Dow embraces circularity . . . and fossil fuels

GreenBiz
Dow CEO Jim Fitterling in conversation with GreenBiz's Joel Makower at GreenBiz 20

With the spinoff of materials giant Dow last year from the DowDuPont union, the company — which recorded $43 billion in annual sales for 2019 from selling the building blocks of plastics and coatings — is taking the circular economy seriously. 

A year ago, Dow helped launch a coalition focused on ending plastic pollution. Dow CEO Jim Fitterling, who spoke this week at the GreenBiz 20 conference in Scottsdale, Arizona, said Dow plans to eventually transform all of its products for brands and consumers so that they are 100 percent recyclable. "We want to stop the waste. So through alliances, we want to get infrastructure in place that does that, and we want to facilitate closing the loop," said Fitterling in an onstage interview.

However, when it comes to moving away from fossil fuels — either using natural gas for electricity or using petrochemicals for the basis of its plastics products — the Dow CEO revealed less ambitious plans.

In response to a question about how the company appears to have hitched its wagon to fossil fuel-based feedstocks for a long time, Fitterling said:

I think we’ll be in that space [fossil fuels] for a long time, but it doesn’t mean we can’t get to carbon neutrality.

Almost all of the world's plastics use petrochemicals as a feedstock. Dow has looked into various ways to use plants and biobased sources as feedstocks, including a project to use sugar cane for ethanol and plastics in Brazil

But because of the massive land required to grow enough plants to convert into these products at a large scale, Fitterling said plant-based plastics "run up against some real sustainability issues around land use and the environment." 

Likewise, Fitterling took a pragmatic stance when it comes to using natural gas for the company's electricity generation. While Dow has a commitment to use 750 megawatts of clean energy for electricity generation by 2025, Fitterling said natural gas is still an important fuel source for the company's electricity demand. 

"Today for an energy-intensive industry, there isn’t a better solution," he said. "Wind and solar are not going to allow us to operate and provide what the world needs, and so it would stunt economic growth."

Later in the interview, Fitterling added: "I think natural gas is an excellent bridge for where we need to go in the future... I don’t think the pressure is going to go off any time soon, but I think as companies, if we embrace the commitments to carbon neutrality, we can get to that future without having to ban all fossil fuels."

The comments run counter to an era where some environmentalists, financiers, business leaders and entrepreneurs are hoping to see the end of the use of fossil fuels. Earlier this week, CNBC financial pundit Jim Cramer declared that he is "done with fossil fuels" following weak earnings by oil giants Exxon and Chevron. Cramer said: "We are in the death knell phase" and pointed to divestments by "a lot of different funds."

At the same time, the Dow CEO's positive petrochemical stance provides optimism for the oil and gas industries that the "death knell" of fossil fuels isn't upon us.

In response to Fitterling's comments, Catherine Reheis-Boyd, president of the Western States Petroleum Association, tweeted, "There’s Power in collaboration. @jimfitterling notes natural gas is viable solution for plastics. Carbon neutrality IS possible without banning of these resources."