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Covestro’s Innovation,

collaboration and partnership

for sustainable Petrochemical

Business

SMART MATERIALS for Sustainability

Dr. Yogendra Chauhan

Technical Director ( IT & Appliances)

Global Industrial Marketing, Polycarbonates

31August, 2016, Shanghai, China

S&P Global Platts Petrochemicals

Markets Asia conference

Bayer MaterialScience is now Covestro

Since September 2015, Bayer MaterialScience

has been an independent company, operating

under the new name Covestro. We continue to

be a leading supplier of high-value polymers

and innovative solutions for key sectors such

as transportation, construction, electronics,

furniture, sports equipment and textiles. With

our products and applications we want to fulfil

our new vision: to make the world a brighter

place.

The separation enables us as Covestro to

deploy our existing strengths even more

rapidly, effectively and flexibly in the global

competitive arena. Independence gives us the

opportunity to build our position as a pure-

play polymers producer.

August 16 │ Proprietary & Confidential 2

A New Identity

Covestro – Familiar yet brandnew

3

A well-known member of the chemical industry with a new name

Shaped by our history …

• 80 years expertise in Polyurethanes,

Polycarbonates, Coatings

• ~16,000 employees

• 8 main production sites

• 3 innovation hubs in Americas, APAC, Europe

• 2014 Sales of € 11.7 bn

… Defined by our future

To make the world a brighter place

• We inspire innovation

• Reduce our impact on environment

• Drive growth

through profitable technologies

with products that benefit society

October 20 Materials Innovation on Plastic Industry

Covestro – well-known, yet brandnew

August 16 │ CPCIC Shanghai 2015 4

Leading global player in polycarbonate and polyurethanes

We have a global footprint …

in sales, production & innovation

• ~17,000 employees

• 8 main production sites

• 3 innovation hubs in Americas, APAC,

Europe

• 2014 Sales of € 11.7 bn

… with a rich legacy and focus on China

Strong local presence

• Covestro’s worldwide largest production site

with 10 years safe operations

• Regional Innovation hub at PRDC

• 2,500 skilled employees

• Global PCS Business Unit HQ in Shanghai

• A founding member of AICM’s RC initiative

High-value materials To make the world a brighter place

Polyurethanes

Raw materials

for rigid and

flexible foams

Polycarbonates

Granules and

sheets for a

wide variety of

applications

Coatings, Adhesives

& Specialties

Raw materials

for coatings,

adhesives and

specialties

The world is changing

Changes will need innovative materials

Population growth

• The world gains one billion people

every 14 years

• Someone born in 2030 can potentially

reach the age of 130

Climate change and scarce resources

• Max. and min. temperatures over land have

increased on a global scale since 1950

• The global demand for energy will double by

2060

Urbanization and mobility

• By 2050, two thirds of the world’s

population is projected to be urban

• The number of cars will quadruple by

2050 – and so will CO2 emissions

6 December 16, 2015 Covestro Bayer Sustainable Development Forum

These changes shape the needs of entire

industries and value chains

Lightweight &

corrosion

protection in

transportation

Energy

efficiency

in construction

Cost

effectiveness in

renewable

energies

Eco-efficient

production

processes

High performing

materials for

convenience

& health

Enabling

materials

in electronics


Chemical industry as an enabler Sustainable operations and products enable other industries

to enhance their own sustainability performance

Insulation

& glazing

solutions

Coatings &

films

Water/Food

packaging

Increased

resource

efficiency

Operations Products & Applications (selected examples)

Reduced

emissions

Alternative

raw

materials

Synthetic

wood

Viscoelastic

materials

Composite

materials


Quest for sustainability in production drives

innovation Covestro innovative materials based on novel production process

Improved processes save waste,

energy & capital

• Chlorine production: ODC* uses

30% - 50% less energy

• HDI gas phase uses 60% less

energy

• TDI gas phase uses 60% less

energy

• Melt PCS process uses 20% less

energy

ODC*: Oxygen Depolarize Cathode 9 December 16, 2015 Covestro Bayer Sustainable Development Forum

