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SAN ANTONIO (ICIS)–The US programme that will phase down the use of hydrofluorocarbons (HFCs) in refrigerants and blowing agents used In polyurethanes will hit some major milestones in the upcoming months – while states consider broad bans on fluorinated materials that could encompass the new chemicals that will replace them, hydrofluoroolefins (HFOs). The US and other countries in the world are phasing down HFCs because they are exceptionally powerful greenhouse gases. Worldwide, the global phasedown of HFCs should prevent the planet’s temperatures from rising by as much as half a degree Celsius, according to the Environmental Protection Agency (EPA). UPCOMING MILESTONESThe US adopted a phasedown schedule as part of the American Innovation and Manufacturing (AIM) act, which became law earlier in the decade. The Environmental Protection Agency (EPA) intends to finalise the technology transitions rule no later than 7 October, said Margaret Sheppard, environmental scientist at the EPA. She made her comments at the Polyurethanes Technical Conference, held by the Center for the Polyurethanes Industry (CPI). The EPA should meet that deadline even if the US government shuts down at the end of September, she said. Implementation of the phasedown will then proceed. Sheppard expects implementation will go much smoother for the polyurethanes industry than those involved with refrigeration and air conditioning. The polyurethanes industry has been preparing for the phasedown for several years by developing acceptable blowing agents and by developing formulations that are compatible with those new new blowing agents. HFC PHASEDOWN SCHEDULEThe next big step takes place in 2024, when US regulations will call for a big decline in the amount of the amount of HFCs that the nation can consume and produce. That amount will be 60% of a baseline established by a formula in the AIM law. The following table shows the phasedown schedule. Year % of baseline 2022-2023 90% 2024-2028 60% 2029-2033 30% 2034-2035 20% 2036 and after 15% Source: EPA In some cases, a suitable replacement for HFCs has yet to be found, Sheppard said. The one polyurethane application that falls into this group is structural composite foam for marine and trailer use. In fact, the EPA is describing the process as a phasedown because there could still be some cases where no alternative to HFCs can be found. STATE PFAS BANS COULD INCLUDE HFOSThe polyurethane industry has been relying on HFOs as a replacement for HFCs because they are exceptionally weak greenhouse gases and they do not threaten the ozone layer. However, some governments could adopt broad definitions and bans of per- and polyfluorinated alkyl substances (PFAS) that could include HFOs, said Ian Choiniere, director, product advocacy for the CPI. These definitions would go beyond those of the EPA, which do not include HFOs as PFAS, he said. The US state of Maine signed into law such restrictions that could ban HFOs in 2030, Choiniere said. Minnesota is another US state that could impose a similar ban in 2032, Choiniere said. Maine has since implemented a legislative working group that would look into the rulemaking process, he said. That opens up the possibility of the state considering the implications of such a ban and developing exceptions to it. Minnesota is has not begun the rulemaking process, so that also opens up the possibility of exceptions, Choiniere said. FOREVER CHEMICALSThe state restrictions come amid growing concerns about PFAS being forever chemicals that take several years to break down and that accumulate in the body. However, HFOs are not forever chemicals because they were purposely designed to break down. This was intentional to prevent HFOs from reaching the ozone layer and destroying it. There has been concerns about secondary byproducts of the breakdown of HFOs, especially trifluoroacetic acid (TFA). Choiniere quoted comments from the ozone secretariat of the UN Environment Programme (UNEP), which said that TFA concentrations are too low to pose a threat. Moreover, the biological effects of TFA are different from PFAS. INTERNATIONAL APPROACH TO HFOSStates have defended their approach on PFAS definitions by pointing to steps being taken by regulators in Europe, Choiniere said. However, the EU has not progressed to risk management, he said. Instead, the EU is reviewing any substances that have a CF2 or CF3 group, he said. That would include HFOs. The UK PFAS Preliminary Regulatory Management Options Analysis is assessing the need for regulatory action. In Canada, Environment and Climate Change Canada releases a report urging a class approach to PFAS using the definition of the Organisation for Economic Cooperation and Development (OECD). While that definition encompasses HFO blowing agents, Canada’s current risk management recommendations only focus on firefighting foams, Choiniere said. BANS AND FLUORINE CHEMISTRYBroad definitions of PFAS could encompass materials beyond HFAS. Fluoropolymers such as Chemours’s Nafion are used as membranes in hydrogen fuel cells and electrolysers, which split water molecules to produce green hydrogen with renewable energy. Polyvinylidene fluoride (PVDF) is used as a lithium-ion binder and separator. Fluoropolymers have dielectric properties that protect data from noise and preserve its fidelity in 5G networks. Semiconductor fabrication plants, known as fabs, require tubing that can resist the chemicals used to etch wafers. Fluoropolymers are typically used because of their properties. Choiniere said he was unable to comment about these restrictions spreading to other fluoromaterials because he is focused on fluorinated gases. The Polyurethanes Technical Conference runs through Wednesday. Polyurethanes are made with isocyanates and polyols.

