Covestro wants to use the circular economy in the future primarily to provide efficient solutions so that products and materials are returned to the value creation cycle at the end of their life cycle – as a whole, in the form of polymers, or in molecular or other chemical forms. The use of other renewable carbon sources and the increased deployment of renewable energies in production are complementary measures at Covestro for establishing a closed loop system in the company. Under the Circular Economy global strategy program Covestro took further steps to establish circularity throughout the entire company and to drive efforts toward “becoming fully circular” – our corporate vision. We identified areas of focus in the strategy program ranging from product design to procurement, energy and raw material generation and use, to the development of new business models and innovative production methods in order to achieve this goal. All our activities aim to close carbon and material loops, and thus achieve climate neutrality and reduce the use of resources in the company itself, and in upstream and downstream stages of the value chain.
Our target for increasing carbon productivity
We intend to create more value and increase our carbon productivity by using fewer carbon-based fossil resources.
Our circular economy activities are making a critical contribution. We investigated and evaluated various indicators and measurement methods for circularity during the reporting year and will build on this to develop a system for Covestro.
Management and implementation
Both the internal transformation and the promotion of external transformation into a closed-loop system are driven by the Circular Economy global strategy program. In the course of announcing the new corporate vision, Covestro added a steering committee to the program. The committee is made up of the heads of the Strategy and Portfolio Development, Procurement, Sustainability, and Central Marketing corporate functions, Polyurethanes, Polycarbonates, and Coatings, Adhesives, Specialties, and the management of the Finance, Production, and Technology corporate functions. By making decisions and providing direction for the program, the steering committee is intended to ensure the implementation and development of steps toward a closed loop system in all corporate functions. Corresponding recommendations for action are developed in global teams that cover technologies for alternative raw materials, raw material markets, procurement, customer segments, site development, CO2 impacts, and positioning in the context of a circular economy. This Group-wide program is sponsored by Covestro’s CEO.
During the reporting period, we made progress on initiatives within the strategy program, including measuring and reporting circularity in the company, criteria for a circular and sustainable product portfolio, Covestro’s climate stewardship, and identification of greenhouse gas reduction paths.
Measuring and reporting circularity in the company
In order to make our achievements in implementing a closed loop system measurable in line with our corporate vision, suitable indicators and criteria are required. We investigated and evaluated various indicators and measurement methods for circularity at Covestro during the reporting year and will build on this to develop a suitable system for Covestro. To this end, we are also studying existing models, e.g., the ones developed by the Ellen MacArthur Foundation or the World Business Council for Sustainable Development (WBCSD), and building on our experience to date with approaches to carbon productivity.
Criteria for a circular and sustainable product portfolio
We have begun defining criteria and circularity requirements for our products and services so that we can align our product portfolio more closely with circular solutions for our customers and offer these in a targeted manner in the future. Examples include minimum recycled or renewable raw material content and the combined use of renewable energy in the production of our materials. A top priority in this regard is to improve our carbon footprint compared with a conventional product portfolio so that we can make a tangible contribution to future climate-neutral value creation in our industry.
Covestro’s climate stewardship and the identification of greenhouse gas reduction paths
The move towards a circular economy is key to substantially reducing Scope 1, Scope 2, and Scope 3 greenhouse gas emissions – i.e., direct and indirect emissions sources pursuant to the Greenhouse Gas Protocol (GHG)) – along the entire value chain. In the reporting year, development of a global carbon roadmap was initiated with an initial focus on the year 2030 in order to align Covestro’s existing targets for reducing greenhouse gas emissions in accordance with the new corporate vision. The roadmap serves as a pillar of our Covestro Climate Stewardship, which is aimed at ensuring compliance with the greenhouse gas emissions targets and continual short-, medium-, and long-term reductions in emissions. The roadmap will be the foundation for prioritizing specific greenhouse gas reduction projects and for adapting the company’s climate-related targets to the new corporate vision. It will generally address and evaluate all direct and indirect sources of emissions pursuant to the GHG Protocol. Covestro already has a regular reporting system in place for Scope 1 and Scope 2 emissions. A reporting system for Scope 3 greenhouse gas emissions is under development.
