Circular Economy for Consumer ChemicalsAn outside-in perspective

Wolfgang Falter

Frankfurt am Main, February 15th, 2019

22018 Deloitte

Circular Economy is an essential element of Chemistry 4.0

Chemistry 1.0Foundation and coal chemistry

Chemistry 2.0Petrochemicals

Chemistry 3.0Globalization & Specialization

Chemistry 4.0Digitalization & Circular Economy

1865

1950

1980

2010

Source: VCI, BASF

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Circular Economy is about sustainable solutions in new eco-systems

Competition Competition

Chemical

Producer

Supplier

Distributor

Customer

New

players

Software

provider

Hardware

provider

Supplier

Chemical Producer

Distributor

Customer

Go

od

s, S

ervic

es,

Bran

d

Co

llab

orati

on

(D

ata

/ K

no

wle

dg

e)

Value based on production of

chemicals and materials

[€/kg]

Value based on designing, building,

operating smart, sustainable solutions

[€/performance or solution unit]

From linear economy … …to complex, often circular, ecosystems

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Circular Economy are extended business models around 7Rs

(Re-)Design Resource-efficient and climate friendly

production

Return Recycling Regeneration of energy/ CO2

Removal

Residue depositing

Customers and users of chemicals

Production of chemicals and materials

Circular economy in the chemicals industry (7Rs)

Source: VCI, Deloitte

52018 Deloitte

Consumer Chemicals are the largest sub-sector in Germany

Chemicals for

consumption

(e.g. detergents, care

chemicals, CASE, I&I)

Pharmaceuticals and

food supplements

Crop protection

agents and fertilizers

PackagingPlastic materials,

synthetic fibers,

synthetic rubber

Composites,

ceramics,

metal alloys

Catalysts,

Membranes,

Cellular cultures

Additives,

ingredients,

pigments

Resins,

binders

Water chemicalsChemicals for mining

and fracking

Solvents

Abrasives, heating

media, coolants,

lubricants

auxiliaries

Production in all

segments of the

chemical and

pharmaceutical

industry

Production

ConsumptionAuxiliariesIn products –concentrated

Application through customers and consumers

Chemicals/

Materials

In products –dispersed

~ % revenues in DE 10% 35% 15% 40%

Source: VCI, Branchenverbände, Deloitte

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What are Consumer Chemicals exactly?

Criteria Consumer Chemicals Other Chemicals

CustomerBrand owner, Retailer

Formulator,Distributor

Professional Industrial

Channel Retail Wholesale Direct Sales

Application, User

DIY, private Craftsman Batch Automated

Shelf life Very short <1year 1-3 years >3 years

Recyclability Uncollectable Collectable Return, Recycle, Regenerate

Product delivery form

Small packages Large packages Containers Bulk

Pro

duct

M

ark

et

Care Chemicals- Home Care- Fabric Care- Personal Care*Disinfectants

Industrial &InstitutionalLubricantsMetals & MiningBiocides

Water ChemicalsFood & Feed AdditivesCoatings, Adhesives, Sealants, Elastomers

AgrochemicalsFertilizers

Pharma-/Nutraceuticals * e.g. Body Care, Hair Care, Oral Care, Skin Care, Cosmetics

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What does Circular Economy mean for Consumer Chemicals?

Return Recycling Regeneration of energy/ CO2

Air, Soil, Water

Residue depositing

A. Application

Use of Consumer Chemicals, incl. tools

D. Waste

Collectable & uncollectable left

behinds

C. Reuse, Recycling

(mech., chem.)

Product and/orPackaging

B. Product(incl. Packaging)

Production of Consumer Chemicals incl. Transportation

& Packaging

(Renewable) Feedstocks &

Energy

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A. Application – The Use/ Consumer Benefit is the key to everything

Note: Fritz Zwicky invented the morphological analysis for multi-dimensional, non-quantifiable problems where causal modeling and simulation do not function well or at all.

1. Define user/ consumer benefit and frame the task from a consumer perspectivee.g. cleaning a floor, removing weeds, connecting two pieces, keep hygiene, etc.

2. Define parameters of the problem solutionse.g. how to do the task (mechanical, thermal, electrical, biological, chemical)?

what functionalities to do (detect, dissolve, remove, dispose stains)?how to apply the solution (spray, brush, soak, wipe, rinse, CIP)?how to transport & store the solution (cans, bottles, bags, drums, IBCs, bulk)?

3. Define potential features of the problem solutione.g. size of the packaging, kind of packaging, material of packaging, kind of closure,

material of closure and label

4. Combine all possible parameters & features

1.

Define user

benefit

2.

Define

parameters

3.

Define

potential

features

4.

Combine

parameters

& features

5.

Select

consistent

solutions

6.

Evaluate

selected

solutions

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A. Application – The Use/ Consumer Benefit is the key to everything

5. Select solutions with high consistency

6. Evaluate selected solutions against pre-defined criteria, e.g.

A. Application: Product and application safety and health for humans (non-hazardous, non-carcinogen / mutagen /reprotoxic, easy-to-use)

B. Product, Production/ Transportation: Ressource and energy efficiency, climate friendliness (GHG, CO2), non-scarce feedstocks/ raws, conformity of suppliers to social & environmental standards, worker protection/ working conditions

C Reuse/ Recycling: Packaging systems/ returnables, Waste-to-X

D. Waste: Environmental impact (eco-toxicity, littering, heavy metals, mobility, bio-diversity, eutrophication, air emissions)

1.

