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Champions Radar – Decarbonization Technologies for the Chemical Industry

Chemical Industry | By •

As the pressure mounts yearly for the chemical industry to become more sustainable, more companies are defining net-zero objectives and clear decarbonization plans. Major chemical companies have set clear plans to heavily reduce their carbon footprint by 2030 and reach net-zero by 2050. The industry will certainly go through deep changes in the upcoming decade to achieve this. In this context, companies are looking for trusted solution providers that can help them design the most efficient plan and support them in the transition to ensure adoption of the new technologies. 

To address this complex challenge, ARC has explored the requirements of the market and mapped it with the solutions that leading automation companies are providing. The aim of this study is to understand how well these companies are fulfilling the need for increased sustainability in the chemical industry.     

More than twenty companies were analyzed. Three are the leaders in the market as they cover most of the challenges facing chemical companies to achieve their decarbonization objectives. There are also other leaders focused on specific solutions which we believe are critical as well. 

 Value and process of Champions Radar 

The Champions Radar aims to map solutions provided by companies to meet specific market needs, helping end users identify suitable providers and highlighting market leaders. For solution providers, it offers insights into their market position, strengths, weaknesses, and growth opportunities. The study starts by discussing challenges with end users, understanding their needs, and mapping those to the offerings of solution providers.  

After gathering and validating information, the solutions are evaluated against key indicators, combining capabilities, experience, and revenue to create the final Champions Radar.

  Champions Radar for Decarbonization Technologies in Chemical Industry 

The study covered topics related to decarbonization roadmap, energy efficiency, fugitive leaks, by-product treatment, energy transition, carbon capture, alternative feedstocks and treatment at the end of life. Major automation companies were considered in the analysis by exploring their value proposition in terms of what hardware, software, and services they provide to the industry. The following are some quick reflections: 

  • Three leaders in the industry: Siemens, Schneider Electric and Emerson. 
  • Aspen Technology is very well established in the chemical industry as a software provider for process optimization.

Most of the companies covered in the scope are focusing on process efficiency and many on energy efficiency 

 The challenges with the largest impact 

In order to reach net-zero, companies in chemical industry are focusing on Scope 1 and 2 for the next 5 years. These emissions are related to those directly emitted in the facility and the ones emitted by the energy that is purchased, which was generated through fossil fuels. But in reality, more than 75% of the emissions linked to this industry is related to Scope 3, which includes all the sources not included in the Scope 1 and 2, and that are involves the whole value chain of the product. 

Two applications were considered in the scope of the study which are related to Scope 3: utilization of alternative feedstocks, and treatment at the end of life. 

Companies like Schneider Electric through AVEVA, or Siemens through its software solution GProm are offering digital tools that enable companies to model new feedstocks and anticipate the effect of the usage of recycled resins or bio feedstocks in their process. 

Solutions related to advanced recycling were also found. Honeywell UOP, for example, offers their own advanced OpCycle Process, which introduces a revolutionary plastics recycling technology to drive a circular economy. Software company Aspen Technologies has plenty experience in the chemical industry and offers specific models related to advanced chemical recycling, which helps end users to simulate pyrolysis processes, accelerate design and increase performance of plants. 

 Concluding Thoughts 

Plastic circularity is a complex challenge by itself and it will have the largest impact on reaching net-zero. Digital circularity tools are needed to help companies move forward: green supply chain, digital passports and blockchain are some of the technologies that will enable companies to accelerate the adoption of this new approach. 

At ARC, we are planning to develop a new champions radar focused on Plastic Circularity, and those digital tools that end users are looking for. We encourage everyone that is interested in this topic (end users and solution providers) to contact us and explore together how can you contribute to this study. 

Do you want to receive more detailed information related to the Champions Radar on Decarbonization Technologies for the Chemical Industry? Don’t hesitate to contact us! 

Luciano is part of the European process team at ARC, covering topics related to sustainability and is located in ARCs offices in Germany. 

At ARC, Luciano assists companies in enhancing their asset performance while emphasizing sustainability. His responsibilities involve leading market research focused on sustainability and supporting asset owners in identifying optimal technologies to address their decarbonization challenges. 

