greenchemistrydrivers
For US science policy, big shift ahead.
Here’s how Congress and Trump could affect the chemistry enterprise.
Here’s how Congress and Trump could affect the chemistry enterprise
By Government & Policy Department
Credit: Mike Segar/Reuters/Newscom
A new, Republican-controlled Congress is planning to curb regulation and cut at least parts of the U.S. budget. Incoming President Donald Trump, who so far has made no strong connections to the science community, is out to make fundamental changes to the federal government. How their actions will ultimately reverberate through the chemistry enterprise is not yet clear. But leaders in Washington could affect U.S. chemists through shifts in trade policy, research funding, and regulation of drugs, pesticides, commercial chemicals, and more.
Jump to Topics:
- Research funding: Uncertainty surrounds federal budget
- Chemical regulation: TSCA implementation a priority
- Nuclear power: Waste could finally find a home
- Energy: Unclear path, tumultuous time for energy policy
- Climate Change: U.S. future in Paris Agreement uncertain
- Pesticides: EPA to decide on several crop protection products
- Trade: Trump signals major shift in import-export policy
- Environment: Scrutiny of EPA’s scientific review process will continue
- Policy outlook roundup
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Research funding: Uncertainty surrounds federal budget
The election of Trump last fall was a shock for the science community. Now, it is grappling with more uncertainty than it has faced in years over science policy and the future of research funding.
“There is a new cast of characters and certainly not the traditionally strong ties to the scientific community,” says Howard Garrison, director for policy at the Federation of American Societies for Experimental Biology, which represents 30 societies. “We are just going to have to wait and see.”
“If the size of the sandbox is shrinking, that is going to bring science with it.”
—Matthew Hourihan, Director of the R&D; Budget & Policy Program, American Association for the Advancement of Science.
That doesn’t mean there won’t be support for research. In the past, Republicans have been advocates for funding basic science, which they see as an important role of the federal government. This played out most recently in the 21st Century Cures Act, a law pushing for medical innovations, which passed in December with bipartisan support.
But many Republicans also present themselves as budget hawks who want to slash the federal deficit. That means they could push for overall cuts to the discretionary budget, which includes almost all science funding. They might also want to enforce sequestration, which passed in 2011 and mandated budget cuts that never fully went into effect but still resulted in the lowest grant funding rates in years for research agencies.
“If the size of the sandbox is shrinking, that is going to bring science with it,” says Matthew Hourihan, director of the R&D; Budget & Policy Program at the American Association for the Advancement of Science. Science in controversial areas such as climate change or social science might be most at risk of cuts, he adds.
The nomination of Rep. Mick Mulvaney (R-S.C.) as director of the White House Office of Management & Budget could indicate cuts are on the horizon. OMB coordinates fiscal policy and the President’s proposed budget.
“We know that Rep. Mulvaney has spoken positively about sequestration, and he’s certainly a fiscal hawk,” Hourihan says. Mulvaney also questioned the government’s role in research funding during a congressional debate over Zika funding last year.
That means that supporters of science research will likely turn to the Congress to bolster science support. With dozens of new members of Congress and new chairs of important committees, “the general consensus is that we need to completely rebuild. And that’s okay,” explains Anthony Pitagno, director of advocacy at the American Chemical Society, which publishes C&EN.;
The changes also might force research advocates to go beyond the traditional science-oriented committees to lobby those that have broader control over spending, especially the House and Senate budget committees. “This gives us an opportunity to reframe our issues,” he says. “We have to work channels that we haven’t for the last couple of years.
Garrison advocates for science groups maintaining a low profile while Trump and Congress work on fulfilling some of their campaign promises such as reforming Obamacare or immigration reform.
“Let’s wait until the dust settles and then build bridges to the new Administration,” he says.—Andrea Widener
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Chemical regulation: TSCA implementation a priority
2017 TSCA milestones
EPA is expected to meet several deadlines this year mandated under the revised Toxic Substances Control Act
▸ May: Publish scope of first 10 high-priority chemical risk evaluations
▸ June: Develop process for determining whether chemicals are low or high priority for risk evaluation
▸ June: Develop risk evaluation process
▸ June: Require manufacturers to provide information to EPA on chemicals they made or used within the last decade
Determining how to review the potential risks of commercial chemicals is at the top of the Environmental Protection Agency’s agenda this year. EPA faces several deadlines related to implementation of the new Toxic Substances Control Act, which was enacted in June 2016. Over the next several years, the agency must evaluate the potential risks of chemicals in household items and industrial products sold in the U.S., starting with 10 high-priority substances. The new law gives EPA authority to request safety data for such chemicals, as well as to collect fees from industry to conduct evaluations.
EPA has already identified the first 10 high-priority chemicals for evaluation. By May, the agency must describe the scope of those evaluations. By June, EPA must have a risk evaluation process in place and a method to identify whether chemicals are low or high priority for evaluation. Also by June, EPA must require manufacturers to provide the agency with information on chemicals they made or used within the last 10 years.
The chemical industry and environmental groups are heavily engaged in discussions with the agency about new policies under TSCA. Early policies and interpretations of some provisions of the new law, particularly those related to EPA’s evaluation of new chemicals, have sparked debate.
The chemical industry claims that the agency’s interpretation of the law is slowing down the review of new chemicals and delaying their entry into the U.S. market. Public health and environmental activists are urging EPA to continue thoroughly reviewing the risks of all new chemicals.
At the very least, EPA under incoming President Trump will reconsider how it evaluates new chemicals, representatives from the chemical industry predict. It is less clear how the Trump Administration will handle pending TSCA rules developed by the Obama Administration, including proposals to ban the use of methylene chloride and N-methylpyrrolidone in paint strippers. Proposed rules restricting the use of trichloroethylene in aerosol spray degreasers, vapor degreasing agents, and dry cleaning spotting agents are also up in the air.—Britt Erickson
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Nuclear power: Waste could finally find a home
The Department of Energy bored more than five miles of exploratory tunnels into Yucca Mountain.
Credit: Department Of Energy
Though completion of nuclear waste repository Yucca Mountain stalled in recent years, an effort to identify volunteer host sites for interim storage of nuclear waste gained traction last year and many expect it to gain momentum in 2017.
The Department of Energy last January kicked-off its community engagement program to identify U.S. sites willing to take on interim storage and permanent disposal of nuclear waste. A final report from DOE released in December 2016 outlined the initiative’s process and progress and summarized public comments.
According to the report, approximately 75,000 metric tons of used fuel from commercial nuclear reactors by the end of 2015 was being stored on-site at nuclear power plants throughout the U.S. An additional 2,000 metric tons is generated each year. Defense activities have produced more than 300 million liters of liquid, sludge, and solid high-level radioactive waste, DOE says.
Calls to solve the decades-old U.S. nuclear waste problem have come from outside and inside the halls of Congress.
Sen. Lamar Alexander (R-Tenn.), who leads the Senate appropriations subcommittee on energy, has called on his congressional colleagues to invest in energy research and find a path forward for nuclear waste management.
“We need to move on all tracks at the same time to solve the nuclear waste stalemate,” Alexander says. In the coming year, he adds, Congress should pass the proposed Nuclear Waste Administration Act, greenlight a pilot program for consolidated nuclear waste storage, and approve funds for private interim storage.
The Nuclear Energy Institute (NEI), a lobbying organization for the nuclear industry, outlined its priorities last month in a memorandum to Trump and his transition team. The group, which has been a proponent of moving the nation’s used fuel to Yucca Mountain, said DOE should complete the licensing process for the site.
“The 114th Congress saw numerous legislative initiatives aimed at addressing our nation’s used fuel management strategy. The nuclear industry anticipates that interest will grow in the 115th Congress,” says Maria Korsnick, NEI’s CEO.—Jessica Morrison
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Energy: Unclear path, tumultuous time for energy policy
Credit: Shutterstock
In the early weeks of the new Congress, Republican majorities in the House of Representatives and Senate are expected to develop plans to roll back energy- and environment-related programs and regulations. The exact hows and whats, however, are unclear.
Meanwhile, several aides say lawmakers will likely attempt to resurrect past bills cleared by the House in the last session of Congress but blocked in the Senate or by President Barack Obama. For instance, the House Energy & Commerce Committee is likely to revisit provisions in the proposed North American Security & Infrastructure Act, which cleared the House along party lines but did not pass the Senate. The measure’s provisions addressed electrical grid security, energy efficiency, and other areas.
Such bills are likely to be modified, reflecting the GOP’s new authority through the incoming Trump presidency as well as control of both bodies of Congress, aides say. Lawmakers are exploring legislative approaches that would spur energy-related infrastructure development.
On the Senate side, movement will be slower. The Senate Energy & Natural Resources committee will take up more than 40 of Trump’s nominees for key Energy and Interior Department posts. That will draw about three months of committee time, according to Senate aides.
Longtime supporters of energy R&D; funding and the jobs that have come with it are worried and looking for ways to protect and support the Department of Energy’s science and technology research programs.
“My hunch is the new Congress is going to be deeply involved in regulatory and nomination battles early on,” says Robert Cowin, Union of Concerned Scientists’ government affairs director. “But right now, we are watching congressional budget conversations from a clean energy standpoint. Particularly, we are looking at funding for programs such as energy efficiency, Advanced Research Projects Agency-Energy (ARPA-E), and grid modernization. On the basis of Trump’s transition team statements, these programs appear to have targets on their backs.
