Backgrounder. Raw material change at BASF. Natural gas, biomass and carbon dioxide can supplement crude oil as a raw material for chemical production

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Backgrounder Raw material change at BASF Natural gas, biomass and carbon dioxide can supplement crude oil as a raw material for chemical production March 2014 P 075/14e Christian Böhme Telefon: +49 621 60-20130 Telefax: +49 621 60-92693 christian.boehme@basf.com Projects relating to the subject raw material change make up one important technology field in BASF s Research Verbund. Here, BASF experts are engaged in identifying interesting processes for utilizing alternative raw materials and are evaluating these processes with respect to technological, economic and ecological aspects. Olefins and aromatics, which are produced mainly by steam cracking and reforming of naphtha, are currently the most important feedstocks for the majority of value chains in the chemical industry. Natural gas is now also being used as a feedstock in a wide range of applications. Renewable resources, on the other hand, have so far only been used to manufacture specialty products and individual applications. A brief look back at the past reveals how chemistry was repeatedly able to adapt to changing circumstances, as the availability and price of raw materials have always been decisive factors in shaping the development of industrial chemistry. Until the 19 th century, renewable raw materials were the most important source of energy and material. With the industrial revolution, coal also became a staple of the chemical industry mainly for the production of dyestuffs. Oil has now been the dominant fossil raw material for BASF SE 67056 Ludwigshafen Telefon: +49 621 60-0 http://www.basf.de Corporate Media Relations Telefon: +49 621 60-99938 Telefax: +49 621 60-92693 presse.kontakt@basf.com

Page 2 P 075/14e about six decades. With its wide range of uses, relatively simple logistics and cost effective conversion technologies, it offers clear advantages. A look into the future, however, shows that steadily rising prices of crude oil, increasingly difficult-to-access deposits and geopolitical uncertainties are becoming critical issues. Once again, the development of new technologies for the utilization of complementary feedstock sources is gaining importance. Initially, broadening the use of natural gas may be helpful. The price of natural gas, however, is closely linked to the energy market. Renewable resources offer advantages such as a favorable carbon dioxide balance or their virtually unlimited range. However, extensive cultivation, especially for the demand of the energy sector, could compete with food production. Carbon dioxide can also be considered for niche applications. The conversion of this thermodynamically stable compound, however, requires both large amounts of energy, for example in the form of hydrogen. This would have to be obtained without additionally generating CO 2 to make the overall process sustainable. Process innovations open up new raw material sources Raw material change will only be possible with the aid of process innovations that allow the utilization of alternative sources of raw materials. These include dehydrogenation technologies for selectively producing olefins, the basis of many of our value chains, from liquefied petroleum gas. In recent years, BASF has developed processes for the production of C 3 and C 4 olefins. These are important basic chemicals for manufacturing numerous products such as superabsorbents, plasticizers, surfactants or solvents. A newly developed catalyst system, already successfully tested in a miniplant, provides much higher

Page 3 P 075/14e selectivities and hence improved utilization of valuable feedstocks (propane or butane). In Ludwigshafen, BASF is currently operating a pilot plant for the dehydrogenation technology. BASF uses natural gas as a raw material in a German Ministry of Education and Research (BMBF) funded project called Gas-derived Solid and Fluid Products. Conducted in collaboration with project partners hte GmbH, Linde AG, ThyssenKrupp Steel Europe AG, ThyssenKrupp Uhde AG, VDEh-Betriebsforschungsinstitut GmbH and the Technical University of Dortmund, the aim is to develop and advance to pilot plant proof-of-concept stage a method for splitting natural gas into hydrogen and a carbon product. This carbon product can potentially be used in the coke and steel industry. Part of the method involves reacting hydrogen with carbon dioxide to give synthesis gas, an intermediate suitable for use in the chemical industry and fuel production. New synthetic routes are also being sought for aromatics, which alongside the olefins represent the second important group of feedstocks for chemical products. For example, natural gas (methane) can be converted into benzene at high temperatures using a molybdenum carbide zeolite catalyst system. BASF researchers are working to further improve the lifespan and selectivity of this catalyst system. At the same time they are developing a process in which heat can be supplied by a new method and the catalyst can be regenerated gently. A special membrane process allows the hydrogen generated during the reaction to be separated from the feedstock methane. In future, this process might offer a means of combating the rising prices of benzene.