Should We Fight Climate Change or Support Free Trade?

Global Trade | By •

Yulin, locating in Shenfu coalfield, together with Ordos and Shuozhou (ShanXi), is called the “Golden Triangle of Coal” in China. 

Ana Swanson of the New York Times wrote an article called Climate Change May Usher in a New Era of Trade Wars. The key point of the article is that legislation and policies aimed at fighting climate change could also further erode free trade.

“The new policies,” Ms. Swanson pointed out, “are pitting close allies against one another and widening fractures in an already fragile system of global trade governance.” On the other hand, “the current system of global trade funnels tens of millions of shipping containers stuffed with couches, clothing and car parts from foreign factories to the United States each year, often at astonishingly low prices. But the prices that consumers pay for these goods do not take into account the environmental harm generated by the far-off factories that make them, or by the container ships and cargo planes that carry them across the ocean.”

The World Trade Organization (WTO) has been a strong proponent of free trade. The WTO puts on the annual event in Davos Switzerland where CEOs from the largest multinationals rub elbows with elite politicians and famous thought leaders. But even the WTO understands new trade legislation is needed to foster a greener world. The Director-General of the WTO called for change during the recent meetings in January. “Because countries tend to impose higher tariffs on relatively clean finished goods, but lower tariffs on often more-polluting inputs and intermediates, trade policy skews in favor of dirtier products – resulting in an implicit subsidy for CO2 production of $550 billion-$800 billion per year,” she said. “Eliminating this bias,” Ms. Okonjo-Iweala added, “would reduce global carbon emissions by 3.6%.”

Green Tariffs and Subsidies

In recent months, the US and the European Union have introduced subsidies and tariffs to reduce carbon emissions. Other tariffs are being contemplated. Last August, President Biden signed the Inflation Reduction Act. This legislation includes $370 billion in tax credits for low-emission forms of energy to fight climate change. There are tax credits for consumers who buy American-made clean cars and generous subsidies for companies building new plants for solar and wind power equipment.

Last December, the Biden administration sent a proposal to the EU for the creation of an international consortium that would promote trade in steel and aluminum produced with less carbon. This would be achieved through the imposition of tariffs on steel and aluminum that would impact China and other countries that did not belong to the group.

Meanwhile, the European Union is moving toward the adoption of a carbon tax law “that would impose a tariff on imports from countries that fail to take strict steps to curb their greenhouse gas emissions.” This legislation would penalize the biggest emitters of planet-warming gases with the goal of helping to prevent a global climate disaster.

These kinds of policies not only reduce greenhouse gas emissions, they protect jobs in nations actively tackling climate change. Otherwise, there could be a race to the bottom where jobs migrate to nations that permit high levels of greenhouse gas emissions.

The trade wars that begun under Trump, and have continued under Biden, have already begun the process of eroding free trade and moving the world toward bilateral trading blocs. In this new world, democracies will increasingly do business with each other. Similarly, dictatorships and pseudo democracies will increasingly trade with each other.

In the past, free trade was breaking down because of concerns about China. When the US agreed to a free trade agreement with China in 1999, the theory was that as more and more Chinese entered the middle class China would become more democratic. That did not happen. What happened instead was massive theft of intellectual property, huge trade deficits, the hollowing out of the middle class in Europe and North America, and the rise of nativist politics.

Does Free Trade Even Make Sense?

The rhetoric around the Chinese tariffs of the last six years makes it easy to forget the philosophy that underpins free trade. Economists are generally supportive of free trade. There is a broad consensus among economists that protectionism has a negative effect on economic growth, subverts technological progress, and causes consumers to pay higher prices.

In terms of technological progress, for example, the rapid advances in wind turbine performance have accelerated because of free trade. Free trade allowed critical components of the turbines to be produced by different companies in different nations. Companies from around the world could focus their research and development in places where they could make the greatest advances – areas where they had comparative advantage.

