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SAN ANTONIO, Texas (ICIS)–The US chemical
industry is starting to view the ‘carbon
challenge’ as a huge opportunity for innovation
and growth.
Meaningfully lowering carbon emissions will
require multiple approaches, along with
substantial investment in technology and
infrastructure. These investments may create
the backbone of a greater global competitive
advantage, building on the inherent US energy
and feedstock edge, as customers worldwide
increasingly demand products with a lower
carbon footprint.
Ultimately, there must be a path to return on
investment. Sustainability must be viewed as
both environmental and economic.
“For nearly 60 years – ever since the movie The
Graduate came out – we’ve been living in world
largely dominated by one word – Plastics. But
the new clarion call for our industry is
Carbon,” said Jim Fitterling, CEO of Dow, in
accepting the Petrochemical Heritage Award at
the International Petrochemical Conference
(IPC), hosted by the American Fuel &
Petrochemical Manufacturers (AFPM).
“The carbon challenge – and the broader need
for greater and greater sustainability – is
truly one of the greatest challenges of my
career. Coming together as individual companies
and as a sector to drive carbon emissions down
is not going to be an easy task,” he added.
However, it’s also “one of the greatest
opportunities for our industry to shine”, said
the Dow CEO, pointing to new processes and
products being created and coming to market,
along with collaborations worldwide to increase
sustainability, including in circularity.
HYDROGEN AND CCS
CRITICALHydrogen and carbon
capture and storage (CCS) will be critical to
decarbonising the chemical industry, and
investment in this area is poised to accelerate
with incentives from the US Inflation Reduction
Act (IRA), including those that boost CO2 tax
credits for both storage and use in enhanced
oil recovery (EOR).
Chemical companies are increasingly looking to
use hydrogen to fuel cracker furnaces instead
of natural gas to reduce emissions, while
capturing and storing CO2.
“Our nation should embrace policies that help
scale carbon capture and sequestration, green
and blue hydrogen, lower carbon energy and
advanced recycling,” said Chet Thompson, CEO of
the AFPM, addressing delegates at the IPC.
“Supporting carbon capture should be an
absolute ‘no brainer’,” he added, pointing out
that even the UN Intergovernmental Panel on
Climate Change (IPCC) recognises that CCS is
needed and that without it, decarbonisation
efforts would cost twice as much.
Green and blue hydrogen can reduce process
emissions across all manufacturing sectors,
reducing life cycle emissions by as much as
80%, said Thompson.
Blue hydrogen is produced from natural gas
through a steam methane reformer, with the CO2
captured and stored. Green hydrogen is produced
by the electrolysis of water using renewable
energy.
While hydrogen and CCS, along with using
renewable energy will go a long way in enabling
chemical companies to meet carbon emissions
reduction goals through 2030, the path to net
zero from 2030-2050 will require new
technologies.
“From 2030 to a net zero environment in 2050 it
gets more difficult. It requires innovations,
so we’re looking at electric cracking… and
methane pyrolysis,” said Michael Heinz, CEO of
BASF Corp, at the C-suite panel discussion at
IPC.
AFPM RAISES STAKES IN PLASTICS
RECYCLINGAlong with
decarbonisation, the other big theme in
sustainability is plastics recycling,
specifically chemical (also called advanced)
recycling of plastics.
AFPM called on the US government to pursue
policies that unlock the potential of chemical
recycling of plastics.
“Advanced recycling could double plastic
recycling rates in this country by 2030,” said
Thompson.
There is currently no federal policy on
chemical recycling. Instead, US states are
individually passing bills that define chemical
recycling as manufacturing operations rather
than waste disposal operations, the latter of
which comes with more stringent regulations. In
March 2023, Utah became the 22nd state in the
US to define chemical recycling as
manufacturing.
AFPM is also going global, participating in
talks as the UN works towards a global plastics
treaty. In March 2022, 175 countries at the
UN agreed to
end plastic pollution and come up with an
internationally binding agreement by the end of
2024.
The group is working closely with the Lead
Plastics Negotiator of the US State Department,
Larke Williams, to propose solutions such as
chemical recycling.
