Waste to Chemicals

London, 10-11 May 2016

AkzoNobel today

■ Revenue €14.9 billion in 2015

■ 45,600 employees

■ Major producer of Paints, Coatings and

Specialty Chemicals

■ 44% revenue from high growth markets

■ Leadership positions in many marketsSector Leader 2012/2013/2014

29%

31%

40%

Performance Coatings

DecorativePaints

SpecialtyChemicals

45%

20%

35%40%

27%

33%

Revenue by

Business Area

Operating income

by Business Area

Invested Capital by

Business Area

10.6%

Return on sales

(operating income/revenue)

15.0%

Return on investment

(Operating income/average 12

months invested capital)

Our bio-based strategy has been in place for almost 4

years – updated in 2015

Strategy and Guiding Principles

A proactive effort to lead the deployment of selected, relevant bio-based chemicals in our core markets and applications

1. Leverage market innovation to focus on development of channel and applications for bio-based chemicals rather than the in-house development of bio-based raw materials and technologies.

2. (a) Focus on cost competitive, high impact areas across BA’s and (b) Provide tailored support to novel bio-based programs in BU’s/SMU’s, to deliver economical materials contributing to sustainability targets

3. Work across the supply chain to integrate bio-based raw materials; Joint development or other partnerships are possible where these enhance our business

4. Carefully consider sustainability implications – to ensure feedstocks are sustainably sourced and managed

A strong platform: 13% bio-based in our organic spend, and 8 partnerships

.

… based on our experience and work to date we can

start to see a path to over time to “green” significant

parts of our supply chain

Tallow &

natural oils

Benzene

Ethylene (C2)

Propylene (C3)

Epoxies

NATURAL

GAS

OIL

Feedstock

Polyesters

n-Butanol

Acetic acid

Methanol (C1)

Major intermediates Key raw materials

Major organic raw materials

Phenol

Ethylene oxide

Acrylic Acid

Materials in scope

Volume in kT (incl derivatives)#

Aromatics

(C6+)

Pure acrylics

Alkyds

Surfactants

Formaldehyde

Xylenes

Ammonia

Vinyl Acetate

Ethylene (VAE)

Base chemicals Monomers

Vinyl acrylics

Styrene acrylics

Acetone

Solvents

Fatty acids

Acetic acid

Acetone

n-Butanol

OILS & FATS

>300

>300

~300

>300ECH

(Epichlorohydrin)

PTA/IPA/PA(Terephthalic acid)

Butyl acrylate

VAM(Vinyl Acetate)

Bisphenol A

MMA

Styrene

NPG(Neopentyl glycol)

ECH(Epichlorohydrin)

Significant investments are taking place – predominantly

in the Americas

Investments Geographical spread

Despite the downturn investments in bio-based chemicals were close to $3B over last 3

years and predominantly in the Americas

.

61

7369

55

37

52

0

20

40

60

80

0

1.200

1.400

1.000

200

400

800

600

2012

20

11

2008

2009

2010

2007

2013

20

14

*

$MNo. Investments

36

68 1%

Americas

EMEAAsia Pacific

12%

87%Millions USD Number of investments

Lux report - Dynamics of Venture Capital Funding in the Bio-based Chemicals

Industry. * 2014 figure based on extrapolation

This investment is driving a sustained growth in

manufacturing capacity

.

Growth in bio-based Material and Chemical Facilities from 2005-2017

World capacity in 2010 of

7 primary petrochemicals

is 478,000 kilotons

(bio-based < 1%)

World capacity in 2017 of

7 primary petrochemicals

expected to grow to

~685,000 kilotons

(bio-based ~2%)

Source: Lux Research (2014); IHS (2011; 2013)

Note: capacity includes both chemical intermediates and final products

But it is difficult. The cost competitiveness of bio-based

chemicals has been threatened recently by the

significant drop in the oil price

.

0

50

100

150

200

2005 2010 2015 2020 2025 2030 2035

Oxford economics handbook

$/b

arr

el

Low (EIA)

High (EIA)

Mid (EIA)

Current price

compared with OEH

and EIA reference

scenarios

Oil price predictions and history

$/barrel

One idea which has come up in our work is around

realizing the circular economy …

Recycling carbon

as a technical

nutrient

Basic

chemicals

Resource Products

Enerkem has developed a novel technology…

Source: Enerkem

Sorted MSW,

residual biomass and

other feedstocks

Heat

recovery

Solids/inerts for

aggregates and

construction

materials

Water

treatment

Catalytic synthesis and product

purification

Cleaning and

conditioning processGasification

Feedstock

preparation

Scrubbing

towers Base

chemicals

Separation

of residues

Product

purification

Catalytic

conver-

sions

Bubbling

fluidized

bed

gasifier

Primary syngas purificationConversion of carbon-

rich residues into

synthetic gas

Sorting, shredding, drying

(if required) and feeding

Conversion of chemical-grade syngas into

final renewable products

Primary

syngas

(CO,

H2)

Chemical-grade, ultra

clean syngas

Biofuels

e.g. methanol

& ethanol

Oxygen

Water

… which, compared to natural gas-based methanol,

could possibly save ≥1.5 tonne CO2 / ton product

10

Comments

Natural gas-based footprint based on industry average

Source of utilities (e.g. renewable or fossil power for plant and air separation, heating, others) has

large impact on waste-derived methanol footprint

End of life carbon typically allocated to original product lifecycle, not to waste-derived product(s)

- Avoided GHG emissions from landfilling waste (CH4) could be deducted

- Fossil carbon content in waste (~50%) could for 50% be allocated to end of life waste-derived

product(s), adding 0.3 t/t

Source: AkzoNobel analysis

0.4

-2.1

Low carbon

utility supplies

-1.5

High carbon

utility supplies1.0

1.1Natural gas

based2.51.4

Cradle-to-Gate

End of Life

Carbon footprint comparison

Tonne CO2 eq. / tonne methanol

Inc

um

b.

Waste

-der.

… and waste is a feedstock with many benefits

■ No competition with food chain or land use– No equivalent of food versus fuel concerns

■ Widely available and Collection & Collation system

already in place– Avoids need to source and ship biomass

■ A “strategic” feedstock– Waste is owned by cities and provinces who can direct it to

benefit their citizens

■ Attracts a gate fee– You get paid to resolve

■ Upgrading fits with (supra)national strategies to

move to circular economy

"Vuilnis bij Essent Milieu". Licensed under CC BY 1.0 via Wikimedia Commons -

http://commons.wikimedia.org/wiki/File:Vuilnis_bij_Essent_Milieu.jpg#mediaviewer/File:Vuilnis_bij_Essent_Milieu.jpg

But how to build a value-chain that does not yet exist?

Biobased

methanol

Production of

secondary

chemicals

(Biobased

/ Circular)

Methanol

Waste

Everyday

materials

Enerkem

technology

We have had to bring together a unique consortium

Chemical players -

Converting methanol into

high-value chemicals

Waste management Advanced

thermochemical

technology

Public Sector -

Crucial support

In Summary

• How do we duplicate this in the

UK?

• Historically low fossil fuel prices,

existing technology very

competitive

• Financing between “equals”

needs building the win-win for all

involved, matching different roles

and contributions with the right

governance

• True partnership, between private

parties and with public parties, is

key

200 ktpa

90

ktpa

135 ktpa

50 jobs

200 jobs

€180

million

Projected key figures, per plant Challenges & opportunities

Waste

input

CO2 reduction

Direct jobs

Indirect jobs

Methanol output

Capital investment