Tuesday, May 29, 2018

Biobased Product Markets – Part 1


Creating a “demand market” for biobased products could be very useful in achieving more acceptance and use of biobased products.   In current “free markets”, fossil fuel-based products usually win out in competition with biobased products because fossil fuel-based products cost much less to produce, and therefore have much lower sales prices.   Greater use of biobased products, versus fossil-based products, would benefit society a lot by reducing carbon dioxide emissions.  Reducing carbon dioxide emissions is needed for society’s benefit, based on the conclusion that such emissions are causing undesirable climate changes.  Undesirable climate changes are likely to get worse as carbon dioxide emissions continue to increase.

Cities account for 70% of global carbon dioxide emissions.  Carbon dioxide emissions are a major contributor to the increasing global average temperature rises and to the changes that are occurring in global climate.  Therefore, city procurement programs to reduce carbon dioxide emissions could be of the highest importance in reducing global carbon dioxide emissions.    And because of society’s (hoped-for) interest in reductions of carbon dioxide emissions, creating a demand market for biobased products through city governments is warranted

Cities purchase billions of dollars (on a global basis) of materials every year.  By purchasing materials that are made from biobased raw materials, versus fossil fuel-based materials, a significant reduction of carbon dioxide emissions can be obtained.  Many cities have procurement rules that provide guidance that environmentally-friendly materials should be purchased, when available.   But at least two questions exist:

1. Are sufficient efforts being made to ensure that biobased materials are being identified and purchased and
2. How much are carbon dioxide emissions being (could be) reduced from the use of these materials.

I visited the websites of twenty-two of the largest United States cities to determine which ones have procurement programs that are committed to purchasing environmental friendly materials.   I found that nine of the twenty-two (41%) have such commitments.  But, unfortunately, none of the nine cities so far provide measured results on the success of such commitments.

Performance measurements are vital in understanding the effectiveness of a city’s procurement program in reducing carbon dioxide emissions.  Here are some actions that I believe are needed for cities to be able to implement effective measurement programs:

1.      A standards organization, such as GRI (click here to go to GRI’s website), which has been instrumental in companies measuring and reporting on sustainability efforts, needs to be established for city programs to report on environmental (sustainability) efforts.  Cities alone cannot be expected to come up with such standards for measuring and reporting sustainability efforts.  Standards need to be established that all cities can respond to so that cities can be evaluated with respect to their peers.
2.      Non-profit associations need to support research and analysis related to correlating biobased materials use with carbon dioxide emission reductions and other positive environmental results.   These associations need to initiate programs to influence public policy including the need for city councils to insist that the results of their procurement programs for reducing carbon dioxide emissions be shown on the city’s websites.
3.      Chemical companies interested in better biobased product demand should lobby their legislatures to require city procurement departments to purchase biobased products and to have in-place effective measurement and reporting programs on these purchases and their results in reducing carbon dioxide emissions.




Friday, May 18, 2018

Data on Chemical Companies’ Waste and the Recycling/Reuse of that Waste


Dozens of chemically-related companies’ sustainability reports were searched to find quantities of waste generated by the companies and the percentage of that waste recycled/reused (reuse is usually generating heat from the waste).  Such data was found for 34 companies and this data is presented in the following table:


company
recycled and thermally recovered waste (mt)
total waste generated (mt)
% of the total waste that is recycled and thermally recovered
methanex
1,500
3,340
45%
orica
7,300
18,200
40%
altana
18,021
28,204
64%
iff
18,665
38,867
48%
borealis
45,892
59,600
77%
givaudan
47,771
61,805
77%
kaneka
37,000
63,000
59%
symrise
18,160
63,550
29%
linde
22,374
67,800
33%
mexichem
12,359
72,700
17%
nippon shokubai
39,633
80,044
50%
shin etsu
71,000
101,000
70%
mitsubishi
50,000
130,200
38%
yara
49,176
81,300
60%
asahi glass
147,754
148,000
100%
lubizol
55,500
153,000
36%
wacker
123,550
167,140
74%
henkel
151,000
179,000
84%
covestro
50,080
193,000
26%
dsm
170,000
202,000
84%
monsanto
185,600
227,000
82%
lg chem
156,622
251,516
62%
merck kgaa
160,000
254,000
63%
asahi kasei
333,600
339,000
98%
mitisubishi
204,000
340,000
60%
tosoh
418,468
419,850
100%
dupont
149,723
465,640
32%
evonik
296,000
512,000
58%
bayer
214,000
840,000
25%
israel chemical
855,540
882,000
97%
formosa petrochemical
1,214,062
1,259,273
96%
scg chemicals
1,373,000
1,376,000
100%
basf
1,674,800
2,120,000
79%
average
253,702
339,334
63%
standard deviation


25%


The data shows that on average the 34 companies recently generated 339,334 metric tons (mt) per year of waste, while recycling/reusing on average 253,702 mt, an average 63% of the waste being recycled/reused.  The data suggests to me that chemical companies have active, successful programs to recycle/reuse the waste they generate.   These programs follow globally-wide standards for collection and reporting data.  The development of these standards has been ongoing for a long time.  It seems to me that such standards do well for company sustainability what accounting standards have done for promoting company financial successes.

