Industrial Guidebook

Technology and Market Potential

Factors affecting the Speciality Chemical Industry in the

North East over the next three years

1
Contents

Executive Summary ................................................................................... 3

Back Ground of the S2B Hub .................................................................... 5

1. Introduction ......................................................................................... 6

2. Recent trends in chemical industries ............................................... 8

3. The North East England chemical industries .................................... 9

4. The role of innovation in the North East chemical industries ........ 10

5. Issues Facing Chemical Industries in the North East Region........ 12

6. The speciality chemicals sector ....................................................... 14

6.1. Innovation in the speciality chemicals sector ...................... 15

6.2. Barriers to innovation in the speciality chemicals ............... 17

6.3. Innovation support in the North East region ........................ 17

7. The personal care ............................................................................. 23

7.1. The trend towards safe and green products ......................... 25

7.2. Future Innovations in personal care industry ...................... 27

8. Energy .............................................................................................. 30

8.1. R&D and innovations in energy sector .............................. 32

9. Flexible electronics .......................................................................... 37

9.1 Innovations and technologies in flexible electronics ........ 38

10. Recommendations .......................................................................... 40

Appendix A ............................................................................................... 41

2
Executive Summary
Chemical industries form the backbone of the world economy and have
continuously fuelled the build up of today‟s civilisation. Society cannot exist
without materials from chemical industries. They exist in everything and every
activity we do in our life. Manufacturing, construction, medicine, transportation
and agriculture are entirely dependent on chemical materials in different
forms.

In the North East of England region, the chemical industries have an annual
turnover of around £9 billion. This makes a major direct contribution to the
region‟s economy at 25% share in its GDP, while also contributing to
employment, people development and the region‟s business profile.

The speciality chemicals sector is part of the chemical industries in the region
and has a leading edge and enhanced capabilities in supply of innovative
products and technological development to customers.

The major challenges today have made it crucial for companies to respond
with a coherent strategy to the issues of globalisation, sustainability and the
environment. To address these issues, companies and or policy decision
makers need to define, understand and sustain success factors for
competiveness of the chemical industries in the North East region.

The Science to Business Hub Project (S2B) is aiming at sustaining some of

the speciality chemicals sector success factors. In addition the S2B Hub
project hopes to address some of the related challenges affecting the
chemical sector as a whole in the North East of England. The project is
looking forward to providing both innovation and technological knowledge
transfer support over the next three years. This support is available to small
and medium sized enterprises (SMEs) that have facilities in the North East in
order to support their ability to innovate, produce or supply speciality
chemicals.

This foresight report forms a milestone of the S2B Hub Project and will
provide information as follows:

 The structure of the global chemical industries;

3
  The North East of England‟s existing speciality chemicals sector
and the impact of key technologies and innovation on it;
 The sector‟s regulatory developments;
 Regional initiatives that contribute to the positive business
environment for investment and growth of speciality chemicals
in the region, particularly in the context of research and
innovation;
 Attracting new businesses to locate their interests in the North
East region.

The Foresight Report defines the factors that affect the speciality chemical
sector globally and identifies the challenges and opportunities over the
coming years for companies within the North East region. The focus is on the
technology and market needs and the major factors influencing the industry in
innovations and technology development.

The report has been prepared in Collaboration with Teesside Manufacturing

Centre (TMC).

4
Background of the S2B Project
“The industry-led Science 2 Business Hub (S2B Hub drives to create projects
and innovative solutions for „science using‟ SMEs in the North East within a
three-year timeframe”. The „S2B Hub‟ is a new science/business collaboration
for the chemical industry to bridge the development gap between research
and the prototyping of products and services. The project aim is to help over
100 small local businesses to gain a competitive edge in product
development by opening up innovative partnerships with academic
institutions and research establishments.

A £1.27m investment from the University is being match funded with £1.17m
from the European Regional Development Fund 2007-13 administered by
One North East. With a focus on the speciality chemicals sector, the project
will link with partners, projects and initiatives in the region, increasing
opportunities for SMEs to tap into cutting edge sector research, share best
practice and network more effectively.

5
1. Introduction

The chemical industry is one of the largest sectors in the UK and has a
strategic, economic and social importance both here and in several other
developed countries. It shapes economic activities in other sectors. It also
provides innovation to „downstream‟ industries involved in the production of a
wide variety of products that improve the quality of our lives and generate
income for the companies and their stockholders (Turton, Bailie, Whiting &
Shaeiwitz, 2003; OECD, 2001). It is also true to say that all other industrial
sectors require the products of the chemical industry to a greater or lesser
degree (Heaton, 1994).

Today, the chemical industry is in the era of shareholder value 1. The key
characteristics of this era are shown in Fig. 1. Global chemical industries are
now under pressures of financial returns and a price-cost squeeze2,3,4. They
have to strive for operational excellence, move towards M&A (merger and
acquisition) and generate new businesses.

Develop- Diversifica- Shareholder

Foundation Expansion Maturity
ment tion value

Scope  Scientific  Upscale from  Substitution  Broadening  Global  Focus on

discoveries laboratory to  Internation- of product competition financial
 New mole- production alization range  Restructuring returns
cules  Emergence  Price-cost  Ongoing price-
of polymers squeeze cost squeeze

Key fac-    Sales  Operational  Operational

 R&D Process Process
tors of  Marketing excellence excellence
 Access to raw develop-ment technology
success material  Engineering  Integration  Process and  Economies of  M&A
 R&D  International application scale Capabilities
presence technology  Market conduct  New business
 R&D generation

Growth  Low  Medium/  high  Medium/  Medium  Medium

relative to high high
GDP

   Move to con-   ?
 National, National, Appearance Consolidated
Industry multidivision of multi- glomerates multibusiness
fragmented
structure companies nationals chemical con-
glomerates

To date
Timeline 1920 1950 1970 1985 1995

1
F. Budde, U.-H. Felcht, H. Frankemölle, (2006)ValueCreation: Strategies for the Chemical Industry.
2nd Edition, WILEY-VCH Verlag GmbH & Co. KGaA, Weinheim, ISBN: 3-527-31266-8
2
Froud, J., Johal, S. and Williams, K. (2002) „Financialisation and the coupon pool‟, Capital and Class,
78/1, 119-51.
3
Lazonick, W. and O‟Sullivan, M. (2000) „Maximising shareholder value: a new ideology for corporate
governance‟, Economy and Society, 29/1, 13-35.
4
Williams, K. (2000) „From shareholder value to present-day capitalism‟, Economy and Society, 29/1, 1-
12.

6
 3
Fig. 1: Era analysis of chemical process industries

Europe is the world‟s largest chemical producer. It has over 300 chemical
production sites, the majority of which are located in clusters5. The strong
European manufacturing base in the chemical industry6, is due not only to its
economic weight, but also to its ability to continually generate innovation
critical to meeting the challenges of modern societies. The strengths of the
European chemical industry are based on:

 Large integrated home market;

 A highly competitive chemical companies adapting to the world market;
 A high degree of integration;
 A well qualified and a skilled work-force;
 Good innovations;
 Competitive clusters7.

The chemical industry in Europe is divisible into four main sectors:

 Basic chemicals;
 Industrial chemicals;
 Fine chemicals;
 Speciality chemicals.

R&D is largely focused on cost reduction in the case of basic chemicals; the
goal is both process and product development in industrial chemicals and fine
chemicals; the emphasis for speciality chemicals is on developing new
products8 to meet changing market demands and stay competitive.

