“We fully support the Green Deal”

The European Union Green Deal was published in 2019 and since then all stakeholders in the EU have been preparing for the realisation of its goals. How do you see the Green Deal and its provisions?

The Green Deal is indeed an ambitious growth strategy of the EU. As [President of the European Commission] Ursula von der Leyen phrased it, it is Europe’s “man on the moon” moment. It will require not only economical and technological but also societal changes from all stakeholders. BASF fully supports the Green Deal and Europe’s ambition to go climate neutral by 2050, however it needs to be implemented together with a strong industrial strategy. In Hungary we support to achieve the national targets by a series of workshops with industry associations as well as supportive communication with the relevant state administration.

What does the chemical industry need to do to achieve the transformation?

The chemical industry is a key pillar in most of Europe’s value chains and the cornerstone of a low-carbon future, simply because the vast majority of everything we use in our daily lives originates from a chemical process. Thus the industrial transformation of all sectors including ours will require substantial innovations. It first starts with the development of climate-friendly energy sources, a feasible electric grid infrastructure, a shift of most chemical processes from oil and gas towards electricity, and continues with targetted product innovations to secure the ambitious goals. During this transition European industry needs an integrated EU policy framework that enables the transition, maintains competitiveness and does not create additional geopolitical dependencies. In short, the transition will bring challenges but also new opportunities for industry.

For Hungary the chemical industry is also an important pillar in the value chain. In 2020 the total domestic chemical sales – net sales from petroleum processing, chemical production, pharmaceuticals, rubber and plastic products – amounted to HUF 5594 billion. This was around 17 percent of total domestic manufacturing turnover; 24 percent of domestic sales of the manufacturing industry and 15 percent of export sales coming from sales of chemical products. Both indicators continue to show a significant weight of the chemical industry in the Hungarian manufacturing sector.

What does BASF do to support the goals of the Green Deal?

BASF is on board to achieve climate neutrality by 2050 and we are committed to innovation and new business models. BASF already provides several innovations that are essential for climate protection, such as insulation materials for energy-efficient buildings, battery materials for electromobility, nitrogen management and the SmartSprayer for a sustainable agriculture, products and processes fostering circular economy and many more. To assess and improve the sustainability of our product portfolio we also operate our Sustainable Solution Steering program, and we conduct our Carbon Management Program that enables us to reduce carbon emissions from chemical production by using renewable electricity and completely new processes (for example, to produce clean hydrogen).

You mentioned that BASF works on circular economy projects. What does this cover?

BASF has several sustainability projects related to mechanical and organic recycling, including the development of products that improve recyclability or products that are biodegradable. We also developed chemical recycling solutions that complement mechanical recycling and tackle those waste streams that otherwise cannot be recycled or are not viable. The plastic waste is converted into oil that can be used in the production processes, replacing the conventional fossil feedstock. An independently reviewed life-cycle analysis concluded that this recycling method has a better environmental profile than waste incineration and fossil-based production. Therefore, chemical recycling can contribute to the circular economy.

In Hungary we are in partnership with the Hungarian company New Energy to recycle used waste tyres. The pyrolysis oil that is produced by New Energy in this process is used at our chemical site in Ludwigshafen as a raw material.

The Farm-to-Fork strategy is a big part of the Green Deal. Can you elaborate a little on BASF’s activity in this field?

Products for the agricultural industry make an important part of BASF’s portfolio and we are committed to sustainable agriculture. We have several projects that support the Green Deal’s goals, for example innovative seed breeding to develop crops that are resilient to climate change. Innovation in biological and chemical plant protection products with more sustainable profiles is also vital. Digital technology innovations will play a key role in enabling more precise use of plant protection products and natural resources. We started the testing of our SmartSprayer technology (developed in cooperation with Bosch) in some countries, and Hungary is one of them. The sprayer automatically differentiates weeds from crops and operates with precise spot treatments, therefore we can reduce the amount of pesticides needed on the field. Our other digital technologies, such as Xarvio and AgBalance, are also available in Hungary. These are digital solutions for agriculture and crop optimisation that support farmers by monitoring soil and crop conditions, assisting with disease and pest detection, and recommending treatments based on in-field conditions. We also market our biodegradable foil called Ecovio, and we have several nitrogen management products that improve the uptake of nitrogen from the plants.

