New Business Models Perspectives for Chemical Industry Competitiveness Russel Mills

1. New Business ModelsPerspectivesforChemical Industry Competitiveness Russel Mills HLG Chemicals Innovation WG Brussels � 1st October 2007 x x

2. Priorities Integration (Product � Market �Site) Global perspectives transitioning to lower carbon (avoiding past mistakes) Deployment at scale Bio �feedstock examples Ultra resource efficiency Market driven businesses Additional New Business Models Overview of Topics

3. 1. Priorities A balancing act: People � Profit � Planet People Working out how Chemistry can best enable resolution of key societal issues Profit Focusing on areas where EU industry has long term competitive advantage Planet Linking above to critical global challenges

4. SusChem visionary projects all embrace new models & these sustainability priorities Focus on areas of significant societal impact Demonstrate extent to which SusChem can positively impacts major areas of society

8. Maximise use of shared resources Minimise supply chain costs Reduce transportation of hazardous products Better use for by-products & �waste�

9. And consumers even more wasteful than industry And consumers even more wasteful than industry

10. 3. Global Perspectives Concept of ensuring each unit of major products are produced in most CO2 efficient manner irrespective of location Accelerating that timing based on GDP based CO2 is more pragmatic challenge where business & markets offer best solution Concept of ensuring each unit of major products are produced in most CO2 efficient manner irrespective of location Accelerating that timing based on GDP based CO2 is more pragmatic challenge where business & markets offer best solution

11. Geo-political Europe used to consume 3x, now Asia Pacific consumes more , soon it will be double our use Geo-political Europe used to consume 3x, now Asia Pacific consumes more , soon it will be double our use

14. Epichlorohydrin from glycerine 150, 000 tpa plant in China now under construction Due on-line in 2010 Utilizes glycerine � a by-product of biodiesel production process Creates significant cost & environmental advantages vs. conventional process technologies

17. Reduction in: Space (20x) Process time (20x) Capital cost (2x) Energy and waste (many times) Quality defects Reduction in: Space (20x) Process time (20x) Capital cost (2x) Energy and waste (many times) Quality defects

19. Meeting the needs of the current without compromising the future Is this achievable without compromising our current lifestyle?

20. BENEFITS Guaranteed long-term revenue (ROCs) Reduced ash, CO2, SO2 emissions Improved stakeholder relationsBENEFITS Guaranteed long-term revenue (ROCs) Reduced ash, CO2, SO2 emissions Improved stakeholder relations

21. BENEFITS Guaranteed long-term revenue (ROCs) Reduced ash, CO2, SO2 emissions Improved stakeholder relationsBENEFITS Guaranteed long-term revenue (ROCs) Reduced ash, CO2, SO2 emissions Improved stakeholder relations

24. EU is largest �quality� consumer market Opportunity to lead global markets with ever increasing quality offerings Growing service requirements in some cases allow product replacement SafeChem solvent service Integrated building products Automotive system offerings (coatings, adhesives etc.) Increasing downstream customer focus Higher speed response to market changes etc.

25. Summary Making new business models sustainable �New� models must still respect �old� economics Integration remains key to chemical industry sustainability Global perspectives can not be ignored Deployment at scale drives transition to lower carbon Resource efficiency increasingly of value Market driven approaches remain essential