“But they are important and create jobs and we want to see them continue to be funded.”
Cowin notes the new Administration has promised to push tax reform. “There may be opportunities in tax code reform proposals to provide support for technology neutral, low-carbon projects.”—Jeff Johnson, special to C&EN;
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Climate Change: U.S. future in Paris Agreement uncertain
Trump’s position on the Paris Agreement to stem climate change isn’t yet clear. During the 2016 campaign, he pledged to “cancel” the Paris Agreement. After he was elected, Trump told the New York Times that he has “an open mind” about the climate deal.
The 2015 international agreement, ratified by 122 countries and the European Union, calls for each country’s greenhouse gas emissions to be capped at levels sufficient to keep global temperature rise below 2 °C, a goal set by policymakers. Some scientists say this level is likely to be sufficient to avoid the worst effects of global warming.
“Trump could formally pull the U.S. out over the next three years under the terms of the agreement,” says David Waskow, director of the international climate initiative of the World Resources Institute, an environmental nonprofit. The impact would be “significant” with worldwide repercussions, he says.
“Climate change has moved to the core of international agreements and diplomacy,” he says. “Retreating from Paris will send negative signals internationally, frankly, in other areas as well as climate. And it will make it very difficult for the U.S. to play a leadership role in the huge and emerging international marketplace for clean energy products,” Wasko says.
He pointed to China’s recent announcement that it will invest more than $360 billion over the next four years to speed up its use of renewable energy.
Environmental activists are gearing up to defend the Clean Power Plan, an Obama Administration regulation designed as the main means for the U.S. to implement the Paris Agreement. A group of states is contesting that rule in federal court—an effort that until recently was led by Trump’s pick to captain EPA, Oklahoma Attorney General Scott Pruitt.
Congress, too, may consider legislation to revoke that EPA rule, given that Republican lawmakers attempted to do so in 2015.—Jeff Johnson, special to C&EN;
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Pesticides: EPA to decide on several crop protection products
Chlorpyrifos
EPA is under a court order to make a final decision about the organophosphate insecticide chlorpyrifos by March 31. In response to a petition from environmental groups, the agency twice last year proposed to revoke all food tolerances for the chemical. Industry and farm groups say it is unlikely that the Trump Administration will support the proposed action because of the importance of the chemical to crop protection, but it is unclear how EPA would justify reversing course. The assessments underlying the agency’s proposal are controversial because EPA used human epidemiological data in some of its determinations. The chemical industry is challenging those assessments.
Atrazine
EPA plans to have its pesticide Scientific Advisory Panel of outside experts review the agency’s draft ecological assessment of the herbicide atrazine this year. EPA released the draft assessment in 2016, concluding that atrazine poses a health risk to many plants and animals. Farm groups and pesticide makers are urging the agency not to tighten restrictions on atrazine, saying it would render the chemical useless in controlling weeds. EPA is also expected to release its human health assessments for three triazine herbicides, including atrazine, later this year.
Glyphosate and 2,4-D
EPA is expected to finalize a proposal early this year that would allow the herbicide Enlist Duo—a combination of 2,4-dichlorophenoxyacetic acid (2,4-D) and glyphosate—to be used on genetically engineered cotton. The proposal would also expand the number of states where the controversial mixture can be used. Enlist Duo, manufactured by Dow AgroSciences, is already approved for use on genetically engineered corn and soybeans in more than a dozen U.S. states. Wine growers in Texas are raising concerns about expanding the use of Enlist Duo, saying volatile herbicides such as 2,4-D are drifting into their vineyards from nearby cropland and damaging their fruit.—Britt Erickson
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Trade: Trump signals major shift in import-export policy
Trump is promising to usher in a new era for trade policy that could signal trouble ahead for U.S. chemical manufacturers.
Last August during the campaign, Trump said he would shift the focus from expansive multilateral trade agreements to renegotiation or withdrawal from existing pacts that he contends have failed to protect U.S. manufacturing jobs.
“We will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores.”
—Donald Trump
As one of the nation’s top exporting industries, the chemical sector has been a strong proponent of the 14 free trade agreements the U.S. has entered into with 20 countries.
“We would like to see a continuance of trade policies that will create new opportunities and address barriers that impede the ability of U.S. specialty chemical manufacturers from growing their businesses,” says Brittany Mountjoy, manager of government relations at the Society of Chemical Manufacturers & Affiliates, an industry trade group.
SOCMA’s member companies—mainly small and mid-sized businesses—are “hopeful about the new Administration,” and the benefits it might bring to specialty chemical makers, Mountjoy says.
Trump, who has long disdained international trade deals that he says make it easier to offshore U.S. jobs, has promised to immediately ditch the Trans Pacific Partnership. He has described the pending free trade agreement signed by 12 countries around the Pacific Rim, including the U.S., Japan, and Australia, as a job-killing “potential disaster for our country.”
“Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores,” Trump said in a late November 2016 video announcing his transition plans.
Last June, he threatened to withdraw the U.S. from the North American Free Trade Agreement, which connects Canada, the U.S. and Mexico, if Mexico doesn’t agree to renegotiate the pact. The 22-year-old agreement, Trump argues, has hollowed out U.S. manufacturing to Mexico’s benefit.
With vast supplies of low-cost natural gas from shale deposits and $175 billion invested in new factories and expanded production capacity, U.S. chemical exports are projected to grow on average 7% per year through 2021, according to the American Chemistry Council, an industry association. But meeting that potential will require new trade agreements, it claims.
“We agree that trade should be fair, and also know firsthand that trade can unlock potential in our economy and create jobs here at home,” ACC says. “We hope to work with Congress and the Trump Administration to chart a path forward on trade that will help American businesses thrive and benefit American workers.”—Glenn Hess, special to C&EN;
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Environment: Scrutiny of EPA’s scientific review process will continue
Congressional scrutiny of the Environmental Protection Agency’s scientific review process could signal changes for the agency this year.
Rep. Lamar Smith (R-Texas), chair of the House Science, Space & Technology Committee, last month challenged the scientific validity of the Environmental Protection Agency’s multiyear hydraulic fracturing study. Smith accused EPA of changing its mind on the impact of hydraulic fracturing on water supplies.
“It is clear that the agency needs to enact reforms of its entire scientific review process,” Smith said in a statement after the release of EPA’s hydraulic fracturing study. “I look forward to working with the next Administration to enact critical reforms to put EPA back on course in pursuing transparency and sound science.”
Smith cosponsored legislation in the 114th Congress aimed at changing the way EPA selects external experts. The House passed the proposed EPA Science Advisory Board Reform Act of 2015 (H.R. 1029), but a companion bill introduced in the Senate failed to gain traction.
The legislation, which could re-surface, would have set new requirements for membership selection to EPA’s expert advisory committees and panels.
The 2015 bill would have opened the door to more EPA advisers from industry.
It also would have prohibited scientists who have received EPA grants within three years from serving, restricted experts from participating in advisory evaluations related to their own research, and required the board to provide written responses to “significant comments” from the public.—Jessica Morrison
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Policy outlook roundup
Rep. Paul Ryan (R-Wis.), Speaker of the House of Representatives, determines which legislation will come before lawmakers for a vote.
Credit: Associated Press
Business: Administration could seek to stop chemical makers’ mergers
The Trump transition’s agriculture adviser, Bruce Rastetter, wants the incoming Administration to halt pending mergers of major chemical and seed companies. These include deals between Dow and DuPont, Bayer and Monsanto, and China National Chemical and Syngenta. Rastetter, CEO of Summit Agricultural Group, told theDes Moines Register the mergers would jack up farmers’ costs because they would amalgamate seed suppliers and agrochemical producers.—Cheryl Hogue
Diversity: Immigration reform efforts could impact scientists
Immigration reform was a cornerstone of President-elect Trump’s campaign platform, with Trump saying he wanted to limit the number of foreign workers who came into the U.S. Scientists are most worried about crackdowns on the H-1B, the visa for highly skilled workers. Trump has attacked the H-1B visa the past.—Andrea Widener
Consumer products: Momentum to boost cosmetics oversight grows
Credit: Shutterstock
Cosmetics and personal care products manufacturers, health groups, and others are urging U.S. lawmakers to reintroduce the Personal Care Products Safety Act this year. The legislation would boost FDA’s oversight of cosmetics ingredients and require cosmetics companies to register with the agency.—Britt Erickson
Drug development: FDA to implement 21st Century Cures law
FDA is gearing up to approve pharmaceuticals more quickly through a new law enacted in December. Though opponents question the safety of accelerated approval, outgoing FDA Commissioner Robert M. Califf says the law will support agency “efforts to modernize and improve efficiency in clinical trial design.” The Trump transition team has made no announcement about FDA work on the 21st Century Cures law as yet.—Jessica Morrison
Education: Higher education legislation may gain momentum in 2017
Sen. Lamar Alexander (R-Tenn.) has been working on a revamp of the Higher Education Act for several years, so he will likely push it in 2017. The parts of the bill that focus on science teacher training, access for disadvantaged students, and reducing administrative burdens for universities are all of interest to the science community.—Andrea Widener
Persistent Pollutants: Industry continues to seek U.S. ratification of treaty
Chemical manufacturers are asking Congress to make the U.S. an official treaty partner to the Stockholm Convention on Persistent Organic Pollutants. Under that agreement, countries are reducing or eliminating the release of substances that can cause serious health problems. Among chemicals it covers are several obsolete pesticides and polychlorinated biphenyls. The American Chemistry Council, an industry group, supports the U.S. becoming a full participant in the 2001 accord, a move that environmental activists back too. “As we work to highlight issues that are important to U.S. manufacturers and American competitiveness, ACC will continue to include ratification of the Stockholm Convention,” the group says.—Cheryl Hogue
World chemical outlook 2017.