5
Delivering the HLG results in the regions: Follow-up conference to the High Level Group on the
competitiveness of the European chemical industry. Final report, 2009.
6
High Level Group on the Competitiveness of the European Chemicals Industry: Final Report,
European Commission - Enterprise and Industry, 2009. Accessed at:
http://ec.europa.eu/enterprise/sectors/chemicals/files/final_report/hlg_final_report_july09.pdf
7
Delivering the HLG results in the regions: Follow-up conference to the High Level Group on the
competitiveness of the European chemical industry. Final report, 2009.
8
Horst Albach, David B. Audretsch, Manfred Fleischer, Robert Greb, Evelyn Höfs, Lars-Hendrik Röller,
Ines Schulz., Innovation in the European Chemical Industry, International Conference on "Innovation
Measurement and Policies", organized by the European Commission (Eurostat and DG XIII),
Luxembourg, 20-21 May 1996.

7
Due to the high capitalisation level and scale of economies required, basic
chemicals tend to be produced by large firms whereas fine and speciality
chemicals are often produced by small and medium-sized firms. The
pharmaceutical industry is often regarded as being part of the Speciality
Chemicals sector.

2. Recent trends in chemical industries

In recent decades, chemical processes have continually improved through a

more efficient use of raw materials and energy, enhanced safety and
increased productivity, while minimising energy use and reducing wasted
material. These days there is a trend towards flexible production processes
that can be tailored to meet the needs of the customer for more complex and
higher purity products.

In the next 20 years, these processes will undergo substantial changes as a

result of the smart design of the synthetic route itself, micro process
technologies, integration and intensification of processes combined with new
catalyst concepts and the development of in silico technologies9. New
technological frontiers will be opened by understanding and optimising
material combinations and their synergies, blurring the distinction between a
material and a functional device comprised of distinct materials.

The confluence of market demand, made possible by close cooperation with

partner industries down the value chain, and innovative technology
development will create new opportunities for the European chemicals
industries. These will exist in areas such as:

 Functional materials tailored to healthcare, wellbeing and nutrition;

 Intelligent materials with special electrical, optical, mechanical and
magnetic properties;
 Materials for new sustainable technologies (energy);

9
High Level Group on the Competitiveness of the European Chemicals Industry, European
Commission, Enterprise and Industry. 2009.

8
  New methods for the controlled synthesis of rationally designed
materials10.

3. The North East England chemical industry

The chemical industry in the North East England extends from feedstocks to
finished products. It boasts one of Europe‟s largest petrochemical clusters
and numerous world class pharmaceutical production and speciality chemical
companies. Together they are one of the largest contributors to both the
North East economy and its knowledge base11. The chemicals and process
industries are absolutely critical to the North East economy and to its
successful development and prosperity.

Until the late 1980s and for nearly 80 years, the chemical industry on
Teesside was dominated by the ICI Company. In recent years ICI has
divested all its Teesside activities. The shrinking of ICI's presence in Teesside
was expected to lessen the strength and impact of the chemical industries‟
contribution to the economic well-being of the region.

However, today the chemical and process industries in the North East are still
thriving. New companies who have moved in have pushed the industry
forward and invested much in their infrastructure. Hundreds of millions of
pounds is now underpinning major developments to keep this industry at the
forefront of the Tees Valley's industrial future.

According to Stan Higgins, chief executive of NEPIC12:

“ICI adopted a market approach so that its business units were

given the freedom to focus on their markets. This was one of the
reasons why the break-up of the company was almost inevitable
and why this business-unit strategy has helped to sustain
Teesside‟s process sector after the breakup. Because of their

10
High Level Group on the Competitiveness of the European Chemicals Industry, European
Commission, Enterprise and Industry. 2009.
11
Arthur D Little (2004). North East Chemicals Vision and Strategy. (see, pages 21-22). Accessed at:
www.onenortheast.co.uk/object/download.cfm?lib=liDownload&id=2054
12
Adopted from: Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at:
www.tcetoday.com

9
 close ties with their markets these businesses have remained
globally competitive”.

Today, around 20% of NEPIC‟s 400 member companies have their roots in
ICI but they are crucial to the success of a sectoral cluster like NEPIC13.
The chemical industry in the North East of England today represents some
25% (£9bn) of the region‟s GDP, and employs 34,000 direct employees in the
North East, working in the various sub-sectors of chemicals, pharmaceuticals,
specialities and biotechnology, with a further 280,000 indirectly involved 14.
Moreover, the North East Process Industry Cluster (NEPIC) has calculated
the region's process industries could expand by a huge £4.5bn in the next
decade15. Currently, 44 investment process industry projects worth £6.1b are
planned in the North East over the next five years16. This compares with
investment of £2.53b over the previous five years.

The strategy of the Teesside chemical industries, supported by the

government development agency One North East and driven by NEPIC is to
use the infrastructure and skills inherited from over 100 years of chemicals
production to build a much more diverse business base 17. The objective is to
link this expertise in chemistry, which underpins the aforementioned annual
sales of the North East process industries, to the development and
application of new technologies like low carbon energy, advanced processes
and printable electronics.

However, the success of Teesside‟s chemical industries has not been without
significant challenges and constraints. The North East Chemicals Vision and
Strategy7 outlines some of the national and the specific regional challenges
and issues facing the chemical industry on Teesside.

13
Adopted from: Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at:
www.tcetoday.com
14
NEPIC, 2007. Skills, Education & Engagement: Action Plan 2007-08. Accessed at:
http://www.onenortheast.co.uk/lib/liDownload/2979/NEPIC%20SE%20Action%20Plan.pdf?CFID=284
7351&CFTOKEN=44408608
15
Growth Strategy for the Process Industries in North East England. Accessed at:
http://www.nepic.co.uk/Documents/GDPdocument.pdf
16
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
17
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com

10
4. The role of innovation in the North East chemical industry

Innovation remains the key to the success of the North East Process Industry.
Innovation is providing much of the stimulus behind the transformation of
Teesside into a dynamic process industry cluster18. It has become a vital
component to a lot of the current investment in the chemical industry. The
area‟s long-established strength in chemical engineering, which ICI did so
much to nurture, continues to be a major impetus behind innovation. This is
underlined by the strong presence of engineering companies such as ABB
Engineering Services, Foster Wheeler, and Aker Kvaerner.

The nature of the innovation tends to differ depending on the sub-sector. As

an example, technical innovation will be a key element in the speciality
chemicals sector, whereas the bulk chemicals sector requires innovation in
supply chain logistics, routes to market and in process development. The
North East region has developed a number of initiatives to drive innovation
with the chemical industries such as the Printable Electronics developments
within the Centre for Process Innovation (CPI).

The North East chemical industry has undergone dramatic change in the last
eight years with key private sector investments as well as innovation
initiatives. As an example, driven by the European Commissioners proposal
to increase the share of renewable energy in the energy mix to 20% by 2012,
investments have been made in bio-fuels and offer the potential for the Tees
Valley to become a hub for clean energy. Additionally, some international
companies are planning to build plants on Teesside for the processing of
heavy oil into fuels, chemical feedstocks and hydrogen.

On the research side, the Printable Electronic Technology Centre (PETEC),

based at the NETPark in Sedgefield, County Durham, is to receive £12m from
the UK Government‟s Advanced Manufacturing strategy, along with a further
£8m that will be channelled by Regional Development Agency One North
East. In the next four years it is estimated that this investment will stimulate
the creation of up to 250 jobs in the North East and up to 1,500 jobs

18
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com

11
nationally. This funding will help to significantly enhance the open access
product development facilities at PETEC with the introduction of new
equipment capable of prototyping applications in many areas, including:

 printable photo-voltaics;
 ultra-efficient lighting;
 printable flexible displays;
 new intelligent packaging.

