Sustainable Circularity in the Chemical Industry

In this episode of Borderless Executive Live, our host Andrew Kris, a founding partner at Borderless, welcomes Valerio Coppini, Vice President of Business Development at Neste, for a deep dive into sustainability in the chemical industry, focusing on Neste's approach to fostering a Circular Economy. This conversation uncovers the extensive measures Neste is implementing to steer the industry toward a more sustainable future. Valerio provides a wealth of knowledge and the statistical data that underscores the importance and feasibility of these initiatives.

Valerio highlights his pivotal role in driving Neste's renewable polymer chemicals business to significantly reduce the carbon footprint of the company’s customers through innovative, renewable solutions. With the chemical industry accounting for 15% of global CO2 emissions, this conversation highlights the unique challenges and groundbreaking strategies Neste has adopted to address this issue.

From examining the essential role of circularity in tackling the challenges for plastics, to exploring the transformative potential of hydrogen and bio-based materials in creating greener chemical processes, this episode provides an all-encompassing overview of efforts toward sustainable circularity in the chemical industry. Valerio's insights and expertise present a powerful vision of how Neste is leading the way to a greener, more sustainable future for one of the world’s essential industries.

Valerio Coppini, Vice President Business Development Neste: https://www.linkedin.com/in/valerio-coppini-a416062/
Andrew Kris: https://www.linkedin.com/in/andrewkris/ 

