Covestro Group at a Glance – Circular Economy and Climate Neutrality

Circular Economy

Efforts toward building a in the company can be measured by verifying the degree to which we can replace fossil sources of carbon for production with renewable raw materials and create a closed loop for producing renewable anorganic compounds. We accomplish this for carbon sources by concentrating on products and processes that permit us to employ biomass, CO2, and raw materials recycled from waste. Synthetic raw materials manufactured using green electricity, such as hydrogen, are also becoming increasingly important. In particular, Covestro can leverage procurement on the one hand and the development of our own innovative process technologies for CO2 use, biotechnology, and plastics recycling using chemical means on the other. We are counting on new strategic partnerships to promote recycling within the value chain to make alternative raw material use transparent and to ensure used plastics are recycled at the end of their life cycle.

Monitoring Circularity in the Company

In the interest of quantifying our progress and successes in building a circular economy in line with our Group’s vision, this reporting year we researched and assessed various indicators and methodologies for measuring circularity in the company. We aim to develop a customized system for Covestro following on this effort. 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 .

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 significant contribution to future climate-neutral value creation in our industry. During the year under review, we marketed new, circular product solutions in both segments.

Recyclability & End-of-Life Solutions

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 production activities. In addition, we also want to use raw materials that were recycled in upstream stages of the value chain at Covestro. On the whole, chemical recycling processes are an important tool to help 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 into account effects and contributions throughout the entire life cycle.

When we engage in dialogue with politicians and the public, we advocate for structuring the required regulatory environment for establishing a 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.

We made progress in areas such as thermochemical recycling of high-performance materials with complex compositions. In the reporting year, Covestro commissioned two new laboratories in Antwerp (Belgium) and Dormagen (Germany) for the thermal decomposition of chemical compounds at elevated temperatures. These facilities can break down polycarbonates as well as rigid foams into high-quality molecules that can then be recycled and integrated into production processes as raw materials. Our low-temperature pyrolysis process enables us to eliminate several steps and therefore to considerably cut carbon emissions compared with conventional high-temperature pyrolysis.

Both pyrolysis and depolymerization are being investigated and pursued as possible chemical recycling technologies for rigid polyurethane foams. In depolymerization, polymers are turned back into materials such as monomers and intermediates using solvents, catalysts, and heat, under pressure if necessary. In this context, CIRCULAR FOAM, an EU project coordinated by Covestro, was launched in October 2021 and will run for four years.

Furthermore, in the year 2021, Covestro made progress in the chemical recycling of flexible polyurethane foam from mattresses. After commissioning a pilot plant in Leverkusen (Germany) at the end of fiscal 2020, we continued to research detailed process parameters in the reporting year and were therefore able to further analyze the laboratory results to date.

Another strategic option for Covestro is enzymatic recycling, which involves using enzymes to very selectively break down plastics into smaller fragments (monomers) at low temperatures. These monomers can then be reused to produce new, equally high-quality plastics. Enzymatic recycling is still in the early phase of development, but due its high selectivity (generating few to no by-products) and low processing temperatures, this technology is very promising. Covestro has identified this potential and, in addition to our own research, has entered into key partnerships to deploy this innovative technology in recycling.

Besides developing pioneering recycling processes, Covestro has also tackled waste logistics. We are developing these activities in line with our circular economy goals of finding suitable ways to reuse previously used materials and products at the end of their life cycle. To this end, Covestro signed a strategic letter of intent with environmental services provider Interseroh Dienstleistungs GmbH, Cologne (Germany), during the reporting period aimed at collaborating on establishing new recycling loops. This partnership is a significant milestone for the convergence of the chemical and recycling industries.

Alternative Raw Materials

In addition to Covestro’s own production of recycled and biogenic raw materials, the strategic alignment of our raw material and energy procurement activities with our corporate vision is vitally important. We aim to continually increase the share of alternative raw materials used in production and reach 100% in the long term. Covestro defines alternative raw materials as all raw materials made from biomass, CO2, or waste, or manufactured on a nonfossil basis using renewable energy.

In the 2021 fiscal year, Covestro further stepped up the volume of strategic alternative raw materials sourced. We purchased a total of more than 20,000 metric tons of circular raw materials for use in production activities in Europe and at our site in Shanghai (China). The goal here is to be able to offer a broad market a steadily growing portfolio of sustainably manufactured materials.

We have begun to have our production facilities audited and certified to the ISCC PLUS process to reflect the certification of these raw materials for 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 addition to Krefeld-Uerdingen (Germany) and Antwerp (Belgium), Covestro had additional sites, including Shanghai (China), certified to the ISCC PLUS process for the integration of renewable raw materials in production in the reporting period.

New Business Models, Digitalization, and Transparency in the Value Creation Cycle

It is critically important for the transformation to a that at the end of the life cycle of a material, the necessary information is available to choose a suitable recycling method. 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.

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-based methods, and simulation of reactions are common methods in digital chemistry that are applied in this context. We use our expertise in digitalization to develop important polymer feedstocks based on alternative raw materials. Covestro additionally concentrates on closing material loops in a number of different applications in the product portfolio. This includes partnerships and new business models aimed at adding value for our customers, for example, by marketing recycled products. In this way, modern data science methods support adaptation to future value chains.

Global and Regional Promotion of the Circular Economy

We also promote the circular economy by participating in regional and global initiatives. For example, as a founding member of the Alliance to End Plastic Waste, Covestro actively campaigns for regulated systems for disposing of and recycling plastic waste to stop it from entering the environment.

In addition to various R&D projects on the circular economy, Covestro participates in other circular economy projects at the sociopolitical level in Europe. 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.

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). 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 the area of plastics. As one of the world’s most important producers of chemicals, China is taking steps to further domestic plastic recycling and, at the same time, to prohibit or limit the use of single-use plastics. Covestro contributed in the year under review to developing national standards there for recycled polycarbonate along with a consortium of partners from the Chinese recycling value chain.

Circular economy
A regenerative economic system in which resource input, waste production, emissions, and energy consumption are minimized based on long-lasting and closed material and energy cycles.
Carbon productivity
The value generated per carbon unit used (e.g., in the form of fossil raw materials such as coal, oil and natural gas). Measuring carbon productivity is intended to promote a sustainable and optimal use of carbon.
Circular economy
A regenerative economic system in which resource input, waste production, emissions, and energy consumption are minimized based on long-lasting and closed material and energy cycles.