report by the international sustainable chemistry

Report by the International Sustainable Chemistry Collaborative Centre for the Global Chemicals Outlook II Understanding Global and Regional Megatrends and Industry Sector Trends Relevant for Sound Chemicals Management and Opportunities in Sustainable Chemistry Innovation

Foundational Paper by the International Sustainable Chemistry Collaboration Centre for the GCO II

2 May 2018

Summary

Executive Summary 4

1 Global Megatrends

1.1 Global economic shifts 7

1.2 Technological Change 9

1.3 Impact on environment, Climate change, Resource use 13

1.4 Demographic changes 13

1.5 Urbanisation 15

1.6 Climate change and pollution 17

2 Sectoral Outlooks: Chemical Risks and Innovation Opportunities in Key Industry Sectors

2.1 The chemicals industry and the relevance of megatrends

for the chemicals management and innovation 19

2.2 Agriculture and food 20

2.2.1 Status and forecast of the sector 20

2.2.2 Potential concerns from and human health and environment perspective 20

2.2.3 Opportunities for sustainable chemistry innovation 21

2.3 Construction 22




2.4 Energy 24




2.5 Transportation / automotive 28




2.6 Electronics 32




2.7 Textiles 36


3 May 2018




2.8 Pharmaceuticals 40




3 List of Abbreviations 45

4 List of Figures 47

5 Bibliography 48

6 Annex I: List of Megatrends in Selected Studies 56


4 May 2018

Executive Summary Chemicals are a key enabler for sustainable development and provide massive benefits to societies

(UNEP 2013a). At the same time, chemicals can cause severe harm to human health and the

environment, and thus must be managed safely (UNEP 2013b). The turnover of the chemical industry

has grown considerably over the past decades. It is expected to almost double again by 2030 compared

to 2015, when it may reach a total volume of EUR 6.3 trillion, up from EUR 3.4 trillion (US$ 7.4 trillion,

up from US$ 4 trillion). A key challenge for the coming years is to deal with the expected increase in

chemical production and use in a way that these chemicals are handled responsibly, and to foster

sustainable chemistry innovation to ensure that throughout their life-cycle, chemicals do not cause harm.

In this report, we identified six megatrends as large-scale changes which are consistently reported in

studies dealing with global socioeconomic development, technological innovation, and dynamics in the

chemical industry. These megatrends are often interacting with each other, and they are formed by, and

influencing the chemical world.

Profound global economic shifts have taken place due to the dynamic growth especially in some

emerging economies. Countries such as China and India have seen a surge in economic activity, their

growth rates outperform most developed countries and they are going to become the world’s leading

economies during this century. At the same time, a massive shift in production capacities has taken

place, and while the output of developed countries continues to increase, Asia has outperformed North

America and Europe and emerged as the uncontested leading region in terms of chemicals production.

Technological change is occurring at an increasingly fast pace. This includes the invention of new

technologies and technological equipment, but also of new processes and products, including new

chemicals. Like the production capacities, the innovation landscape has shifted as well, albeit with a

much more pronounced trend in China, which has emerged as an innovation leader and now grants

more patents on chemistry-related inventions than any other country. Other emerging economies are

showing signs of more innovative activities in chemicals-related areas, but these are considerably less

pronounced, and unlike for the shift in production capacities, developed countries are still strong on

innovation.

Resource use, scarcity and competition is a megatrend driven by increasing economic activity and

the associated material basis needed in many sectors, including the energy and chemical industry.

Overall resource use will continue to grow, and resource scarcity is expected to lead to increasing

competition between countries and between companies. Mining and fossil fuel extraction come with

considerable risks to human health and the environment, and the risks will increase with growing

demand for these resources. As products are becoming more and more sophisticated, which relates

often to more and different constituents as well as increasing mixtures at atomic or molecular level,

recollection and recycling will face increasing challenges at the same time.

Demographic changes include the growth in total population as well as the increasing life expectancy

in most countries and the associated ageing of populations. In 2017 about 7.6 billion lived in the world,

and this number is expected to increase to 8.6 billion in 2030 and 9.8 billion in 2050. While the past

decades were marked by a huge population increase in Asia, the coming decades will likely see a

comparably high increase in Africa, where by mid-century more than a quarter of the world population

is expected to live. The growing number of people will lead to growing resource demand, and as people

are moving to cities, demographic changes are closely linked with the megatrend of urbanization.

Urbanization is taking place on a historically unprecedented case. Since 2008, more people are living

in cities than in rural areas. Until 2050, an additional 2.5 billion people will move to cities and require

housing and other infrastructure, creating a massive demand in construction activities and leading to

changes in mobility and other needs, many of which need to be addressed by chemical-intensive

sectors.

Climate change and pollution is a megatrend based on large-scale environmental changes as well as

pollution problems from the local to the regional and sometimes even global level. Air, water and soil

pollution are assumed to lead to more than 9 million deaths per year, and next to their harms to human

health, pollution causes also significant economic damages. Chemical pollution is one of the

consequences of increased economic activity in emerging and developing economies, in combination

with insufficient regulation or lacking capacities to implement existing regulation in these countries.


5 May 2018

However, pollution is also increasing in developed countries as treatment comes more and more to its

limits and many pollutants are the results of intended use of chemicals, pharmaceuticals and other

products. Sustainability innovation can contribute to reduce greenhouse gas emissions, through

enhancing resource efficiency in the chemicals sector, but also through innovation leading to materials

and products which can drive down CO2 and other pollutant emissions in other sectors.

These megatrends are formed by, and are themselves influencing, dynamics in individual economic

sectors, with profound implications for chemical use as well as much potential for sustainable chemistry

innovation.

Agriculture and food production are already chemical-intensive operations, and their output will have

to grow considerably over the coming decades due to increasing global population and changing, more

resource-intensive diets. The global agrochemicals market had a value of US$ 215.18 billion in 2016

and is projected to grow up to US$ 250.5 billion by 2020. At the same time, biological alternatives to

synthetic or chemical fertilizers and pesticides are in increasing demand, reacting to consumers who

want food that is sustainably grown and also to stricter governmental regulations.

The global construction sector exhibits strong growth, fueled by urbanization trends in emerging and

developing economies and demand for more spacious housing and offices in developed countries. The

global market for construction chemicals is expected to grow by 9% per year and increase to more than

US$ 50 billion by 2025. Construction chemicals can cause severe harm especially to workers, and

concrete with its high CO2 emissions is a major cause of climate change. Sustainability innovation needs

to develop more benign alternatives which are safe for workers and come with reduced greenhouse gas

emissions.

The global energy sector will likely see an increase in energy demand by nearly one third until 2040.

The overall increase will lead to related growth in greenhouse gas emissions. The energy-intensive

chemical industry is expected to contribute to this growing demand, especially due to enhanced

production capacities in Asia, including China and Saudi Arabia. As with the broader economic shifts,

the largest growth of the future energy demand is projected to occur in non-OECD countries. In contrast,

efficiency gains in the European chemical industry are expected to counter-balance the increase in

production. Chemical products will play a key role in enhancing energy efficiency in other sectors, e.g.

through insulation materials, or contribute to low-carbon energy sources. Fostering these applications

can contribute significantly to the mitigation of climate change.

In the transportation and automotive sector, increasing demand for individual mobility as well as

mass-transit will lead to growing emissions of pollutants. The trend to shared mobility devices could

counteract this to some extent. A related trend enhancing sustainability of the sector is e-mobility, whose

further development requires highly advanced chemistry knowledge to manufacture batteries with higher

capacities and lower weight, volume, and costs. However, recycling of conventional car batteries is

already posing a serious health and environmental risks, and for modern e-mobility batteries,

sustainable solutions need to be developed.

The electronics sector is expected to grow from US$ 4 trillion in 2015 to US$ 4.5 trillion at the end of

2018. The use of chemicals in the manufacturing of electrical and electronic products is especially a

concern for workers. There are also high risks at the end of the life-cycle, when e-waste is often

informally scrapped for valuable material. The longevity of electronic products and their recyclability

have to be included much more strongly in the design and production phase to deal with these risks,

and hazardous substances need to be phased out or replaced by more benign chemicals. Innovative

electronic products such as light-emitting diodes (LEDs) can drive down electricity demand for the

lighting sector, and in combination with solar panels and batteries can make lighting available in less

developed off-grid regions, contributing to sustainable development.

The global textiles sector will see strong growth in the future. After the sector already doubled in the

past 15 years, overall apparel consumption is projected to increase by 63%, from 62 million tons in

2016/17 to 102 million tons in 2030. Textile production is a chemically intensive process, e.g. through

the dyeing of fibres or leather tanning as well as processing synthetic fibres. In addition, also

agrochemicals are used in cotton production. The use of chemicals in the sector has serious health

repercussions for workers in the sector and often leads to environmental damages in areas surrounding

textile factories. Solutions to improve the situation are in restricting highly hazardous chemicals e.g.

through the use of restricted substance lists, promoting substitution with more benign chemicals, and

through fostering initiatives that oppose the “fast fashion” trend.


6 May 2018

In the global pharmaceutical sector, global spending for medicine is projected to reach nearly $1.5

trillion by 2021, nearly US$ 370 billion higher compared to the 2016 spending level. The total volume of

medicine consumed will increase by 3% per year during the same period. The US will remain the lead

producer, followed by China. The innovation rate remains high, with an estimated 2,240 new drugs

entering the market each year until 2021. Environmental and health concerns of the sector are related

to releases of pharmaceuticals in the environment, where they can lead to detrimental effects especially

on aquatic life or contribute to antimicrobial resistance. Sustainability potential lies in designing drugs

which more readily biodegrade in the environment, but first and foremost, improvements to production

facilities are required, especially waste water management and proper use of pharmaceuticals.


7 May 2018

1. Global megatrends

Megatrends are “large-scale, high impact and often interdependent social, economic, political,

environmental or technological changes.” (EEA 2015: 5)1 As such, megatrends have tremendous

repercussions, including on the chemicals world. They affect the patterns of production and consumption

in economic sectors, including in the chemicals industry. They can influence the direction and pace of

innovation for new chemicals and chemical applications, and they reshape public attention and political

action on the negative impacts of hazardous substances.

It needs to be noted that there is no consensus approach about the identification of megatrends within

the literature. The notion of megatrends can be used to assess developments within just one sector like

agriculture or energy or in several interconnected sectors, in politics, the economy or the environment,

on the global, regional or national level. They are also not being conceptualized in a uniform way but

come in many varieties and shapes. For example, many reports included demographic changes as a

highly important megatrend, while others labelled demographics (as well as globalization and

technology) as a “primary force” affecting the set of megatrends (EY 2016). Causal drivers and ensuing

trends, or cause and effect can change depending on the viewpoint on these massive and interrelated

forces.

To identify the megatrends influencing global development, innovation, and the chemical industry, we

assessed 12 studies and synthesized a list of six key trends. The studies assessed are dealing with

megatrends in global development (UNDP and UNRISD 2017; UNGA 2017; National Intelligence

Council 2017; KPMG 2016; EEA 2015; Frost and Sullivan 2014), with megatrends particularly relevant

for technology and innovation (OECD 2016a; World Economic Forum 2015), and with megatrends

affecting the chemical industry (VCI 2017; Valencia 2013; Deloitte 2010. The number of megatrends we

found in the studies varied from just three (UNGA 2017) to 12 (Frost and Sullivan 2014), though there

was a clear tendency in many reports to list between six to nine megatrends.

There is scarce academic literature on megatrends, and most reports come from consultancies and

business associations, and some more from public agencies. As was done by Retief et al. (2016), we

conducted a matrix analysis to identify the megatrends which were most consistently referred to in the

literature. As the various reports used different designations for and conceptualisations of megatrends,

this analysis gives a broad indication, but still provides a relatively robust overview of megatrends

referred to elsewhere.

1 Other definitions differ, but are largely congruent with the one quoted above. See, for example, OECD 2016; UNDP and UNRISD 2017; EY 2017a; Frost and Sullivan 2014.


8 May 2018

Table 1: Matrix analysis of megatrend studies

UNDP and UNRISD 2017

UNGA 2017

NIC 2017

KPMG 2016

EEA 2015

EY 2017a

Frost and Sullivan 2014

OECD 2016a

WEF 2015

VCI 2017

Valencia 2013

Deloitte 2010

Economic shifts - X X X X - X X - X X -

Technological change

X X X X X - - - X X - X

Resource use, scarcity and competition

- - - X X X - X - (X) X X

Demographic changes X - - X X - - X - X X -

Urbanisation - - - X X X X - - - X X

Climate change, pollution

X X X X X - - X - X X X

Health, disease, well-being

- - X - X X X X - - - X

Labor market X - - - - X - X - - - -

Interconnectivity - - - X - - X - - - - -

Consumption patterns - - - - - - - - - - - X

Individualism - - - X - - - - - - X -

Poverty and inequality

X - - - - - - - - - - -

Financing X - - - - - - - - - X -

Public debt - - - X - - - - - X - -

Conflict - - X - - - - - - - - -

Multipolarity - - - - X - - - - - - -

Mobility - - - - - - - - - - - X

Seven megatrends clearly stand across the 12 reports assessed. We are covering six of these in the

remainder of chapter 1 below. The one exception is health and well-being. Looking into the

corresponding studies, most focus on changes in the health sector, which we are covering in the sector


9 May 2018

analyses in chapter 2, on the impact of pollution, which we address in combination with climate change,

or on the impact on life expectancy, which we are dealing with in the section on demographic changes.

1.1. Global economic shifts

The last decades were marked by continuous economic shifts in terms of output from the US and Europe

to countries including China, India, Russia, Brazil, Indonesia, Mexico, Turkey, and to a lesser extent to

further countries in Asia, Africa, and Latin America. One aspect of these shifts is the increasing economic

size of emerging economies. Table 2 shows the world’s top 8 countries measured by gross domestic

product (GDP) both in 1990 and in 2016. The table reveals a marked shift, especially due to the vast

increase of the Chinese economy and the dynamically growing Indian market.

Table 2: Gross domestic product of the world's 10 largest economies, in constant 2010 US$.

Country Rank 1990 1990 (million) 2016 (million) Rank 2016

United States 1 9,064,413.77 16,920,327.94 1

China 11 829,561.97 9,504,208.19 2

Japan 2 4,682,813.75 6,052,671.81 3

Germany 3 2,568,633.88 3,781,698.55 4

France 4 1,907,283.79 2,810,525.38 5

United Kingdom 6 1,642,507.26 2,757,620.26 6

India 15 466,533.19 2,464,933.10 7

Brazil 8 1,192,733.08 2,248,106.28 8

Source: World Bank / data.worldbank.org

Long-term economic forecasts show a continuation of these trends. Of course, such projections come

with considerable uncertainties, which are getting larger with longer timeframes. With this caveat in

mind, it is expected that in the Asian region new “tigers” are expected to emerge (e.g. Indonesia, but

also Pakistan, Philippines, and Vietnam) next to existing lead players China and India (PwC 2017).

While the US is still the largest economy measured in nominal GDP, China has already surpassed the

US in terms of purchasing power parity (PPP), and is expected to overtake it in nominal terms around

2030. India is growing less dynamic than China but still more than the US and is thus projected to

outgrow the US by 2040 measured in PPP (PwC 2017).

It is expected that the global economy could more than double by 2050, and the seven largest emerging

economies could increase their share of global GDP from currently 35% to about 50% (PwC 2017).

