Energy in Petrochemicals

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					      Energy in Petrochemicals

              IEA-G8 Workshops
         Climate Change, Clean Energy
              & Sustainable Development
                        Paris: 12 - 13th December 2006


 Russel Mills – Dow Europe



          IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




Presentation Overview
Introduction and Recap of Facts & Figures


1. Petrochemistry Background
  • Understanding performance & value of integration


 2. Status & Outlook
    • Energy Efficiency & Alternatives

   3. Improvement Options for the Future
       • Policies for industry & end users with global impact


          IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




                                                                                          1
Recap of Facts & Figures – Chemical Industry
Largest &
most diverse
industrial user
 of “energy”




• 1995 energy costs at Dow > 50% of total costs
• Largest EU site (Terneuzen) ~ 5% of NL industrial energy use

                                                                     “Energy” is doubly important !

          IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                         13th December 2006




Facts &
Figures

This explains our history
of efficient energy use




          IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                         13th December 2006




                                                                                                                2
  Facts &
  Figures
     efficiency > other industries

      ef
        f ic
            i en
                cy
                     >
                         ot
                              he
                                 r   re
                                          gio
                                              n   s
                                                                                                   After years of intense
                                                                                                   competition our industry
                                                                                                   “respects” efficiency

                                                                                                  This is not case for all users!
                                                                                                  In the 10 years prior to ETS:
                                                                                                  •Chemical industry decreased
                                                                                                  energy (intensity) by about ¼
                                                                                                  •EU households increased power
                                                                                                  use per person by about ¼

                              IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                                       13th December 2006




                                                                                            Consumer
                                                                                            Products
   Facts &                                                                Agricultural
                                                                                              12%                    Pharmaceuticals
                                                                                                                          26%
   Figures                                                                Chemicals
                                                                              5%




   • Revenue: $2.2 Trillion                                           Other Specialties
                                                                            14%
   • People: 10 Million direct
                                                                           Coatings                                        Inorganics
   & 50 Million support                                                      5%                                                4%

                                                                                                                                 Industrial Gases
                                                                          Adhesives &                                                   2%
                                                                           Sealants
                                                                              1% Polymers,                              Bulk
                                                                               Synthetic Rubber                   Petrochemicals &
                                                                                    & Fibers                          Organics
                                                                                      14%                               17%

          Asia, excluding                                             North America
              Japan                                                        25%
               18%
                                                                                              Growth:
                                                                                              •1x GDP: mature economies
            Japan
                                                                                              •1.4x GDP: developing
             10%                                                                              countries
Africa & Middle                                                               Latin America
      East                                                                         5%
      4%

           Eastern &                                                     Western Europe
         Central Europe                                                      34%
              4%
                              IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                                       13th December 2006




                                                                                                                                                    3
 1. Petrochemistry Background

 • Understanding past performance & value of
   integration
    – Importance of Petrochemicals as Building Blocks
    – Examples of integration benefits
        • Cogeneration
        • Waste & by-product use




            IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow               13th December 2006




Petrochemistry
Background

Chemicals
impact
every
supply
chain




                                                                       Nearly all need
                                                                       Petrochemistry
                                                                       building blocks
            IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow               13th December 2006




                                                                                                        4
Petrochemistry
  Background

Limited (viable)
alternatives to
Petrochemicals
as Building
Blocks




 Petrochemical Building Blocks
 You can choose how/where to make them not if to make them
              IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                                  13th December 2006




Petrochemistry
Background                            Long term commitment to CHP relies on
                                      effective use of the “by-product” heat



                                                                         Schkopau, Germany with E. ON
          Ft. Sasktchewan, Alberta
                          with TEAL                                      Tarragona, Spain with Endesa
                Pittsburg, California                                    Terneuzen, The Netherlands
                        with Calpine                                     with ELSTA
           Taft / Texas City / Seadrift                                  Sarnia, Ontario with SRCP
           (Under UCC Model)                                             Ludington, Michigan
                    Plaquemine, LA                                       with Michigan Power Ltd.
               with AEP Resources




      • 2004 savings an equivalent of 32.6 Trillion Btu/year
      • 75% of Dow’s electricity from cogeneration

  Eleven New Cogeneration facilities since 1994

              IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                                  13th December 2006




                                                                                                                             5
Status & Outlook


  • Priorities vary with timelines*
  • Examples:-
       – Dow’s programmes on Energy Efficiency
       – Technology breakthroughs
       – Biomass & other Alternatives


  • Future Commitments

*Short – Medium – Long Term Scenarios

            IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




Status & Outlook

Broadly in line with IEA outlook, even long
term: oil derivatives & gas remain dominant
• Key Saving Options
  – Short term: energy efficiency dominates
  – Medium term: alternatives, bio-based and
    breakthroughs contribute mainly in niches
  – Long term: alternatives start penetrating larger
    volume commodities
• Every option has pros & cons - critical to ensure
  most effective use irrespective of resource used

            IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




                                                                                            6
Status & Outlook                                      10-Year Energy Intensity Goal set 1994


Long Term Energy Intensity Programme that continues independent of Oil Price
Fluctuations or Regulatory Restrictions                                                                                 Savings based on Dow weighted
                                                                                                                        average natural gas price each year

                       6,500                                                                                                      4
                                               Goal: 20% Improvement in Btu/lb.
                                                             Actual: 21% through 2004
                                 5958
                                               Actual: 21% Improvement through 2004                                               3.5
                                                                                                                                   $3.5
                       6,000
                                                                                                                                  3$3.0




                                                                                                                                          Cumulative $ Billions Savings
                       5,500                                                Goal line
                                                                                                                                   $2.5
                                                                                                                                  2.5
             Btu/lb.




