Dusseldorf Despite the current economic crisis, the German chemical manufacturers are sticking to their plans for the green conversion. This is shown by a survey by the Handelsblatt among several German chemical manufacturers. However, the foreseeable recession could result in projects and investments being postponed or extended. This is expected above all in medium-sized companies, which are particularly affected by the energy crisis.
Many chemical companies have recently set ambitious goals for achieving climate neutrality. On the agenda is the conversion to green electricity and the detachment from fossil raw materials such as oil and gas.
They are to be replaced by products recovered from waste and by biological raw materials. At its core, it is about switching to a circular economy in which valuable material is not disposed of, but brought back into value creation.
“Nothing has changed in our global climate goals,” says industry leader BASF, for example. The Ludwigshafen-based company wants to reduce greenhouse gas emissions by 25 percent by 2030 compared to 2018. At that time, the output was 22 million tons. Net-zero emissions are to be achieved by 2050.
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The plastics manufacturer Covestro and the specialty chemicals group Lanxess make similar statements. Covestro will probably have to deal with the “very tense economic situation for the foreseeable future,” commenting on the current situation. However, the historical price increases for fossil fuels show that the switch to green energy and the circular economy is the right way to go. The people of Leverkusen want to become climate-neutral by 2035 and are striving to switch the raw material base to 100 percent renewable sources in the long term.
But the transformation requires huge investments in chemistry. The industry association VCI estimates the sum that would have to be raised to achieve greenhouse gas neutrality by 2050 at a good 45 billion euros. The majority of this will only occur in the coming years. But now the industry is laying the foundations with the first major projects.
The foreseeable and possibly sharp recession in the coming year could thwart this. No company wants to communicate this openly. But in industry circles it is underlined: If costs have to be reduced in the recession, all investments come on the table – including those for the green transformation.
This is also what industry experts expect. “Chemical companies fear a deep recession, in many places the mood is as low as it was in 2008 during the financial crisis,” observed Markus Mayer, analyst at Baader Bank. “Companies will keep their strength together and postpone projects in order to remain liquid.” The green transformation will certainly remain at the top of the agenda, but will “tend to progress more slowly at first.”
The first indicators are already showing this. A survey of 1,325 CEOs worldwide by consulting firm KPMG released last week found that 50 percent are pausing their existing or planned ESG efforts in the next six months due to economic uncertainty. 34 percent have already done so. ESG refers to criteria for environmental protection (environmental), social responsibility (social) and good corporate governance (governance).
Circular economy still a long way off
Smaller chemical companies in particular are in dire straits. “For German SMEs, especially in the energy-intensive sectors, adapting to a new energy world will be a major challenge that will cause some companies to fail,” predicts Deutsche Bank in a recent study.
The large chemical companies, on the other hand, could “internationalize their activities better and choose production sites according to their individual cost and customer structures,” it continues. That’s why they have more room to push ahead with their green conversion projects for the time being.
Many of them will be presented at the K22 plastics trade fair in Düsseldorf, which starts next week. The world’s largest industry get-together is all about the circular economy. The entire economy is still a long way from a functioning cycle: The non-profit organization Circle Economy has determined that only just under nine percent of the resources used are reused.
The rest follows the previous principle: “Take, make, use, dispose of”. Better recycling will be key to change. For years, the rate of plastic recycling in Europe was only 15 percent, but it has recently increased. In 2021, around 21 percent of the 36 million tons of plastic was reused, according to the consulting company AMI.
This has been achieved through more mechanical recycling, i.e. collecting and melting down to new plastic granulate. But this method is limited. Most plastics are mixed and can only be separated into high-purity raw materials that can then be reused using innovative chemical recycling.
Such processes are important for the breakthrough to a circular economy and all major chemical manufacturers are working on them. Essen-based Evonik is developing technologies for processing heavily soiled PET packaging. BASF is also presenting a process for this at the K22 and is developing better recycling of batteries for electric cars. Covestro and BASF are working on a technology for chemically separating mattress foams into high-quality raw materials.
Raw materials from waste oil and biomass
The second important lever for the green transformation in chemistry are renewable raw materials. There is a long way to go: At Covestro, for example, more than 90 percent of the plastics produced are based on oil and gas. Recently, the group has concluded numerous contracts with suppliers who recover important chemicals from waste oil, used fats or biomass.
These are the first projects that are to be scaled up to higher volumes in the next few years. The ambitions are great: Cologne-based Lanxess AG wants to gradually convert its purchasing to renewable raw materials and thus reduce the CO2 footprint from preliminary products by 40 percent by 2030. These are the so-called Scope 3 emissions that arise at the suppliers and are included in the CO2 balance sheet of the chemical companies.
The following applies to the entire green transformation in the chemical industry: Huge amounts of green electricity are required – be it for converting production from gas to electricity or for energy-intensive chemical recycling. Large corporations such as BASF and Covestro are already securing the capacities of wind farm operators worldwide or are involved in the construction of the huge parks themselves.
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