What economists argue is that there is a right way to support a greener world and a wrong way. The right way supports, if not free trade, at least freer trade. The wrong way eliminates the advantages of the free trade regime. The right way uses carbon tariffs that account for the end-to-end carbon used to manufacture and transport goods around the world. A carbon tariff defines an explicit tax rate on greenhouse gas (GHG) emissions. A tax of $100 per ton of greenhouse gas emissions is often bandied about.

Conclusion

In the United States, according to Ms. Swanson of the New York Times, support is growing among both Republicans and Democrats for more “nationalist policies that would encourage domestic production and discourage imports of dirtier goods — but that would also most likely violate World Trade Organization rules. Most Republicans do not support the idea of a national price on carbon. But they have shown more willingness to raise tariffs on foreign products that are made in environmentally damaging ways.” There also appears to be an increasing convergence between Republicans and Democrats on the idea of using “trade tools to discourage imports of polluting products from abroad.”

Transition to Sustainable Aviation Fuel Creates New Opportunities

Sustainability | By •

sustainable aviation fuelThe international aviation industry accounts for 2-3 percent of all greenhouse gas emissions annually and can no longer operate in a sustainable manner without major transformation. In October 2022, the International Civil Aviation Organization (ICAO) met for their 41st assembly. 2,500 delegates from 184 States and 57 organizations adopted a collective long-term global aspirational goal (LTAG) of net-zero carbon emissions by 2050. This target should be viewed as a deadline for the airline industry to change the way aircraft are fueled, flown, and operated. The target is challenging and rigorous but with collaboration, it is possible. Not only is the target possible, but it will also create a new wave of opportunities inside and outside of the industry.

Innovation Opportunities Across Fuel, Fleets, and Infrastructure

In 2019, the global aviation industry grew 5.3% and reached a net worth of $838 billion dollars. After the pandemic in 2020, the industry is expected to make a comeback in 2023 and return to a growth state at a rate of 4.3% until 2050. With the resurgence of the airline industry and an added pressure of net zero pledges, the road to 2050 will begin at ground level. When looking at the largest emitters within the aviation industry, there are several key places where emissions could be reduced: jet fuel, planes, and on-the-ground infrastructure. An Airbus 350 burns around 32 pounds of jet fuel per nautical mile, which equates to around 14,000 gallons of fuel used for a trip between New York and London. When looking at the Boeing 747 quad jet, the numbers begin to rise steeply to about a gallon per second. There are currently 57 flights between NYC to London on any given Monday, which raises the question of how much longer this behavior can be supported under growing regulatory pressure, particularly in the European Union.

Changing Consumer Habits and Potential for Economic Payoff

Faced with such challenges to its operational model, the industry will need to transform. The aviation industry has adapted itself to accommodate consumers’ needs before so why not do it again? With such a wide range of economic opportunity associated with the future of the aviation industry, what are the barriers? Primarily, they have to do with short-term cost and traditional approaches for calculating return on investment (ROI). Past opposition against climate change used to include that it was too expensive to discuss right now or the classic “if it isn’t broken don’t fix it.” However, when looking at the data, increasing intensity and volume of natural disasters, which are now seen as directly connected to climate change, cost the US 145 billion dollars in the year 2021 alone. Now that climate change is starting to hurt Americans’ pockets, reducing emissions doesn’t seem to be an expensive trade off. Reducing GHG emissions from the aviation industry may not be all clear skies and smooth sailing, but it will be an avenue of economic opportunity in several ways.

Aviation Industry Winners Are Already Pushing Back from the Gate

The ICAO 2050 net zero targets are undoubtedly going to be a challenge, but with continued collaboration the business opportunities are plentiful. Most emissions reductions will come from aircraft efficiency, on the ground infrastructure, and sustainable aviation fuel.

From a bottom-up approach, consumers are beginning to be more conscious of where they spend their money regarding the brand’s public attitude towards climate stewardship. This consumer trend is on track to only grow and apply pressure on brands to seriously consider their sustainability initiatives. The ICAO has now set the stage for a grand reshuffling of the key aviation industry stakeholders. Aviation companies and their ecosystems can transform to meet the inevitable or get left on the tarmac with flights permanently delayed.

Gaven Simon is a member of the industrial sustainability and energy transition team at ARC Advisory Group.

