Refrigerants: leading chemicals for the rise of heat pumps?

chemicals used as refrigerants

What chemicals are used as refrigerants? This data-file is a breakdown of the c1MTpa market for refrigerants, across refrigerators, air conditioners, in vehicles, industrial chillers, and increasingly, heat pumps. The market is shifting rapidly towards lower-carbon chemicals, including HFOs, propane, iso-butane and even CO2 itself. We still see fluorinated chemicals markets tightening.

Refrigerants are used for cooling. The thermodynamic principle is that these chemicals have low boiling points (averaging around -30ºC). They absorb heat from their surroundings as they evaporate. Then later these vapors are re-liquefied using a compressor.

The global market includes over 1MTpa of refrigerants, for use in refrigerators (around 100 grams per fridge), passenger cars (1 kg per vehicle) and home AC systems (4 kg per home). There is also an industrial heating-cooling industry, including MW-scale chillers that might contain 400kg of refrigerants, to large global LNG plants.

The market is growing. Structurally, heat pumps could add another 4kg of refrigerant demand per household, especially in markets such as Europe with traditionally low penetration of AC. Rapid rises are also occurring in global AC demand.

From the 1930s onwards, CFCs were used as refrigerants. But CFCs are inert enough to reach the middle of the stratosphere, where they are broken down by UV radiation, releasing chlorine radicals. These chlorine radicals break down ozone (O3 into O2). Hence by the 1980s, abnormally low ozone concentrations were observed over the South Pole. Ozone depletion elevates the amount of UV-B radiation reaching Earth, increasing skin cancer and impacting agriculture. And hence CFCs were phased out under the Montreal Protocol of 1989.

CFCs were largely replaced with fluorocarbons, which do not deplete the ozone layer, but do have very high global warming potentials. For example, R-134a, which is tetrafluoroethane, is a 1,430x more potent greenhouse gas than CO2.

The Kigali Amendment was signed by UN Member States in 1989, and commits to phase down high-GWP HFCs by 85% by 2036. This has been supplemented by F-gas regulation in the EU and the AIM Act in the US. High GWP fluorocarbons are effectively banned in new vehicles and stationary applications in the developed world.

In addition, there has long been a market for non-fluorinated chemicals as refrigerants, but the challenge with these alternatives is that they tend to be flammable. Over half of domestic refrigerators use iso-butane as their refrigerant, which is permissible under building codes because each unit only contains about 100 grams of refrigerant (e.g., in Europe, a safety limit has historically been set at around 150 grams of flammable materials in residential properties, and is being revised upwards).

So what outlook for the fluorinated chemicals industry? Overall, we think demand will grow mildly. It is true that regulation is tightening, and phasing out fluorocarbons.

However, some of the leading refrigerants that are being “phased in” as replacement actually use more fluorinated chemicals than the refrigerants they are replacing…

Hydrofluoroolefins (HFOs) have no ozone depleting potential and GWPs <10. As an example, R-1234yf is now used in over 100M vehicles, and comprises 67% fluorine by mass. This is an increase from the 44% fluorine content in R-22, which was the previous incumbent for vehicle AC systems.

Impacts of electric vehicles? You could also argue that EVs will have increasing total refrigerant demand, as there are in-built cooling systems for many fast-chargers.

Using CO2 as a refrigerant could also be an interesting niche. It is clearly helpful for our energy transition ambition to increase the value in capturing and using CO2. But the challenging is that even if 215M annual refrigerator sales all used 100% CO2 as their refrigerant, this would only “utilize” around 25kTpa of CO2, whereas our Roadmap to Net Zero is looking for multi-GTpa scale CCUS.

For heat pumps, we think manufacturers are going to use propane, CO2, HFOs and a small class of low-GWP fluoro-carbons. So there is a small pull on the fluorinated chemicals value chain from the ramp-up of heat pumps. But the main pull on the fluorinated chemicals chain is going to be coming from batteries and solar, as explored in our recent fluorinated polymers research.

Leading Western companies making refrigerants in the data-file include Honeywell, DuPont, Chemours, Arkema, Linde, and others in our fluorinated chemicals screen.

Building automation: energy savings, KNX case studies and companies?

Building automation energy savings

High-quality building automation typically saves 30-40% of the energy needed for lighting, heating and cooling. This matters amidst energy shortages, and reduces payback times on $100-500k up-front capex. This data-file aggregates case studies of KNX energy savings, and screens 70 companies, from Capital Goods giants to private pure-plays.

KNX is an open standard for building automation. Thus a smart building can be given a central nervous system, called a bus, which is a green cable running throughout the electricals of the building. 500 hardware and software vendors from 45 countries make sensors, controllers, actuators and appliances that can be connected to the bus, and communicate with each other via KNX.