Business people are by nature optimists, and that was true a year ago when companies and economists forecast a buoyant 2016 for the global chemical economy. In the end, however, business didn’t live up to expectations.
Business people are by nature optimists, and that was true a year ago when companies and economists forecast a buoyant 2016 for the global chemical economy. In the end, however, business didn’t live up to expectations. U.S. chemical production rose a sluggish 1.6%, and European output didn’t grow at all. Overall economic growth slowed in China and India. Perhaps chastened, the Europeans have lowered their outlook for 2017. But in the U.S. and Asia, industry executives are once again calling for a good year ahead. Given the political uncertainty roiling much of the world, those executives would be wise to have a “plan B” at hand.
Jump to Topics:
- Petrochemicals: Despite new capacity, 2017 will likely be a strong year
- Agriculture: Changing landscape ahead for crop solutions
- Pharmaceuticals: Immuno-oncology therapies set to take center stage
- Renewables: Paris Agreement, consumers to drive demand for biobased chemicals
- Electronic materials: Stars will align in semiconductors and displays
- Outsourcing: Pharmaceutical chemicals expected to glide through political, pipeline waves
- Instrumentation: Pharma and diagnostics offer continued growth
- Specialty chemicals: Sector is expected to regain momentum this year
- United States: A new year begins, marked by optimism
- Europe: Sustainability to offer growth opportunities in anemic market
- Asia: China is slowing down, but regional growth is solid
- Canada: New spending may knock country out of a rut
- Latin America: A Struggling region looks for recovery
- Middle East: Buoyant outlook seen, as downstream diversification continues
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Credit: C&EN;
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Petrochemicals: Despite new capacity, 2017 will likely be a strong year
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Equipment arrives for installation at Dow Chemical’s Freeport, Texas, complex.
Credit: Fluor
Normally, a year in which a lot of new chemical capacity opens is a period of dampened prices and thin profit margins. But the slew of new ethylene plants destined to come on stream in 2017 doesn’t necessarily mean it will be a bad year for petrochemical makers.
The biggest names in petrochemicals—Dow Chemical, ExxonMobil, and Chevron Phillips—each have world-scale ethylene cracker complexes slated to start up on the U.S. Gulf Coast in 2017. Other firms, such as Mexichem, Indorama, and LyondellBasell Industries, are completing smaller crackers and large ethylene expansions.
Observers say this new capacity is sorely needed. LyondellBasell CEO Bob Patel told analysts in November that he doesn’t expect a repeat of the late 2000s, when a fleet of new crackers in the Middle East flooded the world with new production. From 2007 to 2011, when there was a recession, global capacity addition exceeded growth in demand by about eight crackers worth of output.
But over the past five years, demand has outstripped new supply by about three ethylene crackers worth. “Even with eight cracker equivalents forecast to come online in the U.S. by 2021, the forecast is relatively balanced over the next five years,” Patel said.
“The globe has no spare capacity like it did when the big Middle East wave came,” points out Steve Lewandowski, vice president of olefins at the consulting firm IHS Markit.
Lewandowski says the market for ethylene will only get tighter for most of 2017. He doesn’t expect the big new crackers to start up midyear as scheduled. Given the complexity of turning on massive multi-billion-dollar units, he says, the fourth quarter is a more realistic expectation. And it could be well into 2018 before these plants ramp up and operate full out.
Moreover, Lewandowski points out that most firms, including Chevron Phillips and ExxonMobil, aim to get their polyethylene plants running before they inaugurate new ethylene crackers. To do so, they will need to tap the limited quantities of ethylene available in the merchant market. “We definitely won’t have enough ethylene in the U.S. to fill out all the derivatives,” he says.
The new year is beginning with higher oil prices. In November, OPEC and Russia agreed to a deal that would cut global oil production by about 1%. Prices jumped from about $45 per barrel to more than $52 in the subsequent weeks.
In Lewandowski’s view, that kind of modest movement in oil prices is not enough to undermine petrochemical consumption. “If we jumped to $120 I would say something different, but a move $10 up, I don’t think it’s a killer for global demand,” he says.—Alex Tullo
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Agriculture: Changing landscape ahead for crop solutions
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Hyperspectral images, taken from drones, show crop conditions such as moisture levels and emerging diseases.
Credit: Gamaya
According to the U.S. Department of Agriculture, farmers won’t see much relief from low commodity prices this year, and spending on inputs—seeds, fertilizer, and crop protection chemicals—will continue to be modest. What will increase are investments in technologies that help growers do more with less.
Big agriculture corporations such as soon-to-merge Bayer and Monsanto, as well as start-ups and smaller agriculture firms, are working on multiple ways to help plants thrive with less water, chemicals, and fertilizer while fending off heat, diseases, and other stresses.
Some advances—such as precision imaging and data-based decision-support tools—will be tested on farms this year. Others, such as CRISPR/Cas9 and other gene editing techniques, will move forward in the lab and be commercialized in future years.
As big ag firms consolidate, they will merge once-competing product development projects, says Scott Duncan, head of the North American agriculture practice at the consulting firm Bain. “So a meaningful amount of R&D; and capital will get redirected into other places such as precision agriculture or big data solutions.” He points out that venture capitalists, private equity investors, and established tech firms are also investing in such technologies, which have come to be known as agtech.
In many cases, agtech innovations look nothing like traditional chemicals and seeds. For example, Bayer has formed a research collaboration with FaunaPhotonics to develop a light detection and ranging—or LIDAR—tool to track the whereabouts and movements of pest insects. LIDAR can even distinguish among insect species by detecting insect body sizes and wing beat frequencies. LIDAR is similar to radar but uses lasers to map objects in space.
And farmers will detect insect damage in real time—along with crop conditions such as nutrient levels and disease—from space satellites or with drones. Start-up Gamaya recently raised $3.1 million to commercialize hyperspectral cameras small and light enough to be carried by drones. Cofounder Igor Ivanov, a veteran of big data business applications, says the firm is deploying drones on huge industrial-scale corn, soybean, and sugarcane operations in Brazil.
“Brazilian agriculture is very export-focused, very dynamic,” Ivanov explains. “Growers are keen to use technology to improve production efficiency.”
Meanwhile, smaller firms that develop specialty crops or regionally specific varieties will get new opportunities to improve traits and seeds through gene editing. “The minimum efficient scale to do really radical gene work is coming down and will continue to come down,” Duncan predicts.—Melody Bomgardner
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Pharmaceuticals: Immuno-oncology therapies set to take center stage
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Antibodies (yellow) that target cellular proteins (green) may come to dominate immuno-oncology therapies.
Credit: AstraZeneca
At about $90 billion in sales and more than 10% of the 2016 pharmaceutical market, oncology has become the world’s largest drug sector. Expected to grow two to three times faster than the overall market, cancer treatments should retain the top spot for at least another five years, according to the market research firm EvaluatePharma.
Driving this growth are new therapies, such as checkpoint inhibitors, that stimulate the immune system to fight many different cancers. In 2017, sales of checkpoint inhibitors alone should grow 40–50% to approach $6 billion, according to a market analysis by Decision Resources.
Among the current big sellers are Bristol-Myers Squibb’s Yervoy, which was launched in 2011 and blocks CTLA4. In 2014, BMS’s Opdivo and Merck & Co.’s Keytruda became the first anti-PD-1 drugs. And in May 2016, Roche got approval for Tecentriq, the first PD-L1 inhibitor. These firms, along with AstraZeneca, Pfizer, Merck KGaA, and a host of small companies, have many more immunotherapies in development.
In fact, 2017 should be a defining year for immuno-oncology therapies, particularly for lung cancer, Deutsche Bank stock analyst Gregg Gilbert told clients in a recent report. Lung cancer is the world’s most common cause of cancer deaths. And sales of drugs for non-small cell lung cancers (NSCLC), which make up about 85% of lung cancers, are heading toward $60 billion per year by 2020, he estimates.
This year, clinical trials results are expected not only for single therapies but also for combinations of PD-1 and PD-L1 inhibitors with chemotherapy and CTLA4 agents. These results, Gilbert points out, could start segmenting the market among therapies and provide clarity on which patients may benefit.
Despite this potential, there’s a lot to be learned about using these new drugs. The outcomes of recent clinical trials of Opdivo and Keytruda suggest that the benefits may depend on patients’ levels of PD-L1 expression. Merck, which targeted patients with high expression levels, won an early approval for Keytruda as a first-line NSCLC treatment, while BMS, which didn’t, got disappointing results with Opdivo.
Although immunotherapies, including as-yet-unapproved chimeric antigen receptor T-cell (CART) therapies, could transform cancer care, they do present risks. Recent reports reveal dangerous side effects for the checkpoint inhibitors, such as uncontrolled immune reactions that can lead to organ attack.
