INSIGHT: Supply, clash between policy and regulation loom large in sustainability debate

Joseph Chang


COLORADO SPRINGS, Colorado (ICIS)–Scaling up supply of recycled and renewable materials, along with products that enable sustainability and the energy transition to meet burgeoning demand growth, will be the key challenge for the chemical industry.

Even in today’s challenging macroeconomic environment, many products with a sustainability edge are getting sold out.

“The challenge is not so much demand – it’s really the supply side. We believe demand is here to stay and we have to work very hard across the value chain to make it happen in a market that for the foreseeable future will continue to be supply-constrained,” said Yvonne van der Laan, executive vice president (EVP) of Circular and Low Carbon Solutions at LyondellBasell.

“If we would have enough material on offer for recycled content out of advanced (chemical) recycling, we would be sold out, and we see the same for our mechanical recycling, high quality solutions – sold out,” she added.

Van der Laan and other executives spoke at a panel hosted by Accenture at the American Chemistry Council (ACC) Annual Meeting.

In November, LyondellBasell decided to move forward with engineering to build a chemically recycled plastics plant using its MoReTec technology at its Wesseling, Germany, site near Cologne. A final investment decision (FID) is targeted for the end of 2023, and start-up of the 50,000 tonne/year output plant is expected by the end of 2025.

Demand for recycled polymers is being driven by packaging and brand owner commitments for 2025 and 2030, van der Laan pointed out.

“If you look at packaging, the vast majority is being driven by food packaging and that’s where advanced recycling comes in because by far, for now, that is the best option,” she said.

“In many of these product lines, despite all the economic uncertainty we’re facing, we’re having record quarters and are sold out on Nafion membranes. There is a lot of opportunity in sustainability and in my view, it starts with the product portfolio,” said Mark Newman, CEO of Chemours.

Nafion is Chemours’ fluoropolymer-based ion exchange membrane which is being used in electrolysers to produce green hydrogen as well as in hydrogen fuel cells. In January, Chemours announced a $200m investment to build a Nafion plant in France.

“We are investing heavily both in terms of the technology and R&D, but also in capacity because there’s a lot of demand that is underserved today for more sustainable products,” said Newman.

In thermal management, Chemours is working on immersion cooling for data centers, which can reduce the power load on cooling by 95%. “The server actually sits in the fluid… That could be a whole new business model,” he said.

The global chemical industry has announced $60bn-90bn in sustainability-related investments through 2027, with hotspots in naphtha alternatives (chemically recycled/bio-based/mass balanced), mechanically and chemically recycled polymers, and bio-based intermediates and polymers, according to a new study by Accenture.

The consultancy sees sustainability-related sales representing around 30% of the future growth in the chemical industry through 2027, or $200bn of the $700bn in projected sales growth.

However, this will depend on chemical companies being able to secure permits to build.

Supply is caught in the clash between public policy goals to reduce greenhouse gas (GHG) emissions and increase recycled content in plastic packaging on one side, and regulations that are constraining the construction of new plants and infrastructure on the other.

“The world wants clean energy… and the new economy but they don’t understand what it means at the product level. Getting a new permit to build anything, including materials that enable the green economy, is difficult anywhere in the world, especially here in the US,” said Newman.

“We have a really strange thing where we have governments passing big laws [or introducing proposals], whether it’s the US IRA [Inflation Reduction Act] or the EU Green Deal, to stimulate the green economy. But at a regulatory level, you have a lot of regulation that’s making it virtually impossible,” he added.

“Public policy priorities… don’t match up with regulation and so we have things going in completely opposite directions,” said Newman.

Certain government policies such as those in the US IRA or the EU European Green Deal are helpful, as they can provide more certainty for companies looking to make substantial investments.

“What we all need are policies that give us… a reasonable outlook on the return on those investments. That is where policies, whether they are incentives or compliance-driven, can help us,” van der Laan added.

“Public policy is very important, and we should all applaud… whether it’s the EU Green Deal, the US IRA, the CHIPS Act or the Infrastructure Act as really positive developments for countries, society and the industry,” said Newman.

“But the regulation has to work with the public policy. Otherwise, our society and our industry will never get the benefit of these dollars that are encouraging investment in climate and the future economy,” he added.

Meanwhile, the chemical industry continues to invest in technology to decarbonise its operations.

“You need the building block chemistry to first have a lower carbon intensity to get us going in terms of reducing our GHG emissions,” said Brad Griffith, EVP, Chemicals and chairman of Sasol (USA) Corp.

Investment in technologies such as electric cracking will give the industry the ability to lower its carbon footprint, he added.

“Beyond alternative feedstocks or routes to these building blocks, the exciting thing that inspires us, is when we work with our customers on how to do the job… with different chemistries,” said Griffith.

The chemistry exists for effective cold water washing which saves consumers energy and money. Yet educating the consumer on the efficacy is still a challenge, he noted.

“The choices consumers make are going to be key for us to make this energy transition. At the same time, it can help drive the chemistries,” said Griffith.

The ACC Annual Meeting runs through 7 June.

Insight article by Joseph Chang

Thumbnail shows hand holding green globe. Image by Shutterstock.


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