The Department for Business Innovation & Skills is investing £12 million in
open access demonstrator facilities for industrial biotechnology (IB) at Wilton
in the North East of England. The Government will also provide £2.5 million to
support companies using the demonstrator facility and match funds from the
Technology Strategy Board for new projects related to industrial
biotechnology.

Andy Home, CEO of K Home International, a Teesside-based engineering

design, project and construction management consultancy company, says 19:

“With fluctuating levels of demand and changing energy and

raw material costs, it‟s now more important than ever for the
North East‟s chemical industry to develop more efficient and
flexible processes and adopt prudent investment strategies.
Chemical producers need to invest in even more sophisticated
levels of process automation which in turn will assist in
reducing capital invested in work-in-progress while minimising
waste. They will also need to be more environmentally aware,
adopting processes that reduce levels of polluting liquid and
airborne effluents and raise the potential for more recycling. I
am however confident that this key pillar of the North East‟s
economy will once again rise to meet the challenges of
change.”

19
Adopted from: Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at:
www.tcetoday.com

12
5. Issues facing the chemical industry in the North East

There are a variety of issues faced by the chemical industries in the North
East of England. Some of these issues include:

 The strong competition from emerging countries, notably in Asia, the

Middle East and Russia;
 The trend towards outsourcing complex or specialised chemical or
biochemical transformations and processes;
 Ambiguity in the viability of markets for investors in the current economic
climate20;
 During recent recession, Asian competitors are continually investing to get
ahead21;
 Construction and automobiles sectors on Teesside were severely hit by
the recession; this has raised fears on Teesside as they are big suppliers
to these sectors22;
 Some of the old chemical plants require upgrading. This is not feasible
with the fact that global markets are overloaded by chemical products 23;
 Business and investment decisions are made by multinationals outside
the Teesside area. From their point of view Teesside is simply one of
many regions in which they have plants. There is no overall authority in
charge in Teesside which can act as a one-stop shop24;
 Failure to compete against cheap imports, for example, D1 Oils has
closed a 45,000 t/y of biodiesel refining capacity. This has setback the
efforts to establish the area as a bio-fuels production centre25;
 Skills could be the most formidable challenge in the establishment of new
business and technologies in Teesside26 ;
 Certain product groups (e.g. plant protection items) require relatively long
intellectual property rights protection27 because of the long development

20
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
21
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
22
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
23
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
24
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
25
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
26
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com

13
 and lengthy payback times. This can be both time consuming and
expensive;
 The introduction of new substitutes was defined as a threat for existing
businesses in the speciality chemicals industry28. However, owing to the
few forms of indirect competition for products in this market, overall the
threat of substitutes has been assessed as weak29. This is because
buyers of speciality chemicals often need specific substances or
formulations, where there can be no substitute. Even where a substitute
chemical can be used, it may well be manufactured by the same
companies.

These issues if unresolved will certainly affect economic activity and society
as a whole and will concern manufacturing industry across the board.
Innovation is crucial to overcome these issues and ensure the chemicals
industry‟s future success.

6. The speciality chemicals sector

Speciality chemicals is one branch of the chemical industries that has a

significant role in the value chain. Speciality chemicals are the chemical
materials that are produced for specialised uses. They are produced in lower
volumes than bulk chemicals with the purpose of improving performance of
the manufacturing process or the end-use of a product. They are specially
made to achieve certain results30, perform specific functions, and fit particular
applications and operating conditions.

The speciality chemicals organisations are involved in production of high

value-added chemicals used in the manufacture of a wide variety of products,
including, but not limited to, fine chemicals, additives, advanced polymers,
adhesives, sealants and speciality paints and pigments. Speciality chemical
producers usually focus on the chemistry R&D and innovation of the
applications of their products.

27
Focus on Teesside: transforming the process, tce, Feb. 2009. Accessed at: www.tcetoday.com
28
Speciality Chemicals in Europe: Industry Profile. June 2009. Accessed at: www.datamonitor.com
29
Speciality Chemicals in Europe: Industry Profile. June 2009. Accessed at: www.datamonitor.com
30
High Level Group on the Competitiveness of the European Chemicals Industry, European
Commission, Enterprise and Industry. 2009.

14
The global market for the speciality chemicals is very large, and highly
diversified. The sector is dominated by large multinational organisations, and
because of the focus on the financial returns price-cost squeeze (see, Fig 1),
international competition, safety and environmental issues, there is a global
trend in the sector towards more added value to the finished product.

According to a recent report31, the European speciality chemicals market

generated total revenues of £147.4b32 in 2008. In comparison, the markets of
the Americas33, and the Asia-Pacific region34 grew to reach respective values
of £139.4b and £127.9b in 2008. Sales of fine chemicals proved the most
lucrative for the European speciality chemicals market in 2008, generating
total revenues of £60.6b, equivalent to 41.1% of the market's overall value. In
comparison, sales of paints, coatings and surface treatments generated
revenues of £40.1b in 2008, equating to 27.2% of the market's aggregate
revenues. The European speciality chemicals market is forecasted to
generate total revenues of £182.6b by the end of 2013.

The speciality & fine chemical sector in North East England generates over
£2 billion sales and is expected to grow by £500 million over the next few
years35. Almost all of the world‟s top fine & speciality chemical companies are
present in the North East including Dow, DuPont, BASF and Degussa36.

6.1 Innovation in the speciality chemicals sector

Innovation in the speciality chemicals sector is always required to support the

development of technologies in connection with the following themes:

 Product Identification;
 Time to Market;
 Patent Extension;
 Complex and Pure Products;

31
Speciality Chemicals in Europe, Datamonitor (Published June 2009)
32
The figure published in the source is $241.9b. Today‟s exchange rate (30 Nov 2009) is: £1 Pounds
Sterling = 1.64 USD.
33
Americas comprises Argentina, Brazil, Canada, Chile, Colombia, Mexico, the US, and Venezuela
34
Asia-Pacific comprises Australia, China, Japan, India, Singapore, South Korea and Taiwan.
35
NEPIC Report: Fine & Speciality Chemicals in North East England.
http://www.nepic.co.uk/Documents/CDcontents/05FineSpecialityChemicals.pdf
36
NEPIC Report (Fine & Speciality Chemicals in North East England.
http://www.nepic.co.uk/Documents/CDcontents/05FineSpecialityChemicals.pdf

15
  Increased Regulation and Cost Containment;
 Packaging;
 Sustainability;
 Creating niche markets.

The objectives to achieve are as follows:

 Improve properties of the product formulations to meet specific needs or

to solve product or process problems;

 Achieve sustainable energy creation, storage, and transport, e.g. solar

and fuel cells;

 Use of biocompatible, biodegradable and bio-nano-composites;

 Use of enzymes and microorganisms in the industrial biotechnology to

make products for chemical, food and feed, paper and pulp, textiles and
energy producers;

 Use high throughput experimentation for accelerated product

development;

 Include catalyst, reactor developments and micro process technologies;

 Involve process integration and intensification;

 Use in-silico technologies for modelling, simulation and data mining

 Improve the bottom line operations, supply chain management 37 and

integration solutions;

 Develop smart synthetic routes with reduced waste, side products, energy
consumption and inexpensive raw materials;

 Develop novel technologies to reduce or eliminate waste, improve

material handling, clean equipment efficiently and cope with the problems
of waste treatment units;

 Use of ICT to obtain product, market intelligence, manage technology,

manage regulatory process, increase integration with customers‟, increase
transparency and support a globally dispersed customer base;

37
PICME Report, 2002.

16
 Develop novel packaging and delivery technologies, i.e., smart packaging
for ease of customer use, compatible with customer's process and
regulatory requirements;

 Develop novel process control, product monitoring technologies and

greater automation;

 Develop novel manufacturing technologies that exploit renewable

feedstocks and minimise energy usage and waste;

 Improve capacity to undertake bio-transformations, i.e., industrial „white‟

biotechnologies;

 Flexible process technologies that can be rapidly re-engineered for

product localisation.