“There’s no one size fits all for combating
plastic pollution, and we’re really concerned
about countries that are attempting to set
uniform proscriptive measures because it’s
going to lock us into technologies… that don’t
allow for innovation and the ability for us to
create new pathways to combating plastic
pollution five to 10 years from now,” said
Williams at the Petrochemical Leadership
Luncheon at IPC.
“We need the ability to innovate and the
flexibility to pilot those solutions in
different places,” she added.
CARBON FOOTPRINT OF PLASTICS
RECYCLINGThe circularity
challenge also comes with the carbon challenge,
with claims by certain groups that chemical
recycling is more energy intensive than virgin
plastics production.
“People are trying to position the industry,
and the industry needs to push back and
position itself. All of these myths that are
out there about [chemical recycling] need to be
busted,” said Dow’s Fitterling.
“The full life cycle analyses that are out
there today prove that there’s
plenty of advanced/chemical recycling
technologies that have a lower carbon footprint
than conventional routes to plastics,” he
added.
The carbon challenge is very real, and
innovation and investment will bring out the
opportunity.
“At Dow, we think there’s so much opportunity
in this one challenge, we’ve built our strategy
around it. We call it ‘Decarbonize and Grow’.
How well we rise to meet that challenge is
going to define Dow – and it will define our
industry – for generations to come,” said
Fitterling.
The challenges and opportunities are “one and
the same”, he added.
Hosted by the American Fuel & Petrochemical
Manufacturers (AFPM), the IPC
takes place from 26-28 March in San Antonio,
Texas.
Insight article by Joseph
Chang
Thumbnail shows CO2. Image by
Shutterstock.
28-Mar-2023
HOUSTON (ICIS)–The National Association of
Chemical Distributors (NACD) applauded the
Internal Revenue Service (IRS) for extending
temporary penalty relief and for clarifying its
guidance following the reinstatement of two
Superfund taxes as part of the $1tr
Infrastructure Investment and
Jobs Act, which went
into effect on 1 July
2022.
In a letter to the IRS, the trade group’s fifth
on the topic, the NACD said the prepublication
of the Superfund tax proposed rule is welcome
news for impacted businesses – including
chemical distributors – across the nation.
“NACD applauds the IRS for listening to the
concerns of those affected by not only
clarifying its guidance, which includes
definitions and examples, but also by extending
its penalty relief for businesses who have made
a good-faith effort to comply with the law,”
Eric R Byer, NACD president and CEO, said in
the letter.
“The proposed guidance in the prepublication
will go far in providing chemical distributors,
many of which are small businesses, the
information they need to incorporate the
impacts of the Superfund tax into their
business operations,” Byer added.
Superfund taxes are so named because they
are intended to replenish the environmental
fund established by the US government to clean
up waste sites.
Byer said the NACD is carefully reviewing the
notice of proposed rulemaking and plans to
submit additional comments during the 60-day
comment period, which is expected to begin on
29 March.
Additional reporting by Al Greenwood
28-Mar-2023
LONDON (ICIS)–The European Council and the
European Parliament have come to a provisional
political agreement surrounding the Alternative
Fuel Infrastructure Regulation (AFIR).
The agreement will allow for more recharging
and refuelling stations around Europe to be
deployed in the coming years to enable the
transport sector to “significantly reduce its
carbon footprint” according to the council.
The objectives of the proposed regulation are;
To ensure that there is a sufficient
infrastructure network for recharging or
refuelling road vehicles or ships with
alternative fuels;
To provide alternative solutions so that
vessels at berth and stationary aircraft do not
need to keep their engines running, and
To achieve full interoperability throughout
the European Union (EU) and to make sure that
the infrastructure is easy to use.
The agreement will cover both recharging for
electric heavy-duty vehicles and hydrogen
refuelling, as well as recharging for light
electric vehicles and the supply of electricity
to ships.
HYDROGEN TRANSPORT DEMAND
The transport sector, which has been deemed
difficult to decarbonise, has been identified
as one of the areas where hydrogen can be of
significant use, especially for heavy-duty
vehicles and within the maritime and aviation
sectors.