Other emerging economies are likewise gaining ground, so that by 2050, six of the seven largest

economies will be emerging economies. At the same time, the EU27 is expected to lose market share

and account for less than 10% of global economic output, when it will be economically smaller than

India. Despite these dynamics, most of the G7 countries are still projected to have higher per capita

incomes than the emerging economies, but the gap will be closing.


10 May 2018

Table 3: Projected share of global GDP (PPPs) in 2016 and 2050.

2016 2050

China 18% 20%

India 7% 15%

US 16% 12%

EU27 15% 9%

Source: PwC 2017

A related shift is the increasing multipolarity, visible by the demise of the G7/G8 and the rise of the G20

as an extended forum for global cooperation. A further trend is the rise of non-state actors in global

governance. Civil society, or non-governmental, organizations (NGOs) have taken an increasingly

prominent role in national and international affairs (Matthews1997; Weiss et al. 2013). Multinational

corporations (MNC) have grown to vast economic size: Among the 100 largest economic entities

worldwide are 21 countries and 69 corporations (Green 2016).

Table 4: Global chemical shipments by region.

Region Shipments in 2016, in billion US$ Share of total

North America 870.1 17%

Latin America 216.0 4%

Western Europe 1,048.9 20%

Central and Eastern Europe 109.5 2%

Africa and Middle East 161.0 3%

Asia Pacific 2,792.1 54%

Total Global Shipments 5,197.6 100

American Chemistry Council 2017

The current situation in the chemicals and pharmaceuticals industry reflects these larger changes. In

the early 2000s, Asia surpassed Europe and the US as the lead market, and has since grown to become

the dominant region for the production and use of chemicals. In the Asia-Pacific region, more chemicals

are produced than in the rest of the world combined (see Table 4).

The sales forecasts for the chemical industry likewise show a continuous shift towards Asia (Roland

Berger 2015). Production capacities in the region are expanding as companies react to the growing

demand: "Rising consumer purchasing power will translate into more chemicals people can afford to


11 May 2018

buy, which drives the demand for chemicals across Asia" (A.T. Kearney 2012). Although the European

and US chemical industry are expected to keep growing in absolute terms, they will do so decidedly less

dynamically than the industry in the Asia-Pacific region, and thus lose a considerable amount of their

market share (see Table 5).

Table 5: Past and projected share of chemical sales across regions.

2000 2015e 2035e

Europe 33% 19% 13%

North America 27% 18% 14%

Asia 32% 53% 62%

Latin America 4% 5% 5%

Rest of world 4% 5% 6%

Source: Roland Berger 2015

1.2. Technological change

The rate of technological innovation and change is continuously increasing, and as a result, human

development has seen tremendous progress over the past decades. For the upcoming years, OECD

has put forward a set of 40 key and emerging technologies in the fields of biotechnologies, advanced

materials, energy and environment, and digitalisation (see Figure 1). Many of these technologies have

the potential to revolutionize not only their respective fields, but also aspects of human life, and thus

further increase the pace of technological change we are currently witnessing.

Technological change is not only driven by innovation, but also by society’s adoption of new

technologies on the one hand and the emergence of new ideas on the other. The adoption rate of new

technologies has increased significantly over recent decades; the smartphone is particularly

unparalleled in the pace by which it was distributed among the population (DeGusta 2012). While it took

electricity and the telephone 30 or 25 years, respectively, to be adopted by 10% of households in the

United States, the smartphone achieved this in roughly 8 years, and the tablet in 2.5 years. The next

phase of adoption, signaled by the time it took shift from 10% to 40% adoption, was 39 years for the

telephone, and 15 years for electricity, whereas both the television and the smartphone took about 2.5

years. With increasingly short cycles of innovation, and the growing complexity of technological systems,

some have noted that these systems are no longer comprehensible by humans (Arbesman 2016).


12 May 2018

Figure 1: 40 key and emerging technologies.

OECD (2016): Science, Technology and Innovation Outlook 2016. Paris: OECD Publishing.

The global economic shifts mentioned above, including the shifts in production and the expansion of

production capacities, especially in emerging economies, go hand in hand with an increase in research

and development (R&D) efforts in these key markets. Industry not only encounters a conducive

environment for R&D and prospective markets for innovation in these markets, but also ready access to

a large talent pool. The ongoing burst in innovation can be seen in the increasing number of patents,

which have doubled in number since 2002 and surpassed 3 million in 2016 (WIPO 2017). At the same

time, the development of the average gross domestic expenditure on R&D (GERD) per person shows a

clear upward trend and has increased globally from less than 1.5% of GDP in the late 1990s to 1.7% in

2015, according to UNESCO data. As this period witnessed substantial growth in the global economy,

per capita spending on R&D (in PPP) increased from an average of 95 US$ in 1996 to 263 US$ in

2015.2

Accordingly, a related development is the shift in innovation capacities, also with regards to chemistry

innovation. Using data by the World Intellectual Property Organisation (WIPO) as an indicator illustrates

these significant regional shifts (see Figure 2). Looking at the number of patents granted to a range of

chemistry-related fields, Asia surpassed North America and Europe in the early 2000s and has since

become a global innovation powerhouse, with more granted patents than all other regions combined.

Within Asia, China is leading the charge, with about twice as many patents as Japan, which in turn has

double the number of patents as the Republic of Korea.

2 Data taken from http://data.uis.unesco.org on 14 May 2018.

http://data.uis.unesco.org/


13 May 2018

Figure 2: Patent grants on chemicals-related innovations across regions.

Source: WIPO.3

Latin America and Africa show a more mixed picture with relatively little dynamic, apart from innovations

concentrated in individual countries. According to researchers from Africa, complex and lengthy

application processes pose a major obstacle for filing patents. Limited availability of public and private-

sector funds for R&D was cited as another constraining factor in many parts of Africa.

Figure 3: PCT patent publications on chemicals-related technologies.

Source: WIPO.4

3 Patent grants on: Organic fine chemistry; biotechnology; pharmaceuticals; macromolecular chemistry, polymers; food chemistry; basic materials chemistry; materials, metallurgy; surface technology, coating; micro-structural and nano-technology; chemical engineering. Settings used : Intellectual property right: Patent; Year range: 1987 – 2016; Reporting type: Total count by filing office; Indicator: 5 - Patent grants by technology.

4 Multi-national patent publications on: Organic fine chemistry; biotechnology; pharmaceuticals; macromolecular chemistry, polymers; food chemistry; basic materials chemistry; materials, metallurgy; surface technology, coating; micro-structural and nano-technology; chemical engineering. Settings used: Intellectual property right: Patent; Year range: 2000 – 2017; Report type: Yearly statistics; Indicator: 5a – PCT publications by technology. WIPO IP Statistics Data Center.


14 May 2018

When it comes to the utilization of these patents, data is harder to obtain. WIPO does provide data on

Patent Cooperation Treaty (PCT) publications by technology. As a PCT patent filing gives intellectual

property protection in many countries at once, it provides a better indication about the will to use this

knowledge. Asia is still the leading region for chemistry-related innovation based on PCT publications,

but its position is much closer to that of North America and Europe.

The increasing pace of innovation in the field of chemistry is also visible in the number of substances

registered with the Chemical Abstracts Service (CAS). The rate at which new chemicals are listed has

grown exponentially. It took the CAS 50 years to see the listing of 100 million substances, yet in just two

years since then, another 30 million chemicals were registered. Since 1965, on average one new

substance was registered every 2.5 minutes, and by 2016, this rate had increased to one new substance

every 1.4 seconds.

Figure 4: Number of chemical substances registered with the Chemical Abstracts Service (CAS).

Source. CAS.

Another noteworthy trend is that chemistry-related fields are among those technology areas with the

highest share of women inventors, at least based on data derived through the Patent Cooperation Treaty

(PCT) which allows for simultaneous patent protection in several countries. According to WIPO (2016:

14), biotechnology, pharmaceuticals, organic fine chemistry, food chemistry, and analysis of biological

materials are the five fields with the highest women’s participation rate, around or above 50%. Two

chemicals-related fields are at the top of the list of areas with the fastest growth in women participation

rates when it comes to patent applications, namely organic fine chemistry and food chemistry, both

increasing from around 30% in 1995 to more than 50% in 2015.

Digitalisation is one of the key technological developments and has a tremendous impact on many

industries, including the chemicals industry. Under the heading “Chemistry 4.0”, (Deloitte and VCI 2017)

the impact of digitalisation is considered to lead to drastic changes within the chemicals industry. Three

categories are seen as especially relevant: First, transparency and digital processes should allow

chemical manufacturers to monitor their internal processes and realize efficiency gains; second, data-

based operating models are expected to be used for decision-making, again, for enhancing efficiency;

and third, digital business models might “fundamentally alter existing processes, products, or business

models.” (Deloitte and VCI 2017:12). Important to note, an increase in digitalisation will correspondingly

translate into an increased demand in materials and energy.


15 May 2018

1.3. Impact on environment, Climate change, Resource use

Resource competition and scarcity are closely linked to climate change, population growth, increase of

income and health status (see 1.4). Importantly, this applies not only to mineral, fossil and bio resources,

but also to water, soil and air – the basis of all life – which are being heavily consumed and impacted by

the use of the resources mentioned as well as in industrial processing. Due to a growing population,

available remaining resources are in conflict. To reduce the risks and impacts of climate change and to

tackle increasing CO2 emissions, the 2015 Paris Agreement aims at “holding the increase in the global

average temperature to well below 2°C above pre-industrial levels”. To slow down global warming and

fulfil the Paris Agreement to meet the 2 Celsius degree scenario, industry among sectors such as energy

supply and transport, needs to take on a drastic transformation to support the needed reduction of

greenhouse gas emissions from 40% to 70% by 2050 (OECD 2016b). With a 50% contribution to global

CO2 emissions, China (29.5%), the United States (15.6%) and India (5.9%) are projected to have the

largest savings potential by 2030, and therefore could positively contribute to reducing global warming

by adopting low-carbon technologies (Roland Berger 2017).

Additional triggers negatively impacting climate change are population growth and urbanization,

particularly in emerging countries, contributing to an increase in energy demand and therefore further

human-induced causes of climate change. To fulfil the ambitious task of decreasing greenhouse gas

emissions, a substantial shift towards renewable energy and electro mobility has been promoted

globally, leading to new challenges. Technologies applied in batteries, wind turbines and solar panels

heavily rely on rare earth metals (dysprosium, neodymium, terbium, europium and yttrium). For example,

2 tons of neodymium is used to help drive strong light magnets to propel wind turbines. The renewable

and clean energy industry currently consumes around 20% of rare earth elements and other critical

materials (U.S. Department of Energy 2010). Short term forecasts predict that the mentioned metals are

at risk of supply chain disruption (U.S. DoE 2010). Additionally, the emerging middle-class in developing

countries has caught up to the developed world’s consumption patterns with major implications for rare

earth metals extraction. The shift from necessity to choice-based spending determines rising electrical

sales, resulting in a massive increase in e-waste. By China controlling 95% of rare earth metals supply

and its export reduction by around 40% due to high environmental challenges (Pool 2012; Hurst 2010),

the industry must foster research on tailing alternatives, substitutions, and recycling. Chemically, it is

less complicated to extract rare earth metals through mining than tiny amounts from a cell phone,

meaning recycling is a question of profitability (Jones 2013). As of today, e-waste recycling in Africa is

done by low-paid workers incinerating plastic to isolate materials. This in turn puts workers and the

environment at risk, while recycling in Japan is more and more automated (e.g. Honda announced in

2013 an in-house metal hybrid battery recycling programme, Honda Corp. 2013).

1.4. Demographic changes

Demographic change likely has the most pressing implications on the other presented megatrends in

this report. A rapidly growing population in Africa and Asia corresponding with a growth in the global

middle class will cause a change in consumption patterns, (e.g. increase in protein-based diets and

therefore, conflict in land use), as well as a shift from necessity-based spending to a choice-based (e.g.

increase in electronics sales). An ageing population in developed countries will likely correspond with a

shift from being economic power houses to social and health care-oriented societies. The chemicals

industry will need to provide innovations to improve living and working conditions for the labour force

(e.g. construction materials for an increasing urbanization, agrochemical solutions increasing yields and

combating post-harvest food loss), as well as technological innovations to be prepared to replace a

lacking work force in developed countries (e.g. robotics) and ensuring a comfortable living for the elderly

(e.g. pharmaceuticals, biomaterials).

In 2017 global population reached nearly 7.6 billion and is expected to increase to 8.6 billion in 2030

and 9.8 billion in 2050. By 2050, over a quarter of the global population will live on the African continent

and will remain especially high in 33 of the 47 least developed countries that are in Africa (UNDESA

2017; OECD 2016a). This development will likely lead to a growing middle-class and changing

consumption patterns, affecting resource scarcity, land use conflicts and increasing pressure on social

and health care systems. At the same time, a relatively young and well-educated work force will also

lead to an increase in the number of scientists, researchers and innovators battling the challenges of

the present and the future (OECD 2016a)


16 May 2018

Table 6: World Population Prospects.

Population in millions

Region 2017 2030 2050 2100

World 7.550 8.551 9.772 11.184

Africa 1.256 1.704 2.528 4.468

Asia 4.504 4.947 5.257 4.780

Europe 742 739 716 653

Latin America and the Caribbean 646 718 780 712

Northern America 361 395 435 499

Oceania 41 48 57 72

Source: United Nations Department of Economic and Social Affairs, Population Division (2017). World

Population Prospects: The 2017 Revision. New York: United Nations.

By 2050, the population on the African continent will also account for more than half of the global

population increase (OECD 2016a). Angola, Burundi, Niger, Somalia, United Republic of Tanzania and

Zambia are projected to be five times as large in 2100 as they are today. Should poverty, inequality,

hunger and malnutrition (in children under the age of 5) be reduced in parallel to increased and improved

education and health care systems, infant mortality rates would decrease and life expectancy would

increase, thus supporting further population growth. With fertility rates at 5.1 child births per woman or

higher in Africa, in contrast to 2.5 (2010 – 2015) in developed countries, Africa will likely have a young

working age population of 305 million in 2050, while children in the rest of the world will likely total 148

million (World Bank 2016; UNDESA 2017). A young working population across African countries would

support their research and development capabilities to adapt to future challenges and to increase the

livelihoods of their population.

In Europe on the contrary, the fertility rate is below the required replacement level, shifting economic

growth and resources towards social and health care spending. 25% of the overall population is already

over 60 years of age and is projected to reach 35% in 2050 and 36% in 2100 (UNDESA 2017). The total

population particularly in Eastern European countries such as Bulgaria, Croatia, Latvia, Lithuania,

Poland, the Republic of Moldova, Romania, Serbia and the Ukraine is projected to decline by 15%; this

also corresponds to a decrease in life expectancy to an average level of 72 years (2010-2015) (UNDESA

2017). Europe and North America account for half of the global middle-class with two thirds of the global

spending today (OECD 2016a). Innovations in these regions will likely focus on robotics to replace the

work force and to improve living conditions for the elderly (EY 2017a).


17 May 2018

1.5. Urbanisation

In 2008, for the first time in human history, more people lived in cities than in rural areas. In 1950, 30%

of all people lived in urban areas, and by 2050, it is projected that 66% of the global population will live

in cities. Combined with the ongoing demographic transitions and the expected population growth over

the coming decades, the total number of people living in urban settlements will grow by 2.5 billion people

by the mid-century, up from a total number of 3.9 billion in 2014 (UNDESA 2014a). This means that in

every week until 2050, there will be on average 1 million people moving to a city.

Figure 5: Global population living in urban and rural areas, 1950 – 2014 – 2050 (projected).

