More than 1.000 visitors attended the second Circular Valley Forum in the Historical Stadthalle of Wuppertal (Germany) in November last year. The high-level event for the circular economy, organized by Circular Valley, Tech Tour and the Bio-Based Industries Consortium (BIC), brought together industry, policymakers, entrepreneurs, scientists and civil society organizations.
The first day of the event was reserved for companies in the bio-based economy that were looking for collaboration partners during the final of the Tech Tour Bio-based Industries 2023 program. On the second day, the Circular Valley Forum discussed solutions to current social challenges surrounding the circular economy.
Prime Minister Hendrik Wüst of North Rhine-Westphalia (NRW) and his Flemish colleague Jan Jambon kicked off the Forum with a historic moment: they signed the first cooperation agreement between two regions from Germany and Belgium in the field of the circular economy.
“We do not want to realize the circular economy alone,” emphasized Hendrik Wüst. “No country can do this alone, because the circular economy requires mass and the involvement of many different players. Flanders, as a strong industrial location in the Benelux, is a very valuable partner for us.”
The regions have been working together for years in the fields of hydrogen, the chemical industry and the digital economy, and the circular economy is an obvious follow-up. Over the next five years, NRW and Flanders want to exchange knowledge, launch pilot projects, train specialists and apply for joint financing, and also set up a brand for promoting the circular economy. Wüst: “Setting common goals in the areas of climate and economy benefits both parties. By doing this, we reduce our dependence on fossil fuels and enter a future common market. By linking climate objectives to economic prosperity, well-being and social security, we can guarantee democratic stability.”
“Let's translate our vision into concrete measures”
Jan Jambon (Flemish Government) (Evonik)
This will also entail obligations for politicians: “We have to find a way around this: new thinking, new regulations, creating new legal frameworks for the different markets. Moreover, we can only realize the great opportunity that the circular economy offers by thinking big and collaborating internationally. The more countries, the more parties that join this initiative, the better. We are now leading the way. We do this with the intention of being an example within Europe and showing that it works.”
Catalysts
North Rhine-Westphalia and Flanders can become the recycling center of Europe, according to Jan Jambon, Prime Minister of Flanders. “I firmly believe in the connection between Circular Flanders and Circular Valley as catalysts for cross-border cooperation in the circular economy. And we are open to other partners who want to join us. The Netherlands is an obvious partner for the next phase, as our regions are complementary. Together we are the industrial and innovative heart of European industry. Together we are stronger. Each with its own specialization, but each with the same goal: closing material cycles as much as possible through the use of technology and innovation.”
According to Jambon, the circular economy will be one of the main themes during the Belgian Presidency of the European Council in 2024. “We hope that together with all European Member States we can formulate principles to set priorities for the circular economy in the future work program of the next European Commission. Let us translate our vision into concrete measures and contribute to a sustainable future for our regions.”
Acceleration necessary
For Harald Schwager, deputy CEO of Evonik, boundaries don't actually exist. The chemical company has branches at various locations in NRW, but also in Antwerp and Amsterdam. “The challenges we face today do not stop at national borders. Cross-border cooperation is indispensable to shape a sustainable future,” he said in his keynote speech.
Schwager is convinced of the need to accelerate the transition to a circular economy, in which the chemical industry has an important role to play. “We now feel with full force the mistakes we have made over the past 100 years. Some see that as an opportunity and act on it. Unfortunately, it also means that many companies that once made us great now invest outside Europe. And we continue to move at a snail's pace. Failing innovation, failing access to clean energy and poor political regulatory frameworks are putting us at a disadvantage.”
In a circular economy, new business models emerge and partnerships become more important. Today's everyday products are disappearing and new ones are emerging. But one thing does not change, according to Schwager, and that is the key role of the chemical industry. “We have traditionally been solution providers, drivers of innovation for many industries. Without chemistry there is no sustainable economy, no energy transition and no green transformation.”
