Although it is true that some costing mechanisms are being implemented for emissions, these schemes are in their early days and are not broadly accepted or standardized across economies, regions, states, or continents. As these new costs start to be generally applied, they will become a type II cost.
Another thing worth considering is that for many high-value chemicals or useful materials in commercial use, there are increasingly limited supplies. Supplying these chemicals over time will be associated with increasingly significant costs both monetarily and from the perspective of major disruptions to the environment as sources of rare materials become even scarcer. A good example of this would be in the supply of some transition group metals and platinum group metals that are of great interest to chemists for their use in novel catalyst systems. In addition to the environmental life cycle impacts that occur during mining, extraction, refining, and use of these materials in different catalyst systems, our use of these materials generally results in some portions of these metals being widely dispersed into the environment since complete recovery from process streams is not always possible. In some cases, catalysts are homogeneous and difficult to extract and recover from the reaction mixtures. In those cases where catalyst systems are heterogenized, there can be a 5 to 10% loss of the catalyst with the filter or filter aid.
It would be very difficult and probably very costly indeed to collect the homogeneous catalyst from spent mother liquors and equally difficult to collect all the heterogeneous catalyst from a reaction mixture. It is also difficult and expensive to design, synthesize, and employ alternative catalyst systems that perform the same catalytic function as an existing catalyst and achieve identical product quality and cost.
So if we return to what we learned in Chapters 4 and 5 to consider atom economy once again, we may readily see that low atom economical reactions and mass inefficient processes will affect not just the materials cost of synthesizing a new chemical but the total cost as well.
As is probably known by the reader, but worth reiterating, this is because:
1. Not all portions of the reactant molecules are incorporated into the molecule we are attempting to synthesize [i.e., our starting materials (and the energy we may consume) are not typically used very efficiently].
Cost Category Cost/Ton Cost
Nonhazardous solid waste $35 $1,100
Hazardous waste $250 $500,000
CO2 $86 $17,000
NOx $2,500 $10,000
SO2 $135 $1,100
Societal cost ?
Total $530,000 þ
2. Our synthetic strategies will affect the length and complexity of the route.
a. Portions of the molecule may be in the wrong oxidation state.
b. Protection/deprotection strategies may be required.
c. We may have multiple chiral centers to set, and once set, we may require chiral resolutions if we are not able to set these assymetrically.
d. We may have some particularly difficult functional groups to incorporate.
e. There may be some particularly unstable bonds to deal with.
3. Multiple purification and separations steps may be required to remove by-products, reactants, reagents, solvents, and so on.
4. There are environmental, safety, and health costs associated with the management of materials and the treatment of waste products.
Additional Point to Ponder Imagine that you were trying to make a decision about which synthetic chemical process you should use. Both processes are costed using traditional cost models but then you open the boundary a bit more and include type III, IV, and V costs.
Which type of cost do you think will become the biggest differentiator between the two processes?
20.6.1 Relationship Between Traditional Materials Cost and Atom Economy To illustrate the important relationship between traditional costing methodologies for raw materials andatom economy, let’s look at seven differenteconomic models toevaluate costs for materials used in the synthesis of four different drugs. The cost models we use are as follows:
1. Minimum cost for minimum process stoichiometry þ standard yield, reactant stoichiometry, and solvent. This is the cost when process chemicals are not used in stoichiometric excess, i.e., no more than 1 mol is used.
2. Minimum cost at 100% atom economy þ standard yield, solvent, and process stoichiometry. Reactant costs may be used to assign a cost to the proportion of each material that is incorporated into the product. From this it is possible to calculate the cost if the atom economy is 100% and standard amounts of solvent and process chemicals are used.
3. Minimum cost at 100% yieldþstandard solvent and process stoichiometry. This is the cost for using standard quantities of reactants, process chemicals, and solvent, but the yield is 100%.
4. Minimum cost at 100% solvent recovery and standard yield and process stoichiom- etry. This is the cost if 100% of all solvents are recovered and reused (assume zero recovery cost).
5. Minimum cost at 100% atom economy, process stoichiometry, and solvent recovery.
Reactant costs may be used to assign a cost to the proportion of each material that is incorporated into the product, and from this it is possible to calculate the cost if the atom economy is 100%. No stoichiometric excess of process chemicals is used and solvent recovery is assumed.
6. Minimum cost at 100% yield, solvent recovery, and standard process stoichiometry.
A theoretical minimum cost may be derived assuming a 100% overall yield, 100%
solvent recovery, and standard process stoichiometric excess.
