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Life Cycle Managementin der ProduktionREFA FachtagungDortmund, 16.11.2011Dr. Karsten GrönkeProcess Technology and EngineeringLife Cycle Management

ContentsResource efficiency at EvonikLife Cycle Management at EvonikLife Cycle Assessment in chemical productionHow to improve the resource efficiencySummary and OutlookSource: Process Technology and Engineering (November 2011)page | 2

Evonik is one of the world's leading specialtychemicals companiesEvonik figures 2010Sales 2010thereof Chemicalsthereof Real EstateEBITDAProfitability (EBITDA Margin)Return on Capital Employed (ROCE)Employees in 2010€ 13.3 billion€ 12.9 billion€ 0.4 billion€ 2.365 billion17.8 %15.0 %34,407Source: Process Technology and Engineering (November 2011)page | 3

A worldwide presence: Production sites andsales offices in 52 countriesSource: Process Technology and Engineering (November 2011)page | 4

The new structure of Evonik addresses resourceefficiency as a major part of the businessEvonikExecutive BoardFinancial investmensReal EstateEnergyExecutive CommitteeConsumer,Health & NutritionResource Efficiency Specialty Materials ServicesBusinessUnitsConsumerSpecialtiesHealth &NutritionInorganicMaterialsCoatings &AdditivesPerformancePolymersAdvancedIntermediatesSiteServicesEvonikBusinessServicesProcess Technology & EngineeringSource: Process Technology and Engineering (November 2011)page | 5

One of the mega trends is the focus onnatural resources & environmentGlobal Business EnvironmentMega Trend CategoriesGlobalizationWildcardsDemographicsConsumptionPatternsNaturalResources& EnvironmentRegulation& ActivismNatural Resources & Environment Macro TrendsAcceleratingnatural resourcedemand versusincreasing supplyscarcityEnergyconservation andinnovationIncreasingenvironmentalissues andconcernsGlobal climatechangeIncreasingcompetition andconflict overnatural resources& environmentSUSTAINABILITY TOPICSSource: Process Technology and Engineering (November 2011) and A.T. Kearneypage | 6

Offering our customers value added support fortheir energy efficiency will be a good way todifferentiate from competitorsStudyCustomer and chemical manufacturer view on future businessPossibility of product returnand re-use of recyclable materials4564Securing sustainabilityin their own supply chain5373Support regardingimproving energy efficiency4761Securing sustainabilityin supply chain of their supplier2961Disposal of wasteTechnical service to improvesustainability of your company’soperations40585258Customer view(important or very important)Chemical manufacturer view(important or very important)Source: Process Technology and Engineering (November 2011); A.T. Kearney: “Chemical Customer Connectivity”, Oct 2008page | 7

The United Nations’ IPCC expects greenhousegas levels stabilizing at 445 – 490 ppmMotivationAtmospheric Carbon Dioxide (measured at Mauna Loa, Hawaii)The most ambitious targetthat was assessed wouldrequire global CO 2eqemissions to peak by 2015and to fall to 50-85 % of2000 levels by 2050.It is not important to have evidence of the anthropogenic effect …… since politics have already raised facts.Source: Process Technology and Engineering (November 2011)page | 8

Prices for electricity and natural gas call foressential energy efficiency solutionsDevelopment of electricity and natural gas prices since 2002Electricity price index 1) Natural gas price index 2)2002001881841801781801601671491611601401281441291461401201201231008288801031006020022003200420052006200720082009201020112002 2003 2004 2005 2006 2007 2008 2009 2010 20111) www.vik.de; Medium voltage; every January of the year displayed; January 2002 = 100 2) Stat. Bundesamt, „Einfuhrpreisindex“Source: Process Technology and Engineering (November 2011)page | 9

ContentsResource efficiency at EvonikLife Cycle Management at EvonikLife Cycle Assessment in chemical productionHow to improve the resource efficiencySummary and OutlookSource: Process Technology and Engineering (November 2011)page | 10

