Eco-innovations on Chemelot

Abstract

The Dutch economy is at present largely driven by fossil fuels, including the chemical industry. To achieve the goals set by the Paris Climate Agreement, the industry needs to decarbonise by switching to renewable sources. However, the industry faces many barriers in this climate transition. This research analyses the Dutch chemical site Chemelot, one of the largest sources of greenhouse gas emissions in the Netherlands. Chemelot uses primarily natural gas and naphtha as energy and feedstock resources. Currently, a debate is ongoing on Chemelot whether electricity or hydrogen should be the main focus of replacing fossil fuels and raw materials, as these are the most potential eco­innovation alternatives. These eco­innovations pose a technology battle for dominance. The site users on Chemelot need to make decisions now, which will have consequences for both society and firms in the future.
There are multiple types of factors that affect eco­innovation adoption. This study created a new framework that distinguishes Technological factors from Non­technological factors because it is desir­ able to gain early insight in both: Technological factors so that the decision can be based on what benefits best for the future industry and society; Non­technological factors to identify barriers and op­ portunities in time and how to deal with these. The Non­technological factors are distinguished between External and Internal factors, with External factors reflecting the environment in which a firm operates and Internal factors considering firm­specific characteristics. The objective of this study is therefore to identify relevant factors that affect the adoption of eco­innovations with the ultimate goal of decarbon­ ising the Chemelot site. Hence, this research aims at answering the following research question: What drives the technology battle for eco­innovation adoption on Chemelot?
This exploratory and descriptive research investigated Chemelot as the main unit of analysis. It is a single and embedded case study design. This research started by reviewing the literature regarding the topics of technology battles, technology dominance, adoption, barriers in the chemical industry, and eco­innovations. Based on the literature review, a framework was made containing factors that affect eco­innovation adoption. Additionally, factors were added to the framework based on conversations with experts. The framework was then validated by interviewing experts and conducting a Best­Worst Method analysis. The Best­Worst Method is a suitable Multi­Criteria Decision­Making tool when eval­ uating multiple factors when objective metrics are lacking. Experts were asked to indicate the factors according to relevance with regard to eco­innovation adoption in the chemical industry. Additionally, the weights indicated by the participants were normalised using the Best­Worst Method to compare the factors. In total, 14 participants participated in the semi­structured interviews with questions to gain deeper knowledge about the technology battle between eco­innovations on Chemelot.
The site users on Chemelot have to make decisions for eco­innovations now, which will have con­ sequences for future society and industry. Since the consequences of the eco­innovation choices are influenced by both Technological and Non­technological factors, this research created a new frame­ work of factors affecting eco­innovation adoption. This research found that the sub­factor Regulatory Pressure is the most relevant in the set of Non­technological External factors. In the Non­technological Internal factors, Firm’s Strategy is found to be the most relevant sub­factor, closely followed by Firm’s Management. In the set of Technological factors, the sub­factor Capex is found to be the most relevant factor. The normalised weights of all the factors show that the Non­technological External factors are the most relevant factors for eco­innovation adoption for the Chemelot site. Furthermore, the Techno­ logical factors appear to be equally relevant as Non­technological Internal factors because they hardly rank higher.
The results from the conducted interviews show that experts define a successful energy & raw ma­ terial transition when the environmental impact of greenhouse gasses is reduced while simultaneously maintaining employment, innovation, economic welfare, and adding value to society. The barriers the site users face on Chemelot to reduce environmental impact are: cross­sectoral collaboration among actors, sufficient availability of renewable energy and raw materials, lack of effective policy, high degree of integrated plants and processes, differently aligned strategies of the site users compared to Chemelot’s, increasing pressure by lobbies and society, a failing market always that proposes fossil technologies as the cheapest option rather than providing sustainable eco­innovation alternatives mak­ ing investment difficult, and the lacking or insufficient infrastructure. The opportunity Chemelot has are: the high degree of integrated plants because they offer synergies, advanced R&D facilities, the innova­ tion and knowledge centre Brightlands Chemelot Campus, and highly experienced and knowledgeable experts.
The technology battle between eco­innovations on Chemelot is twofold. For the heat­generating application, the technology battle is fought between hydrogen and electricity. The direct use of elec­ tricity is much more efficient for this application, because energy losses during the initial conversion of electricity to hydrogen are avoided and because no flue gases are released that contain energy when generating heat from electricity. Nevertheless, hydrogen technology for this application is being pushed by the actors, despite the fact that it is a less favourable alternative. This could have serious consequences for Chemelot since this is a much more expensive alternative.
Furthermore, this research concluded that the technology battle for dominance is fought between the incumbent technologies and eco­innovations rather than between hydrogen and electrification. Both electrification and hydrogen are indispensable technologies required in this climate transition but will depend on the application. Moreover, site users continue to maintain their fossil assets while this is expensive and greenhouse gas emissions reduction is limited. They are reluctant to switch to disruptive eco­innovations because of the aforementioned barriers. Continuing the investments, in turn, raises the barrier for the site users to adopt eco­innovations due to the longer payback periods.
Delaying the adoption of eco­innovation can be explained by the lack of a positive business case. The business case is reflected by the Technological factors Capex, Opex, and Efficiency, and is in­ dicated as a prerequisite. This affects the intrinsic motivation of the site users, which is reflected by the Non­technological Internal factors. However, site users are motivated by external pressures such as regulations, subsidies, market pressures, and rising emission taxes, which are reflected by Non­ technological External factors.