WEBVTT - Decarbonizing Petrochemicals 0:00:00.320 --> 0:00:03.160 Hi, I'm Dana Perkins, and you're listening to Switch It 0:00:03.200 --> 0:00:06.800 on the b F podcast. Petro Chemicals are the building 0:00:06.800 --> 0:00:10.840 blocks of countless materials and an essential component of the 0:00:10.840 --> 0:00:14.760 industrial supply chain. They're also one of the largest sources 0:00:14.800 --> 0:00:18.000 of industrial emissions and a growing source of oil demand. 0:00:18.800 --> 0:00:21.200 So how do we bring these emissions down? And what 0:00:21.280 --> 0:00:25.160 are the technologies for decarbonizing? Can we have zero carbon 0:00:25.280 --> 0:00:29.080 high value chemicals and feedstocks? What is it going to cost? 0:00:29.160 --> 0:00:32.159 And what are some of the company strategies. These are 0:00:32.200 --> 0:00:34.440 some of the things my colleagues il Han and c 0:00:34.640 --> 0:00:39.400 C looked at when writing Decarbonizing petro Chemicals Corporate Strategies 0:00:39.680 --> 0:00:44.040 and a second research piece titled Decarbonizing petro Chemicals Technologies 0:00:44.080 --> 0:00:47.840 and Costs. They're both part of a Decarbonizing Industry series 0:00:47.880 --> 0:00:52.240 we've written. Ilhan Savut writes about sustainable Materials for BENF 0:00:52.280 --> 0:00:55.319 and C. C. Tang is an oil and petro chemicals analyst. Here. 0:00:55.680 --> 0:00:57.880 Both of these reports can be read at b NF 0:00:58.080 --> 0:01:01.080 on the Bloomberg terminal, on BNF dot com, or the 0:01:01.080 --> 0:01:03.440 b NF mobile app. A quick reminder, B and E 0:01:03.520 --> 0:01:06.120 F does not provide investment strategy advice and we have 0:01:06.160 --> 0:01:08.480 a full disclaimer at the end of the show. And 0:01:08.560 --> 0:01:11.720 now let's speak with Ilhan and c C about decarbonizing 0:01:11.800 --> 0:01:22.279 petro chemicals. Illan and c C, thanks for joining today 0:01:22.319 --> 0:01:25.440 to talk about petro chemicals. Thanks for having us to 0:01:25.560 --> 0:01:27.560 be here. Thanks DNA. So we're going to get to 0:01:27.600 --> 0:01:29.520 the elephant in the room at a point, which is 0:01:29.680 --> 0:01:32.640 this hundred dollars of barrel. But before we go there, 0:01:33.040 --> 0:01:35.840 let's start with some fundamentals because it's important that we 0:01:35.880 --> 0:01:39.600 all understand what we're talking about here, which is petro chemicals. 0:01:39.640 --> 0:01:41.959 So what are they and what are we talking about today. 0:01:42.120 --> 0:01:47.200 Petro Chemicals consist of mainly ethylene, propoline, and aromatics, which 0:01:47.360 --> 0:01:50.480 we refer to as high value chemicals. So these are 0:01:50.480 --> 0:01:53.559 some of the most diverse materials in industry. They're using 0:01:53.600 --> 0:01:57.840 everything from wind turbine blades, two car seats, pains, detergents. 0:01:58.520 --> 0:02:02.280 Also a massive ndmark it are plastics. So any type 0:02:02.280 --> 0:02:05.440 of finished product that you can think of probably has 0:02:05.480 --> 0:02:11.160 a component that's derived from petro chemicals. So ubiquitous they're everywhere, 0:02:11.600 --> 0:02:15.120 and what is their carbon intensity? So when it comes 0:02:15.160 --> 0:02:19.200 to petro chemicals, there are two issues. One our scope 0:02:19.200 --> 0:02:22.600 po emissions, So essentially the emissions that arise during their production, 0:02:23.280 --> 0:02:26.040 which is mostly done through steam cracking where you take 0:02:26.160 --> 0:02:29.400 some sort of oiler gas based feedstock, you put it 0:02:29.440 --> 0:02:33.240 into a steam cracker where you react that feedstock with 0:02:33.320 --> 0:02:38.000 steam at very high temperatures, and that uses fossil based fuels, 0:02:38.040 --> 0:02:40.920 So then you have a source of seal two emissions there. 