Define user

benefit

2.

Define

parameters

3.

Define

potential

features

4.

Combine

parameters

& features

5.

Select

consistent

solutions

6.

Evaluate

selected

solutions

102018 Deloitte

A. Application – Textile Care examples: Safe Chem and Day 2

Source: Unilever, Ecofys, FLK, SafeChem

400

12560 30 5

1 2 3 4 5Generation

SafeTainer

Chemical Leasing

Performance Pay(kg of cleanedtextiles)

Ecosystem: Cleaningequipment, dry cleaners, SafeChem, local distributors

Hologenated solvent waste per kg of dry cleaned textiles:

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B. Product – desirable characteristics for substances & materials

Characteristics/ Criteria desirable undesirable

Human toxicity/ danger of public health None or very low High or very high

Environmental behaviour (PBT=bioaccumu-lative & toxic; vPvBs=very relevant)

Quickly, fully biode-gradable, no mobility

Persistant, PBTs, vPvBs, mobile

Dangerous physico-chemical properties NoYes (explosive, oxidi-zing, flammable, etc.)

Listed* as “problematic substance” Not listed Listed

Raw MaterialsKnown origin, abundant, sustainable

Non-renewable, scarce, unknown origin, restricted

Emission of GHG Low, renewables High, hydrocarbons

Resource & energy consumption Low High

Integrity of workers High Low

Eco-toxicity / Danger to ecosystem health Low High

Additives, Catalysts, Fillers, Color, Auxiliaries, Solvents, etc.

No, only functional Yes

PackagingMinimum, eco-friendlyRecyclable/ recycled

Unnecessary packa-ging, non-recyclable

* Chemicals on lists: Authorisation under REACH – especially those for which marketing and use restrictions exist (REACH Annex XVII), priority and priority hazardous substances of the Water Framework Directive, Persistent organic compounds regulated under the POPs-Convention, Substances on the priority lists of OSPAR7 and HEL-COM8, Substances affecting the climate according to the Montreal- and Kyoto –Protocol, Ozone depleting substances according to the Montreal protocol, and endocrine disrupting substances, GHS, POPs, BAT, BEP, PIC, Basel conv.etc.

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B. Packaging – Fundamental Redesign and Innovation needed

Source: McKinsey, McArthur foundation

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B. Packaging – Many ongoing initiatives

• RecycleReady Technology enables packaging with the convenience and features of typical multi-material, multi-layered pouches, flow wrappers, and barrier film with the added benefit of recyclability

Savencia Fol Epi – Packaging initiative

• In 2018 revision of plastic tray)

• Less plastic, 30% recycled plastic

• Potential brand image improvement

• Financial benefits

Full sleeves

• Reduction of label size

• +1.1% potential recyclable plastic packaging (10.9kMT/a)

PET-bottle• Instead of using PET-PA-

copolymer, change Barrier (SiOx-Plasma coating)

• +1.8% potential recyclable plastic packaging (18.2kMT/a)

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C. Recycling - Waste-to-Chemicals: Enerkem

Source: Enerkem, Research and Markets, Renewable Chemicals Market – Global Trends & Forecasts to 2018

• 14-member consortium, aiming to produce bio-based methanol from municipal solid waste using Enerkem technology

• Consortium plans to open a first European Waste2Chemistry plant in Rotterdam in 2019. Production of 220 thousand tons of methanol with this new technology would reduce CO2 emissions by more than 250 thousand tons per year

• Out of methanol, AkzoNobel produces propellants (Dimethylether (DME), adhesives and other chemicals intermediates as monochloroacetic acid and chloromethanes)

• Initiative is cash-positive, creating a basis for a viable commercial operation

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D. Waste – Global Alliance to End Plastic Waste (AEPW)

Source: AEPW, The Maritime Executive, Jan 2019

• Partner with cities to design integrated waste management systems in large urban areas where infrastructure is lacking.

• Promote technologies, business models and entrepreneurs that prevent ocean plastic waste and improve waste management and recycling.

• Develop an open source, science-based global information system to support waste management projects globally with reliable data collection, metrics, standards, and methods.

• Create a capacity building collaboration with intergovernmental organizations such as the United Nations to pursue the most effective and locally-relevant solutions.

• Capture plastic waste before it reaches the ocean from the 10 major rivers shown to carry the vast majority of land-based waste to the ocean.

30 members have committed over $1 billion with the goal of investing $1.5 billion over the next five years to help end plastic waste in the environment

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Circular Economy for Consumer Chemicals - Summary

Return Recycling Regeneration of energy/ CO2

Air, Soil, Water

Residue depositing

A. Application

Use of Consumer Chemicals, incl. tools

D. Waste

Collectable & uncollectable left

behinds

C. Reuse, Recycling

(mech., chem.)

Product and/orPackaging

• Use performance/ solution, not product based LCAs

• Make products safe and easy to use• Consider economic, ecologic social

aspects from producers, users and societal perspectives

• Minimize leakages

• Make systems environmentally compatible

• Ensure, products are quickly, fully biodegradable

• Utilize waste

• Minimize/ redesign Packaging

• Recycle packagings

• Use non-hazardous, “good” chemicals

• Think about waste• Avoid non-functional

additives/ ingredients• Explore alternative

feedstocks/ renewable resources and energy

• Minimize transport-tation

B. Product(incl. Packaging)

Production of Consumer Chemicals incl. Transportation

& Packaging

(Renewable) Feedstocks &

Energy

172018 Deloitte

Thank you!

Q & A