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5
The Chemical Industry

Background

The chemical industry is more diverse than virtually any other industry in the United States. Harnessing basic ingredients, the industry1 produces a plethora of products not usually seen or used by consumers but that are essential components of, or are required to manufacture, practically every consumer and industrial product (Box 5-1). Many chemical industry products are intermediates, and chemical company customers are often other chemical companies. Several companies in this industry are also at the forefront of emerging biotechnology industries.

According to the American Chemical Society (1998), the industry's more than 70,000 different registered chemical products are developed, manufactured, and marketed by more than 9,000 companies.2 Of these firms, 40 account for roughly half the industry's output on a mass basis. The chemical industry is the third-largest manufacturing sector in the nation, representing approximately 10 percent of all U.S. manufacturing and boasting one of the largest trade surpluses

of any industry sector ($20.4 billion in 1995). It also ranks as the largest manufacturing sector in terms of production and sales 3 and employs about 1 million people, roughly the same number as the automotive sector.

In the case of the chemical industry, the committee focused its examination of environmental metrics on the production of commodity and specialty chemicals and polymers. Excluded in the analysis are high-value materials such as cosmetics, food additives, and health care products, including pharmaceuticals, which account for a significant fraction of the industry's sales. The energy and materials demands and waste generation associated with these high-value materials are considerably smaller than those for commodity and specialty chemicals. However, the metrics discussed in this chapter would also be relevant to production of the high-value materials. Another segment of the industry not covered in this chapter is the emerging area of biochemical processing, which may require very different environmental performance metrics.

Chemical Production

Chemical products result from chemical processes, which are a complex combination of reaction, distillation, absorption, filtration, extraction, drying, and screening operations. For cost-cutting purposes, most chemical processes must be efficient, and so the design of many production operations is focused on controlling and reducing losses of precious materials. Hence, ecoefficiency, including avoiding releases to land, water, or air, is critical to the industry's economic survival. While every chemical process is unique, most can be generalized to a flow diagram, as shown in Figure 5-1.

Drivers of Improved Environmental Performance

The common driver of environmental performance in the chemical industry, like the automotive industry, is regulation. Public and community concerns about the performance of chemical manufacturers (particularly following negative publicity associated with contaminated waste sites such as Love Canal or chemical accidents such as the tragedy in Bhopal, India) led the industry to establish a set of minimum environmental performance standards.4 For some companies the costs of complying with environmental regulations are equal to what they spend on research and development.5 Experience has shown that it

costs more to react to a regulation than to design systems that address environmental issues from the start (Carberry, forthcoming). For related reasons, some recent environmental performance improvements in the chemical industry have been motivated by the desire to gain a competitive advantage. ''Good neighbor'' motivations and competitiveness concerns have encouraged some of the larger chemical companies to commit to the (thermodynamically unrealizable) goal of reducing emissions and chemical residuals to zero and to work to eliminate the dispersion of chemicals that adversely impact human health or the environment. 6 More recently, chemical companies (particularly those with plans to grow significantly using biotechnology as a base) have begun to explore using sustainable development as a means of driving change and enhancing environmental performance.7

Current Use Of Environmental Metrics

Environmental metrics in the chemical industry fall into two broad categories: those related to process efficiencies, such as yield, and those related to product stewardship. These are summarized in the flow chart shown in Figure 5-2. However, to facilitate comparison with the other industries analyzed in this report, the chemical industry metrics are discussed in terms of manufacturing process and product performance.

Manufacturing Metrics

As in the automotive sector, environmental performance in the chemical industry is monitored and guided by environmental staff, but ultimate responsibility lies with the site operations manager. However, because of the industry's commitment in 1988 to a set of basic environmental standards (Box 5-2), many companies have driven a sense of environmental responsibility throughout their corporate structures. Within the industry's manufacturing operations, this has resulted in an ongoing effort to incorporate metrics into decision making and to continually look for ways to refine current metrics and their uses.

Emissions

As with the automotive sector, one of the chemical industry's primary environmental concerns is emissions from its manufacturing operations. These are regulated by federal, state, and local laws. Chemicals regulated under the Environmental Protection Agency's (EPA's) Toxic Release Inventory (TRI) and other elements of Title III of the Superfund Amendments and Reauthorization Act of 1996 (SARA) are measured by total weight. Although total weight is appropriate for measuring continuous improvement, it does not take into account different production levels at various facilities. This metric would be more useful if expressed as emissions per mass of product. However, normalizing emissions in terms of mass of product would hide the impact of vertical integration (a key factor in chemical manufacturing) and would fail to account for the value of the product to society. As refinements to emissions metrics and other environmental performance metrics are made, it would be worth considering normalization against dollar value of product or, better still, dollar of value added to society. The latter is difficult to determine but would perhaps be more appropriate for sustainable-development discussions.