According to data from ICIS Power Horizon
Forecast, EU transport sector demand for
hydrogen will account for;
22TWh (5%) of the 405TWh total hydrogen
demand by 2030,
52TWh (8%) of the 637TWh total by 2040 and,
126TWh (12%) of the 1,095TWh total by 2050.
28-Mar-2023
BARCELONA (ICIS)–European chemical companies,
especially phenol producers, are planning to
stop applying energy surcharges as gas prices
have fallen to pre-war levels.
Energy surcharges started Q4 2021
Charges stop applying when gas price hits
€25-50/MWh
Gas price currently around €40/MWh
Europe phenol demand depressed despite
lower gas prices
Co-product acetone tighter as phenol plants
have cut rates or shut
Long period of recession, poor demand in
prospect
Chemical companies can switch to recycling
to capture growth
In this Think Tank podcast, Will
Beacham interviews ICIS Insight
Editor Nigel Davis, ICIS
Senior Editor Jane
Gibson and Paul
Hodges, Chairman of New Normal
Consulting.
Editor’s note: This podcast is an opinion
piece. The views expressed are those of the
presenter and interviewees, and do not
necessarily represent those of ICIS.
ICIS is organising regular updates to help
the industry understand current market trends.
Register here .
Read the latest issue of ICIS
Chemical Business.
Read Paul Hodges and John Richardson’s
ICIS
blogs.
28-Mar-2023
NUREMBERG (ICIS)–Consumption of isopropanol
(IPA) is insufficient to result in
significantly tighter conditions despite
upstream acetone constraints in Asia and
Europe.
Demand in the US is also weak, but rising
feedstock propylene pricing is putting pressure
on IPA.
Europe report editor, Nick Cleeve, speaks
to Asia-Pacific editor, Julia Tan, and US
editor, Larry Terry, about global market
conditions for IPA.
IPA is a solvent used in many industrial and
consumer products and as an extractant.
Applications include cosmetics, personal care
products (hand sanitisers), de-icers, paints
and resins, pharmaceuticals and inks and
adhesives.
28-Mar-2023
SAO PAULO (ICIS)–The divestment by Brazil’s
energy major Petrobras of its Lubnor refinery
in the northeast to Grepar Participacoes is
expected to conclude by 31 August as initially
planned, the buyer said to ICIS.
Grepar is expected to pay, in total, $54m for
the refinery located in Mucuripe, in the
municipality of Fortaleza in the Ceara state.
Among others, the refinery produces base oils,
used to produce finished lubes and greases for
automobiles and other machinery.
Last week, speaking to journalists in Rio de
Janeiro, Petrobras’ CEO said the Lubnor
divestment might
be reviewed because of land ownership
issues where the facility is located, according
to Brazilian daily O Estado de S. Paulo,
which is also known as Estadao.
In a written response to ICIS late on Monday, a
spokesperson for Grepar said the company had
not been informed by Petrobras it would
publicly question the divestment.
It added, “We understand that the Petrobras
CEO’s statement meant the company is checking
internally, as provided for in the contracts
signed with Grepar, the clauses that address
Lubnor’s land issues.”
“This situation was already known to the
parties: Grepar, Petrobras, and the City Hall.
Negotiations with the City Hall are still
underway regarding the assignment of the land
use contract for the Mucuripe [Lubnor] refinery
(which is a legal possibility) or whether the
City Hall is interested in selling this area.”
The spokesperson added that “meetings are
taking place normally” between Petrobras and
Grepar in the negotiations for this
transaction.
Brazil’s new administration under President
Luiz Inacio Lula da Silva wants
Petrobras to suspend any divestment
while the government works on a “reassessment”
of its energy policy.
In 2022, Petrobras agreed to sell its Lubnor
refinery and its associated logistics
assets to Grepar Participacoes for $34m.
The spokesperson clarified the initial purchase
price was still valid, but it would be
complemented by “around $20m” comprising other
obligations between Grepar and Petrobras.
“So, the total amount paid by Lubnor is around
$54m, without adding the value of the land that
is still under negotiation,” the spokesperson
said.
Petrobras responded to a request for comment at
the time of writing.
