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CHEMICAL PROCESSING CARBON ACCOUNTING IN CHEMICALS


Dr. Muriel Rakotomalala, a global solution manager in SAP’s Chemical Industry Business Unit, says carbon tracking will act as a chemical industry XaaS catalyst


two different challenges for the chemical industry. But the first can fuel the success of the second. To achieve carbon neutrality by mid-century,


C


new ledgers capable of precisely tracking the carbon inputs and outputs associated with countless processes, products, and services must be built. SAP and others are now working to embed carbon tracking into existing logistics, materials-traceability, and other functions. But that’s only the start. Meeting the challenge of providing real-time,


fine-grained carbon tracking up down supply chains will demand open, interconnected, cross- industry networks for all participants, some of whom are fierce competitors. It’s a daunting prospect, but one the chemical industry is already tackling across its many verticals. Perhaps the clearest example is the carbon- related work happening at the industry’s Together for Sustainability initiative. The chemical industry is just getting this


process going. The focus is still on establishing standards, which is a huge task for an industry as diverse as chemicals, which supplies manufacturing industries from consumer goods to aerospace and defence. Not only must you establish technical standards related to data schema, sharing, and security, but you also have to map carbon content across myriad products which in turn derive from countless material and process inputs. But it’s an effort worth undertaking, as other industries are demonstrating. The bridge from climate-related compliance


to XaaS rests on pillars of precise, real-time data generated throughout the value chain. The ability to create product-service bundles and sell them based on outcomes – not just product volume – depends on a precise understanding of production and service-delivery costs on the chemical producer’s/distributor’s/trader’s end as well as the business value enjoyed by the customer. All that depends on accurate data, modern ERPs, and interconnectivity with emerging business networks.


omplying with emerging climate laws, and rolling out everything-as-a-service (XaaS) business models, may seem like


For a sense of what XaaS can deliver in the


chemicals business, consider the United Nations Industrial Development Organization’s (UNIDO)’s Chemical Leasing initiative, launched way back in 2004. It could just as accurately have been called the “Chemical XaaS initiative.” The aim was to develop “a more efficient use


of chemicals in the production process by redefining the business relationship between the chemical user and the supplier.” I italicised those two words because, as the UN agency recognised, data is merely the raw material for developing the relationships upon which XaaS hinges. Harnessing that data and solidifying those relationships then depends on a mutual understanding of business goals and the processes supporting those goals. Also, given today’s diverse supply chains, these mutual relationships are dynamic and many-to-many.


will be a central aspect of the XaaS value proposition


“


Chemical companies hoping to profit by XaaS are laying digital foundations capable of deftly managing this complexity. Given XaaS’s popularity among customers, building that foundation is a strategic imperative. UNIDO’s take on the XaaS’s benefits apply


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today as they did nearly two decades ago: better performance using less chemicals to benefit the bottom line and the environment; improved long-term business relationships; and improved information sharing between the users of chemicals and those producing them. Examples from UNIDO come from far and wide: an Egyptian electric equipment manufacturer cut 20% of its powder-coating needs and trimmed waste by 5%; a Brazilian hotel slashed its housekeeping chemical use by 40%; and a Ugandan beverage company lowered its bottle-washing chemical


Carbon accounting


consumption by 40% and its conveyor- lubrication chemical use by 48%. In addition, one New Zealand-based


agricultural giant worked with farmers to develop models incorporating weather and crop types to calculate nutrient requirements to the square-meter level, optimising production and minimising carbon-intensive fertiliser use and the phosphate-rich run-off resulting from over- application. Call it nutrients-as-a-service. And a major chemical company’s automotive paint and coatings division assigned its own specialists to a German automaker’s paint line and then charged by the finished vehicle out of the coating line, rather than the litre entering the factory. At first blush, from a chemical-company


perspective, these might not appear to be success stories at all – they’re all using less product, right? But consider the benefits of customer loyalty and, just as importantly, the ability to sell outcomes as a service rather than litres or kilograms of product. All that hinges on visibility into the customer’s expectations of your products as well as your own costs and capabilities. Both, in turn, depend on precise, structured, and auditable data. Carbon accounting will be a central


aspect of the XaaS value proposition. As carbon regulations become universal in the world’s major markets, the products and services embodying less carbon will be more attractive not only on environmental, social, and governance (ESG) grounds, but in a fundamentally economic sense. Further, it’s a safe bet that the sharing of detailed carbon-related data will open doors to sharing other classes of data – data that industry players can use to better partner with each other and their customers, as XaaS – long the exception – becomes the chemical-industry norm.


SAP www.sap.com/uk/chemicals


DECEMBER 2022/JANUARY 2023 | PROCESS & CONTROL 53


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