CARBON dioxide isn't an unwelcome byproduct of chemical production. It is a useful raw material for plastic coatings. It is useful for producing polymers that can be finally made into mattresses.
Covestro, a German chemicals company used to be part of Bayer, generated 12.1 billion euro (US$13.6 billion) in revenue in 2015 and is celebrating its first anniversary this month.
Innovation is in the gene of the new company which has operated successfully because "we are benefiting the society with new applications," said Markus Steilemann, Covestro's board member responsible for innovation.
Chemical producers have never faced such a public demand for assuming their social responsibility. They are hard pressed to manufacture products of higher quality with less impact on the environment in an overcrowded industrial sector.
Overcapacity is eroding profit margins of every chemical enterprise. Last year, the average profit margin of chemical companies in China was 5.3 percent, according to The Financial Times, down from 7.7 percent in 2010. China's chemical market slumped in the past eight years, the European Chamber of Commerce reported.
Covestro, however, is moving in the opposite direction. In the first half of this year China posted core volume growth of 14 percent.
Innovation is helping Covestro to enlarge its profit margins and thrive in new growth markets, Steilemann said.
Shortly after the Paris Agreement on Climate Change was ratified by some countries in April, Covestro drew the world's attention by launching a pilot project to convert carbon dioxide, the culprit of global warming, into polyols on an industrial scale.
Since June 16, a Covestro plant in Dormagen, Germany, has started producing polyols using CO2, with annual capacity of 5,000 tons at this stage. CO2 is now replacing 20 percent of petroleum in its production of polyols, raw materials for polymer foam.
Considering that the sofa we sit on, the bed we sleep on, all contain foams, it is comforting to know that the carbon dioxide that leads to global warming has been harnessed and turned into polymer foam inside our furniture.
The Association of International Chemical Manufacturers reported last month that 75 percent of chemical multinationals in China made environmental protection a major task and 62 percent of them took the approach of innovation to achieve the task.
Covestro is a standout in the crowd with its practices. Besides its CO2 conversion technology, the company is also changing people's life with other innovations. When someone buys a pair of shoes with a leather-like material, it is mostly like made of polyurethane. Today, over 7 billion pairs of shoes are made of this material worldwide. The material matches leather in airpermeability and elasticity but is lighter and cheaper.
Previously, consumers complained about its toxic odor and feebleness, but Covestro has cured these defects with a water-based adhesive technology, which emits no volatiles and uses only half of the energy as compared with oil-based technology.
Manufacturers now have stringent standards for polyurethane coating materials which have to be safe and environment-friendly. Two months ago, Covestro opened a new production line in Shanghai to tap China's water-based coating market. It pledges to save more than 70 percent of energy as compared with traditional plants.
While its competitors still treat energy saving and emission cutting their secondary targets, Covestro has already incorporated them into every aspect of its business. Last year, the company spent more than 2 percent of its income on research and development and promised to cut energy consumption by half in 2030 from the 2005 level.
Innovation is not only embodied in products but also applied to production process and management in a bid to save energy and reduce emissions, said Steilemann.
Covestro collaborated with Aachen University in Germany on converting CO2 into foams and worked with Tongji University in China to find out market needs.
Steilemann said the foam was already used in making the world's first solar-powered aircraft which finished its first round-the-world flight in June.
"As an insulation material, it can save a lot of energy for heating and cooling. Producing the foam with carbon dioxide also saves the greenhouse gas in the process," Steilemann said.
Covestro's polyurethane business unit made many of those innovations. It boasts the largest profitable business in the company. It developed the polyurethane casting resin to strengthen wind blades in China and is promoting foam-lined refrigerators to help save electricity.
Steilemann said Covestro still has more potential for profit growth. For example, the water-based coating technology is now used in a limited scale in China because the cost is higher than traditional methods. The CO2 conversion project is also waiting for expansion.
"Nobody imagined 20 years ago that everyone could use a mobile phone today because it was too expensive in those days," said Patrick Thomas, Covestro's chief executive officer. "Innovation is always ahead of us and will bring enormous benefits and profits later on."
Christian Haessler shared with Shanghai Daily how important innovation is to this company and how it pushes them forward.
Q: You have managed to produce polymers with CO2 at industrial level. How is it realized?
We worked with Aachen University, a celebrated technical university in Germany, for long and developed a catalyst to crack down CO2, so that the carbon molecule inside can be taken as the raw material to form polymers. Normally it is hard to decompose CO2 because it is too stable. With that catalyst you managed the process with little energy consumption.
Q: In China what do you reckon as the major market field and how do you initiate your local innovations?
We have long-term collaboration with Tongji University which is specialized in materials and mechanical science. Recently we developed with them the materials for charging piles of electric vehicles, which is growing quite fast on sales. We have a research institute there, sharing our technologies but also learning the Chinese market from researchers at that university.
In China we also initiated a polyurethane wind blade collaboration and we are actively developing our customers to participate in China's clean energy market.
Q: Covestro has come to China in the 1980s. How many changes have you witnessed in this country on innovation?
I remember when I first came here in early 1990s, we were talking about business of DVD, which is quite a simple material compared with what we make today. Now you see we are working on energy saving products, or materials to match clean energy industry. We are enhancing our innovation paces here, as it is important to be early in the emerging business opportunities. China is so large a market that every of the global chemical companies are here. If we don't innovate, we don't even work with local researchers to get involved in this market, taking over the market shares would be quite a tough journey. That's why we have been working on products with limited market space now. You need to be first, to have the most advantageous stand to take over the market.
(c) 2016 Shanghai Daily Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers