Polyurethanes play a critical role in many aspects of the US manufacturing sector and in energy efficiency. With shale gas lowering the cost of chemical production, now is an exciting time to be in the industry, says ACC's Cal Dooley
On the 75th anniversary of the discovery and development of polyurethanes (PUs), the industry's top scientists and executives are meeting in Atlanta, Georgia. The timing is propitious, as global prospects for PUs and the broader US chemicals sector look positively promising.
"This is the most exciting time in a generation to be involved in the chemicals industry," says Cal Dooley, president of the American Chemistry Council (ACC), noting that PUs will play a major role in the industry's growth going forward.
As many as 800 PU industry leaders are expected to take part in the 2012 Polyurethanes Technical Conference in Atlanta, sponsored by the Center for the Polyurethanes Industry (CPI), part of the Washington, DC-based ACC.
"This is an exciting time for us in this industry," Dooley adds, "because our advantage in technology allows us to capitalise on the significant increase in the unconventional natural gas supply in the US."
Major new supplies of domestic US natural gas, chiefly from shale deposits, "have moved the US chemicals industry from a high-cost environment to one of the lowest cost producers in the world", Dooley explains.
That new-found low-cost feedstock advantage, he notes, "is responsible for in excess of $30bn [€24.3bn] of new investment in the chemicals sector in just the last 18 months, the most significant increase in this industry's capital investments in decades."
The shale play has given US chemical manufacturers new strength in the global marketplace, Dooley explains. "Ours is already a $760bn industry and we support nearly 25% of this country's GDP, including some 800,000 highly paid workers. We have always been one of this country's leading exporters and with our now enhanced global competitiveness, in 2011 we saw US chemical exports increase by 17% over 2010. Our chemical exports have risen from 10% of US export goods overall to 12%.
"If you're talking about in-sourcing, we are seeing a significant inflow of capital and investment and a significant increase in chemicals from the US. We are one of the major sectors contributing to the US recovery."
Against that background of global market potential, Dooley believes the CPI's Polyurethanes Technical Conference will draw attention to the critical role that PUs play in so many different aspects of the US manufacturing industry and the every day lives of people, in its contributions to energy efficiency, building and construction and its critical role in light-weighting vehicles for greater fuel economy.
"This will be the most significant gathering of the experts and product developers in the PU sector," he adds.
CPI executive director Lee Salamone agrees, noting that "there is no other event in North America that offers this sort of opportunity for PUs industry people to network with their colleagues". She says the conference will feature more than 60 papers in 14 technical segments, provide professional development courses and bring participants up to speed on the latest challenges in the marketplace and from regulatory agencies.
"The technical conference focus is on innovation not only in product development and applications but on innovation in meeting the challenges of the marketplace and regulators," Salamone notes. She notes too that the conference will brief players on such diverse subjects as worker health and safety and product stewardship in PU applications, along with chemical management initiatives, and give regulators exposure to "how things really happen in the field, so they get a better idea of what happens on the plants. Industry professionals also benefit from hearing directly from these regulators."
ENERGY POLICY
The interchange between the PU industry and government policymaking is one that Dooley says offers great potential. "For example, we are focused on getting a domestic energy policy that fully develops all of our energy resources, including renewables, but a policy that also features a major role for energy efficiency. When you look at PUs, it is really making a significant contribution for other manufacturing sectors and end-use consumers in reducing the amount of energy used or in helping consumers to use energy more wisely.
"We've been able to clearly demonstrate that a lot of energy efficiency products are derived from PUs, such as foam insulation, roofing materials and other applications that together save enough energy annually to power 50m US homes."
Noting that PU applications in light-weighting automobiles have helped reduce vehicle gasoline consumption by 21%, Dooley says that: "We are going to make those linkages, those connections so that federal and state policymakers can capitalise on our industry and the PU sector in particular to deliver tremendous benefits to manufacturing, consumers and really the entire country."
In ACC's advocacy work, Dooley says the council will not necessarily be engaging in the sort of practices that characterised past efforts, such as broad-based media campaigns aimed at the general public. "Now we are targeting our efforts at regulators and elected officials, to mobilise our experts and industry officials to meet with those regulators and legislators to help them understand the role of plastics in policies they shape to contribute to greater energy efficiencies."
Much of that effort will be focused on work already under way among policymakers for new, advanced building construction codes, Dooley adds. "As those codes are being developed, we want to ensure that we see the most efficient use of energy in the most cost-effective way, and to ensure that the standards being developed for federal and state agencies are truly energy efficient."
Dooley, who served seven terms in the US House of Representatives, suggests policy-makers can become fixated on problem-solving approaches that are too narrow. In particular, he cites "clean energy" proposals in Congress that would create incentives for utilities to use alternative and renewable fuels in order to reduce US reliance on fossil fuels, replacing those with cleaner energy sources.
"We think it would be sounder policy if policymakers were to provide the same incentives for energy efficiency," Dooley says. "From a public policy standpoint, whether you are reducing overall emissions or using a different energy portfolio, you should also encourage and support energy efficiency."