The United States Chamber of Commerce Foundation has a report on how companies benefit by recycling and reusing waste versus landfilling and/or incinerating the waste.  (Click here to read the report – pdf file.)  A report from General Motors provides how the company has managed to recycle 85 percent of its worldwide manufacturing waste.  (click here to read the report – pdf file.)  A McKinsey Company article focuses on company reductions of materials and energy use, including waste material use.  (Click here to go to this article.)


Tuesday, May 15, 2018

An Approach to Determining Environmental Regulatory Strategies for Chemical Companies


Chemical companies can select different strategies for how they manage their response to environmental regulatory requirements.  For example, Mike Rosenberg in his book “Strategy and Sustainability” (click here for a synopsis of the book) suggests four possible strategies:

1. Just meet the regulatory requirements (the low road); 
2. Meet the requirements, but also monitor for possible actions needed (wait and see);
3. Meet the requirements and monitor for needed changes, but also publicize to stakeholders what is being done (show and tell); and
4. In addition to meet, monitor, and publicize, have a strategy that positions the company as a “green” company, attempting to lead its industry in environmental-friendly products (pay for principle).

To get a better feel for what Rosenberg suggests, I applied his ideas to developing a strategy for the chemical company Mexichem.

Mexichem is a chemical company with headquarters in Mexico.  It has 18,000 employees and in 2016 had $5.4 billion in revenues.  Its major products include:  polyethylene, polyvinyl chloride, polypropylene, and fluorine-based products. 

Rosenberg suggests that the selected strategy (one of the four listed above) should be based on analysis of four factors:

1. The industrial sector that the company is in;
2. The geographical regions in which the company operate;
3. The impact that environmental interest groups might have on the company; and
4. What the company has been doing in the past and presently with respect to environmental compliance management.

Here is some “light” analysis I did in each of these factors to help me select a strategy for Mexichem:

Mexichem’s industrial sector.  Because Mexichem’s industrial sector, the chemical sector, produces chemicals, which can adversely affect the environment, chemical sector regulations are extensive, and penalties high for non-regulatory compliance.  

Regions in which Mexichem operates.  Mexichem operates in 37 countries (all continents, except Antarctica) with 120 production plants.  Mexichem is a global company.  

Possible interest groups’ effects on Mexichem.   Environmental interest groups have for a long time been very active in monitoring and commenting upon chemical companies’ environmental records.   These groups are a major source of information on chemical companies’ environmental performance.

Mexichem’s past and present efforts.  Mexichem’s annual report indicates an active program in environmental compliance. 

Based on this analysis, I believe Mexichem’s best strategy for dealing with its environmental regulatory program is strategy number 3, show and tell.   Not only should Mexichem meet all regulatory requirements (as all companies should do) and monitor/measure how it is doing in meeting these requirements, Mexichem should be proactive in publicizing what it is doing (the show and tell strategy).  The forth strategy (pay for principle) is best suited for those chemical companies that provide products sold directly to the public, e.g., personal care products.  Mexichem products are mostly not used in products sold directly to the public so a pay for principle strategy likely would bring little additional marketing and other benefits.  It seems to me, based on reading Mexichem’s reports, that Mexichem is in fact using the show and tell strategy.

The above about Mexichem is a simplified application of some of Mike Rosenberg’s ideas in his book on how companies should go about selecting a strategy for their environmental regulatory (sustainability) program.   However, I am impressed that applying his ideas helped me choose a strategy for Mexichem that seems to be the strategy that Mexichem is using.   Using Rosenberg’s ideas in his book and his lectures (e.g., he has a course on Coursera based on his book) might be useful for chemical companies.




Tuesday, May 1, 2018

Chemical and Metal Shortage Alert – April 2018


The purpose of this blog is to identify chemical and metal shortages reported on the Internet.  The sources of the information reported here are primarily news releases issued on the Internet.  The issue period of the news releases is April 2018.

Section I below lists those chemicals and metals that were on the previous month’s Chemical and Metal Shortage Alert list and continue to have news releases indicating they are in short supply. Click here to read the March 2018 Chemical and Metal Shortage Alert list.

Section II lists the new chemicals and metals (not on the March alert).  Also provided is some explanation for the shortage and geographical information.  This blog attempts to list only actual shortage situations – those shortages that are being experienced during the period covered by the news releases.  Chemicals and metals identified in news releases as only being in danger of being in short supply status are not listed.

Section I.  

Carbon black: India; supply not keeping up with demand
Construction-grade sand:  global; supply not keeping up with demand
     
Section II.   Shortages Reported in April not found on the Previous Month’s List

Alcantara fibers: global; production not keeping up with demand
Aluminum: global; supply not keeping up with demand
Bricks: United Kingdom; production not keeping up with demand
Diethyl toluene diamine: United States; production not keeping up with demand
Silicon: global; supply not keeping up with demand

Reasons for Section II shortages can be broadly categorized as: 

1.  Mining not keeping up with demand: none
2.  Production not keeping up with demand: alcantara fibers; bricks; diethyl toluene     diamine
3.  Government regulations: none
4.  Sources no longer available: none
5.  Insufficient imports:  none
6.  Supply not keeping up with demand:  aluminum; silicon