7. Minimum cost at 100% yield, solvent recovery, and reactant and process stoichi- ometry. A theoretical minimum cost may be derived assuming no stoichiometric excess, 100% solvent recovery, and a 100% overall yield.
Table 20.8 contains a summary of the costs on a percentage basis, and Figure 20.7 shows these results in graphical form.
As you can see from Figure 20.7, pursuing atom economy from a perspective of current costing considerations may be less desirable than some might think. This costing analysis also suggests that we may best be served by pursuing higher yield reactions, a reduction in
% Std. Cost for:
Cost Model Drug 1 Drug 2 Drug 3 Drug 4
1, Minimum cost for minimum process stoichiometryþstandard yield, reactant stoichiometry, and solvent
86.25 98.61 92.4 97.0
2. Minimum cost at 100% atom economyþ standard yield, solvent, and process stoichiometry
87.10 39.58 83.7 69.3
3, Minimum cost at 100% yieldþstandard solvent and process stoichiometry
70.50 32.15 64.2 56.8
4. Minimum cost at 100% solvent recovery and standard yield and process stoichiometry
63.14 83.79 56.1 54.6
5. Minimum cost at 100% atom economy, process stoichiometry, and solvent recovery
36.49 21.97 39.6 20.9
6. Minimum cost at 100% yield, solvent recovery, and standard process stoichiometry
33.64 15.94 20.3 11.4
7. Minimum cost at 100% yield, solvent recovery, and reactant and process stoichiometry
19.89 14.54 12.1 8.3
FIGURE 20.7 Comparison of cost models for four drugs. (From Constable et. al, ref. 29. Reproduced by permission of The Royal Society of Chemistry. CopyrightÓ2002, The Royal Society of Chemistry.)
the stoichiometric excess of the reactants we use, and elimination of, or at the very least, complete solvent recycle and reuse. Unless and until we can truly use all of our reactants and transform them completely to the products we wish, we will need to pay greater attention to all the materials we use in our syntheses.
A more detailed materials cost analysis for the four drugs considered above is contained in Table 20.9 for drug 3 and in Figures 20.8 and 20.9 for drugs 1 and 2, respectively. This TABLE 20.9 Comparison of Costs for Drug Substance 3
Reactants
Molar Equivalents
Used
Percentage of Molecule in Final Druga
Percentage Contribution to Overall Cost of Drug 3 (%)
Percentage of Total Cost for Nonincorporated
Reactants (%)
Intermediate 1 2 43 16.4 12
Reducing agent 4.6 5 38.9 49
Resolving agent 2.2 0 20.4 26
Intermediate 2 2 27 5.8 6
Intermediate 3 1 0 0.8 1
Intermediate 4 1 0 0.8 1
Material 1 3 0 1.5 2
Material 2 1 0 0.1
Material 3 1 100 13.3
Material 4 6 0 0.6 1
Material 5 1.2 0 0.6 1
Material 6 1 100 0
Material 7 10 14.5 0.3
Material 8 2 0 0.4
Solvents — — 28
All other materials — — 0.4
aThis is the wasted cost for each material, due to inefficient incorporation into the product.
50 45 40 35 30 25 20 15 10 5
5% 4%
8%
16%
1%
8%
5%
0% 1%
0
1 2 3 4 5 6
Materials
% of Total Cost
7 8 9 10 11
FIGURE 20.8 Materials costs as a percentage of the standard cost in making drug 1. (From Constable et al., ref. 29. Reproduced by permission of The Royal Society of Chemistry. CopyrightÓ 2002, The Royal Society of Chemistry.)
analysis reveals that more than 75% of the material cost for those portions of reactants that do not remain in the final product (column 5, Table 20.9) is usually attributable to a maximum of four materials. It should hopefully come as no surprise at this point that the data in Table 20.9 also provide confirmation that replacing a chiral resolution with a chiral synthesis is a more beneficial economic and atom economical strategy.
As shown in Table 20.10, an interesting aspect of this comparison is that when the total cost of solvents is compared to the cost of poor atom economy, the cost of the solvent is a greater proportion of the materials costs in three of the four syntheses studied. An additional learning is that yield and stoichiometry are the biggest cost drivers and exert significantly more influence on cost than does a poor atom economy.
