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December 23, 2021 01:19 PM

Neste: a company way ahead of its time

Karen Laird
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    Mecedes Alonso

    Mercedes Alonso

    For over two decades, Neste has been quietly transforming itself from a regional oil refiner into a provider of renewable and circular solutions. Mercedes Alonso,  Executive Vice President, Renewable Polymers and Chemicals at Neste, talked to Sustainable Plastic about the company’s leading role in the move away from fossil fuels – and about making choices.

     

    Looking back, the catalyst for change was probably the climate convention of the United Nations in 1994, according to Mercedes Alonso, Executive Vice President, Renewable Polymers and Chemicals at Neste. As a mark of the growing awareness of the problems associated with climate change, the United Nations Framework Convention on Climate Change entered into force on 21 March 1994 with the specified aim of preventing “dangerous” human interference with the climate system. The ultimate objective was to stabilize greenhouse gas concentrations "at a level that would prevent dangerous anthropogenic interference with the climate system."

    At Neste, as a producer of products derived from fossil resources, the Convention sparked a new vision of what the future could look like.

    The company embarked on a programme to explore technology that, instead of fossil resources, would allow the use of oils and fats from renewable origins to produce renewable diesel and other renewable products, which led to the development of a proprietary technology called NEXBTL, an acronym for Next Generation Biomass to Liquid. The NEXBTL technology allows Neste to turn a wide variety of renewable fats and oils into premium-quality renewable products, such as renewable diesel, sustainable aviation fuels and feedstock for polymers and chemicals production to replace fossil naphtha.

    “Also, in 2005, Neste Oil Corporation, as the company was then known, was floated into the market as a public company. Neste wanted to have a very clear strategic direction and took the decision – which was at the time quite bold and visionary - to look at how we could improve the effect of humans and the petrochemical industry on the environment. And having this proprietary technology in house was what allowed us to go ahead when nobody else was doing this,” she explained.

    The company’s first renewable diesel facility, processing renewable raw materials with NEXBTL technology and located at the Porvoo refinery, was brought on stream in 2007.

    “We invested €100 million at the time to have the first plant come onstream at a time when nobody was looking for renewable products. There was nothing like the public discussions today about climate change, plastic waste, marine pollution or whatever. But we believed that this was the path forward and accordingly, we invested heavily.”

    The process was essentially top-down - a management decision originating from the CEO, supported by the new board of management and team of directors at the time who sought a solid strategy for a new kind of growth. And while Neste still has a conventional oil business the renewables ‘are 94% of our operating profit’.

    The transition did not happen overnight. “A culture change is never that simple. In our case, the process cascaded down from the top leadership to the second level of management in the company and continued to disseminate into every corner of the organisation,” said Alonso.

    “And of course, not everybody at Neste believed in it. It was probably around 2012 that this really started to be a business that positively contributes to Neste’s profit. In these years, the development of the business was also stimulated by new regulations on EU level. It became more and more clear that the decision taken many years earlier turned out to be just right. ”

    Neste headquarters in Espoo, Finland

    Leading the way with renewable diesel

    Neste’s initial renewable products refinery in Porvoo was followed by a second unit there in 2009; the company’s renewables refinery in Singapore opened a year later. A new facility was started up in Rotterdam in 2011. Initially known as NEXBTL or Neste Renewable Diesel, and now called Neste MY Renewable Diesel, the product is generally recognized as the cleanest and highest-quality renewable diesel on the market today. It is a hydrocarbon product, free of oxygen and aromatic compounds.
    In 2010, the EU Renewable Energy Directive was implemented, setting a 10% renewable energy target for transport by 2020 for each member state. The future of renewable diesel looked set for success. However, using crop feedstock next to waste and residues also gave rise to other issues, in particular in the discussion about palm oil.

    Palm oil used to be the principal (90%) feedstock used by Neste, but thanks to its NEXBTL refining technology, providing the company competitive advantage by enabling usage of even lower-quality waste and residues as raw materials, Neste has significantly increased the share of waste and residues in its refining over the past decade.. In the first year-half of 2021, waste and residues represented over 90% of Neste’s renewable raw material inputs globally while palm oil represented less than 7%. Neste plans to reduce the share of palm oil to 0% of its global renewable raw material inputs by the end of 2023.

    Neste’s refineries are all ISCC-certified and capable of producing also increasing volumes of renewable aviation fuel in the future. The question is, these are big investments in renewable fuel technologies - what about the ongoing trends in mobility, such as electric or hydrogen powered vehicles?