FRACKING REGULATION
The ACC advocacy effort also is focused on the upstream energy industry. "This has been a high priority over the last couple of years, working with our upstream partners in the oil and gas industries to ensure that local state and federal governments are adopting appropriate environmental and safety regulations to allow us to develop our natural gas resources," Dooley says.
Recognising that the public interest and government regulators have legitimate needs, Dooley says that: "I've been impressed by the traditional state-level role in the oil and gas areas. Without exception, the states have stepped up and put in place regulations that allow extraction with safety and environmental protection. We think that the regulatory structure has been developed to responsibly extract gas from shale formations."
With a nod to wide concerns about the chemicals used in hydraulic fracturing ("fracking") that is essential to shale gas development, Dooley says that "we have a vested interest in seeing that those policies are there to allow us to get the gas, but we also can provide information about the chemicals used in fracking and work with state agencies to disclose those chemicals and ensure that waste water is treated in a way to not harm the environment."
He adds that the ACC wants to ensure that states have appropriate policies in place on disclosure of chemicals used in fracking "that will provide a level of disclosure that establishes confidence while also protecting CBI," meaning confidential business information underlying proprietary chemical formulations used in fracking fluids.
No discussion of chemicals industry advocacy efforts can avoid what will be an inevitable rewrite of the principal US programme for control of chemicals in commerce, the Toxic Substances Control Act (TSCA).
TSCA REFORM
The general consensus is that the 37-year-old TSCA will undergo a major tune-up in the next Congress that runs from 2013 through 2014, and industry wants to ensure that the modernisation of the law is science- and risk-based.
"We have been engaged over the past four years in working with members of Congress, regulators and NGOs [non-government organisations such as environmental groups] to see if we can get a consensus for bipartisan support for TSCA reform," Dooley says.
He notes that one component of the PU technical conference in Atlanta will be looking at the approach Canada has taken in updating its chemical controls policy. "We can learn from them," he notes.
Legislation initially put forward in the US Senate by Sen. Frank Lautenberg (Democrat-New Jersey) has been broadly opposed by the US chemical industry and a wide spectrum of other manufacturers and business interests. The chief complaint against Lautenberg's bill is that it would essentially create a US version of the EU's programme for Registration, evaluation, authorisation and restriction of chemicals (Reach).
Reach, says Dooley, "is overly bureaucratic and inefficient, and we instead need a system that allows the private and public sectors to focus on chemicals that we ought to be concerned about and manage them in a way that ensures they are used without harm to the environment or consumers."
However, Dooley says, "in just the last few weeks we have seen a great willingness among Republicans and Democrats - including Lautenberg - to engage in more comprehensive conversations to see if we can narrow differences among the various constituencies."
Although much depends on exactly what final form TSCA modernisation will take, the PU sector does not see that major rules overhaul as a threat. "All kinds of good things could come from that," believes Gerry Podesta, senior vice president for PUs North America at BASF, referring to TSCA modernisation.
Podesta, soon to take the chair at CPI's steering committee, says that: "We don't see TSCA reform as a threat at all. Both BASF and ACC have been very supportive of modernisation for TSCA, and ACC and the member companies have put forth a lot of good reform ideas. If done right, TSCA reform is no issue for PUs."
Some 800 polyurethane industry executives are expected to converge on Atlanta, Georgia
RAW MATERIALS AND SAFETY ISSUES
Beyond regulatory reforms, Podesta says, two major issues are facing the North American PU industry. The first is raw materials volatility. "PU is an oil-based industry as opposed to natural gas," Podesta notes, "and there is a lot of volatility and pressure in the oil segment. Feedstock is available, but there is a lot of volatility, and we're battling that."
PU production has to compete at the refinery level with fuel products. "It is the back-and-forth issue of what you want to make from a barrel of oil, whether you make gasoline or put it into PUs. So when gasoline prices spike, we pay more for feedstock."
The second major challenge is controversy over the safe use of PU, Podesta says. "We are confident that our product is a safe product, but we have to be cognisant as an industry that there is a point of conversion that has to be handled safely in application of the product. We have to educate our users on how it is safely used." He notes that "once cured, our product is very safe."
Broadly speaking, Podesta and outgoing steering committee chairman Steve Snead-Smith see still strong market potential and new product application opportunities for PU. Snead-Smith, business director at Evonik for PU additives in the NAFTA region believes there is still a lot of room for PU to grow in the marketplace. "In North America, I see PU growing faster than GDP, and the increasing focus on energy efficiency helps our market," he says.
Podesta adds that PU applications are growing because PU is not only a value proposition but a sustainability proposition as well. Referring to PU's 75-year history, Podesta notes that "for a long time we've always been able to find new opportunities for PU throughout the marketplace. I'm always amazed over the many places we can use PU, and I think it will continue to grow."
Snead-Smith notes that the CPI technical conference will help expand the PU market by pushing the envelope on performance. "Our industry is doing a lot of science to make PUs a continuing and sustainable industry. The challenge is to make sure our products are used in the proper way and are handled properly. That's what CPI has always been focused on: good tech support, technical research to deal with these issues, making sure we do things in a safe way."