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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.

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

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.

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.

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.

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.

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

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.

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

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.