Christophe Schilling

Christophe Schilling

10/14/2010 @ 6:00AM

A Balanced Diet For The Chemical Industry

Big sectors of the economy don’t change overnight, but when preparation meets opportunity, change brings enormous value. Major companies are boosting their energy efficiency and reducing manufacturing costs in an increasingly competitive global landscape. The result is often incremental improvements to profitability and sustainability. Going further involves asking tough questions and requires rethinking long-held assumptions, technology and processes.

The $3 trillion chemical industry is ripe for such a transformation. Innovators from pre-IPO startups to global powerhouses like DuPont are now planting the seeds for a transition that can redefine the industry and the relationship with the world and consumers. Success will be measured first and foremost by the economic benefits.

The chemical industry literally creates the world around us–making materials for stronger car bumpers, stretchy spandex, bouncy running shoes, better medications, and lightweight plastics for computers, phones, bottles and more. The chemical industry thrived on the economics of the 20th century, improving our quality of life but growing totally dependent on fossil fuels.

Production of modern chemicals uses 8% of hydrocarbons worldwide–mostly as raw material, or “feedstock,” but also for energy used in the manufacturing process. The economics of the chemical industry and its environmental footprint depend heavily on fossil fuel-based processes. Diversifying away from fossil fuels can provide improved savings to the chemical industry and “green” a wide range of everyday products.

How can we diversify the industry and enable it to redefine itself? Here’s my three-point solution:

Use a variety of renewable feedstocks to replace oil and natural gas: Recent advances in biotechnology and chemistry mean we can create more chemicals from renewable resources like sugarcane, corn, cellulosic biomass and renewably-sourced syngas. Industry leaders such as DuPont are developing bio-based chemicals like Sorona fiber, made from corn, which represents one of the fastest growing segments of the carpeting industry. Expanding the chemical industry’s production inputs from fossil fuels to include a range of renewable feedstocks allows producers to adjust to local conditions and market changes.

Make changes as close to the source as possible: The chemical industry produces thousands of different chemicals and materials, but most of them are made from about 50 “intermediate and basic” chemicals. If we make more sustainable versions of these 50 chemicals, especially those basic chemicals at the core of the industry, we can leverage existing infrastructure for the rest of the supply chain. We will have the broadest impact on the widest range of downstream products by working earlier in the supply chain.

Turn a transition into an opportunity for lower costs: The good news for the chemical industry is that new bio-based manufacturing from renewable feedstocks should cost less, both in upfront capital investment and operating costs–if you develop the right process technology. As the current industry leaders–Dow, DuPont, BASF and others–invest in these new approaches, they can boost margins and competitiveness. The U.S. can be the leader in bio-based chemicals, reduce our energy dependence, and drive growth of domestic green manufacturing jobs.

The most powerful innovations will put the largest chemical companies to work, leveraging their strengths. Early biofuels innovators that tried doing it on their own learned a harsh lesson before partnering with fuel companies like Shell, Chevron and BP . Joint development can convert the big chemical industry players like BASF, DuPont and Dow into clean technology leaders. But it doesn’t stop there.

Consumers and large brands are exerting their influence to spur this transformation. For example:

–Wal-mart’s Sustainability Index looks to the company’s 100,000 suppliers to evaluate and understand their impact on energy and climate, material efficiency, natural resources, and people and community. The chemicals used to make those products will come under increasing scrutiny.

–Brand owners like Nike are creating real demand pull from their suppliers. Nike’s Considered line of clothing aims for reduced environmental impact. The brand attracts consumers who prefer environmentally friendly products, giving Nike a competitive advantage.

–Consumers are increasingly aware of the impact of their purchase decisions, and solid majorities are paying greater attention to corporate environmental practices. By demanding more sustainable products, consumers will do their part for this revolution.

As the American chemical industry moves from petro-based chemicals toward renewable-based sustainable chemicals, it offers a way forward with more domestic jobs, less reliance on foreign fossil fuels and a more responsible, environmentally aware consumer culture. Sustainable chemical manufacturing will let the industry keep and build more plants in the United States, and use low-cost renewable feedstocks instead of moving production to oil- and gas-rich countries.

Christophe Schilling is the CEO of Genomatica, a renewable chemicals startup.

See Also:

Green Chemistry Is Good For Business

Another Step Toward Green Design

California’s Bad Chemistry

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