“Green” is no longer enoughDeloitte study: “Customers (both businesses and consumers), investors,environmental interest groups, and government are pressuring companies forenhanced quantification of environmental impacts.”“Market drivers for LCA:1) Companies are taking action.2) Consumers want to know.3) Capturing cost savings.4) Evolving regulations.”Customers ask their suppliers concerning achievements andapproaches concerning the megatrend sustainabilitySource: Process Technology and Engineering (November 2011)Source: Deloitte (2009): “Lifecycle Assessment: Where is it on your sustainability agenda?”page | 11

The S2B Eco 2 pools the group’s energyefficiency and climate protection expertiseScience-to-Business CenterEco²Energy Efficiency and Climate ProtectionLine of DevelopmentCO 2Separationand UseEnergyGenerationEnergyStorageEnergy EfficiencyCustomer SolutionEnergy EfficiencyEvonik ProcessesLife Cycle ManagementCorporate BU´s ServicesSource: Process Technology and Engineering (November 2011)page | 12

Eco² projects will be evaluated for theirsustainability by Life Cycle AssessmentsS2B Eco² – Life Cycle ManagementJune 2011BackgroundApproachTargets• Climate protectionis a public focus• Need forstandardizedclimate andsustainability data• Innovative ideasfor increasedenergy efficiency• LCM as an internalcorporate serviceplatform• Corporate wide LCAstandard• Sustainability evaluationfrom product idea tomarketing• Transparent data basis for internalassessments• Evaluation of Evonik products andprocesses concerning sustainabilityand climate relevance• Evaluation of an all encompassing„Evonik Carbon Footprint“• CO 2 -savings in the process and usagephase„Carbon Footprint“ will be a leading parameterfor the evaluation of products and processes at Evonik.Source: Process Technology and Engineering (November 2011)LCM: Life cycle management LCA: Life cycle assessmentpage | 13

LCM group supports different needs in Evonik´sbusiness units and on corporate levelObjective information ofenvironmental burden of aproduct and processComparison of productionprocesses and sites at Evonikfor optimizationSupport of customer needs(e.g. Walmart, Henkel, P&G)Legal regulations(e.g. CO 2certificates, ESHQ)Environmental productdeclaration (EPD) for EvonikproductsAssessment of carbonfootprint in R&D forinnovation guidanceCorporate needs• Database for environmentaland climate strategy• Evonik carbon footprint• Support in communicationMarketing Instrument• Carbon footprint and savingsin the use phase of products• Eco calculator• Support in communicationSource: Process Technology and Engineering (November 2011)page | 14

Today LCM has been established as an in-houseknowledge platform at Evonik• LCM-group at Evonik consists of 8 to 10 members• Access to a growing standardized and well documented data base which iscomprehensively usable in Evonik• Know how to interpret and validate data, models and results and to updatethem is internal available• Up to now more than 80 products and processes of Evonik are evaluated• Defining and implementation of uniform evaluation standards for the entireEvonik is possible• Reliable answering to an increasing number of inquiries about climate-relatedproduct information• Calculation of Evonik carbon footprinting including all services, burden of rawmaterials, process emissions, use phase and disposal of Evonik products.• Support in marketing, R&D, strategic decisions and communicationSource: Process Technology and Engineering (November 2011)page | 15

ContentsResource efficiency at EvonikLife Cycle Management at EvonikLife Cycle Assessment in chemical productionHow to improve the resource efficiencySummary and OutlookSource: Process Technology and Engineering (November 2011)page | 16

Methodology of a Life Cycle Assessmentaccording to ISO 14040Life Cycle Assessments according to ISO 14040ff.• Goal and scope definition• Life cycle inventory analysis (LCI):Quantification of inputs and outputs• Life cycle impact assessment (LCIA):Understanding the magnitude andsignificance of the environmental impacts• Life cycle interpretation:Conclusions and recommendations inrelation to defined goalsLife cycle assessment frameworkaccording ISO 14040Goal andscopedefinitionInventoryanalysisInterpretationImpactassessmentSource: Process Technology and Engineering (November 2011)page | 17

