Published Originaly in Chemical Industry Digest June 2023
Abstract
In today’s industry, sustainability and circularity are crucial for growth. The outcomes of the recent COP27 Summit emphasize the urgency of prioritizing sustainability. Organizations must leverage innovation to offer sustainable prod- ucts/services and reduce their carbon footprint, combating environmental threats like global warming and pollution.
Introduction
Sustainability and circularity have become crucial drivers for industrial growth today. The recent outcomes of the COP27 Summit highlight that sustainability is no longer optional but imperative for the world. Therefore, organizations must refocus their efforts on leveraging innovation to provide sustainable products or services that reduce their overall carbon footprint.
Environmental challenges such as global warming, climate change, and pollution continue to pose significant threats to our ecosystem. It is high time for organizations worldwide to invest in innovative solutions that promote sustainability. Collaboration is essential to lower greenhouse gas emissions and drive innovations for a sustainable future.
Bio based or green products are products with better or similar properties to fossil-based products, Bio based economy, can address the key global challenges of raw materials, climate change, circularity.
The concept of a bio-based green chemical industry is still in its early stages in India. Increasing pollution and the harmful effects of chemical effluents on water bodies are raising serious concerns and driving the industry to prioritize sustainable development. As a result, markets are increasingly recognizing the importance of sustainability.
The sustainability of bio-based green products is measured throughout their life cycle, including design, manufacture, application, and disposal. These products find applications in various sectors such as food ingredients, home and personal care, water treatment, and industrial cleaning products.
The chemical industry has always been at the forefront of creating materials with lower environmental impact and lower carbon footprints. However, the industry heavily relies on fossil fuels like natural gas, crude oil, and coal. Therefore, it is crucial for the chemical industry to consider how investors value sustainability and take necessary actions to maximize value creation in the future.
As industries shift away from fossil fuels and transition to renewable sources, chemicals will play a central role in achieving a net-zero emissions economy.
The Growing Consumption of Green Chemicals
There is a growing trend in the chemicals industry to shift towards “green chemicals” or, more accurately, “sustainable chemistry” that focuses on environmentally friendly products. These products demonstrate significant reductions in environmental impact, consume less energy and water, have lower effluent treatment costs, and are more eco-friendly.
The evolution of green chemistry in the chemical industry is an important trend driving the growth of the green chemicals market. It is projected to grow at a compound annual growth rate (CAGR) of 10.5% between 2019 and 2025.
However, a key challenge for bio-based products is the perceived high initial cost, which hinders widespread acceptance among service providers and consumers. Nonetheless, the transition towards green chemicals is inevitable, and it is only a matter of time before the adoption of these environmentally friendly products becomes mandatory.
All stakeholders need to be educated on the vital role in promoting the benefits of a sustainable, green chemical revolution and creating awareness about the importance of maintaining an eco-friendly environment. Once customers have tested and experienced the benefits of these products, they are likely to continue using them, eventually leading to significant industry growth.
With the increasing focus on climate change and actions for its mitigation, steps are being taken to transition from the current fossil-based economy to a more sustainable one based on renewable energy, biomass, and recycling. The shift towards a bio-based circular economy has multiple drivers and requirements. The need is to develop an environmentally, economically and socially sustainable circular global economy. It necessitates the development of biorefinery systems that efficiently and cost-effectively process biological feed stocks into a range of bio-based products, integrating them into existing infrastructure.
Successful implementation of a bio-based economy requires finding the right balance between market attractiveness and cost competitiveness. Cost competitiveness depends on factors such as feedstock availability, manufacturing efficiency and the potential for value addition through process or technological innovation. Market attractiveness is a composite of the current market size, expected compound annual growth rate (CAGR), and macro trends.
The China factor. Benefits for India
The slowdowns in China have contributed to the growth of India exports. China’s specialty chemicals market has experienced a downturn in recent years, primarily due to various factors, with the most prominent being the introduction of stringent environmental regulations.
Bio-based products: a key focus of global majors
Chemicals play a crucial role as enablers of many sustainable developments such as wind power, more fuel-efficient vehicles, and improved products, which have become the primary focus for companies worldwide. Many mid-sized chemical companies are also transitioning towards increased utilization of bio-based feedstocks, although it may not be the most significant aspect of their overall sustainability initiatives. This shift represents a concerted effort to enhance the environmental impact of their existing petrochemical processes.
By adopting a strategy of innovation, staying at the forefront of change, and recognizing the areas where knowledge can create a meaningful difference, these companies can effectively meet the needs of farmers, customers, communities, and workplace colleagues.
Key factors for Bio-based chemicals
The chemical ecosystem and the industry’s focus on sustainability are primarily influenced by three key factors:
Regulatory: Compliance with stringent regulations, including the gradual ban on single-use plastics, extended producer responsibility (EPR) rules, and regulations governing potentially hazardous substances, requires investments in innovative alternative materials and processes.
Technology: New technologies are rapidly emerging. Examples include biotechnologies on chemolysis used in recycling or renewable raw materials for production. To succeed, these technologies must be scaled up and competitively priced.
Ecosystems: Established value chains are undergoing reconfiguration, with new players entering the ecosystem, such as recyclers, pre-processors, and tech start-ups.
In India, companies are currently preparing themselves for a broader adoption of green and environmentally friendly chemicals, encompassing raw materials and manufacturing processes. Over time, this momentum is expected to grow and gain traction.
Conclusion / Way Forward
The economic development agenda will continue to prioritize sustainability. In this context, the chemical industry plays a pivotal role in creating a sustainable future, given its profound influence on nearly all aspects of modern life.
The objective should be to foster an ecosystem where innovative solutions lead the way towards creating a societal impact that motivates others to adopt sustainable practices.
In general, companies will need to collaborate, co-create, re-evaluate, and potentially reposition themselves to become more sustainable. In order to sustain a long-lasting and successful business in these changing times, it is imperative for chemical companies to integrate sustainability values into their long-term business strategies, policies, operational processes, and procedures. This approach will shape and prepare companies to address the evolving behaviors and expectations of internal and external stakeholders, while simultaneously enhancing competition and profitability.
References:
- https://timesofindia.indiatimes.com/blogs/voices/why-and-how-innovative-sustainable-products-will-drive-the-future/
- https://www.ieabioenergy.com/wp-content/uploads/2020/02/Bio-based-chemicals-a 2020-update-final-200213.pdf
- https://www.mckinsey.com/industries/chemicals/our-insights/india-the-next-chemicals-manufacturing-hub
- https://www.niir.org/blog/what-is-the-future-outlook-for-the-indian-speciality-chemical-industry/