Decarbonization
At the same time, industries face the challenge of decarbonization: exchanging fossil raw materials for more raw materials from recyclates, biomass and waste. Of the 400 million tons of plastic produced worldwide last year, about 10% is now made from recycled or biobased raw materials. In Europe, that share is even twice as high: one fifth. Can the European industry maintain this lead in the longer term? Schwager: “I doubt it. The market share of European plastic manufacturers has halved in the past year. Many other industries are seeing a similar decline. We do have the right mentality to make this new industrial revolution a success. Entrepreneurs are willing to invest, but without smart regulations and affordable energy we will not succeed. Firstly, we lack a legal framework that offers investors legal certainty. This must be regulated at European level.”
Clean and, above all, affordable energy for energy-intensive companies such as the chemical industry is also indispensable. “To give an example: Evonik pays 14 cents per kilowatt hour of electricity on the European energy exchange, plus taxes. In the US the rate is only 2 cents. Such differences make it difficult for European industry to compete internationally.”
The CEO does not see state aid as a solution to this competitive disadvantage. “What we especially need is a clear signal from politicians that value-creating industry, including energy-intensive industry, is still needed in Germany and Europe.”
“The chemical industry is the driving force behind sustainable transformation”
Harald Schwager (Evonik)
Some economists argue that a radical transformation is necessary and that Europe could continue without energy-intensive industry. According to Schwager, this is impossible. “We are the driving force behind a sustainable transformation. We contribute to the well-being and maintenance of high-quality jobs and thus to unity, purposefulness and the survival of the welfare state. In Germany alone we pay €50 billion in taxes every year and every second pension euro in our country comes from the chemical industry. We create a better future. We build the industry of tomorrow with respect for creation and without destroying the old. That is circularity in every respect.”
Biobased products
In various panel sessions that followed, there was further discussion about energy transition as a necessity for the circular economy, the role and responsibility of the business community in making circular products available and cooperation in the value chain for bio-based products that offer an alternative to products from fossil raw materials.
“We gain nothing if high-quality biobased products only last one linear life cycle”
Thomas Rodemann (Vorwerk Elektrowerke)
Biobased raw materials are especially important for post-consumer products that are difficult to recycle. But that doesn't mean they shouldn't be recyclable themselves. “We gain nothing if we make high-quality biobased products that then only last one linear life cycle,” says Thomas Rodemann, board member of Vorwerk Elektrowerke. Circular design is just as important here: products should be made as much as possible from monomaterials and designed modularly so that they can be easily dismantled, sorted and mechanically recycled. Manufacturers must also take back products to reuse the optimized materials and thus extend their lifespan. This is crucial from an overall cost perspective. However, current pricing mechanisms are rooted in linear thinking. They aim to minimize initial production costs, which means products are not optimized for reuse or recyclability. “If we keep thinking this way, the circular economy will never get off the ground,” he says.
Collection
How do we get products back to the manufacturer at the end of their life cycle? Markus Helftewes, director of The green dot, an organization founded to collect plastic, also sees this. “In the EU, only 26% of collected plastics are recycled; 36% is incinerated and 38% ends up in landfills. That is a shame, because many optimized plastics are lost as a result.
“There remains a barrier as long as burning or dumping plastic is cheaper than recycling.” Markus Helftewes (Der Grüne Punkt)
We need to achieve a higher recycling rate. First mechanically and if that is no longer feasible: chemical recycling. This requires regulations, but we also need companies that are committed to this. They need to be supported and encouraged, so that, for example, they get 'fans' who invest and donate ideas. However, as long as burning or dumping plastic is cheaper than recycling, there is still a barrier.”
Agriculture
Both mechanical and chemical recycling are partial solutions for the still growing global demand for renewable raw materials. There is also a growing need for new, more sustainable materials and chemicals. CO2 is a potential raw material for this, but a large part will have to come from agricultural crops. As a result, the debate about using agricultural land for fuels or chemicals instead of food is flaring up again.
