Chemical leasing

Chemicals using industries: cleaning agents, chemicals in waste water treatment plant, ink in the newspaper, painting the industries, fertilizers and pesticides in agriculture, makeup accessories, lubricants and detergents in beverage industry, cleaning of vessels in the food industry.

Chemical leasing is Chemical leasing is a service-oriented business model that shifts the focus from increasing sales volume of chemicals, toward a value-added approach. (UNIDO)

Importance of chemical leasing over traditional approach

1)    Over consumption of chemicals

2)    Lack of proper disposal method or recycling of excess chemicals

3)    Use of inefficient machines

Impacts of improper disposal of hazardous chemicals

1)    Global warming

2)    Bioaccumulation and bio- magnification along aquatic food chains

3)    Ozone depletion

4)    Acid rains

The difference between traditional chemical business model and chemical leasing model

Traditional chemical business model: Chemicals are mainly sold to the customers by chemical producers. The payment is based on the volume or tons of chemicals sold. Increasing the sells chemicals or increasing the price of chemicals are the options amiable for the chemical producers to gain a large profit but  the chemicals producers tend to sell more volume or tons of chemicals in order to enhance their profit due to the competition between chemical producers. The chemicals producers does not bear the responsibility of management of the produced chemicals throughout the entire life cycle of chemicals.

Chemical leasing model: The functions performed by the chemical is mainly sold to users and suppliers by the chemical producer.  The payment is based on the functional units. The profit is increased with increasing of functional unit per volume or kg of chemicals. Chemical producers has to take the responsibility of management of produced chemicals throughout their entire life cycle including management of the waste.

Examples:

The chemical leasing model creates a win-win situation because it gives the benefits for both producers and users. The chemical leasing has designed to achieve efficient use of chemicals and reduce health risks.

It improves the economic and environmental performance of participating companies, and enhances their access to new markets. Proper benefit sharing, high-quality standards and mutual trust between participating companies are considered as the key elements of successful chemical leasing model. 

Advantages of chemical leasing:

1)    Enhance the efficiency of workers and production process

2)    Reduce the cost related to transportation and storage

3)    Significant cost reduction through the reduction of chemical usage

4)    Reduce hazardous waste generation

5)    Enhance the work place safety

6)    Boarder the assess to new markets

7)    Reduce the environmental impacts related to production process

8)    Raise the awareness of employees regarding handling chemicals and health hazardous

9)    Able to comply with environmental regulations related to waste management

Case study in Siberia

Knjaz Milos, largest mineral water and beverages producer of Siberia has implemented a successful chemical leasing project for its conveyor belts with the cooperation of its chemical supplier Ecolab in 2009. Lubricants are generally applied to maintain the smooth movement of bottles along the conveyor belts. In earlier, water based lubricants were applied to the conveyor belts. Alkyl amines and acetic acid compounds which are corrosive and toxic were mainly used as lubricants. Despite the environmental issues regarding high water consumption and high occupational risks, those chemical based lubricants had hazardous properties. Spraying those lubricants to conveyor line made the floor slippery and led to work place accidents.

 Knjaz Milos was able to find an innovative approach to enhance efficiency the production process and ensure the work place safety under the guidance of Cleaner Production Centre in Serbia. The hazardous water based lubricant was substituted by the non- hazardous dried lubricant. The use of dry lubricants lefts the floor dry. Thereby it eliminate the occupational safety risks of employees. Nozzles and automated dosage system were installed to conveyor line. The factory pays the working time of the conveyor belt for the Ecolab rather than paying kg of lubricants.

Ecolab has encouraged to optimize the effectiveness of their lubricants because their profit gained from Knjaz Milos is increased with the reducing the volume of lubricant for the conveyor belts. The shifting into dry lubricants eliminate the water and chemicals for pretreatment and waste water treatment process, reduce the chemical consumption by 50% and save water. It is also able to reduce the health risk associated with aerosols in working place. The coast saving per convoy line has recorded as EUR 5,700 per year. Although Ecolab sells less volume of lubricants, it gains high profit through their service. Both Knjaz Milos and Ecolab were awarded with a Gold for their chemical leasing project at the Global Chemical Leasing Award in June 2012.