United Nations, Department of Economic and Social Affairs, Population Division (2014): World

Urbanization Prospects: The 2014 Revision – Highlights. ©2014 United Nations.

Reused with the permission of the United Nations.

North America (82% of the population live in cities), Latin America and the Caribbean (81%), and Europe

(74%) record relatively high rates of urbanization, which dynamics are hardly discernible in these

regions. On the other hand, Asia-Pacific (50%) and Africa (43%) are currently still much more rural

regions, and increased urbanization has a much higher impact there: About 90% of the 2.5 billion people

who will be moving into cities by 2050 are (and will be) living in Asia-Pacific and Africa (UNDESA 2018).

The number of large and mega-cities are projected to increase, as they will be home to more and more

people. While in 2014, 28 cities had more than 10 million inhabitants, by 2030, the number will have

increased to 41. A comparable increase is expected in cities of 5 to 10 million people, of which there

were 43 in 2014 and an expected 63 in 2030 (UNDESA 2014a).


18 May 2018

Figure 6: Growth of urban population by city size. Source: UNDESA 2014b.

United Nations, Department of Economic and Social Affairs, Population Division (2014): World

Urbanization Prospects: The 2014 Revision – Highlights. ©2014 United Nations.

Reprinted with the permission of the United Nations.

This rate and scale of urbanization will likely lead to a strong and ongoing need to develop accompanying

infrastructure, including housing and transportation. This would lead to significant urban sprawl, as more

than 60% of the land expected to become urban has yet to be developed (UNDESA 2014c). It has been

projected that much of this expansion will convert highly productive cropland and thus contribute further

to the pressure on agriculturally productive areas (Bren d’ Amour et al. 2016). This strong growth

demands massive resource use for construction purposes as well as for maintenance and use by

inhabitants (see also section 2.2 below). A widely cited statistic showed that China used more cement

in the three years 2011-2013 than the United States did throughout the entire 20th century (Swanson

2015).

By 2050, China will have to create housing for 292 million new urban inhabitants, which is only

surpassed by India, where 404 million people are expected to move to the cities (UNDESA 2014a: 56).

These staggering numbers represent a significant challenge for the involved municipalities and national

governments. Much of the migration into cities will be informal and many more people can be expected

to live in slums. While the percentage of people living in slums has decreased from 39.4% in 2000 to

29.7% in 2014, the absolute number of people increased from 791 million to 881 million (UNHABITAT

2016). Thus, the challenge is not only to build living space in itself, but to build sustainable, inclusive,

and affordable living space.

Urbanization also leads to changing needs for employment and mobility, food and a healthy

environment. New mobility models such as car-sharing, new technologies based on e-mobility, and low-

to zero-carbon transportation are thriving in cities. “Future cities built on driverless transit systems, smart

buildings and green spaces — all inhabited by connected and aware citizens — are already beginning

to emerge.” (EY 2017a: 41) While strong on innovation, the increasing demand for resource-intensive

food by growing urban populations poses particular challenges to agricultural areas (Satterthwaite et al.

2010). However, cities are not only hungry for food, but for all sorts of resources: Material consumption

of the world’s cities is expected to increase from 40 billion tonnes to 90 billion tonnes by 2050 (UN

Environment 2018a).


19 May 2018

1.6. Climate change and pollution

Climate change is majorly impacting all the presented megatrends. The interdependencies of climate

change and ecosystems are apparent: with global warming, the core of climate change is increasing.

Carbon dioxide emissions (CO2) are on the rise especially due to the economic growth in non-OECD

countries, putting the eco-system at risk. Additionally, Agricultural production now consumes nearly 70%

of groundwater, while industry consumes 20% and households 10%. Only 2.5% of global water

resources are fresh water, and only 0.3 % are easily accessible (Lauster et al. 2011). Presently, global

water demand has outpaced population growth and is projected to increase by 55% by 2050 (OECD

2016a). With a high-intensive agriculture, surface as well as groundwater quality is degrading and

therefore contributing to the spread of waterborne (e.g. bacterial spread, viruses, protozoa) and vector-

borne diseases (e.g. malaria, dengue fever) (USCRP 2018). Since waste water management

infrastructure has not been properly developed and implemented in most developing countries, the

chemical exposure to the environment and living beings remains high.

With the last 30 years being the warmest within the last 1400 years in the northern hemisphere, due to

a significant rise in greenhouse gas emissions mainly caused by an atmospheric carbon dioxide (CO2)

increase of around 40% since the 1880s (annual global temperature increase since then: 0.85 Celsius

degrees), most of these emissions have occurred since the 1970s when global energy consumption

began to rise substantially, in conjunction with an increase in methane (CH4), and nitrous dioxide (N2O)

(OECD 2016a; EEA 2014). The total greenhouse gas emissions in 2010 consisted of 76% of CO2, 65%

coming from fossil fuel combustion and industrial processes. 11% are caused by intensive agricultural

production processes and deforestation (EEA 2014).

Figure 7: Energy-related CO2 emissions per capita.

OECD (2016): Science, Technology and Innovation Outlook 2016. Paris: OECD Publishing.

Another impact of climate change is on natural ecosystems, including substantial losses of biodiversity

(33% loss from 2010 to 2030; Roland Berger 2017) and increased rates of extinction of coral reefs, the

Amazon forest and the boreal-tundra arctic. As of today, 40% of China’s arable land is suffering from

degradation (soil erosion, acidification) leading to a food crisis. Australia has already lost 40% of its

forests and Brazil 20% of its rainforest due to the transformation of supply chains towards 4 main

commodities: beef, soy, palm oil and pulp and paper. Argentina (40% loss of forests) and India (50%)


20 May 2018

are also facing a high share of land degradation through soil erosion, risking desertification and thus

agricultural productivity loss (Roland Berger 2017: 23). The Food and Agriculture Organization of the

United Nations (FAO) projects that food demand will increase by nearly 50% by 2050, corresponding

with population growth and an increase in per capita income, contributing to natural resource scarcity

and degradation (FAO 2017a). With a rise in population and consumption levels it is projected that it will

not be possible to provide enough land to simultaneously maintain agricultural production levels and to

maintain current natural areas, halt forest loss and completely switch over to renewable energy

production. Conflict of land use and global warming will influence the spread of transboundary plant and

pest diseases (Roland Berger 2017) in agriculture and therefore, lead to increase in agrochemical

development and innovations.

With regard to CO2 emissions Agriculture and fossil fuel combustion are the main drivers for climate

change, as well as freed-up methane from wetlands, leakages from natural gas systems and livestock

production (Roland Berger 2017). A further impact of the triggers mentioned above is air pollution due

to intensifying energy use. Fossil fuel burning from coal and petroleum and mining processes release

sulphur dioxide into the atmosphere, contributing heavily to air pollution and acid rain. The transportation

sector and producing industries are responsible for releasing carbon monoxide, hydrocarbons and

organic compounds. Among the drawbacks of urban life are the negative health effects of air pollution.

The World Health Organization (WHO) estimated that 98% of cities in low- and middle-income countries

and with more than 100,000 inhabitants did exceed air quality guidelines for safe levels of particulate

matter. Ambient air pollution leads to between 3.0 and 4.2 million deaths per year (Landrigan et al.

2018). Cities will thus continue to be the main centres where many of the key challenges of sustainable

development are felt and need to be addressed. Generally, most air pollutants are expected to increase,

particularly nitrogen oxides (transport and power generation) and ammonia (agriculture) (OECD 2016b).

Air pollution causes 6.4 million deaths a year globally (EDF 2018). While in OECD countries it is

projected that air pollution will decrease due to a shift towards low-carbon technologies and innovative

(chemical) materials for various industry sectors, expectations are not the same for the non-OECD ones.

Air pollution is expected to increase massively, predominantly in urban areas, due to the expansion of

housing, automobiles and their corresponding energy production.

The potential for the chemical industry lies in taking on the model of the circular economy. Also further efforts are needed towards achieving more energy efficient processes. In addition to the usual efforts of chemical industry other matters have to be explored, e.g. the potentials of the circular economy, the use of waste and side streams of other industries for the chemical industry etc.

Sustainably grown non-food biomass and biotechnology positively contributes to a replacement of the

oil and petrochemical industry through the development of bio-based batteries for e-mobility, as well as

research on artificial photosynthesis processes and micro-organisms for biofuel production. Another

innovation opportunity is additive manufacturing, using less material saving energy through production

processes and intelligent design (OECD 2016a). Unfortunately, climate change will not be stopped —

society must adapt to the upcoming challenges, including agricultural production shifts, rising sea levels,

changing weather patterns etc., by implementing measures to increase resilience.


21 May 2018

2. Sectoral Outlooks: Chemicals Risks and Innovation

Opportunities in Key Industry Sectors

In the following sections, innovation opportunities are mentioned, that potentially contribute to more sustainable solutions. However, any disruptive innovative approach has to be checked carefully for impacts to avoid a transfer of challenges and risks into another sector or into the future. Sustainable chemistry can serve as a guiding principle to avoid such follow up problems (Kümmerer 2017). How do we know that an innovation is sustainable or at least more sustainable than another one or the existing technology and products? Cement production will still need large amounts of energy and result in large amounts of carbon dioxide emission along its supply chain, even after significantly improving the sector. The Power to X approach is interesting. However, despite all on-going research and its emerging practical implementation it is not yet clear whether it will be (more) sustainable or greener even when renewable energy is used for electrochemical synthesis of organic molecules from CO2. Digitalization (chemical industry 4.0) may hold a potential for more sustainability in industry. However, the increased application of software systems translates to a higher demand for hardware and energy. These few examples demonstrate the complexity of assessing sustainability. Many criteria, specific situations and circumstances of application have to be taken into account. This warrants a systems thinking that we are just at the beginning of understanding. The following considerations and case examples were chosen to exemplify both the opportunities and the pitfalls of innovations in different sectors.

2.1. The chemicals industry and the relevance of megatrends for chemicals

management and innovation

In 2016 the global chemicals industry had a total revenue of EUR 3,360 billion (about US$ 4 trillion), but

is expected to more than double by 2035, fueled largely by China’s substantial supply and demand in

chemicals (Cefic 2018; Roland Berger 2015). Due to China’s ambitious transformation process—driven

by urbanization, a rising middle-class, changing consumption patterns and dedicated support to

implement the Paris Agreement on lowering CO2 emissions—China has shifted from a net importer to

a net exporter of chemicals in terms of sales. Its growing manufacturing base focused on production of

high-value chemicals and plastics will secure China a 62% share of the global market in 2035 (CEFIC

2017; Roland Berger 2015). While China is on the rise, Europe and the United States are confronted

with a declining market share of chemicals sales. A 56% increase in the number of EU regulations for

the chemicals market since 2008 is one of the main drivers for rising costs with regard to research and

development, aside from high energy and feedstock costs in the EU (Roland Berger 2015). The United

States, on the other hand, is benefiting from its access to shale gas, which contributes to a net addition

of 9% of global CO2 emission together with the Middle-East (Deloitte 2017).

Linking the global chemicals industry to the megatrends outlined above, the chemical production is

expected to significantly increase in the future, and will also be discussed in more details in the following

paragraphs on industry sectors. Due to an increase in urbanization, especially in emerging countries,

the demand of construction materials and innovations in the automotive sector will lead to a rise in the

speciality chemicals market, also closely linked to an ongoing development of technology. Growing

demand for construction materials, packaging, transportation, textile, plastics and health care, coupled

with low oil prices will lead to an increase in petrochemicals, not only causing India and China to

establish additional petrochemical production capacities, but also leading to a shift in production control

by OPEC. The fertilizer and agrochemicals sector will be heavily influenced by climate change,

population growth and urbanization. An increasing end-user demand will not only affect agricultural

production, but also international trade patterns and environmental laws and regulation. New

technologies in agricultural biotechnology, genomics and organic farming will shape the future of the

agrochemicals market (EY 2017a). At the same time, identifying sustainable solutions for customers,

and enhancing their own sustainability performance, are key challenges for the chemical industry (EY

2017b).

The overall growth of the chemicals market will be driven by China and the Middle-East (around 12%,

Deloitte 2015), while Europe’s growth will decline to 5%, leading to a global market share in 2035 of

13% (Roland Berger 2015). The mergers and acquisitions in the chemical industry with Germany, China


22 May 2018

and U.S. leading the way (Bayer-Monsanto, ChemChina – Syngenta, Dow – DuPont) are valued at a

global worth of $231.1 billion in shuffling portfolios with regard to intermediates and specialty chemicals,

strongly focused on agrochemicals. In response to the growth of the convergence of seeds and

pesticides, companies are trying to close the gap between research and development in plant genetics

and crop protection (Deloitte 2017). In the following paragraphs the industry sectors linked to the

chemicals industry will be discussed in more detail.

2.2. Agriculture and food

A growing world population will increasingly affect the means of conducting agriculture in future. The

FAO estimates that overall food production needs to increase by about 50% by 2050 (FAO 2017b).

Meeting this need through a further increase in farmland acreage by e.g. deforestation is not desirable

due to downstream problems such as the destruction of natural habitats and of CO2 sinks. An alternative

approach discussed is the intensification of agricultural practices (IFA 2016). However, instead of just

increasing business-as-usual practices, environmental impacts should be limited in future.

2.2.1. Status and forecast of the sector

The global Agrochemicals market had a value of US$ 215.18 billion in 2016 and is projected to grow up

to US$ 250.5 billion by 2020. Agrochemicals describe the products used in the field such as crop

protection like insecticides, fungicides, herbicides and nematicides, as well as fertilizers (biological and

synthetic) and chemical growth products (Market Insights 2018). Due to an increasing population and

urbanization as discussed in the megatrends above, additional pressure is released on the agricultural

sector facing diminishing farmlands, soil erosion and contamination and water scarcity. Nevertheless,

the use of agrochemicals leads to yield increase and the adoption of dual cultivation, due to fertilizer

usage maintaining soil fertility. These factors are pushing the increasing development and growth of the

agrochemicals market of China and Japan, being the largest producers and North America and Asia-

Pacific as largest consumers. With an upcoming rapid population increase linked to economic growth in

China and India, forecasts predict that these countries will ensure the positioning of Asia Pacific “as

fastest growing market for agrochemicals” (The agrochemical market in India is estimated to grow at

7.5% annually, to reach US$ 6.3 billion by 2020, Market Insights 2018).

2.2.2. Potential concerns from a human health and environment perspective

In Sub-Sahara Africa, where farmers use way below the global average of nutrients (10-15 kg per

hectare), the nitrogen use efficiency (NUE) lies way above 100%, going hand in hand with low

agricultural productivity and soil depletion. India, on the other hand, was observed to make excessive

fertilizer use, also propelled by a government subsidy, which has led to less and less increased yields,

compared to the nitrogen input. The International Fertilizer Association (IFA 2016) attributes this trend

to the governments increasing focus on resource efficiency. In developed countries such as the US,

Western Europe, or Japan, the past thirty years have shown a continuous improvement of NUE. A trend

attributed to the uptake of fertilizer best management practices in these regions, according to the IFA

(2016). These observations match the overall trend of NUE over time: at first, with no or very little

nitrogen added, NUE lies over 100% but leads to extensive soil nitrogen depletion. The more nitrogen

is added, at first, yield output increases, reaching a tipping point, after which the yield output per added

unit of nitrogen input would decrease. However, it has been observed that due to the implementation of

more sustainable intensification and, in particular, fertilizer best management practices, the NUE

improves, though it will not be able to reach 100% due to natural losses of nitrogen (IFA 2016). One

exception to this development is Brazil. The country has, due to access to improved technology and a

large proportion of soybeans in its crop mix, managed to circumvent a decline of NUE.