28-Mar-2023
SAU PAULO (ICIS)–High inflation continues
making consumers weary of big-ticket,
durable-goods purchases and that is slowing
down the recovery in the petrochemicals
industry, according to an executive at SABIC.
Brian Powers, head for the Americas at the
Saudi petrochemicals major SABIC, said Q1 “has
not been a great quarter” for petrochemicals
across the board, a slowdown continuing from
the second half of 2022.
The executive added that the re-opening of
China may also take longer than many within the
industry hoped, who see it as the key to
unleash healthy demand for petrochemicals
again.
Powers said SABIC is mulling options to invest
in a facility in the US driven by carbon
capture and storage (CCS) technology or driven
by “carbon neutrality, incorporating the CO2”
into the value chain, although he did not
elaborate.
Powers has been SABIC’s head for the Americas
since May 2022; according to the company’s
annual report, he leads a division which in
2022 posted sales of $5.2bn or 10% of the Saudi
major’s $52.92bn revenue.
Since January 2022, SABIC and US energy and
petrochemicals major ExxonMobil operate a 50:50 joint
venture in Texas, named Gulf Coast Growth
Ventures (GCGV).
The facility includes a 1.8m tonne/year ethane
cracker, a 1.3m tonne/year polyethylene (PE)
plant, and a 1.3m tonne/year ethylene glycols
plant.
In Brazil, SABIC operates a production facility
in Campinas, Sao Paulo state, producing
engineering plastics, polycarbonate (PC), and
acrylonitrile butadiene styrene (ABS) resins;
the company also sells to the agricultural
nutrients sector.
In Argentina, it operates a smaller compounding
facility in Tortuguitas, Buenos Aires province.
SLOWER PETCHEMS
RECOVERYTo the dismay of central
bankers, inflation remains at multi-decade
highs in many countries and that is filtering
down to consumer spending, with shoppers
postponing purchases of
petrochemicals-intensive durable goods, those
with a lifespan greater than three years.
Although far from the peaks of 2022, inflation
remained high in the Americas’ three main
economies in February, with the US at 6%,
Brazil at 5.6%, and Mexico at 7.6%.
“We would have expected inflation to come down
faster than it has. … Durable goods are perhaps
one of the biggest challenges, more so than
packaging, and part of this has to do with
inflationary costs, not just for raw materials
but for everything else involved,” said Powers.
“There has been an escalation in labour costs
as well, significant changes in logistics and
transportation costs, and in many product lines
you have trade barriers. So, consumer goods
prices have gone up dramatically and that is
impacting consumer demand.”
In 2022, around 85% of SABIC’s sales in the
Americas of $5.2bn came from North America –
Canada, the US and Mexico – and around 15% from
Central and South America, according to Powers.
In 2023, the speed of China’s reopening will be
key the Americas’ petrochemicals industry: a
healthy recovery there can lift global
manufacturing output and prop up petrochemicals
prices along the way, he added.
“A strong China lifts the entire global GDP,”
said Powers.
However, some of the pandemic-induced woes
globally are now compounded by a slowing
economy.
In Brazil’s petrochemicals-intensive automotive
sector, for example, to which SABIC serves from
its Campinas facility, the persistent shortage
of components and slowing consumer demand has
forced some plants to idle
production for some time in the first
quarter.
In the US, Powers would not disclose what the
capacity utilisation at the Texas joint venture
has been, although he conceded it could have
been higher due to “limitations” by the end
2022 decided “strictly according to the market”
and not based on the facility’s operational
performance.
Last week, the largest Latin American
petrochemicals producer, Brazil’s Braskem, said
it expects global demand for petrochemicals
to remain in the doldrums for much of 2023.
“In the Americas, demand in Q1 has not been as
strong as Q1 2022 was. A lot of things need to
be reset, because inflation is so severe in
some parts of consumer spending. The recovery
is not going to be the same in automotive than
in food packaging, for example,” said Powers.
“In China, a lot has shifted over the course of
the pandemic. There has been a shift trade
balances [resulting] not just from tariff
exclusions but also from availability of
product and containers, and some production has
shifted. It will take some time to get back to
where things were.”
“The recovery [globally] will come. It’s coming
right now. It’s just slower than we would have
hoped.”
