CEO Panel Theme 3: Sustainability

Moderator: Marcos de Marchi, CEO, Elekeiroz / Chairman of the Board, ABIQUIM

Society's commitment to sustainability brings new challenges for the chemical segment, and industry players are responding in different ways. How is your company adapting in this regard, and what are the future prospects?

We have identified four areas in which the peak demand for crude oil in Colombia is going to occur 10 years later than in the rest of the world (specifically, in 2045 compared to 2035 in other places). This is a fairly large lag, and we have to work diligently to reduce that lag. We are working on gas as a transition fuel. The gas market is quite mature, but we have specific opportunities to continue replacing coal consumption with natural gas in the industrial segment, which helps a lot in terms of efficiency, costs and CO2 emissions. Additionally, we are working hard with vehicle fleets for mass transit systems in large cities. We already have 740 natural gas buses that are arriving in Bogotá, and we see that this change can generate a 50% reduction in the emissions of particulate material. We have similar programs in other Colombian cities.

In terms of CO2 emissions, we see that the world has made quite firm commitments, but in Colombia, these emissions continue to grow, so we need a very proactive program. Ecopetrol has implemented initiatives in this regard, and in the last five years we have reduced CO2 emissions by 5 million tonnes. We are making alliances with companies around the world to introduce technologies that will help us to improve further in this aspect.

Pedro Manrique, Commercial and Marketing Vice President, Ecopetrol

As for renewable energies, like YPF, Ecopetrol is the fourth or fifth largest power generator in the country, but we have to continue introducing renewable energy. We already have a 40-MW biomass plant that works with sugarcane bagasse, and last month we inaugurated the first solar plant that will reduce the costs of Castilla, one of the largest heavy oil fields in the country, by more than US$1 million per year. It is a pilot project for us, but we have identified five more projects that we would like to develop in the next two years. The solar plant in Castilla was built in a record time of seven months. There is a big commitment in Ecopetrol to achieve very specific sustainability goals.

In Braskem we see sustainability across four pillars. First, in operations, especially industrial operations, where we have greenhouse gas reduction and water reuse programs, and a few months ago we signed an energy purchase contract with a wind farm, the first major PPA of this type in Brazil, among many other initiatives.

The second pillar is the development of our products. We always seek to create solutions for customers that increase the sustainability of the products, either because they can be processed using less energy or generating less waste, or because they allow the creation of lighter packages that use less plastic.

The third pillar is the use of renewable raw material. Braskem is today the world leader in plastic produced with renewable raw material, with green polyethylene that is produced from sugar cane in our Rio Grande do Sul plant, and we continue working to expand the portfolio of products with renewable base.

Fernando Musa, CEO, Braskem

The last – and very important – pillar is the circular economy. For more than 10 years, we have supported recycling cooperatives, and in recent times we have made a greater effort to have more than 10 polyethylene and polypropylene plastic products from recycled products, which we sell in Brazil. We are also starting to sell a recycled product in Mexico, and in the United States we already have a recycled polypropylene product. We will continue working in this direction, combining fossil sources, renewable sources and recycled products to have a more sustainable offer.

Finally, each company in the sector has to take action, but we also have to act together: the best example is the Alliance to End Plastic Waste, which includes players throughout the whole value chain.

Daniel González, CEO, YPF

YPF defines sustainability from a much broader perspective. For a company that is almost 100 years old, the idea is how we can reach another 100 years of operations. The focus is therefore on many issues, including corporate governance, economic sustainability and community relations.

As for the reduction of emissions, we will have a power generating capacity close to 450 MW coming from wind power by the end of 2020. That almost equals the total energy that YPF uses in its operations. The interesting thing is that, when we have gone out to sell this renewable energy, we think that end users would like to meet the regulatory requirement of having 20% of their energy from renewable sources. What we have found instead is that practically everyone who bought our renewable energy did so to cover 100% of their needs. Clearly there is an evolution in social demand.

One of our most important transversal transformation initiatives is energy efficiency, both in terms of cost reduction and emission reduction. For example, we are considering investing in a company that manufactures small-scale liquefaction facilities, which would allow us to eliminate natural gas flaring in small exploratory areas or productive areas that are not connected to the gas evacuation. We know that in the future the flaring of gas, no matter if it is accepted by the regulations, will be socially unacceptable.

We also have a long-term vehicle fuel replacement plan. Compressed natural gas is already a very important fuel in light vehicles. Now we are working on heavy vehicles that use LNG. With the huge availability of gas from Vaca Muerta, we can seriously think of natural gas as the transition fuel, even if it can compete with fuels that we sell today. The market is going in that direction.

Additionally, we are making a very large investment in our product refining complexes to reduce the sulfur content in the fuels we produce.

Recently we received the good news that the Dow Jones Sustainability Index qualifies us above the world average in our sector. Although Argentina as a country is behind the United States and Europe in terms of sustainability requirements, we as a company already compare ourselves with peers in these countries.

Diego Ordóñez, President, DOW Argentina and Latin America South Region

Historically, DOW spent a lot of energy, time and resources explaining why plastic was good, but we missed what people were telling us – they did not want to hear why plastic was good. The public, and our customers, were telling us that there is a problem of plastic contamination, and they did not want to hear if DOW's plastic was polyethylene, polypropylene or PET; the discussion was that rivers and seas were contaminated, and as plastic producers, people saw us as part of the problem. Therefore, a year and a half ago, there was a 180-degree change in the strategy.

When we began to understand that we were part of the problem and we should be part of the solution, our approach changed completely, and this process of change has been based on three pillars. The first is innovation and technology. We are working so that all the plastic that is deposited in the environment today becomes raw material for the production of new plastic, and thus the cycle is closed. That process has to occur at a competitive cost, and that is a technological challenge.

The second central theme is collaboration with other parts of the value chain. This is why we have partnered with competitors, consumers, transformers and specialists in the reuse of plastic waste so that the amount available for recycling is increased. Within that collaboration, we want to advance in the ‘PCR’ material (post-consumer recycled) so that raw material is available to be used in the manufacturing of new products.

The third aspect starts at home: we have to consume less, and, in the case of the industry, the challenge is to dispose zero pellets in the environment, both in production sites and during transport and final use by customers. That goes hand in hand with the incorporation of renewable energy sources: in the particular case of Bahía Blanca, in 2020 the complex will already have 20% of the energy consumed coming from renewable energy.