6.2 Barriers to innovation in the speciality chemicals sector

According the Royal Society of Chemistry (RSC) there are several barriers to
innovation in the chemical industry38:

 Exploitation of technology. This is seen by companies as a critical

issue. Many companies see the process of accessing technology held
within universities as unnecessarily difficult, and possibly commercially
unattractive. The commercialisation of Intellectual Property (IP), the
amount of bureaucracy involved compounded by the difficulty of
identifying the correct person to work with at the University are amongst
the factors contributing to their opinion;

 Funding. Many companies see the process of applying for grants to be

too complex, bureaucratic, takes too much time and in many cases the
application is unsuccessful. Another issue is the difficulty in gaining
awareness of what is available through regional and national offices;

 Regulations. Many companies see regulations and legislation to be

significant time and cost burden. The result is that many companies

38
RSC Chemical Science Small Businesses Document.

17
 rejecting the notion that regulations and legislation improved the quality of
their markets and gave them supplier‟s competitive advantage.

6.3 Innovation support in the North East region

Private sector innovation - Although the region has less than 2% of UK

R&D employment39, global research centres for leading companies are
present in the region, examples of these companies are Croda International
plc (acquired Uniqema since 2006), DuPont, Rhodia Parma Solutions, Dow
Haltermann, Shasun, Lucite International, International Paints, Sanofi-
Synthelabo Procter & Gamble, and also a number of niche R&D and
innovation companies such as Davy Process Technology and Johnston
Matthey.

Public sector innovation - In addition to private sector activities the region

has a number of public R&D and innovation initiatives and centres including:
 The Science & Industry Council. The main aim of this council is to
promote the region globally as a primary place for conducting scientific
R&D and enterprise. The early work of the Science & Industry Council
resulted in the region‟s Strategy for Success which is supported by a
remarkable infrastructure of Centres of Excellence including:

 Centre for Process Innovation (CPI);

 Centre of Excellence for Life sciences (CELS);
 New and Renewable Centre of Excellence (NaREC);
 NSTAR, an innovative investment and enterprise development
company.

CPI (Centre for Process Innovation) - CPI‟s strategy is to help both

SMEs and large companies to develop new lower-cost processes which
will enable them to compete on the world market. In addition to a micro-
reactor, it is offering SME‟s access to a spinning disk reactor and a
continuous oscillary baffled reactor (COBR) for development trials. It also
wants to encourage companies to switch to continuous processes. With

39
Arthur D Little

18
 printable electronics, CPI‟s objective is to help establish the area as a
centre for the production and development of materials for this emerging
sector, which forecasters expect to be worth as much as £183b40 by the
mid-2020s.

CPI also manages PETEC (Printable Electronics Technology Centre) at

NETPark. PETEC is a national flagship centre and will provide facilities
for testing materials under development. The areas of interest include;
solar energy photo-voltaics, lighting, printable liquid crystal displays
(LCDs), electronic paper, and organic light emitting displays (OLEDs).
Some 20–25 companies, a third local, another third national and another
third from overseas, are expected to use PETEC for development work
each year.

NStar - is an independent early stage technology venture capital

company, created as a company limited by guarantee. It is creating a
new investment climate for early stage science and technology
companies in the North East of England. At the core of NStar's activity is
the development of a continuum of finance to ensure that funds are
available to create new science and technology start-ups and spin-outs.

New & Renewable Energy (NaREC) - NaREC is a national centre for the
UK dedicated to accelerating the deployment and grid integration of
renewable energy and low carbon generation technologies, utilising wind,
wave, tidal, solar PV and thermal power. NaREC works with global blue
chip companies, SMEs, start-ups and university spin-outs to
commercialise technologies which generate electricity and heat that can
be deployed into the electrical network, or even form part or all of a
distributed energy system.

The Centre of Excellence for Life Sciences (CELS) - CELS is partly

funded by the regional development agency One North East to drive the

40
This value is $300b in the source publication. Today‟s exchange rate (30 Nov 2009) is: £1 Pounds
Sterling = 1.64 USD.

19
 growth of the healthcare and life sciences economy of North East
England. CELS is committed to developing scientific enterprise through
the development and commercialisation of new technology, innovations
and the exploitation of new and emerging market opportunities. CELS
works in close partnership with the North East‟s regional universities,
associated research institutes, healthcare and life science companies and
public sector organisations. CELS‟ activity is focused on supporting
partners in the following key sub-sectors:

 Stem Cells and Regenerative Medicine;

 Ageing and Health (including Assistive Technology);
 Drug Discovery and Biomarkers;
 Diagnostics and Medical Devices;
 Biopharmaceutical Process Development.

Digital Technology & Media (Codeworks) - Established in 2003,

Codeworks is a centre for digital innovation based in North East England.
Codeworks works closely with their primary investor, One North East, to
create and/or develop new and existing digital media technology
companies based in North East England. One North East has invested £10
million in Codeworks‟s programmes and activities since its inception.

R & D Universities in the North East region:

Teesside University

The Technology Futures Institute at Teesside University carries out work

ranging from research to innovation in the process, energy and environment,
life sciences and security sectors. Some of the activities at the Institute are:

 Advanced processing. Research in advanced and functional materials

including catalytic materials, engineering modelling, design and validation,
micro and nanosystems including electronic systems and life science
applications;
 Manufacturing and management systems. Through the Teesside
Manufacturing Centre (TMC), the focus here is on developing and
implementing advanced management systems for the manufacturing and

20
 process industries. A key research thrust in this area relates to managing
technological and organisational change;
 Sustainability. Through the Clean Environmental Management centre
(CLEMANCE), the focus is on carbon management, industrial symbiosis
and contaminated land and water.

Durham University
At Durham University, there are various institutes and centres that directly
and indirectly support the chemical industries in the North East England.
Some of these departments include:

 Biophysical Sciences Institute. Core research areas are imaging and

sensing, modelling, synthesis and fabrication, bio-engineering and applied
nanotechnologies;
 Durham Energy Institute. Development of thin-film photovoltaics, offshore
wind technology, technologies for fusion energy, energy distribution
networks microgeneration, carbon capture and storage, geo-energy,
plants and microbes for energy, clean chemical processes and the
societal aspects of energy use.

Newcastle University

At Newcastle University, there are various institutes and centres that directly
and indirectly support the chemical industries in the North East England.
Some of these departments include:

 Sir Joseph Swan Institute for Energy Research (Swan). Providing an

intellectual lead in the pursuit of the low-carbon economy of the future, by
developing new technologies which reconcile human needs for energy
conversion and use with social and ecological needs;
 Institute for Nanoscale Science and Technology: INSAT. Research and
application of nano science and technology;
 The Institute for Research on Environment and Sustainability (IRES).
Research to sustain the natural resource base and to improve the quality
of life for people regionally, nationally and internationally. The research is

21
 interdisciplinary and addresses social, economic, environmental and
technological issues;
 Biopharmaceutical Bioprocessing Technology Centre (BBTC). The focus
of the BBTC is on biosystems engineering, with a goal to understand
underlying biological complexity and as a consequence manipulate
biological behaviour and/or realise improved whole process design;
 Catalysis and Process Intensification. Research in catalysis and Process
Intensification to develop new and improved energy production processes,
reduce CO2 emissions, and create a green and sustainable chemicals
industry.

