Chemicals are a critical, but often overlooked, factor of success for a circular economy. 96% of all products on European markets, from food to medical treatments, from buildings to consumer electronics, rely on chemicals, so this shouldn’t come as a surprise.
The stakes are big. According to the UN “Global Chemicals Outlook” (2019), chemicals sales more than doubled between 2004 and 2014, and are geared towards doubling again by 2030 and potentially quadrupling by 2060. As for Europe, its 28,000 chemical companies with 1.2 million employees added a record €565 billion of value to the European economy in 2018 alone, making it the fourth largest industry in the EU.
With 90% of GDP growth taking place outside Europe in the coming decades, the challenge for the chemicals industry will be to find its place in this growing global market. Can it achieve this better by continuing its transformation into a sustainable industry that supplies other sustainable industries, or should it rather focus on price competitiveness and pushing for more lax regulation?
Europe has recognized that its future competitive edge will be based on resource efficiency and high-quality durable products, so increasing the production of more sustainable chemicals seems the obvious way to go.
The COVID-19 crisis has only highlighted Europe’s need to reinforce strategic autonomy, public health, and environmental standards. But the European market is also seen by many leading companies as the testing ground for what will happen in other global regions in future decades.
The trouble with hazardous substances
21,515 chemical substances were registered with the European Chemicals Agency (ECHA) by 2018, and more and more of these substances are classified as being “hazardous” under the EU’s Classification, Labelling and Packaging (CLP) regulation system.
That means that some 60% of the chemicals circulating on the European market (by weight) have been identified as hazardous for human health and the environment, including basic chemicals like oxygen or hydrogen, that are needed to produce other chemicals, and household products, from detergents and disinfectants to vinegar.
The transparency challenge: “You can’t replace what you can’t measure”
To manage waste, you have to know what’s in it. On this all stakeholders agree. The controversy is in the scope. Which chemicals should be tracked and traced? Should only substances of very high concern (SVHC) be itemized on the ECHA “candidate list”? Or should it include all SVHC? Some interest groups like the European Environmental Bureau (EEB), a Brussels based NGO, follow a preventive approach, demanding that all chemical substances should be traced, in case some might become of a concern in the future.
While the new chemicals strategy isn’t expected to be very specific on this question, Sadauskas supports the idea of progressive tracking: “Improved digital solutions for tracking and managing information on substances of concern in supply chains have an essential role to play in achieving upstream substitution of chemicals.
A feasibility study on the flow of information from the supply chain to waste operators will soon be published, contributing to the ongoing discussions on how to best inform waste operators on the presence of chemicals of concern in products. “
A more progressive faction within Cefic envisions the use of blockchain technology and digital product passports to share information on chemical composition and identifiers of recyclability and degradability for all chemical products via a joint database like the “National Materials DataHub” planned in the U.K.
But a 2019 E.U. research project shows that the willingness of stakeholders to share data about substances of concern along supply chains is likely to be an obstacle. Even for substances that are well studied and REACH registered, data gaps exist that considerably limit the understanding of mass flows in Europe.
The purification challenge: Breaking the legacy of “take-make-waste”
Apart from substitution and transparency challenges, the biggest elephant in the room is legacy substances and the question of how to get them out of the system. Today for example, when it comes to mixed plastic waste containing substances of concern, separate collection doesn’t happen, and decontamination technologies which can be operated at reasonable costs do not exist.
Tatiana Santos, policy manager at the EEB, states that in many cases purification by separation “would be technically possible, provided hazardous substances in products and processes have been avoided right at the design stage. In most cases, however, it is not economically feasible, except for metals”.
So, is chemical recycling the solution? These are processes that turn polymers back into simpler molecules and can purify contaminated substances, as demonstrated at several pilot plants currently in operation. While some stakeholders like Cefic see chemical recycling as a “key technology to potentially separate legacy chemicals and substances of very high concern”, Sadauskas remains cautious: “Chemical recycling is a promising technology.
However, some challenges remain, including the need for more information on the overall environmental performance of these technologies, in particular regarding energy consumption and nature and safety of the process output.” According to the EU official, “a life-cycle approach needs to be followed in order to consider all the possible benefits and risks of these new systems, including on climate. Finally, the results of ongoing pilot projects still need to be expanded to have a representative picture of the possibilities of this technology.”
Who picks up the bill?
For the chemical industry, making the transformation to circular economy has its challenges. Apart from the ones already outlined above, it would require huge investments in infrastructure across Europe—not only in the chemical industry itself, but in other material and energy intensive industries as well. According to an estimation by Accenture, if 20% of the European chemical industry’s capital spending were to be channeled into circular economy projects, it would take 35 to 60 years to build the assets needed for molecule circulation.
In this scenario, if chemical recycling proved to be the only way to technically solve the legacy issue, would it be viable as an intermediate solution, even at a loss, until the day its mission is accomplished? Or would such capital investments lock-in this technology for good, thereby driving the demand for, and the acceptance and generation of, mixed wastes?
On the road to circularity, where would the liability to invest in new assets, processes and products leave the other industries, let alone small and medium-sized enterprises (SMEs)? Could the transformation be catalyzed through extended producer responsibility (EPR) and advanced eco-modulation schemes taking into account externalities such as health and environmental costs?
It remains to be seen what solutions the Commission will forge by throwing these issues into the crucible. Many will be looking to the new Chemicals Strategy for Sustainability to provide the answers. It cannot provide all of them, but it will be fundamental in setting the orientation for a more circular economy, in balancing the trade-offs, and in providing some degree of regulatory certainty for investors.