The above described megatrends of population growth and changing consumption patterns are both

expected to lead to an increase in the global demand for fertilizers. However, the mix of fertilizers is

estimated to become more diverse (increase of phosphate and potassium fertilizers, comparably slower

increase of nitrogen fertilizers), due to the need for more balanced application of fertilizers to increase

the yield output in the long-term (IFA 2016). Demands of nitrogen fertilizers are expected to shift away

from the Asian region towards Africa and Latin America, while supply of nitrogen fertilizers is expected


23 May 2018

to increase in countries with access to natural gas or coal reserves, due to increased investments in

capacities of ammonia and urea. Exports will continue to come predominantly from Eastern Europe,

Central Asian and West Asia, while imports are expected to continuously go towards South Asia (India

in particular) (ibid.).

Despite various advantages of agrochemical use, the negative impacts are yet significant. The decrease

of soil fertility, intoxication of helpful microorganisms and microbes, as well as increasing pH levels are

only a few to name. Also, important to highlight is ground water pollution and the disturbance of aquatic

life. The excessive use of nitrate-based fertilizers leads to ground water contamination risking for

example immobilization of hemoglobin and a reduction of oxygen within the human body. Furthermore,

the pesticide usage such as DDT, dieldrin and aldrin are not only causing severe impacts on the

environment, but also on all living beings. With a high-intensive agriculture, surface as well as

groundwater quality is degrading and therefore contributing to the spread of waterborne (e.g. bacterial

spread, viruses, protozoa) and vector-borne diseases (e.g. malaria, dengue fever). Since waste water

management infrastructure has not been properly developed and implemented in most developing

countries, the chemical exposure to the environment and living beings remains high. Therefore, the

chemical industry increased its efforts to substitute toxic chemicals with non-toxic alternatives also taking

on the organic food market by providing effective products. However, measures at the source including

the products themselves are first choice (Kümmerer et al. 2018).

2.2.3. Opportunities for sustainable chemistry innovation

Biological alternatives to synthetic or chemical fertilizers, pesticides, or stimulants are meeting a growing

demand for food that is sustainably grown and respond to stricter governmental regulations that aim to

protect humans and the environment. At the same time, the industry becomes more and more aware of

the benefits of such soil treatment that sustainably increases yields. However, this is not to say that the

market grows at a speedy pace: The North American market for agricultural biologicals, which is leading

before Europe and Asia Pacific is expected to grow from 2.08 billion US$ in 2016 towards 6.82 billion

US$ in 2025. Quite similar trends are expected for the European market (from 1.62 billion US$ in 2016

towards 5.36 billion US$ in 2015), where in 2014, around 10.3 million hectares of farmland was cultivated

organically, predominantly in Spain, Italy, and France. With an estimated growth from 1.25 billion US$

in 2016 towards 5.59 billion US$ by 2025, the market for agricultural biologicals in Asia Pacific is

expected to surpass the European market. Reasons are the not so much increased governmental

regulations, but the expected increase of population which leads farmers to be reliant on higher yields

and enhanced nutrient and plant growth that is promised by biological techniques. The majority of the

3.6 million hectares of organically cultivated farmland in the region in 2014 were found in China, followed

by India.


24 May 2018

2.3. Construction


The global construction industry is expected to grow to a total market value of 10.5 trillion US$ by 2023,

according to Research and Markets (2017), and to 15.5 trillion US$ by 2030, according to Global

Construction Perspectives and Oxford Economics (2015). In the latter study it is estimated that the USA,

China and India alone will account for 57% of global construction growth by 2030. Together with

Indonesia, UK, Mexico, Canada and Nigeria, just eight countries will account for 70% of global

construction growth. Among these, India is the fastest growing construction market and expected to

become the third largest market by 2030 but hampered by poor infrastructure and difficulties with running

businesses. CO2 emissions of the global construction industry are estimated at 5.7 billion tons in 2009

(Huang et al. 2018).

Ongoing urbanization is one of the main drivers of construction growth. Whereas in 2014 about 4 billion

people lived in cities, that number is expected to increase to more than 5 billion by 2030 and to almost

6.5 billion by 2050 (UNDESA 2014a). Building infrastructure for 2.5 billion people in about 25 years is a

tremendous and resource-intensive challenge. Apart from urbanization, global and localized impacts of

climate change, (latter especially in combination with increasing urban density and the related heat

emissions), lead to a need for climate adapting housing and commercial facilities (e.g. heat-/cold-

proofing, adaptation to more intensive rain/humidity, and extreme weather protection such as against

excessive winds or flooding).

At the same time, growing disposable income by the growing urban middle class leads to increasing

investments in living comfort and consumption. Emerging sustainable and healthy consumption patterns

are mirrored by growing concerns for healthy living environments (e.g. avoidance of exposure to (semi)

volatile organic compounds (SVOCs/VOCs) from wall paints, flooring, or other materials).

Case study: Pyrethroids

Similar to the naturally occurring pyrethrins, found in Chrysanthemum cinerariaefolium and

Chrysanthemum coccineum, their synthetic relative, pyrethroids, are compounds used in pest control.

By paralyzing the nervous system of the insects whose organs they have infiltrated, they became a

popular ingredient to insecticides. The global market value of pyrethroids is expected to grow from

US$ 3.82 billion in 2016 towards US$ 5.71 billion in 2015.Though they find their uses, not only in

agriculture, but also in homes or schools, pyrethroid pesticides are known to negatively affect the

aquatic ecosystem. The largest global market share of pyrethroid product types is owned by bifenthrin

with 35% in 2016. Though the market prognosis estimates a slight drop, bifenthrin is expected to retain

its market dominance. Permethrin, which is used as an insecticide and also a medication for treatment

of scabies and lice, was indicated to be the most effective and safest medicine by WHO’s List of

Essential Medicines, and is expected to increase its market share as a medicine in future.

Pyrenthroids are most commonly and increasingly used in Asia Pacific (the market growing particularly

fast in China and India), predominantly as pest control in agriculture and repelling of insects. Such

insect repelling products are on the rise, since cases of vector borne diseases such as dengue or

chikungunya have recently increased in the region and regulating bodies have taken initiatives to halt

them. Europe, the second largest market for pyrethroids, is expected to grow, due to the ban on

nicotinoid pesticides (clothianidin, imidacloprid, thiamethoxam), which are known to harm bee

populations, and subsequently need substitutes.


25 May 2018

The global market for construction chemicals is expected to grow by 9% per year and increase to more

than 50 billion US$ by 2025 (Global Market Insights 2017). Construction chemicals are commonly sorted

into five categories (ibid):

• Concrete admixtures

• Protective coatings

• Asphalt modifiers

• Adhesives

• Sealants

Regionally, the growth in the construction chemicals market may be much larger. Especially in the fast

growing and massively urbanizing Asian and African markets, higher growth rates have been observed.

For example, India expects a steadily increasing growth rate (CAGR) of 17.2% from 2016 – 2020, to

reach a market size of 1.89 billion US$ (Bahadur 2017).

Global cement use is expected to increase from currently 3.5 billion tons per year to more than 5.5 billion

tons in 2050 (Global Construction Perspectives and Oxford Economics 2015). Other researchers agreed

that there will be a rapid increase of cement production in the coming decades, but that it would slow

down and reach 4.2 billion tons in 2050, a figure which might be considerably lower if a high carbon tax

would be imposed on CO2 emissions for the sector (Ruijven et al. 2016).


Construction chemicals can pose serious harm to workers on construction sites, and in the case of

offices or housing also to office workers and inhabitants. Especially in developing countries, asbestos

remains a very serious hazard. The WHO estimates that 125 million people in the world are exposed to

asbestos in the workplace, and the diseases associated with occupational exposure led to the deaths

of 107,000 people (WHO 2014). Another source of hazardous chemical pollution are plasticizers, which

are commonly used in products like polyvinyl chloride (PVC). PVC materials are a major source of indoor

chemical residues of substances like DEHP, which have been linked with asthma (Jaakkola; Knight

2008; but see Kanchongkittiphon et al. 2015). Especially in the case of asbestos, exposure can take

many years before the most serious health effects become visible.

Everyday exposure is nevertheless a common source of problems for workers. In a study based on a

questionnaire filled in by more than 30,000 Dutch construction workers, it was reported that on average

6.4% of them complained about gases and vapours, with much higher figures for asphalt workers (53%)

and road markers (45.9%). An average of 4.6% complained about smoke, while among road markers

(31.4%) and pile drivers (32.7%) were considerable higher. An average of 8.0% complained about

chemicals, and here the highest share of workers who complained was among concrete repair men

(61.8%), epoxy/polyurethane floor layers (45.7%, terrazzo workers (36.4%), painters (34.3%) and

sealant/polyurethane foam appliers (29.5%) (Tienen; Spee 2008).

A number of chemicals have been recommended by various stakeholders to be avoided or replaced in

the construction industry. The US Green Building Council published a list containing hazardous

chemicals such as asbestos, cadmium, mercury, chromium(VI), polyvinyl chloride, phthalates, bisphenol

A, perfluorinated compounds and all carcinogens listed in California Proposition 65 for projects on US

territory, and for projects outside the US carcinogens listed on the REACH substances of very high

concern (SVHC) Candidate List. Other stakeholders have likewise published lists of substances to avoid

in construction, for example the “red list” by the International Living Future Institute or the Cradle to

Cradle Banned Chemicals List.5 Replacing these substances is a key challenge for sustainable

chemistry innovation.

5 US Green Building Council : LEED BD+C: New Construction | v3 - LEED 2009: Avoidance of chemicals of concern. Online at https://www.usgbc.org/credits/new-construction-core-and-shell-schools-new-construction-retail-new-construction-healthcar-8, accessed 9 May 2018; International Living Future Institute: The Red List. Online at https://living-future.org/declare/declare-about/red-list/, accessed 9 May 2018; Cradle to Cradle Certified™ Banned List of Chemicals. https://www.c2ccertified.org/resources/detail/cradle-to-cradle-certified-banned-list-of-chemicals, accessed 30 May 2018.

https://www.usgbc.org/credits/new-construction-core-and-shell-schools-new-construction-retail-new-construction-healthcar-8

https://living-future.org/declare/declare-about/red-list/

https://living-future.org/declare/declare-about/red-list/

https://www.c2ccertified.org/resources/detail/cradle-to-cradle-certified-banned-list-of-chemicals


26 May 2018


Enhancing sustainability is one of the key challenges for the global construction sector (World Economic

Forum 2017). The emerging circular economy thinking in the construction sector requires the

incorporation of recyclability of construction materials, with the reduction of negative externalities as one

central aim (Lemmens; Luebkeman 2016). This pertains specifically to chemicals, as these can pose a

serious barrier to circularity. As one review noted, while there is general awareness of the circular

economy concept in the sector, its application is “in its infancy.” (Adams et al. 2017) A range of policy

instruments exists which could be used to accelerate the transition towards a circular economy

specifically in the construction sector (Høibye; Sand 2016).

While a building may serve its purpose for residential housing, commercial or industrial activities or

leisure/entertainment, it may also be considered as a material base. To this regard a linkage between

digitization and construction will open new opportunities but also new requirements to construction

material suppliers (cf. Roland Berger 2016). As of now, construction is among the least digitized sectors,

showcasing both the need and opportunities to companies to become active there (Agarwal et al. 2016).

Plastic is a widely used construction material and about 21% of the 47 Mt of plastic used in Europe go

into the construction sector (Plastics Europe 2012). However, plastic pollution is already a pressing

global environmental problem (Ellen Mac Arthur Foundation 2017b). While some uses of plastic in

construction can come with considerable environmental benefits, e.g. frames for insulation windows,

and may be well recyclable, others pose challenges at the end of their life-cycle. Sustainable chemistry

innovation can reduce the need for fossil fuels and thus contribute to mitigate the climate change. But it

must not necessarily lead to plastic which is more benign at the end of the life-cycle.

2.4. Energy


While growing concern and efforts for increasing energy efficiency for residential, commercial, industrial

purposes and transport continue making inroads, population growth and continuing industrialization are

expected to result in a growing energy demand in the coming decades by nearly one third until 2040

(IEA 2016). The Electronic Industries Alliance (EIA) organization estimates that the total world energy

consumption is expected to rise from 575 quadrillion British thermal units (Btu) in 2015 to 736 quadrillion

Btu in 2040.

According to an assessment from the IEA (2017), an increasing number of energy efficiency regulations

have contributed to a clear slowdown in energy demand growth. In the IEA New Policies Scenario,

demand growth will further slow (from an average of 8% per year from 2000 to 2012 to less than 2% per

year since 2012) to an average of 1% per year until 2040. Without new efficiency measures, end-use

consumption in 2040 would be 40% higher. In line with the view of IEA, the global energy outlook of

ExxonMobil (ExxonMobil 2017) reiterates that electricity generation will be the largest and fastest

growing demand sector, reflecting strong growth in global electricity demand. The oil demand will grow

to support commercial transportation and chemical needs.

In the emerging energy scenario, the 2040 per-capita energy consumption in China will exceed that of

the European Union (EU). According to the IEA, global trends will be determined by China’s choices,

which could spark a faster clean energy transition. The influence of Chinese vehicle manufacturers in

launching electric vehicles (EVs) is a commonly cited example. The New Policies Scenario assumes

that one-third of the world’s new wind power and solar PV will be installed in China. China will also

account for more than 40% of global investment (in EVs).

By 2040, the non-OECD share of global energy demand is expected to reach about 70%, as efficiency

gains and modest economic growth help keep OECD energy demand relatively flat. China and India

together account for about 45% of world energy demand growth to 2040. (ExxonMobil 2017)

The overall energy demand in the transport sector is also projected to increase due to an initial increase

in personal mobility demands, which will peak sometime between 2020 and 2025. However, the growth


27 May 2018

in economic activity and disposable personal income is expected to drive increasing trade of goods and

services, leading to higher energy demand in the commercial transportation sectors. The largest growth

by volume is expected in heavy duty transportation, but marine and aviation are projected to grow the

largest by percentage. The development of regional energy demands in the transport sector mirrors the

economic growth (GDP) outlook of different regions, with the majority of growth in commercial

transportation is likely to occur in the non-OECD countries.

Figure 8: Change in world primary energy demand by fuel.

© OECD/IEA 2017 World Energy Outlook, IEA Publishing. Licence: www.iea.org/t&c

Similar regional differences can be noted with regard to the development of residential and commercial

energy demands. Overall population growth, growth in households, rising prosperity and expanding

commercial activity are expected to trigger higher demand for lighting, heat and power in homes (e.g.

increased use of home appliances and amenities such air-conditioning, cooling, heating) and offices,

resulting in a rise of about 25% by 2040 (non-OECD countries 40%). The African region and China will

each account for about 30% of the increase in demand in this segment (ExxonMobil 2017).

As the largest group of energy consumers, industrial activities account for around 50% of global energy

demand, which is projected to grow by about 25% during the period 2015 – 2040. The heavy industry

sector will continue to take the largest share. Improvements in energy efficiency in industrial processes

are expected to moderate the overall industrial energy demand growth. With heavy industry shifting to

other emerging markets such as to India, Africa and Southeast Asia, the corresponding industrial energy

demand will also change.

Within this segment, the chemical sector sees the highest growth in energy demand with around 45%

during period from 2015 to 2040. The demand for chemical products is expected to outpace GDP in

many emerging markets, such as in Asia. Economic and population growth, rising prosperity and

disposable income as well as urbanization fuel the demand for fertilizer (increased food production),

plastics (e.g. packaging) and other chemical products.

