p a s s p o r t t o your fut ure - chemistry australia
TRANSCRIPT
P A S S P O R T�T�O YOUR FUT�URE
June 2030
Dear colleague,
Congratulations. We are delighted to present your useful PASSPORT
pre-reading materials.
These four short reports address some of the major threats and
opportunities confronting our community, industries and our way of life in
Australia. They are essential reading for you.
Each report by different authors addresses the four key drivers we identified only two decades
ago in 2010 in the lead up to the Prepare 2030 Forum. You will recall that excellent session in
Melbourne, Australia where for the first time we came together and moved from passive talk-
fests to robust, frank discussion and integration into future plans, especially for the plastics and
chemicals sectors and the consequences for all receiving sectors. It was a formative event and
some useful new relationships were formed!
Our timing was excellent. It had been hard for many of us to venture beyond our comfort zones
and embrace confronting drivers. But many of the key issues were becoming clearer at the time
and the daring ‘Prepare 2030 - Passport To Your Future’ certainly freed us from our short-term
incremental approaches. Some were off the mark, some were controversial and others speculative,
but the document achieved its objective of opening our minds on opportunities and threats!
As predicted there have been some major shifts. Thankfully through smart thinking, planning and
cooperation we have survived where others have floundered. We are the envy of many around
the world for our civil and productive society, stable government and partnership approach.
Thank you for your part in this journey and we look forward to working with you in the future.
Margaret Donnan
CEO - Plastics and Chemicals Industries Association
IMPORTANT READING Your Passport:
PREPARE 2030 – ThREATs AND OPPORTuNITIEs
Plastics and Chemicals
Industries Association
PO Box 211, Richmond, VIC, 3121
Ph: +61 (03) 9429 0670
Fx: +61 (03) 9429 0690
Author: Richard Collins - April 2010
Project Manager: Helen Millicer
www.pacia.org.au
Resource Allocation Assessment
Businesses everywhere are keenly awaiting their Resource
Allocation Assessment for 2030-35 – if the National
Resource Allocation Commission (NRAC) doesn’t lift
our quota on key non-renewable resources we’ll need to
rethink our expansion plans.
The primary concern of course is our hydrocarbon allocation.
Best thing industry ever did post-peak oil in 2012 was win
consensus from governments to quarantine hydrocarbons
from being wasted as transport fuel. 1 Oil and gas, despite
our feedstock diversification projects, remain the basis
for so many high-value plastics and chemicals products
fundamental to our lifestyle and sustainability. Diversification
of energy sources has been vital. 2
It’s hard to predict NRACs centralised alignment priorities
in the next five-year plan as it balances supply of rationed
resources with strategic national production goals. We do
know it supports “higher order uses” for materials and is
looking for at least Factor 10 (tenfold) resource efficiency
improvements before it will support a sector.
Hark back 20 years and it was an unfettered free market,
then along came the resource pinch. 3 I remember that New
Scientist special in 2007 warning about peak phosphorus,
uranium, platinum, silver, indium – some German materials
chemist estimated even zinc could be used up by 2037 if we
all consumed at the rate of the US. 4
China also convinced us central authorities could create
and sustain economic miracles. Of course it started in 2009
buying phosphorus mines globally, locking up long-term LNG
contracts with Australia and building strategic oil reserves. As
resources got tight and the population boomed, governments
became nervous – and now we’re waiting for NRAC.
Efficiencies and alternatives
Our cities and society have totally changed in 20 short
years. Renewables, alternative materials and closed loop
systems are mainstream now. No more waste with one-cycle
products, for example.
Fortunately our company diversified early into bioplastics
based on cellulose and safflower oil substitute 5, and ramped
up oleochemical alternatives in our detergents and personal
care items. As renewable resources, both are exempt from
NRAC, but they are only partial replacements for hydrocarbons
and they come at a cost, raising the price of everything from
building materials to solar paints and toothpaste.