                                                                                                                                   $2.0
                       5,000                                                                                              4766
                                                                                                                                  2
                                                                                                                                   $1.5
 > 20                                                                                                                             1.5
                       4,500
                                                                                                                                   $1.0
 Million                                                                                                                          1
 Tons                  4,000
                                                                                                                                   $.5
 CO2e                                                                                                                             0.5
                                                                                                                                   0.0
 saved
                       3,500                                                                                                      0
                                1994.00 1995.00 1996.00 1997.00 1998.00 1999.00 2000.00 2001.00 2002.00 2003.00 2004.00 2005.00
                                 1994     1995 1996 1997 1998 1999                2000 2001 2002 2003 2004 2005

                                                         Cumulative Savings (B$)        Total Energy

                       IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                                                           13th December 2006




Status & Outlook                                                         Biorefinery concept

• Biofuels: EU target 5.75%
  of transport fuels by 2010,
  20% by 2020
• Biomass can selectively
  replace petroleum
  feedstocks
    – But: currently uneconomic*,
      inefficient use of land &
      competing feedstock uses
• Next step: integrated
  Biorefinery to demonstrate
  feasibility to (essentially)
  convert targeted crop to
  energy & saleable products                                                             * = uneconomic without subsidies

                       IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                                                           13th December 2006




                                                                                                                                                                          7
Status & Outlook

       Demonstrate Progress

 Pu
      bli
          s   h
                  co
                       m
                        m
                         it m
                             en
                               ts



  2015 Commitments
  www.dow.com
                                                                                      Effectively a 20 year
  We will take aggressive action to
                                                                                      programme to cut energy
  mitigate climate change                                                             use by half (with even
  • further commitments of 2.5%                                                       larger reductions in GHG)
  reduction per year for next 10 years
        • Energy intensity
        • GHG emissions intensity

                           IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                       13th December 2006




 Improvement Options for the Future

• Support innovation throughout supply chain
• Encourage resource use hierarchy
  – “Use before you Burn”
• Apply cradle to cradle life cycle thinking to
  whole process

Establish policies that encourage (energy/resource)
efficiency investments (not de-industrialization)



                           IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                       13th December 2006




                                                                                                                               8
 Improvement Options
                                                                             • Viable energy
                                                                             policies essential to
                                                                             chemical industry
                                                                             • Effective energy
                                                                             policies equally reliant
                                                                             on solutions from
                                                                             chemical industry




                                                                                   Source: Stern Report, 2006




                IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                        13th December 2006




Improvement Options
                                         • Largest energy savings “in use”
                                         • Biggest impact outside industry boundary

 The car’s
 lifecycle
     Raw materials            Manufacture                 Distribution     Use     Disposal/recycle




• Lightweight plastics and             • Antifouling paints to             • Adhesives which aid
  composites                             reduce marine                       disassembly
• Paint to increase durability           pollution and fuel
• Seals for improved                     consumption
  efficiency
                   • Paint with lower VOC             • Lubricants and fuel additives to
                     emissions                          improve fuel economy and emissions
                   • Biodegradable metal              • Exhaust catalysts
                     working fluids                   • Biofuels
                                                      • Fuel cells and other new power units
                IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                        13th December 2006




                                                                                                                     9
Summary
Petrochemicals* are efficiently produced. Significant variations
exist, but even for “leaders” more can (and will) be done
• their end products contribute significantly to energy savings
• intelligent site “integration” plays a key role
• customers & end users offer even larger potential savings



 • Resource efficiency dominates savings short & mid term,
 but there is critical need to keep all options open
 – full life cycle thinking needed to benchmark every new policy
 measure - including pragmatic aspects of their global impact

* Petrochemicals – the key building blocks for the chemistry using industries
                IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow        13th December 2006




      Back up slides


                IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow        13th December 2006




                                                                                                     10
Climate Change - Cleaner Energy - More Sustainable Development




     Contributions from 3 sources
 Company                                  Association          HLG




    IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow         13th December 2006




    IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow         13th December 2006




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IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




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IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




                                                                                13
Chemical Industry: Geographic Balance


                    Asia, excluding                                         North America
                        Japan                                                    25%
                         18%




                      Japan
                       10%

     Africa & Middle                                                               Latin America
           East                                                                         5%
           4%

                      Eastern &                                               Western Europe
                    Central Europe                                                34%
                         4%


Source: ACC
         IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                            13th December 2006




Chemical Industry: Product Balance

                               Consumer
                               Products
                                 12%                                   Pharmaceuticals
     Agricultural
     Chemicals                                                              26%
         5%




  Other Specialties
        14%

      Coatings                                                               Inorganics
        5%                                                                       4%

                                                                                   Industrial Gases
      Adhesives &                                                                         2%
       Sealants
          1% Polymers,                                                    Bulk
           Synthetic Rubber                                         Petrochemicals &
                & Fibers                                                Organics
                  14%                                                     17%

Source: ACC
         IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                            13th December 2006




                                                                                                                  14
IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                13th December 2006




                                                           Source: Stern Report, 2006




IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow                13th December 2006




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IEA-G8 Workshop: Energy in Petrochemicals – R. Mills/Dow   13th December 2006




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