Metrics rather than 'greenwashing'
 

Sustainability in Mexico’s Chemical Industry

June 05, 2024

Image courtesy of Ecolab

In recent years, concerns about ‘greenwashing’ have led to greater expectations for sustainability reporting and a need for companies to take tangible steps to reduce their resource usage and carbon footprint. “We have noted that environmental and societal concerns are more genuine now and taken seriously,” said Oscar Saco, managing director of SGS. “Greenwashing will not disappear, but many companies are genuinely concerned and investing in technology to reduce things like their water usage.”

SGS, a testing, inspection and certification company, offers services that allow the general industry to measure its footprint and resource consumption. SGS has seen greater demand from clients for assistance determining where a company currently stands, and what steps can be taken to improve its sustainability. As sustainability certificates become more of an expectation, there is greater focus on data collection and measurement of key sustainability metrics such as water usage. 

To accomplish this, there has been a surge in demand for innovation-driven solutions, companies seeking cutting-edge technological advancements to address their needs. The future of sustainability is at the heart of this global focus on R&D, with niche segments becoming areas of major opportunity for specialty chemicals providers. Arkema, for example, offers a variety of sustainability solutions, and recognizes opportunity in specialty chemical solutions for construction. “We are looking to exploit some of the global megatrends in decarbonizing the built environment (the so-called ‘cool surfaces’ technology),” said Manuel García, president of coating solutions for Mexico, Central America, and the Andean region.

For Cemex, materials  for construction and urbanization solutions are ripe for sustainable innovation. The company, which focuses on cement, concrete and aggregates production, is using innovative additives to reduce CO2 emissions. These additives demonstrate the potential of chemical innovation to decarbonize the construction sector and improve buildings’ energy efficiency. The company’s Vertua line of lower carbon products has a 30% reduction in CO2 content compared to traditional cement and concrete. Vicente Saisó, vice president global sustainability at CEMEX, said: “Using additives creatively to reduce CO2 emissions is our key focus and will determine the future profitability of our industry.”

The company’s target was that 50% of the company’s total sales by 2025 be lower-carbon products, but demand has been such it they reached the threshold at the end of 2023. The construction industry is conservative about adopting new formulations, but these types of solutions can be the future of sustainable development. There are, however, regulatory inhibitions slowing the growth of these products. Saisó explained: “In some markets, local building codes or regulations have not yet accepted lower carbon products.” 

Tecnoindustries produces materials for bricks and other housebuilding tools, with a large carbonates division. Each of the company’s divisions has its own sustainability targets. Javier García, director of operations at Tecnoindustries, said: “We have benefitted from large multinational clients with stringent environmental standards, which they have passed down so we can do business with them. We are doing the same further down the value chain, creating a virtuous cycle.”

For Arkema, investing in sustainable solutions is at the core of meeting future demand. Salvador Soria, president of Mexico, Central America and the Andean region for Arkema, stated: “There is a rising demand for eco-friendly, sustainable alternatives that minimize ecological footprints and support responsible practices.”

Biological products for a more sustainable food system

Consumers are now more focused on the safety of the food they consume and the impact of growing techniques on the land. In response, the crop protection industry has been investing heavily in sustainable alternatives to traditional agrochemicals. This is an industry-wide trend, as Luis Eduardo González Cepeda, former president of the Mexican agrochemical industry association UMFFAAC, explained: “There is a growth in the registration of new organic and biological products. It is now part of the fabric of the companies we represent.”

Acadian Plant Health produces products from a seaweed called Ascophyllum nodosum, which is grown in the North Atlantic. The company, which recently launched a product called TOGGLE to enable grains, cereals and industrial crops to be more resilient against abiotic stress, supports its clients in the agricultural sector in increasing yields sustainably. Sergio Aburto, director Latin America North for the company, explained: “Our Canadian seaweed has a high concentration of bioactive compounds, providing a high bio-stimulant technology that helps the crop’s abiotic stress resistance.” 

There is immense potential for the biostimulants market in Mexico across several segments. Sugar cane prices are rising, so sugar cane producers are more willing to spend money on products to sustainably improve yields. Demand for agave, driven by tequila and mezcal, is also continuing to rise. Additionally, Mexico is strong in high-value crops such as berries and vegetables, and some specialty crops like walnuts, all of which have the money to invest in advanced biological technologies.

Delayed permitting approvals have been a challenge to navigate, and there is no positive end in sight. Companies wait years for product approvals, dramatically slowing the pace with which the industry can bring innovations to market. AMVAC, for example, has 14 registration applications waiting for a response, and another 15 for which COFEPRIS needs to review the information, some of which are as old as 2018. “We are trying to work with the authorities, developing products with greener technology and trying to comply with their demand to develop alternatives to agrochemicals,” said Marco Salcedo, director of AMVAC. “If they want to have better, greener technology, they must speed up the process of registrations.” 