0:02:41.800 --> 0:02:45.200 But then there's also another aspect to it, and that's 0:02:45.240 --> 0:02:48.519 because what's and I find it's quite fascinating when we 0:02:48.560 --> 0:02:53.679 talk about the cartonizing petrick chemicals. Um the petro chemicals 0:02:53.720 --> 0:02:58.160 themselves consist of carbon molecules, so they're made of carbon themselves, 0:02:58.440 --> 0:03:01.200 So there are emissions associate did with end of life, 0:03:01.400 --> 0:03:04.280 such as incineration of plastic waste. So there are two 0:03:04.280 --> 0:03:06.840 sources of emissions there. But I think it's just important 0:03:06.840 --> 0:03:11.000 to point out that pet Kim's is one of the 0:03:11.040 --> 0:03:14.760 major imagers among hard to abate sectors, and demand for 0:03:14.919 --> 0:03:18.320 petro chemicals are expected to increase significantly over the coming decades. 0:03:18.360 --> 0:03:21.560 So whatever whichever way you look at it, it's crucial 0:03:21.560 --> 0:03:24.360 that we decarbonize this sector. So the hard to abate sectors, 0:03:24.400 --> 0:03:27.080 these are the ones where we don't have the solutions yet, 0:03:27.120 --> 0:03:29.079 and I guess we'll come to that in terms of 0:03:29.120 --> 0:03:31.840 some of the solutions that are starting to present themselves. 0:03:31.880 --> 0:03:35.440 But even within this class of hard to abate, where 0:03:35.480 --> 0:03:38.240 would you put them? Are they one of the biggest 0:03:38.240 --> 0:03:41.360 concerns or are they one where you feel like maybe 0:03:41.360 --> 0:03:42.800 they're going to make their way off of the hard 0:03:42.840 --> 0:03:46.080 to abate lest soon. In terms of carbon footprint, petcams 0:03:46.160 --> 0:03:50.440 follow cemented steel closely, and I would say that they're 0:03:50.480 --> 0:03:52.920 not as hard to abate. So pet Kim's is a 0:03:52.920 --> 0:03:56.600 bit easier compared to steal and cement. That's actually whatever 0:03:56.640 --> 0:04:00.520 it presents on decarbonizing petro chemicals. That's actually how I 0:04:00.600 --> 0:04:03.680 make the audience feel better is talk about the fact 0:04:03.760 --> 0:04:06.160 that they could be much worse off if they worked 0:04:06.160 --> 0:04:09.520 in the steeler cement sectors. So you're telling me there's 0:04:09.520 --> 0:04:12.480 a chance, I'm sure you may age their movie clothes. Okay, 0:04:12.520 --> 0:04:15.760 here we go. So can we talk about who the 0:04:15.800 --> 0:04:18.280 players are in this space? Would be really useful to 0:04:18.400 --> 0:04:22.840 understand if these are the big oil majors that we know, 0:04:23.320 --> 0:04:26.160 or if this is a really fragmented market. I think 0:04:26.240 --> 0:04:31.159 there are different types of petcam producers. Some oil majors. 0:04:31.279 --> 0:04:34.680 They have their petcam segments, the names we are all 0:04:34.680 --> 0:04:38.800 familiar with, Shell, Exallmobile, and they all have their downstream 0:04:38.839 --> 0:04:42.440 pecam business, so they used their upstream oil and gas 0:04:42.440 --> 0:04:46.400 as feed stock to feed into their petrol chemical facilities. 0:04:46.880 --> 0:04:50.599 And then we have dedicated petrol chemical producers also, I 0:04:50.600 --> 0:04:55.240 think familiar names like BSF and Doubt. They are not 0:04:55.400 --> 0:04:58.480 that upstream into oil and gas, but they are pretty 0:04:58.480 --> 0:05:02.520 focused in petrol chemicals calls from this basic petrol chemicals 0:05:02.520 --> 0:05:05.960 and specialty petrol chemicals. And then we have the end users, 0:05:06.120 --> 0:05:10.799 the consumer brands that use this plastics in their products. 0:05:10.920 --> 0:05:13.479 Il Han mentioned that we are likely to see more 0:05:13.560 --> 0:05:17.440 petro chemicals in various aspects of our lives in the future, 0:05:17.760 --> 0:05:20.919 and this is the potentially growing space within the businesses 0:05:20.920 --> 0:05:26.160 that you've just mentioned. CC. Is this a really growing 0:05:26.480 --> 0:05:29.800 and strategic part of the business and where does it rank, 0:05:29.800 --> 0:05:32.360 I guess in terms of their other business activities these 0:05:32.360 --> 0:05:36.000 businesses look at the future. I think it's very important 0:05:36.160 --> 0:05:40.279 to all these different types of petrochemical companies because we 0:05:40.400 --> 0:05:44.080 have seeing growing demand for petrol chemicals, so everyone is 0:05:44.480 --> 0:05:50.120 investing heavily to boost their capacities, especially for this oil 0:05:50.160 --> 0:05:54.040 and gas companies they are seeing challenges in other segments 0:05:54.040 --> 0:05:57.800 