Hello and
welcome to this blog post about the future of the chemical and in particular
the plastics industry. I do not have a crystal ball to predict the future,
however we can envision it based on the current megatrends. This is my attempt
to do so and since this is a broad topic, I split the post in two major parts:
Part 1: the
present time plus 3 years (2021 and post COVID-19 phase) and
Part 2: the
near future: 2025 – 2035
Let us get
started with the first part.
Emerging
technologies
In their
latest foresight report, Lux research [1] presented 12 emerging technologies
which will have great potential to strive after the COVID-19 Pandemic time.
Among the 12 technologies, five are in particular important for the chemical
and plastics industry:
-
Advanced plastics recycling
-
Materials informatics (the use of machine learning in materials development)
-
Additive manufacturing (3D printing)
- Synthetic biology
- Digital sales platforms
Advanced
plastics recycling is an important cornerstone for the plastics industry to
become a circular economy. Plastic waste will be a viable feedstock available
in a decentralized way. The commoditization of customization is achieved by
digital material platforms which decrease inefficiencies and minimize the
difference between a commodity and a specialty business.
Growth is
important, however qualitative growth is much more relevant than growth over
consuming more things.
Emerging Technologies to watch in 2021 and beyond (The Future of Chemical and Plastics Industry). |
The Great
Reset
In the year
2020, Klaus Schwab, founder of the World Economic Forum, presented the three
core components of the Great Reset [2, 3]. He is referring to the post COVID-19
time which offers an opportunity to "reset and reshape" the world. The
idea is to align the world more with the United Nations 2030 Sustainable
Development Goals (SDGs).
What are the
three core components [2]?
1.
Stakeholder Economy: aim is to create conditions for a stakeholder
capitalism. This includes the policy improvement on taxes, regulations, fiscal
policies, and trade to obtain fairer outcomes for stake- and shareholders.
2.
Building green urban infrastructures and creating incentives for businesses
to improve their environmental, social, and governance (ESG) metrics.
3.
4th Industrial Revolution: how to use the innovations of the 4th Industrial
Revolution for the public good.
Globally our
population is growing. The middle classes are expanding too and more people
will escape poverty, which is very positive for all of us. The demand in
chemical and materials is expected to quadruple by 2050 and to fulfill the
Paris climate agreement, the chemical industry needs to shift to a net-zero
emission industry. Reaching such aims is facilitated by using low carbon
emitting technologies in the production plants.
Solar
electrification of chemical operations is ongoing. For example, specialty
material producer Solvay is with 81.4 MW installed capacity among the top ten
companies in the US for solar adoption [4].
Top 10 Players in the US using solar energy to power their plants [4]. |
Sustainability
With the
Green New Deal agenda on the start in the European Union, the focus on the UN
Sustainable development goals (SDGs) will further increase [5].
Pressure on the chemical and plastics industry will increase to accelerate the transition towards circular business and operation models. Together with a reduction of the environmental footprint of the operations to protect biodiversity on a global scale. Downside may be more regulations set by the EU and directing certain sectors into the wrong direction [6]. Furthermore, the Green New Deal agenda is in contradiction to the Jan Tinbergen Rule of Thumb which states that a political instrument cannot efficiently achieve two goals at the same time [7, 8].
Conclusions
first part
The rebound of the economy has already started, especially in Asia. Worldwide companies try to catch up and profit of the rebound. The COVID-19 pandemic accelerated the digitalization of chemical business operations. Furthermore, investment companies such as BlackRock increased the focus on sustainable investing. This means that capital will flow more and more to companies which try to solve the world’s biggest challenges. The combination of the steps shown above will allow the plastics industry to be part of this trend too.
In the
second part we discuss a possible transformation of the plastics industry in
terms of business models and how it can keep up with the growth of tech
companies in the long run.
Thanks
for reading and #findoutaboutplastics
Greetings,
Herwig
Juster
Literature
[2] https://www.weforum.org/agenda/2020/06/now-is-the-time-for-a-great-reset/
[3] https://www.weforum.org/agenda/2020/08/building-blocks-of-the-great-reset/
[4] https://solarmeansbusiness.com/
[5] https://www.nytimes.com/2019/02/21/climate/green-new-deal-questions-answers.html
[7] https://www.investopedia.com/terms/j/jan-tinbergen.asp
[8] https://www.thehindu.com/opinion/op-ed/in-economics-what-is-tinbergen-rule/article24332615.ece#:~:text=This%20refers%20to%20a%20rule,precludes%20the%20achievement%20of%20others.
[9] https://www.blackrock.com/us/individual/investment-ideas/sustainable-investingIdea
collection