Sustainable products for innovative applications Covestro materials for novel energy systems & increased energy

efficiency

Increasing cost-efficiency in renewables

Wind Blades

• Development of stronger, tougher, lighter composite

materials for faster, more cost efficient manufacturing

processes of wind blades

Towers & Nacelles

• Improved corrosion resistance with advanced coating

raw materials for towers & structural foam for nacelle

manufacturing

Increasing energy-efficiency in public transport

Interior tram wall paneling

• Polycarbonate sheets enable light weight for energy

saving

• PC sheets protect passenger safety due to flame

retardant properties and durability


Sustainable raw materials for innovative

products Covestro is rethinking its raw material base

From pollutant to raw material

• Covestro is integrating CO2 into the

production chain

• Dream production: CO2 as raw

material for polyols

• Technical and commercial viability

of CO2-containing PU foam proven

in two-year test phase


At Covestro sustainability principles govern

our targets

People Planet Profit

Serving people

• improve well-being

• enhance safety

• support social

progress

Reducing impact

• responsible use of

resources

• close material cycles

Creating value

• need-based solutions

for markets

• safeguarding growth &

jobs


This requires a comprehensive view at the

full life cycle of our products…


Eco-friendly production

April 26 │ Covestro Property. All rights reserved 14

Sustainability

Covestro aims to reduce its specific CO2 emissions by 50% by 2025.

The company is

constantly working

to improve its

production

processes and

increase its energy

efficiency.

covestro.com

Chapter 2 Sustainability x DESIGN


LCA Study (Life-cycle assessment)

Case study: automotive Glazing


Full Considerations

LCA Study (Life-cycle assessment)

From Production to End of Life, 150,000km Use


Full Considerations

Recycling

19

More than one Life

MORE THAN ONE LIFE

Water bottles made of polycarbonate can be

filled many times. Even then, their use has not

come to an end.

• Polycarbonate can be recycled for such things as car

bodywork parts and housings for laptops.

• The quality of the recycled materials is not inferior to that of

virgin material for the targeted application profile.

April 26 │ Covestro Property. All rights reserved

Recycling

20

More than one Life

Once a water

bottle, tomorrow a

part of a car –

many materials

from Covestro can

be recycled.

Closed production

cycles protect the

environment.

Turning old into new

April 26 │ Covestro Property. All rights reserved

Reduce Complexity

Non-Painting, Non-Plating, Non-Printing


Less is More

Inherent colors, textures, even Functions

1. Brilliant colors

2. Translucent colors

3. High Reflective White

4. Metallic effects

5. Phosphorescent and Fluorescent effects

6. Edge Colors

7. Light-stable brilliant colors

8. UV Cut-Off for Sun Glass

9. Infrared light absorption colors

10. Infrared light transmission colors


Less is More

Black color with Infrared light transmission

Laser Marking


Less is More

Inkless, high flexibility

Higher efficiency, Lower weight


Innovation

100% Clean Energies – Solar Impulse


Innovation

SUN IN THE TANK

Covestro sponsors the Solar Impulse

project – flying without fuel.

• ultra-lightweight polyurethane foams for the

cockpit and batteries

• extremely thin polycarbonate sheets for cockpit window

• specialty adhesives for composite material

covestro.com

Bio-based

Phenol as raw material for

Polycarbonate

27

Bio-based Phenol

Covestro´s aspiration re bio-based phenol

Our motivation

Covestro´s expertise in this field

Our offer to partners

Bio-based Sustainable and Innovative Solutions 28

Chemicals


Our position in the value chain

Wood/

furniture

Construction

Sports/leisure,

cosmetics, health

Electrical/

electronics

Automotive/

transportation

Key industries Covestro Suppliers

Petro-

chemicals

Bio-based

chemicals

Inorganic raw

materials

Energy

Poly-

urethanes Poly-

carbonates

Coatings,

Adhesives

& Specialties

Basic

Chemicals


Chemicals


Our position in the value chain

Wood/

furniture

Construction

Sports/leisure,

cosmetics, health

Electrical/

electronics

Automotive/

transportation

Key industries Covestro Suppliers

Petro-

chemicals

Bio-based

chemicals

Inorganic raw

materials

Energy

Poly-

urethanes

Poly-

carbonates

Coatings,

Adhesives

& Specialties

Basic

Chemicals

Bio-phenol (not available today)

Motivation

Expertise

Partner search


Covestro is interested to

purchase bio-based

Phenol, respectively one

with a lower carbon

footprint


Our motivation

Covestro´s sustainability position

Reduce impact on the planet …

… and increase profit for society

Our

operations

Our

logistics

Customer

operations

Use of

product

End-of-life

Our raw

materials

Drive development of PPP product solutions (People, Planet, Profit)

Reduce impact from

Reduce impact from…

Foster Life Cicle Thinking

Reduce impact from

Enable our partners

PEOPLE

PLANET

PROFIT

2020 target: Reduction of our specific CO2

emission by 40% (based on 2005)

2020 target: Actively drive initiatives that identify

cost-effective, renewable and bio-

based raw materials

CO2

CO2


Our motivation

Climate change

Coping with Challenges

CLIMATE CHANGE

Source:

(1) World Meteorological Organization - press release Geneva 26.05.2014

(2) Met Office - 2015 global temperature report 09.11.2015

(3) IPPC 5th Assessment Report

CO2

400ppm(1)

1°C(2)

(3)


Our motivation

Climate change report - relevance of purchased raw materials

Source figure: http://www.ghgprotocol.org/files/ghgp/Corporate Value Chain (Scope 3) Accounting and Reporting

Standard.pdf; Covestro data: CDP Climate Change 2015 Report from Bayer AG

35%

65%


Our motivation

Relevance of phenol for polycarbonate

kg

CO

2 e

q.