of their business. They have challenges from electric vehicles. They 0:05:57.839 --> 0:06:00.760 are not sell more gasoline as they are now in 0:06:00.839 --> 0:06:03.560 ten years, so they need to find out a solution 0:06:03.720 --> 0:06:06.400 for all the oil and gas they're producing, so they 0:06:06.640 --> 0:06:09.320 or pivot to petrol chemicals. They see it as a 0:06:09.440 --> 0:06:13.120 like solution for when we hit like pick oil, the 0:06:13.279 --> 0:06:17.120 oil demand destruction from electric vehicles. That's certainly a space 0:06:17.160 --> 0:06:21.480 that b ADF does talk about. So let's go to 0:06:21.640 --> 0:06:24.320 the elephant in the room, the thing that I promised 0:06:24.320 --> 0:06:28.400 at the beginning. So we have seen record oil prices 0:06:28.760 --> 0:06:32.800 well over a hundred barrel CC. Can you talk a 0:06:32.839 --> 0:06:34.760 little bit about what it means for the petro chemicals 0:06:34.800 --> 0:06:36.880 industry and ill hand, can you talk about what it 0:06:36.960 --> 0:06:39.880 might mean a little bit on NINT carbonization side. I 0:06:39.920 --> 0:06:43.800 think high oil prices definitely a pain for the petrol 0:06:43.839 --> 0:06:48.520 chemical producers. They are seeing much much higher costs because 0:06:48.560 --> 0:06:53.080 their feedstock, the NAZA and eating they're using are correlated 0:06:53.360 --> 0:06:56.159 with oil and gas price and now we have like 0:06:56.279 --> 0:07:00.960 record prices, so they are taking higher cost and the 0:07:01.040 --> 0:07:03.640 problem here is whether they can pass on this cost 0:07:03.680 --> 0:07:07.480 to their customers. If they can, then that's not a problem. 0:07:07.640 --> 0:07:10.920 They still have their margins. But if they cannot, which 0:07:11.240 --> 0:07:16.280 I'm afraid that's basically the case here in Asia Pacific especially, 0:07:16.800 --> 0:07:20.480 so if they cannot pass on this additional cost to 0:07:20.560 --> 0:07:24.760 their customers, they are bearing this pains of higher feast 0:07:24.760 --> 0:07:27.720 dock cost. The reason why they cannot pass on the 0:07:27.760 --> 0:07:32.200 cost is because that the competition is really high here. 0:07:32.600 --> 0:07:37.280 We have a lot of capacity additions from China, from 0:07:37.320 --> 0:07:39.960 like Asia and also from the Middle East, so we 0:07:40.040 --> 0:07:43.760 have a lot of producers coming into this field. We 0:07:43.880 --> 0:07:49.080 also have relatively weak demand. The producers cannot raise their 0:07:49.200 --> 0:07:53.080 product price alongside with the feast dock price when it 0:07:53.080 --> 0:07:56.640 comes to the decorbonization aspect of things. So, just to 0:07:56.680 --> 0:08:00.200 give some context, pet Kim's players have actually made some 0:08:00.280 --> 0:08:02.880 of the most ambitious net zero targets out there. If 0:08:02.920 --> 0:08:05.280 we compare it to the other hard to abate sectors, 0:08:05.560 --> 0:08:08.840 petcamps put players have actually made the most netser targets. 0:08:08.840 --> 0:08:11.920 So we think that over fifty of petro chemical production 0:08:11.920 --> 0:08:16.320 capacity is un covered by a net zero target right now. 0:08:16.560 --> 0:08:20.480 So all these players that are in this market right 0:08:20.480 --> 0:08:23.840 now that are maybe if if they're integrated players enjoying 0:08:23.880 --> 0:08:26.640 higher cash flows or pure petro chemical players that are 0:08:26.640 --> 0:08:30.240 may be suffering from higher feeds prices. So regardless, they're 0:08:30.280 --> 0:08:33.680 going to have to spend billions of dollars per year 0:08:33.880 --> 0:08:38.600 between now and to decarbonize their asset bass and reach 0:08:38.640 --> 0:08:41.760 those net zero bles. So that's just something important to 0:08:41.840 --> 0:08:44.120 keep in mind. And will discuss a bit more the 0:08:44.160 --> 0:08:48.000 technology options and where the costs are leader, but there's 0:08:48.040 --> 0:08:50.120 no other way of looking at this. This is going 0:08:50.200 --> 0:08:54.920 to require billions of dollars and investments each year going forward. 