US, EU GREEN PLANSThe
passing of the Inflation Reduction Act (IRA) in
the US in August 2022 dramatically shifted the
country’s gear towards a greener industry, with
several investments announced by petrochemicals
companies taking advantage of tax breaks and
other financial support instruments.
So much so, that some in Europe worry
the 27-country EU is falling behind in a
sphere it used to like to think it was the sole
champion. In response to the IRA, the EU has
announced its own
plans to support industrial players transition
towards more sustainable operations.
“There are some strong economics in the US that
have been initiated by the IRA and everybody in
the industry is looking at how this will play
into these investments. We are looking at an
investment driven by CCS or driven by carbon
neutrality, where we incorporate the CO2 into
the value chain,” said Powers.
“There is a concern that we won’t drive change
just by brand owners making a visionary
statement saying they will reduce carbon
footprint; they need economic incentives,
either by tax or other economic incentives.”
Powers went on to say that two models to
transition to a greener energy are emerging
thus. In the EU, he said, there is a “clear
understanding” about carbon costs and the
potential tax burden of that on companies.
In the US, meanwhile, there is no expectations
such a tax will be implemented and, on top of
it, the IRA is now incentivising investments.
“They need economic incentives, either by tax
or other incentives. The IRA puts the US in a
very different pathway: instead of putting a
tax on everything, it incentivises investments
in CCS or those which integrate CO2 into
products. You avoid the CO2 emissions, and it
gives you the financial incentive to do so.”
Powers said the Texas joint venture was built
when the IRA-like incentives were not in place,
although there was already “an expectation”
petrochemicals plants would aim for carbon
neutrality.
To achieve that, he said the facility will aim
to follow SABIC’s target of 20% reduction in
its emissions by 2030, compared with 2018
levels, although he did not elaborate how that
can be achieved in the short term.
“The facility has flexibility for its
feedstocks. … We will have a multifaceted
approach, in which we will include both
electricity as well as the fuel sources for the
crackers. Fundamentally, we don’t have all of
this established yet,” said Powers.
Asked whether these changes could take 10 years
or more, he said it would be “much sooner” than
that.
To conclude, Powers was also asked whether life
for a petrochemicals executive was much easier
before, when the climate emergency had not come
into full view and industrial plans were made
without the need to pay attention to carbon
emissions.
Chemical engineer by training, Powers also
worked in executive positions at US chemicals
majors DuPont and Dow before joining SABIC.
“Well, I think it was much less complex. But
now, the future of this industry and others
depends on this. There is even the question
about whether you can continue to operate if
you don’t drive for these solutions,” he said.
“Where are we going? Towards circularity of
products as well as carbon neutrality. The 2050
net-zero target is a challenging target. … The
biggest challenge is that some governments are
not looking at this holistically, or they don’t
have the funding [to implement the required
changes]. For industry, however, I am confident
we can deliver carbon neutrality by 2050.”
This interview took place in Sao Paulo on 27
March.
Front page picture: SABIC and ExxonMobil’s
joint venture in San Patricio county,
Texas
Source: SABIC
Interview article by Jonathan
Lopez
28-Mar-2023
SINGAPORE (ICIS)–Mitsui Chemicals is cutting
the production capacity of its toluene
diisocyanate (TDI) plant at Omuta, Japan, to
50,000 tonnes/year from 120,000 tonnes/year
currently in July 2025, the Japanese producer
said on Tuesday.
“Given supply and demand trends in Japan and
overseas, Mitsui Chemicals has decided that a
reduced output of around 50,000 tonnes per year
will be optimal going forward,” the company
said in a statement.
The new setup will still allow the company to
meet domestic demand for TDI, which is used as
a raw material in the production of
polyurethane (PU), it said.
Mitsui Chemicals has positioned PU as one of
several businesses in the that would be subject
to restructuring under its long-term plan.
“In addition to the forthcoming optimisation of
TDI production capacity, the restructure will
encompass the development of high value-added
products, including high-performance methylene
diphenyl diisocyanate and high-performance
polyols such as polypropylene glycol,” the
company said.