The chemical industry has developed a variety of metrics relating to "reportable releases." Through TRI, SARA requires companies to report on a wide range of chemicals, if minimum release quantities are exceeded.8 In addition to this mandatory reporting, another part of SARA9 provides for a wide range of voluntary data collection.

Required reports such as TRI are used in the industry to learn about the performance of competitors. Equally important, TRI can be used to identify chemical companies that are having problems with their emissions and which may therefore be in the market for innovative products or approaches that reduce them. Reportable release data can be very confusing in the absence of additional analysis. Several companies, including Dow, DuPont, Monsanto, and Union Carbide, have developed simplified scoring systems that divide this reporting into three categories of significance related to human health. Metrics on all three categories are used internally within the companies for decision-making purposes. The most significant category is reported publicly as incidents (of releases) per year.

Another improvement in emissions metrics relates to predicting toxic dispersion or the potential for toxic dispersion. In the case of airborne emissions, some in the chemical industry are using models to predict the concentrations of pollutants that may occur over a given distance or area. Models are also used to evaluate the reliability, quality, or risk associated with a supplier or as a factor in assessing risks related to potential mergers or acquisitions. In addition, they are

used for long-term technology or business planning, particularly to prevent the environmental release of materials that pose the greatest risk in terms of toxicity and dispersion potential.

Ideally, emissions metrics should allow one to rank environmental and health risks. This would require a weighting system that takes into account the effects of a range of factors, such as persistent bioaccumulative toxicity, ozone depletion, global warming, atmospheric and surface water acidification, human health effects, photochemical ozone generation, aquatic oxygen demand, and aquatic toxicity.10 Current regulatory-derived metrics treat all emissions alike and do not take into account differences in hazard potential. One current effort to address this situation is a system of potency metrics developed by Imperial Chemical Industries, a U.K. chemical company (Box 5-3). While a significant step forward, this method can be further improved if modified to weight various chemicals with regard to method of disposal (air, water, landfills, deep-well injection, public treatment facilities, or incineration) and their health exposure "pathway" (i.e., how a particular emission may reach a susceptible receptor in an organism).

Public Concerns

The potential for a catastrophic chemical release is a major concern of the chemical industry. While there are too few such events for metrics to be applicable, both environmental laws and the Occupational Safety and Health Act require defining a "worst case" and a "more likely" release scenario for a catastrophe and reporting that to the community.

Chemical plumes, incinerators, noise, landfills, regulated outfalls, remediation sites, and transportation accidents can create concern among the public. Community complaints and violations of state or federal regulations are tracked and dealt with by external affairs groups and community advisory panels according to CMA guidelines. Some sites try to anticipate concerns by conducting public opinion surveys about "environmental quality." The results of such surveys are used for community relations as well as for internal planning purposes.

Resource Use and Waste

Two types of materials are generally tracked throughout the chemical industry: those intended for inclusion in the product ("raw materials") and all other materials purchased, including "support materials" (e.g., acids, bases, solvents), maintenance materials, and packaging. In this context the waste ratio (Box 5-4),

first publicized by 3M, has been used to demonstrate the effectiveness of waste reduction activities and is the most cited nonregulatory-driven environmental metric. A variation on this metric is the material efficiency ratio, or the amount of product sold divided by the amount of all materials purchased, sometimes including packaging (Box 5-4). Waste and other losses are included in the ratio to the extent they are known. Some who prefer this latter metric feel that tracking

BOX 5-4 Waste and Material Efficiency Ratios

The waste ratio was developed by 3M to encourage conversion of wastes into byproducts (residuals that are productively used in manufacturing) and the reduction of waste.

Because waste is considered to be a sign of inefficient production, the ratio provides an indicator of waste generation as well as product and materials loss. Some, however, prefer the material efficiency ratio over the waste ratio because of the lack of agreement about a definition of "waste."

only waste fails to account for materials burned for energy recovery; destroyed in incinerators, flares, or biological waste treatment units; or otherwise disposed of (sometimes categorized as "nonproduct" output). Resolving the lack of clarity about the definition of a waste might be a useful refinement of metrics such as these but could prove difficult and costly in a materials-intensive sector like the chemical industry.