“New digital and biological solutions can make agriculture regenerative”Frank Terhorst (Bayer Crop Science)
Frank Terhorst (board member of Bayer Crop Science AG) says there is enough farmland worldwide to do both: 1,4 billion hectares. Of this, less than 8% is currently used for growing crops for biofuels and less than 1% for bio-based plastics. “Additionally, we now have the opportunity to make agriculture regenerative through new digital and biological solutions. With catch crops on agricultural land, or energy crops on degenerated soils unsuitable for growing food, there is no need to compete with food production. Think of all kinds of weeds that can be harvested for the production of biodiesel. All this reduces the total CO2-pressure considerably.”
Floor drain
Biobased or not, if substances end up in the environment, they must be designed to break down under those conditions. This applies, for example, to personal care products and detergents, which end up in the sewer via the drain and cannot be collected for recycling. Henkel, which produces these products, takes this into account in its product strategy, says Frank Meyer (Senior Vice President of Henkel Consumer Brands): “We focus on complete biodegradability of these substances. In addition, we use renewable raw materials for 50% of our plastic packaging and we want to reach 100% step by step. Together with BASF we have further developed a way to replace fossil fuels in our production processes with biogas from residual products.”
Most circular solutions that require significant investments are, for the time being, more expensive than continuing with the linear economy and fossil fuels. However, the prevailing view in the business community is that continuing on the current path is not an option. Investing in sustainability is seen as a moral obligation. Customers, NGOs and end users also demand it. Moreover, it is stimulated by governments at national, but also European level, such as various funds linked to innovation, regional development and the like EU Green Deal.
Rest of the world
The US, China and India are also currently working hard to realize circular and biobased production. For example, the US is pumping in a billion dollars with the Inflation Reduction Act (IRA). Moreover, energy is cheap there, making production costs much lower. However, money is not the only thing that counts, argued Lauren Kjeldsen, member of the Evonik Board of Directors, during a workshop on international incentives. It is also about flexibility and proactivity. In Europe, entrepreneurs have to deal with overregulation and slow bureaucratic procedures. In stark contrast to this is the responsiveness of decision-makers in the US: “The certainty that all preconditions in the US will be arranged on time is in itself an incentive to settle there. The same goes for a small state like Singapore. You feel there that they recognize that strong industrial companies are needed and welcome.”
“Transparency and clarity are much more important for entrepreneurs than financial incentives”
Surendra Patawari (Gemini Corporation)
Elsewhere in the world, the red carpet is also being rolled out for industrial companies. Surendra Patawari, CEO of Gemini Corporation: “The Indian Ministry of Energy has a budget of 40 billion to distribute. The Director of Loans Jigar Shah will simply say, 'If you do this, you will get that'. Such an approach provides clarity.” In Europe, attitudes tend towards distrust of the industry. “Here you are told: 'If you don't do this, you won't get that.' It's a completely different approach. Transparency and clarity are lacking. And these are ultimately much more important for entrepreneurs than financial incentives.”
This was also emphasized by Mona Neubaur, Minister of Economy in NRW and patron of the Circular Valley Forum. “We must not only express our ambitions, we must dare to take concrete measures that can be implemented clearly and without fuss by the business community, shoulder to shoulder with scientists and the responsible ministries. Because time is running out. If we look at the pace at which we reduce CO2emissions, it will take until 2065 before we get to the point where we should be in 2040.”
She was referring to the 1980s, when acid rains threatened Europe's forests. The federal government then took the drastic measure of mandating the use of desulfurization plants for the chemical industry. This not only saved the forests, but also allowed for the rise of a whole new industry in Germany, which led the way in desulfurization technology. “Similarly, the circular economy will be a growth engine for our economy and industry.”
Gamechangers
The Forum concluded with the 'Demoday': pitches from 14 young startups that were guided by the Circular Valley Community from September this year. They focus on various facets of circularity: alternative raw materials, building materials, packaging, water and recycling. It is striking that these startups came from all over the world: Germany (4x), the US (2x), Luxembourg, Switzerland, Serbia, Ecuador, Nigeria, Singapore, Yemen and Mexico.
The next 'Tech Tour Circular event' will be held on April 23 and 24, 2023, in Ghent, Belgium. It will focus, among other things, on the bioeconomy, chemicals and materials.
Source Agro-Chemistry. This article was produced in collaboration with the Bio-based Industries Consortium.
