Winning in a Circular Economy - Chemical Convention · Reaction to evolving consumer sentiment and regulation Non-Exhaustive Globally, commitments ... Source: Accenture model, GVR,

Practical steps for the chemical industry

Winning in a Circular Economy

Helsinki, 24th October 2019

In 2016 we described a concept for taking the European chemical industry into the circular economy

Copyright © 2019 Accenture. All rights reserved. 2

€65 Bn value for chemicals industry by enabling circularity in downstream industries

5 principal loops to circulate molecules

Potential to circulate 60%+ of molecules …provided cost competitive low-carbon energy

Bio-based raw materials as a mitigator, but not a full solution


Source: Accenture Research; Blackrock/ Global Sustainable Investment Alliance (2018); angel.co

In 2019, the chemical industry is partly pivoting, partly “taken“ into the circular economy

81% of end consumers prefer environmentally friendly products

49% perceive the chemical industry to be least concerned about their environmental impact

Alliance to End Plastic Waste founded;

committed $1.5 Bn investment

70+ brand-owners pledged 100% of plastic packaging to be reusable/recyclable/compostable by 2025

Sustainable investments increased

from $23 Tn (2016) to $31 Tn (2018)

EU increases the recycling rate for municipal

waste to 65% and packaging to 75% by 2030

Drivers and examples


Source: AS ASG RES Research 1) Volume impacted on upstream producers due to substituted products

Brand owners are responding with a race of self-commitments Reaction to evolving consumer sentiment and regulation

Non-Exhaustive

Globally, commitments result in a volume impact of approx. 7M tons of polymers

For calibration: this corresponds to approx. 6.2% of chemicals consumption of EU28 (excl. inorganics)

1,500 kt

1,700 kt

1,000 kt

750 kt

600 kt

300 kt

300 kt

250kt

220 kt

100 kt

70 kt

25 kt

3.5 kt

2 kt

1 kt

Copyright © 2019 Accenture. All rights reserved. 51) Only applies to selected states of the US; Source: Accenture WEEE: Waste Electrical and Electronic Equipment; EPR: Extended producer responsibility

An increasing number of the 193 countries started to regulateTypes of CE-related regulation and examples

1


Consumed chemicals to suitable EoL-materials: Europe, in 2018, in million tonnes

A major challenge are dispersed, non-separated and local secondary raw material streams

Permanent use = in use for longer than one year.

Source: Accenture model, GVR, AMR, PlasticsEurope, Accenture Research ICIS; Values rounded, EoL=end of life 1) Acrylic, Alkyd, Polyesters, etc.

Chemical

Industry

Consumer

Industry

End of

lifecycle

Waste

management

Recycled

today

Accessibility at

end of lifecycle

Paints & Coatings1)

Lubricants Carbon blackSolventsCatalysts Crop protection

Nitrogen fertilizer Phosphate fertilizer Potassium fertilizer Other inorganics

26.9

23.8

56.7

31.5

27.9

10.0

17.2

3.2

3.5

13.8

15.6

1.7

2.0

35.8

101.2

31.2

70.0

Chemical Recycling

8.9

12.9

5.8

3.4

<0.1

Glycolic acid

Silicone

Surfactants

Other

PP

LDPE & LLDPE

HDPE

PVC

PU

PET

PS & EPS

Other polymers

22.8

21.3


Circularity, therefore, likely to start in densely populated areas to ensure stable feed into recycling assets

Source: Accenture with Eurostat data

Municipal waste in Europe (2017, in tons per km²)

New wave of innovations

Reuse of existing assets

Design for circularity

New recycling assets

End user demand

Brand ownercommitment

Dispersed, non-separated secondary raw material streams also shape business cases


Selected average recycling cost structures and comparison to virgin alternatives

Industrial scale chemical recycling plant for pyrolysis oil from polyolefins

Crude oil price range

Small scale decentralized chemical recycling plant for polystyrene

Virgin feedstock price range

Price for unsaturated polyester

Industrial scale chemical recycling plant for PET glycolysis to unsaturated polyester

Profit

Depreciation

Process costs

Transport

Waste/ Precursor

Fossil feedstock price (range)

4030

40

43557

480

752

825

1,201

1,600

40

34153

335

98

120

316

8210

675

80

890

3163

Source: Accenture Research

in €/t

1000

152

137

Price ranges

What does this mean for individual companies?