2034

607

19

7

1407 1268

840

1277

http://www.iea.org/t&c


28 May 2018

Figure 9: Number and share of people without access to electricity by country, 2012.

© OECD/IEA 2014 Africa Energy Outlook, IEA Publishing. Licence: www.iea.org/t&c

With the relocation of chemical production closer to these emerging markets, the chemical industry will

add to the regional energy requirements. In addition to local demands, access to low cost feedstocks is

a crucial competitive factor. In the Middle East, feedstock availability drives the petrochemical industry

evolution. With feedstock accounting for about two-thirds of chemicals energy, the energy demand is

expected to more than double.


According to the British Petrol Statistical Review of World Energy, June 2017, oil, gas and coal account

for 85% of the world’s primary energy consumption, thus contributing to about 2/3 of greenhouse gas

emissions. As per the IEA World Energy Outlook, a transformation in electricity and heat generation

would be of need to meet the targets in the international climate change agreement. A possible

decarbonisation of the energy sector would require a combination of starting points, considering (a)

increasing energy efficiency, (b) expanding renewable energy, (c) reducing resource consumption and

(d) reducing pollutant emissions during the use of fossil fuel sources (BMU 2018). By 2040, around 37%

of the global gross power supply might be met through renewable energy sources (IEA 2016), while the

remainder will be supplied by energy from fossil sources. However, electricity is the rising force among

worldwide end-uses of energy, making up 40% of the rise in final consumption to 2040 – the same share

of growth that oil took for the last twenty-five years (IEA 2016).

The Agenda 2030, SDG 7, strives towards securing access to affordable, reliable, sustainable and

modern energy for all. For example, in early 2018 India announced its plan to achieve 100%

electrification of households. Corresponding strategies will need to address resource efficiency and

climate friendliness of energy generation, storage, distribution and use. Urbanization and geographically

concentrated industrialization require not only a sustained supply of electricity (whether locally

generated or effectively transmitted), but also result in growing energy demand for the transport of

people and goods. The continued economic interlinkage of supply chains is also reflected by the growing

energy demand for intra and interregional movement of goods.

http://www.iea.org/t&c


29 May 2018


As far as energy efficiency, efforts may focus on (a) energy efficient production processes, (b) energy

efficiency of buildings, (c) energy efficiency of tools and gadgets as well as (d) supportive technologies

(energy monitoring, metering & management, pumping systems, heat exchangers, etc.). The global

market for energy efficiency technology is expected to grow from US$ 995 billion (2017) to US$ 1781

billion by 2025. In a similar fashion the global market for environmentally friendly technology in

generation, storage and distribution of energy will nearly double during the same period (2018: US$ 796

billion; 2025: US$ 1390 billion) (BMU 2018: 48). In the latter segment, renewable energy technologies

will account for around 53%, followed by technologies for environmentally friendly use of fossil fuels

(25%), efficient distribution technology and storage technologies. Hereby, the segment for energy

storage technologies will increase by nearly 16% from 2017 to 2025 (BMU 2018).

The renewable energy mix is still dominated by hydropower as the single largest segment (31%), but

solar (19%) and wind (22%) are expected to account for nearly 50% by 2025.

The overall increase of electricity generation from renewables is mirrored by related growth in the job

market. In 2017, the number of jobs in the renewable energy sector surpasses 10 million for the first

time (IRENA 2018).

With the increase in renewable energy sources, the question of effective energy storage to make energy

available when and where actually required, is increasingly coming to the forefront. For example, issues

such storage efficiency and capacity are key topics in furthering e-mobility.

Case study - Power to X

A flexible utilisation of energy from volatile renewable sources may rely on converting power into

another form such as power to gas (hydrogen, methane), power to liquid (e.g. synthetic fuel) as well

as power to chemicals. For example, the SOLETAIR initiative (by INERATEC, an off-shoot of the

Karlsruher Institut für Technologie, Germany and the Lappeenranta University of Technology, Finland)

explores the conversion of carbon dioxide into a synthetic fuel with the help of solar energy. In a first

step, the pilot unit, which fits into a regular shipping container, splits hydrogen and oxygen using

electrolysis. During the second steps, carbon dioxide is converted into carbon monoxide, followed by

a Fischer–Tropsch synthesis to liquid hydrocarbons. While Power-to-X technologies seem to be

promising in the valorisation of a new, not primary fossile carbon source (CO2), the environmental

impacts of these Power-to-X pathways need to be assessed critically. Current investigations are often

focussed on the carbon footprint of CO2 conversion processes, thereby underestimating the high

resource demand (e.g. rare earth elements, metals, difficult to recycle composite materials) of the

entailed process chains starting from renewable electricity, CO2 and water supply, electrolysis and

subsequent conversion processes.

According to the German Association of Chemical Industry (VCI) chemicals will play a central role in

incorporating resource efficiency and climate friendliness of energy generation, storage, distribution and

use. In its assessment of the future of energy storage (VCI 2014), VCI concludes that to balance the

increasing fluctuations in the supply of renewable energy (such as wind, solar), energy storage apart

from distribution networks is indispensable. Chemical energy storage is comparatively better suited to

facilitate excess electricity over long periods of time as large quantities (e.g. electrolytically generated

hydrogen or synthetic methane). Whether for commercial or private use, energy storage systems meet

life-style and mobility demands.

Such systems will play a crucial role in distributed generation, under which power generation takes place

on-site at the point of consumption without relying on long distribution networks. The solar PV segment

is expected to hold the largest and fastest growing segment in the market (Coherent Market Insights

2016). Due to the decreasing cost of the solar photovoltaic cells, often combined with subsidy schemes,

an increase in the number of installations of the solar photovoltaic (SPV) has been observed globally.

The US Solar Energy Industries Association (SEIA) reported the U.S. installed SPV capacity to grow


30 May 2018

from 2,031 megawatts (MW) in 2017 to 49.3 gigawatts (GW) of total installed capacity by 2025. Apart

from home use and isolated solutions, the distribution of large scale solar PV hybrid plants in several

developing countries such as Kenya, Bangladesh, and Indonesia are expected to fuel the growth of

distributed generation market in this segment. By terms of geographical regions, apart from Africa, Asia

Pacific is estimated to be the major revenue contributor due to the lack of a reliable grid infrastructure

especially the Southeast Asian countries, where the population is spread across several islands, will

drive the demand for off-grid power systems in the near future (Coherent Market Insights 2016; 2017).

With many first-generation solar panels nearing their end of life, the challenge of adequate disposal

comes to the forefront. For example, in November 2016, Japan’s Environment Ministry warned that the

amount of solar panel waste Japan produces every year would rise from 10,000 to 800,000 tons by

2040, and the nation had no plan for safely disposing of it. In Europe, photovoltaic waste management

falls under the European Waste Electrical and Electronic Equipment Directive (WEEE). Incorporating

Extended Producer Responsibility (EPR) concept, the WEEE requires the original producers of these

goods to ensure their take-back and recycling within the countries of the EU. End consumers must not

face any additional cost at the moment of the disposal. The revised version of 2012 introduced a

provision on the disposal of photovoltaic (PV) modules for the first time. A similar spectre is being raised

about the future management of energy storage provisions.

Case study – Innovative environment friendly energy storage systems

With renewable energy supply on the rise, the integration with flexible and scalable energy-storage

solutions is necessary to mitigate output fluctuations. In view of the growing demand availability of

crucial materials for high-density and high-performance systems is becoming limited. Setting out to

develop an affordable, safe, and scalable battery system, the Center for Energy and Environmental

Chemistry (CEEC) Jena, Germany, has developed a redox battery using organic polymers as the

charge-storage material in combination with inexpensive dialysis membranes, which separate the

anode and the cathode by the retention of the non-metallic, active (macro-molecular) species, and an

aqueous sodium chloride solution as the electrolyte. According to the CEEC research team, this water-

and polymer-based redox flow battery has an energy density of 10 watt hours per litre, current

densities of up to 100 milliamperes per square centimetre, and stable long-term cycling capability. The

polymer-based redox flow battery uses an environmentally benign sodium chloride solution and

cheap, commercially available filter membranes instead of highly corrosive acid electrolytes and

expensive membrane materials. Given its simple processing methods the versatility of polymers in

batteries opens the potential for a wide range of application, such as „printed foil batteries. Such

printed batteries could be applied to smart packaging or apparels (Janoschka et al. 2015).

2.5. Transportation / automotive


Urbanization and population growth increase the need for intra-urban transport as well as movement of

goods from supply to consumption areas. Furthermore, a growing consumer middle class that also

implies changing consumption patterns particularly in emerging economies, will lead to continuous

(though slightly lower, from 3,6% from 2001-2016 to about 2% by 2030) growth in global car sales

(McKinsey 2016). As such, the World Bank (2017) estimates that by 2050, there will be twice as many

vehicles on the roads compared to today’s 1 bn.

At the same time, personal mobility patterns, particularly in the urban areas are changing, which will

lead to a lower growth rate in personally owned vehicle as well as acceptance of alternative modes of

transports (public, bicycles), particularly in Europe and North America (Pucher; Buehler 2017). As one

reason for increased shared mobility, McKinsey (2016) names a greater diversification of vehicles that


31 May 2018

is targeted at different specific uses, and estimates that by 2050every third new car could be used for

shared mobility.

Along these lines, but at first sight quite ironically, personal car inventories are expected to decrease by

2030 in Europe and the US (by 29% and 22% respectively), while sales of new cars are expected to

increase (by 34% and 20%, respectively). In China, both the inventory of personal cars and the sales of

new cars are expected to increase by 53% and 30% respectively (PwC 2018). Unsurprisingly in this

respect, PwC (2018) estimates that such developments will take place at different paces in different

regions. As such they estimate that by 2030, the amount travelled by individuals will increase by about

23% in Europe and 24% in the US, but by 183% in China.

PwC identify four megatrends for the transport sector, namely, increased connectivity of vehicles, that

will allow for traffic to be organized more easily in the future, autonomous driving, that will come along

with further technical advances, shared mobility, and a substantial increase in electric cars (it is

estimated that about 55% of newly sold cars in 2030 will be electric cars).


Rodrigue (2017) states that transport negatively impacts the environment by contributing to climate

change, impairing the quality of air, water, and soil, as a cause of noise, biodiversity loss, and land-loss.

Similarly, as early as 2000, WHO (2000) indicated that transport noise, transport accidents and injuries,

as well as air pollution were the main impairments of transport to human health. Not only due to the

combustion engines in the automotive sector, transport heavily contributes to greenhouse gas

emissions, and thus, to climate change. Maritime transport, moving 80% of the globally traded goods

from A to B, is a heavily polluting business (Vandyke; Englert 2017). While the shipping industry

accounts for a share of 2-3% of global greenhouse gas emissions, the sector continues to grow, which

has led the International Maritime Organization to project growth scenarios of increased emissions by

50% - 250% (IMO 2015). At the same time, the use of highly polluting residual fuel oil, high in sulfur,

poses a particular threat to human health and the environment.

Case Study – Lithium-Ion Batteries in China:

With market shares of electric vehicles projected to boom, so will the demand for battery cells. Chinese

battery manufacturers have been observed to be expanding tremendously. In 2017, Forbes reported

that there were more than 140 battery manufacturing companies in China, that had increased their

manufacturing capacities to reach 125 GWh, thereby doubling their capacities within a mere three

years. This capacity is expected to double by 2020, thereby taking up 70% of battery cell market share

(Perkowski 2017). This is partially attributed to a massive increase of production of Chinese electric

vehicles, connected with the preference of Chinese producers of vehicles to use domestically

produced lithium-ion batteries.

As the end of life of the electric vehicles that China started to push for in 2009 is approaching, lithium-

ion batteries, containing heavy metals and other toxins which are potentially harmful to human health

and the environment are expected to pile up. Recycling the batteries is meant to be the burden of the

manufacturer, though plenty of informal enterprises have taken it upon themselves to perform recycling

processes in their backyard. Nevertheless, recycling of lithium-ion batteries is supposedly not very

profitable unless undertaken in large quantities (Stanway 2017).

While the Chinese government aims at transforming battery recycling industry into a high-tech and

highly regulated branch, a growing number of (largely informal) refurbishes is bridging the time it takes

by repurposing old – but still working batteries either into either new applications or for power storage.

Picking up on this trend, the BMW AG plans to test an energy-storage farm to capture energy

generated from renewable sources based on up to 700 used battery packs (Minter, 2018).


32 May 2018

For road traffic, air pollution through particulate matter and sulfur emitted by diesel motors is one of the

largest concerns from a human health and environment perspective. In this regard, a shift in all countries

towards low-sulfur fuels and the establishment and implementation of emission control regulations

and/or action plans will be necessary to reduce the negative effects of the diesel fleet (UN Environment

2017). To reduce air pollution from the transport sector, WHO (2018) suggests shifting to clean modes

of power generation, to improve public (rail) transportation within and between urban areas, provide

incentives for walking and cycling in cities, as well as a shift towards cleaner heavy-duty diesel vehicles

with lower emissions. Furthermore, fuels with lower sulfur content could contribute to fewer emissions

from fuels (ibid.).

In how far the trends of increased interconnectivity and autonomous driving will affect the health issue

of transport accidents and injuries remains to be seen. Recent tests of autonomous vehicles have shown

that accidents tend to increase with the mileage driven, not unlike conventional cars (Favarò et al. 2017).

Meanwhile, a shift towards electric vehicles, though probably leading to reductions in noise and

improvements of air quality, may have other adverse effects if current problems of battery recycling are

not solved.


Disruptive changes in the automotive / transportation sector will also have changing effects on the

market that manufactures the chemicals and materials built in or used for vehicles. Deloitte (2018)

expects a shift away from the production of lubricants, automotive fluids, or fuel additives, particularly

due to the move away from the combustion engine. Not only will the single-gear electric motor consist

of far fewer moving parts, which will require less diverse materials, and fewer lubricants and other liquids,

but instead it will lead towards an increased demand for battery materials (e.g. lithium and copper). To

maximise energy-usage, light-weight materials such as high-performance polymers and commodity

polymers are expected to be built in future vehicles (ibid.). Often as compound materials which are

Case study – The waste legacy of lead-acid batteries:

One contemporary issue with combustion motor vehicles is their use of lead-acid batteries. While

about 85% of all lead goes into lead-acid battery production, application in conventional vehicles is

their primary use (International Lead Association 2012). Recycling those lead-acid batteries (ULAB) is

a highly polluting procedure. Globally 1.9 million people are at risk from severe health damages from

lead exposure due to unsound lead-acid battery recycling (Pure Earth; Green Cross 2016, Daniell et

al. 2015). The often informal operations in many low- and middle-income countries pose severe health

risks especially to children (The Ecologist 2016; Haefliger et al. 2009)-, thus implying a high burden of

disease predominantly in Southeast Asian countries, but also in China (Kuijp et al. 2013), Africa, and

Latin America.

The growing market for automobiles in low- and middle-income countries is expected to also lead to

increasing numbers of lead-acid batteries. It is estimated that more than 1.2 million batteries are put

on the market in Africa each year (Tür et al. 2016). While contemporary electric vehicles use a different

technology, lithium-ion batteries will pose a quickly growing environmental and health challenge in

coming decades, with their own specific recyclability challenges (Lv et al. 2018), in particular the very

diverse mix of compounds that is not easily separated (Gaines 2014). Therefore, innovation must be

fostered not only to develop cheaper batteries with higher capacities, but also to design them to be

more sustainable throughout their life-cycle, with a special focus on their end of life and recyclability

(Larcher;Tarascon 2015)


33 May 2018

difficult or impossible to re-use or recycle, hence posing a contradicting challenge in terms of

sustainability.

