© 2014 IHS
Information | Analytics | Expertise
© 2015 IHS
DEVELOPMENTS DOWNSTREAM:
THE NEW GENERATION OF
FLUOROCHEMICALS
8 OCTOBER 2015, MARRAKECH, MOROCCO
Ray Will, Director, Specialty and Inorganic Chemicals
+1 408 343 4837
• 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?
© 2015 IHS
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FLUORSPAR 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?
FLUORSPAR 2015/ OCTOBER 2015
6
© 2015 IHS
Recent Regulatory Developments Concerning HFCs (US)
FLUORSPAR 2015/ OCTOBER 2015
Event
June 2013
United States & China agree to phase down HFC consumption &
production with multilateral cooperation using the expertise and
institutions of the Montreal Protocol
September 2013
United States reaches agreements to phase down HFCs with G-20
& China under UN Framework Convention on Climate Change
(UNFCCC) using the expertise and institutions of the Montreal Protocol
and Kyoto Protocol for accounting and reporting emissions.
April 2015
2015 North American Amendment Proposal to Address HFCs
under the Montreal Protocol
The United States, Canada and Mexico submitted a proposal to phase-
down production and consumption of HFCs under the Montreal
Protocol.
July 2015
Narrower use limits for HFCs as alternatives to CFCs
Final Rule, 40 CFR Part 82, Protection of Stratospheric Ozone: Change
of Listing Status for Certain Substitutes Under the Significant New
Alternatives Policy Program (SNAP)
7
© 2015 IHS
Selected HFC Use Restrictions Under SNAP (US)
FLUORSPAR 2015/ OCTOBER 2015
Application HFC-134a HFC-125
Propellants
Unacceptable as of
July 20, 2016, except
uses listed as
acceptable, subject to
use conditions
Unacceptable
as of July 20,
2016
Refrigeration:
Vending
machines, new
Unacceptable as of
January 1, 2019
Refrigeration:
Retail food, new
equipment
Unacceptable as of
January 1, 2020
Motor vehicle air
conditioning,
new cars
Unacceptable as of
Model Year 2021,
except where allowed
under narrowed use
limit
8
Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20, 2015
© 2015 IHS
Selected HFC Use Restrictions Under SNAP (US)—
Foam Blowing (continued)
FLUORSPAR 2015/ OCTOBER 2015
Application HFC-134a HFC-245fa HFC-365mfc
Flexible
Polyurethane
Unacceptable as of
January 1, 2017 except
under narrowed use limit*
Unacceptable as of
January 1, 2017 except
under narrowed use limit*
Unacceptable as of
January 1, 2017 except
under narrowed use limit*
Polystyrene:
Extruded Sheet
Unacceptable as of
January 1, 2017 except
under narrowed use limit*
Unacceptable as of
January 1, 2017 except
under narrowed use limit*
Unacceptable as of
January 1, 2017 except
under narrowed use limit*
Rigid
Polyurethane:
Commercial
Refrigeration &
Sandwich Panels
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Rigid
Polyurethane:
Appliance
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
9
*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
Selected HFC Use Restrictions Under SNAP (US)—
Foam Blowing (continued)
FLUORSPAR 2015/ OCTOBER 2015
Application HFC-134a HFC-245fa HFC-365mfc
Rigid Polyurethane:
Slabstock and Other
Unacceptable as of
January 1, 2019, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2019, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2019, except
where allowed under a
narrowed use permit*
Rigid Polyurethane:
Marine Flotation Foam
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2020, except
where allowed under a
narrowed use permit*
Polystyrene Extruded
Boardstock and Billet
Unacceptable as of
January 1, 2021, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2021, except
where allowed under a
narrowed use permit*
Unacceptable as of
January 1, 2021, except
where allowed under a
narrowed use permit*
10
Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20, 2015
*i.e. only in military or space and aeronautics-related applications.
© 2015 IHS
HFC Bans in the EU
FLUORSPAR 2015/ OCTOBER 2015
Application Prohibition Date Example of HFC Product
Banned
GWP Limit
Domestic Refrigeration 1 January 2015 HFC-134a <150
Commercial Refrigeration1 January 2020 R-404A (125/143a/134a) <2,500
1 January 2022 HFC-134a <150
Movable Air Conditioning 1 January 2020 HFC-134a <150
Plastic Foaming Agents
Expanded Polystyrene1 January 2020 HFC-365 mfc <150
Plastic Foaming Agents
Other Foams1 January 2023 HFC-365 mfc <150
11
Source: Official Journal of the European Union, 20.5.2014
EU bans target the high Global Warming Potential of HFCs and Refrigerant Blends containing
HFCs
© 2015 IHS
HFC Phase Out—
Raw Material Impacts, Chlorinated Organics
FLUORSPAR 2015/ OCTOBER 2015
12
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.
