On March 7, we took the opportunity to sit down and discuss the chemical industry in more detail with Colette Alma. Colette has been director of the VNCI for 15 years. With new climate policies announced by the Dutch government, we find out how she sees the future of the Dutch chemical sector.
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The chemical industry is the fourth largest industry in Europe. It is also one of the biggest industries in the Netherlands, with several large multinationals making their mark on the industry based here. The Royal Association of the Dutch Chemical Industry (VNCI) is an organization bringing together and (in)directly representing 600 companies within the Dutch resources industry. The VNCI acts as a platform for the Dutch chemical sector to work together, explore trends and jointly address challenges. It looks out for the industry, aiming to inspire and unite different parties in the chemical industry.
Colette Alma has just spent 15 years as director of the VNCI and has worked in several different roles in the chemical sector before.
Why does the Dutch chemical industry need to change?
"The chemical industry is one that, on the one hand, delivers innovative solutions which increase both comfort and offer a positive impact on sustainability. On the other hand, the industry is increasingly seen as a big net polluter belonging to the 'old economy' and well due for an overhaul. At first glance, these two views seem to be miles apart. So, what must be done to create an environment where companies in the chemical sector can be both competitive and deliver a positive impact to society at large?"
"The proposed Dutch climate agreement is asking companies in the chemical industry to present, by the end of 2019, concrete plans to reduce greenhouse gas emission, for example by contributing to a circular economy. To draft these plans and set the companies up for success the discussions need to be held in a broader fashion. Companies, politicians and citizens must come together to jointly form a vision that identifies and captures sustainable value – and then they need to live up to this ideal. To realize a hydrogen society, technological development and collaboration between industry, the energy sector and the government (e.g. for infrastructure) is necessary."
Are other countries working on the same problem?
"The Dutch chemical industry faces the challenge of realizing this transition – and retaining a favorable business climate at the same time. We are competing in a global market and with the number of big international chemical companies working from the Netherlands, we need to balance the climate of ambition and the business environment we have within the Netherlands. The industry has a strong drive to make a successful transition and a positive, sustainable impact. But being the front-runner means that the transition will be more expensive for us than for those companies who will follow in other countries."
Could you give us a practical example of the challenges the chemical industry is facing?
"Definitely: the electrification of the chemical industry. The chemical industry requires a lot of energy and heat to produce their products. Even if the industry wants to switch to using renewable electricity for these needs, it needs more than is currently available. This means that there are substantial investments needed in the renewable power industry and the associated infrastructure if it is going to meet the chemical industry’s needs. Offshore wind farms are a possibility for most of the chemical clusters in the Netherlands, as their location is relatively close to shore, so they can easily be connected to the wind farms. However, for Chemelot, located some 150 kilometer inland, this poses a challenge."
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Companies, politicians and citizens must come together to jointly form a vision that identifies and captures sustainable value.
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"Issues like this mean that hydrogen will certainly play a big role in the future; it can be used as both an extremely versatile energy carrier as well as feedstock to produce chemicals such as methanol and ammonia. But to realize a hydrogen society, technological development and collaboration between industry, the energy sector and the government (e.g. for infrastructure) are necessary."
How is the Dutch chemical industry developing to meet these challenges?
"In the coming years, we expect to see many thematic collaborations being created. Already we can see a variety of ecosystems developing throughout the Netherlands, with chemical companies working together on innovative processes in an integrated way with research companies and other industries. For example, there are the recycling efforts in Chemelot, and in the north of the Netherlands we see a lot of developments in the interface with the energy sector."
"Promisingly, we see a couple of start-ups with innovative ideas joining the ecosystem who are deploying sustainable solutions. Still, the number of start-ups emerging on the scene is relatively low in the chemical sector. The period needed to go from ideation to a full-blown plant can take more than a decade, just because there are so many factors that play a make-or-break role. Going from research to a demo plant often proves to be the hardest part. Next to that, success also depends on market development and meeting health and safety standards."
That sounds promising - but will change within the industry be enough?
"These challenges mean that the Dutch chemical sector cannot do it all in isolation. We need to take an innovative approach and work together across the ecosystem to deploy smart, green and competitive solutions. There is still some uncertainty where and when the funding should come from, and when and where we will be able to reap the benefits. Global CO2 pricing would be helpful to create an incentive while retaining a level playing field and fund initiatives contributing to our climate goals. The way these charges are, they set essential preconditions for companies to contribute to our climate goals."
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The Dutch chemical sector cannot do it all in isolation.
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"Companies from different backgrounds joining forces and making a difference together is already happening at a smaller scale, but we need it to reach a larger scale if we are going to comply with the Paris Agreement. The transition that lies ahead is of an unprecedented scale, and it is unique, in the sense that it is enforced (policy driven) instead of technology driven."
"The ecosystem of the chemical industry is becoming increasingly important and companies are starting to realize they cannot work alone in siloed environments anymore. This is a great opportunity to start partnerships and work together to accelerate the transition to a more sustainable ecosystem. At the same time, it immediately pinpoints the areas where we still need to take big steps to make the changes needed to achieve the 2050 ambitions."
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How can businesses in the resource industry become truly purpose-driven?
Purpose-driven business is a radical realignment, a new outlook on the way we create value. The opportunities for sustainable growth and change are huge – and nowhere more so than in the resources industry. Our choices about which opportunities we pursue today will shape our future.
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How is VNCI supporting the transformation of the Dutch chemical industry?
"The chemical industry is of great importance – for the Dutch economy, and in meeting the set-out ambitions for 2050 – but it is not very prominent in the media. The industry needs to engage in a dialogue and open up to the outside world more than it has in the past."
"Being aware of this, the VNCI actively participates in discussions at the climate table. We are stressing there that the chemical industry should engage more with the wider world to get a balance of perspectives and ideas; it’s about making people more aware of the real drivers in the industry and giving them the necessary background information, so we can have the right conversations about the role of the industry in meeting our emission targets."
"The discussion now is often one-sided. To move past this, we need to engage and have an open conversation that focuses on long-term societal value and not on short-term political gain. The short window of political influence simply does not match with the long-term running time of projects in the chemical industry. The only way around this is to have a broader conversation including a wider set of stakeholders. People working in the chemical industry need to become more comfortable sharing their perspective on where they see the industry going, and how and where they feel the chemical industry can make a positive contribution to society's goals."
Is there anything you can do to help besides creating a dialogue?
"Attracting the right balance of people who are set on making a positive impact on the chemical sector is something that is getting a lot of attention within the industry. At the VNCI we are actively promoting the industry and its career opportunities at high schools to give young people a perspective on how they could make a career in chemicals. Nowadays, career choices are not only based on skills and study background, but also on the potential impact. Talent programs focusing on young professionals are becoming more and more important in a world where people are not solely basing their career on educational background and remuneration alone anymore. The trend where young professionals want to make a positive impact and deliver value at work is something that is very much felt in the industry."
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The chemical industry should engage more with the wider world to get a balance of perspectives and ideas.
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What is the key takeaway from all this?
"Overall, becoming a visible and familiar part of society is increasingly important. The chemical industry can play a key part in the transition to a sustainable economy. It can be a huge driver behind innovations that move towards greater efficiency and a more circular economy. Innovation in the industry will create a sense of pride that will be orchestral in developing a better relationship with the sector's ecosystem."