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Accelerating Energy Innovation: Lessons From the Chemical Industry
- 1. Accelerating energy innovation: Lessons from the chemical industry Ashish Arora, Duke & NBER Alfonso Gambardella, Bocconi ?
- 8. The Global Market for Engineering and Licensing in Chemicals, 1980-1990 43.9% 34.6% 21.5% 15.6% 71.6% 12.7% Total 29.2 52.9 17.9 20.3 72.2 7.4 Textile & Fibers 35.6 2.9 61.5 16.9 52.1 31.0 Misc. Specialties 50.0 46.2 3.8 17.0 79.0 4.0 Pulp & Paper 52.8 6.1 41.2 13.2 63.1 23.8 Plastics & Rubber 41.9 3.2 54.8 17.6 63.0 19.4 Pharmaceuticals 49.1 32.4 18.5 10.8 75.9 13.3 Petrochemicals 42.1 48.6 9.3 10.0 83.7 6.4 Oil Refining 36.4 19.4 44.2 21.9 53.8 24.3 Organic Chemicals 48.5 34.6 16.8 14.4 78.9 6.6 Miscellaneous 51.7 24.4 23.9 20.9 71.3 7.8 Minerals & Metals 51.1 36.1 12.9 17.8 60.3 21.9 Industrial Gases 46.4 29.2 24.4 18.9 66.9 14.1 Inorganic Chemicals 32.8 62.3 4.9 17.1 78.0 5.0 Gas Handling 40.8 38.8 20.4 20.3 74.8 5.0 Food Processing 33.7 61.5 4.8 15.6 79.6 4.8 Fertilizers 39.0 33.7 27.2% 33.5 34.1 32.4% Air Separation By other firms (*) By SEF Own Technology by other firms (*) by SEF In‑House SECTORS % of Licenses % Of Plants Engineered
Editor's Notes
- Role of government in chemical innovation, past and present: Two case studies Coal to oil Synthetic rubber The importance of diffusion Specialized Engineering Firms (SEFs) and the division of labor Implications for anti-trust and IP policy
- The tremendous increase in the production of synthetic rubber did not require radical technological advance. Although a variety of alternative monomers (building blocks) were tried out, it turned out that butadiene and styrene, used in the Buna-S rubber patented in Germany in 1921, were the most suitable. Neither was the basic process fundamentally new. Even so, a variety of logistical and technological problems had to be solved, such as expanding the supply of butadiene, for which advances in chemical engineering and petroleum refining were critical. Butadiene could be produced from the byproducts of oil refining or natural gas. It could also be produced from other sources, such as industrial alcohol (ethanol). Many different sources of ethanol were considered, included alcohol from grain or molasses. In Europe, Chemische Werke Huls (a German specialty chemicals company) nearly built a tire plant with French red wine as an ethylene source; the United States actually imported beet ethanol for butadiene for the synthetic rubber program shortly after WWII. During the tenure of the synthetic rubber program, Congress passed laws mandating use of grain ethanol for butadiene production. Plus ca change, plus c'est la meme chose ! The vast bulk of butadiene, however, was ultimately produced from oil-refining byproducts.
- Program succeeded in accomplishing rapid increases in production of inputs and outputs, by creating a “standard” synthetic rubber, defining input requirements, investing in production capability, allocating output, and information sharing. Program succeeded in increasing scale and cost reduction with existing techniques, and many improvements in the process. Program did not succeed in significant innovations in polymer science, catalysis, or process technology
- Co-invention, investment and inter-dependencies. When first introduced, rayon fiber was believed to be weaker than cotton fiber, and because rayon fibers were further weakened when wet, the material was assumed to be unsuitable for tire cord. However, it was discovered that hot rayon is 50 percent stronger than cotton. Rayon tire cord, however, did not take off until World War II, when circumstances forced the use of synthetic rubber for tires; synthetic rubber tires run hotter than natural rubber tires, and therefore rayon was a better cord material under those hotter conditions. This also illustrates the systemic interdependencies in chemical innovation.
- Coal tar provided a source for synthetic dyes; coal coking furnaces provided the nitrogen for fertilizers and explosives such as TNT, and coal provided the toluene for those explosives. Heating coal to make coke—a raw material in the manufacture of high-carbon steel—also produces a number of chemically useful gases and byproducts: coal tar, ammonia, and benzene.