Editor’s Choice: Consumers Will Wait for Sustainability

Sustainability | By •

Survey Says: 86% of Consumers Willing to Delay E-commerce Delivery in Favor of Sustainability

sustainabilityNote: Today’s post is part of our “Editor’s Choice” series where we highlight recent posts published by our sponsors that provide supply chain insights and advice. This article is from Logistyx looks at the findings from a recent survey on sustainability.

One of Logistyx’s long-time partners, Blue Yonder, published its 2022 Consumer Sustainability Survey, revealing retail consumer preferences related to sustainable shopping habits after surveying more than 1,000 U.S. consumers on their sustainable shopping opinions and behaviors. Among the key findings:

  • 86% of consumers are willing to delay e-commerce deliveries for the sake of improving sustainability if given an incentive to do so
  • 64% of consumers are willing to spend more for sustainable packaging
  • 40% of consumers agree there should be a purchase threshold to qualify for shipping

In a recent column at Forbes titled “Sustainability Vs. Instant Gratification: Shopping And Shipping In 2022,” Logistyx President Ken Fleming explored the impact of consumerism and instant gratification on shipping sustainability, arguing shoppers need to alter their mindset to focus on sustainability for the good of the planet:

“The fundamental shift in mindset about how we shop is likely to have the greatest effect of all. When we prioritize sustainability over instant gratification, shop with companies that prioritize sustainability, and demand more sustainable options from shippers and carriers, then we’ll see a dramatic shift in our impact on the environment.”

The Blue Yonder survey is encouraging on that front. Speaking with Supply Chain Management Review, Edward Wong, senior vice president, global retail sector leader at Blue Yonder, stated:

“As retail emerges from pandemic-era practices, sustainability is back in focus. The findings of this study reflect the paradigm shift toward a more environmentally friendly supply chain as consumers are now willing to do their part to embrace more sustainable shopping habits.”

To read the full article, click HERE.

What the World Cup Can Teach Industrial Companies About Energy Transition and Sustainability

Sustainability | By •

energy transitionThe World Cup is upon us, which is an odd thing to be saying in November. Setting aside some of the issues related to this specific one, I’m excited as I am every four years, whether it is the women’s or men’s cup (Don’t go to a biennial cup, FIFA. Don’t do it.). It is the world’s biggest sporting event that highlights the globe’s most popular sport. What is remarkable about this year’s tournament, and sports in general lately, are the learnings that can be applied to industrial companies working through energy transition and sustainability challenges. I’m not suggesting a one-to-one comparison between sports and industry, but there are some parallels that industrial companies could benefit from observing.

I’ve been a big soccer fan (if you insist, I call it football, get over yourself) for many decades now. As I retired from about 15 years of rugby back in the day, I needed sports to follow in my newly found down time. Sure, I had and will continue to follow American sports to varying degrees, but I had become hooked on flowing games versus the stop-start nature of most U.S. sports. Regularly following international and overseas rugby was a challenge. So, I tuned into soccer, which was much more readily available on television and in person. Within a couple of years of following the game, I was utterly hooked.

It’s becoming easier to quickly spot greenwashing

With that backstory in mind, let’s get back to energy transition and industrial sustainability and their intersection with the World Cup. First, let me begin by crediting Dan Falkenheim and Alex Prewitt for their most interesting article on the greenwashing in sports. Fascinating read, and a springboard for my thoughts.

In their article, they point out the complete disconnect between obvious reality and the desire by organizing bodies in sports to connect their brand, many times via greenwashing, to carbon neutrality and other sustainability-positive claims. In this example, the tournament location, required infrastructure development, and very scope 3-heavy nature of the event, make the since retracted claim of a “plastic- and carbon-neutral” seem, well, kind of silly to make to being with.

If you create new plastic, you are still adding to the problem, no matter what you remove from rivers and oceans. And although Qatar continues to still claim carbon neutrality, its pathway to that statement is, pun fully intended, awash in greenwashing. Read the article to get the detail of that decisions as well as the broader sports examples highlighted.