0:08:55.240 --> 0:08:58.120 Before we do get into those technology things. Let's just 0:08:58.320 --> 0:09:01.560 close off, and you know, we could probably sit here 0:09:01.559 --> 0:09:03.559 and talk about it all day, but for our purposes, 0:09:03.679 --> 0:09:06.600 what are the inputs? What are the primary inputs they 0:09:06.600 --> 0:09:09.880 are going into these high prices for the oil space 0:09:10.040 --> 0:09:13.079 right now because the war in the Ukraine certainly is 0:09:13.120 --> 0:09:16.200 one of them, but we were seeing these prices going 0:09:16.280 --> 0:09:20.200 up before that started. I think the market is was 0:09:20.240 --> 0:09:24.839 already really tight before we have this uh Ukraine walk. 0:09:25.000 --> 0:09:29.360 That is because after like two years into COVID, we 0:09:29.440 --> 0:09:32.920 have seeing like oil demand is getting back to pre 0:09:33.160 --> 0:09:38.440 virus levels, so people are driving, people are even flying more. 0:09:38.960 --> 0:09:41.880 So we have more demand, but on the supply side, 0:09:41.960 --> 0:09:45.839 we do not have enough supply coming either from the 0:09:45.920 --> 0:09:49.040 OPEC producers in the Middle East or from the U 0:09:49.160 --> 0:09:53.560 S show producers. For OPAC, they're gradually lifting up their 0:09:53.600 --> 0:09:56.680 supply for shall they have for the show producers, they 0:09:56.760 --> 0:10:02.280 have more concerns about their supply is coming like slower 0:10:02.320 --> 0:10:05.680 than demands. So that's why we are having like a 0:10:05.679 --> 0:10:09.720 tight market before the war, but now currently with a 0:10:09.760 --> 0:10:13.720 lot of uncertainties around the sanctions in Russia. There's no 0:10:13.880 --> 0:10:17.400 direct sanction on oil, but the oil sector is self 0:10:17.440 --> 0:10:22.640 sanctioning themselves. The ship owners are staying away from Russian 0:10:22.640 --> 0:10:26.079 oil and the refiners are staying away from Russian oil, 0:10:26.160 --> 0:10:29.719 so we have people are worrying we might lose the 0:10:29.840 --> 0:10:33.240 supply from the Russia side, So that's another hit from 0:10:33.240 --> 0:10:36.040 the supply side. Then we are the market is further 0:10:36.120 --> 0:10:40.319 into on balance. I would say, wow, so they're being cautious. 0:10:40.400 --> 0:10:43.439 And you mentioned that flights are resuming. I definitely am 0:10:43.480 --> 0:10:46.560 feeling that I'm seeing people travel worst. I'm glad to 0:10:46.600 --> 0:10:49.160 know that my personal experience is reflective of what we're 0:10:49.160 --> 0:10:50.880 seeing in the market, because that's another thing that I 0:10:50.880 --> 0:10:53.600 know that we track closely is is flights and oil 0:10:53.640 --> 0:10:56.720 demand coming from that? So let's go into this space. 0:10:56.760 --> 0:11:00.240 We've established that petro chemicals are hard to baitsa there, 0:11:00.360 --> 0:11:03.920 that there are some solutions out there, and that it's 0:11:03.960 --> 0:11:06.880 a growing space of growing source of demand going forward, 0:11:06.920 --> 0:11:09.720 both strategically for the company's making them, but also in 0:11:09.840 --> 0:11:13.760 terms of a problem from an emission standpoint. So ill Haan, 0:11:14.080 --> 0:11:16.160 we're going to need to figure out how we fix 0:11:16.240 --> 0:11:18.920 it and where shall we start. What aspects of the 0:11:19.000 --> 0:11:21.840 value chain are these net zero targets. Many of the 0:11:21.840 --> 0:11:24.280 companies that have made them um and you noted that 0:11:24.320 --> 0:11:28.640 they're ambitious. What are they looking to address? Just to clarify, 0:11:28.679 --> 0:11:31.000 they've made these targets for their scope one in Scope 0:11:31.000 --> 0:11:34.360 two emissions. So we'll talk a bit later about Scope three, 0:11:34.360 --> 0:11:36.480 but when it comes to Scope one in scope to 0:11:36.960 --> 0:11:40.840 it essentially comes down to de carbonizing those steam cockers 0:11:40.880 --> 0:11:42.720 that I was telling you about or coming up with 0:11:42.720 --> 0:11:45.480 alternative production processes. So I think that's that's a good 0:11:45.520 --> 0:11:47.400 and simple way of looking at it. So they're kind 0:11:47.400 --> 0:11:49.800 of two groups of de carbonization technology. Is the first 0:11:49.880 --> 0:11:53.040 being modifying