LONDON (ICIS)–Advanced design work has begun on a hydrogen production project that could have capacity of up to 1GW and is expected to produce approximately 230,000 tonnes/year of low-carbon hydrogen, the developer said on 25 September. Hydrogen produced by the HPP2 project, due online in 2026 and being developed by EET Hydrogen, will be used by local industrial and power generation customers in the northwest of England within the HyNet cluster. This follows on from the front-end design and engineering (FEED) completion on the 350MW HPP1 plant, also due online in 2026, back in September 2021. The two plants are adjacent to each other. HPP1 and HPP2 combined are expected to capture some 2.5m tonnes/year of CO2 before increasing capacity to 4GW by 2030. This would be 40% of the UK government’s 10GW target for low-carbon hydrogen generation capacity. However 5GW of the 10GW target covers renewable hydrogen produced via electrolysis which neither HPP1 or HPP2 will qualify for.

LONDON (ICIS)–The UK and Germany have signed a declaration to work together to underpin international trade in hydrogen, the UK energy department said in a statement on 26 September. The agreement was signed in Berlin by UK energy efficiency minister Lord Callanan and  German energy secretary Philip Nimmermann. The two countries will “accelerate the role of low-carbon hydrogen in their nations’ energy mix, showing the world how to expand new net zero-friendly markets”, the statement said. Under the agreement, hydrogen technologies should become “cheaper and more accessible”, the statement added. Five key pillars of collaboration were agreed: Accelerating the development of hydrogen projects for industry and consumers Establishing international leadership on hydrogen markets, setting safety standards and regulations to aid trade Research and innovation on hydrogen from production to end use Promoting trade for hydrogen plus related goods, technologies and services Joint market analysis to support planning and investment by government and industry. Both Germany and the UK are forecast to see strong hydrogen demand in the coming years, with  ICIS data showing demand will reach 88TWh in Germany and 24TWh in the UK by 2030. While the UK is seeking to produce all its own hydrogen with potential for exports from Scotland, Germany will import the bulk of its hydrogen requirements from other countries. Germany expects to import between 50%-70% of its hydrogen via a mix of pipeline flows from nearby countries and maritime ammonia from other global regions.

