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October 8, 2009 | By IAN YOUNG
Germans marked the 19th anniversary of the 1990 reunification of East and West Germany with nationwide celebrations last Saturday. Hundreds of thousands turned out in Berlin to watch two giant puppets wander through the streets--one starting off from the east of the city and the other making its way from the west--and embrace symbolically at the Brandenburg Gate. The day was rounded off with an evening rock concert and fun fairs, as searchlights pierced the night sky above the capital.
The atmosphere at the 43rd European Petrochemical Association (EPCA) annual meeting, which kicked off the following day at Berlin's Intercontinental Hotel, could not have been less celebratory. Europe's petrochemical industry is still reeling from a collapse in demand in the fourth quarter of 2008 and first quarter of 2009, and any encouragement to be drawn from recent signs of recovery--especially in emerging markets--is tempered by the incoming tsunami of petrochemicals and plastics from newly completed manufacturing complexes in the Mideast. The combination of a demand shock followed rapidly by a supply shock is a "double whammy coming at us," Graham van't Hoff, global v.p./base chemicals at Shell, told me in a pre-EPCA interview. "The industry knows it faces a bigger challenge than it has ever faced before," van't Hoff says.
There were nevertheless a number of positive signals to take away from the EPCA gathering, not least an affirmation of the chemical industry's commitment to sustainable development, which the EPCA organizers made the theme of this year's event. Stephen Pryor, president of ExxonMobil Chemical, set the tone with an opening keynote address, in which he expressed confidence that chemical companies' capacity to innovate will ensure that the industry meets the challenge of sustainability. "Climate change requires action now with a balanced, sustainable approach," Pryor said in a question-and-answer session following his presentation.
Ulrich von Deessen, president/competence center, environment, health, and safety at BASF, delivered a presentation on the second day of the EPCA meeting that outlined BASF's efforts to combine supply chain management with sustainable development. BASF's 'Verbund' integrated manufacturing model has enabled the company to achieve "primary energy savings" equivalent to about $1 billion/year and cut carbon dioxide (CO2) emissions by 6 million m.t.-7 million m.t./year, he says. Von Deessen reiterated BASF's commitment to cut its carbon footprint 25% by 2020.
Progress made by the chemical industry on sustainability drew praise from an unlikely source: Joschka Fischer, former German foreign minister and vice chancellor, who participated in two panel sessions at the EPCA meeting. Fischer, a Green Party politician, served two terms as environment minister for the German state of Hesse in the mid-1980s and early 1990s, before heading to Berlin to concentrate on national politics.
During his time in the Hesse government, Fischer had several confrontations with the former Hoechst, at that time the biggest private-sector employer in the state. Fischer ordered a study in April 1993 into Hoechst's competence to manage hazardous operations, following a series of pollution accidents at the company, and called for changes to the company's management; ordered the temporary closure of a Hoechst dye intermediates plant following a leak of the carcinogen ortho-nitroanisole in August 1993 that he said was not reported to local authorities or the public quickly enough--an incident that triggered tougher safety and environmental legislation in Hesse; and blocked the opening in the 1980s of a Hoechst plant for the production of insulin derived from the pancreases of slaughtered pigs, in line with the Greens' opposition to genetically engineered medicines.
To see Fischer, once the scourge of Hoechst, sitting next to von Deessen on the EPCA stage and repeatedly congratulate BASF on its climate strategy was nothing short of remarkable. "Today, BASF is the most beautiful of the three sisters [BASF, Bayer, and the former Hoechst]," Fischer said. "Some time ago, people thought they had a grim future." The significance of the statement was not lost on the EPCA audience, particularly the German delegates, who agreed that it was an acknowledgement of a culture change within the chemical industry. "We learned a hard lesson [from legislation] 20 years ago," von Deessen responded. "We have to stay close to politicians to lobby in a positive way."
Fischer went on to urge the chemical industry to drop its opposition to the European Union's cap-and-trade CO2 emissions scheme--opposition based on a possible loss of competitiveness due to the likely cost of buying emission permits and the lack of a "level playing field" because no other regions have cap-and-trade, as well as the implicit threat of carbon leakage. Being the first region to adopt cap-and-trade will turn out to be a major advantage, Fischer says. "The rest of the world will follow us," he says. "Progress will not take place if we wait until everybody moves. So somebody has to go first. Carbon leakage and plant relocations will happen anyway. It's wrong to say we're in a defensive position. Chemical companies need to have confidence and take a more aggessive approach. Cap-and-trade will exist worldwide 10 years from now and we'll just be talking about how to improve it," Fischer says.