Growing World - During the last centuries the chemical industry has enabled the first and second industrial revolution, and also the longest period of wealth creation in human history. During the last four decades, the world GDP grew from almost $15 trillion in 1970 to almost $63 trillion in 2010, while the world population doubled from 3.6 billion people to seven billion people and the world average life expectancy grew from 45 to 67 years old, pulling hundreds of millions of people out of poverty. Meanwhile, the world energy demand also doubled from 4.9 million tons of oil equivalent (MTOE) to 12 million (MTOE), the crude oil demand also doubled from 45 million barrels of oil to 88 million barrels of oil and natural gas demand tripled from 35 trillion ft3 to an impressive 111 trillion in 2010.

In the second article in a three-part series, Rafael Cayuela Valencia, author of the book The Future of the Chemical Industry by 2050, examines how the innovation landscape must change in order to accommodate a much-needed cut in resources, energy demand and CO₂ emissions.

The following next decades will be equally demanding, stretching the chemical industry to levels never seen before; by 2050, the chemical industry is expected to quadruple from 2010 levels. However all these positive aspects will not come alone. Energy and resource scarcity (including food, water and others), greenhouse emissions and climate change will present formidable challenges and business opportunities for the industry. That challenges in combination with massive economic and industry growth, changing feedstock (to shale gas and bio), products (more sustainable), markets and players (towards BRIC and REST) will entail a massive transformation in the industry.

CO₂ Emissions Diet
In light of climate change, the world must learn to leave with an average of 4,000 grams of CO₂ per capita and day, as opposed to the current 13,283 grams and the projected 28,215 grams by 2050. This represents a significant technological challenge as well as a massive business opportunity. To put this target figure in perspective, 4,000 grams of CO₂ per capita and day is equivalent to a 20-40 km car ride, with 100-200 grams of CO₂ being used per kilometer - or the current level of per capita and day emissions in India in 2010.

Can we imagine the amount of technologies and challenges our industries will need to overcome and the chemical industry will need to enable in order to comply with these severe requirements? Can we imagine how our industries will need to change when we are confronted with this super diet of CO₂ emissions?

In 2010, the cost for one ton of CO₂ in Europe and under the European Trading Scheme (ETS) fluctuated between €10-20 per month. As an individual perhaps some people could still afford to pay for these extra emissions, but others might not - and certainly the world as a total can't. Such a severe CO₂ emissions limitation would present a huge challenge to all industries. Surely the world's perspective on emissions will radically change when our society, companies, industries and countries will start valuing and pricing CO₂ and its alternatives with the 4,000 grams in mind.

The global perspective on all these issues - energy, resources and emissions - is about to change very soon. As soon as the world economy starts improving, governments around the world will start enacting more and more stringent legislation to address these topics. The world is just at the beginning of that very long journey of ever-increasingly stringent and global legislation and regulations.

Necessity And Innovation
The history of the chemical industry has been built around two fundamentals pillars: necessity and innovation. During the last centuries, the chemical industry has solved some of the major challenges presented to humans, enabling the first and second industrial revolutions, the highest period of growth and the current levels of wealth. The industry has sometimes been driven by markets, sometimes by innovation and sometimes by governments and society eager to find solutions urgent issues.

Due to the massive economic and population growth over the last four decades, the chemical industry focused on operational efficiencies rather than traditional innovation. In fact, most of the significant industry innovations happened in the first half of the last century. Now that the need to address resource and energy scarcity, emissions reductions and climate change is upon us, the industry will be forced to go beyond operational efficiencies and to move back to its roots: fostering innovation and technology (fig. 1).

Moving Toward Convergence and Collaboration
Under the imperative need of our world to pursue all the positive aspects of the upcoming economic growth and prosperity while handling resource and energy scarcity and a carbon productivity of 60% versus 2010 and 80% versus 2050, the chemical industry will require true innovation and a transformational change. The industry will change its feedstock, products, technology and markets - however it is the way it works and innovates that will enable the next technological revolution.

The fact that one single technology, company or industry might not be able to solve or even tackle some of the upcoming challenges highlights the necessity of vertical and horizontal collaboration as well as technological convergence. Industry collaboration and technology convergence will represent the ultimate parading of innovation and the bases of the third industrial revolution: the sustainable revolution.

It is fascinating to consider what kinds of products, solutions and innovations could be created when a stream of companies across the whole value chain work together on tackling energy and emissions reductions. The aggregated value, brain power and solutions these companies could bring together are simply amazing.Collaboration and technological convergence will be at the center piece of the chemical industry, innovation and the next technological and industrial revolution. However collaboration and technological convergence would not be easy as multiple and serious hurdles will need to be overcome.

Technological and business collaboration and convergence require different mindsets, different kind of employees and even different business and political leaders. Collaboration requires that individuals must be able and willing to go beyond their own boundaries, companies, industries and countries on the search of value and solutions. Collaboration will also require much more broad technological profile with much more flexible employees and leaders.

Companies will need to be more open and able to share knowledge without losing value. Proper innovation will require new ways to share and protect intellectual property and knowledge. At the same time, governments and authorities will need to find ways to stimulate innovation and collaboration, providing the right scheme of targets and incentives while setting the framework for collaboration within the proper legal boundaries.

Companies will also need to spend broad amount of time on selecting their partners and stream chain, as their intrinsic value will not only be linked to its own value anymore, but to the value of their technology partners. At the same time, banks and institutions will start valuing companies not only for their intrinsic value but also for their future technological value.

These are some of the most obvious challenges for technical collaboration and convergence, and these already imply massive changes in the way the chemical industry currently innovates. These changes will be gradual, but the implications will be pervasive.

However some things remain absolutely clear: The world will be able to solve the upcoming challenges if we act together immediately. Innovation, collaboration and convergence will be the catalyst for the third industrial revolution. The chemical industry, as always, will be at the forefront of the solution.

Conclusion
The chemical industry and our society are on the verge of a massive economic and technological revolution. During this transformation, companies, whole industries and perhaps countries could become bankrupt or even disappear while others will reach new levels of success and prosperity. Companies and industries able to lead in this transformation will be the leaders of the future, and those embracing technological collaboration and convergence will be at the forefront.

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Want more? Check out the book:
The Future of the Chemical Industry by 2050



Discussing the technological supremacy of the chemical industry and how it will adopt a leading position to solve some of the largest global challenges humans have even seen, this book details how the industry will address climate change, aging populations, resource scarcity, globality, networks speed, pandemics, and massive growth and demand. Author Rafael Cayuela currently works as the global product and marketing director for Styron.

ISBN: 978-3-527-33257-1
Hardcover, 332 pages | June 2013, Wiley-VCH