DEVELOPMENTS DOWNSTREAM: THE NEW GENERATION OF FLUOROCHEMICALS
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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 +1 408 343 4837 Ray.Will@ihs.com © 2015 2014 IHS
FLUORSPAR 2015/ OCTOBER 2015
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© 2015 IHS 2FLUORSPAR 2015/ OCTOBER 2015
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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?
Impacts to Fluorspar Consumption and the Market?
© 2015 IHS 6FLUORSPAR 2015/ OCTOBER 2015
Recent Regulatory Developments Concerning HFCs (US)
Event
United States & China agree to phase down HFC consumption &
June 2013 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
September 2013 (UNFCCC) using the expertise and institutions of the Montreal Protocol
and Kyoto Protocol for accounting and reporting emissions.
2015 North American Amendment Proposal to Address HFCs
under the Montreal Protocol
April 2015 The United States, Canada and Mexico submitted a proposal to phase-
down 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
July 2015
of Listing Status for Certain Substitutes Under the Significant New
Alternatives Policy Program (SNAP)
© 2015 IHS 7FLUORSPAR 2015/ OCTOBER 2015
Selected HFC Use Restrictions Under SNAP (US)
Application HFC-134a HFC-125
Unacceptable as of
July 20, 2016, except Unacceptable
Propellants uses listed as as of July 20,
acceptable, subject to 2016
use conditions
Refrigeration:
Unacceptable as of
Vending
January 1, 2019
machines, new
Refrigeration:
Unacceptable as of
Retail food, new
January 1, 2020
equipment
Unacceptable as of
Motor vehicle air Model Year 2021,
conditioning, except where allowed
new cars under narrowed use
limit
Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20, 2015
© 2015 IHS 8FLUORSPAR 2015/ OCTOBER 2015
Selected HFC Use Restrictions Under SNAP (US)—
Foam Blowing (continued)
Application HFC-134a HFC-245fa HFC-365mfc
Flexible Unacceptable as of Unacceptable as of Unacceptable as of
Polyurethane January 1, 2017 except January 1, 2017 except January 1, 2017 except
under narrowed use limit* under narrowed use limit* under narrowed use limit*
Polystyrene: Unacceptable as of Unacceptable as of Unacceptable as of
Extruded Sheet January 1, 2017 except January 1, 2017 except January 1, 2017 except
under narrowed use limit* under narrowed use limit* under narrowed use limit*
Rigid Unacceptable as of Unacceptable as of Unacceptable as of
Polyurethane: January 1, 2020, except January 1, 2020, except January 1, 2020, except
Commercial where allowed under a where allowed under a where allowed under a
Refrigeration & narrowed use permit* narrowed use permit* narrowed use permit*
Sandwich Panels
Unacceptable as of Unacceptable as of Unacceptable as of
Rigid
January 1, 2020, except January 1, 2020, except January 1, 2020, except
Polyurethane:
where allowed under a where allowed under a where allowed under a
Appliance
narrowed use permit* narrowed use permit* narrowed use permit*
*i.e. only in military or space and aeronautics-related applications.
Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20, 2015
© 2015 IHS 9FLUORSPAR 2015/ OCTOBER 2015
Selected HFC Use Restrictions Under SNAP (US)—
Foam Blowing (continued)
Application HFC-134a HFC-245fa HFC-365mfc
Unacceptable as of Unacceptable as of Unacceptable as of
Rigid Polyurethane: January 1, 2019, except January 1, 2019, except January 1, 2019, except
Slabstock and Other where allowed under a where allowed under a where allowed under a
narrowed use permit* narrowed use permit* narrowed use permit*
Unacceptable as of Unacceptable as of Unacceptable as of
Rigid Polyurethane: January 1, 2020, except January 1, 2020, except January 1, 2020, except
Marine Flotation Foam where allowed under a where allowed under a where allowed under a
narrowed use permit* narrowed use permit* narrowed use permit*
Polystyrene Extruded Unacceptable as of Unacceptable as of Unacceptable as of
Boardstock and Billet January 1, 2021, except January 1, 2021, except January 1, 2021, except
where allowed under a where allowed under a where allowed under a
narrowed use permit* narrowed use permit* narrowed use permit*
*i.e. only in military or space and aeronautics-related applications.
Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20, 2015
© 2015 IHS 10FLUORSPAR 2015/ OCTOBER 2015
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 GWP Limit
Banned
Domestic Refrigeration 1 January 2015 HFC-134aFLUORSPAR 2015/ OCTOBER 2015
HFC Phase Out—
Raw Material Impacts, Chlorinated Organics
1,1,1
Trichloroethane
5%
HFC-134a
Trichloroethylene
22%
Methylene HFC-134a
Chloride
48%
HFC-32 Perchloroethylene
19%
HFCs: 125,
CarbonTetraChloride 134a
6%
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.
© 2015 IHS 12FLUORSPAR 2015/ OCTOBER 2015
Recent Changes Among Upstream Raw Material
Suppliers and Downstream HFC Producers
Event
Solvay sold its Germany-based refrigerants business including HFCs
30 January 2015
and pharma propellants business to Daikin
Dow Chemical sold its Chlorine Business, including chlorinated
27 March 2015
organic feed stocks for HFC and HFO production to Olin
DuPont completed the spin-off of Chemours as an independent
3 August 2015 publicly traded company. Chemours’ businesses include
fluorochemicals including HFCs as well as HFOs
© 2015 IHS 13FLUORSPAR 2015/ OCTOBER 2015
• 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?
Impacts to Fluorspar Consumption and the Market?
© 2015 IHS 14FLUORSPAR 2015/ OCTOBER 2015
HFO applications--Refrigeration
HFO refrigeration applications are expected to include use in pure form and in blends
Refrigeration Replaces Application
HFC-32/ HFC-125/ HFO-
Blend: R-452A R-404A blend Refrigerated transport
1234yf
HFC-32/ HFC-125/ HFO- R-404A & Low & medium temperature
Blend: R-449-A
1234yf/ HFC-134a R-507 blends commercial refrigeration
Commercial refrigeration, water
Blend: R-513A * HFO-1234yf/ HFC-134a HFC-134a
chillers & heat pumps
Additional HFOs and HFO blends are being tested
*Pending ASHRAE number
© 2015 IHS 15FLUORSPAR 2015/ OCTOBER 2015
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
HFC-134a, HFC-245fa, HFC-
HFO-1233zd(E) Rigid polyurethane: Appliances
365mfc
HFO-1233zd(E), HFC-134a, HFC-245fa, HFC- Rigid polyurethane: Commercial
HFO-1234ze(E) 365mfc Refrigeration & Sandwich panels
HFC-134a, HFC-245fa, HFC-
HFO-1233zd(E) Flexible polyurethane
365mfc
HFC-134a, HFC-245fa, HFC- Polystyrene: Extruded Boardstock
HFO-1234ze(E)
365mfc and Billet (XPS)
© 2015 IHS 16FLUORSPAR 2015/ OCTOBER 2015
• 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?
Impacts to Fluorspar Consumption and the Market?
© 2015 IHS 17FLUORSPAR 2015/ OCTOBER 2015
HFO’s Market Entry—Mobile Air Conditioning (MAC)
Outside of Europe HFO is likely to be in full
HFO Full Implementation at
implementation for MAC by or after 2025
OEM
2017 EU Nearly every county or region shown is already
North America making HFO introductions in limited models
Japan
South Korea However, IHS forecasts that CO2, an alternative
China refrigerant will be introduced in Europe as soon as
By 2025 Thailand 2017 and will grow at the expense of the HFO MAC
or later India market and will spread to other regions in
Rest of Asia subsequent years after 2020
South Africa
Other Africa
South America 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.
© 2015 IHS 18FLUORSPAR 2015/ OCTOBER 2015
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
© 2015 IHS 19FLUORSPAR 2015/ OCTOBER 2015
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
© 2015 IHS 20FLUORSPAR 2015/ OCTOBER 2015
• 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?
Impacts to Fluorspar Consumption and the Market?
© 2015 IHS 21FLUORSPAR 2015/ OCTOBER 2015
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 2018
© 2015 IHS 22FLUORSPAR 2015/ OCTOBER 2015
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
© 2015 IHS 23FLUORSPAR 2015/ OCTOBER 2015
Thank you
Ray Will, Director, Inorganic and Specialty
Chemical Consulting
IHS Chemical Consulting
+1 408 343 4837
ray.will@ihs.com
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