the steam cracking process, and then the second 0:11:53.240 --> 0:11:58.040 just alternative commercializing alternative production processes. When it comes to 0:11:58.080 --> 0:12:00.920 the carbonizing steam cockers is there's some of the more 0:12:01.200 --> 0:12:04.760 kind of the usual suspects of the carbonization, so things 0:12:04.800 --> 0:12:09.400 like adding carbon capture and storage, or electrifying the furnaces, 0:12:09.480 --> 0:12:13.959 so instead of combusting those fossil fuels, you instead electrifier 0:12:14.040 --> 0:12:17.440 steam cracker and use resistance heating to get those high 0:12:17.840 --> 0:12:21.079 temperatures of up to a thousand degrees celsius, as well 0:12:21.120 --> 0:12:24.160 as things like changing the type of feedstock you use. 0:12:24.240 --> 0:12:26.360 So for example, if you have a NAFTA cracker, you 0:12:26.400 --> 0:12:30.880 could also switch to bionafta and crack that instead. When 0:12:30.880 --> 0:12:33.560 it comes to alternative production processes, there's a lot of 0:12:33.679 --> 0:12:36.320 movement happening there. Geeks like us tend to be a 0:12:36.320 --> 0:12:39.280 bit more interesting. So there are things like rotodynamic reactors, 0:12:39.320 --> 0:12:41.720 so that's a new furnace design for example, where you 0:12:41.920 --> 0:12:45.199 have a rotor that's just moving in place. It's again 0:12:45.240 --> 0:12:50.120 electrified and it's using the kinetic energy from spraying the 0:12:50.160 --> 0:12:54.000 little NAFTA particles to get those high temperatures. You also 0:12:54.080 --> 0:12:58.920 have other electro chemical processes, for example seal two two chemicals. So, 0:12:58.960 --> 0:13:02.000 as I mentioned earlier, petro chemicals and plastics are made 0:13:02.120 --> 0:13:06.240 of carbon, so you could actually capture use captured carbon 0:13:06.400 --> 0:13:11.480 to make these organic molecules. Now for a very short break, 0:13:11.600 --> 0:13:19.239 stay with us, So new technology innovation. This is definitely 0:13:19.520 --> 0:13:21.080 something that I think is fun for all of the 0:13:21.120 --> 0:13:25.360 nerds out there. So how new are these technologies? Because 0:13:25.360 --> 0:13:27.319 you mentioned at the beginning, you know there's c c 0:13:27.520 --> 0:13:30.200 U S, which that one has been discussed for a 0:13:30.240 --> 0:13:33.800 long time, and I know that part of the industry 0:13:33.880 --> 0:13:37.240 is making progress, but these other things, these I'm not 0:13:37.320 --> 0:13:39.319 even going to try and repeat the technicals off that 0:13:39.440 --> 0:13:43.319 you just said that these other technology advancements. Is this 0:13:43.360 --> 0:13:45.319 all brand new and are there a lot of bets 0:13:45.360 --> 0:13:47.439 being placed and then we'll see hopefully if one or 0:13:47.480 --> 0:13:50.040 to emerge or have these also been around for a 0:13:50.080 --> 0:13:53.560 while and now we're just sort of getting the application 0:13:53.600 --> 0:13:56.160 in the scale that they needed. It's a mix of both, 0:13:56.240 --> 0:13:58.520 but in terms of the way that we have to 0:13:58.600 --> 0:14:01.600 use them to decarbonize a set, it's all relatively new 0:14:01.640 --> 0:14:05.400 and untested. So we really need to kind of step 0:14:05.440 --> 0:14:07.520 up and make sure that we're trying these technologies and 0:14:07.559 --> 0:14:10.920 deploying these technologies commercial scale over the next decade. If 0:14:10.960 --> 0:14:14.160 we really want to reach those targets. But so far 0:14:14.200 --> 0:14:16.960 they've been relatively untested. But we're seeing a lot of 0:14:17.240 --> 0:14:20.240 movement in terms of players trying to kind of bring 0:14:20.280 --> 0:14:22.720 these technologies to market. So the we that needs to 0:14:22.800 --> 0:14:24.360 invest in it that they are kind of a couple 0:14:24.400 --> 0:14:27.040 of different strategies for companies to adapt technology and what 0:14:27.160 --> 0:14:28.880 is doubts our set to a startup and the other 0:14:28.960 --> 0:14:31.560 is to build a house. What's actually happening here, because 0:14:31.560 --> 0:14:34.560 this sounds expensive. One thing that's happening is there's out 0:14:34.600 --> 0:14:37.280 of