/ kg

po

lycarb

on

ate

ph

en

ol

ca.

40%

*

* calculation based on eco-profile values of

PlasticsEurope (http://www.plasticseurope.org/

plastics-sustainability-14017/eco-profiles.aspx)

bio

-co

nte

nt*

in

%

* bio-content calculated as bio-based carbon

content typically used for certificates according to

ASTM D6866

CO2 footprint bio-content

po

lycarb

on

ate

bio

-ph

en

ol

ca.

75%

*

%


Our motivation

2014 statistics & survey

bio-based drop-ins vs.

all bioplastics

>50%

bioplastics used for

packaging vs. non-packaging

bioplastics vs.

all plastic

material

<1%

>67%

future market

interest for bio-based

drop-ins in

non-packaging

application ?

STRONG

for bio-based

polycarbonate in specific

industries

Source:

www.bio-based.eu/markets

www.plasticseurope.org/Document/plastics-the-facts-2014.aspx

Source:

Global market study commissioned

by Covestro in 2014 / 2015 including

customer survey on sustainability


Our motivation:

contribute to coping with

climate change

be able to respond to strong

future interest in specific

industries



Phenol market

46%

13%

28%

end uses for phenol 2015

BPA Nylon, KA Oil

Phenolic Resin Others

BPA

66%

31%

PC Epoxy Resin Others

Polycarbonate

Sources:

IHS e.g. IHS World Analysis Cumene, Phenol, Acetone 2016, ICIS, inter alia



Potential routes to bio-based phenol

Biocatalysis Chemo catalysis / Classical intense separation

Sugars Precursor Benzene

Petro BTX Benzene Phenol Cumene

Biomass BTX

Phenol

Lignin

Lipids BTX

Furanics

Phenolics

Phenolics

Sources: Patent and literature search



Bio-based phenol via fermentation - own development

GLUCOSE

CHO*

bacteria cell as a

chemical reactor

* precursor in the aromatic amino acid pathway

4HB PHENOL

new reactions

removed

reactions

min0 5 10 15 20 25

mAU

0

100

200

300

400

500

600

700

800

DAD1 E, Sig=280,16 Ref=360,100 (INJMA\ZTJUR_2012_09_14\FE02 40H.D)

Phenol

Bioreactor (1 liter)

Sources:

WO 2014/076113 and cav 3-2014, page 68f



Economic and ecological assessment

Source:

Internal screening based on assumptions for a sustainable source of biomass

and an optimized process which would be the target of further developments

kg

CO

2 e

q. / k

g

pe

tro

- p

he

no

l

up to

50%

CO2 footprint reduction potential

€ COGM for bio-phenol

potentially lower, but

depends on petro vs.

sugar raw material cost

?

?

bio

-

ph

en

ol


Our offer to partners

Win-win partnership for a successful bio-phenol innovation

(scouting & assessment of routes, own R&D & IP)

available

(expertise in technical,

economic & ecological

assessment, sample testing

capacity)

(purchase agreement in case

of economic viability)


Our offer to partners:

significant demand

development cooperation

including groundwork &

expertise


covestro.com

High

Performance

enabled by

Nature

The first biobased diisocyanate

and a new building block for

polyurethane coatings:

pentamethylene diisocyanate

Resource

Scarcity

• Renewable material %

• Carbon footprint / LCA

• Regulations /

Certificates

• Corporate Image

• Product differentiation with

new raw materials

• Improve performance with

newly available raw

materials

• Technical breakthroughs in biotechnology

• Scarcity of fossil resources

• Process costs

Drivers for renewable raw materials

Much more than just a “nice to have” for sustainable marketing


Biobased Pentamethylene diisocyanate (PDI)

A new building block for polyurethane chemistry

• The first isocyanate with significant biocontent: 71% renewable carbon*

• The corresponding derivatives are similar to hexamethylene diisocyanate (HDI)

based ones, yet offer some advantages

• Produced very efficiently from biomass combining biotechnological and

chemical processes, e.g. energy efficient gas phase technology

• First diisocyanate in 30 years to be fully developed and scaled-up

High performance enabled by nature * Confirmed by radiocarbon method 14C

measurement according to ASTM-D6866 standard


Biobased Pentamethylene diisocyanate (PDI)