Transcript

0:12

Hello and welcome to Bordless Executive Live, the podcast. This is Andrew Kris. My special guest today is Valerio Coppini, vice president of business development of Neste. Valerio is responsible for the growth of Neste's renewable polymer chemicals businesses. Working hard to reduce the carbon footprint of industrial customers through finding renewable solutions. Welcome to you, Valerio. It's a pleasure to have you here, most of our listeners will be very familiar with the questions around sustainability and your work on renewable polymers and chemicals is clearly going to be essential . In particular, I think for some parts of the industry, some of your customers and maybe some polymer producers, this is an existential issue that needs to be addressed. So how are you going about that, Valerio? Thank you, Andrew. So you know that the chemical industry is one of the largest emitter of CO2 into the atmosphere. Actually, if I am not wrong and I recall correctly, it represents about the 15 percent of the total emissions and the chemical industry, is a little bit different from the other industries because fossil that represents, the larger majority of the resources that we are using in chemical industry, represents feedstock, and also the energy supply. So this, makes the chemical industry a little bit different from the rest of the industries for which we need to tackle the CO2 emission. In the chemical industry, I would say that about 50 percent of the total production is polymer, and polymer has been the first sector to tackle strongly the concern about environmental protection and also CO2 emission. So the role of Neste in this important path toward better environmental protection is about supplying the industry with feedstock. That comes not from fossil resource, but from waste and biomass. Indeed, that's a very important step. And by the way, I think that's also coming up pretty well from the sustainable aviation fuels business where Neste is also pretty heavily involved. It's good to see that. So there's a lot of talk about circularity in the industry, Valerio. Is circularity the solution here to solving these major challenges for plastics? Yes, circularity is for sure an important component in order to reduce the dependency of chemical industry for what concern the fossil utilization. Today, the large majority of the circularity effort that are made on the chemical industry comes from mechanical recycling. Let's say that all in all, about 10% of the plastic that are produced globally are today recycled mechanically, but there is some limitation I would say for what concerns the mechanical recycling. First of all, mechanical recycling is a process that degrades the plastic. So we cannot recycle infinitely the plastic waste. The second point is that the quality of the material that comes out from mechanical recycling is sometimes not so good in order to be used for high level application. So for that reason, there is a need in order to implement also an advanced recycling step that may help in extending the pool of plastic waste that can be recycled from one side, and from the other side can be a good process, a good industry solution in order to approach application that today cannot be approached by mechanical recycling. But if I may say, unfortunately, chemical recycling, mechanical recycling, and all kinds of recycling are important, but they are not the only available solution that we need to deploy in order to drastically reduce the carbon footprint of the industry. Another important component comes from the utilization of drop in hydrocarbon that comes from the transformation of waste and residues and biomass. So what are called in today's industry, renewable feedstock. So in Neste, let's say that we are embracing a nullistic approach, if I may say because from one side, the circularity, Is important in order to reduce the environmental impact of plastic waste it's important because we are utilizing available feedstock that are waste, to produce a valuable product. And this is extremely important in regions where feedstock is not very much available, like for instance, Europe. But on the other side, even if we would be perfect in recycling plastic waste, an important portion of the plastic waste that we are feeding to the circular system will be lost, and this is due from one side from the let's say organic loss that we're going to have in a certain mechanical and chemical recycling process, but very much it comes because if we want to transform a polymer waste into a new feedstock, we need to provide the energy. This is thermodynamic, unfortunately. And the large majority of this energy today comes from the plastic waste itself. So this means that when we are transforming a plastic waste into a new plastic, about 30 percent of the feedstock is lost. So this means that if we are just circulating the plastic, every cycle we're going to lose 30 percent of the material. So we need to integrate this material. And the approach of Neste is, let's integrate these material with renewable feedstock, so from feedstock that is coming from biomass. So after some cycles, I would say that this cycle will become green. So not only protecting the environment against the pollution of plastic waste, but also becoming a full green circular cycle. So that's a time issue, right? Recycling and recycling and recycling until each time you take a 30 percent chunk out in energy. In the end, you end up with a greener product, right? That's what you're saying? Exactly. So every time we lost, we introduce a green material. Yeah. And so where are these green materials coming from? So Neste is one of the leaders in transforming waste and the residues in molecules, hydrocarbon molecules, that are fully drop in for the chemical industry. So the renewable feedstock comes from waste organic biomass. Today, the large majority of the feedstock that Neste is using for serving the chemical industry, comes from lipids waste. So used cooking oil, fats and grease that are that are not any more eligible for human food. And so it can be utilized for transforming it in hydrocarbons. Have you already set up collection chains and so on? Is that part of your business strategy as well? Exactly. So one of the, the most important topic let's say is addressed by the sustainable industry is to secure the feedstock. So we need to completely change the habits that the petrochemical industry has for what concern the supply of hydrocarbon. So far it was I would say extremely easy. A pipeline with crude that were coming into a refinery. But today, when we are addressing waste and residues. And it may be fats, it may be oil, it may be also plastic waste. We need to go collecting that plastic waste. And what Neste did historically, we integrate our company upstream in order to secure a reliable supply of such feedstock. Very good. And so I know that things like CO2 reduction, of course, are also part of this whole equation. What's happening in respect of CO2 when you're looking at tackling the plastic waste issue? Yeah. I mean I would say that our generation and I am 50 years old. Is and has been educated a lot about fighting against plastic pollution. So we started collecting plastic waste at home. We are extremely focused in order to reduce the plastic consumption and to reduce, as much as we can, the single use plastic consumption. But what I see with the feedstock that we are utilizing to de fossilize the chemical industry, plastic waste goes into the direction to reduce the environmental pollution. While renewable feedstock goes into the direction to reduce the CO2 emission into the atmosphere both part of the same holistic approach, but they are tackling together two different critical problems for our planet. Yeah, well, it's it's wonderful to see. And of course, Neste is always at the top of the list when we're looking at companies that have made a clear commitment to this whole area. The thing that strikes