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This data-file has reviewed 20 case studies of KNX building automation projects. Their average energy saving is 40%. In other words, well-automated ‘smart buildings’ use 40% less energy than they did prior to the building automation project.

Building automation energy savings

In lighting, the average energy saving is 40%. For example, the KNX system might use a presence detector to switch off the lights if no one is in a room. Or it might use a lighting sensor to turn off lights if enough sunlight is already streaming in through the windows. Particularly sophisticated systems will detect ambient light across an entire room, and maintain a constant, pre-determined brightness level, which might mean dimming/amplifying lights nearer to/further from the windows.

In heating, the average energy saving is 30%. The KNX system might use temperature sensors to avoid over-heating a room, especially if no one is present, or scheduled to be present, or at night. Some systems link to window-sensors, and will not heat a room if a window is open. Or air quality sensors in ventilation ducts avoid over-ventilating a room and thereby cooling it.

In air conditioning, the average energy saving is 40%. Typical functionality is similar to heating described above. In addition, the KNX system might close blinds during the day to prevent heat gain in a room where no one is present, or automatically open windows at night to release heat when outside temperatures are cool.

Energy savings are clearly helpful amidst a protracted energy shortage. It is notable from the data-file that KNX projects have historically been expensive, costing $100-500k at a large commercial building where 3,000 KNX devices might be installed over >5,000m2. Payback times are around 5-10 years in normal times. But they are also a direct function of energy prices.

Thus we have screened 70 leading providers of KNX products. It is a large landscape of companies. But we think 30-40% of projects will typically feature at least some components from large European Capital Goods giants, such as ABB, Siemens and Schneider. 7-30% of projects feature components from a dozen, private, specialist companies (chart below).

Building automation energy savings

The data behind the building automation energy savings, KNX case studies, and the full screen of leading companies can be downloaded via the button below.

Heap leaching: energy economics?

costs of heap leaching

This data-file captures the energy economics of leaching processes in the mining industry, especially the costs of heap leaching, for the extraction of copper, nickel, gold, silver, other precious metals, uranium, and Rare Earths. The data-file allows you to stress test costs in $/ton of ore, $/ton of metal, capex, opex, chemicals costs, energy intensity and CO2 intensity.

How does heap leaching work? A sloping area of 500,000 to 1,000,000 m2 is excavated, lined with a polymer membrane (e.g., HDPE). Gradually, finely ground ore is added, reaching typical heights of around 10 meters, or around 15 tons of ore per m2. As the ore piles up, leaching chemicals are sprayed onto the surface. Sulphuric acid dissolves metals such as copper. Sodium cyanide forms soluble complexes with PGMs.

75-85% of the valuable metals might thus be extracted in the pregnant leach solution, which drains off (chart below). This leach solution is then accumulated for further processing, for example, by electrowinning.

costs of heap leaching

The typical costs of heap leaching with H2SO4 might contribute $2.5/kg to the costs of processing an industrial metal, under typical input assumptions. Energy consumption and CO2 intensity are both very low. Most likely around 2kWh/ton of ore; with a fully loaded CO2 intensity of 4 grams per ton of ore.

The typical costs of heap leaching with NaCN might contribute $2-30/Oz to the costs of processing a precious metal, depending on the ore grade. Despite the very low energy cost per ton of ore, the numbers are amplified by an order of magnitude by very low ore grades.

For example, if an ore contains 40 grams/ton of gold-equivalents, and heap leaching recovers 80% of this material, then you will need to process c30 tons of ore to recover 1 kg of gold-equivalents (or 30,000 kg per kg). Thus heap leaching alone can generate 50kg of CO2e per kg of gold. Precious metals and Rare Earth are among the most CO2 intensive materials in the world, although their total CO2 footprint is diminished by using them in small quantities.

80-90% energy and CO2 savings. If you are extracting copper from a 1% ore grade, heap leaching will require 225kWh/ton-Cu of energy, while a subsequent electro-winning step might require 500kWh/ton. By contrast, smelting might require 6,000 kWh/ton. This is the alchemy miracle of hydrometallurgical processing, and why we consider heap leaching to be an efficiency technology.

The energy economics of leaching operations depend on capex, opex, ore grades, recovery rates and chemicals costs. All of these variables can be stress-tested in our model, in the tabs overleaf and are backed up by data that has been aggregated from technical papers.

Energy efficiency: an overview?

Overview of energy efficiency

Energy efficiency denotes the useful energy that can be consumed divided by the input energy, most often thermal input energy, that must be supplied. Hence this data-file looks across all the different models and data-files, which we have built up across our research into energy technologies and energy transition, in order to give an overview of energy efficiency, comparing and contrasting the energy efficiency of different processes.

