Rein Willems, former head of Shell Nederland, has been closely involved in the strategic plans drawn up for the port of Rotterdam and the Eems Delta. The course of action for both chemical clusters is based on a two-track approach: increased sustainability/cost reduction for existing processes and investment in activities in the area of renewable raw materials. One of the results of this in the northeast of the Netherlands was Chemport Europe (see pages 20 and 21), which opened in April.
Rotterdam and the Eems Delta need to prepare ahead for a more sustainable chemical industry. Is this transition proceeding according to plan?
‘Good progress is being made in the northeast of the Netherlands, in Delfzijl to be precise. That applies especially to the way the businesses share the costs of utilities. This in turn has resulted in cost savings, some of which are used to invest in new activity. A good example is a biorefinery which AkzoNobel, Avantium, Chemport Europe, RWE and Staatsbosbeheer want to build. Setting up infrastructure for steam based on biomass is another initiative. This enabled AkzoNobel, in collaboration with Eneco, to straightaway make one tenth of its power consumption green in the Netherlands. Timewise, the plans for the port of Rotterdam are slightly behind those for the Eems Delta. Initiatives for more sustainable processes have been implemented, such as Shell’s supply of residual heat to 16,000 households. By putting things like heat, energy and CO2 to better use, businesses can lower their process costs and reduce their CO2 footprint: a win-win situation. The biobased chemicals situation in Rotterdam is slightly more difficult. About 14 new players are aiming at chemicals based on renewable raw materials. But the problem is that these relatively small companies stay small, because there is a lack of scale. We are waiting for a large-scale biorefinery which will then feed the downstream processing companies with semi-finished products.’
Why has that biorefinery not been built yet?
‘Currently there is not a good business case for this kind of facility as yet. The low oil prices are largely to blame. There are simply no parties willing to invest 200 to 300 million euros in a biorefinery right now. This will only be possible if governments assume part of the risk. There is very little enthusiasm, either from the government or from private investors. A few years ago I urged the Ministry of Economic Affairs to participate in the construction of a biorefinery. We are now three years down the track and the silence is deafening! Perhaps Invest-NL, established at the start of this year with a budget of 2.5 billion euros, can provide a solution. Are there prospects of such a plant in the medium term? I know that Biobased Delta has made considerable progress with the Redefinery project, but also that no decision has been made yet.’
Apparently these biorefineries are possible in the US, Brazil and Malaysia
‘Yes, but only because the governments there contribute financially. The business case for such plants is not really different to here in Europe. It’s just that here “we” are wary of investing in industrial production. The emphasis is on pre-competitive R&D projects. That is a good thing in itself, but we do have to prevent this R&D from being turned into industrial production outside of the European Union. If the activity is shifted more and more to outside the EU borders, the expertise will also disappear more and more to other continents. That would be a terrible shame, certainly for the Netherlands which has an excellent worldwide reputation in the field of petrochemicals, chemicals and biotechnology.’
Are the Netherlands – and the EU in a wider context – on the right track in any case with their R&D programmes in innovative and more sustainable chemical and manufacturing industry?
‘I still support the innovation policy as implemented with the nine Top sectors. “We” have the potential in all those sectors to play a part on the world stage. The point is that we must not become slack. Other countries and continents are investing substantially more in scientific research and R&D, luring our talented researchers away to universities and research institutes overseas. Ben Feringa, who won the Nobel Prize for Chemistry last year, had every reason to appeal to the government for more money and resources for fundamental research.’
Shouldn’t the business sector feel challenged as well? Scientific/fundamental knowledge is essential for radical innovations. And it is the businesses which form the link between fundamental research and the market.
‘Certainly we should challenge businesses on this point. The past years have been anything but easy for the chemical and manufacturing industries. When the focus is on rationalisation, investments in new business are affected adversely. DSM implemented its policy consistently. Shell is now much more active in the area of renewable energy, as witnessed by the ambitions in advanced biofuels.’
Back to the government. In view of the broadly supported commitment arising from the Paris Climate Agreement, governments could tilt the playing field more towards energy as well as chemicals from renewable raw materials. That would also ‘soften’ the effect of a lower oil price.
‘In the Netherlands and also worldwide there is broad consensus about climate change and the role of CO2 reduction in minimising its effects on people and the environment. Some parties do go too far in the sense that they want to lay down the law for businesses or want targets which are not economically feasible. The business community wants to reduce its CO2 footprint as well, but in a way that allows it to remain competitive. Putting a price on CO2 and trading in it has turned out to be ineffective. I expect changes in this to happen in Europe in the short term, partly by removing free rights from the market. That is something that will have to happen. CO2 currently costs five to six dollars per tonne; it will have to be at least 40 dollars to have any kind of effect. Besides a higher tax on carbon, I see market forces as an effective lever to limit CO2 emissions. Large brand owners, for example in the automotive or food sectors, want to reduce their CO2 emissions. This has a ripple effect through the supply chains which supply these companies. Investors are looking more and more at the “ecological performance” of businesses. One wake-up call is the initiative of the Financial Stability Board to draw up accounting standards for the evaluation of the climate actions (editor’s note: CO2 emissions) of businesses so that investors can compare these efforts. My expectation is that this measure will be highly effective.’
How important do you think fossil raw materials are in the medium term? It looks like the oil price will remain relatively low for the time being.
‘Their importance will decrease, but slowly. Fossil currently accounts for 80 percent of the volume of fuel and raw materials. According to various parties (editor’s note: IEA, BP, Shell, ExxonMobil), that will be around 60 percent in 30 years’ time. The fossil sources will shift more, with the more polluting raw materials such as coal and diesel being exchanged for gas or advanced biofuels. The price of oil will not exceed 60 dollars for the time being. That ceiling has come about due to shale gas exploitation. At lower prices shale gas is not profitable, but it enters the picture when prices are around 60 dollars, which makes the supply grow and dampens any price rises. Let’s not forget that the global demand for energy is still increasing, by 1 to 1.5 percent per year. To meet this demand we still need fossil energy for the time being.’