Eco-Efficiency: Inside BASF and Eco-Efficiency Analysis Tools

1. Eco-efficiency: Inside BASF and Beyond…Charlene Wall, BASF Corporation, Mount Olive, New Jersey

2. Eco-efficiency: Inside BASF and Beyond…Charlene Wall, BASF Corporation, Mount Olive, New Jersey • Introduction to Eco-efficiency • Eco-efficiency Decision Tool Case Studies: • Textile dyeing • Logistics • Refrigerators

3. Sustainable Development is based on three Pillars Economy Society Ecology Eco-Efficiency Analysis

4. What is Eco-Efficiency Analysis? • A comprehensive assessment of products and processes. • Ecological and economic aspects are equally weighted. • The products are analyzed from the end customers‘ perspective. • Potential scenarios and their effects are evaluated. • Eco-efficiency analysis is a standard tool in the BASF Group: more than 150 analyses have been carried out.

5. Costs Analysis Total costs Costs in $ per functional unit 1.0 high low costs Alternative 1 Alternative 4 Alternative 3 Alternative 2 Alter- native 2 Alter- native 1 Alter- native 4 Alter- native 3

6. Ecological advantage Parameters considered Ecological fingerprint Relative environmental impact • Raw Materials • Energy consumption • Land Use • Emissions • Toxicity • Risk potential Energy Consumption 1.00 High Land Use Emissions 0.50 Product 2 0.00 BASF Raw Materials Toxicity Potential Product 1 Risk Potential Low Development of Ecological Value 1 = greatest effect on the environment 0 = smallest effect on the environment

7. Luft-emissionen 50% Luft-emissionen 50% Airemissions 50% Emissionen Emissionen Social Assessment Factors Energy consumption 20% Greenhouse warming potential 50% Raw material consumption 20% 10% Land Use Ozone depletion potential 20% Emissions 20% Wateremissions 35% Photochemical ozone creation potential Toxicity potential 20% 20% Wastes 15% 10% Risk potential Acidification potential 10%

8. Ecoefficiency Portfolio: Links Costs and Environmental Impact 0,3 high eco-efficiency Alternatives investigated Alternative 3 Customer - related benefit: 1 unit of …. Alternative 1 • Alternative 1 x % • Alternative 2 z % • Alternative 3 y % • Alternative 4 t % • The circle area is equal to the relative market position. relative market position Environmental impact (normalized) 1,0 Alternative 4 Alternative 2 low eco-efficiency 1,7 1,7 1,0 0,3 Costs (normalized)

9. Dyeing Eco-efficiently:Helping small and medium enterprises make the best decisions • Pilot project with UNIDO and UNEP as part of the United Nations - Global Compact initiative • A software tool which allows the user to assess the eco-efficiency of various processing methods

10. Production Processing Steps Disposal Water Pre-treatment Dyeing Finishing Electricity Wastewater Off-gas treatment Steam Production of Dyes Auxiliaries Landfill Incineration Finished fabric Dyeing Eco-efficiently: System Boundaries

11. Dyeing Eco-efficiently: Inputs and Outputs • User Inputs: • Fabric quantity, number of processing steps, processing time • Chemicals • Utility consumption • Process emissions • Costs • Eco-efficiency Manager Outputs: • Portfolio: which alternative is the most eco-efficient? • Environmental Fingerprint: what are the impacts of each? • Relative comparisons for each of the categories: Emissions, Energy and Raw Material Consumption, Land Use, Toxicity and Risk Potential

12. Process Improvements • A two-step dyeing process for mixed fabric was changed to a one-step process, by using a new chemical. • Decreased energy and water consumption resulted in improvements in almost all environmental categories.

13. Process Improvements • The new chemical provided environmental benefits at the same overall costs, even though the chemical price was more expensive.

14. Ecologistix - a Software developed by BASF • The goal of this software is: • to compare economics, environmental impact and responsible care for transporting products • to offer innovative and responsible solutions to our customers Getting from here to there eco-efficiently

15. Getting from here to there eco-efficiently • User Inputs: • Payload • Chemical hazard class • Shipping fees • Distances for land, sea • Number of transfers • Open/closed filling systems • Eco-efficiency Manager Outputs: • Portfolio: which alternative is the most eco-efficient? • Environmental Fingerprint: what are the impacts of each? • Relative comparisons for each of the categories: Emissions, Energy and Raw Material Consumption, Land Use, Toxicity and Risk Potential • CO2 savings potential

16. Logistic alternatives for supplying product to another site (14.000 t pro Jahr) Ludwigshafen Rail, Tank-car (58 t Load, 755 km) Tank-truck (23 t Load, 698 km) Destination Site

17. Getting from here to there eco-efficiently Alternatives 0,5 Customer Benefit: Transport of 14.000 t of product from Ludwigshafen to a customer Road transport, conventional tank-truck 23 t Load Rail, Tank-car, 58 t Load Environmental Impact (normalized) 1,0 1,5 1,5 1,0 0,5 Costs (normalized)

18. Cooling Eco-efficiently: Refrigerators • A project done by BASF for the German Green Party and the Wuppertal Institute • Helps the consumer decide: “Should I buy a new refrigerator or continue to use my old one?” • Considers production and disposal of the appliance itself, as well as energy consumption

19. Refrigerators: the Customer Benefit Customer Benefit New Alternatives Product Use • Buy a new refrigerator and dispose of/recycle the old one: two energy efficiencies (A & B) • Use of a 143 l cooling capacity refrigerator over 5 years • Continued use of a 10 year old refrigerator with 260 kWh/y or 330 kWh/y average energy consumption

20. Base case New A Old 1 New B Old 2 Cooling Eco-efficiently: the Portfolio 0,5 Alternatives considered High eco-efficiency Customer benefit: Use of 143l of cooling capacity over 5 years Environmental impact (normalized) New A –Highest Efficiency New B – Lower Eff. 1,0 Old 1 – Higher Eff. Old 2 – Lower Eff. Low eco-efficiency 1,5 1,5 1,0 0,5 Costs (normalized)

21. Cooling Eco-efficiently: Refrigerators • Buying a new more energy-efficient appliance brings the greatest environmental benefit… • …at only slightly higher cost • Energy efficiency is key!!!

22. Eco-Efficiency Analysis: Our Innovative Instrument for better Products With an eye to the markets of the future, we believe that it is prudent to consider the environmental friendliness of one’s own products. That is why we felt it was important to develop an effective means of monitoring ecological and economic performance. Eco-efficient products and processes give BASF and our customers a competitive edge. For more information: www.basf.de/en/corporate/sustainability/oekoeffizienz/or send an email to wallc1@basf-corp.com