VIENNA (ICIS)–The European petrochemical markets are in a trough, with no demand upturn expected for 2024. While sentiment at the European Petrochemical Association (EPCA) meeting in Vienna was not one of optimism, it was of resilience. Demand is expected to remain at a low level for 2024; however, market participants did not expect conditions to worsen. “Expectations of pick-up in demand in 2024 are based on hope, not market fundamentals,” said one chemical major. “We will continue to play this game for another year and a half,” said one major producer. While survival was the theme of last year’s event, flexibility became a key theme this year, with companies adapting to the ‘new normal’ for the markets. The fall in gas prices provided some relief for European sellers, who were able to move into defence mode, lowering prices throughout 2023 and closing the window to material from Asia for some markets. European operating rates remain low, and producers will be required to carefully manage balances next year. “Next year will be a year of flexibility and adjusting,” said one producer. “Flexibility will have a higher priority than in previous years,” commented a producer. Heavy destocking has been seen across all markets, with players managing working capital closely given the ongoing financial pressures. This will disrupt traditional destocking behaviour in the fourth quarter, with the value chain already at a depleted level. “Destocking is over and we have reached a steady state,” said one seller. The risk of the lower inventories was another key topic, with the potential for prices to spike sharply in the event of production outages, with a lack of buffer in the system. Memories turned to 2008, after the economic crash and the last time the industry saw a significant downcycle, with the lower investment in facilities a risk for supply constraints once demand does increase. This reinforced the need to corporation, flexibility and multiple supply options for buyers, already looking further ahead and strategically planning for after the current downcycle. The EPCA annual meeting runs from 25-28 September. Focus article by Katherine Sale Front page image shows the Danube Canal in Vienna (image credit: Nicolas Economou/NurPhoto/Shutterstock)

LONDON (ICIS)–Arkema is investing €130m in a new purification process to cut carbon dioxide (CO2) emissions by 20% at its Carling acrylic monomers production site in France, it said on Wednesday. The French chemicals major will implement the new, patented purification technology by 2026 to improve operational efficiency and the site’s environmental footprint. “After the introduction of biobased acrylic monomers in 2022 using the mass balance approach, this new project at Carling is another key step to position Arkema as a leader in low-carbon acrylic materials, and to help our customers reduce their Scope 3 emissions,” said Richard Jenkins, senior vice-president for Arkema’s Coating Solutions. The Carling facility produces acrylic monomers used in performance coatings, adhesives, water treatment and other performance materials used in various applications. Arkema said the project was part of its global decarbonisation capital expenditure roadmap and has been partly funded by the French state under the France 2030 programme, which supports the development and industrialisation of renewable energy solutions.

SINGAPORE (ICIS)–UK energy firm BP has started building a solar project in Texas that will supply electricity to the joint venture petrochemical project of ExxonMobil and SABIC in the US Gulf Coast. The Peacock Solar project will have a capacity of 187 megawatts defined conditions (MWdc) is located 10 miles north of Corpus Christi in San Patricio County, BP said on 26 September. Financial details of the solar project were not disclosed. BP’s 50:50 joint-venture partner – global solar firm Lightsource bp – is developing the project and managing the construction on behalf of the UK energy firm. “Peacock will sell all of the electricity it generates under a long-term power purchase agreement to Gulf Coast Growth Ventures (GCGV), a joint venture between ExxonMobil and SABIC, which produces materials used to manufacture clothes, food containers, packaging, agricultural film and construction materials,” it said. GCGV’s complex in Corpus Christi has a 1.8m tonne/year cracker; two polyethylene (PE) production units with a combined capacity of 1.3m tonnes/year; and a 1.1m tonne/year ethylene glycols unit, according to ICIS Supply and Demand Database “Once online, the solar-generated electricity will be used to partially power our plant and help reduce emissions in support of a net-zero future,” GCGV president Paul Fritsch said. Start of commercial operations at the complex, which is a joint venture between US energy giant ExxonMobil and Saudi petrochemical major SABIC, was announced in January 2022. The Peacock solar project is part of BP’s “aim to invest in and build renewable energy capacity of 50 gigawatts (GW) by 2030”, it stated.