Another interesting outcome of this comparison came from the results for drug 4, where it was found that neither atom economy nor solvent were significant cost drivers and did not represent opportunities for cost reductions. In the case of this drug synthesis a catalyst was used and it was comparatively costly relative to the other materials used in the synthesis. It was also found in this case that approximately 10% of the catalyst was lost to effluent as part of the process, despite its being a heterogeneous catalyst. A 10% loss of this catalyst to effluent represented 16% of the standard materials costs paid by the company for this drug
1 5%
3%
6%
1% 2%
11% 10%
25 20 15
% of Total Cost
10 5
0 2 3 4 5 6
Materials
7 8 9 10 11 12 13
3% 2% 2%
0%
FIGURE 20.9 Materials costs as a percentage of the standard cost in making drug 2. (From Constable et al., ref. 29. Reproduced by permission of The Royal Society of Chemistry. CopyrightÓ 2002, The Royal Society of Chemistry.)
TABLE 20.10 Comparison of Solvent and Poor Atom Economy Costs for Drug Substances
Drug
Solvent Cost as
% of Total
Cost for Nonincorporated Reactants as % of Total
1 45 32
2 36 21
3 22 61
4 14 10
(Figure 20.10). It should be noted that 16% of the standard materials cost is not a small number! Moreover, this cost does not include the total cost of the material; the life cycle costs were not included (i.e., the cost of raw materials extraction, catalyst production, use, recovery, regeneration, etc.), and the loss of the catalyst to effluent with all the associated issues of metals in effluent were not considered. Although this is not an argument against using catalysts, it is certainly true that the type of catalyst, its potential for reuse, and its recoverability are important features of good process design and environmental and economic performance.
It is recognized that the evaluation above considers only a few industrial processes that represent the current state of affairs for drug manufacture and does not consider costs beyond the simple material costs of drug synthesis. Although it has been shown that the EHS costs in a total cost assessment for many industries can be quite significant, our studies have shown that the EHS costs for high-value-added materials such as pharmaceutical intermediates or pharmaceutical substances are generally less than traditional material costs unless total life cycle costs are included. Until standardized, accepted economic models for life cycle costs are built and agreed upon, it will remain difficult to assess these costs and make acceptable business decisions based on these costs. In addition, unless society forces markets to focus greater attention on these types of costs, they will continue to ignore these costs.
This analysis also ignores the potential benefits from alternative more atom economical routes, where it may be possible to have only two reactants producing a single easily isolated product in a completely recyclable reaction medium at room temperature and pressure.
A second alternative would be a synthesis without solvent, but this would undoubtedly increase the energy requirements. Thus, it must be understood that the point of striving for more atom economic reactions in the future is the hope that they use fewer resources (materials and energy) and have higher overall process efficiencies.
PROBLEMS
20.1 There is an old saying that “Hindsight is 20 : 20.” Select a compound from the following list (DDT, Alar, PFOA, CFCs) and:
(a) Describe how total cost assessment may have prevented your chosen compounds from becoming items of commerce in the first place.
FIGURE 20.10 Costs percentages for drug production.
(c) Which cost type would have been the most difficult to determine?
20.2 Return to Table 16.4.
(a) For each material in the table, which cost type would be represented?
(b) Which cost type would contribute most to the total cost?
(c) Which area—raw material, energy, air emissions, or water emissions—would have the greatest costs not usually accounted for by most industries?
20.3 Problem 5.7 shows the Craig synthesis of nicotine. Find a second synthesis of nicotine and perform a TCA on these to determine which route would be preferred.
20.4 Compare a traditional chiral synthesis employing a resolving agent with an asym- metric synthesis using TCA. Which synthesis is better from a total cost perspective, and why? What are the largest total cost drivers in each synthesis?
20.5 From the situations in Table P20.5, describe how total cost assessment might be applied most effectively and give a reason why, as was done in Example 20.1.
20.6 Table P20.6 contains an assessment of costs for three different processes for several high-volume production materials used in plastics manufacture. Assume sales of
$1 billion/yr for each chemical.
(a) What general conclusions can you draw regarding each of these processes?
(b) Describe the key vulnerabilities for each process based on the data provided.