Recycling and production processes
Our core technical competence is the development and application of complex chemical processes. In particular, we want to use this expertise to establish innovative chemical and biochemical recycling and production processes for a circular economy. We want to create processes that enable us to reclaim from used materials the chemical precursors required for their production. These can in turn be used as raw materials in our own production activities. In addition, we also want to use recycled raw materials in upstream stages of the value chain in production at Covestro. On the whole, chemical recycling processes are an important tool for Covestro in gradually replacing the use of fossil-based materials and in contributing to closing carbon loops as a pillar in a climate-neutral method of production. The benefits of the new processes will be verified by means of a life cycle assessment (LCA), in other words, taking the entire life cycle into account.
When we engage in dialogue with politicians and the public, we advocate for structuring the required regulatory environment for establishing a comprehensive circular economy with room for innovation and, in addition to established recycling methods such as mechanical recycling, also recognizing chemical recycling processes as complementary methods.
Covestro is currently researching recycling processes for its own products and materials in more than 20 projects. Of particular importance for Covestro are processes with which materials can be chemically or enzymatically transformed back into their molecules. The secondary raw materials obtained in this manner are of a comparable quality and have properties similar to conventionally manufactured raw materials, and can therefore be reused to manufacture products and materials.
When it comes to implementing circularity, we have made important progress in polyurethane recycling. The first pilot plant for recycling flexible polyurethane foam was commissioned during the reporting year, building on our participation in the PUReSmart research partnership project. This foam is used, among other things, for the manufacturing of mattresses and car seats. In contrast to other processes under development, both polyether polyol and toluene diamine (TDA) are reclaimed here, not just polyether polyol. TDA is used at Covestro in toluene diisocyanate (TDI) production. By recovering it, we aim to develop a fully closed loop for our flexible polyurethane foams.
Further development of the circular and sustainable product portfolio
A key element in the circular economy is applying the principle of design for circularity. This means that various aspects of circularity, such as alternative raw materials, avoiding waste, durability of the application, and recycling options, are considered when developing products. Depending on the intended use, design for recycling may also play an important role here, along with the use of as few as possible different and pure materials in a product.
In this context, Covestro has set standards and, for instance, launched a unique headlight concept based on the use of monomaterials. This LED headlight system is composed of just four materials: Makrolon® polycarbonate; Bayblend® polycarbonate/ABS blend, a scratch-resistant coating (outer lens cover), and metallization (reflectors). This simplifies recycling considerably as it reduces separation, sorting, and storage effort in the recycling streams at the end of the headlight’s useful life.
Another aspect of circularity at Covestro is CO2 recycling. The materials we produce are based on carbon, which can be converted to CO2 in various ways. In the future, all possibilities for CO2 use must be exploited to meet the ambitious government and non-government climate protection goals under the Paris Agreement. We have already established an innovative platform technology for this purpose – cardyon® – that allows us to use CO2 in our production process directly, and we continually strive to expand the existing application options for this technology. In addition to current uses, such as mattresses, sports flooring, and textile fibers, Covestro developed another application in the reporting year and offers the technology for the manufacture of foams used in the automotive industry. In the year 2019, Covestro was nominated along with RWTH Aachen University and the Max Planck Institute for Chemical Energy Conversion, Mülheim an der Ruhr (Germany), for the German Future Prize – the Federal President’s Prize for technology and innovation – and selected for inclusion in the “Circle of the Best” for this prize.
Moreover, in addition to the integration of renewable raw materials into production processes already underway, business activities involving mechanically recycled polycarbonate were expanded further in the reporting period. Polycarbonate products with mechanically recycled content are now marketed not only in the Asia-Pacific region but also in Europe. All told, 13 types of polycarbonate have been developed to date containing up to 75% recycled content. This enables us to reduce our carbon footprint by up to 50%.
In China, Covestro also entered into a strategic partnership in the area of drinking water container recycling. An agreement was signed with partners Nongfu Spring, Hangzhou (China), and Ausell, Shanghai (China), to introduce a recycling model for 19-liter reusable drinking water containers that can be recycled after several uses and reused as recycled polycarbonate, particularly in electronics applications. The partnership expects to collect and recycle one million of these drinking water containers annually.
