Accelerating circularity: do we have the necessary conditions for driving transformation?

If the economy was just about growth, the coming decades would almost be like a walk in the park for the chemical industry, as plastics demand is expected to grow four-fold by 2050.[1] But over the same period, total annual municipal waste generation is expected to increase globally by 70%.[2]

With the European Green Deal, the EU has channelled the need for change into a concrete policy strategy. The major landmark is 2050. By then, we should have built a carbon-neutral and circular economy in Europe. This means that by 2050, virtually all resources we use should be from renewable sources (the concept of a bioeconomy) or recycled (the concept of a circular economy). In addition, the products we produce should be recyclable. Therefore, what we need to start building is a circular bioeconomy.

For the chemicals industry, it also means that we are confronted with enormous challenges. We are already living in the decade that is going to determine the future of our industry, our society, and our planet. The clock is ticking fast towards 2050.

We are also past the point where only target setting is sufficient: we must start making more sustainable choices today. And those solutions are already available. The question is: do we have the necessary conditions to fully embrace them and drive our industry’s transformation?

What we know for sure is that the challenges are too enormous to be tackled with one single solution. Instead, we need a multitude of solutions and cross-sectoral partnerships. What we need is teamwork, openness towards multiple technologies, and an unbiased assessment of how we can achieve the greatest possible impact in the limited time we have.

At Neste, we have experienced first hand that passionate people with an innovative spirit and hands-on mentality, combined with collaboration with the right partners can drive fundamental change. We have proven that the transformation of a company’s business model can open up new, exciting market opportunities.

Today we refine waste, residues and innovative raw materials into renewable fuels and sustainable feedstock for chemicals, plastics and other materials. In 2020, Neste’s renewable products helped our customers reduce greenhouse gas emissions by 10.0 million tons, equaling the annual carbon footprint of 1.5 million average EU citizens or the removal of 3.7 million passenger cars from the roads for a full year. Imagine: 3.7 million passenger cars would mean that the cities of Berlin, Munich, Cologne, Hamburg, Frankfurt and Leipzig would be so to say “car-free”.

While biofuels already carry the potential to significantly reduce carbon footprints of road transport and aviation, policymakers have yet to define concrete guidelines for other, emerging and not yet economically feasible solutions such as power to liquid.

Similarly, market acceptance for plastics from renewable and recycled feedstock will be decisively influenced by regulatory frameworks – for example, by a potential increase of mandatory quotas in plastic products. And for recycling technology: to achieve the EU’s existing recycling objectives for plastics, even ambitiously quadrupling mechanical recycling capacities will not do the trick on its own. Time for wishful thinking is over - we need to employ all available solutions. With chemical recycling, we have a second, complementary solution at hand. The time for wishful thinking is over - we need to employ all available solutions.

The question remains: do we have the necessary conditions to fully embrace all sustainable alternatives? And even if we do, are we willing to transform?

If we want to truly accelerate circularity, reduce the use of fossil raw materials and drive transformation, we need to remember that all new solutions and technologies require major investments. And investments need a predictable business environment and policies that encourage innovation, because innovation cycles – especially in the chemical industry – take years if not decades to become a reality. A progressive, technologically forward thinking and consistent policy framework can encourage all industry players to innovate and maximize value from existing resources.

If these conditions are met, we are ready to drive transformation towards a truly circular bioeconomy.

This article was first published on Handelsblatt’s Chemie 2021 webpage on 19 April 2021. #CEOTalks[1]

Statista: Global cumulative production of plastic 1950-2050. [2]

World Bank (2018), What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050.