How to apply lessons learned to industrial sustainability efforts

So, let’s turn it toward industry. As pointed out by the authors, the approach by the Qatari organizing body isn’t unique. In fact, it’s very common in corporations, not just across sports but in all market sectors, particularly those with high emissions. As we see examples more quickly uncovered, greenwashing simply isn’t worth it, nor is it the right thing to do.

Taking a lessons-learned approach from the article, how can industrial companies think through their sustainability strategies and the inevitability of the long journey they demand? A good deal of it has to do with acknowledging that it’s not a straight path yet committing to and proving you are walking it:

  • Be straightforward: Many of the sustainability reports from the last few years are byzantine efforts that try to paint a desired picture versus showing what is. That is leading to some, particularly the investment community, growing skeptical about what they read and are told. Communicate your role in contributing to emissions and other ESG issues and indicate your vision for improvement. Don’t use marketing to try to bypass or couch negative contributions or gloss over science.
  • Map out the journey and tangibly demonstrate you are on it: Building on the above, most involved in energy transition understand this is a big lift. Industrial companies are heavy polluters that are also central to the society we have collectively created, and overnight change simply isn’t possible. There will be many bridge improvement methods, natural gas and carbon offsets as examples, which don’t actively solve sustainability problems but do provide steps away from a more negative current state. Be very specific as to how you are improving short-, medium, and long-term rather than pointing to hard-to-verify end state metrics. Identify your investment in improvement and communicate it as a percentage within the overall context of total investment. Don’t use bridges, couched in marketing, to overstate the benefits of short-term improvements.
  • Use respected auditing and embrace data transparency. Transparency needs to become your ally. Initially, it won’t appear to be, but it will as you quantifiably improve over time and then can communicate that progress outward. A respected and neutral third-party auditing framework helps. Additionally, support more effective data efforts, particularly open-access ones, to help better quantify climate emissions impact. In doing so, you will be able to better measure how decisions and operational scenarios might impact your sustainability performance. An example is the work done by the Rocky Mountain Institute via the Oil Climate Index plus Gas (OCI+). Due to the differing nature of emissions from varying oil and gas resources, one of the conclusions RMI reached was that life-cycle emissions are a more accurate way to measure impact versus simpler measurements commonly used today. That changes how companies in that industry can view the impact of their decisions, perhaps reprioritizing strategies.

Sustainability is evolving, so don’t let perfect be the enemy of good. By the very nature of the problems it tackles, sustainability is reliant upon Iterative improvement. What is good today will seem primitive tomorrow. There have been and will continue to be scientific and technological breakthroughs. Regulations will shift in unforeseeable ways. Transparency will broaden, affecting the data, people, and processes involved in ensuring improved sustainability performance. Even if primitive, 1) measure your footprint; 2) publicly commit to a target and outline how it will be achieved; 3) organize and take action; 4) use an accepted reporting standard, communicate externally, and welcome feedback.

The Benefits of Sustainable Supply Chains

Sustainability | By •

Consumption and Emissions – A Growth Story

sustainable supply chainsGlobal retail sales are expected to grow to $27.3 trillion USD in 2022, up 5.0% from last year. Paralleling this growth in e-commerce is a growth in carbon emissions – parcel deliveries are estimated to increase by 78% globally by 2030, resulting in up to 30% greater emissions.

Companies have many levers to pull to reduce their impact on the environment such as altering the materials used in products, using more sustainable packaging and even reducing business travel. The supply chain, however, offers the most fruitful area for improvement. According to a report from McKinsey, a typical consumer company’s supply chain creates far greater social and environmental costs than its own operations, accounting for more than 80% percent of greenhouse-gas emissions and more than 90% of the impact on air, land, water, biodiversity, and geological resources. For companies to achieve reductions in carbon footprints, they should look to sustainable investments in their supply chains for the greatest impact.

Benefits of Sustainable Supply Chains

Having a sustainable supply chain won’t just reduce costs and emissions. Here are a few key and ancillary benefits that eco-friendly operations can have on a company:

Reduced Environmental Impact: The overarching goal of sustainability is to reduce the impact that people, governments and companies have on the environment. With sustainable supply chains, companies can significantly reduce their carbon footprints, helping to create a better world for tomorrow.