Materials Intensity

Materials intensity metrics are generally the most useful for decision making in the chemical industry. Yield, first-pass first-quality (FPFQ) yield, process "uptime," and waste per mass of product are monitored daily to ensure consistency of operations. Troubleshooting is called for if there are changes in these measurements' short-term averages (i.e., days to weeks). More serious actions, such as improvement of process equipment and process control, can be triggered by changes in the intermediate-term (i.e., weeks to months) averages of these measures. Stable long-term averages, along with atomic (stoichiometric) and materials efficiency, are factors in designing new technology.

Yield is the ratio of the amount of product sold to the amount of product that should have been produced for sale based on the purchase of raw materials and assuming no waste, no side reactions ("perfect" control of chemistry). and no other losses. It is usually expressed as a percent. Yield data can signal the need for a variety of specific actions (Box 5-5).

FPFQ yield describes the highest-quality product possible without resorting to any capture and recycle of potentially valuable preproduct. Yield is the single most important indicator of environmental efficiency, while FPFQ yield is the dominant metric for effective use of manufacturing capital equipment.11

Interestingly, process uptime, usually regarded as a nonenvironmental metric, is frequently the second most important indicator of materials efficiency. Uptime is the percentage of a year that the equipment is operating at intended rates. When equipment is down for maintenance or operating at a slower rate due to production scheduling or lack of demand, there is no increase in waste generated. However, process uptime is a critical environmental metric because waste generation rates during start-ups and shutdowns are frequently far greater than during normal operations.

A newly emerging concept is atomic efficiency, which is the ratio of the output atoms to input atoms based on chemical stoichiometry. It is usually expressed as a percent. While atomic efficiency is usually not important for products derived from a few simple reactions, it is important for more complex chemicals such as drugs and advanced agrochemicals that rely on complicated multiple-step reactions.

Energy Use

As with other industries, in the chemical sector energy efficiency is used to track environmental performance. The chemical industry's energy requirements—like those of most "heavy" industries—are dominated by production operations. Some companies in the industry are also tracking and reporting emissions of greenhouse gases, particularly carbon dioxide (CO₂), since such emissions relate to energy efficiency. In the chemical industry, CO₂ emissions result directly from fossil-fuel use in heaters, boilers, and other devices or indirectly as a result of purchased energy (e.g., steam and electricity) derived from fossil fuels.

Some companies report emissions of greenhouse gases in mass of CO₂ equivalents per year.12 Increasingly, these emissions are reported normalized per pound of product or per unit product. Internally, companies generally track energy consumption in BTUs per unit process (such as distillation) or per pound of product. When it is a major expense, the energy consumption of a subprocess (e.g., purification) will also frequently be monitored. Most companies will include recovered energy from wastes (e.g., waste solvent and trash diverted to steam incineration) in their energy-use calculations. This use of waste feedstocks as a fuel usually returns less energy per pound of CO₂ emitted, but it is far preferable (and more efficient) to incineration or otherwise disposing of the waste without recovering energy. With the increased focus on energy consumption following the Kyoto Protocol and the probable economic disincentives for generating CO₂, comparing alternative processes or products in terms of CO₂ production may have great utility in the future.

While energy-use metrics are not currently as important to the chemical industry as are materials-use metrics, stable long-term energy averages are traced and used as a basis for process equipment and control improvements; for planning of fundamental new technology; and for developing cogeneration energy partnerships.

Product Metrics

Unlike vehicles, commodity and specialty chemicals and polymers are often ingredients in final products, rather than end products themselves. Environmental impacts related to these chemicals, therefore, must be considered within the context in which they are transported, used, and disposed of.

Product Stewardship

The primary objective of product stewardship is to help minimize the safety risks and environmental impacts of the transportation of chemicals and their subsequent processing by customers. Product stewardship also entails designing the product (and associated delivery systems) to minimize adverse safety and environmental impacts during final use and disposal. Specific efforts include staff training in the safe handling of acids and toxic gases; environmental audits and planning with customers to reduce emissions; reformulating chemicals to avoid volatile solvents or ozone-depleting substances such as chlorofluorocarbons (CFCs); developing end-use products with greatly reduced persistence, bioaccumulation potential, or toxicity; providing a mechanism to reuse or recycle a product at the end of its useful life; and investigating the potential for producing biodegradable chemicals and developing "green" suppliers. A major trend within the chemical industry is extending the stewardship concept not only to suppliers, but also to customers. More attention is also being given to the ultimate fate of the product.

The handling of hazardous materials and chemicals by chemical companies or their customers is another aspect of product stewardship. SARA Title III requires that any potential for an explosion or toxic release has to be reported on the basis of "practical worst-case scenarios." The management challenge is to work with the community to ensure that the low probability of such an event is understood.