HOUSTON (ICIS)–Brazil Potash said that the leadership of the Mura people has informed the Canadian producer of their vote in favour of the Autazes Potash project. Currently, Brazil Potash is advancing the estimated $2.5bn project in the state of Amazonas with the proposed mine and processing facilities located 75 miles southeast of the state capital Manaus. It had previously submitted an indigenous consultation study (ECI) to the government indigenous rights protection agency, yet earlier this month, a local court had suspended the preliminary permit. Federal prosecutors had claimed to the court that permitting procedures were not properly undertaken. The company, which has expectations of starting production by 2026, denied any wrongdoing at the time. In a statement, the governor of Amazonas, Wilson Lima, said the support of the Mura people is crucial with there now being the possibility of establishing a new economic foundation for the state. “This is a very important day, a historic day because we are taking a significant step towards changing the lives of the people who reside in the state of Amazonas, especially those in the municipality of Autazes,” said Lima. “This is a fundamental step, and I consider it the most important one, which is the process of consulting the Mura people about the potassium exploration activity in the municipality of Autazes.” Adriano Espeschit, the president of the company’s subsidiary Potassio do Brasil, said that the potash produced worldwide is a crucial fertilizer for crops and that right now, Brazil is very dependent on imports rather than being self-reliant. “This is a new moment for Autazes, for Amazonas, for Brazil, and why not say it for the world, as food security depends on fertilizers for agriculture, to feed people and eradicate hunger in our world,” said Espeschit. “This is a strategic project to end world hunger. We will work on the next steps to advance licensing and begin the project’s installation in Autazes.” Current estimates show that Brazilian annual potash consumption is approximately 12.6m short tons, with roughly 85% of those needs served by imports, but Brazil Potash expects that the Autazes project will eventually be producing 2.2m tons per year.

HOUSTON (ICIS)–Australian fertilizer developer Minbos Resources announced it launched its phosphate fertilizer brand, Prosper Primeiro, at an industry workshop earlier this month in Angola. The producer is currently advancing the Cabinda Phosphate project plant and the Capanda green ammonia project in Angola. Minbos said it held a workshop attended by representatives of the nation’s Agriculture, Economy and Mining Ministries, the Institute for the Development of Agriculture (IDA) and the Fund for the Development of Agriculture (FADA). Representing the producer was CEO Lindsay Reed and Country Manager Camache Caturichi, with the aim of the event to not only launch the new brand but provide technical support to IDA extension workers and industry regarding local soils and growing conditions. Minbos said it was also an opportunity to introduce extension workers to phosphate-based fertilizer and the importance of large applications in the first year. It gave the producer a chance to demonstrate its phosphate decision support tool, which is an interactive application available for free which allows farmers to make decisions on the rates and returns for Prosper Primeiro. Minbos said it also provided an update on field and greenhouse trials featuring the efficacy for the yield increases delivered by Prosper Primeiro.

SAN ANTONIO, Texas (ICIS)–A US law intended to promote energy efficiency is beginning to stimulate demand for polyurethane insulation, an official with Covestro said on Tuesday. The law, called the Inflation Reduction Act (IRA), is relatively new, so it is just now beginning to have an impact, said Judi Bayer, head rigid raw materials for Covestro. She made her comments on the sidelines of the Polyurethanes Technical Conference, held by the Center for the Polyurethanes Industry (CPI). Polyurethane spray foam and polyisocyanurate board stand to benefit from such energy-efficiency policies because they are among the strongest insulating materials available. Spray foam has the additional benefit of functioning as a building envelope, which prevents air leakage. HOME BUILDERS RESPOND TO LOW HOUSING STOCKBayer said there are signs that home builders in the US are increasing construction activity to address the shortage of available housing. She pointed to number of US housing starts for single-family homes. Although the number of housing starts fell in August from July, they rose year on year and they were up from the winter and spring months, as shown in the following chart. Figures are not seasonally adjusted. Source: US Census Bureau Nonetheless, high costs are making it more difficult for consumers to afford a new house. Higher mortgage rates, higher material costs and higher labour costs have all made new houses increasingly unaffordable. And because of the shortage of more affordable existing houses, consumers often have little choice but to buy a more expensive new house. Home builders are taking steps to get costs under control, such as reducing the size of housing. SNAPSHOT OF CURRENT AUTO MARKET Automobiles are an important end-market for flexible polyurethane foam, and for much of 2023, automobile sales have been increasing globally by the mid single digits, said Scott Skolnekovich, vice president flexible foam, performance materials North America, Covestro. For North America, the growth rate for automobile sales has been in the high single digits, he said. Automobiles have stood out among major polyurethane end-markets because of its growth, he said. Other major end-markets for flexible foams have not been as robust. Flexible foam demand for furniture and mattress production has been lagging because consumers had splurged on these purchases during the depths of the coronavirus pandemic, Skolnekovich said. Purchases that consumers would have normally made in the future were made during the pandemic years, he said. Since then, consumers are spending their money on services such as travel instead of big-ticket items such as furniture and other durable goods, Skolnekovich said. Inflation is also discouraging sales of furniture and mattresses, but not to the same extent as changing consumer habits, he said. The Polyurethanes Technical Conference runs through Wednesday. Polyurethanes are made with isocyanates and polyols. Interview article by Al Greenwood Recasts tenth paragraph to read “mid single digits” instead of “low single digits”