The replacement of metal oxide catalysts in plastics with
organic options has opened the way to endless recycling,
where previously plastics could only be rebirthed once. 6
This technological breakthrough also underpinned our
comprehensive take-back scheme for all types of plastics.
Indeed new business models have firms leasing the plastic
polymer and collecting it at the end of life. All this has of course
informed product design, such as minimising unidentified
blended plastics and customer-provider relationships.
In hindsight we wish we had got into landfill mining
opportunities earlier – for a while they were a gold mine of
petroleum-based resources.
There have been fewer alternative inputs on the chemicals
and pharmaceuticals front, though green chemistry
continues to work on organic and renewable compounds.
Finally, our recycled water has at least given us a nice
competitive advantage when it comes to water security,
footprint labelling and the potential embodied water trade.
1 UK Industry Taskforce on Peak Oil and Energy Security http://peakoiltaskforce.net/download-the-report/2010-peak-oil-report/
2 Dow 2009, Energy Policy for America http://news.dow.com/dow_news/pdfs/dow_energy_plan.pdf
3 CSIRO Limits to Growth 30 Year Review http://www.csiro.au/resources/SEEDPaper19.html
4 New Scientist, May 2007 ‘Earth audit’
5 CSIRO Crop Biofactories Initiative
6 WME magazine, April 2010
Driver 1: Resources and Materials
From: Resource Security Manager
To: CEO
Re: Resource Allocation Assessment 2030-35
Environment metrics
It is time to update the market on our annual performance
and risk metrics, as per the 2015 Australian Stock Exchange
integrated reporting rules. We have good news and threats.
Our governance is sound. The Carbon Visibility System
extends up the supply chain, we’ve secured climate insurance
and we meet the ASX’s mandatory extreme weather buffer of
storing 75% of three month’s material use.
Our public reputation is high in comparison to others
providing valuable good will in our ‘licence to operate’.
We easily meet the Eco-foot international benchmark for
the industry, particularly water intensity (per unit of output),
air emissions quality and the percentage of design-for-
environment features in our products. Carbon intensity
remains a problem on the global benchmark (see below).
It is amazing to realize how many of these requirements
were evident back in the 2010s.
Our opportunities pipeline is strong. Nano-reinforced plastics
are recognised as the sustainable structural material, providing
greater flexibility in a more extreme climate, easier transport
and recycling – and best of all they can be cheaply replaced.
Smart paints and heat-sensitive window tints are raising
building performance, plus our solar energy generating paint
line, Solaris, is leading the market.
Increasingly hot weather is impacting health, lifestyle and
spread of disease thereby increasing challenges and demand for
pharmaceuticals. 7 Speculation has continued for 20 years on
the climate risks around our geo-engineering options, including
spraying of sulphate particles into the atmosphere to mitigate
the greenhouse effect. 8
Finally, increasing urban density means less construction per
head of population, despite population growth. And it’s still
too soon to know how agriculture will fare in Australia in the
medium-term. The rise of urban permaculture and vertical
farming has offset some of the lost sales in broadscale farming.
Carbon accounts
Mixed news here, unfortunately. While year on year we have
successfully reduced our total CO2 equivalent emissions,
our carbon intensity is still too close to the level stipulated
in the 2018 Cape Town Treaty restricting movement of
greenhouse pollution. 9
Finance markets have seen this as a business risk since the
UN ratified a scheme developed by business of industry-by-
industry greenhouse targets rather than national ones.
We have not been idle. Plant B is now highly automated for
world’s best practice energy efficiency, and our external
energy partner has the entire site substantially off-grid
thanks to the neighbourhood quad-generation power
plant (power, heat, cooling, hot water) and biogas from
the Western Treatment Plant for the city’s sewage. Our site
location has premium value because of this secure supply,
however other sites have less reliable supply and diminished
productivity due to weather events interrupting transmission.
The real problem remains our Scope 5 emissions right up the
supply chain. Australia continues to rely on fossil fuels for
65% of its energy because successive governments vacillated
under pressure for low cost energy and put so much faith in
carbon capture. China and Korea now dominate low-priced
renewable technologies, the US and India lead on innovation
– Australia just didn’t diversify far enough or early enough, so
our inputs are carbon-heavy.