1,1,1 Trichloroethane
5%
Trichloroethylene22%
Perchloroethylene19%
Methylene Chloride
48%
HFCs: 125,
134a
HFC-32
HFCs: 245fa,
365mfc
CarbonTetraChloride
6%
HFC-134a
HFC-134a
2014 Global Total: 2,146 KMT
© 2015 IHS
Recent Changes Among Upstream Raw Material
Suppliers and Downstream HFC Producers
FLUORSPAR 2015/ OCTOBER 2015
Event
30 January 2015Solvay sold its Germany-based refrigerants business including HFCs
and pharma propellants business to Daikin
27 March 2015Dow Chemical sold its Chlorine Business, including chlorinated
organic feed stocks for HFC and HFO production to Olin
3 August 2015
DuPont completed the spin-off of Chemours as an independent
publicly traded company. Chemours’ businesses include
fluorochemicals including HFCs as well as HFOs
13
© 2015 IHS© 2015 IHS
• 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?
FLUORSPAR 2015/ OCTOBER 2015
14
© 2015 IHS
HFO applications--Refrigeration
FLUORSPAR 2015/ OCTOBER 2015
Refrigeration Replaces Application
Blend: R-452AHFC-32/ HFC-125/ HFO-
1234yfR-404A blend Refrigerated transport
Blend: R-449-AHFC-32/ HFC-125/ HFO-
1234yf/ HFC-134a
R-404A &
R-507 blends
Low & medium temperature
commercial refrigeration
Blend: R-513A * HFO-1234yf/ HFC-134a HFC-134aCommercial refrigeration, water
chillers & heat pumps
Additional HFOs and HFO blends are being tested
15
*Pending ASHRAE number
HFO refrigeration applications are expected to include use in pure form and in blends
© 2015 IHS
HFO applications (continued)
FLUORSPAR 2015/ OCTOBER 2015
Foam Blowing Replaces Application
HFO-1233zd(E)HFC-134a, HFC-245fa, HFC-
365mfcRigid polyurethane: Appliances
HFO-1233zd(E),
HFO-1234ze(E)
HFC-134a, HFC-245fa, HFC-
365mfc
Rigid polyurethane: Commercial
Refrigeration & Sandwich panels
HFO-1233zd(E)HFC-134a, HFC-245fa, HFC-
365mfcFlexible polyurethane
HFO-1234ze(E)HFC-134a, HFC-245fa, HFC-
365mfc
Polystyrene: Extruded Boardstock
and Billet (XPS)
16
Mobile Air Conditioning Replaces Application
HFO-1234yf HFC-134a Automobiles and light trucks
Additional HFO blends are being tested
© 2015 IHS© 2015 IHS
• 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?
FLUORSPAR 2015/ OCTOBER 2015
17
© 2015 IHS
HFO’s Market Entry—Mobile Air Conditioning (MAC)
FLUORSPAR 2015/ OCTOBER 2015
18
Outside of Europe HFO is likely to be in full
implementation for MAC by or after 2025
Nearly every county or region shown is already
making HFO introductions in limited models
However, IHS forecasts that CO2, an alternative
refrigerant will be introduced in Europe as soon as
2017 and will grow at the expense of the HFO MAC
market and will spread to other regions in
subsequent years after 2020
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.
HFO Full Implementation at
OEM
2017 EU
By 2025
or later
North America
Japan
South Korea
China
Thailand
India
Rest of Asia
South Africa
Other Africa
South America
© 2015 IHS
HFO’s Market Entry—Refrigeration & Air Conditioning
FLUORSPAR 2015/ OCTOBER 2015
19
• 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
HFO’s Market Entry—Propellants, Foam Blowing and
Solvent Use
FLUORSPAR 2015/ OCTOBER 2015
20
• 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© 2015 IHS
• 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?
FLUORSPAR 2015/ OCTOBER 2015
21
© 2015 IHS
Impacts to Fluorspar Consumption and the Market?
FLUORSPAR 2015/ OCTOBER 2015
22
• 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
FLUORSPAR 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
23
© 2015 IHS
FLUORSPAR 2015/ OCTOBER 2015
Thank you
Ray Will, Director, Inorganic and Specialty
Chemical Consulting
IHS Chemical Consulting
+1 408 343 4837
24