20.7 A drug company is about to produce a drug and is confronted with site costs as shown in Figure 20.10.
TABLE P20.5
Decision Rationale
Pollution prevention alternatives Materials/supplier selection Facility location/layout Outbound logistics
Market-based environmental options Public relations/lobbying
Training
TABLE P20.6 Cost Assessment Metric
Acrylonitrile from Propylene
Adipic Acid from Cyclohexane
Phenol from Cumene
Material intensity 4.35 lb/$ 0.766 lb/$ 1.90 lb/$
Energy consumption 32.9 kbtu/$ 21.9 kbtu/$
114 gal/$
27.3 kbtu/$
Water consumption 1.43 gal/$ 0.26 gal/$
Toxic dispersion 0.24 lb/$ 0.003 lb/$ 0.008 lb/$
Pollutant dispersion 6.37 lb/$ 1.24 lb/$ 0.94 lb/$
(a) From a traditional cost perspective, where should the company attempt to put its resources to reduce costs, and why?
(b) It turns out that the highest-cost material is a catalyst: How might TCA be used to change the companies’ practices to address both the use of this particular catalyst and the subsequent loss of some of this catalyst to effluent?
20.8 The cost of a pharmaceutical compound is computed at various stages of develop- ment and in the first year of production as shown in Table P20.8.
(a) What general conclusions about cost estimation can you derive from this table?
(b) What are the biggest cost drivers once a product is in production?
(c) How might green chemistry and engineering be used to affect the largest cost drivers?
(d) If you were to look at this from a total cost assessment perspective, which items would be the largest cost drivers, and why?
20.9 The costs for different materials used in producing a compound are contained in Table P20.9.
(a) If the process was not changed, which materials would represent the greatest challenge to recovery?
(b) As is typically the case, there are large quantities of low-value materials in the process, such as HCl. What opportunities might there be to address this as a waste? How might TCA help to decide what to do?
TABLE P20.8 Cost at a Variety of Stages
R&D Cost Estimate
(1 £/kg product)
R&D Cost Estimate
(2 £/kg product)
Site Cost (£/kg product)
Cost of Chemicals
in Site Waste Streams
(£/kg product)
Site Chemicals
in Waste Streams [Cost (£) at 12,000 kg/yr
peak production]
Site nonchemical
[Cost (£) at 12,000 kg/yr
peak production]
Total process chemical cost
0.1 8.7 114.3 105.4 1,265,262.9
Total solvent cost 30.5 13.1 25.2 25.0 300,081.9
Total reactant chemical cost
381.8 21.4 30.4 32.5 390,270.9
Total, site environmental cost (£/kg product)
— — 14.2 170,861.2
Utilities (£/kg product) — — 4.0 474,04.8
Labor (£/kg product) — — 15.9 190,491.6
Packaging materials (£/kg product)
— — 0.6 7,727.9
Filters (£/kg product) — — 2.3 27,674.1
Other (£/kg product) — — 2.7 32,169.2
Grand total — — 203.9 163.0 1,955,615.7 408,757.6
(c) Which materials would present the best opportunities for recovery, and why?
(d) What green chemistry approaches might be taken if you wanted to increase the potential for cost reductions?
REFERENCES
1. Bailey, P. E. Full cost accounting for life cycle costs: a guide for engineers and financial analysts.
Environ. Finance, Spring 1991, pp. 13–29.
2. Surma, J. A survey of how corporate america is accounting for environmental costs.Understand.
Environ. Account. Disclos. Today, 1992, pp. 85–94.
3. White, A. L., Becker, M., Savage, D. E. Environmentally smart accounting: Using total cost assessment to advance pollution prevention.Pollut. Prev. Rev., 1993, 3(3), 23–35.
4. Kreuze, J., Newell, G. ABC and life cycle costing for environmental expenditures. Manag.
Account., Feb. 1994, pp. 38–42.
5. Kennedy, M. L. Getting to the bottom line: how TCA shows the real cost of solvent substitution.
Pollut. Prev. Rev., 1994, 4(2), 17–27.
6. White, A. L., Savage, D. E. Budgeting for environmental projects: a survey.,Manag. Account., 1995, pp. 48–54.
7. Savage, D. E., White, A. L. New applications of total cost assessment.Pollut. Prev. Rev., 1995, 4, 7–15.
8. Savage, D. E., White, A. L. New applications of total cost assessment.Pollut. Prev. Rev., 1995, 4, 7–15.
9. Epstein, M. J. Improving environmental management with full environmental cost accounting.
Environ. Qual. Manage., 1996, 6, 11–22.
10. Epstein, M. J.Measuring Corporate Environmental Performance: Best Practices for Costing and Managing an Effective Environmental Strategy. IMA Foundation for Applied Research, Montvale, NJ, 1996.