Life cycle inventory analysis (LCIA)Thermal EnergyElectricityThermal EnergyElectricityRaw Material A1Raw Material A2ProcessStep AIntermediate A1(1 kg, as referencematerial forProcess Step A)Intermediate A1 asRaw Material B1x kgRaw Material B2ProcessStep BFinal Product(1 kg, as referencematerial forProcess Step B)Direct Emissionsto air/water/soilCoolingWaterBy-Product A1Direct Emissionsto air/water/soilCoolingWaterBy-Product B1Wastes(water,solids)Wastes(water,solids)Source: Process Technology and Engineering (November 2011)page | 18

Product carbon footprints and LCA projects couldcover a wide field of boundaries and impactsProductionLCAImpact categoriesFeedstock…Ozone depletionEutrophicationAcidificationGlobal warming…Ozone depletionEutrophicationAcidificationGlobal warmingProduct use…Ozone depletionEutrophicationAcidificationGlobal warmingEnd-of-liferecycle/disposal…Ozone depletionEutrophicationAcidificationGlobal warmingCFGate-to-gateCradle-to-gateCradle-to-cradle/graveThe current focus is on the carbon footprint (CF)CF = The Carbon Footprint accounts for all Greenhouse gases like CO 2, CH 4, N 2O etc. that are converted to CO 2-equivalents (CO2e)Source: Process Technology and Engineering (November 2011)page | 19

The Carbon Footprint (CF) of chemical productsis increasing with resource and energy demandGWP of raw materials and chemical products from databaseSource: GaBi 4 DatabasesSource: Process Technology and Engineering (November 2011)page | 20

The chemical industry is based on fossil rawmaterials for feedstock and energyEU chemicals and pharmaceuticals raw material consumptionThe Carbon Footprint is a good measure forenergy and fossil resource consumptionSource: Eurostat, 2008Source: Process Technology and Engineering (November 2011)page | 21

Example 1: Comparison of different process routes onbasis of Carbon Footprint (CF) and production costsBenchmark New route A New route BRaw materialsRaw materialsRaw materialsReaction 1Reaction 2ExtractionCrystallizationPackagingReactionFiltrationCrystallizationDryingReactionCrystallizationDryingPackagingDrying Packaging > 200°C> 100°C> 40°C> 10°CGlobal warming potential [kg CO2e / kg]6543210BenchmarkRoute ARoute BBetter0,0 0,5 1,0 1,5 2,0production costs [€ / kg]CF in combination with costs helps to decide about the best route for productionSource: Process Technology and Engineering (November 2011)page | 22

Example 2: Identification of main influence factors forthe Carbon Footprint (CF) of a production processGlobal warming potential in %Raw materials10090523100Reaction807025FiltrationCrystallization60504035Drying3020105Packaging10015Raw Rawmaterial 1 material 2UtilitiesPowerHeatTransportsEmissionsWasteTotalCF helps to identify the inputs with the main influence on Carbon FootprintSource: Process Technology and Engineering (November 2011)page | 23

Example 3: Identification of targets in a productionprocess for process improvementsGlobal warming potential in %Raw materials100905100Reaction807030FiltrationCrystallization6050403020515DryingPackaging2010025RawmaterialsReactionFiltrationCrystallizationDryingPackagingTotalCF helps to focus on the main development targets for process improvementsSource: Process Technology and Engineering (November 2011)page | 24

ContentsResource efficiency at EvonikLife Cycle Management at EvonikLife Cycle Assessment in chemical productionHow to improve the resource efficiencySummary and OutlookSource: Process Technology and Engineering (November 2011)page | 25

The energy supply contributes 30% on averageto the total CF of chemical products …Investigation of 39 chemical product systems:Values in %for energy supplyMaximumMinimumarithmeticaverageGlobal Warming Potential(GWP)27730Acidification Potential (AP)27719Eutrophication Potential (EP)17819Photochem. Ozone CreationPotential (POCP)14512Source: Dissertation by M. Shibasaki, ‘Methode zur Prognoseder Ökobilanz einer Großanlage…’, Uni-Stuttgart 2008Source: Process Technology and Engineering (November 2011)page | 26