And a Phase II trial of Juno Therapeutics’ anti-CD19 CART therapy was halted twice after patients died. Still, encouraging early efficacy data has been reported in hematologic cancers and, as Juno pauses, other firms are advancing. Analysts anticipate that Kite Pharma or Novartis could launch the first anti-CD19 CART therapy in 2017.—Ann Thayer
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Renewables: Paris Agreement, consumers to drive demand for biobased chemicals
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Green Biologics is shipping biobased chemicals from its plant in Minnesota.
Credit: Green Biologics
In 2017, the 114 countries that signed and ratified the Paris climate change agreement will start rolling out strategies for meeting their commitments. Together they account for almost 80% of global emissions of greenhouse gases. This year, those policies will dovetail with consumer preferences—and increasingly stringent product policies at major retailers—to tilt supply chains in favor of bio-derived ingredients.
Although the U.S. ratified the Paris Agreement, it is unclear whether the new Trump Administration will implement the policies needed to reduce emissions. Similarly, Trump’s appointees may be less inclined than the Obama administration to back new renewable technologies through loans and grants.
As always, companies will sell into markets that offer incentives. In biofuels, low-carbon fuel standards in California, Oregon, and Washington will attract shipments of cellulosic ethanol from the Midwest. Northern European nations are investing in facilities that make fuel from wood. China and other Asian countries are raising biofuel targets, but so far rely on first-generation biofuels.
Firms working to commercialize biobased chemicals will continue to find the rest of the world more welcoming than the U.S.—especially while oil prices are low. Many of the largest producers of biobased materials are located in Brazil, Canada, France, Italy, and Indonesia.
In April, biobased specialty chemical firm Elevance Renewable Sciences, which has its main plant in Indonesia, sold a site in Natchez, Miss., where it had planned to start chemical production. BioAmber, now in Canada, plans to start bio-succinic acid production in China. And Amyris is working with the government of Queensland, Australia, to make biobased farnesene and other products for the Asian market.
But all is not lost for biobased companies in the U.S. Synthetic biology firms such as Zymergen and Ginkgo Bioworks that develop microbes for biobased chemical makers attracted hundreds of millions of dollars from venture capitalists last year. “Growth of these platforms should lead to even bigger numbers for the segment in 2017,” Lux Research predicts.
Meanwhile, Green Biologics, which makes biobased n-butanol and acetone using modified microbes, has begun shipping from its plant in Little Falls, Minn. There are commodity markets for those chemicals, but the firm is focusing on applications—such as cosmetics and specialty coatings—where biobased inputs are highly sought or offer better performance.
“Necessity and the market drove us here,” explains Tim Staub, head of business development for Green Biologics. “We work through one application at a time, differentiate where we can, and avoid those where we can’t.”—Melody Bomgardner
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Electronic materials: Stars will align in semiconductors and displays
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Both chip fabrication and display manufacturing should do well in 2017.
Credit: Taiwan Semiconductor Manufacturing Corp.
Usually, suppliers of electronic materials can’t catch a break. When business is booming in flat panel displays, the semiconductor industry is in the doldrums. Or vice-versa. This year, though, demand should be strong from both major markets.
“It’s almost too good to be true,” says Mitsunobu Koshiba, president of the electronic chemicals producer JSR. The company produces materials used by both display and chip makers.
The price of displays didn’t drop as much as expected in 2016, with the consequence that materials makers weren’t under heavy pressure to drop their prices. Materials suppliers had feared a disaster with the ramp up of new display plants in China that would flood the market, Koshiba recalls. In anticipation, Samsung closed production lines in South Korea that together accounted for 3% of world display supply, Koshiba says. “The market is well balanced now,” he says.
The robustness of the semiconductor market is also a surprise, Koshiba notes. At the beginning of 2016, semiconductor makers expected demand to weaken in the second half of the year, once manufacturers had shipped their Christmas season orders. Instead, “by June, the industry noticed that chip inventories were too low,” he says.
Demand has been strong for the workhorse chips, cut from 200 mm silicon wafers, that are often used in vehicle electronics, according to Mark Thirsk, a partner at the electronic materials research firm Linx Consulting. It has also been strong for cutting-edge chips featuring ultrathin circuit lines that are typically produced from 300 mm wafers. In between, demand for more standard chips made from 300 mm wafers is softer.
Multiple patterning, a manufacturing method that involves repeated lithographic exposure of silicon wafers, is also driving demand, Thirsk notes. Each exposure results in 10 to 15 additional manufacturing steps requiring deposition chemicals, etchants, cleaners, and other materials.
In 2017, the electronics industry eagerly anticipates the first commercial use of extreme ultraviolet lithography after several years of delay. But it’s not clear how profitable extreme ultraviolet lithography will be for materials suppliers, Thirsk says. JSR and other companies have invested so much in the necessary materials that it could be difficult for them to harvest much of a profit, even with premium pricing.
The electronic materials industry is full of surprises and rapid boom-bust cycles. Not all materials will do well in 2017. Color filters for displays, for instance, are badly oversupplied, Koshiba notes. But on the whole, suppliers should enjoy a rare period when most of their business shines.—Jean-François Tremblay
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Outsourcing: Pharmaceutical chemicals expected to glide through political, pipeline waves
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Contractors, such as France’s Axyntis, should see the negative countervailed by the positive for another good year.
Credit: Axyntis
The pharmaceutical chemicals sector has been in a rut for several years—a very nice rut in which most companies report double-digit growth serving an industry with an ever-growing appetite for contract manufacturing and related services. The year ahead promises more of the same, but with a few significant disturbances in the landscape.
“Call it the year of extreme volatility,” says Guy Villax, CEO of Hovione, a Portuguese contract manufacturer. He and others point to countervailing forces of political uncertainty in the U.S. and Europe on the one hand, and a validated strategy of serving the drug industry’s growing outsourcing needs on the other.
James Bruno, president of the consulting firm Chemical & Pharmaceutical Solutions, also senses uncertainty. “With this presidential election, I think everybody is adopting a wait-and-see attitude,” he says. President-elect Trump is promising a big corporate tax cut, Bruno points out, but interest rates have already risen and are likely to go up again.
And there are other signs of concern. Bruno points to a drop in U.S. drug approvals to 22 in 2016 from 45 in 2015. “People are wondering if this is a fluke because we set a record the year before, or are we back to there not being a really good pipeline?”
Consultant Roger LaForce sees the year ahead as one of consolidation in the wake of recent deals. Closing out 2016 was the purchase of a big Zach System plant in Italy by Fabbrica Italiana Sintetici, a move that will create one of the largest contract manufacturers globally, LaForce says. And everyone points to Lonza’s recent agreement to buy Capsugel as solidifying the contract development and manufacturing organization model of offering everything from drug active manufacturing to final dosage formulation. As drug companies drop in-house manufacturing, they are contracting on a strategic basis, Villax says, and require a broad range of services.
“People will be going more and more toward the one-stop shop,” agrees Ampac Fine Chemicals CEO Aslam Malik. In general, Malik sees acquisitions picking up. “People will start buying in 2017. And if you are the sell side, you will get a good price,” he adds, noting that Lonza is paying $5.5 billion for Capsugel.
For some, the positive and negative forces will likely balance out, making for continued clear sailing this year. “In the end, I’m not sure anything really changes,” says Shawn Cavanagh, chief operating officer of Cambrex. “The market overall has been and will continue to be good for contract manufacturers who have invested in capacity and capabilities.”—Rick Mullin
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Instrumentation: Pharma and diagnostics offer continued growth
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BioMarker Strategies has a grant to develop immunotherapy-related tests on its SnapPath cancer diagnostics system.
Credit: BioMarker Strategies
As sellers of a range of products across several industries, lab and analytical instrument suppliers can find their businesses rocked by all sorts of market dynamics. Sometimes the net result is positive; other times not. “While 2016 offered a strong combination of improving end markets, the 2017 outlook is less compelling,” Goldman Sachs stock analyst Isaac Ro told clients in a recent report.
Several factors are in play this year. U.S. academic funding has benefited from legislation, such as the 21st Century Cures Act, but any annual increases are not guaranteed under the new administration, Ro pointed out. Meanwhile, growth is modest in Japan, somewhat stronger in China, and slowing in Europe.
On the industrial side, lab spending should be helped by policy changes—such as the Paris Agreement on climate change and China’s latest five-year plan—and a slightly higher forecast for the global economy, Ro added. Biopharmaceutical production remains strong, but drug R&D; spending is decelerating and could be disrupted by a pickup in mergers and acquisitions.
Instrumentation sales reached about $47 billion in 2016 and are anticipated to grow about 4% in 2017, according to Agilent Technologies. “Predicting end-market growth in today’s uncertain political and economic environment is challenging,” Agilent CEO Mike McMullen said when reporting fiscal year sales in November.
The slowest growing end markets are chemicals and energy, which makes up about 10% of instrument sales, and academia and government, which together are just under 20%. Both are expected to increase by 1–3% in 2017. Sales to the pharmaceutical sector, which is 25% of the market, should grow up to 6%.
Rounding out the market and seeing the fastest growth at up to 8% is clinical diagnostics. To tap into it, suppliers have been actively building their businesses. In early 2016, Thermo Fisher Scientific paid $1.3 billion to buy the genetic analysis firm Affymetrix. More recently, Danaher spent $4.8 billion on molecular diagnostics provider Cepheid.
