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How does a company like Dow Chemical, with a reputation attached to chemicals like napalm and DBCP (which made workers sterile), find itself in the green biz? Well according to Neil Hawkins, the company’s VP of sustainability, it’s by no means an act of philanthropy. Hawkins, […]

How does a company like Dow Chemical, with a reputation attached to chemicals like napalm and DBCP (which made workers sterile), find itself in the green biz? Well according to Neil Hawkins, the company’s VP of sustainability, it’s by no means an act of philanthropy.

Hawkins, who delivered his remarks to an audience at the Dow Jones Environmental Ventures conference in San Mateo on Tuesday, also offered up a basic outline of how Dow is investing hundreds of millions of dollars into more eco-friendly chemistry innovations that can provide cleaner drinking water technology, petroleum plastic alternatives, and alternative energy-generation technology.

But a quick look at its latest quarterly numbers paints a clearer picture of Dow’s motivation: According to the New York Times, the company saw the single largest increase in raw materials and energy costs in the company’s history. Dow uses crude oil and natural gas as feedstocks to produce chemicals and plastics, and the costs contributed to Dow reporting a 3 percent drop in quarterly profit over the comparable three-month period last year.

Hawkins admitted that the high price of oil is an incentive to Dow finding petroleum alternatives. In addition to investigating the use of bioplastics, last year Dow said it was teaming up with Brazilian sugar and ethanol producer Crystalslev to make polyethylene from sugarcane ethanol. Hawkins called this venture “the single largest renewable plastic plant in the world.”

Dow Chemical is also playing VC, searching for hot startups that can deliver next-generation alternatives and hopefully deliver it from its petroleum-based feedstock needs. Hawkins say its venture arm, Dow Venture Capital, is investing at least $500 million into the areas of alternative energy, health, water and various cleantech sectors.

Dow is also looking to mine universities for green chemistry innovations. Last November, UC Berkeley’s business school and its college of chemistry said they’re creating a Sustainable Products and Solutions Program with an initial $2 million, and a total on $10 million, in financing from the Dow Chemical Co. Foundation. The schools say they will focus on “sustainability issues involving society, science, engineering, the environment and finance.” It’s not a big investment, but a small bet on the future’s bright minds.

Some of Dow’s smaller investments have less to do with petroleum alternatives. Hawkins pointed out an investment in WaterHealth International, which has developed a water purification technology that is being implemented in 2,000 villages, serving 11 million people, in rural India. Dow’s venture arm invested in the company and also provided the startup with a loan guarantee of $30 million.

And the company is even looking into alternative energy generation. Dow’s building division — Dow Building Solutions — is working on building materials, like roofing and sidings, that can embed thin-film solar panels. Last March the company said its solar energy initiative had received $20 million from the Solar America Initiative Pathways Program from the Department of Energy.

Dow isn’t shy about noting that its green investments are really to green its bottom, and as the company looks to add more alternative materials, we’ll see how successful its cleantech bets really are. Hawkins said that Dow has grown up over the last 110 years, that it has changed along with the chemical industry itself. That means weaning itself, along with the rest of the world, off of hydrocarbons.

By Katie Fehrenbacher
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