Sustainability has become a dominant driving force, a game changer for business and industry, and more particularly so, for all hydrocarbon to downstream industries. it is also leading to discover new business opportunities. This is also driving innovation.
To understand the scope and importance of sustainability and the various transitions taking place, how these are driving technological and attitudinal changes in industry, Chemical Industry Digest quizzed CEOs of top companies.
Their views are reproduced here. We start off with Dr. Richard Lobo of Tata Chemicals.
Q 1. Chemical Industry Digest (CID): From global warming to it’s ill effects to decarbonisation to sustainability pressures, what, according to you, are the range of challenges facing the chemical and allied industries? Could you enlist them and the areas that are very crucial?
Dr. Richard Lobo (RL): Global warming is a truth of the present times. NASA estimates that, overall, the Earth was around 1.36 degrees Celsius (or about 2.45 degrees Fahrenheit) warmer in 2023 than in the late 19th-century. As responsible global citizens, it becomes our collective duty to ensure every step is taken to decarbonise and make sustainability our topmost priority. As part of decarbonisation efforts, governments are imposing environmental regulations in order to strengthen the carbon reduction initiatives.
Chemical industry, a critical segment of the global economy and supply chain network, will play a key role as the world transitions towards decarbonisation. According to a report released earlier this year, the industry will have to reduce overall emissions by around 60% within 2030 if global warming is to be reduced in accordance with the 1.5° pathway.
The industry is slowly, but surely,transitioning towards more sustainable practices, with the use of renewable feedstocks, energy-efficient processes, and circular economy principles. Stakeholders, including investors, consumers, and regulators, are increasingly gravitating towards transparency and accountability regarding environmental and social performance, which is promising for the industry.
Q 2. CID: Would these challenges retard the growth of the chemical industry, or can each of these be converted into opportunities?
RL: Every challenge is an opportunity. The time has come for the industry to innovate, grow and transform. For instance, the imperative to mitigate climate change presents an opportunity for chemical companies to develop low-carbon alternatives. Investments in renewable energy sources, such as solar and wind power, can help reduce carbon emissions from manufacturing processes while also lowering operational costs.
Companies addressing environmental pollution can develop eco-friendly products and technologies, such as biodegradable polymers and cleaner production processes, to enhance sustainability. Resource scarcity drives innovation in recycling and resource recovery technologies. Chemical companies can adopt circular economy principles like closed-loop systems and waste-to-energy technologies to maximize resource efficiency. Compliance with regulations demonstrates commitment to sustainability. Supply chain disruptions require resilience through localized production, redundancy measures, and strong supplier relationships. Growing demand for sustainable products offers market differentiation opportunities. Technological innovation can improve efficiency, reduce costs, and unlock new revenue streams. By responding to changing consumer preferences, companies can innovate, engage with consumers, and build brand loyalty, turning challenges into opportunities for value creation and a sustainable future.
Q3. CID: The chemical industry, is driven by R&D and innovation, though in India, the overall chemical industry spending on R&D is very low. How can the Indian chemical industry change over and use innovation as a driver of growth?
RL: Tata Chemicals values R&D and innovati-on’s crucial role in fuelling growth in the chemical industry. Despite India’s private sector trailing in R&D spends globally, we view this as an opportunity. Through strategic investments in innovation, we aim to unlock substantial growth not only for Tata Chemicals but also for the entire industry.
With India’s robust chemical sector valued at $170 billion (2021), we see particular promise in specialty chemicals, where we boast a trade surplus and strong growth prospects. By focusing R&D on thriving areas like the $5.5 billion agrochemical market (CAGR 8.3%) , we aim to solidify India’s position as a global leader in specialty chemicals.
Sustainability is a core priority, not just a trend. Our R&D prioritizes bio-based and recycled feedstocks. Recognizing the vast potential of digital transformation, we’re pioneering AI-powered process optimization to achieve industry leading efficiency and competitiveness. We are committed to fostering collaboration by partnering with research institutions and universities accelerating innovation across the value chain. Even a slight increase in R&D spend can yield substantial dividends. By prioritizing targeted R&D investments, Tata Chemicals is poised to play a pivotal role in driving the Indian chemical industry’s transformation into a global innovation hub.
Q4. CID: If so, how should chemical industries go about building an innovation culture in their companies, an innovative infrastructure that is result oriented. What skill set should be inculcated/brought to the fore by the industry’s manpower?
RL: As we stand on the brink of remarkable possibilities, driven by the unexplored potential of AI & ML, we are also deep in the throes of ever transforming to stay relevant – with the reimagination of products, services and business models, the shifting of consumer patterns, urgent call to action on sustainability, the essential commitment to human rights and heralding change through corporate citizenship. The chemical industry, the backbone of our economy, needs to strengthen their purpose by nurturing the culture for experimentation among their people. Transformation needs to be the fuel that powers our manpower in the journey of radical innovations. Another key factor here is how we view crisis. The mindset towards insurmountable challenges and disruptions need to change – they are only opportunities to innovate and transform, especially through strategic collaborations and open innovations. The organisations need to formulate business models and spirit of innovation to impact humanity, philanthropy and ethics beyond profits.