University of Northumbria

At University of Northumbria, there are various centres that support the

chemical industries in the North East of England. These departments include:

 Energy Systems and Advanced Materials Research Group. The Energy

Systems Group combines two main areas of strength, photovoltaic and
power engineering, with a view to addressing a field of growing
importance, that of energy generation and supply. The Northumbria
Photovoltaics Applications Centre (NPAC) carries out research on solar
cell development, design and performance of photovoltaic systems and
environmental impact analysis of this renewable energy technology;

The Energy Systems Group also has expertise in wind power, particularly
relating to control and generation aspects. The Power Engineering group
undertakes research activities in emerging technologies in electrical
power, including flexible AC transmission systems, custom power
technology, quality of supply, embedded generation and variable speed
motor drive systems. The research activities are strongly linked to industry
requirements, with some having strong interdisciplinary aspects;

 Building and Renewable Energy Group. The Group‟s active research

interests lie in renewable energy “microgrids”, geothermal heat pumps and
adaptive building energy controls.

22
7. The personal care sector
Personal care is one branch of fine chemicals and depends heavily on
speciality chemicals ingredients in the formulation of its products. Personal
care products consist of personal cleansing, oral care, skin and hair care,
deodorants, perfumery, colour cosmetics and baby care.

2003 3.6 10 22 25.5 39

2008 3.6 12.9 20.4 25.9 37.3

0% 20% 40% 60% 80% 100%

Other Latin America North America Asia Europe

Fig 2: Global Personal Care Market Share by Region41

The global market for personal care products and the need for innovation and
brand building in this subsector are rapidly growing. The factors underpinned
the success and growth in this industry are; the large market, increased
buying power, the significant global growth per year, the significant rise in the
use of these products in developing countries, the ability to compete on the
basis of product differentiation, a low capital-intensive asset base, a high
return on capital, relatively low barriers to entry42 and the increased demand
for products in retail outlets.

In year 2008, the global personal care market was estimated at £164.5b43 at
retail level, and, £6.1b for ingredients. The market is growing at 5-6% per
annum underpinned by demographics and the drive for sustainability.
Emerging markets are showing >10% growth and Europe remains the largest
region, but is losing share (see, Fig. 2). The emerging markets are advancing
at the fastest pace, Europe‟s pace is slow, but UK‟s growth pace is moderate.

41
Kline, Innovative and Enabling Technologies for Personal Care, in-cosmotics, Munich 2009.
42
Kline, Innovative and Enabling Technologies for Personal Care, in-cosmotics, Munich 2009.
43
This value is $270b at the source publication. Today‟s exchange rate (30 Nov 2009) is: £1 Pounds
Sterling = 1.64 USD.

23
Skin care is the largest and fastest growing product class, and, of all personal
care subsectors and market adjacencies, cosmeceuticals44 has experienced
the strongest growth, enabled by innovation.

The products are sold both under manufacturers‟ own brands and under
retailers‟ brands, and distributed through a large number of retailers,
pharmacy businesses and health care providers.

The well-known brands dominate the markets, and, in order to meet specific
needs, products are becoming increasingly sophisticated. Personal care
companies usually conduct development of products and brands based on
consumer behaviour and needs, aiming at upgrades or development of new
products. New products are launched continuously to markets, and the
innovation work in this subsector more often result in new patents.

In general, personal care products are classified into three categories as

follows:

 Classic Products: these products are aimed at traditional consumers

who demand products with basic level of performance, at a reasonable
price and suitable for the whole family;

 Advanced Products: these products are aimed at consumers who

require product performance that goes beyond the requirements of
classic products;

 Superior Products: these products are aimed at consumers who seek

specialised products which provide an overall convincing product
experience.

The personal care industry in the UK is controlled by consumer safety

regulations. One of these is the Statutory Instrument 2008 No. 1284 - The

44
Cosmeceuticals are some products can be both cosmetics and drugs. This may happen when a
product has two uses. For example, a shampoo is a cosmetic because it's used to clean the hair. But,
an anti-dandruff treatment is a drug because it's used to treat dandruff. So an antidandruff shampoo is
both a cosmetic and a drug. Other examples are:
 toothpastes that contain fluoride
 deodorants that are also antiperspirants
 moisturizers and make-up that provide sun protection
These products must meet the standards for both cosmetics (colour additives) and drugs.

24
Cosmetic Products (Safety) Regulations 200845, which controls UK‟s
cosmetics industry. These regulations have to be adhered to before the
ingredient or product can be utilised by consumers.

The European Union (EU) regulation Registration, Evaluation, Authorization

and Restriction of Chemicals, known as REACH, is a law that took effect on
June 1, 2007 and will be phased in over an 11 year period. It has been
developed and implemented to replace about 40 other legislative controls in
an effort to streamline and improve the former legislative framework on
chemicals marketed in the EU. REACH places greater responsibility on
industry to manage the risks that chemicals may pose to consumer health
and the environment.

7.1 The trend is towards safe and green products

Consumers have increasing health concerns over the safety of personal care
products and their speciality chemicals ingredients. Some products have
historically done little to help personal care products to gain favour of the
consumers. Cosmetics and beauty products often contain toxic ingredients
that may cause cancer and other fatal illnesses, such as lower immunity to
disease and neurological or even reproductive damage. Additionally, personal
care products may cause allergies and skin problems. Examples of these
ingredients are diethanol amines (DEA) and alkyl phenol ethoxylate (APE)
that have concerns over possible carcinogenic effects.

Currently, more ingredients are suspected of being carcinogenic as well,

examples of these are triethanolamine (TEA) and mono ethanolamine (MEA)
that are used in sunscreen creams, cleansers, foundations, and mascara.
Coal tar colours, phenylenediamine, benzene and even formaldehyde are
some of the toxins commonly found in shampoos, skin creams and
blushers46.

There is also growing consumer demand for green personal care products
which will involve identification, extraction and incorporation of natural active

45
http://www.opsi.gov.uk/si/si2008/uksi_20081284_en_9
46 Tim Utton, Danger that Hides in Make-Up, Daily Mail, 08/04/2002. Accessed at:
http://www.dailymail.co.uk/health/article-108549/danger-hides-make-up.html#ixzz0uo0nkcgj

25
ingredients into effective consumer products. The green product (natural and
organic) is still in its infancy but is by no means insignificant. The grot hi
demand for green products is expected to be double digit for the next five
years and the control of green claims are expected to become more
sophisticated and regulated. The global natural and organic market was
valued at £4.2b47 in 2007, with North America and Western Europe,
accounting for a significant 65% and 28% respectively.

The „green‟ trend has become a global phenomenon. Manufacturers

nowadays are competing to produce products to be natural, organic, bio, and
environmentally friendly. Natural and renewable raw materials are key
factors to business success if this global trend is to be served. But the key
challenge is to make greener products without compromising on product
performance or convenience. Manufacturers have to take consumers different
demands on performance and “greenness” into account.

Making green formulations leads in many cases to reduced performance.

Some consumers are willing to sacrifice the high-class product performance
by the green lifestyle. Some others are keen on product performance. Some
consumers also see the locally produced products to be green because of the
transportation savings. Thus, the challenge for personal care manufacturers
is to be able to increase the level of green ingredients in their formulations
without compromising performance.

Personal care speciality chemicals producers have accordingly begun to

focus on R&D activities for producing safer and greener ingredients. With
significant contributions from nanotechnology and biotechnology, the efforts
included more naturally derived and biodegradable raw materials in the
product ingredient, safer solvents, less wasteful by-products and adoption of
energy-conservation practices such as cold processing which eliminates the
need for high temperatures and unnecessary energy costs.