Raw material and energy procurement
In addition to Covestro’s own production of secondary and biogenic raw materials, the strategic alignment of our raw material and energy procurement activities with our corporate vision is vitally important. During the reporting period, Covestro therefore further expanded its strategic partnerships to promote the circular economy.
As part of a strategic raw material partnership with Neste, Espoo (Finland), and Borealis, Vienna (Austria), Covestro has started to use renewable hydrocarbons in the production of the phenol, which is required to manufacture polycarbonate. To date, the hydrocarbons on which this chemical is based were obtained from petroleum. At Neste, however, they are produced from resources such as waste and residual oils and fats. In a further step, Borealis uses the hydrocarbons certified by Neste to produce phenol, which Covestro uses to produce polycarbonate. On this basis, petroleum can be replaced with certified renewable raw materials in the value chain for producing polycarbonate.
We have begun to have our production facilities audited and certified to the ISCC+ process to reflect the certification of this material for its further use along the entire value chain. International Sustainability and Carbon Certification (ISCC) is a recognized system for certifying the sustainability of biomass and bioenergy. The standard, which covers all stages of the value chain, is widely used worldwide. In the reporting period, Covestro initially had the Krefeld-Uerdingen (Germany) and Antwerp (Belgium) sites in Europe certified to the ISCC+ process for the integration of renewable raw materials in production. Other sites for the integration of renewable raw materials are to be certified in the future in order to provide these solutions to a broad market and to move successively from the raw materials used in production to alternative raw materials.
Covestro also made progress in supplying production sites with renewable energy and signed what was then the world’s largest industry supply contract for offshore wind energy with energy supplier Ørsted, Fredericia (Denmark). From the year 2025 onward, Covestro will be supplied with electricity for a period of at least 10 years from wind energy generated by a newly constructed wind farm off the island of Borkum. A capacity of 100 megawatts was agreed. This deal bolsters Covestro’s comprehensive sustainability strategy and provides impetus for climate-friendly electricity generation. Likewise, it contributes to shrinking the carbon footprint of production, our products, and our customers’ applications.
In the context of expanding the generation of electricity from renewable sources, Covestro advocates for subsidizing wind energy generation using a differentiated pricing model in which all cost components for the industrial electricity price are included to keep the price competitive in an international context and consequently drive the continued expansion of renewable energy in accordance with long-term climate goals at the European and global levels.
Digitalization and transparency in the value creation cycle
It is critically important for the transformation to a comprehensive circular economy that at the end of the life cycle of a material, the necessary information is available so that a suitable method of recycling can be chosen. Covestro is involved in the Circularise Plastics project along with Circularise, The Hague (Netherlands), and DOMO Chemicals, Leuna (Germany). The objective of the project is to develop an open blockchain standard for establishing a data exchange protocol. This will identify materials and their composition along the entire value chain so that the best possible recycling option at the end of the product’s life cycle can be determined. The unique thing about this protocol is that the stored information is only accessible to those with a justified interest, enabling sensitive product information to remain protected.
Moreover, Covestro started a pilot project with Circularise and DOMO Chemicals as well as Porsche, Stuttgart (Germany), and Borealis, Vienna (Austria), in the reporting period. In this project, the traceability, carbon footprint, and other sustainability indicators are to be digitalized using the blockchain method along the entire supply chain for materials and products that Porsche uses in vehicle manufacturing.
Covestro also implements digital processes to support technology development as part of the circular project portfolio. “In silico” catalyst development, in which the sequence of chemical reactions and the effect of different catalyst structures are calculated with computer-chemical methods, and simulation of reactions are common methods in digital chemistry that are applied in this context. We use our expertise in digitalization for the development of important polymer feedstocks based on alternative raw materials. Moreover, modern data science methods support adaptation to future value chains.
Community and regional engagement
Covestro pursues the circular economy globally. Additional activities to promote a circular economy were initiated in the various regions in which we do business.
Our global commitment
As a company that does business across the globe and whose products are found in a wide variety of applications, Covestro is aware of its responsibility. This is why we advance the circular economy and climate protection in global initiatives. For example, as a founding member of the Alliance to End Plastic Waste, Covestro actively campaigns against the disposal of plastic waste in the environment.