Since autonomous driving vehicles are expected to decrease the number of accidents (though, as

mentioned above, these vehicles at their current state do not necessarily confirm this expectation), the

demand for refinishing equipment and eventually even some safety-related equipment may decrease in

future (Deloitte 2018). At the same time, autonomous vehicles may require different coating technologies

and materials, to increase visibility of the vehicles' sensors. The switch away from gasoline towards

electricity will require substantial changes in the supporting infrastructure (gas stations, pipelines), as

well as in the petrochemical industry (ibid).

However, automotive is not the only transportation sub-sector that will undergo a development in terms

of chemical usage. According to several chemical producing enterprises (BASF, Arkema, among

others), light-weight materials and battery solutions also find greater application in the aviation and mass

transportation sectors.

Case study – Metal-Air Batteries:

In order to speed up and facilitate the transition from fossil-fuel based combustion motor vehicles

towards electric vehicles (preferably using energy from renewable sources), manufacturers are in need

of improved energy-storage technologies. Batteries with a high energy density and electronic efficiency

are and will be crucial in this regard. Currently, lithium-ion batteries dominate the market due to “their

high gravimetric and volumetric capacity as well as good energy efficiency” (Liu et al. 2017:246). While

research on improving lithium-ion batteries continues, to make them applicable also in electric vehicles

of high power and energy density, other scientists have taken it upon themselves to investigate

alternatives. One such alternative branch are metal-air batteries which (depending on their sub-type)

do not only consist of materials that are abundantly found on earth, but that also have properties of

high energy density and capacity, the fact that their capacity does depend less on operating load or

temperature, as well as their constant discharge voltage. Depending on their predominant material

(lithium, sodium, potassium, zinc, magnesium, aluminum, iron), they show theoretical energy densities

of up to 10 times that of lithium-ion batteries. Studies on iron-air batteries have shown a performance

of volumetric energy density of nearly five times that of current lithium-ion batteries (9,700 Wh/l

compared to 2000 Wh/l) (Forschungszentrum Juelich 2017).

Despite their promising properties, development of metal-air batteries is still in its infancy, faced with

different issues that, among others, pose safety concerns or negatively affect the reversible charging

and cycle life (Liu et al.). For iron-air batteries, Forschungszentrum Juelich (2017) expect a long way

until they reach market maturity: “Although isolated electrodes made of iron can be operated without

major power losses for several thousand cycles in laboratory experiments, complete iron-air batteries,

which use an air electrode as the opposite pole, have only lasted 20 to 30 cycles so far”.


34 May 2018

2.6. Electronics


The electronic sector is a dynamically growing market. According to the German Electrical and

Electronic Manufacturers’ Association (ZVEI 2017), global production of electrical and electronic (E&E)

products was 4,008 billion € in 2015, up 14.5% from 2014, and the industry employed about 27 million

people. ZVEI estimates that by the end of 2018, the market will have grown to 4.5 trillion €. The top

producing regions and their respective market share were:

1. Asia: 2,924 billion € (share: 73%)

2. America: 495 billion € (12%)

3. Europe: 558 billion € (14%)

Closing in on individual countries, the top seven producers, their output and market share are:

1. China: 2,034 billion € (share: 51%)

2. USA: 395 billion € (10%)

3. Japan: 273 billion € (7%)

4. Korea: 245 billion € (6%)

5. Germany: 137 billion € (3%)

6. Taiwan: 98 billion € (2%)

7. Malaysia: 55 billion € (1%)

More than half of the global E&E production takes place in China, though India's manufacturing base is

gearing up and could reach 104 billion US$ by 2020, currently growing at a CAGR of 27%. If consistent,

such a strong CAGR means the sector could double within 3 to 4 years. Looking into the subsectors,

ZVEI (2017) gives the following figures for the individual market segments that together make up the

electrical and electronic products sector (see Table 7).


35 May 2018

Table 7: Size of sectors on electrical and electronic products, market share, and projections. Source: ZVEI

(2017); own calculations.

Sector 2015, in billion € Share in % Projected size in

2018, in billion €

Automation 493.4 12.3 549.7

- Electric drives 125.4 3.1 141.3

- Switchgears, Indus. Control Equipment 173.9 4.3 193.7

- Measurement & Process Automation 194.2 4.8 216.3

Power Engineering 240.1 6.0 262.3

Medical Engineering 95.4 2.4 113.6

Communications Technology 431.0 10.8 466.3

Information Technology 415.0 10.4 449.0

Household Appliances 236.3 5.9 273.5

Lighting 112.0 2.8 126.0

Consumer Electronics 224.4 5.6 245.2

Electronic Components & Systems 977.4 24.4 1,082.8

In almost all electrical and electronic products, chemicals and chemistry knowledge are essential. bcc

research (2016) estimated that the global electronic chemicals and materials market had a value of 22.0

billion US$ in 2014 and was expected to grow to 30.5 billion US$ by 2020.


36 May 2018


Manufacturing electronics requires the use of many different chemicals, many of which are problematic

from a health and environment perspective. In a study commissioned by the Nordic Council of Ministers,

Nimpuno and Scruggs (2011) named the following chemical elements and chemicals as the main

hazardous substances in E&E products:

• Lead

• Mercury

• Cadmium

• Zinc

• Yttrium

• Chromium

• Beryllium

• Nickel

• Brominated flame retardants

• Antimony trioxide

• Halogenated flame retardants

• Tin

• Polyvinyl chloride (PVC)

• Phthalates

The use of hazardous substances is a problem for consumers, yet the highest risk is carried by workers

both during the assembly stage and even more during the waste stage of electronic products (Lundgren

2012). Even if the product itself poses little risk to consumers, workers in manufacturing may be exposed

to hazardous levels of dangerous chemicals. At the end of the life-cycle, the risks resurface again. The

health hazards connected with toxic chemicals especially during informal recycling operations are an

increasingly important issue, as the amount of discarded electronic products continues to grow (Perkins

et al 2014).

Globally, 44.7 million metric tonnes of e-waste were generated in 2016, and this amount is expected to

increase to 52.2 tonnes by 2021 (Baldé et al. 2017). The “Global E-Waste Monitor” differentiates

between six categories of e-waste:

• Temperature exchange equipment /refrigerators, air conditioners etc.)

• Screens

• Lamps

• Large equipment (dishwashers, washing machines etc.)

• Small equipment (toasters, vacuum cleaners etc.)

• Small IT (mobile phones, personal computers etc.)

Of the current e-waste flow, 80%, or 35.8 Mt, is not documented and occurs through informal or illegal

channels. Baldé et al. (2017: 5) note that this is "likely dumped, traded, or recycled under inferior

conditions." A key challenge for reducing risks associated with the end-of-life of electrical and electronic

products is an improved information flow throughout the value chain, for which Scruggs et al. (2016)

propose a global standard. Another key challenge is to equip workers in the informal e-waste recycling

sector with the tools and knowledge necessary to avoid the related health risks (Ohajinwa et al. 2017).

While informal e-waste operations are certainly among the most hazardous occupations (Pure Earth

and Green Cross 2016), exposure to toxic substances is common even in formalized e-waste recycling

in developed countries, which requires according measures to protect workers (Julander et al. 2014).


37 May 2018


To become more sustainable, the electronics sector needs to incorporate circular thinking from the

design stage through the entire life-cycle to the waste stage. If done properly, and if connected with

innovative products which have inherent sustainability advantages (see the case study on LEDs below),

there is an enormous potential for the sector to contribute to achieving the 2030 Agenda.

Innovation case study: LEDs

Having access to artificial light is an essential enabling factor for economic development. Conventional

incandescent light bulbs are easy and cheap to produce, but very energy intensive and have a short

life span. While compact fluorescent lights (CFL) are more energy efficient and last longer, they contain

mercury, which poses a health hazard and makes recycling difficult.

Light emitting diodes (LED) offer energy-efficient lighting with a long life-span and without hazardous

substances. Due to technological advances, LEDs can produce light with a high colour rendering index

(CRI). Apart from LED-based household and public illumination replacing incandescent light bulbs and

CFLs, technological advances of LEDs have enabled thinner screens in the form of organic LEDs,

while more recent innovations include LEDs emitting ultraviolet light.

In the US, it is expected that the electricity use from lighting will fall from about 1,100 kWh to about

500 kWh per household due to the use of more energy efficient lighting by 2050, and high efficiency

gains are likewise expected in the commercial sector (EIA 2018). Globally, lighting accounts for about

20% of global electricity usage. The International Energy Agency estimates that by 2022, energy-

efficient lighting (CFLs and LEDs) will account for 90% of indoor lighting (IEA 2017: 12). The IEA also

calculated for Indonesia that, if current LED adoption rates continue, consumers will save up to 560

million US$ in avoided electricity costs per year. This is possible because the price of LEDs has gone

down significantly, from more than 50 US$ in 2011 to less than 10 US$ in 2016 in the US, and

considerably less in India. Energy savings in these two countries alone amounted to more than 140

TWh (IEA 2016: 101).

Though the energy savings are substantial, and related emission reductions including of mercury from

coal-fired power plants are an additional benefit, LEDs are not without risks when it comes to recycling.

While it may be less dangerous than dealing with used CFLs, there are still a number of hazardous

substances built in LEDs which makes their disassembly and recycling challenging from a health and

environment perspective (Lim et al. 2011). Moreover, the small size and multiple applications of LEDs

are a challenge for recollection. Much improved recollection systems are therefore an indispensable

prerequisite for recycling of their constituents.

Fostering sustainability innovation in the electronics sector would also enable to monetarize a hitherto

largely wasted economic opportunity, as the value of raw materials in all e-waste is estimated to be

around 55 billion US$ (see Table 8).


38 May 2018

Table 8: Mass and value of raw materials in e-waste. Source: Baldé et al. 2017: 54.

Material Kilotons (kt) Million €

Fe 16,283 3,582

Cu 2,164 9,524

Al 2,472 3,585

Ag 1.6 884

Au 0.5 18,840

Pd 0.2 3,369

Plastics 12,230 15,043

2.7. Textiles


The world of textiles is well-established, generally sophisticated with a large variety of fibres and

constructions routinely sold and expanding globally in recent years. A view from a high-level perspective

finds both commodity and specialty materials — produced as woven, knitted and nonwoven fabrics in

forms from natural, synthetic, inorganic, including bio-polymer materials — emerging in the last few

decades, serving the needs of the apparel sector as well as various technical sectors (e.g. technical

textiles for constructions, building and living, automotive, medical sectors). With the global population

rising to around 8.5 billion people by 2030 (and even further until 2040) and GDP per capita expected

to grow at 2% per year in the developed world and 4% in the developing world, the overall apparel

consumption is poised to increase by 63%, from 62 million tons (2016/2017) to 102 million tons in 2030

- an equivalent of more than 500 billion T-shirts.

Already, in the last 15 years, worldwide clothing production has approximately doubled (Ellen McArthur

Foundation 2017a) driven by a growing middle-class population across the globe and increased per

capita sales in mature economies. The latter rise is attributed to the ‘fast fashion’ phenomenon, marked

by quicker turnarounds of new styles, increased number of collections offered per year, often lower

prices and a declining cloth utilisation rate. This soaring current and future demand for apparel—much

of it from developing nations—will see the annual retail value of apparel and footwear reach at least

US$ 2.3 trillion by 2030 (an over 30% increase of US$ 590 billion between now and then) (ref. Global

Fashion Agenda and Boston Consulting Group 2017).


39 May 2018

Figure 10: Growth of clothing sales and comparison with declining clothing utilisation.

Source: Ellen MacArthur Foundation 2017: A New Textiles Economy: Redesigning Fashion's Future.

Reprinted with friendly permission of the Ellen MacArthur Foundation.

In line with this development, the chemical intensive textile sector is expected to grow as well.

Accordingly, the growth of global apparel industry drives the development of the textile chemicals

demand over the forecast period. Comparative forecasts from various market research institutions as

well as the chemical industry itself place the prognosticated value of the global market for textile

chemicals market at US$ billion 31.8 by the end of 2026 (from US$ 21.02 billion in 2015), implying a

growth at a rate of 3.7% CAGR over the forecast period, 2016 – 2026 (Transparency Market Research,

Inkwood Research, Grandview Research 2018).

The typical range of products comprises of wetting agents, emulsifiers, dispersants, detergents,

chelating agents, and biocide active ingredients. Increasing demand for technical textile across

numerous end-use applications is also expected to be beneficial for the overall market growth of textile

chemicals. Surfactants are the largest chemical category consumed in textile processing and are used

in many different functional textile formulations and operations as scouring agents, dyebath additives,

and softeners. In 2015, surfactants accounted for close to 30% of the total global value of chemicals,

followed by warp sizes and coatings (IHS Markit 2016) with a total worth of US$ 6.35 billion in 2015.

The Asia Pacific textile chemicals industry is expected to witness the fastest growth and is expected to

grow at a CAGR of 4.2% from 2016 to 2025. Expansion of key textile manufacturing players in the

region, coupled with increasing domestic consumption of novel textile products is expected to support

the region to maintain its dominance over the forecast period. The technical textile application segment

is estimated to witness the fastest growth over the next ten years. For example, the U.S. product market

in this segment is anticipated to grow at a CAGR of 3.8% from 2016 to 2025 to reach a net worth of US$

930.1 million by 2025.

China is likely to remain the world’s largest manufacturer of textiles and apparel. Growing disposable

income among the growing Chinese middle class resulted in increasing consumption, including of

fashion and apparel. In line with these, the Chinese textiles and apparel will focus on meeting the

domestic demand, which is marked by high turn-overs and quickly changing fashion trends. Over the

longer term, macro-employment trends (such as China`s labour pool shrinking by one-fifth over the next

50 years) are expected to weaken China’s manufacturing base (McKinsey Global Institute). Many


40 May 2018

Chinese garment makers have already started opening or sourcing from manufacturing facilities in

Bangladesh, Cambodia, Vietnam, Myanmar, Pakistan as well as in other up-and-coming sourcing

countries, in an effort to tap into lower-cost labour pools and utilise trade agreements to better feed both

the global garment buyers and the domestic market at an appealing price point. Apart from these already

established manufacturing hubs in Asia, Ethiopia is poised to become a fast-growing manufacturing hub

in Africa (McKinsey 2015). With the given demographic changes and economic developments on the

African continent as drivers, the textile and garment industry in Africa may be able to take advantage of

its vicinity to the markets in Europe as well as to a fast growing and large African market. The population

in Africa is expected to reach 2 billion people by 2050, of which 56% will be residing in urban areas

(African Development Bank 2016). In the long run, several other African countries, particularly those

with strong potential for supply chain backward integration (e.g. production of natural fibres meeting the

demand for organic cotton), are expected to expand their garment and textile industry as part of their

national industrialization strategies, hereby considering the sector’s employment opportunities for their

youth population (African Development Bank 2017).

Growing urbanization with a corresponding growth of residential construction and a growing middle class

with disposable income and higher expectations regarding quality life style, particularly in the Asia-

Pacific region and in emerging economies such as China, India, Russia, and Brazil, are expected to

drive the apparel and home textile market (e.g. window shades, towels, toilet and kitchen linen,

coverings, mats, rugs, and textile floors), which holds a dominant market share in the worldwide textile

chemicals market 38.62% in 2015). The rising consumer demand for innovative and styled clothing

products is expected to be a key factor steering the market growth in the coming years.