47
The value is $6.9b in the source publication. Today‟s exchange rate (30 Nov 2009) is: £1 Pounds
Sterling = 1.64 USD.

26
In theory, it is possible to manufacture a completely natural product in some
product categories. However, in practice it still remains a challenge to deliver
an economically justifiable product which is completely natural and which
maintains the aesthetic and functional performance that some consumers
demand. New innovations are therefore required in order to increase the
degree of „naturalness‟ in such products and, at the same time, maintain high
performance levels.

However, it is not always true to say the ingredient is safe because it is

natural. Some essential oils are extremely toxic and should never be applied
to the skin without caution. There are risks of irritation, photo-toxicity,
sensitisation or being an abortifacient. It is always therefore a challenge for
research to discover the toxicological profile of essential oils.

7.2 Future innovations in the personal care industry

Nowadays, white biotechnology is used for several applications in personal

care formulations. The white biotechnology allows companies to develop
polymers and other ingredients with unique cosmetic properties. White
biotechnology holds many promises for sustainable development and will
continue to bring many innovations to the personal care industry. The
fermentation is used as a source of innovation for the production of cosmetic
bio-molecules, such as hyaluronic acid (HA), dihydroxyacetone (DHA) and
coenzyme Q10.

The growth of speciality chemicals use in personal care products is largely

influenced by the nanotechnology boom and increased public environmental
awareness48. Nanotechnology developments in the personal care subsector
are socially and economically meaningful. Using nanotechnology, or more
precisely nanobiotechnology, research can be made more exactly, rapidly
and substantially, and researchers become more effective, up to a molecular
level. Applications of nanotechnology in the personal care subsector are in

48
Personal Care Report

27
nano-analysis, nanobiotechnology, nano-materials, nano-chemistry, nano-
optics, nano-electronics

Some of the lotions with high protection factors have been developed by
using nano-particles of titanium and zinc oxide as additives. In addition, skin
creams with special lipoid acid, toothpaste, lipsticks or anti-microbial coatings
and sprays have been developed.

In the personal care subsector, there is growing consumer demand for

synthetic free and ecological cosmetics, e.g. naturaceuticals, which will
involve identification, extraction and incorporation of natural active ingredients
into effective consumer products. Manufacturers of cosmetic products are
required to use ingredients containing fruit and vegetable extracts to benefit
from the natural anti-oxidant properties they contain. New and naturally
derived suspension aids are also required to provide reliable performance,
low cost and compatibility with high surfactant and surfactant-thickened
formulations.

Some polymers are now available, such as micro-fibrous cellulose (MFC).

MFC is made from the sustainable process of microbial fermentation and is
naturally-derived and biodegradable. This ingredient offers excellent
suspension properties, low cost, and exceptional limits of compatibility. The
development of MFC was proof that naturally-derived products can replace
and outperform synthetic polymers. The surface tension reduction by
silicones leads to so called „greening with silicones‟. Many desirable
properties can be achieved by using silicones, such as foaming of materials
that cannot be foamed with fatty surfactants; creating invert emulsions;
spreading; and elegant aesthetics.

There is also demand in this subsector for more advanced technologies and
materials, i.e. surfactant processing (sulfonation, esterification, condensation
of fatty acids, reaction with alcohol), fragrance and aroma compound
processing (esters, alcohols, aldehydes, ethers), polymer processing
(silicones, polyethylene glycol, propylene glycol), UV filters (organic, inorganic
and combined compounds), rheology modifiers, emulsifiers, emollients, active
ingredients, colorants nano-particles, microcapsules, films, various functional

28
polymers, hormonal creams, colorants, various functional polymers, new
actives and improved active deposition for gums and oral health.

The delivery systems49 are one category of enabling technology50 in personal

care. Some examples of this category are nano-particles, microcapsules,
micro-sponges, patches and films.

More categories of enabling technologies involve the cosmetic actives,

vitamins, antioxidants, proteins, peptides, biopolymers, botanical actives and
skin whitening. These Enabling technologies will continue to come from a
variety of sources, see Fig. 3 below.

Drug
Development
Food Synthetic peptides Wound Care
and other actives
Vitamins, antioxidants, Biopolymers,
actives scaffolds

Nanoparticles, Molecular coupling,

Delivery molecular films Personal chemical hybrids Chemical
Systems Care Engineering
Science
Fixative polymers, Botanical actives
delivery systems

Chemical/ Extraction
polymer Techniques
Science

Fig. 3: Sources for Enabling Technologies in the Personal Care

The Centre of Excellence for Life Sciences (CELS) is a research centre

providing R&D support in the region (see Section 6.3).

Creative Gene Technology, CGT, is a spinout from Durham University. Its

business is based around research into plant biochemistry, molecular biology
and developmental genetics. CGT's research has many potential
applications. For example, the technology can be used to increase yields and
improve the quality of oils coming from plants, meaning that more and better
quality oils could be produced for a variety of uses, including applications in

49
Delivery systems are special systems that enable actives to be taken into the skin cell and so ensure
a more effective action. Some actives are not functional until they get to the place or target site
where they are meant to go. A delivery system will provide enhanced performance in suitable
products because it is delivering the ingredient more effectively to the target site as compared with
simple diffusion through the skin.
50
Enabling technologies are areas of research relevant to a particular scientific or engineering goal.

29
the cosmetics and healthcare industries and even in the production of bio-
diesel.

Larger organisations in the region involved in R&D and supply include

Vertellus Specialties, Lucite, Croda, Huntsman and Procter and Gamble.

8. Energy

The main source of energy in the world today is fossil fuels, which cover
about 80% of the demand of global energy. The world‟s energy sector
challenges are seen in the increasing energy consumption, security of
supplies, energy markets liberalisation and sustainability. Europe is becoming
more and more dependent on imported fuels. Today, about 50% of the fuel
for energy consumption in Europe is imported and this is forecast to rise to
65% by 2030, and by that time the CO2 emissions are forecast to rise by
approximately 5%51. The Stern Review52 indicates that any delay in reducing
carbon emissions will be dangerous and will cost significantly more in the
long run. The UK has set a target to reduce CO2 emissions to 80% by 2050.

Europe‟s dependence on fossil fuels cannot be maintained in the long run;

hence it is critical for the European countries to find a secure and sustainable
energy supply. The Council of the European Union has in 2007 agreed that
Europe should develop a sustainable and integrated climate and energy
policy. The challenges are technical, political, resource and economic
factors53.

The transport sector is largely based on fossil fuels and consumes

approximately 20% of the world‟s energy. The main concerns about energy
supplies, especially in the transport sector, are related to security of supply
and the action required for tackling climate change. These concerns have
served to increase the interest in new sources of energy and technologies
such as biofuels, solar power, wind turbines, geothermal heating, hydrogen
and electrical cars with long operating ranges. The challenge is not only to

51
Risø Energy Report 6, Future options for energy technologies, Risø National Laboratory, Technical
University of Denmark
52
Stern Review of the Economic Consequences of Climate Change (2006),
http://www.hm-treasury.gov.uk/stern_review_report.htm
53
http://www.dur.ac.uk/dei/research/renwengy/

30
find new sources of clean and secure energy, but to increase energy
efficiency through development of improved materials and technologies such
as thermal insulation, energy efficient lighting and equipment, and
development of better storage systems for energy.

