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Process component
with added value

Oil is far too valuable to burn. As a result we also view the raw materials we produce, such as hydrogen, as more than just a source of fuel and therefore use it as a material process component – with added value.


MANAGEMENT
APPROACH

Our aim to make responsible use of natural resources and to protect the climate and our environment is an established component of our corporate policy. We are always striving to reduce energy consumption and the amount of environmental pollutants caused by the production process. We also work to help our customers to protect the environment. This is something we can achieve, for example, by offering an alternative to products containing substances that are harmful to the environment or by offering products whose use makes a contribution to protecting the environment.

In the long term, H&R is pursuing the objective of decarbonizing its production processes, aiming to achieve the target of the “Green

Refinery”, i.e., fully synthesized specialty production based on renewable energies. We are sustainably reducing the use of fossil raw materials and use sustainable energy sources to operate our refineries.

In general, our German sites are certified in line with ISO standards 9001 (quality), 14001 (environment), 18001 (occupational health and safety) and 50001 (energy), which we use to monitor and control our energy, resource and CO2 management. Since 2012, we have been reporting figures for our carbon emissions, wastewater and waste as the amount of emissions per ton of feedstock. This allows us to reflect the degree of value added and the size of our refinery sites to the greatest extent possible. As the degree of vertical integration increases and production efficiency improves, we aim to avoid exceeding the 2011 reference value and where possible to come in below that benchmark.

Our “Environmental Aspects and Impacts” database enables us to identify all activities that have an impact on the environment and to detect and assess risks during normal operations, during disruptions to operations, and in emergencies. This allows us to identify opportunities for improvement and develop appropriate measures.

ENERGY EFFICIENCY AND
CARBON EMISSIONS

Our goal is to optimize our production processes so as to maximize the proportion of crude-oil-based specialty products and to minimize the proportion of barely usable components, or components that can only be used in a combustion process.

Our feedstock is a key element in this regard, because the better its quality and the more specifically it is tailored to suit the individual production units, the greater the yield of high-quality specialty products. But energy consumption is also important – the greater the degree of processing, the more energy has to be used to produce the products.

Our good position in the energy efficiency rankings for the refinery sector was confirmed most recently in 2019 in an updated performance analysis conducted by HSB Solomon Associates LLC®. Both specialty refineries in Hamburg and Salzbergen achieved rankings in the second quartile when benchmarked against other refineries.

With two energy-intensive production plants in Germany with energy costs that are also significantly in excess of the international average, our company has declared the goal of always keeping our energy consumption as low as possible and ensuring that it is as efficient as possible so that we can reduce our carbon emissions as much as possible.

By doing so, we not only want to improve our own carbon footprint but also to help achieve the climate protection goals called for by the Federal Government and the Paris Climate Agreement. With this in mind, we have established an energy management system pursuant to the ISO 50001 standard at our refinery sites in Hamburg and Salzbergen. It defines company responsibilities and includes commitments to improve energy-related performance and compliance with all applicable statutory requirements relating to energy use. It also provides the framework for individual strategic and operating targets, along with measures for achieving them. All of this is incorporated into the company’s energy policy.

We record our energy consumption at our refinery sites on an ongoing basis and evaluate it once a week. This allows us to intervene quickly if need be and identify specific measures to save energy. These projects include, for example, projects focusing on heat integration in our facilities, measures to improve tank insulation or small-scale projects such as the move to switch our lighting over to LED technology.

The contributions to overall savings achieved as a result are anything but small, however. In the last four years alone, cumulative energy savings for both refinery sites amounted to 292,000 MWh.

We therefore significantly exceeded our self-imposed target for annual energy savings of 0.5% again in 2020.

We see to it that compliance with the requirements of the ISO 50001 standard is audited on a regular basis by an independent outside expert. If the requirements are not met, we adjust our measures and processes accordingly. The last independent audit, which confirmed our ongoing compliance with all of the ISO 50001 requirements, took place at the beginning of 2020. We also conduct annual internal audits to verify and demonstrate that the requirements of the ISO standard are actually applied in practice within the organization. We avail ourselves of the option under the ISO 50001 standard not to make our energy policy available to the public.

One of the major effects of higher energy efficiency and lower energy consumption is lower emissions of CO2. The measures taken to reduce carbon emissions in our company are largely in line with those taken to reduce primary energy consumption, as outlined in our energy policy. Our flexible-control hydrogen electrolysis (PEM) system, for example, allows us to produce hydrogen from renewable energy sources at our refinery in Hamburg-Neuhof. This means that we can avoid the carbon emissions associated with external production of hydrogen from fossil energy sources and its transportation to our refinery.

In order to arrive at the best possible over- view of our emissions, we have developed an emissions calculator spanning H&R’s entire value chain, from the extraction and processing of raw materials to sales/distribution. This calculator allows us to determine the direct and indirect emissions for each product. We account for the depth of our value chain by calculating the sum of all individual plant throughputs in the course of production.