We’re hoping hydrogen will re-level the playing field and cut
our risks and costs.
Driver 2: Climate and Environment
From: Climate and Environment Officer
To: CEO
Re: Market briefing for 2029/30
7 Australian Medical Association report, 2005, ‘Climate Change Health Impacts in Australia’
8 The Royal Society Report, Sept 2009 http://royalsociety.org/Geoengineering-the-climate/
9 US EPA issued an “endangerment ruling” listing CO2 as a pollutant, Dec 2009
Overview
Decades ago, several chemical companies called for major
change and identified mega challenges: water, renewable
energy and conservation and agricultural productivity.
For 25 years CAP has been the centrepiece of emerging
markets, underpinned by China’s economic gravitation, a rising
middle class across the region and Australian natural resources.
Ever since the World Trade Organisation failed after the first
Resources War in 2017, CAP has been the pre-eminent regional
bloc and is now closing in on the EU and North America in
successfully addressing the three areas of mega challenges.
There had been warning signs of the fracture: geo-politics
changed with the American Recession of 2009 and the
standoffs at the Copenhagen Accord that year; localism
grew in tandem with resource constraints and rising oil/
energy/carbon costs; ‘Fortress Europe’ introduced its carbon
tariff 10 and REACH chemical controls, and the US its Quality
Goods Control Act targeting emerging economies. To cap it
all off nations introduced more robust national regulations
complicating global trade and finance. The best of our
members have weathered this period of rapid change.
Achievements
Through cooperation regulatory alignment and multi-lateral
recognition have been achieved on several key issues within
the bloc in the last several years.
One is chain of custody certification, principally for chemicals
and cellulosic sources for plastics, given the potential
environmental trade-offs. All countries have now joined the
scheme, providing full transparency in plastics and chemicals
supply chains.
Through our partnership with governments and regional
NGOs, we have also broadened our Product and Materials
Stewardship (PAMS) scheme to include consumer packaging
across the bloc. It’s a logical extension given many plastics
members are already leasing and recovering polymers for
short-term use.
Third, we saw further linkage and collaboration across
the bloc, the most active year since the CAP Free Trade
Agreement was signed in 2019. Highlights were the dual
stock market listing of Melbourne Chemicals in both Australia
and Korea, and the joint venture between Malay Plastics,
Beijing Lend Lease and the University of Queensland to
commercialise nano-enriched polymers for building materials.
Challenges
Vietnam Chemical Consortium’s failed bid this year for
Australian Gas Company shows risks and challenges remain
in balancing national and international interests, despite the
CPA Free Trade Agreement.
The next goal of our PAMS scheme is to develop a framework
for hazardous and dangerous wastes, including some nano-
materials. Leadership is coming from China and Australia.
Work is also continuing on the proposal to recognise the
Embodied Environmental Aspects of goods. For example,
financial markets want to trade water virtually on the basis
of fully priced externalities, as mooted 23 years ago by the
World Business Council for Sustainable Development. 11 This
could see the emergence of water-based economic zones.
Driver 3: International Dynamics
From: Plastics and Chemicals China-Asia-Pacific Association (PACCAPA)
To: All Regional Members
Re: PACCAPA Annual Industry Review
10 Euractiv.com, comments by French President Nicolas Sarkozy, 2010
11 WBCSD, 2006, ‘Business in the world of water: The H2O Scenarios’
The trust premium
Resources, climate and environment continue to be
major drivers determining lifestyle, role and perceptions
of government and industry. Trust remains the number
one issue particularly since the partial meltdown after
peak oil in 2012. People more than ever demand truth in
government and industry communications, advertising, in
a product’s ‘lifestory label’ and reports. 12 They expect all
major companies to have a Stakeholder Advisory Committee,
with public reports, so our partnership with the company
continues to be a good role model.