There is great opportunity for technological innovation in developing more sustainable crop protection products. FMC, for example, is in the process of bringing its new BioPhero pheromone technology to Mexico, currently working with the government to gain approvals.  Carlos Jurado, Latin America North business director at FMC, stated: “BioPhero developed the technology to replace expensive synthetic pheromones using highly specialized pheromones in smaller volumes, which will significantly reduce operational costs for farmers.”

In the coming year, development of advanced, natural crop protection products will continue to be a priority across the industry. The trend towards sustainable and biological products is irreversible, pushed both by strict regulation and consumer demand. Looking forward at 2024, Luis Osorio, executive director of industry association PROCCyT, said: “This year’s mission is vital: To support the development and investment in sustainable practices, new products and technologies, such as biotechnologies that support this transition.”

The industrial gas sector gears up for green hydrogen

A cheaper and greener energy sector is the holy grail for Mexico’s entire industrial sector, but the path forward is winding. For industrial gas producers seeking to provide low carbon gas, the lack of access to electricity from a renewable source is a major inhibitor. In the long-term, a greener energy matrix in Mexico will require energy production from a wide variety of renewable sources, including wind and solar.

Even in the past three years, the interest in developing a green hydrogen segment in Mexico has grown dramatically. Cryoinfra, a Mexican company, has a strong presence in hydrogen, and in 2024 the company will open another hydrogen plant in San Luis Potosí. Hydrogen, in all its forms, is currently seen as potentially the future for decarbonizing many industries, with many companies in Mexico looking into blue hydrogen, with the focus on reducing the carbon intensity of hydrogen.

Green hydrogen will be important in the future, but there is currently no market because of the high costs and lack of legal security. Dieter Femfert, the commercial director of Cryoinfra, is also vice president of the Mexican Hydrogen Association, which works with the government to support green hydrogen projects. Femfert stated: “Other countries are beginning to use green hydrogen for mobility, such as cars, trains, ships and planes, and we need to move in the same direction.”  

Energy and gas providers in Mexico are focusing more closely on the country’s green hydrogen potential. The potential for solar, wind and water energy generation would allow for the production of a fully green hydrogen. Industrial gas producer Air Liquide’s team participated in a study of the potential for green hydrogen in Nuevo León. Raphael de Montfort, general director of the company in Mexico, explained: “There were several core conclusions: The most important point is that the interest of all key stakeholders was confirmed and we see the progressive emergence of an ecosystem to promote green hydrogen.”

Topsoe has, likewise, witnessed interest in the country’s green hydrogen potential. The company always participates in the hydrogen exposition in Monterrey. Florencia Vitelleschi, general manager Mexico at Topsoe, explained: “We are starting an industry that currently does not exist in Mexico from scratch, but Mexico has a very large automotive sector and strong industrial sector, so the markets exist.”

Mexico’s position next to the US also positions it well to benefit from green subsidies the US is giving out through the IRA. “I was at a US embassy event the other day, and they were demonstrating the incentives there are to carry out projects in Mexico,” said Vitelleschi. “The US is well-positioned for hydrogen, and Mexico will benefit.”

To overcome the high-startup costs for green hydrogen projects, there is a need for subsidies at the beginning of green hydrogen projects to ensure their viability. This call for financial support was mirrored by a larger call among the executives interviewed for this report for investment in infrastructure to provide renewable power, allowing the country to produce green hydrogen at a competitive price. This requires a collaborative effort between the government, industry and the citizenry. 

The demand for green hydrogen is driven by sustainability priorities, but to develop a green hydrogen industry would be a smart economic move for a country with as much renewable energy potential as Mexico has. This energy potential, combined with the country’s privileged geographic position, positions it to supply green hydrogen to markets such as Korea and Japan. “Mexico has an excellent opportunity to become a hydrogen producer and supplier to these Asian markets, where there is lots of industry but no indigenous energy base,” said Hugo Villareal, vice president of energy and engineering at Linde. “There needs to be a collective stakeholder effort to jumpstart this industry and incentivize capital to make it a reality.” 

Despite positive signals, an active green hydrogen production segment is still a long way away for the country. Currently, green hydrogen technologies are not economically viable in Mexico, and so liquid natural gas (LNG) will continue to be central to the country’s energy matrix. Carlos Boone, director of business intelligence and corporate affairs at Énestas, said: “There are other, greener energies in play, but in Mexico public policy has not yet encouraged the transition to those alternative sources and we are not actively developing it.”

From Boone’s perspective, LNG is both the present and the future. Infrastructure for natural gas has increased across Latin America, but particularly in Mexico, including investments in terminals. Boone explained: “Natural gas is often thought of as a transition fuel, but with everything that is happening in the world, including the war in Russia and trade issues between China and the US, natural gas took over. Today, LNG is being imported to any country that can receive it.” 

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