HOUSTON (ICIS)–US builders are reducing the sizes of single- and multifamily housing to make them more affordable as mortgage rates reach 20-year highs, an executive at Huntsman said. US mortgage rates have been rising with the benchmark interest rate, which is set by the Federal Reserve. The US central bank could raise rates by one more quarter point from the current 5.25-5.50% as part of its campaign to bring inflation down to its target of 2%. That campaign by the Fed has helped push average mortgage rates to 7.19%, a 20-year high, according to Freddie Mac, a company that buys and securitises home loans. Those higher rates are one of the factors making housing unaffordable to a growing number of US consumers. Home builders are responding by reducing the size of single-family houses by 10%, said Jan Buberl, Huntsman vice president polyurethanes Americas and global propylene oxide (PO)/methyl tertiary butyl ether (MTBE). For multifamily housing, the reduction is 20%, he said. MULTIFAMILY CONSTRUCTIONBuberl noted that many multifamily projects under construction were financed when interest rates were much lower. It is unclear if similar projects would be viable under today’s much higher interest rate environment, he said. POLYURETHANES AND CONSTRUCTIONConstruction is important to Huntsman’s polyurethanes business because two-thirds of its sales in the Americas are tied to the sector, Buberl said. Out of that, 60% is tied to residential construction in the Americas and 40% is tied to commercial construction. For residential construction, a lot of Huntsman’s polyurethane chemicals are used in insulation and oriented strand board (OSB). For the chemical industry in general, housing is a key end-use market in the form of paints, wire insulation, house-wrap, sealants, roofing materials, resilient flooring, vinyl siding and many other chemical and plastic-related products. Other products include plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres. New housing also generates sales of appliances, furniture, carpet, fixtures and window treatments. In total, each start engenders on average over $13,000 worth of chemistry. AFFORDABILITY CRISISIn years past, consumers would have bought existing homes if they could not afford a new one. However, the US has a shortage of existing homes because of a drought in house construction that followed the 2008-2009 recession. In addition, people who own homes are reluctant to sell them because their purchases were financed with relatively cheap loans, Buberl said. The average mortgage rate for current homeowners is 4%. If consumers continue to hang on to their homes, they may choose to remodel and renovate, which would require polyurethanes and other plastics and chemicals used in construction. IMPLICATIONSAlthough housing is unaffordable for a large number of consumers, a significant share of them are at the age when people typically buy homes. Those demographics, the shortage of housing and the smaller size of new homes could encourage more construction and sales even as mortgage rates remain high. For multifamily housing, higher interest rates could make it more difficult to arrange the financing for future projects. Developers could try to offset those financing pressures by building smaller projects. CURRENT SNAPSHOT OF COMMERCIAL CONSTRUCTIONBuberl noted that office construction is in a difficult situation because of vacancies caused by people working from home. Warehouse construction has just come off of a wave of activity. It is close to equilibrium, with room for some additional growth. Companies are building a lot of industrial plants closer to their customers in a phenomenon known as reshoring or nearshoring, Buberl said. These types of industrial projects have flat roofs that require insulation. Walls also require insulation. Roofs and concrete floors require coatings. The Polyurethanes Technical Conference is held by the Center for the Polyurethanes Industry (CPI). It continues on Tuesday and runs through Wednesday. Interview article by Al Greenwood Thumbnail shows a home being built. Image by the National Association of Home Builders (NAHB).