Technology and social media have made society transparent
and hyperlocal. Businesses tightly target key groups; on the
other hand stakeholders have more access behind business
walls than ever before, and are not afraid to use it. That
boycott of Food Co when its’ claims to use 100% recycled
water were exposed was a wake up call for all.
Groups and values
Many people know their Eco-foot, most want to reduce it,
little surprise given our resource pressures, the new eco-
generations and the National Wellbeing Indicator. There
are continuing social and political tensions between the
Conspicuous Accumulators and the now well established
Minimalists. We’ve noticed two divergent responses amongst
the Minimalists. Conscious Consumers aspire to less,
shunning ‘stuff’, buying by lifecycle labels and turning to
repair. The Virtualists embrace technology and prefer leasing
services over owning products – how strange people used to
buy music on disks. Few have room for clutter.
Demographics and cities
Our cities are more diverse and dense than ever, courtesy of
30 million Australians (many being recent immigrants from
the region), the cultural influence of Asia’s mega-cities, our
low greenhouse gas goals and the high costs of energy, fuel
and building materials.
Infrastructure Australia was right when it estimated the
avoidable annual cost of congestion would double to more
than $20 billion by 2020. 13 The exodus to the regions and
shift to public and pedal transport has not abated. The
growing issues of geographic poverty and disadvantage
remain major concerns and risks for all.
Baby Boomer pressures are easing; emerging are the first
members of the ‘Tenties Bubble’ due to Gen Eco born around
2010 and immigration running three times the 1990s average. 14
shaping the places
The demographics will shape workplace, homeplace and
marketplace. SAC recommends retaining the Later Age
Employee Program a few years, although we do recognise the
need to rethink the onsite Accommodation Village now there
are fewer aged employees to support/transport. We also
recommend the company enhances its diversity program.
The benefits of increased tele-working and shifting the
management function to Bendigo are clear – reduced
congestion cost and diversified geo-risk – but we’re keen
to keep an eye on dislocation issues for both home- and
site-based workers. Work-life balance for home workers, in
particular, appears at this stage to be a net positive.
The marketplace will change with the demographics.
One example: the 30-year boom in age care drugs may now
flatten, replaced by Gen Eco interest in health and long-term
brain function.
Driver 4: social change
From: Stakeholder Advisory Committee (SAC)
To: CEO and the Board
Re: SAC report 2029/30
12 trendwatching.com, 2007, ‘Still made here’
13 Infrastructure Australia, 2010, ‘The State of Australian Cities’ report
14 Australian Government Treasury, 2009, ‘Intergenerational Report’
Resources and Materials
• Whatfactorsmightunderpinasustainable,profitable
economy and society in a world of declining resources
and increasing costs?
• Howmaybusinessmodelschange?
Climate and Environment
• Thebarisconstantlyrisingintermsofenvironmental
performance. Where will it be set in 20 years time?
• Energycostsarerisingwithorwithoutapriceoncarbon
emissions. What will energy provision look like in 2030
and can Australia have a competitive advantage?
International Dynamics
• Whataretheover-the-horizonopportunitiesandthreats
stemming from new international frameworks?
• Whatarethepotentialramificationsofpopulation
pressure, a growing global middle class and resource
constraints? How should governments, business and the
community respond to best effect?
social change
• Populationgrowthandgenerationalchangesignalnew
dynamics in the workforce, marketplace and community.
Who will your stakeholders be in 20 years time and how
may their values change?
• Howwillcitiesadaptandwhataretheopportunities/threats?
Overarching systemic issues
• Allthesedriversareinterconnected.Arethereemerging
systemic issues and how might they impact on any/all of
these changes? What are the opportunities, costs and
threats?
• Whatpolicysettingsandregulatoryreformswillhelp
ensure change is incremental rather than disruptive?
• Whatbusinessmodels,manufacturingprocessesand
products will succeed in a 2030 world?
YOuR ThOuGhTs ON 2030 fOR ThE wORkshOP fORuM
some questions to stimulate your thoughts for the workshop
Notes