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Overview
The circular economy aims to eliminate the extraction of new raw materials and design a circular lifecycle with each step in the process being fully integrated. Waste is systematically eliminated, and emissions are reduced throughout the entire process with the incorporation of renewables. A recent ARC study conducted of chemicals industry manufacturers indicate complex supply chains, a lack of proven technologies, inconsistent regulatory policies, and a lack of economic viability are the most significant barriers to achieving circular economy goals. However, 75 percent of respondents believe digital capabilities are essential.
This report addresses how industry leaders in the chemical and petrochemical industries are leveraging digital technology as key component of the transition to a circular model of production and consumption and as part of an overall path to sustainability of operations. Energy, optimization and supply chain management and predictive maintenance tools are valuable digital capabilities to help advance the circular economy. Key findings of this research include:
- Circular economy is not just about recycling plastics and has a broader impact on all segments of chemicals production value chain.
- Chemical companies are transforming value chains and services to meet customer demand for sustainable products.
- Digital solutions are instrumental for the advancement of circular economy.
- Partnering across the value chain will reduce supply chain complexities and drive out costs of circular solutions.
What Is the Circular Economy?
Sustainability goals and environmental, social governance (ESG) mandates have taken the forefront of almost every business sector. Sustainability at the highest-level means fulfilling the needs of current generations without compromising the needs of future generations while ensuring a balance between economic growth, environmental care and social well-being. For the Chemical industry sector, this challenge impacts the entire value chain, including raw materials, manufacturing products materials and components and consumption by consumers and disposal.
The chemical lifecycle today is linear, where raw materials are extracted, products are designed and manufactured, then consumed by customers, and disposed of as waste. Each step of the process consumes energy and creates waste products. A circular economy, however, is a model of production and consumption which involves reusing end products as feedstocks or re-manufacturing, recycling and reducing waste and emissions considering the complete material flow. Circular economy aims to eliminate the extraction of new raw materials and design a circular lifecycle with the extraction, design and manufacturing, consumption and disposal being fully integrated. Waste and emissions are systematically reduced or eliminated throughout the entire process.
Challenges in Advancing the Circular Economy
Beginning in the first quarter of 2022, ARC Advisory Group conducted research surveys and interviews of industry leaders to analyze and benchmark the current state of circular economy initiatives across the Chemical, Polymers and Specialty Chemicals industries. A global audience of more than 200 industry professionals from R&D, Operations, Technical Management, Supply Chain, and other roles provided valuable data to provide insights into the top challenges, the relative importance of initiatives, key drivers and importance of digital solutions.
The research identified the top challenges in advancing circular economy goals as addressing complex supply chains, the lack of proven technologies, inconsistent regulatory policies, and a lack of economic viability. The supply chains for product circularity are undoubtedly complex. Turning post-consumer materials into feedstocks currently represents a complex supply chain challenge. The materials tend to be highly distributed, and the energy and carbon footprint required to move products back to the manufacturing source is costly and logistically complicated.
Important Initiatives Supporting Circular Economy Goals
Leading chemical R&D groups are now making investments in advanced chemical recycling along with the help of several smaller engineering firms (start-ups). Processes such as depolymerization and improved pyrolysis technologies to turn mixed plastic waste into naphtha or pyrolysis oil, which can be cracked into petrochemicals and plastics will eventually decrease in cost and become more easily scaled and economically viable. Depolymerization is the process of converting a polymer into a monomer or a mixture of monomers into their raw materials for conversion back into new polymers and are in use for some polyester and polystyrene. Over time these methods of advanced recycling will continue to be more cost effective. Key drivers for investments are to satisfy customer buying preferences and access to new markets.
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Keywords: Circular Economy, Sustainability, Chemicals, Polymers, Supply Chain, Recycle, Plastics, Energy Optimization, ARC Advisory Group.