Page 4 P 075/14e Potential applications of carbon dioxide remain limited Within the technology field raw material change, scientists are also investigating several ways of for using carbon dioxide (CO 2 ) as a raw material. They are studying whether certain chemical products can be manufactured using CO 2 in an economically viable manner. Formic acid is one such product. Conversion of CO 2 into formic acid is currently the subject of intensive research efforts worldwide. BASF researchers are developing a highly efficient catalyst system that can make this process economical. The goal is to use CO 2 from offgas streams in the chemical industry as a raw material. Sodium acrylate is another example: the Federal Ministry of Education and Research (BMBF) is sponsoring a project of the BASF-supported Catalysis Research Laboratory (CaRLa) at Heidelberg University and hte GmbH, a company belonging to BASF. Together with scientists of Technical University Munich (TUM) and Stuttgart University, the researchers are looking for alternative methods for producing sodium acrylate based on CO 2 and ethene. Last year, they succeeded in doing something that no-one had ever achieved before during 30 years of research in this field: they managed to close the catalytic cycle of the reaction. This represents a first major step towards utilizing the reaction. Sodium acrylate is a key basic ingredient for superabsorbents. In addition, BMBF (Ministry of Education and Research) funding is in place for a project investigating integrated synthesis of dimethyl ether (DME) from methane and CO 2, a collaboration involving BASF, Linde AG, hte GmbH, Technical University of Munich, the Max Planck Institute for Coal Research and Fraunhofer Institute of Environment, Safety and Energy Technology. The aim of the project is to develop a one-step method for producing DME by the intermediate stage synthesis gas from the most cost-effective carbon sources, i.e. CO 2 and CH 4. On this

Page 5 P 075/14e project, BASF is developing a new catalyst for producing DME from a stoichiometric mixture of carbon monoxide and hydrogen. DME has the potential for future use as a source of energy. Already in use as an LPG substitute in Asia today, DME also has excellent properties as a diesel fuel. DME can also be converted to olefins, which in turn can be used as components in polymer synthesis. In principle, CO 2 can to a limited extent supplement the chemical industry s portfolio of raw materials for specific applications. The gas can be obtained from sources such as power plants and chemical plants where it is available in large amounts and high concentrations. Although carbon dioxide is a cheap source of carbon, a great deal of expensive energy is needed for thermodynamic reasons to make it usable. Production processes would therefore only truly consume CO 2 if this energy were generated CO 2 -neutrally. Even if that were the case, the amount of CO 2 bound by use in chemical production would have very little impact on climate change. Calculations by the German Society for Chemical Engineering and Biotechnology (Dechema) indicate that the entire global potential from manufacturing basic chemical products from CO 2 instead of crude oil or natural gas would only be sufficient to bind approximately 178 million metric tons of carbon dioxide per year. That is less than one percent of annual global CO 2 emissions. Renewable raw materials offer long-term solutions For BASF, renewable raw materials are attractive for two reasons: On the one hand, customer demand and regulatory developments are creating an attractive market. On the other hand, the use of renewable feedstocks makes it possible to develop products with new properties and produce molecules that would otherwise not be accessible or less well accessible via fossil-based routes. BASF already has products related to renewable

Page 6 P 075/14e raw materials at all stages of the value chain and uses them to produce specialties. For the further use of renewable resources, it will be important to ensure sustainable use of the biomass as a chemical feedstock without competing with food and feedstuff production. This requires processes that make it possible to utilize non-edible biomass. Lignocellulose obtained from wood is a promising material for this purpose. In December 2013, BASF and American technology provider Renmatix Inc. (Philadelphia, Pennsylvania) announced that they will jointly scale up the Plantrose process. In cooperation with BASF the technology will be demonstrated and improved in pilot scale in a Renmatix plant in Georgia. With the Plantrose technology, cellulose and finally sugar is obtained from wood chips at high temperature and high pressure in a two-stage process. Industrial sugars are important renewable resources from which biofuels or chemical feedstocks and intermediates are produced by chemical and fermentative processes. Already at the end of 2011, BASF Venture Capital invested US$ 30 million in the company Renmatix. The mass balance approach offers a further possibility of using renewable raw materials in BASF s existing Production Verbund. Using this method, renewable raw materials can be used to replace fossil resources at the beginning of the production and are then allocated to the defined sales products. The advantage for the customer is that the formulation and the quality of the products remain unchanged. BASF is already supplying the first of these products dispersions for construction adhesives to a major customer who uses them to produce flooring adhesives for the construction industry, for example.

Page 7 P 075/14e BASF is also studying the dissolution and processing of cellulose using ionic liquids. This technology for the utilization of renewable resources will help to simplify and optimize existing processes, because ionic liquids can be used to provide solutions of cellulose in technically usable concentrations and flexibly process them into different products. In future, products such as cellulose fibers or films could be produced by a direct dissolution process. Cellulose products and derivatives have a wide range of potential applications including textiles, packaging, automobiles or construction materials. In addition these products could be further utilized as renewable alternative precursors for light-weight materials. Occurring in a volume of some 700 billion metric tons, cellulose is the earth s largest source of organic raw material. Yet of the 40 billion metric tons that nature renews every year, no more than 0.5 percent are used, mainly as a feedstock for paper and packaging.