When Peter Vanacker takes over as CEO of LyondellBasell sometime by June, one of the first things to hit his desk could be a status report on the petrochemical giant’s toe dip into molecular plastic recycling.
It’s crunch time at the pilot plant in Ferrara, Italy, where waste gets chemically broken down into the very feedstock needed for making new plastic. The initial success of the project, which started up in 2020, will be revealed in the coming months, according to interim CEO Ken Lane.
That’s just in time for Vanacker’s arrival. As CEO of Finland’s Neste for the past three years, he can take his fair share of the credit for the whirlwind transformation of the Finnish oil refiner into a renewable fuel supplier. All inside a decade, the awards and plaudits for sustainability at Neste rolled in.
Whether this can be repeated at LYB remains to be seen. The company is still a textbook case study for a private equity. Brought back from the brink by Apollo Global Management, the investor netted some $10 billion by the time it had exited. And LyondellBasell emerged very-much a survivor in the cut-throat world of commodity plastics, where an absolute adherence to cost efficiency rules the day. And to state the bleeding obvious, Finland, a recognised leader in ESG, isn’t the US.
Vanacker is an intriguing choice for LYB. Looking at the molecular recycling pilot project, interim CEO Lane indicated it could be a couple of years or so before a decision on a commercial-scale plant is taken.
LYB is making baby steps, addressing the “low-hanging fruit” first on the path to producing 2 million tons of recycled and renewable-based polymers annually by 2030. Measures include buying renewable energy and feedstock that can be cracked at existing plants at no extra investment, Lane said. More intricate projects will be rolled out over time.
It doesn’t help that plastic markets are booming. Polyethylene capacity is set to increase by 8 million tons over the course of this year but LYB, like Dow and others, see rebounding demand soaking up the extra supply. Rather than facing a cliff edge later this year, Lane said he expects “the complete opposite.” Markets will remain strong.
LYB has earmarked $2 billion and that sum will get it someway towards reducing its scope 1 and scope 2 emissions by 30% by the end of the decade. And then there’s the standard net zero emissions pledge by 2050.
Vanacker will need to start signing off on the extra capital needed for projects to achieve those targets.