BASF is very active in Hungary regarding the promotion of the Green Deal initiatives among Hungarian companies and fostering discussion with the government. What activities do you drive?

Indeed, BASF Hungary is very active in this regard and we are engaged with several stakeholders regarding the Green Deal. I am leading two Green Deal working groups, one in the German-Hungarian Chamber of Commerce and the other in the American-Hungarian Chamber of Commerce. Within these working groups we organised several events alongside the major topics of Green Deal, such as clean energy, circular economy, sustainable agriculture, sustainable mobility and finance. We invited high-level governmental stakeholders to these events to engage in discussion with them, showcase what Hungarian companies do to support the achievement of the Green Deal’s goals, and we also listened to the governmental position and vision regarding the implementation of national goals. With this we also provided a platform for companies to share their best practices to foster discussion and inspiration via good examples. We plan to continue this work in 2022.

Are the targets and deadlines of the Green Deal realistic? Is the program executable?

The targets are challenging but the industry has embarked to fulfil the targets. At the heart of the Green Deal there is the legally binding objective of EU climate neutrality by 2050. This is the framework for more stringent GHG [greenhouse gas] reduction targets by 2030 across all sectors of the economy. The achievement of these will require deep upcoming industrial transformation based on technologies that are not yet scaled and sometimes not yet developed, while regulatory changes coming along the way will put increased financial burden on industry. Higher climate ambitions for 2030 must therefore be coupled with measures to maintain competitiveness through improved carbon leakage protection. Also, the Green Deal requires not only industrial but societal and financial transformation as well. We fully support the Green Deal and Europe’s ambition to go climate neutral by 2050 and we are committed to work on solutions that enable the transformation.
The chemical industry is facing a double twin transformation – with digitalisation, climate neutrality, circular economy and the Chemicals Strategy for Sustainability that is another key pillar of the Green Deal. If we want to meet these challenges a clear and robust transition pathway for the chemical industry is needed that integrates the entire transformation effort into an overall approach.

Are the targets firm? Can society and industry rely on long-term investments?

We are supporting and encouraging the governments to set up frameworks on which long-term investments can be based. As long-term plan security will play a crucial role we need combined financing mechanisms, simplification of funding rules and alignment of European and national support programs to enable the transformation.

Is there a risk that Europe’s global competitiveness will suffer if we just press ahead without closely coordinating with other continents?

With the Green Deal the European Union strives to make Europe the first climate-neutral continent by 2050 and overhaul its environmental laws. In this spirit the EU Commission wants to further strengthen Europe’s already exemplary legislation, and in 2020 published its Chemicals Strategy for Sustainability (CSS). Specifically concerning the latter, we advocate for a science-based and innovation-driven approach (risk-based versus hazard-based evaluations) of the regulatory framework to maintain the competitiveness of European industry. If this cannot be achieved, we risk losing the production of substantial amounts of key value-chain products that will then be imported in the form of end-products from other regions.

Second, climate-friendly products will require large amounts of reliable renewable energy at competitive prices. According to current estimates Europe will not be able to produce the required amounts of green energy on its own, therefore energy imports from other regions (direct or via vectors as hydrogen) might be needed.

Overall, an alignment between the main global players on the way forward would be the best way to achieve a level playing field and avoid distortions for the consumers.

Does COVID-19 hamper the implementation of the Green Deal?

The pandemic caused economical and societal harm in several sectors, which puts extra burden on economy and industry. On the other hand, the COVID-19 crisis has shown the gaps but also built skills and openness to accelerate digitalisation to enable industrial transformation and innovation. The momentum needs to be leveraged for ambitious digitalisation goals in the coming years. I believe that the current COVID-19 crisis and the European Green Deal will accelerate the shift towards more sustainability.

Does society need to change behaviour alongside industry?

Yes, the way we live, how we build our houses, how we heat and cool them, how we travel and what we consume need to change. Thus the European Green Deal’s success very much depends on citizens’ day-to-day choices. Examples are selective waste collection, choosing products with better environmental impacts, reducing water consumption or changing the diet to make it more sustainable. Now, many sustainable products and services are more expensive than their “conventional” counterparts, and with choosing the greener options at the cashiers, consumers can also foster the spread of these products on the market. In the future the sustainable choice shall be the easy and affordable one, from transportation modes and heating our homes to purchasing food and products we use every day.