… this is in good agreement with the data fromCorporate Carbon Footprint of EvonikCarbon Footprint for Evonik Chemicals in 20085,90,70,60,125,28,3+33%9,6Productionof purchasedmaterials(Scope 3)Directemissions fromprocess andenergy supply(Scope 1)Productdisposal(Scope 3)Indirectemissions frompurchasedenergy(Scope 2)Transport ofraw materialsand products(Scope 3)Other Scope3 emissions2008, Evonik Industries”, certified October 2011Source: Process Technology and Engineering (November 2011) page | 27TotalSource: Brochure “Corporate Carbon Footprint

In Europe the chemical production is decoupledfrom energy consumption and GHG emissionsThe European chemical industry make considerable effort to increase energy efficiencySource: Cefic Chemdata international and European Environment Agency (EEA)Source: Process Technology and Engineering (November 2011)page | 28

Carbon Footprint can be reduced by using combinedheat and power plant (CHP) and renewable energiesCarbon Footprint of energy supply for power and steamCHP = Combined heat and power plantSource: Process Technology and Engineering (November 2011)Source: GaBi 4 databasespage | 29

Only small increase in cost may lead tosignificant improvement in carbon footprintExample 4: Influence of electricity source for Evonik polymer, cradle-to gate100100 %100100 %GWP [% per kg product]9080706050403020100-35%65 %Product GWPCosts [% per kg product]90807060504030201002 % 4 %Product costs for powerPower grid mixusing hydropowerCombination of LCA and cost evaluation shows efficient optimization potentialsSource: Process Technology and Engineering (November 2011)page | 30

The main part of Evonik Carbon Footprint iscoming from the purchased raw materialsCarbon Footprint for Evonik Chemicals in 20085,90,70,60,125,28,39,638%Productionof purchasedmaterials(Scope 3)Directemissions fromprocess andenergy supply(Scope 1)Productdisposal(Scope 3)Indirectemissions frompurchasedenergy(Scope 2)Transport ofraw materialsand products(Scope 3)Other Scope3 emissions2008, Evonik Industries”, certified October 2011Source: Process Technology and Engineering (November 2011) page | 31TotalSource: Brochure “Corporate Carbon Footprint

The use of renewable resources can be an optionto decrease the Carbon Footprint of a productSource: EEA Technical Report: “Maximising the environmentalbenefit of Euope’s bioenergy potential”, 2008Source: Process Technology and Engineering (November 2011)page | 32

The Carbon Footprint of renewables is influenced by avariety of factors considering the whole supply chainMethod for calculating Carbon Footprint of biofuels from EU directive 2009/28/ECE = e + e + e + e + e − e − e − e − eeclptduwhere:E l = total emissions from the use of the fuelscae ec= emissions from extraction or cultivation of raw materialse le pccsccr= annualized emissions from carbon stock changes caused by land-use change= emissions from processinge td= emissions from transport and distributione u= emissions from the fuel in useeee sca= emission saving from soil carbon accumulation via improved agricultural managemente ccs= emission saving from carbon capture and geographical storagee ccr= emission saving from carbon capture and replacemente ee= emission saving from excess electricity from cogenerationrenewablesSource: Process Technology and Engineering (November 2011)page | 33

With sustainable cultivation and an optimizedsupply chain renewables have a high potential …renewablesGWP for biodiesel from palm oil (Malaysia), fallow land [g CO 2 e / MJ] 1)100GWP [g CO 2 e/MJ biodiesel]9080706050403020fossil diesel-67%100cultivation andextraction ofraw materialscarbon stockchange by landuse-changeprocessing ofraw materialstransport anddistributionTotal1)Calculated according to EU directive 2009/28/ECwithout use-phase and creditsSource: Process Technology and Engineering (November 2011)page | 34

… but this positive effect can be turnedcompletely with non-sustainable cultivationrenewablesGWP for biodiesel from palm oil (Malaysia), rain forest [g CO 2 e / MJ] 1)300GWP [g CO 2 e/MJ biodiesel]25020015010050fossil diesel+247%0cultivation andextraction ofraw materialscarbon stockchange by landuse-changeprocessing ofraw materialstransport anddistributionTotal1)Calculated according to EU directive 2009/28/ECwithout use-phase and creditsSource: Process Technology and Engineering (November 2011)page | 35