Q 5. CID: What are the opportunities for the chemical industry in the emerging situation? Is it in scaling up their core competencies in a greener manner and /or in bringing new and differentiated technologies and products?
RL: The chemical industry can align its core competencies with an environmentally friendly approach, leveraging initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat.’ The Petroleum, Chemicals, and Petrochemicals Investment Regions (PCPIR) policy aims to attract investments of Rs. 20 lakh crore (US$ 276.46 billion) by 2035, fostering technological innovation, job creation, and sustainable development. The government’s allowance of 100% FDI in chemicals and production incentive schemes creates a favorable regulatory environment. With the global shift from China, India is emerging as a preferred destination for specialty chemicals, supported by robust domestic consumption and improved exports. Improvements in the US margin situation also provide optimism, with long-term global margins projected at 20% and 40% in India.
Q 6. CID: Today there is a huge convergence of digital technologies, commonly stated as Industry 4.0 including digital twins, VR, and Augmented VR, and the one that is swamping the media world-AI. What could be some of the transformative impacts of these technologies on the chemical industry, in particular-AI. How would it enable R&D and Innovation and is the chemical industry alive to the paradigm changing potential of these technologies?
RL: AI stands as a beacon of transformative potential, particularly within R&D and innovation in the chemical industry. Predictive analytics offers unparalleled opportunities to expedite product development while simultaneously reducing costs and improving quality. By analysing vast volumes of process data, AI and ML extract valuable insights to optimise reactions and process variables such as temperature, pressure and yields, thus facilitating faster scale-up. Furthermore, AI-based predictive modelling and simulations accelerate chemical product development, significantly reducing R&D time and costs.
Innovative technologies such as high-throughput automated workflow systems enable swift product screening, facilitating agile innovation by swiftly testing reactions. Moreover, the implementation of the digital twin technology creates virtual replicas of physical assets, allowing for simulations of products and processes, thereby minimising the need for risky physical trials. Augmented Reality (AR) and Virtual Reality (VR) also play pivotal roles in enhancing production monitoring, safety training, and remote expert support, fostering a culture of real-time awareness and continuous improvement.
By harnessing AI alongside other Industry 4.0 capabilities, the chemical industry unlocks the potential for transformative innovations, simultaneously enhancing productivity, compliance, safety and sustainability. This convergence of advanced technologies not only accelerates the pace of innovation but also ensures that industry practices align with evolving regulatory standards and sustainability goals, positioning the chemical industry as a frontrunner in the era of digital transformation.
Q 7. CID: Summing up, how are all these, i.e., innovation, digitalization, etc., taken up in Tata Chemicals, and what outcomes are you looking at?
RL: We have deeply integrated innovation and digitalisation into our business approach to drive growth and advancement. Our comprehensive strategy encompasses various initiatives aimed at leveraging external expertise, nurturing internal innovation, and harnessing cutting-edge technologies. We have implemented business process re-engineering across business operations and are embedding digitalisation across offices/plants to address process inefficiencies.
Our three state-of-the-art R&D centres, located in Pune and Bengaluru, serve as incubators for cutting-edge innovation and enable us to remain at the forefront of technological advancements. The Pune Innovation Centre has successfuly developed specialty silica products through strategic R&D partnerships with prominent silicone rubber customers. Additionally, our Rallis Innovation/Chemical Hub and Agri BioTech Lab are dedicated to driving innovations in crop care and seed technologies, supported by multi-location seed research stations.
Looking ahead, we are committed to increase the deployment of advanced technologies across manufacturing and business processes.
Through these efforts we aim to deliver impactful outcomes and sustain our position as a leader in the chemical industry.
Source Links:
- https://www.mckinsey.com/industries/chemicals/our-insights/the-chemicals-industry-of-tomorrow-collaborate-to-innovate
- https://www.tatachemicals.com/upload/content_pdf/integrated-annual-report-under-regulation-01-june-2023.pdf
- https://www.tatachemicals.com/upload/content_pdf/integrated-annual-report-fy-2022-23.pdf
- https://www.pwc.in/assets/pdfs/consulting/esg/sustainability-and-the-chemical-industry.pdf
- https://www.iea.org/energy-system/industry/chemicals
- https://cio.economictimes.indiatimes.com/news/next-gen-technologies/industry-4-0-the-fuel-that-can-lift-india-to-global-manufacturing-standards/102030388
- https://www.tatachemicals.com/upload/content_pdf/integrated-annual-report-under-regulation-01-june-2023.pdf
