In yesterday’s ESG and Climate report, we focused on the possibility of gaining a competitive edge by focusing on the most likely outcome for each climate and sustainability challenge and moving in that direction quickly, rather than waiting for regulations or incentive schemes to develop to make the financial decision more palatable. This is more important when other countries already have incentive schemes that are encouraging behavior that could create a competitive edge or where companies are acting unilaterally. There are a couple of interesting examples below:
The first is in the last bullet point and summarized in the chart and concerns a blue methanol project in Canada. With the high expected carbon tax in Canada, the country is moving ahead with CCS projects while competing countries (most obviously the US) are debating and waiting. Canada has blue hydrogen projects, green hydrogen projects, and now a blue methanol project making their way out of the starting gate. If consumers of plastic, for example, start looking for low carbon PET within the next year or so – Canada will have the ability to convert blue methanol to acetic acid – important in the production of PTA, the major molecule in PET. Blue acetic acid would have plenty of other interesting markets, and a lower carbon MTBE (also a methanol derivative) would pick up carbon credits in gasoline pools outside the US.
Source: Nauticol Energy, Enhance Energy Partner, GreenCarCongress, March 2021
The second is Unilever’s investment in recycling projects. Unilever is investing only $15 million in Closed Loop Partners private equity vehicle focused on funding recycling ventures. This could easily be labeled as ”greenwashing”, as the investment is much smaller than the headline warrants, and Closed Loop only invests in “sure things” – small recycling projects that are focused on specific needs and specific streams of waste polymer – often targeting the personal care and household products markets that would matter to Unilever. However, we would hope that Unilever is doing more than just adding some cash to the fund and has, in exchange, gained some claim or exclusivity on any investment that creates either major recycling cost savings or breakthroughs in how to clean or sort polymers – given the company a potential edge should something groundbreaking appear. If they have not done this, then the ”greenwashing” label would be more appropriate.