Under a business-as-usual scenario, these sector developments will have significant environmental

implications at the existing as well as emerging manufacturing locations. the World Bank estimates that

20% of industrial wastewater pollution worldwide originates from the textile industry. (Kant 2012: 23). In

addition to waste water, textile production contributes to chemical containing solid wastes, sludge as

well as air emissions (IFC 2007). However, growing environment and health concerns regarding the

adverse effects of chemicals, , have emerged as a major factor in the overall market development - not

only in markets such as the USA and Europe. Apart from the consumers’ concern for potentially harmful

chemicals in final products and their possible negative impacts during use, the scope has expanded to

the whole value chain over the last 15 years. Sensibilitation campaigns, such as the Anti Fast Fashion

Movement or the Detox Compaign launched by Greenpeace in 2011, with the aim of reaching a toxic-

free production by 2020 by eliminating 11 priority chemical groups (ECHA 2017), created additional

public pressure on the different players in the value chain, including the suppliers of textile chemicals.


Of the total fibre input used for clothing, 87% is landfilled or incinerated. During the period 2010 to 2015,

the volume of sales has doubled from around 50 bn units to more than 100 bn units. At the same time,

the clothing utilisation rate (average rate of a unit being used before it ceases to be used) has steadily

dropped. This ‘take-make-dispose’ system (“fast fashion”) is not only extremely wasteful on resources,

but also very polluting (Ellen MacArthur Foundation 2017a). Less than 1% of material used to produce

clothing is recycled into new clothing, representing a loss of more than US$ 100 bn worth of materials

each year. Current practices contribute to around annually 0.5 million tonnes of microfibre leakages into

the oceans. Under a business-as-usual scenario, the growth in material volume of textiles would see an

increasing amount of non-renewable inputs, up to 300 million tonnes per year by 2050. On current trend,

the amount of plastic microfibres entering the ocean between 2015 and 2050 could accumulate to an

excess of 22 million tonnes – about two thirds of the plastic-based fibres currently used to produce

garments annually (Ellen MacArthur Foundation 2017a). The new textiles economy would strive for a

combination of (1) phasing out of substances of concern and microfibre releases, (2) increasing clothing

utilisation, (3) radically improving re-/upcycling and (4) making effective use of resources and (5) moving

to renewable inputs (e.g. renewably sourced feedstocks for fibres).

Though the overall economic benefits of phasing out substances of concern might be difficult to assess

due to low transparency on chemical use or data on worker-related health impacts, it is estimated that

eliminating today’s negative health impacts emanating from poor chemicals management in the textile

industry would have an economic benefit of 7 billion € (8 billion US$) annually in 2030. (Global Fashion

Agenda; Boston Consulting Group 2017) The potentially negative impacts extend beyond the production


41 May 2018

of fibres and textile (e.g. use of pesticides during cotton growing) and the use of clothing (e.g. release

of substance during washing). 73% of clothing ends up in landfill or is incinerated at their end of life. The

Swedish Chemicals Agency (KEMI) estimates that substances of concern contained in textiles, such

as any remaining dyes or chemicals introduced during production or use, can leak from the textiles as

they degrade, accounting for the release of over 2,000 tonnes of hazardous colourants in the EU each

year. If waste is incinerated without controlling emissions, the combustion gases also have the potential

to release substances of concern. (KEMI 2014)

The environmental impacts of this product are significant, since the fibre and textile production is both

water and chemical intensive. For example, to produce a single t-shirt it takes around 2700 litres of

water. At the same time, the process generates large volumes of waste water, containing residuals of

chemicals not absorbed by the material manufactured.


Stringent environmental regulation, growing restrictions on specific chemicals/chemical groups in whole

value chains by international buyers, campaigners (e.g. the DETOX campaign by Greenpeace) or

industry driven initiatives such as Zero Discharge of Hazardous Chemicals (ZDHC), blue signs as well

as the wider consideration of circular economy concepts drive the changes and innovations in the textile

and apparel sector. Leading brands as well as young start-ups are increasingly offering "green", “bio”

and “sustainable" collections, which emphasize aspects such as avoidance of toxic chemicals, use of

recycled or upcycled fibres, low water and carbon footprints as well as end-of-life recyclability (Ellen

MacArthur Foundation 2017a). There has been an increase in popularity of sustainable textile fibres,

which includes organic cotton, flax, hemp, jute, sisal, abaca, and bamboo. Renewable and

biodegradable synthetic fibres manufactured from natural resources such as polylactic acid and lyocell

are being preferred over petroleum-based non-biodegradable synthetic fibres such as polyester

(Technavio Research 2017)

These developments have already fostered new forms and closer cooperation between manufacturers,

researchers and chemical suppliers over the last years to address the environmental as well as

safety/health impacts through innovations in process technologies and textile chemicals. Low-water

consuming (low float technologies) and even water-free production technologies (e.g. water free carbon

dioxide-based dyeing, DyeCoo, Netherlands) are increasingly being adopted by manufacturers in the

textile segment as Best Available Technologies (BAT). Textile chemical suppliers are responding by

aligning their textile chemical portfolios with the emerging positive and negative lists of chemicals,

developing less-and low hazard alternatives, with reduced water usage and effluent discharge (e.g. salt-

free dying solution which reduce the discharge of Total Dissolved Solids TDS or Salt-free reactive dyeing

of cotton hosiery fabrics by exhaust application of cationic agent, Journal of Cleaner Production 2016:

1-11) as well as guiding their customers in the effective use of these chemicals and sound chemicals

management. Emerging manufacturing hubs ( in particular in Africa) start to adapt and integrate such

best available and appropriate technologies, to address potential conflicts about resources (e.g. use of

arable land for growing food crops or natural fibres, use of ground and surface water for industrial

production or agricultural and domestic use), thereby avoiding the mistakes in established

manufacturing hubs.

In response to market trends, the textile industry itself is moving ahead with the development of new

textile materials and fabrics, incorporating smart functions into the fabrics, using nano- and

biotechnology know-how, sensory functions, wearable electronics and Internet of Things. In addition to

enhanced functionalities, R&D and innovations in products aim at increasing comfort, wellness,

freshness, and care.

Industry 4.0 with new technologies and methods are beginning to change and disrupt the traditional way

of textile/apparel production as well. Combining new developments in automatization (e.g. robotic and

additive manufacturing) with material sourcing and material science, digitalisation in value chains will

have widespread implications on the textile and apparel industry in those countries which presently rely

on plentiful availability of human resources and low costs (ILO 2016). Such automated production units

have already started operations (Example: The Adidas Speedfactory). Automation will enable greater

decentralization and flexibility in global manufacturing. It signals potential job losses for textile hubs like

Bangladesh due to “insourcing” to advanced economic countries as well as easier relocation to new

emerging markets (Centre for Policy Dialogue 2016; 2018). At the same time, how consumers view


42 May 2018

fashion has begun to change. The idea of slow fashion is making inroads, which not only advocates

buying less and focusing on quality over quantity but also putting increasing emphasis on the

sustainability aspects of product and production.

Taking into consideration the sector`s developments, concerns as well as opportunities, following key

innovation areas for sustainable chemistry in the textile sector emerge: (1) Development of new

materials (such as synthetic and cellulosic fibres), (2) development of new safer textile chemicals (such

as safer finishing chemicals and bio-based dyes), (3) contribution to reducing water consumption for

example into the direction of waterless processing (e.g. waterless dyeing and finishing processes) as

well as water reuse, (4) advancing scope for fibre recycling (e.g. cotton, polyester, blends and nylon),

(5) establishment of supportive systems (e.g. chemicals management information systems, traceability

systems). (Fashion For Good; Safer Made 2018) and (6) water treatment and recycling towards closed

loops (e.g. advanced water treatment and recovery, recovery of chemicals).

Summary of key disruptors

• Product customization technology, such as additive manufacturing, body scanners and

computer-aided design (CAD),

• Computerised manufacturing processes, namely automated cutting machines and sewbots

• Wearable technology, nanotechnology, and

• More sustainable, environmentally friendly manufacturing techniques

• Recyclability of materials and products

2.8. Pharmaceuticals


Universal health coverage is one of the targets the nations of the world have adopted in the Sustainable

Development Goals (SDGs). And it’s also a top priority of the WHO as part of the organization’s „Health

For All“ strategy. Ultimately, countries that make progress toward universal health coverage don’t just

achieve better health outcomes for their people. They also will progress toward the other health-related

targets and SDGs. Better health allows children to learn and adults to earn; it helps people escape from

poverty; and it lays the foundation for long-term economic development. Health is a fundamental and

universal human right. No one should get sick or die just because they are poor or because they cannot

access the medicines or technologies they need. And access to pharmaceuticals and other health

technologies—vaccines, diagnostics, medicines, medical devices and assistive technologies—is a key

pillar of universal health coverage (WHO 2017).

In 2016 North America accounted for 49.0% of world pharmaceutical sales compared with 21.5% for

Europe. According to IMS Health data (QuintilesIMS 2016), 64.7% of sales of new medicines launched

during the period 2011-2016 were on the US market, compared with 17.5% on the European market

(top 5 markets). There is rapid growth in the market and research environment in emerging economies

such as Brazil, China and India, leading to a gradual migration of economic and research activities from

Europe to these fast-growing markets. In 2016 the Brazilian and Chinese markets grew by 10.0% and

6.9% respectively compared to an average market growth of 4.5% for the total European Union market

and 6.3% for the US market.

The total volume of medicines consumed globally will increase by about 3% annually through 2021

(QuintilesIMS 2016), only modestly faster than population and demographic shifts, but driven by very

different factors around the world. Spending on medicines will grow by 4–7%, primarily driven by newer


43 May 2018

medicines in developed markets and increased volume in emerging markets. Developed markets will

offset increased costs from new medicines with the use of generics, and a greater focus on pricing and

access measures, while emerging markets will struggle to live up to promised access expansions made

when their economic outlooks were stronger.

Global medicine spending will reach nearly $1.5 trillion by 2021, up nearly $370 billion from the 2016

spending level. Most global spending growth, particularly in developed markets, will be driven by

oncology, autoimmune and diabetes treatments where significant innovations are expected. The U.S.

will continue as the world’s largest pharmaceutical market and emerging markets will make up 9 of the

top 20 markets. China will continue as the second largest market, a rank it has held since 2012.

Developed market spending growth will be driven by original brands, while emerging markets will

continue to be grow through non-original products that make up an average 91% of emerging market

volume and 78% of spending. Global spending of new medicines will continue to rise from less than

20% in ten years to 35% by 2021 , approaching half of total spending in U.S. and European markets.

This rise primarily will be driven by the adoption of new breakthrough medicines, but also will be a key

focus of payers and constrained by cost and access controls as well as a greater focus on assessments

of value. Off-invoice discounts and rebates, particularly in the U.S. market, will reduce growth by about

1%, resulting in a total global market of $1 trillion in 2021.

The number of new medicines reaching patients will be historically large with 2,240 drugs in the late-

stage pipeline and an expected 45 new active substances (NAS) forecast to be launched on average

per year through 2021. The new medicines will address significant unmet needs in cancer, autoimmune

diseases, diseases of the metabolism, nervous system and others. In addition to the continued research

of mechanisms in use in existing drugs, there will be an ongoing flow of new mechanisms to target cell

processes and diseases across the spectrum. Developments that go beyond specific “drugs” are

emerging in research that will challenge traditional regulatory approval and commercialization

approaches. These include completely new platforms that will see their first human uses in areas such

as gene-editing technology CRISPR, which could transform personalized cancer treatments while

creating a plethora of ethical dilemmas. Advances are expected to treat a range of diseases by

harnessing the microbiome (a person’s own gut bacteria), as well as regenerative cell technologies that

include stem cells harvested from one part of the body to use against a disease in another.

Cancer is by far the largest general category of research, including immunology, cell-therapy and dozens

of molecularly targeted agents. Treatment choices will be made based on the tumor diagnosis as much

as by a patient’s family history, genetic marker or by biomarkers the tumor expresses. The sheer number

of cancer treatments, their potential combinations in treatment regimens, and the variety of companies

involved in development will bring significant change to the landscape of cancer treatment over the next

five years. Dramatic improvements in survival and tolerability are expected and will be accompanied by

substantially greater levels of clinical trial and real-world information to support treatment decisions.

Payers and providers are developing tools to better assess value and will demand, or create on their

own, the evidence to support spending, especially where new treatments would add to already

expensive cancer treatment costs.


Pharmaceuticals can enter the environment at all stages of the product’s life-cycle. The major source of

pharmaceuticals entering into the environment is via excretion, following the use of a medicine taken to

prevent, cure or alleviate a medical condition. A comparatively smaller contribution stems from industry

emissions during the manufacture of pharmaceuticals and from the incorrect disposal of unused or

expired medicines.

The issue of pharmaceuticals in the environment requires a balanced approach. In contrast to many

other substances/chemicals in the environment medicines play an important role in human health.

Today, citizens can expect to live up to 30 years longer than they did a century ago. Huge reductions in

mortality (e.g. from HIV/AIDS, many cancers or cardiovascular disease) and significant progress in

terms of quality of life are the results of some large and many small steps in biopharmaceutical research

(IFPMA 2017). The public health benefits of pharmaceuticals should always be the priority when

assessing the environmental impact of pharmaceuticals.


44 May 2018

Addressing potential risks of pharmaceuticals in the environment requires a sound assessment of

current and future actions, whilst remaining mindful of patient needs and ensuring access to medicines.

Founded on the principles of product stewardship, the ECO-Pharmaco-Stewardship (EPS) initiative has

been developed (EFPIA 2016). It considers the entire life-cycle of the medicine and addresses the roles

and responsibilities of all parties involved, including public services, the pharmaceuticals industry,

environmental experts, doctors, pharmacists, and patients. The EPS initiative is supported by three

pillars, which have been identified as key areas of focus for the pharmaceutical industry:

Pillar 1 – Identification of the potential environmental risks of existing and new active pharmaceutical

ingredients (API) through intelligent and targeted assessment strategies. The European pharmaceutical

industry has initiated a project under the Innovative Medicines Initiative (IMI), a joint undertaking

between the European Commission (EC), academia and the pharmaceutical industry. The project will

use all available scientific knowledge to develop tools and assays, which will prioritise and identify the

pivotal areas in which more data would strengthen the understanding of a potential risk for medicinal

products in use today. This will enable the most efficient and effective use of resources. It is anticipated

that the output may also be applied to screen new active pharmaceutical ingredients in development to

target environmental testing needs. Studies such as these are the prerequisites and must inform the

implementation of measures that increase sustainability in pharmaceutical development and

consumption.

Pillar 2 – Manufacturing effluents management: the compilation of best industry practices, enabling

manufacturers to minimize risks to the environment. For the most part, the processes used to

manufacture medicinal products are largely similar wherever in the world they may be used. It therefore

follows that potential losses into the environment from manufacturing facilities should also be equally

controllable. However, this assumes that a good understanding of the risk to the environment and the

knowledge required to limit losses are uniformly available. In an effort across the industry, experts from

several major manufacturers have shared experiences and developed a “maturity ladder” and

associated guidance, in order to enable an enhanced understanding of the existing methods and the

potential need for specific methodologies relative to the potential environmental risk posed by APIs

and/or manufactured medicinal products. Manufacturing companies were encouraged to exchange

practices in further developing their level of effluent control systems.

