DSM has become something of a sustainability trailblazer for the chemical industry as it pushes the concept of carbon pricing through its own operations and investments as well as lobbying others to do so.
The Dutch specialty group applies a €50/tonne carbon price to all its operations and investments as part of a company growth strategy, which is driven by trends of global population growth and the need for action against climate change.
Management board and executive committee member, Dmitri de Vreeze, who is responsible for the company’s Materials division plus sourcing, the Netherlands and Asia, says that since the Paris agreement was signed in 2015, industry must play its part in pursuing the target of keeping global temperature rises less than 2°C above pre-industrial levels.
“That can only work with intervention and we want to show our commitment to this. Some businesses will be scared and this should be the case for those with very high carbon emissions - these companies should take action.
He adds: “We feel governments and legislators need to help businesses take a step up in improving the world.”
DSM’s €50/tonne carbon price assumption is used to judge the viability of existing operations and future investments. “We measure our own carbon footprint and that of any new investments and this helps us future-proof our businesses. We think this should be implemented [more widely], and we feel it will come,” de Vreeze adds.
DSM emits 1.5m tonnes/year of carbon. All of its sites are analysed with the aim of cutting their emissions by 3-4% each year. The company’s carbon emissions have declined by 40-45% since 2008. “We must look at all sites and the worst performers need huge programmes to cut their emissions,” he says.
DSM also takes part in carbon price lobbying. CEO Feike Sijbesma is on the Global Carbon Pricing Leadership Coalition, which encourages other companies to work with a carbon price. The coalition brings together 200 executives from government, the private sector and civil society to share experience working with carbon pricing and to expand the evidence base for the most effective carbon pricing systems and policies.
“A few countries do it, such as China, which is taking a huge leadership role. A level playing field is important as there are different systems in Europe, China and Canada that should be aligned.”
According to Judith Schroeter, business director Carbon Market Analytics for ICIS, internal carbon pricing is becoming more common, mainly in reaction to the Paris agreement on climate change that was signed in 2015. She is aware of its use by international oil and gas companies and several consultancies supporting other industrial companies in setting up internal carbon prices. Businesses are required to take part in different carbon markets if they operate in several regions, so: “it makes it internally easier for companies if they are using a constant price across the business,” said Schroeter.
RENEWABLE ENERGY TARGETS
DSM has joined RE100, a global business initiative committed to 100% renewable electricity. The company has a RE100 goal to purchase 100% renewable electricity, with an interim goal that 50% of purchased electricity will be from renewable sources by 2025.
DSM is working with AkzoNobel, Google and Dutch electronics/healthcare group Philips to invest in the Krammer wind park in the Netherlands. This will start up in 2019 and generate 350,000,000 kWh of power, or enough for 100,000 households. DSM will purchase enough to provide 10% of its total annual electricity needs.
“DSM is always being future-proofed. We go out to the market and pick out trends over the next five to 10 years. We see two big macro trends. Firstly, the growth in global population from 7.6bn-9.7bn by 2050: this raises a food and nutrition problem that will drive growth.”
He adds: “Looking at these trends we will build the new DSM for the future. Our strategy is built around sustainability. The world expects companies and governments to be more focused on sustainable business.”
De Vreeze concedes that his materials division has a worse carbon footprint than others, but points out that many of its products such as engineering plastics substitute metal to reduce CO2 through light-weighting and fuel efficiency.
ELECTRIC VEHICLE IMPACT
Electric motors produce a lot less heat than internal combustion engines so have less requirement for high heat-resistant materials such as nylon 6 and 6,6.
De Vreeze agrees, but adds that some trends in the electric vehicle market are positive for DSM, and some negative. He believes electric vehicles will be an important market but not mainstream for another 20 years.
“At that point high heat-resistant engineering plastics will perhaps be less relevant. But there will be an increase in the need for other materials [such as engineering plastics] for friction reduction as well as films in batteries.”
Increasing the distance between charges through weight reduction will be a key priority and this will drive different forms of innovation with more new raw materials. He highlights polyamides, caprolactam, and new composites like Dyneema, which DSM claims is the world’s strongest fibre.
“The next step is the internal combustion engine over the next 10 years – making them more efficient. Then electric vehicles will be the following step up in 10 to 20 years.”
He says DSM’s innovation pipeline will switch to different systems in terms of materials and there will be a change in where the company sells its products.
“These materials must be sustainable and follow the circular economy in terms of reuse and recyclability. Bio-based resins and composites will be important.”