DEVELOPMENTS DOWNSTREAM: THE NEW GENERATION OF FLUOROCHEMICALS

Transcription

1 Information Analytics Expertise 8 OCTOBER 2015, MARRAKECH, MOROCCO DEVELOPMENTS DOWNSTREAM: THE NEW GENERATION OF FLUOROCHEMICALS The latest in the phase out of HFCs and its impact on the chemical supply chain Growth and proliferation of HFO and its several applications Are there regional differences in demand for new generation fluorochemicals? Ray Will, Director, Specialty and Inorganic Chemicals Ray.Will@ihs.com IHS

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6 DEVELOPMENTS DOWNSTREAM: THE NEW GENERATION OF FLUOROCHEMICALS FLUORSPAR 2015/ OCTOBER 2015 The latest in the phase out of HFCs and its impact on the chemical supply chain Growth and proliferation of HFO and its several applications Are there regional differences in demand for new generation fluorochemicals? Impacts to Fluorspar Consumption and the Market? 6

7 Recent Regulatory Developments Concerning HFCs (US) Event June 2013 September 2013 April 2015 July 2015 United States & China agree to phase down HFC consumption & production with multilateral cooperation using the expertise and institutions of the Montreal Protocol United States reaches agreements to phase down HFCs with G-20 & China under UN Framework Convention on Climate Change (UNFCCC) using the expertise and institutions of the Montreal Protocol and Kyoto Protocol for accounting and reporting emissions North American Amendment Proposal to Address HFCs under the Montreal Protocol The United States, Canada and Mexico submitted a proposal to phasedown production and consumption of HFCs under the Montreal Protocol. Narrower use limits for HFCs as alternatives to CFCs Final Rule, 40 CFR Part 82, Protection of Stratospheric Ozone: Change of Listing Status for Certain Substitutes Under the Significant New Alternatives Policy Program (SNAP) 7

8 Selected HFC Use Restrictions Under SNAP (US) Application HFC-134a HFC-125 Propellants Refrigeration: Vending machines, new Refrigeration: Retail food, new equipment Motor vehicle air conditioning, new cars July 20, 2016, except uses listed as acceptable, subject to use conditions January 1, 2019 January 1, 2020 Model Year 2021, except where allowed under narrowed use limit Unacceptable as of July 20, 2016 Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20,

9 Selected HFC Use Restrictions Under SNAP (US) Foam Blowing (continued) Application HFC-134a HFC-245fa HFC-365mfc Flexible Polyurethane Polystyrene: Extruded Sheet Rigid Polyurethane: Commercial Refrigeration & Sandwich Panels Rigid Polyurethane: Appliance January 1, 2017 except under narrowed use limit* January 1, 2017 except under narrowed use limit* January 1, 2020, except January 1, 2020, except January 1, 2017 except under narrowed use limit* January 1, 2017 except under narrowed use limit* January 1, 2020, except January 1, 2020, except *i.e. only in military or space and aeronautics-related applications. January 1, 2017 except under narrowed use limit* January 1, 2017 except under narrowed use limit* January 1, 2020, except January 1, 2020, except Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20,

10 Selected HFC Use Restrictions Under SNAP (US) Foam Blowing (continued) Application HFC-134a HFC-245fa HFC-365mfc Rigid Polyurethane: Slabstock and Other Rigid Polyurethane: Marine Flotation Foam Polystyrene Extruded Boardstock and Billet January 1, 2019, except January 1, 2020, except January 1, 2021, except *i.e. only in military or space and aeronautics-related applications. January 1, 2019, except January 1, 2020, except January 1, 2021, except January 1, 2019, except January 1, 2020, except January 1, 2021, except Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20,

11 HFC Bans in the EU EU bans target the high Global Warming Potential of HFCs and Refrigerant Blends containing HFCs Application Prohibition Date Example of HFC Product Banned GWP Limit Domestic Refrigeration 1 January 2015 HFC-134a <150 Commercial Refrigeration 1 January 2020 R-404A (125/143a/134a) <2,500 1 January 2022 HFC-134a <150 Movable Air Conditioning 1 January 2020 HFC-134a <150 Plastic Foaming Agents Expanded Polystyrene Plastic Foaming Agents Other Foams 1 January 2020 HFC-365 mfc <150 1 January 2023 HFC-365 mfc <150 Source: Official Journal of the European Union,

12 HFC Phase Out Raw Material Impacts, Chlorinated Organics Methylene Chloride 48% HFC-32 1,1,1 Trichloroethane 5% HFC-134a Trichloroethylene 22% HFC-134a CarbonTetraChloride 6% Perchloroethylene 19% HFCs: 125, 134a HFCs: 245fa, 365mfc 2014 Global Total: 2,146 KMT The above pie chart represents chlorinated feedstocks used in the production of HFCs the quantities reflect the total global market. A large portion of the chlorinated organics shown above are used for HFCs and thus will have a declining market. 12

13 Recent Changes Among Upstream Raw Material Suppliers and Downstream HFC Producers Event 30 January March August 2015 Solvay sold its Germany-based refrigerants business including HFCs and pharma propellants business to Daikin Dow Chemical sold its Chlorine Business, including chlorinated organic feed stocks for HFC and HFO production to Olin DuPont completed the spin-off of Chemours as an independent publicly traded company. Chemours businesses include fluorochemicals including HFCs as well as HFOs 13

