Editor’s Page: The Growing Importance of Business in Engineering
John Pearson, Divisional President
In this era of ever-higher crude oil prices, and at a time of impending legislation to tax carbon emissions and favor "greener" technologies, the role of the chemical engineer is experiencing important changes. In a nutshell, the engineer’s role is shifting from process specialist to one that is ever more integrated in the overall business decision making of the chemical process industries (CPI). Market research and engineering research are becoming sister disciplines, as the rapidly changing landscape of rising energy and chemical-feedstock prices and new green legislation collide. You can see why this is true from the example of petrochemicals production.
Record-high oil and chemical feedstock prices are causing a whole range of rapid shifts that will ripple throughout the global CPI. Most forecasters are expecting the oil price to settle above $100/bbl. Production of olefins and petrochemicals is moving to regions with the most favorable feedstock costs (Middle East) and consumption is shifting to the regions of most rapid economic growth (China, India and other Asian countries). North America is, not surprisingly, developing new interest in and enthusiasm for coal and biomass as potential future feedstocks.
But beyond these effects, higher oil prices impact not only the regions where products are made, but which products are made. Every product has four main cost areas: feedstock, energy, capital and labor. Processes that are energy and feedstock intensive are likely to be relatively defavored in North America and Europe compared with processes that are capital or labor intensive. Of course, everything is relative, but this would represent a reversal of the current paradigm, where capital intensity, for example, has been a discouragement to investment.
What about "green" legislation? It is clear that the nominees for the U.S. Presidential election this November believe that greenhouse gas (GHG) emissions should be limited in some way. U.S. engagement in the climate-change debate is likely to provide proponents of carbon taxes new momentum around the world. Carbon does, however, already have a value, with trading occurring under various regimes in North America and Europe. Its cost will add a new factor into decisions taken about which products can be made competitively. Engineers will have to consider where their utility power comes from, and the expected prices for carbon credits, before informed decisions can be made.
While it is too early to say what conclusions will be reached, it seems clear that the processes that will suffer most from GHG legislation are those that depend on creating value from coal, use a lot of electricity, or include a lot of energy-intensive oxidation, compression or refrigeration steps. The favored processes will be those that can eliminate energy-intensive steps, or that can depend on feedstocks other than fossil fuels.
Chemical engineers will have to meet a lot of new design challenges as the green juggernaut rolls forward. Bioprocesses will have to be considered as viable alternatives to existing fossil-fuel-based value chains, reactor design will have to be overhauled, and new catalysts and energy efficiency will be top of the list in investment decisions.
But underlying all of these challenges to business as usual is the need to integrate the engineer and engineering research into the overall business vision of companies. It’s time for more engineers to get their business degrees and move into senior management jobs. The health of the CPI will be all the better for it.
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