There is a massive growth and innovation need – and potential


180

170

130

120

140

160

150

Base scenario

Circular economy scenario

Base scenario consumption

Circular economy scenario consumption

140 million tons in 2018




Million tons

2018 2020 2022 2024 2026 2028 2030

Projection of consumption volume with and without CE 2018-2030

Note: Chemicals sold to customers – not counting basic chemicals and intermediates that are further processed within the chemical industry

Source: Accenture

However the circularity-induced growth potential strongly differs by applicationHeatmap of chemical demand shift driven by circular economy themes

CE Trends Chemicals


Source: Accenture

7.8% 7.2% 6.9% 7.0% 7.0% 7.0% 7.0% 7.0% 8.2% 7.0% 8.4% 7.8% 6.5% 8.3% 7.3% 7.6% 7.4%6.6%7.1%7.5%

-1.4%

-0.9%

-3.4% --0.8%

-0.1% -0.1% -0.1% -0.1% -0.1%-0.01%-0.1%-0.3%

-0.6% -0.1% --0.1% -0.1%-0.6%

0.2%

0.8% 0.8% 0.9% 0.6%0.8% 0.7%

0.7% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%

1.7%

1.1% 0.1% 0.6% 0.4% 0.2% 0.1% 0.1% 0.9% 0.9% 0.4%0.2%0.6%

1.3% 1.6% 1.2% 1.7%

1.2% 1.0% 1.0% 1.0% 1.1% 1.9% 1.0% 1.4% 0.1% 1.7% 1.5% 0.8% 1.7%1.2%

1.8% 1.8% 1.5% 1.6% 1.5%1.4%0.3%1.1%

1.7% 1.0% 1.1% 0.9% 1.1% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.9% 1.6% 1.6% 1.5% 1.3% 1.7% 1.1%1.6%0.6%1.2%1.4%

0.2% 0.1% 1.2% 0.4% 0.7% 0.7% 0.7%

1.2% 1.2% 0.8% 0.9% 1.2% 1.8% 1.8% 1.7% 1.5%1.3%

1.6% 1.2%1.9%1.2%

2.5%

2.1%

2.8% 2.5%

2.3%

2.8% 3.3% 3.4% 3.4% 3.4% 3.4% 2.5% 3.4% 2.1% 2.4% 2.4% 2.9% 2.9% 2.1%2.2%

2.5% 2.1%

2.6% 2.4%

2.3%2.5%2.0%

Agricultural appliances

Adverse … Beneficial Not applicable……Impact

Wa

x

Tit

an

ium

dio

xid

e

Su

rfa

cta

nts

Sty

ren

e B

uta

die

ne

Ru

bb

er

(SB

R)

Sp

ec

ialt

y S

ilic

a

Silic

on

e

Po

lyv

iny

l c

hlo

rid

e (

PV

C)

Po

lyu

reth

an

e (

PU

)

Po

lyte

tra

flu

oro

eth

yle

ne

(P

TF

E)

Po

lyst

yre

ne

(P

S)

Po

lyp

rop

yle

ne

(P

P)

Po

lym

eth

ylM

eth

ac

ryla

te

(PM

MA

)

Po

lye

thy

len

e t

ere

ph

tha

late

(P

ET

)

Po

lye

ste

rs p

ain

t &

co

ati

ng

s

Po

lyc

arb

on

ate

(P

C)

Po

lya

mid

e (

PA

) 6

& 6

6

Pig

me

nts

Oth

ers

pa

int

& c

oa

tin

gs

Oth

er

the

rmo

pla

stic

s

Oth

er

solv

en

t (a

lco

ho

ls,

gly

co

l eth

ers

, h

yd

rocar

bo

ns,

ch

lori

nat

ed

, ac

ids,

am

ines

& e

ther

est

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)

Oth

er

pla

stic

s

Lu

bri

ca

nts

Lo

w-d

en

sity

Po

lye

thy

len

e

(LD

PE

) &

Lin

ea

r lo

w-d

en

sity

P

oly

eth

yle

ne

(L

LD

PE

)

Ke

ton

e s

olv

en

t

Hig

h-D

en

sity

Po

lye

thy

len

e

(HD

PE

)

Gly

co

lic

ac

id

Fe

rtiliz

er

Ex

pa

nd

ed

Po

lyst

yre

ne

(E

PS

)