collaboration going on. So a lot of the players 0:14:37.320 --> 0:14:40.800 are kind of coming up with consortia to work together 0:14:41.120 --> 0:14:44.080 because they're facing the same the same problems, right, So 0:14:44.160 --> 0:14:48.400 it's kind of a matter of gathering resources, sharing i P. 0:14:48.920 --> 0:14:51.040 And trying to work together with your peers who are 0:14:51.120 --> 0:14:56.320 facing very similar, very similar problems. So they're sharing technology, well, 0:14:56.320 --> 0:14:59.480 the sharing technology ideas. I mean, this is essentially in 0:14:59.480 --> 0:15:02.680 the race to net zero that is a space where 0:15:02.680 --> 0:15:05.200 actually we don't have any time to waste in terms 0:15:05.240 --> 0:15:09.240 of keeping proprietary information to oneself as a competitive edge. 0:15:09.520 --> 0:15:11.640 Is that what you're actually seeing in the industry that 0:15:11.720 --> 0:15:16.520 this kind of defies the business competitive logic. I think 0:15:16.640 --> 0:15:20.760 it doesn't really define the competitiveness side of side of business. 0:15:20.760 --> 0:15:24.160 It's more players finally realizing that net zero is non 0:15:24.160 --> 0:15:26.560 negotiable policies around the corner. I mean, if you're not 0:15:26.600 --> 0:15:30.040 already paying carbon prices, you're you're about to. You're probably 0:15:30.040 --> 0:15:32.360 already paying carbon prices in many markets, and you're about 0:15:32.400 --> 0:15:35.320 to start paying them in many more markets. So I 0:15:35.360 --> 0:15:37.960 think it's just these players finally realizing that it's not 0:15:38.000 --> 0:15:41.600 a zero sum game. That you can collaborate, commercialize of 0:15:41.600 --> 0:15:44.560 technology and everyone can be better off for it. It's 0:15:44.560 --> 0:15:46.880 not a question of well I reached net zero, you didn't. 0:15:47.200 --> 0:15:50.480 They all have to. They all have to reach net zero. 0:15:50.960 --> 0:15:53.920 Let's all get there together, Okay. SOE reference GOPE three emissions, 0:15:53.920 --> 0:15:56.040 and I think that there is definitely a theme emerging 0:15:56.160 --> 0:15:58.800 across a number of different shows that we've done and 0:15:58.840 --> 0:16:01.080 switched down when we bring ups three. This is a 0:16:01.120 --> 0:16:04.720 tough thing for every company because what happens to the 0:16:04.760 --> 0:16:07.480 stuff that you have made when you, in theory no 0:16:07.600 --> 0:16:10.480 longer have control over it, at least in the way 0:16:10.560 --> 0:16:13.800 industries are currently set up. So the Scope three emissions, 0:16:15.040 --> 0:16:18.880 what talk to me about the scale of the problem 0:16:18.920 --> 0:16:21.160 for the petrochemical space and what are they facing in 0:16:21.240 --> 0:16:24.760 terms of trying to wrangle this. Yeah, well, when it 0:16:24.800 --> 0:16:28.360 comes to SCOOPE three, specifically downstream Scope three emissions, a 0:16:28.400 --> 0:16:31.920 little of the carbon footprint of these petro chemical products 0:16:32.080 --> 0:16:35.080 can actually end up coming from those downstream remissions because 0:16:35.240 --> 0:16:38.680 there's that carbon captured inside the products. What's interesting here 0:16:38.760 --> 0:16:42.760 is that addressing those downstream Scope three emissions actually fits 0:16:42.760 --> 0:16:46.440 in very very well with the circular economy because circular 0:16:46.440 --> 0:16:51.000 economy is actually your biggest tool when addressing those downstream 0:16:51.120 --> 0:16:54.400 end of life emissions. So for example, instead of incinerating 0:16:54.640 --> 0:16:57.520 plastic waste and it's releasing that fossil based carbon back 0:16:57.560 --> 0:17:01.960 into the atmosphere, you could take that stake recycle its 0:17:02.000 --> 0:17:04.280 that's still a carbon emitting process, but it can be 0:17:04.520 --> 0:17:07.560 certain types of recycling can be less carbon intensive, so 0:17:07.640 --> 0:17:10.159 that can help the carbonize your value chain. But at 0:17:10.200 --> 0:17:12.000 the same time, there are other types of recycling, for 0:17:12.040 --> 0:17:16.200 example chemical recycling that can sometimes actually increase your carbon footprint, 0:17:16.400 --> 0:17:20.080 so they're also moving parts. But the circular economy and 0:17:20.119 --> 0:17:23.800 net zero one area where they intersect are those Scope 0:17:23.800 --> 0:17:26.399 three emissions. And yeah, like I said, that there's just 0:17:26.440 --> 0:17:29.199 alto moving parts. Not only on the technology side and 0:17:29.280 --> 0:17:31.639 the carbon emission side, but i CC mentioned on the 0:17:31.680 --> 0:17:34.800 market side as well, So the carbonizing petrol chemicals, like 0:17:34.920 --> 0:17:37.680 kind of sometimes look at it as kind of playing wacam. 