Mitsui Chemicals also intends to set up a
chemical recycling scheme for PU foam and is
considering the use of ISCC PLUS-certified
bio-based toluene produced at the company’s
Osaka Works site to produce “greener TDI”, it
added.
28-Mar-2023
SINGAPORE (ICIS)–In this podcast, Nurluqman
Suratman speaks with ICIS analysts Patricia Tao
and Jean Zhou about the recent developments in
China’s fuel oil markets.
– Private teapot refiners importing more fuel
oil to obtain higher refining margins and to
plug supply gap of cutback bitumen
– Shandong private teapot refiners’ fuel oil
imports expected to increase this year
– Teapot refiners’ fuel oil import growth to be
capped due to desulphurisation costs
28-Mar-2023
SINGAPORE (ICIS)–Saudi Arabia petrochemical
giant SABIC expects to complete its first
chemical recycling plant in Europe in the
fourth quarter, while it seeks more
collaboration partners in Asia in promoting
wider adoption of recycled plastics, a company
official said.
“Our world-first advanced recycling unit to
upscale production of SABIC’s certified
circular polymers from mixed and used plastics
is expected to reach completion in Q4 2023,”
SABIC vice president for south Asia Janardhanan
Ramanujalu told ICIS, referring to the
pyrolysis-based chemical recycling
unit in Geleen.
The plant, which will have up to 20,000
tonne/year capacity, is expected to use mixed
plastic waste as a feedstock source.
SABIC, which is 70%-owned by energy giant Saudi
Aramco, is targeting to process 1m tonnes/year
of plastics by 2030 to produce renewable
polymers called TRUCIRCLE.
“Our TRUCIRCLE initiative includes mechanically
recycled materials, certified circular products
from advanced recycling of mixed waste
plastics, certified renewable polymers from
bio-based feedstock as well as closed-loop
services to help mitigate the plastics ending
up as waste,” the SABIC official said.
SABIC is exploring plans for a larger-scale
project, which is likely to have a processing
capacity of around 200,000 tonnes/year, as well
as other projects potentially including a
smaller-scale chemical recycling plant in Saudi
Arabia, ICIS had reported in January.
“Today, the majority of SABIC’s asset base,
which produces sustainable products, resides in
Saudi Arabia and Europe. As the EU is leading
in framing regulations, SABIC is initially
concentrating on developing TRUCIRCLE™ products
in the EU Region,” Ramanujalu said.
ASIA PROSPECTS
SABIC considers “Asia is one of the key growth
areas”, providing the company with
opportunities to partner up with both upstream
and downstream players, Ramanujalu said.
“We are definitely open to exploring more
partnerships in Asia at scale to bring even
greater access to sustainable materials in the
near future,” he said.
For packaged foods, SABIC has plastic recycling
collaborations with Unilever’s ice cream brand
Magnum, as well as with Mars and Landbell using
its circular polypropylene (PP).
In Malaysia, the Saudi company is working with
local plastic packaging manufacturer Scientex
to produce recycled, flexible food packaging
using ocean-bound plastics.
“The plastic is being collected from Malaysia’s
waterways and recycled for use in premium
noodles packaging,” Ramanujalu said.
“These collaborations demonstrate the
feasibility of tackling the plastic waste
challenge through dedicated value chain
collaborations, and sets a milestone in shaping
a circular plastics economy in Malaysia and
across Southeast Asia where ocean-bound plastic
waste is a particular challenge,” the SABIC
official said.
Asia is currently lagging behind Europe on the
circular economy reform given regulatory,
geographical and infrastructure challenges that
must be overcome.
“Lack of awareness about proper segregation,
collection, identification in recycling
practices, poor or non-existent civic
infrastructure in remote parts and, until
recently, low demand for recycled plastics, are
just some of the reasons,” Ramanujalu said.
“While we are seeing bright sparks across the
region, more can still be done, and it will
require the concerted efforts of policymakers,
businesses and consumers alike,” he added.
“We are exploring ways to contribute, and
taking a long-term view on how we do this,” the
SABIC official said.
Interview article by Pearl
Bantillo
Click here to see regulatory targets
and a list of chemical and mechanical recyclers
on the ICIS Circular Economy topic page.
28-Mar-2023
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