From a legal standpoint, the main pillars for determining our carbon emissions are, first and foremost, the provisions of the Greenhouse Gas Emissions Trading Act (Treibhausemis- sionshandelsgesetz/TEHG). In addition, the ISO 50001 standard also calls for the monitoring of relevant data by providing for energy reviews, binding energy efficiency indicators and the introduction of an energy life cycle statement for certain plants. Finally, industry standards and very specific information such as information on individual plant set-ups, processes and production methods used, and the composition of energy sources and other operating resources used, are also included when calculating our carbon emissions. In fi- nancial year 2020, our emissions per ton of feedstock totaled 391.2 kg. The figure for the past financial year was therefore 8.8% higher than the 2011 benchmark (359.6 kg).

What may look like an increase at first glance can be explained when put in context – carbon emissions have fallen in absolute terms since 2011. Viewed over the past ten years, both H&R refineries show a 7.4% drop in emissions based on the 2011 benchmark.

At the same time, we also express our emissions as a proportion of the raw materials we use. Rather like a high-performance engine, our processing facilities are most efficient when they are operated at peak performance with the highest possible throughput volumes. By contrast, a low-revving engine leads to higher fuel consumption, higher emissions, etc.

We experienced a similar situation at our sites last year. In the few weeks where Germany had to implement hard lockdown measures and many of our customer industries could only buy very few products from us, our facilities were running with lower raw materials input and, as a result, were not able to attain their usual high efficiency levels.

As a result, we are correspondingly confident that H&R will not only be able to reduce its emissions in absolute terms in 2021, but will also fare better in relative terms.

Waste
approach

Because of the wide variety of types of waste, the quantity, the potential risk posed by certain types of waste, the complexity of disposal procedures and disposal costs, H&R KGaA places high priority on operational waste management and on optimizing costs. For example, the plant site at the Hamburg-Neuhof refinery produces around 60 different types of waste in differing quantities and frequencies.

The approach we follow is to always reduce the amount of waste caused by our production process as much as possible. On the one hand, we accomplish this by achieving the best possible ratio of core products to by-products and, on the other hand, through a high degree of vertical integration. At the same time, we will also include in our calculations waste that does not originate from our production processes. This may include, for example, excavated soil during construction work, which will be recognized as “Waste per ton of feedstock”, just as process waste is. Waste that we cannot currently avoid is disposed of professionally and in compliance with all legal requirements.

Goals and measures to reduce the amount of waste we generate are identified and implemented as part of our environmental management system, which is certified in accordance with the ISO 14001 standard and also includes specifications on waste management.

This standard specifies environmental management requirements that organizations can implement to improve their environmental performance and to achieve environmental targets. It is based on the central elements of planning, implementation, control, and improvement.

Compliance with the requirements is verified and certified by an independent outside body. The next certification will take place in mid-2021. In addition, we ensure compliance with laws, provisions, audit obligations, and regulations and verify the performance of our environmental management system with the help of officer meetings, internal audits, and compliance audits.

The total amount of waste generated by H&R’s refinery sites is at a gratifyingly low level. By way of comparison, in 2020 we once again managed to reduce the amount of waste we produce by a good 13.0% compared to the benchmark year of 2011 (3.09 kg/ton of feedstock). In the past financial year, as in the previous year, we generated 2.68 kg of waste per ton of feedstock.

WATER AND
WASTEWATER

The prudent and conscious use of water resources is an issue that the H&R Group also classifies as material. Most of the water required for our refineries is used for cooling. This water does not come into contact with our products and can be returned directly to the environment. Only a small proportion of the water is used directly in our refinery processes. Once used, this water also contains hazardous components that pose a potential risk; consequently, wastewater management is also very important.

As a rule, our goal is to consume as little water as possible and to generate as little wastewater as possible. The targets and measures for reducing our water consumption are identified, implemented and audited as part of our environmental management system, which is described in the section on waste. Our water sources are the local utility companies.

Ideally, we use sophisticated, complex procedures to purify contaminated process wastewater right at the point of contamination so that it can be returned safely to the environment as wastewater. After deducting the amount of rain falling on sealed surfaces, we drained off a total of 673.8 liters of domestic or process wastewater per ton of feedstock in 2019. As a result, we were significantly down on the 2011 benchmark (861.2 liters) by around 21.8%, but significantly up on the previous year’s figure for the reasons relating to efficiency outlined above.

The Salzbergen site also draws water from the Ems River and uses it, in processed form, as process and boiler feed water to provide steam. Water from the river is also used to compensate for evaporation losses in the cooling water circuit. In order to conserve water, we use our cooling water several times in the process in some cases. We are also working to create new ways to use service water in order to further increase the recycling rate.