At the same time, equipment makers are joining with pharmaceutical and other partners to combine diagnostics with drugs. In October, Thermo Fisher joined the Cancer Moonshot initiative. Then in December, the company launched an immunotherapy program with Washington University School of Medicine in St. Louis.
Meanwhile, Roche Diagnostics’ Ventana and Agilent’s Dako units are working with AstraZeneca, Bristol-Myers Squibb, Merck & Co., Roche, regulators, and research organizations on the Blueprint Project. The goal is to characterize and compare companion diagnostics used in prescribing new immuno-oncology therapies.
Results from the work’s first phase were recently published. The next phase will compare test results to patient outcomes to identify those patients who might benefit from treatment.—Ann Thayer
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Specialty chemicals: Sector is expected to regain momentum this year
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As more pipelines are built to move fuels to market, coatings that enhance flow will be needed.
Credit: Shutterstock
Globally, specialty chemicals output is expected to regain momentum in 2017 after a slower-than-expected increase in 2016, according to the American Chemistry Council. The trade association anticipates a production rise of 3.3% in 2017 after a 2.6% increase last year.
ACC had expected a 3.9% production jump in 2016, but the downturn in oil and gas drilling, a global slowdown in manufacturing, and weakness in China held production back. Observers are now looking for a stronger year for specialties because of higher energy prices, renewed infrastructure spending, and a potential manufacturing uptick, particularly in the U.S. and Asia.
Paint, now a $135 billion-per-year global market, could see 3% output growth in 2017, says Phil Phillips, president of Chemark Consulting. Adhesives and sealants, a $45 billion market, will grow in tandem with paint, he adds.
In the U.S., the incoming Trump Administration is likely to trigger a rise in demand for highway markings and sealants as well as paint used on rail cars, Phillips says.
Pipeline construction projects under the new administration should spur demand for powder coatings used on pipe interiors to increase the flow of oil and gas to their destination, Phillips adds. Similarly, pipeline construction in China to speed fuels to market for a growing middle class will increase coatings demand, he says.
In addition, U.S. infrastructure spending will spur production of additives that aid concrete’s workability and improve its durability, says Ray Will, a director at the consulting firm IHS Markit. U.S. demand for the additives generally grows at about 3% a year, but he predicts a 5% increase this year.
If the Trump Administration renegotiates trade agreements, as it has threatened to do, U.S. exports of specialty chemicals could be compromised, Will warns. On the other hand, if the administration succeeds in expanding the U.S. manufacturing base, then specialty chemical makers will benefit from stronger local demand, he says.
Higher energy prices may be on the horizon if Saudi Arabia is able to get oil-producing nations to limit output. If that transpires, U.S. oil producers will increase their own output, Will predicts, pushing up demand for oilfield chemicals.
Specialty chemical production targeted at consumers will also rise. Kunal Mahajan, who tracks the $9 billion-per-year specialty cosmetic ingredients segment at the consulting firm Kline, says growth for the category is fastest in Asia where consumer buying power is on the rise. Demand for ingredients such as sunscreens, rheology modifiers, and preservatives will grow at about 7% in China and India this year, compared with 2% in the U.S. and other developed countries.—Marc Reisch
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United States: A new year begins, marked by optimism
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Is this the year?
U.S. chemical output will grow 3.8% in 2017, ACC predicts.
Note: Figures are for chemicals not including pharmaceuticals. a Projected.
Source: American Chemistry Council
After six years of sluggish growth, output from the U.S. chemical industry will expand by 3.6% in 2017, according to a projection by the American Chemistry Council, the country’s largest chemical trade group.
The figure implies that much will change from 2016, when ACC estimates output grew by a mere 1.6%. An earlier prediction by the group called for more robust growth of 3.1% in 2016.
Overall U.S. economic growth will remain modest, ACC says, but the chemical industry will be a source of strength because cheap shale gas provides a strong competitive advantage, and the industry serves fast-growing global markets. Economist predictions for global growth this year range from 3.1 to 3.4%, compared with about 2.8% in 2016.
The shale gas boom continues to attract investment and chemical jobs to the U.S. Gulf Coast, says ACC chief economist T. Kevin Swift. In addition, “chemical companies in the U.S. continue to innovate, focusing on improving efficiencies as well as on new, leading-edge product development,” he says.
ACC’s figures assume that factors dragging down the chemical economy will moderate or improve in 2017. A glut in supply chain inventories has evened out, for one. Swift also predicts that automotive builds and single-family home construction will be robust. And he says business investment will increase, reversing a strong postrecession trend.
What’s more, Swift alludes to a new, business-friendly climate under the incoming Trump Administration, saying “tax and regulatory reform will go far to rejuvenate U.S. economic dynamism and performance.” Although Trump has promised to erect trade barriers, Swift says total trade will pick up slightly in 2017.
Recent surveys show ACC is not alone in its optimism. According to the Conference Board, consumer confidence in November returned to prerecession levels, due in part to positive views of the labor market. And a survey of home-builder confidence by the National Association of Home Builders resulted in its highest reading since 2005.
But government figures show single-family home starts sank 4.1% in November. Also that month, new vehicle sales—which have been a big area of spending—shrank 2.0%, as measured by J.D. Power and LMC Automotive. Fiscal moves by the new administration will influence buying, the survey partners say. “The economy and industry could be facing a boom or bust depending on which policies are focused on and implemented.”—Melody Bomgardner
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Europe: Sustainability to offer growth opportunities in anemic market
Sector-specific
European chemicals will see pockets of growth this year.
▸ Overall: 0.5% increase in production
▸ Agricultural chemicals: stable
▸ Consumer chemicals: moderate demand growth
▸ Petrochemicals: will continue to profit from lower oil prices
▸ Polymers: robust demand growth from packaging and construction sectors; limited growth from auto sector
▸ Specialty chemicals: moderate demand growth
Source: CEFIC
Economists are at sixes and sevens as to whether the European Union will experience higher economic growth and a consequent hike in chemical demand in 2017. Some say the U.K.’s decision to leave the EU could destabilize the region, dampening economic growth. Sustainability, though, is set to drive chemical demand.
CEFIC, Europe’s leading chemical industry trade group, expects a 0.5% uptick in chemical production across the EU in 2017 after no growth in 2016. Petrochemical makers will continue to profit from low oil prices, while demand for polymers from the auto industry is expected to soften. Specialty and consumer chemicals will be supported by moderate demand growth from business and consumers, CEFIC says.
The German chemical industry association VCI predicts German production will not grow in 2017. “The chemical business in 2017 is expected to remain without significant momentum, especially with the political uncertainty and economic risks in foreign markets around the globe,” says Kurt Bock, president of VCI and CEO of BASF.
One of the uncertainties is the U.K.’s pending exit from the European Union. Offsetting the so-called Brexit to a degree, VCI expects digitalization—such as using digital mapping systems to apply agrochemicals—and sustainability to help drive growth in Germany.
Another plus, according to Jefferies stock analyst Laurence Alexander, is that favorable European Central Bank policies in the year ahead will keep borrowing costs low and maintain a weak euro currency. The corporate “poster child” for 2017 could be the Dutch firm DSM, Alexander says, thanks to relatively noncyclical end markets such as nutrition and a favorable foreign exchange footprint.
Paul Hodges, chair of the U.K. consulting firm International eChem, agrees with VCI that sustainability is becoming more important for the EU’s chemical industry. He notes that the circular economy—in which products are designed from the outset to be reused and recycled—is becoming a major initiative in Europe.
“Sustainability is replacing globalization as a key driver for the economy,” Hodges recently told attendees of an ACS webinar. This new normal could drive demand for reusable or biodegradable materials in applications including clean water and sanitation, digital health care, and intelligent food packaging, he said.
But the effect of economic stimulus policies—predominantly the printing of more money—in EU countries in recent years could also be coming home to roost, according to Hodges. The likelihood now is a drawn-out downtrend in prosperity in Europe, he said.—Alex Scott
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Asia: China is slowing down, but regional growth is solid
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Picking up
India’s growth will outpace China’s, but from a smaller base.
a Projected. GDP = gross domestic product.
Sources: Asian Development Bank, World Bank
Key sectors of the Chinese economy are going strong, India is booming, and chronically weak Japan is not in a recession. It’s unclear how Brexit or the new U.S. administration will impact Asia, but the outlook for 2017 is positive for chemical companies operating in the region.
Managers are talking about expansion. “Our key focus for 2017 will be to increase local manufacturing in Asia,” says Mike Horton, the China-based president of Asia-Pacific operations for the paint, coatings, and specialty materials producer PPG Industries.
PPG’s desire to expand its manufacturing footprint in Asia stems from an optimistic view of sales growth in the region. Although the Indian economy is growing faster in percentage terms, China will be where most economic expansion takes place in absolute terms, Horton says. It is China where PPG will look first to build new plants or acquire existing ones to accommodate demand growth, particularly from the automotive sector and, surprisingly, construction.
Despite the Chinese media attention that tens of thousands of surplus apartments have attracted, they are more the exception than the rule in the country, Horton claims. Demand absorbs new supply in many cities, he says. And outside the housing sector, he adds, the government is investing in the construction of new airports and train stations.
