Official UNIDO Definition

Chemical Leasing (ChL) is a service-oriented business model that shifts the focus from increasing sales volume of chemicals towards a value-added approach. The producer mainly sells the functions performed by the chemical and functional units are the main basis for payment.

Within Chemical Leasing business models the responsibility of the producer and service provider is extended and may include the management of the entire life cycle.

Chemical Leasing is a win-win situation. It aims at increasing the efficient use of chemicals while reducing the risks of chemicals and protecting human health. It improves the economic and environmental performance of participating companies and enhances their access to new markets. Key elements of successful Chemical Leasing business models are proper benefit sharing, high quality standards and mutual trust between participating companies.

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EU REACH Directive and Chemical Leasing

Chemical Leasing is an efficient tool for implementation of the upcoming EU REACH Directive. ChL Business Model originally developed by the Austrian Ministry of Environment is applied within the frame of a demonstration project, supported by the Austrian Government and implemented by UNIDO (United Nations Industrial Development Organization), in close cooperation with the North-Western Cleaner Production Center (NWICPC). The Chemical Leasing is a new and innovative tool to promote sustainable management of chemicals and to close the material cycles between suppliers and users of chemicals ("closing the loops"). Further, it aims at shifting from the current practice of "selling products" to "offering services", with environmentally and economically sound benefits. ChL based projects involve the cooperation between NWICPC, users and producers of chemicals as well as stakeholders, know-how suppliers and waste disposal companies in the following aspects:1. Providing the information about the advantages of ChL business model to Russian chemical enterprises, organization of workshops, seminars and bilateral meetings on the implementation of this innovative approach to business relations;2. Establishment of ChL business relations based on service-oriented supply of chemicals and methods for their optimized application (reduced consumption) with
payment according to the quantitatively measurable final outcome of their use;3. Extension of service oriented business relations towards efficient recycling of various chemicals and waste management.

Implementation in Russia

Performance of the first phase of the demonstration project indicated the main prospects and obstacles to ChL implementation in the Russian chemical market. The most promising area for the development of ChL based business relations is found to be related to the supply of chemicals, equipment and know-how for waste purification processes. This field is featured with an urgent necessity in modernization and optimization of the existing technologies in view of the insufficient level of wastewater purification facilities at many enterprises, permanently growing chemical impact on the environment, increasing control from state ecological organizations. Other promising areas for ChL implementation in Russia include the possibilities for reduced consumption of such substances as solvents, detergents, soaps due to the application of know how providing their recycling or optimized use.
The main promoting factors for efficient ChL implementation in Russia are fast growing chemical market, establishment of new business relations between producers, suppliers, users R&D organizations and stakeholders in chemical industry as well as a growing level of environmental control.
The main obstacles to effective implementation of ChL business model in Russia include a general economic instability, lack of support from authorities, insufficient awareness of the companies' authorities about this innovative concept and lack of their motivation in structural changes of their business activity. The demonstration project on ChL implementation is performed in Russian under supervision and coordination of UNIDO and NWICPC since 2005.

Main events and milestones of the project performance:
Training Workshop on Chemical Leasing Business Models organized by UNIDO with the participation of NWICPC general director Dr. A.A.Startsev and National Expert on Chemical Leasing Dr. S.V.Myakin (Vienna, March 1-3, 2005)

• General presentation of ChL concept by the representative of Austrian government (Ministry of Environment) Mr. Tomas Jakl
• Detailed overview of the approaches to ChL implementation by the UNIDO International Expert on Chemical Leasing Dr. Reinhard Joas
• Information about the main promoting factors, obstacles and prospects for ChL implementation in Russia by Dr. Startsev and Dr. Myakin

• Presentation of the projects supposed for organization according to ChL concept in the North-Western region of Russia
• Discussion of the plan of activities for the informational support, coordination, national and international cooperation for the promotion of ChL Business Models implementation
• Visits to industrial, service and R&D companies interested in the participation in the project.

• Evaluation of the Demonstration project performance progress in Russian, Egypt and Mexico (companies involved, general official and public opinion towards ChL Business Models, governmental and intergovernmental support)
• Presentation of the extended concept of Chemical Leasing as an advanced approach to the establishment of advanced cooperation in chemical industry combining economic efficiency and decrease of the adverse impact on the environment.
• Analysis and co-ordination of the prospects and plans for the further implementation of ChL Business Models towards concluding ChL contracts between producers, suppliers and users of chemicals optionally involving additional participation of service companies, R&D organizations and stakeholders.

• Discussion of the current activities and further prospects in the Demonstration project performance
• Visits to companies currently and potentially participating in ChL based projects, coordination of the implementation activities with their authorities.

• Global presentation of Chemicaeasing concept and the results of the UNIDO project on Chemical Leasing and Cleaner Production as well as future strategies for its successful worldwide dissemination;
• Reports of the representatives of large and medium scale chemical enterprises on the achievements and benefits based on the implementation of ChL Business Models.

The combination of Cleaner Production and Chemical Leasing has proven to be a win-win situation for economy and environment and can be applied to industries of different sizes.

Cleaner Production and Chemical Leasing are efficient policy instruments for sustainable chemicals management.

The Global Action Plan of the SAICM process and the Quick Start Programme should support the international dissemination of Cleaner Production and Chemical Leasing projects.

• Discussion of the progress of ChL implementation in Russia towards conclusion commercial contracts between producers, suppliers and users in chemical industry
• Analysis of the general outcome of the 1st phase of the Demonstration project performance;
  Visits to participating companies, coordination of current and further activities
• Presentation of the general concept, achievements, prospects and benefits of Chemical Leasing implementation to the St-Petersburg administration and representatives of the Committee on Ecology of the Russian Parliament.