Consumer Loyalty & Satisfaction: Today’s consumers worldwide are increasingly concerned about their own carbon emissions and impact on the environment. Companies that can reduce their carbon footprint and communicate this with consumers can deliver a positive brand image and gain a competitive advantage. Companies that execute on their sustainability initiatives are likely to enjoy increases in consumer loyalty and satisfaction as well as increased total revenues.

Costs & Profitability: Sustainable supply chains are efficient supply chains that achieve more with less. By introducing route optimization, green-vehicle fleets and crowdsourced delivery, companies can reduce the amount of people, fuel and effort required to operate their supply chain. The added benefit? Reduced costs and improved profitability. Companies that actively plan with climate change in mind secure an 18% higher return on investment than companies that do not.

Investor Relations: Both retail and institutional investors are growing more considerate of sustainability initiatives when allocating funds for investment. Companies that are able to promote sustainable practices are becoming more lucrative for investors with sustainability goals in mind. In 2020, sustainable funds, on average, outperformed both their traditional peers and indexes, according to Morningstar’s 2021 Sustainable Funds U.S. Landscape Report. Improved investor branding and increased returns? Sounds like a win-win.

Compliance: Governments around the world are demanding greater supply chain sustainability in an effort to reduce emissions. Both local governments and the United Nations have emission reduction targets in place and are keenly aware of the effects supply chains have on sustainability. Building more sustainable supply chains can help companies comply with these mandates.

Corporate Culture: Hiring and retaining employees traditionally rests on factors such as pay, vacation and work performed. With each new generation, however, a growing focus on corporate responsibility enters the conversation. A survey of US employees found more than 70% of workers would choose to work at a company with a strong environmental agenda, nearly 40% of millennials have chosen a job because of company sustainability, and more than 60% of workers said a strong sustainability plan would affect their decision to stay at a company.

Tech-Enabled Sustainability Solutions

Technology is changing the way supply chains are orchestrated by enabling greater predictiveness, configurability and efficiency, which in turn translates into greater sustainability. Here are a few key tech-enabled innovations that can help companies create leaner, greener supply chains:

Loop Optimization: Leverages driver activity data of historical orders to suggest the optimal number of routes within a geofence.  This results in an unlimited-scale solution that provides multiple optimized loops and pushes the limits of route performance, generating greater delivery efficiency and reduced carbon emissions.

Green Vehicle Route Planning: Enables customers to design and plan last-mile delivery of products with an intelligent mix of green fleets (electric bikes, bikes and foot delivery), to achieve on-time delivery ultimately driving high consumer satisfaction with minimal or zero carbon footprint.

Long-Haul Truck Route Planning: Allows carriers to design optimal multi-day, long-haul trucking routes to minimize idling times, avoid roadblocks and reduce fuel consumption. Carriers can not only achieve sustainability goals but also meet their OTIF targets.

Carrier Allocation System: Helps brands select suitable delivery partners for different types of shipments to improve their first attempt delivery rates, minimize delivery re-attempts and damaged goods deliveries, and avoid repeated transport and corresponding carbon emissions. This goes hand-in-hand with a strong focus on ensuring a higher percentage of first attempt delivery rates to build and sustain a loyal customer base.

Sustainability Dashboard: Provides a visual representation specifically measuring carbon footprint KPIs for the customer, helping them understand carbon emissions breakdown by mode, route, carrier. The dashboards are designed to scale to be granular enough to measure package-level emissions. The dashboard also provides the ability to track and control CO2 emissions across all modes of transportation (road, rail, ocean and air) and benchmark third-party carriers and routes with the least CO2 emissions.

Jorge Lopera is Vice President Latin America & Industry at FarEye. Jorge has over 15 years of global logistics experience in senior roles encompassing customer growth, product management, and strategy. As Vice President, LATAM & Industry, responsible for FarEye’s expansion into the LATAM region, overseeing commercial and operational activities including sales, account management and channel & ecosystem partners. Serves as industry expert, contributing to major publications and supporting analyst relations.

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