Sustainability is fast emerging as one of top priorities for chemical companies which are investing in initiatives such as advanced recycling and hydrogen production.

“It is not a new topic for the chemical industry but there certainly has been a shift in the focus. For example, in the 1960s, sustainability meant safety around the processes of the environment and people. The focus has shifted on the pollutants as we moved into the 1970s and in the next decade it was more about CO2 in the backdrop of the Kyoto Protocol. And slowly it has shifted towards social and climate related changes. So if we look at the last century, the focus has shifted from regulatory compliance perspective to the cost reduction, revenue and now it is more on bringing value to the society,” said Nikhil Kalane, Management Consultant-Energy & Chemicals, PwC.

Kalane shared his insights while giving a presentation on ‘the topic, Sustainability in the Chemicals Sector’ at the recently concluded ‘NextGen Chemicals & Petrochemicals Summit 2022’ organized by Indian Chemical News.

Explaining his viewpoint on growing sustainability buzz in the chemical sector, Kalane said: “The change has been brought about by three key trends. One being the customer behaviour due to which there is an increased demand in terms of environmentally friendly and socially responsible products. Secondly with a lot of digital interventions which were costlier earlier but now become economical, has brought technology waves in all the industries. It has opened opportunities in terms of innovation and energy efficiency when it comes to operating your businesses. Thirdly, climate change and resource scarcity. As we all know, specific to the chemical industry, we are more dependent on crude oil feedstocks as well as biomass and other resources, the overall industry is having a challenge of resource scarcity and we are digging more and utilizing it. At the same time there are stricter environmental regulations that need to be complied. This changes how the businesses were operated earlier and today.”

“Looking from a chemical perspective, this industry is quite well positioned in responding to such trends because of its nature of catering to various end user industries. With the molecules it provides to the end use customers, it also adds great value. The traditional linear model has now been converted into a circular business model which has got all the elements right from sourcing renewable feedstocks, using bio-based renewable feedstock, such as BASF coming up with bio based polyamides. There is a lot around process and product innovation in terms of circularity, recycling chemical products. Also the digital tools implementation to enhance visibility in the supply chain, a lot of product substitution, improvements in process efficiency and testing of new products is happening across segments. The overall picture gives us confidence that the chemical industry is well positioned to adhere to new regulatory compliance and develop new sustainable solutions,” added Kalane.

On how motivated the chemical companies are, Kalane added: “In the 22nd annual CEO survey conducted by PwC in 2019, 58% of global CEOs mentioned that they will be prioritizing their investments around sustainable processes and products. Sustainable companies with right reporting and mindset

can bring more trust to the customers which it caters to. There are a lot of opportunities which can be addressed in terms of providing sustainable solutions. There is lower risk when you comply with regulations and also lower cost when you have robust operations. Investors are more keen to invest in sustainable businesses and it creates more value in lower cost when it comes to re-financing.”

On the current initiative taken by the industry, Kalane opined: “Chemical industry is already accelerating its commitments to invest in a sustainable future. Both global and Indian companies are committing their GAG emissions and water usage and net carbon emissions. This is likely driven by environmental regulations. In the context of India, recently the new regulations have come which mandate the polymer processors, importers, brand owners to comply with certain norms of recycling and definitely the sustainable management aspect has an important role in the overall sustainability game. Many companies have come forward with many initiatives and partnerships and a lot of commitments have been made.” 

Listing out the action points, Kalane said: “Reduction in the embedded fossil fuel based carbon footprint is the way forward to the sustainable chemicals value chain. If you look around major chemical feedstocks, be it C2, C3, the two thirds of the carbon which is embedded in the feedstock comes from the fossil based fuels today. On the other hand, petrochemical demand is going to increase by 2.5% globally in the next few years. Therefore, the question is whether we can take care of this embedded carbon footprint because this will not help in the overall sustainable value chain. Thus to replace fossil fuel based embedded carbon with renewable one, it is a must to further deploy renewable carbon sources. Biomass energy integrated solutions will help in reduction of 60% and it will further decrease when we see a widely decarbonized scenario.”

“Development in technology and chemical innovations will drive the applicability of sustainability solutions and their impact. I believe now is the time to act and strengthen sustainability in the chemical ecosystem,” Kalane concluded.