0:17:38.119 --> 0:17:40.800 Whenever you kind of hit one on the head, another 0:17:40.880 --> 0:17:43.600 problem pops up. But if you kind of stay on 0:17:43.680 --> 0:17:46.440 top of it, you can it's actually not that heart 0:17:46.440 --> 0:17:48.760 of a game, constant work in progress, you know. I 0:17:48.880 --> 0:17:53.640 mentioned that these petrol chemical companies that haven't make sculptree 0:17:53.720 --> 0:17:57.800 commitment so far, but I think we have seeing some 0:17:57.920 --> 0:18:01.240 progress on that side because they are collecting data. I 0:18:01.240 --> 0:18:04.520 think that's the first step before you make Scopes three commitment, 0:18:04.600 --> 0:18:09.280 because you need company specific data sets to measure your 0:18:09.480 --> 0:18:14.120 future success, your future improvement. Because currently what they are 0:18:14.320 --> 0:18:19.119 using for the moment is the industry wide default numbers. 0:18:19.119 --> 0:18:23.480 With that you cannot measure how one specific company are 0:18:23.520 --> 0:18:27.600 doing in later years because industry default numbers doesn't change 0:18:27.960 --> 0:18:31.399 really much over the time. So they are collecting data 0:18:31.600 --> 0:18:34.200 like BSF and doubt they are saying that we are 0:18:34.359 --> 0:18:37.639 working with the data side when we get enough data, 0:18:37.760 --> 0:18:41.880 which it could take long time because of this complexity 0:18:41.920 --> 0:18:45.959 of their product catalog. But when they have that, I 0:18:46.000 --> 0:18:50.880 think it's like a more nice transition to their future 0:18:50.880 --> 0:18:53.560 commitment on Scope three. One of the things that I 0:18:53.640 --> 0:18:56.840 think is great is that we've got cc now online 0:18:56.880 --> 0:19:00.360 today from Beijing, so we're trying to cover bit more 0:19:00.359 --> 0:19:03.520 of the world in terms of the perspective. And this 0:19:03.640 --> 0:19:08.040 is a global industry, so you're seeing different petrochemicals producers 0:19:08.040 --> 0:19:11.000 and different parts in the world and invariably definitely being 0:19:11.000 --> 0:19:14.159 consumed all over the world. And there's the parts of 0:19:14.200 --> 0:19:17.560 the petrochemical space from an end consumer standpoint that you 0:19:17.640 --> 0:19:19.920 don't see, but then there's the stuff that we do see, 0:19:19.960 --> 0:19:24.320 and definitely a rise of groups that are putting a 0:19:24.480 --> 0:19:29.160 very clear light on waste streams and not wanting to 0:19:29.200 --> 0:19:33.480 see petrochemical product waste. And so the question here is 0:19:34.000 --> 0:19:36.560 where in the world do you also see a strong 0:19:36.640 --> 0:19:39.560 desire or maybe emerging desire is the right way to 0:19:39.600 --> 0:19:44.120 put it. From policymakers around really addressing this and maybe 0:19:44.160 --> 0:19:47.399 even putting a little additional pressure on the industry to 0:19:47.480 --> 0:19:50.000 look at Scope three. For Dumble in China, there are 0:19:50.359 --> 0:19:55.639 no direct regulations on Scope three saying you, as a 0:19:55.680 --> 0:19:58.879 petro chemical company, you need to deal with your Scope 0:19:58.960 --> 0:20:02.359 three missions. We are not there yet, but we have 0:20:02.600 --> 0:20:07.399 like policy discussions and even policy draft in place talking 0:20:07.400 --> 0:20:11.679 about the waste problem. And that's also in China's like 0:20:11.960 --> 0:20:15.520 road map to carbon neutrality. So I think that is 0:20:15.560 --> 0:20:20.440 definitely gonna help, but it's not like a direct answer 0:20:20.560 --> 0:20:23.240 to the Scope three. Just to