Key chemicals industry trends in 2023
Engineering organizations are prioritizing the design and production of chemicals that are better for our health, the environment and the economy.
Research indicates that innovators and green leaders in the chemicals industry are best placed to maintain competitive differentiation and value creation. In an analysis by McKinsey(opens in new tab/window), chemical companies with greener product portfolios yielded higher total shareholder returns than companies with less sustainable product portfolios.
The urgency of reducing carbon emissions is driving rapid innovation in the chemicals industry, along with the need to maintain business viability amid economic and geopolitical unpredictability. These are four areas where chemicals and materials organizations are focusing in order to drive sustainability and continued growth.
Safe and sustainable-by-design (SSbD) chemicals
In 2020, the European Commission published a chemicals strategy for sustainability(opens in new tab/window) that introduced the concept of safe- and sustainable-by-design (SSbD). It defined(opens in new tab/window) SSbD as “a pre-market approach to chemicals that focuses on providing a function (or service), while avoiding volumes and chemical properties that may be harmful to human health or the environment, in particular groups of chemicals likely to be (eco) toxic, persistent, bio-accumulative or mobile.”
This approach requires a lifecycle perspective and urges chemical producers to assess the environmental and human impacts of every stage of chemical development and usage.
While the SSbD framework is still a work in progress, the European Commission’s Joint Research Centre has recommended a two-phase approach for developing SSbD criteria. The first step focuses on four design principles:
Green chemistry — e.g., using waste as sustainable feedstock
Green engineering — e.g., self-healing designs, such as concrete with bacteria(opens in new tab/window) that automatically fills in cracks
Sustainable chemistry — e.g., redesigning processes to create better products, such as genetically engineering microalgae to become a more efficient feedstock
Circularity by design — e.g., compostable food packaging that can be re-incorporated into the production cycle multiple times
The second step is an assessment of material and chemical hazards, human health and safety effects in the processing phase, human health and environmental impact in the use phase, lifecycle, and social and economic sustainability.
These steps align with the view of Cefic, the European Chemical Industry Council, which says any SSbD criteria must address environmental, social and economic factors(opens in new tab/window) and take a lifecycle approach.
Adopt SSbD across your product portfolio by identifying chemicals and processes that can be substituted with alternatives that are safer, emit fewer greenhouse gasses, and allow for easier composting and upcycling.
Carbon removal and circularity
Carbon capture and utilization (CCU) technology captures CO2 and uses it as input for producing new, valuable materials. Instead of being stored underground, CO2 is injected into the manufacturing of products like cement, concrete and carbon fiber.
CO2 can be captured from stationary sources like power plants or directly from the atmosphere. Direct air capture (DAC) uses chemical reactions induced by liquid or solid sorbents to remove CO2 from the air. Globally, there are 19 DAC plants in operation, removing an average of 10,000 tCO2(opens in new tab/window) from the atmosphere per year.
But these plants also demand significant energy. To reduce the energy requirements of DAC, new methods are being developed, such as subjecting the sorbent chamber(opens in new tab/window) to massive temperature changes, using waste heat from other systems(opens in new tab/window), and using wind power and green batteries. Advanced sorbents with a higher CO2 capture rate can also make DAC more efficient.
Other carbon-removal methods require more innovation to truly result in reduced emissions. Take, for example, the technologies for carbon capture and mineral carbonation (CCMC). CCMC is circular, as silica and solid carbonates formed from mineralized CO2(opens in new tab/window) can be used in building projects and construction materials like concrete. However, mineral processing is energy-intensive(opens in new tab/window) and requires large volumes of minerals, negating the environmental gains from carbon capture.
Systems-level thinking can yield novel ways to capture carbon. True to the SSbD spirit, a team of Norwegian researchers redesigned the steam reforming process(opens in new tab/window) that’s used for producing hydrogen from natural gas. Using a special ceramic membrane reactor, the process eschews the need for an external heat source to produce hydrogen. Instead, heat is automatically produced as hydrogen is pumped through the proton-conducting membrane. The membrane also separates CO2, which can then be transported, sequestered and utilized.
Due to its ability to speed up R&D and cut prediction inaccuracy by about 50%(opens in new tab/window), AI is now seen as a way to boost profit, productivity and sustainability in the chemical industry. Machine learning and predictive analytics can augment R&D efforts, such as by identifying optimal synthetic routes for novel compounds, predicting unwanted properties, and forecasting material costs.
One case study proposes a computer-aided process for redesigning triisobutylphosphate(opens in new tab/window) (TiBP), an organic compound used as a flame retardant. The computer-aided workflow generated chemical structure suggestions. It then used a quantitative structure-activity relationship (QSAR) model to predict undesirable properties. Multi-criteria analysis was used to evaluate each structure’s health and environmental hazards, as well as synthesizability. The resulting alternative compound exhibited better safety characteristics, though it did not confirm an improvement in biodegradability.
Try out a similar workflow in your R&D process to identify chemicals and synthetic routes that help you develop better products. Scale and speed up the process with AI-powered software.
Chemical companies in 2023(opens in new tab/window) face volatile energy prices, rising feedstock costs, disrupted supply chains and economic uncertainty. These are driven by many factors, including the Russo-Ukrainian war, residual Covid aftershocks in the supply chain, and high inflation and interest rates. As a result, chemical companies are seeking ways to boost their profit margins. High-demand, high-margin products like specialty chemicals fit the bill.
Specialty chemicals, also known as performance chemicals, are based either on single molecules or on formulations of mixed molecules. Specialty chemicals heavily influence the way a product functions.
Globally, the most in-demand specialty chemicals are electronic chemicals, specialty polymers, industrial and institutional cleaners, surfactants, and flavors and fragrances, according to S&P Global(opens in new tab/window). Demand will continue to rise, with the market size for specialty chemicals(opens in new tab/window) expected to grow from $616.2 billion in 2022 to $914.4 billion in 2030. Much of this demand will come from the need for construction, electronics, pharmaceutical and water treatment chemicals.
There is also an increasing demand in electronics and consumer goods for safe and sustainable specialty chemicals. For example, Apple has set its own regulations on specialty chemicals, which need to be followed in the production of its products. The Apple Regulated Substances Specification (opens in new tab/window)is publicly available and outlines how the company aims to remove harmful substances from the product life cycle.
To improve profits in this highly competitive segment and become more valuable to your customers, invest in downstream opportunities(opens in new tab/window) like providing support services to clients and developing customized and novel formulations. This shift toward a more service-oriented approach also raises the entry barriers for competitors as it requires specialization and ongoing collaboration with clients.
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