    “It's a great step forward to have transport increasingly moving into electrical vehicles,” said Mercedes Alonso. “The point we are making with our renewable diesel and other renewable fuels is that we can do this now - and we can do this at a larger scale. Producers of cars around the world have confirmed that Neste’s renewable diesel can replace fossil diesel by 100% in their engines. And we have successfully commercialised this. In other words, it can already be used in existing vehicles that may have an average lifetime of 11.5 years. Right there, by switching fossil diesel to renewable diesel, you can already reduce the greenhouse gas emissions by up to 90% without any other adjustment necessary, or without having to change vehicles. We believe that there's a space for all kinds of technology to progress at the same time - and starting now we can do that with renewable diesel. Why wait when we can do something now?”

    Neste, she added, is continuing to look into new feedstock, including algae, municipal waste, lignocellulosic waste and residues and new carbon technologies: “We're investing a lot in R&D, investigating different feedstocks that do not compete with the food chain, and do not compete with land that can be used for farming, to continue to enhance the pool of materials that we can use to replace fossil crude.”

     

    Adding waste plastics to the mix

    If twenty years ago Neste’s goal was to successfully develop and commercialise its NEXBTL technology to combat climate change, or global warming as it was then mainly called, by replacing fossil fuels, the company’s goals today are even more ambitious and targeted at becoming a global leader in circular and renewable solutions. To that end, new targets have been set to reduce annual greenhouse gas emissions of Neste customers by at least 20 million tonnes by 2030; ‘By 2020 we had already achieved a reduction of 10 million tonnes’, according to Alonso.

    “We also aim to grow our renewables businesses, while also looking  at new technologies to accelerate circularity of waste plastics to reduce the use of fossil resources  and to return these plastics back into high-quality new products: Our ambition is to process a million tonnes of plastic waste per annum by 2030, converting this waste into recycled feedstocks to make new plastic resins  - so that we can continue to increase circularity.”

    The plans are well-defined and comprehensive. “We are committed to achieving carbon neutral production by 2035 which is ahead also of the Paris agreement targets,” she stressed.

    Neste already successfully processed 400 tonnes of liquefied plastic waste at its refinery in Finland in 2020, an amount corresponding to the annual amount of plastic waste generated by 20,000 average European citizens. This was the first time Neste had processed liquefied waste plastic at an industrial scale. During the run, packaging and mixed waste plastics were upgraded into high-quality recycled feedstock for petrochemical industry uses, for the production for example of new plastics.

    In the sourcing of liquefied waste plastic for the first processing run, Neste was supported by Ravago. Together with Ravago and several other plastics value chain partners, Neste is also developing chemical recycling technologies and capacity to enable recycling of plastic waste streams that are unsuitable for mechanical recycling. In fall 2021, Ravago and Neste announced their joint aims to build an industrial scale chemical recycling facility in the Netherlands.

    “We are on the verge of deploying technology to go into multi-thousand tonnes of production of liquified waste plastic every year. While there is still a lot of work to be done, this is a huge step for our industry towards turning hard-to-recycle plastics from waste to a valuable resource, making circularity of plastics a reality,” said Alonso.

    By combining the expertise of Ravago and Neste, we have the means to rapidly implement the technology to start production at commercial scale. With joint and dedicated efforts, we can bring together the know-how along the entire value chain to turn waste into valuable resources. Our ambition is clear: to be a global leader in renewable and circular solutions.”

    Neste RE

    Chemical recycling as a solution

    Neste is not a manufacturer of polymers and chemicals, but of feedstocks that are used in the cracker to produce the building blocks for chemicals and plastics. The liquefaction technologies Neste is helping to further develop and commercialize can help contribute to a solution for waste plastic that cannot be otherwise recycled.

    “Chemical recycling has been a promising technology to accelerate the creation of a circular economy for quite a while,” said Alonso. “Now, it is time to take it to the next level and turn the promise into an industrial solution.”

    Yet the European Commission has to date been relatively cautious about the practice, among other things citing concerns about the amount of energy it consumes. Its status is, to date, not completely clear.

    The industry – feedstock producers, raw materials producers and processors - are hoping for a clear and harmonised recycling-rate and recycled-content rule throughout the EU, that would build on the common recycling definition in the EU Directive 2008/98/EC on waste.

