sustainability, energy, chemicals, operational excellence

The Sustainability Imperative: A Closer Look

Make Room for Sustainability in Your “Objective Function”

May 20, 2021

The energy transition and circular economy imperatives are driving the need to evaluate and transform existing business and operating models for companies looking to achieve their sustainability objectives. Industry experts from Phillips66, McKinsey and Company, SABIC and MOL Plc, recently got together to discuss these imperatives and much more. The panel discussion was hosted by AspenTech as part of its OPTIMIZE 2021 user and customer virtual conference. 

The panel included Dr. Bob Maughon, Executive Vice President Sustainability, Technology, and Innovation at SABIC, Zhanna Golodryga, Senior Vice President, Chief Digital and Administrative Officer at Phillips 66, Giorgio Bresciani, Senior Partner at McKinsey & Co, and Béla Kelemen, Business Excellence VP at MOL Plc.

 

Looking Ahead: Challenges and Opportunities for Sustainability 

Dr. Bob Maughon from SABIC, kicked off the discussion by highlighting four major challenges that companies are now facing. First, there is the need for new technologies that enable the use of renewable energy to lower carbon emissions or use carbon through a cycle in a different way; second, is the need for significant capital to transition the industry to new process technology; third, and maybe most impactfully, with these changes, there will be risk. 

“We’re talking about bringing new technologies, new processes and new capital expenditure into what is a fairly mature set of process technologies. That means bringing a lot of risk and change,” said Dr. Bob Maughon, SABIC.

Bob also noted that there is a business model challenge. The value chain is expanding and forcing a more circular view—the need to address end of life of plastics, including waste collection, sorting and conversion, which have not previously been part of the upstream petrochemical production value chain.  

Zhanna Golodryga from Phillips 66 agreed, adding, “Sustainability is providing an opportunity to optimize the end-to-end value chains in a manner never done before.”

Zhanna also outlined three stages P66 is undertaking to help drive organizational change. In the short term, P66 is working toward converting a petrol refinery in California to a biodiesel refinery. In the medium term, P66 is looking at what can be done with hydrogen – green hydrogen in particular – and what can be done to make it more commercially viable. In the long term, a business unit has been set up to help explore breakthroughs in technology, such as solid oxide fuel cells and photovoltaics, which could allow P66 to pursue completely new sustainability pathways.

 

Beyond Technology: The Role of Culture, Agility and Ecosystems 

In discussing how to move the industry forward, Giorgio Bresciani from McKinsey & Co., raised the point that AI and digital technologies will help accelerate the energy transition to be able to mitigate the risk. He sees three fundamental areas to address for companies to succeed in the energy transition. His first recommendation is to really get teams confident with data and alternative approaches.

“Getting them the right data and understanding of the right alternatives and creating the conditions for the teams to be more confident to apply it.” 

His second recommendation was to focus on specifics that, “increase the productivity and reduce the waste, which would make the operation more efficient.” 

Finally, he noted that looking at the business impact is critical, “with an emphasis to insure proper returns in terms of economics.”

Giorgio continued to talk about what is needed to take advantage of the available technology and how to drive agility in teams. “I think it is crucial to enable the teams to remain adaptive, and to be open to continuous innovation.  It’s crucial to bring in a more agile type of mindset into teams that are at the forefront of the deployment of the technology and finding the means to operations.”  

He also commented to on the importance of the ecosystem. “I believe partnerships along the value chain with technology companies and other providers are essential to leverage the ecosystem, to think in a new way to look at data and share the data and to create platforms to optimize the level of investments and, if any, returns in the industry.”  

 

Moving Forward: New Objectives for the Leaders in Industry 

Béla Kelemen from MOL Plc, summed it up well in saying that a change in mindset is required. “Until now, a clear driver was profitability. When we were doing the optimization, the objective function was quite clear…How can we bring sustainability into that objective function?” 

He noted that presently we must find an approach where, “business models can work in a profitable way to provide the single most important value, which is called sustainability.” 

Zhanna noted that it is up to leaders in the industry, to move the ball forward. She claimed leaders like those on the panel are in the best position to manage the transition. 

“It cannot be done without us. We have the skills, we have the expertise, we have the talent, we understand chemistry, we understand physics, we understand the mechanics. Sustainability will continue to be critically important to all of us.” 

One thing is certain – sustainability is established as a high priority for CEOs, Boards and investors alike. A culture that drives innovation and adaptability at all levels of an organization will be key to addressing the ‘dual challenge’ of profitability and sustainability and will define the industry leaders for the next 10 years.

 

For more on-demand sustainability sessions, visit the OPTIMIZE agenda.  

 

 

 

 

 

 

 
 
 

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