More energy efficient and with a better carbon footprint

• Bio-based and significantly improved carbon footprint cradle-to-gate in

comparison to HDI (internal assessment done, external certification in process)

• Bio-based process with significant improvement on energy efficiency

•

Refinery

Precursor 1

Precursor 2

HDI

HDA

1

2

3

Crude oil extraction

4

4 step petro-based synthesis vs

2 step bio-based synthesis

Carbon footprint* (GWP):

6,5 kg CO2 eq

* ALIPA industry average value / GWP: Global Warming Potential

Fermentation to PDA

PDI

1

2

Carbon footprint

under calculation

Biomass

Bio-refinery

CO

2

CO

2

CO

2


High performance enabled by nature

The first biobased polyurethane crosslinker

• Development of technology platform based

on PDI

• First PDI derivative launched April 2015 at the

European Coatings Show:

DESMODUR® eco N 7300, a polyisocyanurate

• Full REACH registration to be completed in 2016

• Capacity up to 20 kt from 2016 on in existing

facilities

• Innovation multi-awarded:


Desmodur® eco N 7300

Near drop-in with upside potential

* 70% renewable carbon, 14C measurement according to ASTM-D6866 standard

0

1

2

3

4

5Potlife

Drying

Compatibility

Pendulumhardness

Biocontent

Scratchresistance

Chemicalresistance

Weatheringresistance

Desmodur® eco N 7300 Desmodur® N 3300

5 e

xcelle

nt ↔

0 b

ad

*


Desmodur® eco N 7300

Multiple applications

… and much more! You can potentially use Desmodur® eco N 7300 wherever HDI trimers are used

High performance enabled by nature


• Market introduction of Desmodur eco

N7300 at European Coating Show 2015

• Samples available

• Commercial availability planned 2016,

global capacity up to 20kt in existing

facilities

• New technology platform based on this

new isocyanate in development

PDI & Desmodur® eco N7300

Summary

High performance enabled by nature Bio-based Sustainable and Innovative Solutions 51

100

eco

70 High performance enabled by nature

% performance

less emissions CO2

% bio-based


Forward-looking statements

Forward-looking statements

This presentation may contain forward-looking statements based on current

assumptions and forecasts made by Covestro AG. Various known and unknown risks,

uncertainties and other factors could lead to material differences between the actual

future results, financial situation, development or performance of the company and the

estimates given here. These factors include those discussed in Covestro’s public

reports which are available on the Covestro website at www.covestro.com. Covestro

assumes no liability whatsoever to update these forward-looking statements or to

conform them to future events or developments.


http://www.covestro.com/

http://www.bayer.com/

Our offer: The Impranil® eco family

Zero solvent & renewable synthetic material for textiles


PU skincoat with grain / texture

PU foamed body layer coating

tiecoat

textile substrate

PU finish IMPRANIL® eco DL 519

43±3% bio-based*

IMPRANIL® eco DLS

53±3% bio-based*

IMPRANIL® eco DLP-R

65±3% bio-based*

* % renewable carbon, 14C measurement

according to ASTM-D6866 standard

• Bio-based polyurethane dispersions to be used in

every layer of the synthetic material

• Performance matches existing products & the bio-

based versions can be dropped in directly with low

reformulation effort

Partnerships along the value chain

Covestro links chemicals to key consumer markets

Polymers &

Intermediates Applications Chemicals

CO2 CO2


TODAY’S SUSTAINABILITY

CHALLENGES REQUIRE

INNOVATION AND

COLLABORATION – LET’S

START TOGETHER TODAY

covestro.com

Thank you for

your attention

Dr. Yogendra Chauhan Covestro ( Shanghai) Mgmt. Co. Ltd,

12/F, CITI Group Towers,

33, Hua yuan Shiqiao Road, Pudong, China- 200120

Tel: +86-21-80208104

[email protected]

Forward-looking statements:

This presentation may contain forward-looking statements based on current assumptions and

forecasts made by Covestro AG.

Various known and unknown risks, uncertainties and other factors could lead to material differences

between the actual future results, financial situation, development or performance of the company

and the estimates given here. These factors include those discussed in public reports of Covestro

and Bayer which are available on the Covestro website at www.covestro.com as well as on the

Bayer AG website at www.bayer.com.

Covestro assumes no liability whatsoever to update these forward-looking statements or to conform

them to future events or developments.

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