11. U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics.An Introduc- tion to Environmental Accounting as a Business Management Tool: Key Concepts and Terms.
EPA 742-R-95-001. U.S. EPA, Washington, DC, June 1995.
12. American Institute of Chemical Engineers’ Center for Waste Reduction Technologies.Total Cost Assessment Methodology., A.D. Little, New York, NY, 1999.
Material
Standard Cost/kg of Product (£)
Total Annual Recoverable Material (Potential) (kg)
Potential Recoverable Material Cost
(annual) (£)
Average Waste Stream Concentration
(w/w)
Stream Composition
A 14.5 219,000 3,175,500 0.25 Aqueous
B 4.36 328,500 1,432,260 0.18 Spent broth
C 33.2 30,849 1,024,189 1.88 IPA M/L
D 13.9 39,943 555,210 1.49 IPE M/L
E 16.8 29,838 501,277 2.61 MeOH M/L
HCl 0.32 2,387,502 328,320 14.17 Aqueous acid
KH2PO4 0.07 505,430 317,310 0.35 Spent broth
Mg 0.49 79,404 249,410 1.17 Aqueous acid
13. Greer, L., Van Loben Sels, C. When pollution prevention meets the bottom line.Environ. Sci.
Technol., 1997, 31(9), 418–422.
14. Schaltegger S., M€uller, K. Environmental management accounting: current practice and future trends. Geographic focus: global. Calculating the true profitability of pollution prevention.
Greener Manage. Int., Spring 1997. 17.
15. Kennedy, M. L. Integrating total cost assessment with new management practices and mandates.
Environ. Qual. Manage., 1998, 7(4), 89–97.
16. Reiskin, E., Miller, D., Shapiro, K., Dierks, A., Zinkl, D., White, A., Savage, D.Strengthening Corporate Commitment to Pollution Prevention in Illinois: Concepts and Case Studies of Total Cost Assessment. Prepared for Illinois Waste Management and Research Center. Tellus Institute, Boston, 1998.
17. Schaltegger S., Hahn T., Burrit R. Environmental management accounting: overview and main approaches, InEnvironmental Management Accounting and the Role of Information Systems, Seifert, E., Kreeb M. Eds., Kluwer Academic, Dordrecht, The Netherlands, 2000.
18. Schaltegger, S., Burrit, R.Corporate Environmental Accounting: Issues, Concepts and Practices.
Greenleaf Publishing, Lebanon, TN, 2000.
19. United Nations Division for Sustainable, Development.Environmental Management Accounting Procedures and Principles. United Nations, New York, 2001.
20. Gale, R. J. P., Stokoe, P. K. Environmental cost accounting and business strategy. InHandbook of Environmentally Conscious Manufacturing, Madu, C., Ed. Kluwer Academic, New York, 2001.
21. Koch, D., Dow Chemical pilot of total “business” cost assessment methodology: a tool to translate EH&S “. . .right things to do” into economic terms (dollars).Environ. Prog., 2002, 21(1), 20–28.
22. Bengt, S., Environmental costs and benefits in life cycle costing.Manage. Environ. Qual., 2005, 16(2), 107–199.
23. Curkovic, S., Sroufe, R. Total quality environmental management and total cost assessment: an exploratory study,Int. J. Prod. Econo., 2007, 105, 560–579.
24. Global Environmental Management, Initiate. Finding Cost-Effective Pollution Prevention Initiatives. GEMT, Washington, DC, 1994.
25. Repetto, R., Austin, D.Pure Profit: The Financial Implications of Environmental Performance.
World Resources Institute, Washington, DC, 2000.
26. Epstein, M.Measuring Corporate Environmental Performance. Irwin Professional Publishing, Chicago, 1996.
27. Badgett, L., Hawke, B., Humphrey, K.Analysis of Pollution Prevention and Waste Minimization Opportunities Using Total Cost Assessment: A Case Study in the Electronics Industry. Pacific Northwest Pollution Prevention Research Center, Seattle, WA, 1995.
28. Causing, M., Jensen, S., Haynes, S., Marquardt, W.Analysis of Pollution Prevention Investments Using Total Cost Assessment: A Case Study in the Metal Finishing Industry. Pacific Northwest Pollution Prevention Research Center, Seattle, WA, 1996.
29. Constable, D. J. C., Curzons, A. D., Cunningham, V. L., Metrics to green chemistry—which are the best?Green Chem., 2002, 4, 521–527.