Challenges and opportunities for chemical Bio-based products. FEDIOL 2015 General Assembly Conference 19 June 2015

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1 Challenges and opportunities for chemical Bio-based products FEDIOL 2015 General Assembly Conference 19 June

2 This is Cefic Since its creation in 1972, Cefic has grown to become one of the largest industry trade organizations in Europe and in the world. Representing over 95% of the European Chemical Industry Representing chemical companies in Europe 30 National Chemical Federations across Europe Over 600 direct Company Members from Europe More than 30 Associate Company Members from around the world 40 Partner Companies & Associations 25 European Affiliated Associations Operates 94 Sector Groups focusing on 120+ product families and over 79 Strategy Implementation and Issue Teams dealing with the industry s horizontal issues (REACH, International Trade, Energy & Climate Change, Research & Innovation, ) About 5000 industry experts from companies and federations participate in the Cefic groups 2

3 Cefic Organogram Directorate Energy & HSE Industrial Policy Legislation & Institutional Affairs Product Stewardship/ ICM Research & Innovation Sustainability Public Affairs Finance & Administration Halogens/ Euro Chlor Communications Advocacy Petrochemicals Europe Fine, Specialty & Consumer Chemicals Plastics Europe Affiliated Associations 3

4 The dimensions of the Bioeconomy for the EU Chemical Industry EU Bioeconomy Strategy Innovation Public Private Partnerships for démonstration and flagship projects Access to biomass for the chemical industry Market Development EU Industrial Policy Standards Setting (biosolvents, biosurfactants, biolubricants, biopolymers) Labels Public Procurement EU biomass: Imported biomass: Competitive 1st and 2 nd generation biomass - Carbohydrates - Bioethanol - Natural Oils 4

5 Value Chain Simplified; proportions not to scale! Customer industries including agroindustry, refineries, mining Chem. industry Energy use Chemical industry Fine and specialty chemicals Raw Materials Base Organic base chemicals Coal tar Inorganic base chemicals Chemical Value Chain Bioethanol = internal energy use in crackers Naphtha, condensates, LPG, gasoil Vegetable oils, Animal fats, Cellulose, Sugar, Starch, Bioethanol, Natural Rubber, Glycerol, and others Salt, phosphate, flurospar, lithium, potassium, preciuos metals, and many others Coal Mining Natural gas production Refineries Agroindustry Inorganics mining 5

6 The Chemical Industry: key player Mix of traditional and new applications: Carbohydrates used in specialties like enzymes, vitamins, organic acids, polymers Animal fats/vegetable oils used in surfactants/emulsifiers for detergents, cosmetics, coatings Natural extracts for cosmetics and fragrances Bio-based plastics, eg. PLA (polylactic acid), starch based or bio polyethylene, bio PET, polyethylene-terephthalate (PEF, polyester polyethylene-furanoate) 6

7 Renewables hold a 9% share of our carboncontaining Raw Materials Shares in total organic raw materials material (feedstock) use only, EU chemical industry, % 21% 9% Mineral Oil derivatives Natural Gas Coal 68% Renewables 7

8 Renewables shares: detailed breakdown Renewables shares in total renewables, EU chemical industry, % 9% 18% Vegetable Oil Animal Fat Chemical Pulp 14% total: 8.5 mill. tonnes/a (for ETBE) 12% 6% 10% Starch and Sugar Bioethanol Bioethanol for ETBE Natural Rubber Glycerol 7% 18% Others Vegetable waxes, natural resins, tanning agents, proteins, medicinal plants 8

9 Why bio-based? Awareness for intrinsically sustainable products Increased political support Europe s highly sophisticated chemical industry Expansion of our raw material base Development of new, differentiated & sustainable products - new or drop-in Integration of fermentation into chemical processes 9

10 Source: European bioplastics, 10

11 Source: Nova Institute for Ecology and Innovation, 11

12 Innovation: Bioplastics - the case of PEF (100% biobased replacement for PET). and other opportunities in advanced materials First commercial plant: On stream in 2016 Name plate capacity: 30-50k Tpy Full scale industrial plant: On stream in Name plate capacity: k Tpy Pilot plant: On stream in 2012 Name plate capacity: Tpy 12

13 Bioethanol is the key building block for bioethylene CH3-CH2-OH CH2=CH2 13

14 Access to Biomass - Is there enough of it? Example Dutch Sugar beet to ethylene in the Netherlands To make 2 MM MT/yr of ethylene, ha of sugar beets are needed, equivalent to 15% the surface area of the Netherlands Conclusion: Theoretically, there is enough biomass globally, however we need to include citeria like regional and local food and feed demand, ILUC, biofuels demand and cost 14

15 Challenges Free and fair access to (renewable) raw materials - Competition for resources (food vs energy vs materials); - Discrimination fossil vs green feedstock; - Discrimination vs 3 rd countries having (free) RM access, Brazil, US; - Discrimination between agricultural products for chemical use (palm oil vs bio ethanol); - Tariff anomaly (duties on RMs vs finished goods) Stable, coherent and predictable policy framework Innovation 13

16 Bio-economy and the way forward Cefic Board concluded that bio-economy is a priority for our industry. Cefic rejects subsidy supporting schemes, binding targets and other market distorting policies and we advocate for creating/keeping a level playing field. request for tariff suspension for limited chemical uses As regards Market Development, we make no distinction between fossil based and renewables, as both are resources for our sector. Cefic Bio economy Task Force Team: Under auspices of Cefic Industrial Policy, aligning positions with Sector Groups and external players like EuropaBio. 16

17 Win-Win situation chemical and rural sector Development of bio-based production is creating a great opportunity for both the European chemical industry as well as for the rural sector, promoting the much desired investment and job creation. Common denominators for both chemical and rural sector are: Promoting bio-based economy will allow to develop new markets to which the agricultural sector can feed into, but most importantly, help boosting economic growth; The EU is (relatively) not well positioned with regards to resources and developing bio-based economy will help extending our feedstock range; Developing bio-based economy will help meet the (growing) consumer demand for bio, that is predominantly concentrated in the EU (automotive, construction, cosmetics, packaging materials). This requires a holistic policy approach across the Commission DGs that removes discrimination and market distorting practices and stimulates innovation. Key success factor is collaboration throughout the entire value chain, from agriculture to bio chemicals. 17

18 Value chain: Agro meets Chemicals Nutrition Paper, fibers etc. Nutrition Chemicals & Materials Energy