me though, you know, is are you really making a difference? I mean, are there enough materials available at this point from a renewables perspective? Neste is one company. And I'm sure you're doing everything you can, but is that enough? So, you are right. I mean, today chemical production is 870 million tons of product per year. So all in all we can say that chemistry is consuming about 1 billion tons per year of feedstock. So it's a huge demand. We cannot take on this demand just with a single solution. In fact, I think that we will see in the next year, a combination, a synergy between different solution that will be adopted. So what the Neste is doing right now is, I mean, we do have. I think the most important capacity in the planet for producing renewable hydrocarbons. So today we have a capacity installed of 5.5 million tons per year of drop in molecules that are ready to be used in order to defossilize our industries. And we are growing because just two years ago Neste were producing 'only' 3.3 million tons. This year we are producing 5.5. But the journey is not finished because by 2026, we are expecting to de bottleneck, one of our biorefinery. And so this production will reach 7 million tons. It's not yet the 1 billion that we were mentioning before, but, it's available. And it is important to mention that it's not a promise, it's something that is today available for de fossilizing the chemical industry. And I wonder whether you have any comment to make on the discussion around hydrogen and, how that is impacting the work that you're doing at Neste. So hydrogen for us is an intermediate chemical that we use in our biorefinery for producing the drop in molecule and the drop in hydrocarbon. Today in our biorefinery we are trying and we are actually implementing projects. In order to produce this hydrogen with renewable resources. My personal point of view about the utilization of hydrogen in the industry is that it would be interesting to use hydrogen wherever we cannot utilize directly green energy. To utilize hydrogen as the medium to reconvert the CO2 into new hydrocarbon. So it's what is called , 'the power to X'. Power, because hydrogen should be produced from renewable electricity, and then the hydrogen may be reacted with the CO2 to produce a new hydrocarbon. This is an important possibility that we have in our hands to extend drastically the quantity of feedstock available for the chemical industry coming from a renewable resource instead of from fossil. Indeed. and can [] you tell me a bit more about bio based materials? Because I often hear there's a bit of a dichotomy between food versus materials in this context. Yeah, so for sure what the chemical industry, but also what, what Neste is doing is to avoid the contamination, I would say, between the food industry and the biomass to hydrocarbon industry. So what we are doing proudly is that we are utilizing waste and residues to produce drop in hydrocarbon. Actually is the, I would say is the ABC of Neste. Neste is distinctive because it's transforming waste into good material. So this is our differentiation factor in the industry and we don't accept compromise on that. That's really good to hear that and I sometimes feel that there's enormous pressure coming from the consumer end of the business and back into industry, but there's also some regulatory pressure coming, isn't it, from the EU and in other parts of the world too. What's your perspective on that? Yes. So I need to say that right now all the chemical renewable and circular business is based on voluntary approach. So this means that there are at the end of the chain, a consumer And before the consumer, brand owners that are willing to pay more for having in their hands sustainable, circular and renewable plastic or chemical, but I need to say that this situation is a little bit unfair for the chemical industry because the hydrocarbon renewable and circular that we are utilizing for making chemical products. Actually, when they are going into the transportation field, they are getting incentive through a regional or country mandates. So this means that if you want to use a product, an hydrocarbon for producing chemical goods, you need to renunciate todays mandate. And this is not fair, but in that regard, I see that for instance, the European community is moving forward. There is an interesting plan to implement a minimum circular and renewable content in the plastic that will be produced. And also what caught my attention is that in February this year we saw that the European industry in Antwerp made a very interesting commitment. The Antwerp declaration, I think that's called, right? Yeah, the Antwerp declaration, exactly. So if I remember correctly, more than 70 chemical company in Europe participate to this declaration. And one of the topic of these declaration was about making a distinctive path forward for the low carbon and the sustainable chemistry. So sustainability and low carbon are pillars of the future European chemical industry. And the technologies that go with that need to be developed and they're hopefully going to be developed in Europe to sustain this whole industry. As I think you mentioned to me earlier on, there's about eight million people in the industry in Europe, and I'm sure that Europe does not want to become let's say an historical amusement park for the rest of the world. So these industries need to continue to work and to be successful worldwide. Some of the technologies you're developing, are going to be a large part of that aren't they. Maybe one final question to close off this conversation. You know, our work at Borderless is around executive search, it's specifically about working on talent and people. So let's talk about the people that are working on helping to transition this whole industry and industries in general. What kind of mindset do you really need for that? In terms of pushing renewables or recycle solutions, where do you have to come from to think this through well? So Andrew, I reconnect with the previous point that you were anticipating about distinctiveness. So distinctiveness for sure is about the technology, it's about business dynamic, but all those things come from peoples mindsets. So this industry- the industry of sustainability, of circular economy,-is an industry where people need to have a purpose driven mindset and this, for instance, it is the case for the Neste employees, you know, that our motto is that we want to create an healthier planet for the next generation. So it's an important purpose that our people need to share and believe me, everything we do, we have clearly in mind this commitment, this purpose that our company has. It's been very interesting because I've been happy to follow the Neste story in many ways and it's very, very clear that in terms of committing your entire company more than in word, but in doing the things that you're doing you're very much at the head of the game. It's very nice to see. Look, generally speaking, in the past, sustainability and profitability were seen as an oxymorus and something that will never happen. I think that Neste is demonstrating in the industry that we can be profitable and sustainable together. And this is a great, in my opinion, demonstration about the fact that all together, I mean, Neste with all it's partners, clients, and competitor, because we also need the competitor. We can accelerate the defossilization of the industry. Because we have just one planet, and we need to reverse the tendency that we implemented in the last decades, especially for what concern the greenhouse gas emission. Indeed. I'm really grateful to have had this conversation with you, Valerio. I think everything that you're doing is such an important part, and I hope we have a chance to welcome you back again one of these days to hear more about the progress you and Neste are making in this context. Thank you for joining us. Thank you, Andrew. Thank you very much.