The Chemical Industry’s Balancing Act

Lars Krause and Michael Carus discuss crediting the value of bio- and CO2-based and recycled materials: the mass balance approach

AS INITIATOR of the renewable carbon initiative (https://bit.ly/3thPK8J), the nova Institute supports a full phase-out of use of fossil carbon resources. In the energy sector this can be done through decarbonisation. However, for the carbon-using chemicals industry, this strategy is not feasible. For the important chemical and derived material industries, alternative carbon sources are required to shift towards more sustainable and climate-friendly production and consumption. We call these alternative carbon sources “renewable carbon”, which can be bio-, CO₂- or recycling-based (see Figure 1).

We have already observed a strategic change from fossil-based feedstocks to renewables in the chemical industry. With chemical recycling, carbon capture and utilisation (CCU) as well as the production of bio-based chemicals and derived materials, a range of different technologies is already partially commercially available, and their share will increase in the future. Nova’s latest reports on chemical recycling, bio-based building blocks and polymers, and carbon dioxide as feedstock screen the latest developments on the market (https://bit.ly/3deEnc1). The report on chemical recycling shows for instance more than 70 technology providers which use chemical recycling to turn plastics back into renewable chemicals, materials, and fuels. For bio-based building blocks and polymers we identified more than 174 companies active on the market. And for CO₂-based chemicals, polymers and fuels we saw more than 100 different projects and companies. However, these represent only a small portion of the overall market. We expect that during the gradual shift from fossil to renewable carbon sources it will be inevitable to mix them somewhere in the value chain of chemicals and materials.

Against this background of increasingly complex value chains and new technologies, the mass balance approach is a promising tool which credits proportions of bio-based and recycled feedstock.

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The framework of mass balance and free allocation

Aside the strategic and technological basis for a sustainable chemical industry without fossil carbon, the associated standards and certification schemes are currently being implemented. These developments are based on the need for a corresponding system for crediting the share of renewable carbon in a product, value chain or feedstock. In the last few decades we observed that the value chains and technologies become increasingly complex, and physical separation of different feedstocks throughout the value chain is not practicable. From the industries’ point of view the question arises as to the framework in which a corresponding crediting of renewable feedstocks is possible, and how corresponding claims can be made or communicated. In the last decade, as part of different certification schemes, the mass balance and free allocation approach has become increasingly important for the transformation of today’s fossil feedstock base to a renewable one.

While the mass balance approach keeps track of the mass-flow that might be mixed with unspecified attributes through a value chain, the allocation allows claim of a specified mass for only selected products at the end of the value chain (see Figure 2). This is especially true if one wants/needs to substitute the fossil feedstocks partly by renewable feedstocks from biomass, CO₂ and recycling in large existing chemical plants, verbund sites and refineries. This situation arises from the fact that in most cases, the large facilities cannot – for a variety of reasons – be dedicated solely to renewable resources. On the one hand, availability of renewable raw materials may still be too low to ensure a profitable and sustainable processing in large plants. A certain demand is therefore necessary, since a profitable operation of the plants cannot be ensured if they only run for a few hours or even days exclusively for renewable feedstocks. On the other hand, certain processes may still require the blending/mixing of renewable and fossil feedstocks due to the lack of available renewable alternatives.

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The history of certification schemes and claims

To gain a better understanding of the opportunities and benefits for the chemical industry we evaluated the history and current status of different certification schemes. In the past, various certification schemes were initiated, and evolved independently based on mass balance systems for biomass and mechanical recycling. Meanwhile these have widely grown together and are now being extended to chemical recycling (eg ISCC certification for Plastic Energy’s oil which is produced from the pyrolysis of plastics waste).

So far, the integration of CO₂ as a feedstock is currently not a priority, but we recommend that this should be integrated quickly due to its rapidly-growing importance. The mass balance and free allocation approach come with two challenges: One is the tracking and validating of the mass balance principle along the value chain, and the other is even more challenging – allocation of the renewable share to selected products. In the early years of the tool, there were some major deficits with regard to incorrect labelling of the mass-balance products as well as their descriptions, which now has been improved. We found that certification schemes now avoid the confusion with the claimed content of a product (eg the product has X% bio-based or recycled content) by addressing or communicating the share of substituted fossil feedstock through bio-based or recycled materials.

We also found that the established certification schemes have several other aspects in common. All schemes require recognised third-party certification bodies to verify the compliance of the scheme requirements and to issue the certificate. Another common aspect is the requirement for a book-keeping system to keep track of the inputs and outputs of certified materials and products as well as requirements on balancing over time periods which is usually done in timeframes of 3-12 months. Finally, the balancing only includes raw material used for material purposes, and not energy use.