North East England has deep roots in energy science and engineering as
the first global fossil fuel export industry had been established in the region
as far back as the end of the 16th Century. The North East England energy
sector currently employs around 30,000 people 54, and was identified by One
North East (ONE) as one of three key areas to receive massive investments
and development over the next 20 years with a potential to generate around
£2 bn of income. The energy sector‟s objective in the North East is to create
and secure environmentally sustainable energy supplies, and improve
efficiency of power generation, transmission and use 55.

The region currently hosts energy research, design and support facilities,
such as, NaREC, CPI, the Technology Futures Institute sustainability
programme at Teesside University, Northumbria Design School and the
Northeast Biofuels.

8.1 R&D and innovations in the energy sector

Biofuels. Biofuels are liquid fuels derived from plant materials. Various forms
of Biofuels produced from renewable sources have been used for a long time
for electricity production, heating and for transport fuels. Bioethanol is seen
as the future transport fuel. Other liquid transport fuels are biodiesel, synthetic
gasoline and diesel produced from gasified biomass. The biomass is the
source for the production of liquid fuels. The production of ethanol from sugar
cane is an example of this. The ethanol produced through this process can be
used either neat or as a blend with petrol; and is extensively used in Brazil.

The USA is also expected to make about 5 percent of its transport fuel supply
from ethanol in 2012. In Canada, China, France and Spain the ethanol is

54
http://www.ncl.ac.uk/energy/business/index.htm
55
Chemistry for Tomorrows World, www.rsc.org/roadmap

31
produced from different sources such as cellulosic waste (i.e., straw), sugar
beet and wheat. The major producers in Europe of biodesiel based on
oilseeds, usually rape (canola) are in France and Germany. Biodiesel can
also be produced from palm oil and coconut oil, making it an attractive option
for a number of economies in South East of Asia. The European Commission
has set a target of 6 per cent biofuels by 2010.

There are some issues around the biofuels sources, some of them are:

 Sufficient land availability is a critical factor. Using land for energy

generating crops is seen as a threat for global food security;
 Biomass is a local and bulky resource, so transport costs can be a
barrier;
 Harvesting, collection, handling, transport and storage – are a great
technical and cost challenge for modern biofuels. These barriers can
be overcome by building local plants to convert bulky crops into
energy-dense liquid, gaseous or solid fuels.

Innovation in biofuels, is needed across the entire production chain for

biofuels, from feedstocks and processing, to end use and distribution.

R&D and innovation is needed at the feedstock stage to improve crop quality
(higher biofuel yields), increase yield of biomass per unit of the used land
area, reduce losses from insects and environmental factors (such as
drought), reduce the needs for production inputs and reduce land-use
competition through higher productivity.

At the processing stage, there is a great need to develop processing

techniques of lignocelluloses, the foundation for more sustainable, biofuels.
At the distribution and end user stage, innovation is required to develop
biofuel-relevant engine technologies.

Hydrogen energy. Hydrogen is favourable as an energy carrier56 because its

combustion produces only water. The global production of hydrogen is 50

56
An energy carrier is a substance or phenomenon that can be used to produce mechanical work or
heat or to operate chemical or physical processes (ISO 13600). It is any system or substance that
contains energy for conversion as usable energy later or somewhere else. This could be converted for

32
million tons per year but all of this is used in the petrochemical industry. Many
economies are seriously considering the shift towards so called „hydrogen
economy‟. Massive investments in new plant are required to increase the
production of hydrogen by 2030 to a level 20 to 25 times more than
production at present.

To produce hydrogen, there are two production routes; conversion of

hydrocarbons by partial oxidation or reforming, and electrolysis of water using
electricity produced from various sources. 98% of the hydrogen is currently
produced from hydrocarbons, the cost through this route is high and there are
considerable amounts of carbon dioxide produced which is a greenhouse
gas. However, the commercial products are still scarce and expensive,
hydrogen as a direct fuel suffers from several problems. Some of these
problems are:
 The cost of pumping and pipeline transport is expected to be
considerably more than for natural gas;
 Compression and liquefaction of hydrogen are costly;
 Limitations to storage and distribution;
 High associated risks.

There are five processes to produce hydrogen through the two production
routes. These processes are as follows:

Electrolysis. The hydrogen in this process is produced by splitting water using

electricity. The process is well understood and convenient for producing
hydrogen from renewable electricity. The technology is proven, commercially
available and the hydrogen produced is highly pure. However, the cost of the
hydrogen produced through this process is strongly impacted by the
electricity prices and the efficiency of the whole chain is low.

Steam reforming. The hydrogen in this process is produced by using heat and
steam to split hydrocarbon gases. The hydrogen produced through this
process is low-cost, and the process at the large scale is widespread, well-
understood and involves sequestration of CO2. The small-scale units are not

use in, for example, an appliance or vehicle. Such carriers include springs, electrical batteries,
capacitors, pressurized air, dammed water, hydrogen, petroleum, coal, wood, and natural gas.

33
commercially viable. The hydrogen produced through this process contains
impurities and there are concerns on the CO2 emissions and concerns about
the fact that the hydrocarbon gases may be used directly as fuel.

Gasification. The hydrogen in this process is produced by splitting biomass

and heavy hydrocarbons into hydrogen and gases. The process at the large
scale is well-understood and suitable for solids and liquids. The small-scale
units are very rare; the hydrogen requires extensive cleaning before use; the
biomass gasification is still an area of research and is in competition with
other synthetic fuels that require biomass.

Themochemical Cycles. The hydrogen in this process is produced by using

cheap high temperature heat generated from nuclear plants or concentrated
solar energy. There is international collaboration in research, development
and deployment of this process between USA, Europe and Japan. There is
potential for massive production, low cost, no GHG (Green House Gases)
emission for transportation, or big heavy industry and the process is highly
efficient. The process is not commercial yet and research and development
needs over 10 years on the materials, chemistry, process and technology. A
high temperature nuclear reactor (HTR) deployment and hydrogen
infrastructure for transportation applications are needed.

Biological production. Algae and bacteria in some conditions produce

hydrogen directly. This is potentially large resource for hydrogen production
with no feedstock required. The production rates are slow in this process, a
large area is needed and highly efficient and appropriate organisms are not
yet found. The process is still under research.

The storage of hydrogen is another issue. There are different technologies to

store hydrogen and each technology has potential for R&D and innovations.
Some the storage technologies are:

Compressed cylinders. This is heavy in weight and currently suitable for

storing small amount of hydrogen at low pressures. The high pressure is still
under development. The capacity efficiency is low compared to fossil fuels.

34
Liquid tanks. It requires super insulation for low temperatures storage, and
the cost can be high. There are hydrogen losses through evaporation, and
capacity efficiency is low compared to fossil fuels.

Metal hydride. This is heavy in weight, expensive, degrade with time and
energy storage density is low.

Carbon structure. This type is not fully understood or developed yet and early
made promises remain unfulfilled.

A reliable infrastructure is also required for production, storage, and

distribution of hydrogen. In the case of using hydrogen as a vehicle fuel in the
transport sector, special facilities will be required. Innovations in the design of
products such as vehicles and compressed gas cylinders will help
overcoming current drawbacks in hydrogen safety and adequacy.

Fuel cells. Fuel cells technologies are integral part of the move towards the
„hydrogen economy‟. Fuel cells usually work through catalyzed reaction
between hydrogen and oxygen to produce electricity and water. Hydrogen is
produced to feed fuel cells by reforming the hydrogen carriers such as natural
gas and methanol. Fuel cells development greatly depends on advanced
research in chemistry.