More about the Seminar

Organizations participating in the Demonstration project on Chemical Leasing implementation in Russia:

North-Western International Cleaner Production Centre (NWICPC)

• organization and coordination of ChL projects,
• organization of seminars and workshops on ChL implementation;
  information support of ChL projects on national and international levels

Service company ERG

• development and supply of material saving technologies in various branches of chemical industry
• development and implementation of efficient innovative processes for wastewater purification and chemical wastes disposal supply of chemicals according to ChL concept

Henkel-ERA - affiliation of Henkel AG

largest producer of industrial and household glues, soaps and detergents in the North-Western region of Russia

• implementation of an advanced process for wastewater purification using chemicals supplied according to ChL business model Federal enterprise "Krasny Bor" specializing in the collection, storage and processing of toxic liquid wastes
• implementation of an innovative process for liquid wastes processing using chemicals supplied according to ChL business model

Artflex, Ltd.

large producer of packaging materials with flexographic printing

implementation of a process for recycling of solvents applied for flexographic printing,
use of chemicals supplied according to ChL business model

Chemical Leasing demo-projects coordinated by UNIDO NWICPC, St.Petersburg

1. ERG - Henkel-ERA - NWICPC cooperation in industrial wastewater purification
   ERG organizes a service-oriented supply of a modernized process for the purification of wastewater from glue, soaps and detergents production at Henkel-ERA facilities providing a significant reduction of the consumption of reactants required for efficient water purification (iron chloride - by about 50%, sodium hydroxide and standard filter packs - by 10-15%) relating to the earlier applied technology with the whole services (process transfer and modernization, equipment and chemicals supply) according to the final outcome (purified water amount) instead of selling reactants. In addition to economic advantages, the suggested approach also provides a significant ecological benefit since in addition to wastewater purification to the level appropriate for discharge into the environment the services supplied by ERG include safe transportation and disposal of the residual solid wastes yielded at the purification process thus completely protecting the environment from pollution relating to this process. Presently ERG and Henkel-ERA have completed the equipment modernization and the process up-scaling/testing activities and confirmed both the process efficiency and applicability of ChL based business relations. The project is performed since 2005. The contract on ChL services on wastewater purification between ERG, Henkel-ERA and NWICPC as the coordinator is prepared and ready for signing.

2. ERG - Krasny Bor - NWICPC cooperation in hazardous liquid wastes processing
   The project relates to the purification of wastewaters containing galvanic and organic contaminants from various industrial enterprises in St-Petersburg collected at Krasny Bor for disposal. Presently these wastewaters are permanently stored in natural landfill reservoirs causing a danger for the environment in view of the possible overfilling with rainwater or penetration into the groundwater. The process developed by ERG involves the following steps: (1) biological treatment with active sludge for the elimination of a significant part of organic contaminants, (2) precipitation with CaCl2, FeCl3, Al2(SO4)3 for the removal of organic anions, (3) Fenton process based on oxidation with Fe(II) ions catalyzed by hydrogen peroxide, (4) sorption on active carbon and (5) selective ion exchange. This approach affords an efficient purification of wastewater to the level appropriate for discharge into the environment according to the ecological legislation and sanitary standards. Furthermore, ERG suggests to Krasny Bor a package of services including the supply of chemicals and equipment required for wastewater purification, know how providing the optimization of the chemicals consumption, training of Krasny Bor personnel to performing the relating operations and services on the residual solid wastes transportation and disposal. These factors provide the background for the application of ChL business model, particularly for the supply of the process and required chemicals as a service to be paid according to the final outcome, i.e. the amount of the purified wastewater instead of the amount of supplied reactants. Presently ERG and Krasny Bor have signed a protocol of intentions to cooperate in a joint ChL project and completed the laboratory and pilot tests that confirmed a high efficiency of the developed technology.

3. ERG - Artflex - NWICPC cooperation in the recycling of solvents for flexographic printing
   Artflex, Ltd. in cooperation with ERG purchased and installed a machine for recycling of solvents used for cleaning the flexographic printing equipment from paint residues. The relating process enhancement affords the application of ChL business models in business relations between these companies (supply of the solvents by ERG with payment according to the amount of produced packages with flexographic printing) and provides the following environmental benefits:

• reduction of solvents consumption by more than 70%
• avoiding an expensive and environmentally adverse discharge of the used solvents to municipal waste processing enterprises

The project is launched in 2005. Signing of a Chemical Leasing contract is expected in 2006.
Chemical Leasing is promising for the application of various chemicals upon the possibilities for;

• partial or complete recycling
• optimization of application with reduced consumption
• involvement of the supplier or producer in the application process (service supply instead of selling)
• cooperation of several enterprises (producers, suppliers, service companies, R&D organizations providing know how and advanced material-saving technologies, waste disposal plants) in consortia on complex services involving the supply of chemicals, their optimum application and waste disposal.

Potential areas for ChL implementation

1. Advanced wastewater purification processes
2. Optimization of the application of glues, soaps, detergents. Reduction of their consumption due to know how suggested by producers and suppliers.
3. Household heating systems (optimization of chemicals consumption
   for cleaning of pipes and radiators)
4. Energy supply. Reduction of chemicals supply for cleaning of heat exchangers
5. Food industry - optimization of the consumption of cleaning and degreasing agents for cleaning of pipes, equipmets, packages and wastewater
6. Agriculture - optimization of fertilizers consumption

Further activities planned