Finally, consumer demand for new cars remains strong, with the China Association of Automobile Manufacturers reporting 14% growth during the first 10 months of 2016. Demand should remain robust in 2017, Horton says, although the possible phase-out of a government subsidy for the purchase of small cars might affect sales temporarily.
At BASF, Sanjeev Gandhi, the board member responsible for Asia and the Pacific, is also upbeat about 2017. Notably, he expects an improvement in profit margins for materials used in the manufacturing of polyurethanes. BASF produces these raw materials at massive plants in Shanghai and Chongqing, China.
The slowdown in China is not a significant concern, Gandhi argues. One of the reasons it happened, he says, is that the economy has been through a restructuring to lessen dependence on export-oriented manufacturers. This rebalancing, he says, was one of the most positive and significant changes to happen in Asia in 2016.
Meanwhile, Japan, Asia’s second-largest economy, will not be dragging down the region. In its latest outlook report, the Manila-based Asian Development Bank notes that Japan should manage to grow by almost 1% in 2017. Overall, the bank expects the economies of Asia to be stable in 2017. Excluding Japan, it says, Asia will grow by 5.7%.—Jean-François Tremblay
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Canada: New spending may knock country out of a rut
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Bounce back
After a two-year slump, Canadian chemical sales should climb again in 2017.
Note: Sales converted at the 2016 average exchange rate of $1.00 U.S.=$1.325 Canadian. a Estimate. Source: Chemistry Industry Association of Canada
Once again, the Canadian chemical industry was true to its slow and steady form in 2016. However, 2017 should prove to be an exciting year for Canadian chemical makers. Plans for multi-billion-dollar expansions may receive final go-aheads, while mergers and acquisitions are set to create bigger Canadian companies.
Sales for the sector declined by 2% in 2016 to $17.3 billion, according to the Chemistry Industry Association of Canada (CIAC), the country’s industry trade group, largely due to lower selling prices. Volumes increased by nearly 4%. This year, CIAC sees sales increasing 1% as prices strengthen, but volumes are expected to decline by 2%.
Capital spending in Canada fell nearly 8% in 2016, to $815 million, according to David Podruzny, CIAC’s vice president of business and economics, as companies wrapped up expansion projects.
Now, another wave of expansions may soon be coming to Canada. Last month, the Alberta government approved hefty incentives for two proposed petrochemical projects. “If they go ahead as projected, we should see capital spending ramping up,” Podruzny says.
About $225 million in government royalty credits are earmarked for a joint venture between Petrochemical Industry Co. of Kuwait and Pembina Pipeline Corp. It plans to build a $3 billion complex to convert propane into propylene and then polypropylene.
Another $150 million in royalty credits is set aside for Inter Pipeline, which also wants to build a propane dehydrogenation plant in Alberta.
That project was first unveiled about a year ago by another firm, Williams Cos. North American Polypropylene (NAPP), an affiliate of the U.S. private equity firm Goradia Capital, signed on to build a related polypropylene plant.
NAPP is now suing Williams and Inter Pipeline in a Texas court. NAPP alleges that Williams cut it out of the project when Williams sold its Canadian operations to Inter Pipeline.
The Canadian industry is also seeing sizable consolidation. Last month, Chemtrade Logistics agreed to purchase Canexus for $680 million. Chemtrade makes inorganic chemicals, including sulfuric acid and sodium nitrate. Canexus makes chlorine and sodium chlorate.
Additionally, two of the nation’s largest fertilizer makers, Potash Corp. of Saskatchewan and Agrium, are merging to form a company with $21 billion in annual revenues.—Alex Tullo
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Latin America: A Struggling region looks for recovery
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Turning around
The region’s economy could improve in 2017.
a Projection. GDP = gross domestic product.
Source: International Monetary Fund
Stretching roughly 10,000 km from the Rio Grande to Tierra del Fuego, Latin America cannot be generalized. Economic performance in the region ranges from disaster (Venezuela) to stability (Mexico).
But it is fair to say that the the region’s economies have been slumping recently. The world’s economy grew by 11% since 2013, but collectively Latin America hasn’t seen any growth, according to the International Monetary Fund. And although the situation might not get worse, 2017 isn’t likely to be much of a year for recovery either.
The region’s largest economy, Brazil, is experiencing its “deepest recession in decades,” IMF says, noting that the problem is compounded by a corruption scandal and political crisis that led to the ouster of President Dilma Vana Rousseff in August of last year. IMF says the “recession may be nearing its end” and expects a smidgen of economic growth in 2017.
IMF expects that growth in Argentina will rebound as a new government, sworn into office in late 2015, improves management of the economy. There is no such hope in Venezuela, where the economy contracted a staggering 10% in 2016, leading to food scarcity and a breakdown in social order. Mexico, IMF says, will likely remain on its steady course.
Rina Quijada, senior director at IHS Markit’s Chemical Insight business in Latin America, says Brazil’s largest chemical maker, Braskem, is succeeding despite the slack home economy. Exports helped keep production at high levels even though plastic resin demand in Brazil declined by an estimated 5% in 2016.
In Mexico, the main event has been the start-up of a new ethylene and polyethylene joint venture between Braskem and the Mexican firm Idesa. However, the state oil company Pemex, in order to supply the partnership with feedstock ethane, has had to throttle back its own production of ethylene and its derivatives.
“A common denominator in most of the countries is that the state-owned oil companies are financially distressed,” Quijada says.
An exception, she says, is Argentina’s YPF, which is starting to produce significant quantities of natural gas from shale. Dow Chemical, which has partnered with YPF in natural gas exploration, is interested in using the new gas source as a feedstock for its Argentinian operations and possibly for an expansion. Quijada thinks this could lead to a new chemical project early in the next decade.—Alex Tullo
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Middle East: Buoyant outlook seen, as downstream diversification continues
Middle East chemicals by the numbers
▸ $80 billion: Chemical sales in 2015
▸ 2%: Region’s share of global chemical sales
▸ 71%: Share of region’s output represented by 10 fertilizers, plastics, and basic chemicals
▸ $729 million: Region’s chemical R&D; spending in 2015
▸ 2%: Region’s share of global chemical R&D; spending
Source: Gulf Petrochemicals & Chemicals Association
Chemical sales in the Middle East will remain buoyant in 2017 despite challenging global economic conditions, according to the region’s largest industry organization, the Gulf Petrochemicals & Chemicals Association.
Overall, the outlook is positive, according to Ahmad Al-Ohali, CEO of Sipchem, a Saudi Arabian petrochemicals firm. Al-Ohali is a director on the board of GPCA. “From 2007–2016, 139 petrochemical projects were introduced in the Gulf Cooperation Council valued at $215 billion. This is tremendous growth, and there are similar opportunities in the future,” he says.
But Middle East chemical makers are concerned about the rising competitiveness of the U.S. petrochemical industry with its low-cost natural gas from shale. “The future holds no certainties,” Ohali says.
Abdulaziz Judaimi, head of chemicals for Saudi Aramco, argues that the only way to ensure competitiveness and growth is to “continue developing more differentiated, higher-value products; continue creating strong brand identities; and continue upgrading to stay ahead of the curve.”
The Middle East is already adding high-value specialty chemical products. The industry’s diversification strategy took a major step forward in November when Sadara, a $20 billion chemical complex operated jointly by Dow Chemical and Saudi Aramco, officially opened in Jubail, Saudi Arabia.
The Sadara complex will produce a swathe of polymers and specialty chemicals in plants set to start up every week for the next few months. It will mostly use naphtha as feedstock.
Sadara’s opening marks “a major change point” for the Middle East, says Paul Bjacek, head of chemicals research at the advisory firm Accenture. Sadara has economies of scale combined with highly efficient processes that will make it cost-competitive globally, he says.
In line with the region’s diversification strategy, Sadara is adjacent to an industrial park for downstream manufacturing activities, including plastic part production.
Another development that promises to shape the Middle East petrochemical landscape is the lifting in 2016 of international sanctions on Iran. The country has the potential to become a major petrochemical producer in the next few years. However, headwinds loom, Bjacek cautions. “It is more than five years away because there are plenty of investment opportunities first in North America,” he says.—Alex Scot
Talented 12: Class of 2016.
This group of skilled young ‘operatives’ has been covertly using chemistry to safeguard the planet.
ACADEMIC FAMILY TREESLABORATORY LOVESTALENTED 12 BY THE NUMBERSQUIZ: GET TO KNOW THE TALENTED 12CLASS OF 2015: WHERE ARE THEY NOW?SUGGEST CANDIDATES FOR 2017
THE TALENTED 12
THIS GROUP OF SKILLED YOUNG 'OPERATIVES' HAS BEEN COVERTLY USING CHEMISTRY TO SAFEGUARD THE PLANET
Secret agent James Bond (aka 007) has saved the world so many times, he makes it look easy. What the extraordinary young scientists profiled here will tell you is, in reality, it's anything but.
Welcome to the second annual Talented 12 feature, in which we're blowing the covers of a group of top-notch chemistry "operatives" whose mission it is to solve some of the world's most diabolical scientific problems. This group is monitoring our food supply for contaminants, tackling unyielding diseases such as Alzheimer's, and finding better ways to convert sunlight into electricity.