Within the framework of the World Economic Forum’s “Collaborative Innovation for Low-Carbon Emitting Technologies” (LCET) initiative, Covestro advocates for the accelerated development of climate-friendly technologies in the chemical industry and downstream value creation stages. Covestro assumed co-leadership of the waste processing project within the LCET initiative. This project aims primarily to investigate the role of the circular economy in achieving greenhouse gas reduction targets and to advance this through collaborative approaches.
Our commitment in Europe
In addition to various R&D projects on the circular economy, Covestro participated in other circular economy projects at the sociopolitical level in Europe.
Of note is our participation in the Circular Economy Initiative Deutschland (CEID) organized by the German Academy of Science and Engineering (Acatech). This initiative financed by the Federal Ministry of Education and Research (BMBF) and partners such as Covestro published three final reports with our participation in fiscal 2020. The subjects of these reports are circular business models, closed-loop requirements for mobile electricity storage, and closed-loop requirements for plastic packaging. Together they form the starting point for the road map to be developed by CEID for a circular economy in Germany.
At the European level, Covestro is a founding member of the Circular Plastics Alliance, whose goal is for European industry to use at least 10 million metric tons of recycled plastics annually from the year 2025 onward. Recommendations for value-chain-specific action items are developed here in specific working groups. Covestro is an active member in the automotive, packaging, construction, electronics, and monitoring groups.
At the Leverkusen (Germany) site, Covestro participates in IN4climate.NRW, which was launched by the Ministry of Economics, Innovation, Digitalization, and Energy of North Rhine-Westphalia and serves as a platform for industry, the sciences, and the political sphere to establish climate-neutral industry. Covestro is represented in the economic advisory board by Board of Management member Dr. Klaus Schäfer, among others. In the reporting year, IN4climate.NRW concentrated on the circular economy, hydrogen, and the CO2 economy, which are also core elements of Covestro’s circular economy strategy. Among other things, Covestro participated in the drafting of discussion papers by IN4climate.NRW on CO2 use, the potential of chemical plastic recycling, and the role of hydrogen.
The role of hydrogen in a greenhouse-gas-neutral chemical industry and Covestro’s commitment
In the future, hydrogen is expected to contribute substantially to the energy transition – for example, by being used as part of CO2 conversion for the generation of climate-neutral sources of energy, for use as energy and as a material, especially in the chemical industry.
Covestro campaigns for the development of a national and European hydrogen strategy. In this context, our Board of Management member Dr. Klaus Schäfer was appointed by the German government in September 2020 to the National Hydrogen Council, which began its work in October 2020.
Our commitment in the United States
In North America, we advocated at our site in Pittsburgh, Pennsylvania (United States), to include the option of chemical recycling in the state’s waste regulations. Through our involvement in the American Chemistry Council (ACC), we are also promoting recognition of this option and a uniform regulatory environment in the United States in other American regions. Moreover, we have launched projects to accelerate the development of chemical processes to recycle polyurethane foams, e.g., as part of our partnership with the Mattress Recycling Council, which advocates for the use and recycling of used polyurethane foams for mattresses.
Our commitment in China
In addition to developing our portfolio of recycled polycarbonate, we pushed forward with the development of other applications by combining them with other recycled raw materials such as carbon fiber and PET (polyethylene terephthalate).
New waste management approaches and the development of creative closed loop approaches together with students were the focus of our longstanding partnership with Tongji University and the Covestro-Tongji Innovation Academy in Shanghai (China) in the reporting year.
In China, we were also involved in circular economy topics through various associations such as the China Petroleum and Chemical Industry Federation (CPCIF), the China Plastics Reuse and Recycling Association (CPRRA), and the China Circular Economy Association (CCEA). Of particular note during the year under review was the fact that we joined the CPCIF-CPRRA Green Recycled Plastic Group as a founding member. By participating in these associations, Covestro plans to contribute to advancing the closed loop principle for plastics in China and to raising awareness among politicians and citizens of circular options along the entire value chain, particularly in respect of plastics.
Moreover, we continued to take part in the Upgrading New Energy Vehicles recycling project under the auspices of the Sino-German partnership established by the governments of China and Germany. This project aims to investigate the basic conditions for closed loop recycling for cars and deliver results with a view to developing possible standards.