14 DEVELOPMENTS DOWNSTREAM: THE NEW GENERATION OF FLUOROCHEMICALS FLUORSPAR 2015/ OCTOBER 2015 The latest in the phase out of HFCs and its impact on the chemical supply chain Growth and proliferation of HFO and its several applications Are there regional differences in demand for new generation fluorochemicals? Impacts to Fluorspar Consumption and the Market? 14

15 HFO applications--refrigeration HFO refrigeration applications are expected to include use in pure form and in blends Refrigeration Replaces Application Blend: R-452A Blend: R-449-A HFC-32/ HFC-125/ HFO- 1234yf HFC-32/ HFC-125/ HFO- 1234yf/ HFC-134a R-404A blend R-404A & R-507 blends Blend: R-513A * HFO-1234yf/ HFC-134a HFC-134a Additional HFOs and HFO blends are being tested Refrigerated transport Low & medium temperature commercial refrigeration Commercial refrigeration, water chillers & heat pumps *Pending ASHRAE number 15

16 HFO applications (continued) Mobile Air Conditioning Replaces Application HFO-1234yf HFC-134a Automobiles and light trucks Additional HFO blends are being tested Foam Blowing Replaces Application HFO-1233zd(E) HFO-1233zd(E), HFO-1234ze(E) HFO-1233zd(E) HFO-1234ze(E) HFC-134a, HFC-245fa, HFC- 365mfc HFC-134a, HFC-245fa, HFC- 365mfc HFC-134a, HFC-245fa, HFC- 365mfc HFC-134a, HFC-245fa, HFC- 365mfc Rigid polyurethane: Appliances Rigid polyurethane: Commercial Refrigeration & Sandwich panels Flexible polyurethane Polystyrene: Extruded Boardstock and Billet (XPS) 16

17 DEVELOPMENTS DOWNSTREAM: THE NEW GENERATION OF FLUOROCHEMICALS FLUORSPAR 2015/ OCTOBER 2015 The latest in the phase out of HFCs and its impact on the chemical supply chain Growth and proliferation of HFO and its several applications Are there regional differences in demand for new generation fluorochemicals? Impacts to Fluorspar Consumption and the Market? 17

18 HFO s Market Entry Mobile Air Conditioning (MAC) HFO Full Implementation at OEM 2017 EU By 2025 or later North America Japan South Korea China Thailand India Rest of Asia South Africa Other Africa South America Outside of Europe HFO is likely to be in full implementation for MAC by or after 2025 Nearly every county or region shown is already making HFO introductions in limited models However, IHS forecasts that CO2, an alternative refrigerant will be introduced in Europe as soon as 2017 and will grow at the expense of the HFO MAC market and will spread to other regions in subsequent years after 2020 IHS forecasts that HFC-134a will remain the world s dominant MAC refrigerant through 2025, as it will be used to service vehicles manufactured prior to HFO implementation. 18

19 HFO s Market Entry Refrigeration & Air Conditioning The US is the world s largest HFC market dominated by refrigeration & air conditioning applications. In turn HFO will have the world s largest market in the US where it will partially replace the use of HFCs Alternative hydrocarbon refrigerants such as propane and isobutane are expected to take a significant portion of the market as the phase out of HFCs advances in the US The shift to hydrocarbon refrigerants in the US will strongly resemble recent developments in Europe & Japan where hydrocarbon refrigerants have displaced HFCs in domestic and commercial refrigeration Regions outside of the US, Europe and Japan will also shift from HFC refrigerants to alternative refrigerants including HFO, hydrocarbons and other not-in-kind alternatives. The lower cost of hydrocarbon and other not-in-kind alternative refrigerants will tend to limit HFOs to applications to where there are performance advantages 19

20 HFO s Market Entry Propellants, Foam Blowing and Solvent Use For aerosol propellants HFO-1234ze can provide an alternative to using HFC-134a and HFC-152a For plastic foam blowing HFO-1234ze can provide an alternative for HFC-134a, HFC- 152a, HFC-245fa and HFC-365mfc. For solvent uses HFO-1234ze can provide an alternative to HFC-134a and HFC- 431mee and other niche fluorochemicals also subject to phase out due to their high GWP. As with other HFC segments not all applications will shift to HFO so there will be some loss of markets to not-in-kind alternatives 20

21 DEVELOPMENTS DOWNSTREAM: THE NEW GENERATION OF FLUOROCHEMICALS FLUORSPAR 2015/ OCTOBER 2015 The latest in the phase out of HFCs and its impact on the chemical supply chain Growth and proliferation of HFO and its several applications Are there regional differences in demand for new generation fluorochemicals? Impacts to Fluorspar Consumption and the Market? 21

22 Impacts to Fluorspar Consumption and the Market? Given the current HFC phase-outs in place plus the rise in production of HFOs IHS projects a rise in acidspar direct and indirect demand from 2015 through 2019 for the US and Europe. Between 2015 and 2019 there will be significant transitions in the market segments served by HFCs as specific HFCs and blends are phased out and replacement products are phased in. There will be: Continuing new equipment introductions using new refrigerants (MAC, Stationary a/c, Refrigeration) including HFOs, and not-in-kind alternatives HFC producers will be inclined to rationalize HFC production so expect production allocations to be sold to other producers as plants are closed HFC consumers may experience a tight market for HFC supply as allocations are imposed particularly beginning in

23 Summary There will be continuing changes to the regulations stay tuned for updates In the US much of the recent regulatory change has been the result of executive order current policy could be changed by a new administration Watch for developments in China s activity in both fluorochemical markets and climate change regulations 23

24 Thank you Ray Will, Director, Inorganic and Specialty Chemical Consulting IHS Chemical Consulting