You'll want to keep an eye on these agents that, with the help of our advisers, we've selected. We expect them to help safeguard the planet for future generations. And unlike James Bond, they won't need Q to outfit them with exotic gadgets for saving the world. They can build their own. Meet the Talented 12 ...
Lauren Austin
Nuclear biochemistry snoop looks to bring advanced nanotech to big pharma
(p.34)Luis Campos
Organic chemist is building a reputation for building overachieving materials
(p.35)Karena Chapman
High-energy researcher is revealing the atomic details of materials with X-ray techniques
(p.36)Anthony Estrada
Molecule builder is tackling the most daunting neurological disorders
(p.37)Talented 12 by the numbers
Here’s how this year’s
class stacks up
(pp. 38-39)Daniel Fitzpatrick
Computer whiz wants to free synthetic chemists from mindless tasks
(p.40)Lili He
Analytical scientist is working to keep contaminants off dinner plates
(p.41)Juan Pablo Maianti
Chemical biologist is pioneering new approaches to treating diabetes
(p.42)Bill Morandi
Reaction inventor seeks new ways to build valuable molecules
(p.43)Laboratory Loves
We asked our secret agents which gadgets they can’t live without in the lab.
(pp. 44-45)Alison Narayan
Synthetic chemist recruits enzymes to do handy but tricky chemistry
(p.46)Renã Robinson
Analytical chemist is looking for the connections between the brain and other parts of the body in Alzheimer’s disease
(p.47)Alex Spokoyny
Inorganic chemist performs new tricks with boron for catalysis, energy storage, and protein recognition
(p.48)Ke Xu
Microscopy expert is pushing the limits of resolution to peek inside human cells
(p.49)
Exxon, GT find way to cut carbon emissions for chemicals: Science.
Exxon Mobil and Georgia Tech researchers published findings of a breakthrough in the journal Science on Thursday, saying they had devised a way to slash carbon emissions from chemicals manufacturing by using reverse osmosis instead of heat to separate molecules.
Exxon Mobil and Georgia Tech researchers published findings of a breakthrough in the journal Science on Thursday, saying they had devised a way to slash carbon emissions from chemicals manufacturing by using reverse osmosis instead of heat to separate molecules.
Reverse osmosis, which has been widely used for decades in desalination plants that turn seawater into drinking water, has long been seen as having applications for the oil and chemicals industry.
Now researchers have finally come up with a specially treated polymer that can serve as the semipermeable membrane needed to do reverse osmosis for chemicals manufacturing at room temperature.
Current techniques use high temperatures and heat to break up molecules to create chemicals that are used in myriad products across the economy.
Exxon said it was too early to say when the new technology could be applied commercially, or how they might go about patenting and licensing the technology so that other manufacturers could use it.
But if applied globally, the chemical industry's annual carbon dioxide emissions could be slashed up to 45 million tons, which is about equal to the yearly carbon dioxide emissions of about of 5 million U.S. homes.
The fossil fuels industry is under pressure to curb emissions, especially in light of the Paris Agreement signed in December, in which 195 governments agreed that aims to limit the rise in global temperatures to 2 degrees Celsius (3.6 degrees Fahrenheit), raising the potential for regulatory crackdowns on carbon-based businesses.
“We need multiple solutions to reduce CO2 emissions,” said Vijay Swarup, Exxon's vice president of research and development.
Chemical plants account for about 8 percent of global energy demand and about 15 percent of the projected growth in demand to 2040.
Researchers said their next steps will be to develop a pilot project that, if successful, could be scaled up.
(Reporting by Terry Wade; Editing by Jonathan Oatis)
Can chemists turn pollution into gold?
Scientists are trying to convert carbon dioxide emissions into something of value—without using too much energy.
Scientists are trying to convert carbon dioxide emissions into something of value—without using too much energy
By Katherine Bourzac on July 25, 2016
Carbon dioxide is a stable molecule, and doesn't store much energy in its chemical bonds. To use it, chemists have to add energy, often through heating, which usually requires electricity. Much of that comes from power plants that burn coal or natural gas—emitting more carbon dioxide into the atmosphere, even more than was captured. Credit: Zirafek/Thinkstock (MARS)
We humans emitted 35.9 metric gigatons of carbon dioxide into the atmosphere in 2014, mostly from burning coal and natural gas in power plants, making fertilizer and cement, and other industrial processes. If chemists could capture carbon dioxide and turn it into chemical building blocks for other products, the way plants do, says Cornell University chemical engineer Lynden Archer, “carbon dioxide would not be a nuisance anymore, but a gift.”
For years scientists have been trying to store carbon dioxide captured from exhaust flues at power plants and other emitters, mostly by injecting it deep underground. Without large subsidies, however, this expensive carbon sequestration process may not be economically viable. Injecting carbon dioxide into old oil wells to drive out more oil is one application, but it’s not enough, and it’s not clear it even pays, given current low oil prices. Proponents of utilizing carbon rather than storing it hope they will profit by creating something of value from this waste product. The most likely applications use the gas as a raw material for making chemical products, which could also pay off by replacing petrochemicals with something greener.
These proponents face a difficult chemistry problem. Carbon dioxide is a stable molecule, and doesn’t store much energy in its chemical bonds. To use it, chemists have to add energy, often through heating, which usually requires electricity. Much of that comes from power plants that burn coal or natural gas—emitting more carbon dioxide into the atmosphere, even more than was captured.
Engineers, chemists and other researchers say new technologies are changing the picture. Paul Bunje, senior scientist in the Energy and Environment group at the XPrize Foundation, hopes that awarding a big prize for a solution will stimulate a diverse group of technologists. Next Tuesday, the foundation will announce that more than 40 teams are competing to win a $20 million prize. The winner of the Carbon XPrize, to be announced in spring 2020, will sequester the most carbon dioxide into a product of greatest net value. Some teams aim to make polymers, or fuels to replace gasoline, or industrial chemicals.
In the longer term, all the different companies producing one chemical or another could make up a carbon-utilization industry that could make a difference. A problem on the scale of climate change needs multiple solutions, Bunje says.
“The question now is how can people in chemistry create new reactions, new mechanisms to use carbon dioxide as a feedstock?” says Cornell’s Archer, who is also a Carbon XPrize advisory board member. This week in Science Advances, he offers one answer: a fuel cell that generates electricity while converting carbon dioxide into a commodity chemical. Archer and his student Wadji Al Sadat built a prototype reactor that combines carbon dioxide with aluminum and oxygen to produce oxalates. Oxalates are used to make acids, rust removers, fabric dyes and other industrial chemicals.
Archer is well aware of the pitfalls of trying to do environmentally friendly chemistry with carbon dioxide. “Usually you consume so much energy that it’s cost prohibitive—but we get energy back,” he says. “That surprised us.”
The cell runs on aluminum and air. Inside, oxygen reacts with an electrode made of aluminum to form a highly reactive aluminum superoxide capable of reacting with otherwise reluctant carbon dioxide. The two react to generate aluminum oxalate. The fuel cell captures some energy from these chemical reactions, and although it requires a voltage to drive the reaction, the process appears to generate more electricity than it consumes, Archer says. Because the metal is consumed, choosing the right one is key. He settled on aluminum because it’s abundant and inexpensive. And even though aluminum production emits carbon dioxide, Archer hopes his system will capture enough carbon within oxalates to offset that.
The Cornell group cautions that it doesn’t fully understand the chemical reactions involved. The early version of the fuel cell uses an expensive material called an ionic liquid as the electrolyte, for example. If it plays a critical role and can’t be replaced, the technology may not be viable, says Archer.
Oxalates are a niche product, as are many of the chemicals being made by startups working on carbon utilization. But some are aiming big. Skyonic’s pilot plant in San Antonio, Texas, captures emissions from a cement plant and turns them into limestone and acid. Solidia Technologies sequesters carbon dioxide in concrete itself. And other companies in various stages are working on making plastics, alternative fuels and chemical feedstocks.
Without pointing fingers at any project in particular, Howard Herzog says many of those that promise to use captured carbon look a little too good to be true. Herzog is a senior research engineer at the MIT Energy Initiative and a proponent of carbon sequestration. “Carbon dioxide is spent energy,” he says. Getting value out of carbon dioxide in the form of commodity chemicals or energy, without putting more energy in somewhere in the life cycle of the product, is extremely difficult. “You can’t win in terms of energy. Thermodynamics tells us that,” Herzog says.
Although Herzog admits that some of the companies may be profitable, he’s skeptical about the potential for carbon utilization to have a significant environmental impact. He was a lead author of the 2005 IPCC Special Report on Carbon Dioxide Capture and Storage, and says the report’s conclusions about carbon utilization still hold: The potential to make a dent in global emissions is small. Even if the chemical industry used carbon dioxide to make all its products—something no one thinks is likely—they couldn’t sop up all the emissions.
Kendra Kuhl, co-founder of Opus 12, a startup in Berkeley, Calif., is well aware that carbon utilization won’t fully solve the world’s emissions problem. Opus 12 is developing an electrochemical reactor that uses novel catalysts and renewable electricity to turn carbon dioxide into polymer building blocks and other chemicals. Kuhl says Opus 12 will compete for the Carbon XPrize. And even though there is not enough demand for products to consume a large share of carbon dioxide emissions, she says that given the environmental consequences of continuing to dig up fossil fuels to feed the petrochemical industry, it’s worth trying to use carbon dioxide instead. “We need a new way of doing chemistry.”