The research currently is in the development of different types of fuel cells

e.g. alkaline, proton exchange membrane, molten carbonate, phosphoric
acid, and solid oxide operating over temperatures range from 60 to 1000 ˚C
with efficiencies range from 50 to 60 per cent. Fuel cells are expected to get
further step forward in the next few years. They are expected to be used in
applications such as transport, stationary power generation, and portable
equipment. Portable appliances such as cell phones, laptop computers and
similar devices appear to be a mass market for fuel cells based on
nanomaterials. There is a strong consumer demand for an alternative to
existing batteries which are relatively high cost for their energy output.

There are some challenges for fuel cells in the market. They are currently too
expensive for commercial introduction, need proof of lifetime expectations,
and prove of reliability of fuel cells and fuel processors.

35
The CPI‟s Low Carbon Energy projects have fuel cell and hydrogen testing
laboratories and a carbon energy consultancy service to businesses. There
are research and technological development opportunities in hydrogen
production through electrolysis of water, thermo chemical water splitting and
biochemical hydrogen generation.

The Solar Cells. The Solar Cells (PV) global annual growth is more than
40%, which means that it is the fastest-growing renewable energy
technology. Solar energy is in the long term expected to make a major
contribution to global energy supply. One of the most promising solar energy
solutions are the nanotechnology-enhanced thin-film solutions. The polymer
solar cell is also promising technology, and expected to decrease the cost of
PV. Organic solar cells are seen as a future alternative to inorganic
semiconductor based technologies to achieve cost effective, large scale
conversion of sunlight into electricity57.

Wind Energy. The global annual growth of wind energy in terms of installed
capacity was 17% over the last five years. European countries are leaders in
wind energy deployment, with expectations for further development in the
future. The targeted R&D in wind energy in the coming years includes
technologies such as turbine, towers, blades, controls, drive trains, power
electronics, aerodynamics, hydrodynamics, materials, electrical machinery &
control, and reliability & condition monitoring. Also, the capacity factors of
wind turbines need further research & development. The capacity factor of
wind turbines can be improved by placing larger rotors on taller towers with
lighter components and load-mitigating rotors. However, a shortage of skilled
labour in this area is having a negative impact on wind energy in the UK 58.

The Durham Energy Institute at University of Durham and the Sir Joseph
Swan Institute for Energy Research (Swan) at the University of Newcastle are
the main facilities in the region providing support to the wind energy
technologies.

57
J. Mater. Chem., 2009, 19, 5276 – 5278.
58
The UK Innovation Systems for New and Renewable Energy Technologies. Imperial College London
Centre for Energy Policy and Technology & E4Tech Consulting, 2003.
http://www.oecd.org/dataoecd/57/36/32163700.pdf

36
Geothermal energy. Geothermal energy has a huge potential in Europe.
However, it is difficult to predict the share of geothermal energy in the future
energy consumption.

9. Flexible electronics
Flexible electronics refer to robust, thin, light-weight, non-rigid devices and
applications. Flexible electronics are seen as a future opportunity for the
manufacture of technologically advanced electronic equipment by use of
more sustainable and lower cost technology. Flexible electronics are
increasingly used in a number of applications due to their low profile, light
weight, and favourable dielectric properties. Some of these applications
include:

 Flat displays made on plastic or other non-glass substrate;

 Flexible displays;
 Rollable displays.

The world sales of flexible electronics are projected to be £30b by 2015. This
will include displays, logic and lighting applications. By advancing the
technologies and overcoming more technology and business barriers, the
market is estimated to expand to £152.3b59 by 2025.

59
The value is £250b at the source publication. Today‟s exchange rate (30 Nov 2009) is: £1 Pounds
Sterling = 1.64 USD.

37
9.1 Innovations and technologies in flexible electronics

The flexible substrate is the key component for delivering this technology.
The technologies of flexible electronics will lead to new electronics and optical
products such as printable large-area displays, paper-like electronic
newspapers, embedded intelligence and ubiquitous sensors, low-cost
photovoltaic cells, wearable electronics, and item level radio-frequency
identification (RFID) tags. However, in the development of flexible electronic
devices, the device lifetime and reliability are both barriers yet to be
overcome.

Key promising technologies in the field of flexible electronics are:

 Display technology - light weight, energy efficient, wide viewing angle and
cheap manufacture of large displays. Future applications: roll up displays.
liquid OLEDs - future technology for flexible OLEDs60.

 Photovoltaics - organic semiconducting materials processed using roll-to-

roll technologies. PETEC's Wilton coater facility is already gearing up to
the challenge of developing continuous processes for production of OPV
and other thin film PV technologies. Current developments include the
deposition of tailored conductor layers on substrates, and also the
development of effective barrier layers that will protect cells from the
elements for many years of lifetime.

 Solid state lighting- utilising electroluminescent materials to proved very

low energy consumption lighting.

Speciality chemical and science using SME‟s carrying out R&D into advanced
materials in this sector could be envisioned to prototype products in
collaboration with Teesside University projects, cluster groups, as well as
utilising the testing facilities available at Teesside University and CPI.

60
Appl.Phy.Lett. 95, 053304, 2009.

38
CPI is leading the development of the new Printable Electronics Technology
Centre (PETEC). Working in collaboration with multinationals and leading
research bases, this project will establish PETEC as an internationally
recognised facility for the development and commercialisation of printed
electronic devices and flexible functional materials.

PETEC facilities include fabrication of prototype devices and flexible

electronics substrate facility class 1000 clean room; housing a reel-to-reel
vacuum sputter coater and facilities for testing the barrier properties of
coatings applied to plastic substrates.

PETEC enables the development of novel active matrix backplanes, which

can be applied to a variety of display driving requirements. Latest organic and
selected thin film inorganic materials can be used. Patterning processes are
specially tailored to take advantage of these materials‟ high performance and
the potential to be processed in continuous manner. The technology can be
applied to create electronic paper, flexible LCD, and potentially even active
matrix OLED displays.

PETEC‟s organic flexible electronics devices (OFED‟s) development is a

key priority area. Early working prototypes have already been made in the
laboratory, and PETEC will be working on improving reliability and reducing
manufacturing costs for truly flexible lighting systems.

10. Recommendations

 Private sector companies need to upgrade their R&D plans, build up long
term relationships with universities and research centres, open to
innovation schemes and establish medium and long term research
objectives.

 Public sector support bodies need to focus on the quality of R&D

expenditure, based on excellence and priorities and coordinate European
and national efforts in research and innovation.

 Case studies about success of some companies in gaining funding need to

be promoted to address the common frustration between companies about
difficulties in getting grants or funding.

39
 Increasing awareness of SMEs about the funding available.

 Early communications of forthcoming legislation.

 The chemicals industry needs to improving communication and

transparency with stakeholders in regard to safety and environmental
friendly research and innovation throughout the value chain up to the end
user. Innovation requires the confidence of investors, customers,
employees and consumers in the sustainability and safety of products and
processes. They need to continue to develop a more effective dialogue
with society based on mutual understanding and trust.

 Cost control will continue to be a primary focus in the face of pressures for
flexible manufacturing technologies, high quality products, cleaner
production and waste elimination.

40
Appendix A: Companies in the North East

The local companies in the North who could supply cosmetic markets are:

 Banner Chemicals
 Croda,
 Creative Gene Technology
 Dow Halterman
 Durham Organics
 Fine Organics
 Fine & performance Chemicals
 Frutarom
 Fulbeck
 High Force Research
 Huntsman Toxide
 Johnson Matthey
 Lucite,
 Lyrachem
 Nano-central
 Newchem Technologies
 Procter and Gamble.
 Rutarom UK Ltd
 Shasun
 Spartan Nano
 Vertellus
 Etc.

41