To cap it

all off nations introduced more robust national regulations

complicating global trade and finance. The best of our

members have weathered this period of rapid change.

Achievements

Through cooperation regulatory alignment and multi-lateral

recognition have been achieved on several key issues within

the bloc in the last several years.

One is chain of custody certification, principally for chemicals

and cellulosic sources for plastics, given the potential

environmental trade-offs. All countries have now joined the

scheme, providing full transparency in plastics and chemicals

supply chains.

Through our partnership with governments and regional

NGOs, we have also broadened our Product and Materials

Stewardship (PAMS) scheme to include consumer packaging

across the bloc. It’s a logical extension given many plastics

members are already leasing and recovering polymers for

short-term use.

Third, we saw further linkage and collaboration across

the bloc, the most active year since the CAP Free Trade

Agreement was signed in 2019. Highlights were the dual

stock market listing of Melbourne Chemicals in both Australia

and Korea, and the joint venture between Malay Plastics,

Beijing Lend Lease and the University of Queensland to

commercialise nano-enriched polymers for building materials.

Challenges

Vietnam Chemical Consortium’s failed bid this year for

Australian Gas Company shows risks and challenges remain

in balancing national and international interests, despite the

CPA Free Trade Agreement.

The next goal of our PAMS scheme is to develop a framework

for hazardous and dangerous wastes, including some nano-

materials. Leadership is coming from China and Australia.

Work is also continuing on the proposal to recognise the

Embodied Environmental Aspects of goods. For example,

financial markets want to trade water virtually on the basis

of fully priced externalities, as mooted 23 years ago by the

World Business Council for Sustainable Development. 11 This

could see the emergence of water-based economic zones.

Driver 3: International Dynamics

From: Plastics and Chemicals China-Asia-Pacific Association (PACCAPA)

To: All Regional Members

Re: PACCAPA Annual Industry Review

10 Euractiv.com, comments by French President Nicolas Sarkozy, 2010

11 WBCSD, 2006, ‘Business in the world of water: The H2O Scenarios’

The trust premium

Resources, climate and environment continue to be

major drivers determining lifestyle, role and perceptions

of government and industry. Trust remains the number

one issue particularly since the partial meltdown after

peak oil in 2012. People more than ever demand truth in

government and industry communications, advertising, in

a product’s ‘lifestory label’ and reports. 12 They expect all

major companies to have a Stakeholder Advisory Committee,

with public reports, so our partnership with the company

continues to be a good role model.

Technology and social media have made society transparent

and hyperlocal. Businesses tightly target key groups; on the

other hand stakeholders have more access behind business

walls than ever before, and are not afraid to use it. That

boycott of Food Co when its’ claims to use 100% recycled

water were exposed was a wake up call for all.

Groups and values

Many people know their Eco-foot, most want to reduce it,

little surprise given our resource pressures, the new eco-

generations and the National Wellbeing Indicator. There

are continuing social and political tensions between the

Conspicuous Accumulators and the now well established

Minimalists. We’ve noticed two divergent responses amongst

the Minimalists. Conscious Consumers aspire to less,

shunning ‘stuff’, buying by lifecycle labels and turning to

repair. The Virtualists embrace technology and prefer leasing

services over owning products – how strange people used to

buy music on disks. Few have room for clutter.

Demographics and cities

Our cities are more diverse and dense than ever, courtesy of

30 million Australians (many being recent immigrants from

the region), the cultural influence of Asia’s mega-cities, our

low greenhouse gas goals and the high costs of energy, fuel

and building materials.

Infrastructure Australia was right when it estimated the

avoidable annual cost of congestion would double to more

than $20 billion by 2020. 13 The exodus to the regions and

shift to public and pedal transport has not abated. The

growing issues of geographic poverty and disadvantage

remain major concerns and risks for all.

Baby Boomer pressures are easing; emerging are the first

members of the ‘Tenties Bubble’ due to Gen Eco born around

2010 and immigration running three times the 1990s average. 14

shaping the places

The demographics will shape workplace, homeplace and

marketplace. SAC recommends retaining the Later Age

Employee Program a few years, although we do recognise the

need to rethink the onsite Accommodation Village now there

are fewer aged employees to support/transport. We also

recommend the company enhances its diversity program.

The benefits of increased tele-working and shifting the

management function to Bendigo are clear – reduced

congestion cost and diversified geo-risk – but we’re keen

to keep an eye on dislocation issues for both home- and

site-based workers. Work-life balance for home workers, in

particular, appears at this stage to be a net positive.

The marketplace will change with the demographics.

One example: the 30-year boom in age care drugs may now

flatten, replaced by Gen Eco interest in health and long-term

brain function.

Driver 4: social change

From: Stakeholder Advisory Committee (SAC)

To: CEO and the Board

Re: SAC report 2029/30

12 trendwatching.com, 2007, ‘Still made here’

13 Infrastructure Australia, 2010, ‘The State of Australian Cities’ report

14 Australian Government Treasury, 2009, ‘Intergenerational Report’

Resources and Materials

• Whatfactorsmightunderpinasustainable,profitable

economy and society in a world of declining resources

and increasing costs?

• Howmaybusinessmodelschange?

Climate and Environment

• Thebarisconstantlyrisingintermsofenvironmental

performance. Where will it be set in 20 years time?

• Energycostsarerisingwithorwithoutapriceoncarbon

emissions. What will energy provision look like in 2030

and can Australia have a competitive advantage?

International Dynamics

• Whataretheover-the-horizonopportunitiesandthreats

stemming from new international frameworks?

• Whatarethepotentialramificationsofpopulation

pressure, a growing global middle class and resource

constraints? How should governments, business and the

community respond to best effect?

social change

• Populationgrowthandgenerationalchangesignalnew

dynamics in the workforce, marketplace and community.

Who will your stakeholders be in 20 years time and how

may their values change?

• Howwillcitiesadaptandwhataretheopportunities/threats?

Overarching systemic issues

• Allthesedriversareinterconnected.Arethereemerging

systemic issues and how might they impact on any/all of

these changes? What are the opportunities, costs and

threats?

• Whatpolicysettingsandregulatoryreformswillhelp

ensure change is incremental rather than disruptive?

• Whatbusinessmodels,manufacturingprocessesand

products will succeed in a 2030 world?

YOuR ThOuGhTs ON 2030 fOR ThE wORkshOP fORuM

some questions to stimulate your thoughts for the workshop

Notes