The burden of regulatory reporting requirements and the added management concerns inherent in the use of hazardous chemicals has led to innovations in the production and delivery of such compounds. Examples include the development of centralized, zero-storage and zero-transportation manufacturing techniques for highly hazardous material (such as phosgene); the manufacture of less-hazardous, next-step intermediates before storage and transportation; and the provision of facilities at the customer's site for point-of-use, just-in-time generation of highly hazardous materials.

No short-term metrics have emerged for product stewardship, other than the degree of implementation of sound management processes. Review of management processes is part of environmental auditing and is usually done annually for planning and goal setting. CMA has developed a set of guidelines in this area (Box 5-6). The guidelines are intended to prompt action when they are reviewed within the highly specific context of an individual business.

Packaging

Although many chemical companies consider packaging a separate issue from materials use, packaging is being increasingly recognized as a major, and in some cases dominant, aspect of materials-use metrics. The common packaging metric is total mass of packaging, sometimes normalized per unit of material

sold. The metric is heavily used internally and, despite concerns about protecting confidential business information, is shared externally with increasing frequency. The major needs seem to relate to making more-sophisticated containers or other large assemblies and lightweight packaging and developing recycling networks. Generally, packaging that is intended to be waste (e.g., for consumer foods) or that unavoidably ends up in the environment (e.g., fast-food wrappings) would inflict less environmental harm if it were truly degradable. Conversely, it may be preferable to recycle packaging intended for more durable use. Understanding these differences, designing packaging products, and developing appropriate metrics remain challenges for the industry. In the short term, chemical companies have set goals for reducing the amount of packaging that enters or leaves their facilities. In the longer term, companies are working with their customers to develop innovations to reduce packaging and other risks associated with the purchases of chemical products (Box 5-7).

Summary Of Environmental Metrics In The Chemical Sector

The metrics used in the chemical sector, as in the automotive sector, can be categorized in terms of resource use and environmental burden. These are shown in Table 5-1, along with health and safety metrics that are generally collected by the same environmental health and safety staff.

Challenges And Opportunities

The use of environmental performance metrics and improved environmental stewardship techniques within the chemical industry is increasing. While many metrics have been driven by regulation and a general desire to be a "good neigh-

bor," others have been driven by competitive self-interest. The metrics currently in use, however, have several shortcomings, and there are emerging issues such as sustainability that will also require improved metrics.

Stewardship of Hazardous Materials

Stewardship of hazardous materials is a vital part of the chemical industry's product stewardship efforts. The consequences of inattention to this issue can destroy a company's credibility and ability to operate. Some companies, therefore, keep track of such measures as storage time or distance transported. Currently, all hazardous materials are treated alike. Correcting for risk factors (e.g., true toxicity, exposure pathway, method of transportation, method of handling) could provide valuable information that would help improve management. Understanding of these types of risk analysis, however, is still in the embryonic stage.

Emissions and Toxics Dispersion Metrics

The chemical industry's efforts to manage emissions from a multimedia perspective (i.e., to manage emissions to all media [water, air, and land] rather one medium at a time) has demonstrated the advantages of such an approach for environmental management (Solomon, 1993). That approach however, does not alter the need to track emissions by specific media. Rather the challenge lies in the development of potency-related metrics. The development of these metrics by ICI (Box 5-3) has renewed interest in weighted and aggregated metrics. Presently, however, no proposed system effectively aggregates the various categories of concern. More important, there is no consensus on what would constitute the most significant categories. The controversy is illustrated by a recent study that aggregated environmental metrics based solely on reported wastes, spills, and enforcement actions, normalized according to sales dollars (Kiernan and Levinson, 1997). At least two companies that had achieved excellent ratings and recognition based on current environmental performance standards and metrics were rated worse than average, according to the study. But the study failed to take into account complexities such as product mixes, number of sites, and types of emissions. While proponents of weighting and aggregation argue that such efforts can lead to better decision making, critics suggest that rather than more sophisticated metrics, it is more simple and useful metrics that are required. Furthermore, basic management approaches to improving environmental performance have yielded more challenging goals. For example, the goal of continual improvement toward zero emissions is ambitious enough that, in the short term, it has been more effective at improving performance than the development of any weighted or aggregated metrics.

Indeed, efforts to identify, define, and prioritize environmental issues coupled with the development of a publicly accepted understanding of those issues, may be more important than efforts to improve environmental metrics. Such an approach could lead to scientific methods to test for, or at least estimate, the adverse impacts that will guide subsequent industry actions.