add, I think when 0:20:23.240 --> 0:20:28.080 it comes to Scope three spent specifically downstream scope to emissions, 0:20:28.080 --> 0:20:30.680 it's mostly being driven by the circular economy and and 0:20:30.680 --> 0:20:33.440 and the waste push. So it's it's more being framed, 0:20:33.840 --> 0:20:36.119 like you said, as a waste problem than than a 0:20:36.600 --> 0:20:40.440 than an emissions problem, which in the long run indirectly 0:20:40.440 --> 0:20:42.920 will help the carbonize a share of emissions as well. 0:20:43.119 --> 0:20:49.639 Now for a very short break, stay with us. So 0:20:49.680 --> 0:20:52.720 in this space, there are a lot of different avenues 0:20:52.800 --> 0:20:54.840 that companies can address, and so it may be hard 0:20:54.920 --> 0:20:58.560 to really define who's succeeding and who isn't. But there 0:20:58.600 --> 0:21:00.919 are always leaders and laggards, and maybe even if we 0:21:01.040 --> 0:21:03.920 just look at how ambitious the targets are, can you 0:21:04.200 --> 0:21:07.200 name a couple of leaders. I won't make you pick 0:21:07.280 --> 0:21:09.679 laggards because that's just me, and I suppose for today 0:21:09.680 --> 0:21:12.199 we'll focus on leaders C see, I think we have 0:21:12.320 --> 0:21:14.320 the same two names in mind. Do you want to 0:21:14.680 --> 0:21:22.800 say it one? Two? Okay? What makes them leaders? I 0:21:22.840 --> 0:21:26.040 think they're the ones that have actually, in addition to 0:21:26.080 --> 0:21:29.240 the targets that they've set, they've also kind of they've 0:21:29.240 --> 0:21:32.840 made the financial commitments, so they've actually made capex allocation 0:21:32.880 --> 0:21:38.240 commitments to decarbonize their asset bass which is extremely crucial. 0:21:38.400 --> 0:21:40.240 As I said before, we're going to need billions of 0:21:40.240 --> 0:21:43.520 dollars of investment annually to reach those targets. And in 0:21:43.560 --> 0:21:46.159 the case of petro chemicals and those technologies that I 0:21:46.240 --> 0:21:50.320 discussed previously, it's especially important because we don't see those 0:21:50.359 --> 0:21:54.800 technologies necessarily becoming cost competitive with unabated production, so you 0:21:54.840 --> 0:21:58.080 don't have those similar deep learning curves that we've seen 0:21:58.200 --> 0:22:02.480 with renewable power, so like solder and wind or with batteries, 0:22:02.880 --> 0:22:06.480 we don't expect such massive reductions in the cost of 0:22:06.960 --> 0:22:09.760 net zero production when it comes to petrol chemicals, which 0:22:09.800 --> 0:22:13.080 makes it all the more important that you follow up 0:22:13.119 --> 0:22:16.760 with these capex allocation commitments because it's going to cost money, 0:22:17.080 --> 0:22:19.360 so you kind of have to put your money where 0:22:19.359 --> 0:22:22.159 your mouth is. And even for the laggers, I would 0:22:22.200 --> 0:22:26.600 say that I think they will catch up in terms 0:22:26.600 --> 0:22:30.280 of their commitment or their pledge because some of the 0:22:30.320 --> 0:22:34.080 targets we have seen by these petrol chemical producers are made, 0:22:34.119 --> 0:22:37.040 were made like a couple of years ago, and then 0:22:37.480 --> 0:22:42.040 by then they were worrying about their huge capacity expansion plans. 0:22:42.040 --> 0:22:46.320 So they say we we will cut our emission by half. 0:22:46.920 --> 0:22:50.240 But now I think with more and more countries like 0:22:50.320 --> 0:22:55.320 pledging net zeros within like for a facility within that country, 0:22:55.359 --> 0:22:58.720 you eventually have to achieve net zero. So I believe 0:22:58.760 --> 0:23:02.800 they will update their targets very soon. And also we 0:23:02.840 --> 0:23:06.320 are seeing more and more pressures from the investors side, 0:23:06.800 --> 0:23:10.639 so they keep keep getting asked, what are you going 0:23:10.720 --> 0:23:13.800 to do about climate change? How resilient you are even 0:23:13.840 --> 0:23:16.320 the face of climate change? Do you have any plans? 0:23:16.400 --> 0:23:19.560 Do you see it as a risk or opportunities? So 0:23:19.640 --> 0:23:22.320 they need to address these concerns. I think so they 0:23:22.320 --> 0:23:25.240