Chemical leasing business models application

Based on experiences obtained in Egypt, Mexico and Russia and to enable a systematic approach of the implementation of Chemical Leasing business models at company level, UNIDO has developed a first toolkit. It covers the main steps to be undertaken to ensure the smooth and efficient application of Chemical Leasing in the industries of different countries. An overview of the general content of UNIDO s Chemical Leasing toolkit is included in Chapter 8. 

Schwager P, Moser F (2006) The application of Chemical Leasing business models in Mexico. ESPR 13(2) 131-137... 

Reasons The application of Chemical Leasing business model provided more than 50% decrease of wastewater purification costand required chemicals consumption thus providing a mutual profit for both participating companies. Small enterprises also can collect wastes for cyclic purification (for example once per week). ... 

Successful application of Chemical Leasing business models with tangible environmental and economic benefits requires a systematic and structured approach. UNIDO defines five phases of a Chemical Leasing business model that cover a period of approximately 24 months (Fig. 3). 

The chapter is organised as follows In the following section 2 we focus on the traditional sales concept and the consequences of information exchange. In section 3 we introduce possible objectives of Chemical Leasing business models and in comparison to the sales concept discuss differences in information management. In section 4 we turn our attention to the applicability of Chemical Leasing business models in practice. Section 5 closes with a summary and discussion of results. 

Chemical Leasing business models can differ with regard to (1) location of the application of the chemical/ownership of the chemical -the chemical can be applied both on the site of the supplier and the user (2) the proprietorship of the equipment - the equipment can be owned either by the supplier, by the user, or by a third party equipment provider (3) the application of the chemical - in leasing contracts the application of the chemical can fall under the responsibility of the supplier, the user, or a third party (4) the operation of the equipment -the operation of the equipment may either fall under the responsibility of the lessor or the supplier and, (5) the recycling and/or the final disposal - the recycling and/or final disposal of the chemical may either be provided by the user, the supplier, or a third party5. 

First, let us recall the shortcomings of the sales concept in face of information asymmetries. As stated in section 2, the traditional selling of chemicals, firstly, does not prevent over-consumption. In a competitive market it is rather the aim of the sales concept to sell as much commodities as possible to increase the profits of the sellers. A sales contract consequently provides no incentives to reduce such adverse effects of chemicals on human health and the environment that are related to the quantity of chemicals in use. Secondly, the sales concept provides no incentives for transferring accurate knowledge on the efficient application of the chemical, as this lowers the profits of the sellers. In contrast, Chemical Leasing business models are capable to effectively deal with problems of information asymmetries. Based on the findings of Ohl and Moser (2007), both models introduced above (A and B) show comparative advantages as follows ... 

All in all, both models are able to reduce the over-consumption of chemicals due to information asymmetries between producers and users. If producers of chemical substances have advanced knowledge on the efficient application, disposal and recycling of produced chemicals the dissemination of this knowledge is neither required by REACH nor supported by the traditional sales concept. This poses additional risk to human health and the environment. These risks can be avoided by the introduction of Chemical Leasing business models, an innovative approach that delivers incentives for efficient application, disposal and recycling of chemicals. 

Royal Commission on Environmental Pollution (2003) The long term effects of chemicals in the environment, twenty-fourth report Chemicals in products. Safeguarding the Environment and Human Health, London Sharma VP (2003) DDT The fallen angel. Current Science 85(11) 1532-1537 Schwager P, Moser F (2006) The application of Chemical Leasing business models in Mexico. ESPR 13(2) 131-137... 

The Registration phase of REACH and the Principles of Chemical Leasing business models have additional central aspects in common. They both involve different stages of the supply chain - as producers and applicants are challenged - and both approaches are life-cycle oriented either through their documentation requirements addressing phases of production, use or dis-... 

The concrete application at plant level has furthermore demonstrated that a systematic approach based on the preventive Cleaner Production idea boosts the economic and environmental success of Chemical Leasing business models. 

The Austrian Federal Ministry of Agriculture, Forestry, Environment and Water Management (BMLFUW) commissioned various studies, showing that almost 4000 Austrian companies would basically qualify for the application of Chemical Leasing models, cutting today s annual use of 150,000 tons of chemicals by one third. On average, the user of such new business models can expect cost savings of approximately 15%. 

In the interview relating to the experience of Chemical Leasing application the General Director of the service provider underlined that the new business model was beneficial for the company in respect of economic profit and opportunity for a most effective introduction of innovations and know-how. The Deputy Technological Manager of the company using the service indicated that the new business relationship was economically beneficial and provided the fastest and mostly efficient approach to solve environmental problems that the company had been facing before. 

In the following table all described cases are summarised. It is clearly shown that in most cases the user is responsible for the application plant and only in the case of Safechem/Pero the supplier cooperation owns, manages and accommodates the plant. The substance is often owned by the supplier, only in 2 cases the ownership changes from supplier to user. The recycling or disposal equipment is managed and owned by the supplier in each of the analysed business cases. Finally, there is clear evidence of economic and environmental benefits gained in all cases where users and suppliers are satisfied with the proposed Chemical Leasing model (Fig. 11). 

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