Europe circles the circular economy.
Tempers flare over how to deal with hazardous chemicals in closed loop systems of the future.
Tempers flare over how to deal with hazardous chemicals in closed loop systems of the future
By Alex Scott
COVER STORIES
Can everything old be made new again?
Cleaning the clothing industry
Europe circles the circular economy
Jumping from a linear economy, in which materials and products are used once and then discarded, to a circular one, where products are designed to be recycled and their raw materials endlessly reused, has become a goal—a lofty one—for the European Union.
Backers see the circular economy as a win-win for the economy and the environment. Successful implementation could offset the European chemical industry’s lack of fossil-fuel-based feedstock while also meeting the region’s ambitious environmental goals. Critics call the concept idealistic and unworkable.
Either way, EU regulators are now in negotiations to develop waste-related regulations as a first step to a circular economy in the region. The European Parliament will vote on whether to adopt the regulations in the fall.
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Panelists at the recent Helsinki Chemicals Forum discuss which chemicals should be included in the circular economy. Seated from left: Puoskari, Smith, the Netherlands government environment coordinator Hans Meijer, Singhofen, and Warhurst.
Credit: Alex Scott
Rare bedfellows, the chemical industry and environmental activists both welcome the circular economy, but as recent clashes between the parties show, they have very different views on how it should be implemented.
The European Chemical Industry Council, or Cefic, Europe’s largest chemical industry association, likes the idea of being a first mover on the circular economy. The concept could provide the cheap raw materials the European chemical industry desperately needs, but it also presents major risks, said Peter Smith, Cefic’s executive director of product stewardship, speaking recently at the Helsinki Chemicals Forum in Finland.
“The devil is in the details,” Smith said. One devilish detail is which chemicals would be included in closed-loop recycling systems and which would be excluded on grounds that they present an unacceptable hazard to society. Inclusion or exclusion should be made on a case-by-case basis by looking at costs and benefits, Smith said.
Some environmental experts, though, want tough rules to apply from the outset. “Circularity alone could even increase problems when you have hazardous materials,” said Axel Singhofen, an adviser on health and environment policy to the European Parliament. “Toxics out, then recycle; not the other way around,” said Singhofen, who advocates excluding flexible polyvinyl chloride (PVC) and other chemicals from recycling systems.
Environmental activists say the 169 substances of very high concern,which include some phthalate plasticizers used in flexible PVC, that are already controlled under the EU’s Registration, Evaluation & Authorisation of Chemicals (REACH) chemical management law, should be automatically excluded from recycling systems under any circular economy legislation.
The circular economy explained
What is it?
A circular economy is one that is restorative and regenerative by design and that aims to keep products, components, and materials at their highest utility and value at all times. It distinguishes between nonbiodegradable materials for recycling and biological materials for composting.
Is it more than recycling?
Yes. Its goal is to minimize waste and maintain the value of materials rather than downgrade them. It also promotes sharing, reuse, and maintenance.
What are the benefits?
Potential economic and environmental gains.
Shortcomings?
There are no standards or fixed targets.
Challenges ahead?
Whole supply chains will have to work together, hazardous materials could undermine recycling streams, and waste regulations must be reoriented to promote resource reuse.
What groups are involved?
The European Union, United Nations, Ellen MacArthur Foundation, Cradle to Cradle Products Innovation Institute, Product-Life Institute.
Many other chemicals—fluoropolymers and nanotubes, for example—have good properties but also unwanted qualities, so traceability is needed, said Mari Puoskari, strategy director for Nordic waste recycling firm Ekokem.
But industry executives at the Helsinki forum indicated that they aren’t about to be steamrollered on the issue. Giuseppe Malinverno, Solvay’s head of government and regulatory affairs, called out from the audience floor during an on-stage discussion to tear into Michael Warhurst, executive director of CHEM Trust, a U.K. environmental group.
A visibly angry Malinverno lambasted Warhurst, an environmental activist and chemist, for naming companies that he said had failed to substitute known hazardous substances in their products. “We’re not producing just for fun,” Malinverno said.
Ultimately, though, the chemicals to be included in—or excluded from—closed-loop waste streams will be decided by regulators. The European Commission’s broad thinking on the topic is that the region could extend its behemoth REACH regulation to manage chemicals in waste recycling streams.
In essence, Europe would create a hybrid chemical manufacturing and waste management regulation, said Bjorn Hansen, head of the European Commission’s chemicals unit.
Geert Dancet, who runs the European Chemicals Agency (ECHA), the body responsible for implementing REACH, proposed that ECHA could become the body responsible for overseeing the tracking of chemicals in a circular economy. In this role, ECHA would provide information about exposure to chemicals to help evaluate their suitability for recycling, Dancet said.
But Cefic questions whether a REACH-style approach would be suitable. For example, in certain recycling systems, substances of very high concern may be diluted to such an extent that they no longer present a risk, Smith said.
Cefic also complains that a recent EU proposal to align waste management legislation with the circular economy doesn’t go far enough to remove barriers that prevent waste from being reused as raw material. “The proposal should have been more ambitious,” Cefic said in a recent comment on the proposal. Criteria for enabling the reuse of post-consumer residues should be reassessed so that valuable resources can be returned to the production process, it argued.
Beyond the question of what to recycle, the circular economy raises questions about how to recycle. The role of chemists and the chemical sector would be to develop novel materials that can be readily separated or novel processes for separating existing materials, such as the depolymerization of plastics. “This needs research, and we could help,” Smith said.
Funding for such research is already available in Europe via the Horizon 2020 research fund. This year and next, the EU will provide a total of $60 million to finance the development of technologies that support a circular economy. A further $400 million will be allocated to resource-saving processes.
Efforts to create a circular economy are already under way in parts of Europe, especially in the Netherlands and Scandinavia. For example, Swedish construction firm Skanska already applies circular principles to some building projects. The company’s biggest challenge is determining which substances are suitable for recycling.
“Our suppliers are the key. We need them to develop green products and provide clear and easily understood information,” said Eva-Lena Carlén-Johansson, sustainability program manager for Skanska.
The firm recently built a $1.9 billion hospital in Stockholm designed to be completely recycled at the end of its useful life. The client sought to avoid both PVC and phthalate plasticizers, Carlén-Johansson said.
For the project, a Skanska supplier, Hilti, developed an injectable tile mortar that is free of acrylates and has reduced dibenzoyl peroxide content. Advantages are that the mortar is not classified as hazardous waste and construction workers don’t have to wear protective clothing, Carlén-Johansson said.
Skanska has created a database of the materials used to build the hospital so that all components can be recycled. “This is an important approach for the circular economy,” Carlén-Johansson said.
In another move to reorient construction materials toward the circular economy, the chemical maker Saudi Basic Industries Corp. (SABIC) collaborated with the U.S. architect William McDonough and the building design firm WonderFrame on buildings made from polycarbonate sheets and aluminum that can be disassembled and reused.
The partners have used the approach to construct a building near Amsterdam in an area dubbed Circular Valley. Here, companies, the local government, and nongovernmental organizations are working together to convert the area into a “living lab” and international hub for testing approaches to the circular economy, SABIC said.
Other circular economy initiatives are also in play. Earlier this year, the U.K.-based Ellen MacArthur Foundation, created by former yachtswoman Ellen MacArthur and headed by former McKinsey & Co. partner Andrew Morlet, introduced a circular economy initiative for companies in the plastics value chain. Named the New Plastics Economy, it sets out a three-year program for consumer goods firms, packaging producers, plastics companies, and chemical firms.
The initiative seeks to create a mechanism for bringing all links of the value chain together and rethinking packaging materials and postconsumer handling. More than 40 companies have signed on, including Dow Chemical, Coca-Cola, and Unilever.
According to the foundation, the program is not just an exercise in being green but a way of recouping some of the 95% of the value of plastic packaging material, worth as much as $120 billion, that is lost annually as waste. A 2012 McKinsey report stated that EU manufacturing could realize net raw material cost savings of up to $630 billion annually by deploying a circular economy approach.
“We know this is the right thing to do for the environment, and there is also an opportunity to create value for business,” said Neil C. Hawkins, head of sustainability for Dow.
Dow recently took a step forward in this field with the introduction of polyethylene for making food packaging pouches that are fully recyclable. Standard pouches feature ethylene vinyl alcohol or polyamide barrier layers that won’t finely disperse in polyolefins during recycling. Dow’s approach is to use reactive polymer modifiers that coat polar components of the barrier layer to help it disperse during recycling.
“Technology is a key enabler in closing the loop,” Hawkins said, cautioning that society must be realistic. “Due to the complexity and cross-sector collaboration requirements to support a circular economy, adoption of this practice takes time.”
But not everyone considers the current approach to the circular economy to be robust enough to deliver truly sustainable resource reuse.
“Definitions of circular economy can be watered down to be almost anything that relates to an environmental agenda,” said Michele Field, an independent environmental consultant based in the U.K. “At present, organizations that commit to a circular economy approach do not need to meet any tight time goals or standards.”
It’s far from clear whether the circular economy will become a system Europe uses to transition to a new manufacturing paradigm or whether it will end up as just another environmental buzzword. But for now, the circular economy merry-go-round is turning. It’s an approach to sustainability on which European regulators, environmental activists, and even businesses are looking to hitch a ride.