Just like we are asked from our customers about ourproduct sustainability we have to ask our suppliersWal-Mart, the world's largest retailer, launched the “Sustainability Index”:“With this initiative, we are helping create a more transparent supply chain,driving product innovation and ultimately providing our customers withinformation they need to assess products’ sustainability.“The approach consists of three steps:Step 1: Supplier Sustainability AssessmentStep 2: Lifecycle Analysis DatabaseStep 3: A Simple Tool for Customers… … Consumers“Greening” the business requires support by the whole supply chainSource: Process Technology and Engineering (November 2011)page | 36

The shift to the emerging economies is a highchallenge for a sustainable business developmentWorld sales and percentage share of chemical productsSource:Cefic ChemdataInternationalThe emerging economies in Asia outpace industrial countries in chemical productionSource: Process Technology and Engineering (November 2011)page | 37

The disposal of our products also has a bigimpact on Carbon Footprint of EvonikCarbon Footprint for Evonik Chemicals in 20085,90,70,60,125,28,323%9,6Productionof purchasedmaterials(Scope 3)Directemissions fromprocess andenergy supply(Scope 1)Productdisposal(Scope 3)Indirectemissions frompurchasedenergy(Scope 2)Transport ofraw materialsand products(Scope 3)Other Scope3 emissions2008, Evonik Industries”, certified October 2011Source: Process Technology and Engineering (November 2011) page | 38TotalSource: Brochure “Corporate Carbon Footprint

Recycling usually minimizes the impactstemming from the raw material extractionGeneric example for recycling of plastics:Environmental ImpactOthersRaw Material BurdenNo recycledraw materialsWith recycledraw materialsThe higher the impact of virgin product the higher is the recycling potentialSource: Process Technology and Engineering (November 2011)page | 39

Particularly the use phase of products orsystems offers the largest CO 2 e saving potentialExample: Car tireGlobal Warming Potentialper passenger car tire(kg CO 2e)Raw materials Transport Production Use phaseSource: Continental Study= 4%= 96%By reducing the rolling resistance with the Silica/Si69 system asignificant fuel and CO2 savings in usage can be achievedSource: Process Technology and Engineering (November 2011)page | 40

ContentsResource efficiency at EvonikLife Cycle Management at EvonikLife Cycle Assessment in chemical productionHow to improve the resource efficiencySummary and OutlookSource: Process Technology and Engineering (November 2011)page | 41

Resource efficiency over the whole value chain isthe main challenge in chemical industrySummary and outlook Resource efficiency is an important part in Evonik’s business Evonik established the LCM group to measure the environmental impacts The Carbon Footprint is the leading parameter for evaluation of processes and products Energy supply is an important factor in resource efficiency for the chemical industry The European chemical industry make considerable effort to increase energy efficiency Raw materials have a high share in Carbon Footprint of chemical production processes The resource efficiency has to be increased over the whole value chain of a product The development of recyclable and durable products will increase resource efficiency In future also other parameters will become important for evaluation, e.g. Water FootprintSource: Process Technology and Engineering (November 2011)page | 42

Fresh water will be the next deficient resource inmany regions of the worldWater FootprintThe Water Stress Index considers the problem of regional water scarcityWater stress index = water withdrawal / water availabilitySource: Process Technology and Engineering (November 2011)page | 43

Water Footprint is an emerging aspect to beconsidered in Life Cycle AssessmentWater FootprintThe methodology of Water Footprint calculation is still under development DIN EN ISO under development Existing methodology focuses on food industry Methodology tested – crucial point: cooling water Large impacts on bio products expected Adoption of methodology to chemical industrynecessaryLCM group currently working at development of Evonik standard for Water FootprintSource: Process Technology and Engineering (November 2011)page | 44

Source: Process Technology and Engineering (November 2011)page | 45