Challenges and opportunities for chemicalBio-based products

FEDIOL 2015 General Assembly Conference19 June 2015

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This is CeficSince its creation in 1972, Cefic has grown to become one of thelargest industry trade organizations in Europe and in the world.

• Representing over 95% of the European Chemical Industry

• Representing 29 000 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 StrategyImplementation 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 Ceficgroups

Cefic Organogram

Directorate

ProductStewardship/

ICM

IndustrialPolicy

Energy& HSE

PublicAffairs

Research &Innovation

Legislation& Institutional

Affairs

Finance &Administra-

tion

Halogens/Euro Chlor

PetrochemicalsEurope

Fine, Specialty& Consumer

Chemicals

Plastics Europe

Communi-cations Advocacy

AffiliatedAssociations

Sustainability

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EU biomass:

Competitive 1st and 2nd

generation biomass

Imported biomass:

- Carbohydrates- Bioethanol- Natural Oils

Access to biomass forthe chemical industry

InnovationPublic Private

Partnerships fordémonstration andflagship projects

Market Development EU Industrial Policy Standards Setting

(biosolvents, biosurfactants,biolubricants, biopolymers)

Labels Public Procurement

The dimensions of the Bioeconomy for theEU Chemical Industry

EU Bioeconomy Strategy

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Chemical industry

Fine and specialty chemicals

Che

mic

al V

alue

Cha

in

Refineries

Customer industriesincluding agroindustry, refineries, mining

AgroindustryNatural gasproduction

CoalMining

Chem. industryEnergy use

Inorganicsmining

Organic basechemicals

Inorganic basechemicals

Salt, phosphate,flurospar, lithium,potassium, pre-ciuos metals,and many others

Raw Materials Base

= internalenergy usein crackers

Naphtha,condensates,LPG, gasoil

Vegetable oils,Animal fats,Cellulose,Sugar, Starch,Bioethanol,Natural Rubber,Glycerol,and others

Bioethanol

Coaltar

Simplified; proportionsnot to scale!

Value Chain

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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 biopolyethylene, bio PET, polyethylene-terephthalate (PEF, polyesterpolyethylene-furanoate)

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Renewables hold a 9% share of our carbon-containing Raw Materials

Shares in total organic raw materials – material (feedstock) use only,EU chemical industry, 2011

derivatives

68%

21%

1%9%

Mineral Oil

Natural Gas

Coal

Renewables

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Renewables shares: detailed breakdown

Renewables shares in total renewables, EU chemical industry, 2011

Vegetable waxes, natural resins, tanningagents, proteins, medicinal plants

18%

6%

10%

18%7%

12%

14%

5%

9% Vegetable Oil

Animal Fat

Chemical Pulp

Starch and Sugar

Bioethanol

Bioethanol for ETBE

Natural Rubber

Glycerol

Others

total: 8.5 mill. tonnes/a

(for ETBE)

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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

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Source: European bioplastics, http://en.european-bioplastics.org/ 10

Source: Nova Institute for Ecology and Innovation, http://www.bio-based.eu/ 11

Innovation: Bioplastics - the case of PEF (100% bio-based replacement for PET)

Pilot plant:On stream in 2012Name plate capacity: 20-40 Tpy

First commercial plant:On stream in 2016Name plate capacity: 30-50k Tpy

Full scale industrial plant:On stream in 2018 - 2019Name plate capacity: 300-500kTpy

…. and otheropportunities inadvancedmaterials

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Bioethanol is the key building block for bio-ethylene CH3-CH2-OH CH2=CH2

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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, 600.000 ha of sugar beets are needed , equivalent to15% the surface area of the Netherlands

Conclusion:Theoretically, there is enough biomass globally, however we need to includeciteria like regional and local food and feed demand, ILUC, biofuels demand andcost

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Challenges

• Free and fair access to (renewable) raw materials- Competition for resources

(food vs energy vs materials);- Discrimination fossil vs ‘green’ feedstock;- Discrimination vs 3rd 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

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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 othermarket distorting policies and we advocate for creating/keeping a levelplaying 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 IndustrialPolicy, aligning positions with Sector Groups and external players likeEuropaBio.

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Win-Win situation chemical and rural sector

Development of bio-based production is creating a great opportunity for both theEuropean chemical industry as well as for the rural sector, promoting the muchdesired investment and job creation. Common denominators for both chemicaland 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 boostingeconomic growth;

• The EU is (relatively) not well positioned with regards to resources anddeveloping bio-based economy will help extending our feedstock range;

• Developing bio-based economy will help meet the (growing) consumerdemand for bio, that is predominantly concentrated in the EU (automotive,construction, cosmetics, packaging materials).

This requires a holistic policy approach across the Commission DGs thatremoves discrimination and market distorting practices and stimulatesinnovation. Key success factor is collaboration throughout the entire valuechain, from agriculture to bio chemicals.

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Nutrition

Chemicals& Materials

Energy

NutritionPaper, fibers etc.

Value chain: Agro meets Chemicals