Resource-Use Metrics

Attempts have been made to credit postconsumer waste that substitutes for virgin material, which in the case of the chemical industry is petroleum, or to develop a similar credit for crops and biomass that are used for raw materials. Currently, however, no agreed-upon metrics have been established. Likewise, there is a question as to whether firms should be credited for increasing a product's useful life in instances where the "value" of a chemical is rented but the manufacturer maintains control over its recovery, reprocessing, and reuse. In general, there are unresolved questions about how environmental costs and the benefits of recyclability and retrofitting ought to be measured.

There is also generally no acceptable method of balancing the environmental costs of increased material or energy use in production with the environmental benefits a product may create elsewhere in the economic system. Plastics that reduce the weight of cars and thus increase fuel efficiency are a prominent example.

The practice of normalization by mass is relatively simple, but it fails to measure environmental burden with respect to the function delivered. For example, take a new generation of agrochemicals that accomplishes the same (or better) weed control at about 1/200 the application rate of the previous generation. This means the farmer will handle less material and that there is less material being applied to the land. But, when evaluated on the basis of manufacturing waste or energy used per pound of chemical produced, these new products may appear more material or energy intensive, using current metrics. Their performance on a weight-per-acre-treated basis is superior, but such characteristics are unlikely to be captured in current metrics.

Energy is a vital input in efforts to recover product (and product precursors) through solvent recycling and waste streams. In fact, there is usually an increase in energy use for gains in materials efficiency. While recycling by itself is frequently reported internally and externally, no effective way has been found to capture this trade-off. Metrics that capture the trade-offs between energy and materials use, or between the manufacture of a product and its use, may have the greatest long-term impact. They could be useful not only to customers but also to other industries. Developing such metrics represents a challenging task.

Sustainability

Several preliminary efforts are under way within the chemical industry to define meaningful metrics relating to sustainable development. These metrics are addressing such issues as energy efficiency, including considerations for energy from truly renewable sources; materials efficiency, including considerations for truly renewable materials; capability for recycling and recycle content; and toxic dispersion corrected for quantified toxicity and for exposure pathway. In each of these areas there is a need to develop a common understanding of the concept of sustainability, develop metrics that drive continuous improvement, garner public acceptance for sustainability metrics, and establish benchmarks against which individual companies can measure themselves.

While there are certainly many issues related to sustainability that will be resolved only through public debate, the chemical industry would benefit by exploring the following issues:

• Use of raw materials and other process inputs derived from renewable and postconsumer recycle sources. Some care must be exercised here, since products made from renewable or recycled materials are not always

• better from an environmental standpoint. In some cases, the energy demand for the collection system or the product separation steps can be so high as to produce a net CO₂ increase comparable with the use of fossil carbon and "virgin" materials.
• Use of renewable energy or other "green" energy.
• Use of reprocessed water, with emphasis on returning spent water in superior condition to aquifers or to potable supplies.
• Feedstocks with lower environmental impact than currently competitive choices.
• Impact of manufacturing processes and product use on such things as biodiversity, habitat loss, and deforestation.

References

American Chemical Society. 1998. Technology Vision 2020: The U.S. Chemical Industry. Available online at http://www.chem.purdue.edu/v2020/. [February 5, 1999]

Carberry, J. Forthcoming. Environmental knowledge systems at DuPont. Paper in Green Tech·Knowledge·y: Information and Knowledge Systems for Improving Environmental Performance. Washington, D.C.: National Academy Press.

Chemical Manufacturers Association (CMA). 1995. CMA Statistical Handbook. Washington, D.C.: CMA.

Chemical Manufacturers Association (CMA). 1998a. Responsible Care: A Public Commitment. Available online at http://www.cmahq.com/cmaprograms/re/about/content_rc_about.html. [August 10, 1998]

Chemical Manufacturers Association (CMA). 1998b. Responsible Care: Codes of Management Practices: Product Stewardship. Available online at http://www.cmahq.com/cmaprograms/rc/renews/lc_rc_rcnews.html. [August 10, 1998]

Imperial Chemical Industries. 1998, Environmental Burden Approach. Available online at http://www.ici.com/download/index.htm. [August 10, 1998]

Kiernan, M., and J. Levinson. 1997. Environment drives performance: The jury is in. Environmental Quality (Winter): 1–8.

Magretta, J. 1997. Growth through global sustainability: An interview with Monsanto's CEO, Robert B. Shapiro. Harvard Business Review 75(1):78–83.

Solomon, C. 1993. Clearing the air. What really pollutes? Wall Street Journal, March 29.

White, A., and D. Zinkl. 1997. Green Metrics: A Status Report on Standardized Corporate Environmental Reporting. Boston: Tellus Institute.

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