    “We work with technology providers like chemical  recycling company Alterra, which we invested in to jointly develop technology to deploy; we work together with companies like Ravago and Remondis, to gain a better understanding of how we can expand the range of waste plastics that can be treated with mechanical recycling, and we're also working with brand owners and producer partners to make sure waste plastics are converted back into plastics,” said Alonso. “After all, the main point is that waste plastic does not end up being waste, but the plastics are kept in the circularity loop.”

    Neste is also looking at how the definition of mass balance is defined and how legal acceptance of a mass balance approach for chemical recycling could be created based on a recognised standard when implementing or amending legislation. “For example, the use of some of the portion into fuels should not be counted into a recycled quota,” she said.

    Chemical recycling complements other plastic recycling options like mechanical and dissolution recycling, Alonso stressed. “Of course, we still need to reduce and reuse. And to promote a more efficient use of plastics – as well a better design for recycling. But there is a lot of plastic already out there, while plastics demand is expected to grow four-fold by 2050.  This is why we put so much emphasis on collaboration in the value chain and on using all the technologies we have available. We need them all.”

     

    Technically challenging

    Neste RE, as the company calls the polymers and chemicals feedstock it produces from renewable waste and residue oils and fats or now also, waste plastics, can contribute, said Alonso, to lowering the carbon footprint over the lifecycle of the product. “The NEXBLT units are set up to take waste and residues like used cooking oils, so they run on 100% renewables,” she explained.

    When produced from waste plastic, the process is slightly different: this is liquefied in a thermochemical liquefaction process, which turns it into a material similar to crude oil - which is then being used in Neste’s traditional oil refineries.

    In a steam cracker, Neste RE can be used on its own or in a blend. It is a drop-in solution suitable for the existing production infrastructure, ‘a complete one on one replacement of crude-based feeds in the cracker’, said Alonso. “You could make basically anything that is output from the cracker.”

    She added that the transformation towards more renewables ‘continues with a very high level of ambition’ - also when it comes to Neste’s traditional refineries. “By increasing the share of renewable and recycled raw materials that are co-processed with crude oil, we are producing lower   carbon footprint products. The waste plastic goes into our traditional refinery facility, which means less crude oil use there. We're working on achieving a 10% reduction in the crude needed – replacing 10% of the crude oil capacity by renewables and recycled material, which is double what the industry can typically co-process. It is going to be challenging but we think at Neste that it's achievable.”

    Polymers produced from Neste RE have the same quality as those made from conventional fossil feedstock. The company has also conducted a life cycle assessment  study on the environmental impacts of using Neste RE. This showed a greenhouse gas (GHG) emission reduction of more than 85 percent over the life cycle when Neste RE produced from 100% renewable raw materials was used to replace conventional fossil feedstock in the chemical and polymers industry. The LCA study and its results were reviewed by an external panel of experts from VTT Technical Research Centre of Finland Ltd, Quantis GmbH and Aequilibria Srl-SB.

    Neste’s renewables production capacity today stands at 3.2 million tonnes per year. The plant in Singapore is currently being expanded which will boost capacity to 4.5 million tonnes by 2023.

    “We are also currently engaged in a feasibility study with an aim to set up another world-scale renewables facility in Rotterdam” Alonso noted.

     

    Looking ahead

    Going forward, the company will continue to follow an ambitious course. Internally, themes such as carbon neutral and nature positive value chains have emerged, leading to targets on, among other things, biodiversity and human rights.

    “We're looking at carbon neutral production, scope 1 and 2 by 2035 and helping customers to reduce over 20 million tonnes of greenhouse gas emissions by 2030; we're looking at driving a positive impact on biodiversity and achieving a nature positive value chain. We are setting up new activities to achieve these, while we remain committed to combating deforestation in our supply chains; we require the same from our suppliers and we're spearheading this transparency in our industry supply chain,” Alonso summed up.

    New products and technologies will also continue to be explored. Next to the Singapore investment, the modifications made at the Rotterdam facility will bring Neste’s sustainable aviation fuel production capacity to some 1.5 million tons annually by the end of 2023.

    “We are also continuously expanding our raw material base, so, next to the waste and residues we already use we are now looking at even lower quality waste. The ‘nastier’ the raw materials are, the more difficult it is to produce good quality materials from these,” said Alonso.

    As a society we need to start looking at waste with different eyes, she concluded.

    “Using chemistry, so many technological advancements are possible that will enable us to better manage so many of the issues we see today.”

    She added: “Chemistry is often seen as the source of all evil, but as a chemist, I think that we are also the source of many solutions.”

    NEXBTL facility in Rotterdam

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