Pillar 3 – extended ERA: the refinement of the existing environmental risk assessment (ERA) process

for medicinal products to ensure that they remain up-to-date and relevant. An important cornerstone of

EPS is a refined Environmental Risk Assessment (ERA) process, extending beyond marketing

authorization. The ERA of a medicinal product is currently performed by companies either as part of a

new marketing authorization or when an increase in the environmental exposure is expected, e.g. with

the approval of a new indication or the inclusion of a new patient population. ERA must be performed to

evaluate potential risks of medicines to the environment and ensure adequate precautions are taken

where specific risks are identified. The extended ERA (eERA) includes provisions to:

(i) adjust exposure predictions as usage figures become available to better reflect reality, including all

products with the same API; and (ii) reconsider the effects profile, as relevant and reliable laboratory findings and/or observations in the

field linked to an adverse outcome become available. The need for diligence does not end with the EPS pillars; there are many other opportunities to

minimize losses to the environment along the life-cycle of a medicinal product, such as increasing

transparency and access of the environmental data, and educating the public on the correct use and

disposal of unused and expired medicines. In order to promote the latter, a collaborative campaign

focusing on the correct disposal of unused and expired medicines was initiated by the industry in 2015

(EFPIA 2016).

https://www.efpia.eu/media/25276/pillar-1-intelligence-led-assessment-of-pharmaceuticals-in-the-environment.pdf

https://www.efpia.eu/media/25276/pillar-1-intelligence-led-assessment-of-pharmaceuticals-in-the-environment.pdf

https://www.efpia.eu/media/25277/pillar-2-manufacturing-effluent-management-abstract.pdf

https://www.efpia.eu/media/25277/pillar-2-manufacturing-effluent-management-abstract.pdf


45 May 2018


Overview of possible actions to further curb the impact of pharmaceuticals in the environment:

➢ More research to better understand the risks;

➢ More stringent conditions for putting a pharmaceutical on the market;

➢ „Greener“ design of pharmaceuticals, e.g. to make them more biodegradable;

➢ Cleaner manufacturing;

➢ Better risk mitigation, e.g. not allowing over-the-counter sale of pharmaceuticals that pose an

environmental risk;

➢ More thorough post-market monitoring of pharmaceuticals in the environment and feedback to the

regulatory process;

➢ Better training for medical professionals, e.g. about pharmaceuticals that are less harmful for the

environment;

➢ Better information for the public, e.g. about how to dispose of unused medicines;

➢ Smaller packaging sizes, to reduce unnecessary waste/disposal;

➢ Improved handling of waste pharmaceuticals;

➢ Improved sewage and wastewater treatment;

➢ Improvements in livestock farming to reduce the use/emission of pharmaceuticals.

Some emerging areas and fields of innovation

The pharma industry is at the early stages of a fundamental shift as advanced data sciences are

embedded across the value chain. For the last four decades, the volume and variety of medical

innovation has expanded significantly, a trend driven in large part by continued innovation and large-

scale utilization of electronic medical records, high-resolution medical imaging, and next-generation

genomics. Pharmaceutical companies have begun to realize benefits from this evolving data ecosystem,

using new methods for rapid acquisition, curation, analysis, and visualization of large, diverse data sets

in cloud-based storage and distributed computing power platforms (BCG 2017, Deloitte 2018, McKinsey

2018).

➢ Artificial Intelligence & Machine Learning: Artificial Intelligence (AI) is the simulation of human

intelligence processes by machines, especially computer systems. Drug/biotech companies are

analyzing the huge amount of data in their database by applying artificial intelligence and machine

learning to identify patterns in ways that humans cannot. Artificial intelligence driven solutions are

enabling pharma/biotech companies to identify the appropriate patient population, reduce or

eliminate the need for some studies, and in some cases even predict outcomes in a virtual patient.

Several collaborations have been formed in the past couple of years between big pharma/biotech

players and AI-driven companies, primarily start-,ups to discover novel biological targets and

molecules for pharma players using AI. Medical decision made with artificial intelligence using the

power of supercomputers will revolutionize everyday medicine. Cognitive computers, such as IBM

Watson, have been used in many ways to analyze big data, not only in genomic research but also

in biotechnology. This will change the way new drugs are found as a machine can analyze with

greater accuracy and speed.


46 May 2018

➢ Genomics & Personalised Medicine: Genomics enables patients to receive therapy individually

customized to their genetic background. Patients will own a huge text file containing their DNA data.

They can take it to their doctor and receive personalized drugs instead of the blockbusters that are

manufactured for millions of people even though patients are all genetically and metabolically

different. The cost of DNA sequencing is dropping constantly. When it’s finally available to the

majority the whole concept of prescribing medication will change. Pharmaceutical companies need

to get ready for the transformation, so it can offer solutions to all.

➢ Internet of Medical Things (IoMT): Internet of Medical Things brings together medical devices and

applications and technology that procure vital data in real time. Chronic diseases, which require

frequent monitoring, can be tracked effectively so that patients receive timely and proper treatment.

Wearable devices like Apple Watch, Fitbit and Samsung S Health help users achieve their fitness

and health targets. It could well be the future of healthcare as pharma and medical device

companies look to innovate and keep up with technology to help patients and physicians better

monitor and track diseases (Allied Market Research 2016). Pharma and tech companies are now

taking things a step further and collaborating to make devices that can track chronic and lifestyle

associated diseases like diabetes, which are becoming rampant. In fact, the scope for innovation in

this area — contact lenses that can detect glucose levels, devices that monitor caloric intake,

bioelectronic medicines that may treat a wide range of chronic diseases, robotic-assisted surgery

— is seemingly endless.

➢ 3D Bio-Printing: Three dimensional printing or 3D printing is a prototyping technology by which

different materials are fused under computer control to create a three-dimensional object. Add

biology/cells to the process and it becomes a new technique – 3D bioprinting. These printers are

used to manufacture human tissues/muscles as well as organs and bones that can be implanted

into living humans. 3D printing technology, also known as additive manufacturing, is leading to major

innovations in medicine manufacturing, particularly personalized medicines. Compared to

conventional manufacturing systems, 3D bioprinters offer benefits like high production rates, better

precision and accuracy and reduces material wastage, which can save costs. Though still new to

pharmaceutical drug research and development, 3D printing has been in use in the medical devices

sector for many years. A Scottish group has been working on printing out drugs in 3D with a printer.

The first drug printed out with a 3D printer was approved by the Food and Drug Administration (FDA)

in 2015. In future, patients can get a blueprint of a customized drug in a customized dosage related

to their genomic background and a local pharmacy will print it out for them without the participation

of a pharmaceutical company.

➢ Nanorobots: In blood nanorobots could make early diagnoses by constantly measuring any health

parameters. If the technology of transporting drugs to the actual cellular targets in nanocarriers

becomes viable, the pharma industry will have to start producing different end products to make

sure they are compatible with nanotechnology. This requires a new approach to medication, without

which the transformation of pharma could be a hard and rocky one. This is the most futuristic

example, but it’s never early enough to start preparing for a new revolution.


47 May 2018

3. List of Abbreviations

AI Artificial intelligence

API Active pharmaceutical ingredients

BAT Best available technology

Btu British thermal unit

CAD Computer-aided design

CAGR Continuous annual growth rate

CAS Chemical Abstracts Service

CEEC Center for Energy and Environmental Chemistry

CFL Compact fluorescent light

CRI Colour Rendering Index

EC European Commission

EIA Electronic Industries Alliance

E&E Electrical and electronic products

EPR Extended Producer Responsibility

EPS Eco-pharmaco-stewardship

ERA Environment Risk Assessment

EU European Union

EV Electric vehicle

FAO Food and Agricultural Organisation of the United Nations

FDA Food and Drug Administration

GDP Gross domestic product

GERD Gross domestic expenditure on research and development

GHG Greenhouse gas

IEA International Energy Agency

IFA International Fertilizer Association

IFC International Finance Corporation

ILO International Labour Organization

IMI Innovative Medicines Initiative

IoMT Internet of medical things

IRENA International Renewable Energy Agency

LED Light emitting diode

MNC Multinational Corporations

NAS New active substances

NGO Non-Governmental Organisation

NUE Nitrogen use efficiency

OECD Organisation for Economic Co-operation and Development

PCT Patent Cooperation Treaty


48 May 2018

PPP Purchasing power parity

PV Photovoltaic

R&D Research and development

ULAB Used lead-acid batteries

UNEP United Nations Environment Programme

UNESCO United Nations Educational, Scientific and Cultural Organisation

UNRISD United Nations Research Institute for Social Development

SDGs Sustainable Development Goals

SEIA Solar Energy Industries Association

SPV Solar photovoltaic

SVHC Substances of very high concern

SVOC/VOC Semi volatile organic compounds/Volatile organic compounds

TDS Total dissolved solids

VCI Verband der chemischen Industrie

WBCSD World Business Council for Sustainable Development

WEEE Waste Electrical and Electronic Equipment

WHO World Health Organisation

WIPO World Intellectual Property Organisation

ZDHC Zero Discharge of Hazardous Chemicals

ZVEI Zentralverband Elektrotechnik- und Elektroindustrie e.V.


49 May 2018

4. List of Figures and Tables

Figure 1: 40 key and emerging technologies. 12

Figure 2: Patent grants on chemicals-related innovations across regions. 13

Figure 3: PCT patent publications on chemicals-related technologies. 13

Figure 4: Number of chemical substances registered with the Chemical Abstracts Service

(CAS). 14

Figure 5: Global population living in urban and rural areas. 1950 -2014-2050 (projected) 17

Figure 6: Growth of urban population by city size. Source: UNDESA 2017b. 18

Figure 7: Energy-related CO2 emissions per capita. 19

Figure 8: Change in world primary energy demand by fuel. 27

Figure 9: Number and share of people without access to electricity by country, 2012. 28

Figure : Growth of clothing sales and comparison with declining clothing utilisation. 39

Table 1: Matrix analysis of megatrend studies 8

Table 2: Gross domestic product of the world's 10 largest economies, in constant 2010 US$.9

Table 3: Projected share of global GDP (PPPs) in 2016 and 2050. 10

Table 4: Global chemical shipments by region. 10

Table 5: Past and projected share of chemical sales across regions. 11

Table 6: World Population Prospects. 16

Table 7: Size of sectors on electrical and electronic products, market share, and projections.

Source: ZVEI (2017); own calculations. 35

Table 8: Mass and value of raw materials in e-waste. Source: Baldé et al. 2017: 54. 38


50 May 2018

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https://www.vci.de/die-branche/zahlen-berichte/chemiewirtschaft-wichtiger-laender-laenderberichte-und-laenderkurzberichte.jsp

https://www.vci.de/die-branche/zahlen-berichte/chemiewirtschaft-wichtiger-laender-laenderberichte-und-laenderkurzberichte.jsp

http://www.who.int/news-room/fact-sheets/detail/ambient-(outdoor)-air-quality-and-health

http://www.who.int/news-room/fact-sheets/detail/ambient-(outdoor)-air-quality-and-health


57 May 2018

WIPO (2017): World Intellectual Property Indicators 2017. Geneva: World Intellectual Property

Organization.

World Bank (2017): Transport., http://www.worldbank.org/en/topic/transport/overview. Accessed: 6

May 2018.

World Bank (2018): Global Economic Prospects: Broad-Based Upturn, but for How Long? Washington

DC, World Bank Group.

World Economic Forum (2017): Shaping the Future of Construction: Insights to Redesign the Industry.

White Paper.

World Economic Forum (2015): Deep Shift: Technology Tipping Points and Societal Impact.

ZVEI (2017): The Global Electrical & Electronic Industry – Facts & Figures. German Electrical and

Electronic Manufacturers’ Association.

http://www.worldbank.org/en/topic/transport/overview


58 May 2018

6. Annex I: Lists of Megatrends in Selected Studies

UNDP and UNRISD (2017): Global Trends: Challenges and Opportunities in the Implementation

of the Sustainable Development Goals

1. Poverty and inequalities

2. Demography

3. Environmental degradation and climate change

4. Shocks and crises

5. The changing context of development cooperation and financing sustainable

development

6. Domestic and international private business and finance

7. Technological innovations for Sustainable Development

UNGA (2017): Fulfilling the promise of globalization: advancing sustainable development in an

interconnected world. Report of the Secretary-General

1. Shift in production and labour markets

2. Rapid advances in technology

3. Climate change

National Intelligence Council (2017): Global Trends: Paradox of Progress

1. The rich are aging, the poor are not

2. The global economy is shifting

3. Technology is accelerating progress but causing discontinuities

4. Ideas and Identities are driving a wave of exclusion

5. Governing is getting harder

6. The nature of conflict is changing

7. Climate change, environment, and health issues will demand attention

KPMG (2016): Future State 2030: The global megatrends shaping governments


59 May 2018

1. Demographics

2. Rise of the individual

3. Enabling technology

4. Economic interconnectedness

5. Public debt

6. Economic power shift

7. Climate change

8. Resource stress

9. Urbanization

EEA (2015): The European Environment: State and Outlook 2015: Assessment of Global

Megatrends.

1. Diverging global population trends

2. Towards a more urban world

3. Changing disease burdens and risks of pandemics

4. Accelerating technological change

5. Continued economic growth?

6. An increasingly multipolar world

7. Intensified global competition for resources

8. Growing pressures on ecosystems

9. Increasingly severe consequences of climate change

10. Increasing environmental pollution

11. Diversifying approaches to governance

EY (2017): The upside of disruption: Megatrends shaping 2016 and beyond

1. Industry redefined

2. The future of smart

3. The future of work

4. Behavioral revolution

5. Empowered customer

6. Urban world

7. Health reimagined

8. Resourceful planet

Frost and Sullivan (2014): World’s Top Global Mega Trends to 2025 and Implications to

Business, Society, and Cultures (2014 Edition)


60 May 2018

1. Connectivity and convergence

2. Bricks and clicks

3. Smart is the new Green

4. Future of energy

5. Future of mobility

6. Infrastructure development

7. Economic trends

8. Urbanization

9. Social trends

10. Health, wellness, and wellbeing

11. Innovating to zero

12. New business models

OECD (2016): OECD Science, Technology and Innovation Outlook 2016.

1. Demography

2. Natural resources and energy

3. Climate change and environment

4. Globalisation

5. Role of governments

6. Economy, jobs and productivity

7. Society

8. Health, inequality and well-being

World Economic Forum (2015): Deep Shift: Technology Tipping Points and Societal Impact

1. People and the internet

2. Computing, communications and storage everywhere

3. The Internet of Things

4. Artificial intelligence (AI) and big data

5. The sharing economy and distributed trust

6. The digitization of matter

VCI (2017): The German Chemical Industry 2030: VCI-Prognos Study – Update 2015/2016


61 May 2018

1. Growing and ageing world population

2. Globalisation is losing in speed

3. Faster dissemination of technologies and knowledge

4. No shortage of energy and raw materials to 2030

5. Environmental and climate protection are gaining in importance worldwide

6. Public debt impairs growth

Valencia (2013): The Future of the Chemical Industry by 2050.

1. Social

• Population

• Demographics

• Urbanization

2. Economic

• World economic growth

• BRIC economic

• Foreign direct investment

3. Political

• New international order

• Corporate economies

• Social networks

• A people’s world

4. Energy

• Oil, gas, others

5. Climate change

6. Wild cards

Deloitte (2010): The chemical multiverse: Preparing for quantum changes in the global

chemical industry

1. Demographic change

2. Quality health care

3. New patterns of mobility

4. Convergence of technologies

5. Globalization

6. New patterns of consumption

7. Resource scarcity (energy, water, and food)

8. Climate change/green

9. Urbanization

report by the international sustainable chemistry

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