Verbund in the fall: a week with Europe's sustainability leaders
Verbund is a great word. It’s German for "combination" or "integrated system." It’s been more fully described as "the physical integration of production, market platforms and technologies which tie the businesses together." Said another way, it links back to "sustainable" or "holistic" thinking in companies, markets and supply chains.
I was searching for a bit of "verbund" in my recent trip to Europe.
GreenBiz Group, the company behind GreenBiz.com’s news and analysis, as well as the three annual sustainability events we run, is in North America. But the companies we cover operate worldwide, and a preponderance of them are European-based.
Take, for example, the biggest developers and service companies driving renewable and distributed energy worldwide. Most are European-headquartered giants such as ENGIE, Schneider Electric, EDF, Enel, EDP, many of which were borne of state-owned utilities. There are chem giants such as BASF and major players in water and waste such as Veolia. On the other end of the spectrum, look at consumer products, where brands such as Unilever, BMW and Danone are pacesetters in sustainability.
Two weeks ago, I ventured out to get to know these innovators better, visiting a host of companies in Paris, as well as quick trip to Germany to see two of the country’s leaders: BMW and BASF.
BMW: sustainable best practices, and planning an all-electric future
Think of world-class German manufacturing prowess, and you might come up with BMW. Routinely on the list of top global brands is the maker of the world’s "ultimate driving machine," which boasts a headquarters that includes a museum documenting the early days through the future of automobiles, a high-tech manufacturing factory in the heart of one of the world’s most expensive cities and BMW Welt, a giant showroom where car lovers can pick up new models.
A leader in luxury automotive, BMW is now, like all long-term automakers, sorting through the challenges the industry is facing. Call it ACES (Autonomous, Connected, Electric, Shared), as does BMW, or call it CASE (Connected, Autonomous, Shared, Electric), as does Daimler. Whatever you call it, the automotive world sees it as the future. And that means it’s currently in a state of reinvention.
BMW tackled energy efficiency and operational sustainability early — mostly due to the economics. The company saw these moves as a foundational way to cut costs and be a category leader. Looking forward, the company is racing ahead on electric cars, as the market that Tesla has opened up is strong. With improvements in battery technology and a past foray into electric with the i3, the company is poised to accelerate into the electric era, with 12 all-electric models planned by 2025.
I also had the chance to sit down with Jury Witschnig, BMW’s head of sustainability strategy product and production, to talk renewable energy, circular economy and the all-electric rollout. (You can find the interview here.)
BASF: integrated chemical production at massive headquarters on the Rhine
The BASF headquarters in Ludwigshafen is gigantic. Sitting on the Rhine River, it boasts 6 square miles, 39,000 employees, three ports, two tank farms, a vast pipeline network, medical services, its own fire department and 2,000 miles of pipe.
In this day and age of light, nimble, WeWork-like office space, BASF’s campus looks like a real throwback to another era.
While BASF’s campus looks as traditionally industrial as it gets, its sustainability team had some fresh thoughts.
Christoph Jaekel, vice president sustainability strategy, and team discussed the future of plastics and the future of chemicals. They are using a term called "Mass Balance": using oil or gas derived from either biomass or recycled plastics as a feedstock to manufacture products in existing BASF plants. The amount of sustainable feedstock is allocated to the final product via the certified mass balance approach.
To get technical: The lion’s share of chemical production starts in the steam cracker, where steam is used to split or "crack" naphtha, a long-chain hydrocarbon derived from crude oil, into smaller molecules. These molecules then serve as the building blocks for downstream production.
Derived from organic waste, products such as bio-naphtha and biogas — along with their petrochemical analogs — are fed into plants at the beginning of the production process. Bio-naphtha is fed into a steam cracker; biogas into a syngas plant. In the ChemCycling project, recycled feedstock will be added at the beginning of the production process and allocated to the end product.
The calculation-based principle of the "mass balance" allocation offers multiple advantages: It reduces greenhouse gas emissions and fossil-feedstock inputs, while the quality and properties of a product remain the same. As a result, the products can be processed exactly like conventionally produced materials.
To take one example, architectural coatings, up to 100 percent of the fossil feedstock to manufacture them can be replaced by renewable raw materials. Downstream customers of BASF in consumer or industrial goods don’t need to adjust their product formulas; they can offer the same product quality and better fulfill sustainability requirements from their customers.
"The principle of ChemCycling is to use plastic waste as a feedstock for chemical recycling that would add to the already established mechanical recycling," said Jaekel. "The output is oil that would go into a steam cracker and output into different uses and products. It’s a great alternative to incineration or landfilling plastic waste which is not being recycled yet."
The key challenge to getting ChemCycling to scale? Developing the appropriate technologies for balancing inputs from feedstock for use at industrial scale in order to turn out different products.
Paris: PRI in the City of Light, Quantis explores biodiversity and a visit with the Geants francais d’energie
I spent three busy days in Paris, taking advantage of the fact that so much of French corporate might is headquartered in a couple square mile area in Paris called La Defense. My visit was concurrent with the Principles for Responsible Investment’s big conference, which brings together asset managers and others looking to integrate ESG more closely into their strategies.
I also spent a day with Quantis, sustainability consultant to many of France’s biggest corporations. It gave an interesting briefing on the value of biodiversity for its clients, which include Danone, Veolia and Heineken.
France is also home to many of the world’s energy giants.
My trip started with a visit with Fabien Bremont and Audrey Bresciani of Dalkia’s international team. Dalkia is part of EDF, Electricite de France, which has grown out of the French national electric utility. Headquartered in Paris, with $77.88 billion in revenues in 2016, EDF operates a diverse portfolio of 120-plus gigawatts of generation capacity in worldwide. Dalkia is EDF's energy efficiency and local renewable energy business. From its base in France, it is expanding abroad. In the United States, it has acquired Groom Energy and Aegis Energy. Together with EDF Renewables and Entersolar, EDF is a major player in the United States. Dalkia and its CEO, Sylvie Jehanno, are ambitious on how they can expand their energy efficiency services in North America with commercial and industrial customers. More on that soon.
I also met with Gwenaelle Huet, overseeing the dual roles of president for North America and head of renewables for ENGIE. Long a major player in natural gas and nuclear under the name of GDF Suez, ENGIE has catapulted its position in renewables and is ambitious to increase its portfolio in that space. It plans to add 9 gigawatts of renewables capacity by 2021.
I ended my trip with a visit with Xavier Houot and Esther Finidori of the Schneider Electric sustainability team.
And in fitting French fashion: There was a transit strike on the last day that shut down the Metro and train system and left the roads gridlocked.
Still, as Cole Porter once sang, "I love Paris in the fall!" Traffic strikes notwithstanding.