The chemical industry is essential for our everyday lives, providing ingredients for applications ranging from plastics and personal care products to nutrients for growing crops.
It is also an energy intensive industry. To make chlorine for example, you need large amounts of electricity to split salt and water. And at our chemical parts, we depend on high pressure and high temperature steam which require large amounts of energy to produce.
Historically the energy market was fully dependent on fossil sources. AkzoNobel put the shift from fossil to renewable energy sources at the core of our Planet Possible strategy some time ago and we have been delivering on that agenda ever since. Our energy portfolio is currently comprised of 40% renewable energy, far more than most similarly energy intensive companies. But our ambition does not stop there – by 2050, we aim to be completely carbon neutral.
A secure, affordable energy supply is key to the long-term success of the chemical industry. For AkzoNobel, energy plays a vital role in producing our products in a secure and efficient way, and is central to our ability to create new value chains and offer increased business value.
We have therefore chosen to tackle these challenges head on and implement a clear energy strategy to reduce our emissions, manage our costs, limit our company risk and grow our business.
Big measures for big impact
Making chemistry fully sustainable means transforming a global industry. Therefore, our energy strategy has a clear focus on larger scale projects which can be copied and scaled across the industry and have a long-term impact.
In many cases, we have chosen to work together with customers, partner companies and even competitors to help realize large, complex projects, through joint power purchasing agreements (PPAs) and other forms of collaboration.
For example, in the Netherlands, we are leading a consortium which includes Google, Philips and DSM to purchase green electricity from two new wind parks. Together they will have a total capacity of more than 140MW, equivalent to the energy needs of 140,000 households. We are working with partners to realize additional wind projects and looking to further expand this approach to our other energy intensive locations across the globe.
Another example is our chemical islands concept in Brazil. Here, our production facilities are integrated directly into the customer’s paper mill, helping to minimize transport costs and lower energy needs by sharing resources with the pulp mill. The required energy is sourced directly from waste wood, left over from the processing of eucalyptus trees grown on an adjacent plantation.
Waste wood is serving as an energy source in Netherlands as well. Earlier this year, we commissioned a new supply of heat generated from waste wood to our chemical park in Delfzijl. Replacing electricity from gas with a direct, sustainable heat supply helps us reduce our CO2 emissions by 100,000 tons a year.
We mean business
Our energy strategy not only supports our sustainability program, it also directly benefits our business in terms of lower costs, less risk and new value chains.
Energy is one of our single biggest expenditures, and keeping costs down directly affects our bottom line. Cost-effective solutions are those which can withstand the test of time. In an energy environment where prices are continuously influenced by market dynamics and policy makers, what is cheap today may turn out to be a risky bet tomorrow. By investing in energy efficiency and renewable energy with partners and building a robust energy portfolio, we are securing profitability in the long term.
Hence, we ensure our portfolio is diversified, relying on power from solar, wind, natural gas and biomass from multiple suppliers. As a result, we can count on an extremely reliable power supply with low risk exposure to power shortages, rising oil prices or changes in carbon pricing.
Adding renewables to our profile also improves the sustainability of our products, helping us retain and acquire customers and also find new ways of creating value for them. For example, our renewable contracted energy enables the production of green hydrogen through electrolysis, and by the end of this year the first zero emission buses will be running on our renewable green hydrogen fuel.
Renewable energy is characterized by variation in supply. As we connect more wind parks and solar panels to our national grids, these swings will only become more severe and occur more often. Companies like AkzoNobel can play an important role in balancing these swings, and can even use them to create mutual benefits.
Sustainable growth requires forward thinking
A solid growth strategy takes into account the world of tomorrow. Increased awareness for sustainability among policy makers, customers and the general public means carbon and energy prices could change drastically in the mid to long term. Our energy systems will change with them, affecting existing value chains and creating new ones. By basing our energy strategy on building a diversified, green energy portfolio, we are not only ready to face the future, but well positioned to grow with it.