Est

er

solv

en

t

Ep

ox

y p

ain

t &

co

ati

ng

Dy

es

Cro

p P

rote

cti

on

Ch

em

ica

ls

Ca

taly

sts

Ca

rbo

n b

lac

k

Alk

yd

pa

int

& c

oa

tin

g

Ac

rylic

pa

int

& c

oa

tin

gs

Ac

rylo

nit

rile

bu

tad

ien

e s

tyre

ne

(A

BS

); S

tyre

ne

-ac

rylo

nit

rile

re

sin

(S

AN

)

Agricultural consumables

Automotive

Building & Construction

Consumer products

Electrical & Electronics

Household, Leisure & Sport

Others

Packaging

Process chemicals

Technical applications


The race is on to occupy “sweet spots” in future value chains

1

2

4

5

6

7

8

Race for value chain partnerships

Race for applications for secondary materials

Race for consumers preferring eco-friendly offerings

Race for reverse logistics partnerships

Race for bio-based chemical value chains

Race for innovations and circular solutions

Race for technologies (waste separation / chemical processes)

Race for homogeneous raw materials

3Basic chemicals

Inter-mediates

Polymers / Specialties

Downstream value chain

End consumer


Chemical companies pursue a set of entries into circularity

Source: Company websites, www.environmentalleader.com; Accenture analysis

JV for mechanical recycling

acquired mechanical recycler

Supply recycled PET

provides waste

provides waste

cellulose-based bioplastics for

green packaging

PE + PP

PE

PP

PS

PS

Mixed plastic to synthetic oil

Multilayer to LDPE

PET

PET

Carbon fiber

Bio plastic

PU

PS

PET recyclatesupply

acquired mechanical & chemical recycler

1Chemical company & waste manager

2Chemical company Start-up & waste manager

3

Start-up, chem co, packaging producer, brand owner & waste manager

4

Start-up, chem co, packaging producer, brand owner & waste manager

5Start-up, brand owner & waste manager

Collaboration modelRaw materials

Chemical industry

Converters OEMs/Brand owner End userWaste manager

endlessly recyclable polymer

for footwear

recycled carbon fiber for injection

molding

And there is a multitude of ventures and new entrants targeting individual niches


Number of relevant start-ups by value chain and technology maturity

Refined hydrocarbons, petrochems, fuels, others

Growth

• Anhui Oursun EnviromentalTechnologies

• Blest• Klean Industries• Plastic Energy

Concept

Lab

• Illinois Sustainable Technology Center

Pilot

• Climax Global Energy• Jeplan• Polycycl• Reclaimed EcoEnergy• Resynergi

Early commercial

• EcoFuel Tecnologies• Enerkem• Enval• Fulcrum BioEnergy• GreenMantra Technologies• Golden Renewable Energy• New Hope Energy• Nexus Fuels

• Agilyx• Pyrowave• Recycling Technologies• ReNew ELP• Renewlogy• RES Polyflow• Sierra Energy • Vad

Monomers & intermediates

Polymers

• perPƐTual

• University of Massachusetts-Lowell• Karlsruha Institute of Technology

• TRASH2CASH

• Axens• Biocellection• Tyton BioSciences• University of Portsmouth & U.S.

Department of Energy’s National Renewable Energy Laboratory

• University of Ulsan

• Carbias• Gr3n

• Next Generation• Polystyvert• Resinate Materials Group• Worn Again Technologies

• Ioniqa• Loop Industries

• APK• Cadel

Deinking• CreaCycle• Ecopek• Equipolymers

• Aquafil• SABIC Innovative Plastics

Monomers & intermediates PolymersHydrocarbons Plastic products Post cons. waste

• Galactic• Geo-tech Polymers• Natureworks• PureCycle

Technologies

Source Closed Loop Partners – Accelerating circular supply chains for plastics:

Plastic products & packages

Post consumer waste

Conversion Decomposition Purification Mechanical

Practical Steps for Moving Forward

Treat it as a growth and new business model opportunity

Build capabilities to identify and build circularity options

Embed circular in daily operations and management (ways of working, target setting, roles)

Identify consumers & value chains planning to buy eco-friendly

Revise long term demand assumptions for linear models

(Re)gain ownership of the narrative

1.

2.

3.

4.

5.

6.


Thank you

Documents

Winning in a Circular Economy - Chemical Convention · Reaction to evolving consumer sentiment and regulation Non-Exhaustive Globally, commitments ... Source: Accenture model, GVR,