Electrification increases efficiency, at the process level. This is a general theme across analysis of transport, industry and heat, seen most notably in replacing internal combustion engine vehicles (15-20% efficient) with electric vehicles (80-90% efficient), both on an apples-to-apples basis. Our other data-files give more underlying detail and bottom-up calculations on vehicle fuel economy.

New energies technologies are not always efficient, and some are simply easier to implement in a world that is in energy surplus than a world that is in energy deficit. The best examples in this category are hydrogen, batteries and CCS.

Conventional energy is also getting more efficient. It would be wrong to conclude that today’s incumbent base of turbines, furnaces and industrial processes are sitting around like turkeys waiting for Thanksgiving. We see amazing potential to improve conventional energy efficiency, from CHPs to improved heat, to improved catalysts.

The overview of energy efficiency simply offers our ‘best number’, which can be taken as a general rule of thumb for the energy efficiency of different processes, along with 1-6 lines of explanation, plus links to c30 of our underlying data-files, which give full and more detailed calculations, category-by-category

PureCycle: polypropylene recycling breakthrough?

PureCycle technology review

This technology review gives an overview of PureCycle Technologies, founded in 2015, headquartered in Ohio/Florida, USA, went public via SPAC in 2021 and currently has c150 employees. The company aims to recycle waste polypropylene into virgin-like polypropylene, preventing plastic waste, while saving 79% of the input energy and 35% of the input CO2 compared with virgin product.

Why is this challenging? Even after sorting and washing, plastic waste is still contaminated with spoiled food, chemicals, dyes and pigments, resulting in recycled product being dark and low-quality. Several other patents have sought to address these issues, but with only varying success, and via complex and/or costly methods.

Controversies have been raised by a critical report from a short-selling firm. However, our usual patent review allowed us to infer how the process is envisaged to work, including good, specific and intelligible details, covering the solvents, filtration methods, medium temperatures and medium-high pressures (data here). This de-risks some of the risks.

This note contains our observations from our PureCycle technology review, the company’s ambitions, challenges, and scores the patent library on our usual dimensions of problem specificity, solution specificity, intelligibility, focus and manufacturing readiness. We also tabulated technical data that is presented in several patents.

Further research. Our recent commentary on PureCycle technology is linked here.

Aurubis: copper recycling breakthrough?

Aurubis technology review

Aurubis Technology Review. Aurubis recycles scrap metals and concentrates into high-purity products, mostly copper products. The company is listed in Germany, has 7,200 employees and revenues of €16bn in 2021,  as it processes 1MTpa of recycled materials, plus 2.25MTpa of concentrates from 30 mining partners.

Its flagship Hamburg facility employs 2,000 people and is said to be “one of the most modern and environmentally friendly copper smelters in the world”.

Environmental credentials include two-thirds lower energy (at 2 MWH/ton) and lower carbon than (at 1.7 tons/ton) primary copper production. Improving sustainability is also a key focus for the company, per our overview.

Another target is growth. Metals recycling is growing 4% pa in Europe (from 7.3MTpa in 2019, and only 40-45% of metal waste is collected) and 5% pa in North America (5.6MTpa in 2019, only c30% is collected).

The conclusion in our Aurubis technology review is that the company does have a partial moat around its business, as it has patented several process improvements, to remove pollutants (30%), enhance product purity (25%), energy efficiency (20%) and optimize specific products/alloys (40%) in its copper processing operations.

Some of the most interesting innovations, and further observations on the patent library, are covered in our usual technology review.

Further research. Our outlook on growth in global copper demand as a result of the energy transition is linked here.

Recycling: a global overview of energy savings?

Global recycling energy savings

A global overview of recycling is laid out in numbers in this data-file, covering steel, paper, glass, plastics such as PET and HDPE and other metals, such as copper and aluminium. In each case, we cover the market size (in MTpa), the recycling rate (in %), primary energy use (MWH/ton), CO2 intensity (tons/ton) and the possible savings from recycling.

We estimate that 1GTpa of waste material is recycled globally, as 35% of these products’ total markets are sourced from scrap. As a good rule of thumb, recycling saves 5MWH of primary energy and 2 tons of CO2 per ton of material, or around 70% of the footprint of primary production, although the precise numbers vary category-by-category.

In the energy transition, we estimate global CO2 savings from recycling are already around 2GTpa. Rising energy and CO2 prices would incentivize more recycling, and save another 2GTpa of future CO2, we estimate.

Steel is the largest category, as around 30% of the 2GTpa market is sourced from scrap, or c600MTpa, avoiding c80% of the energy and c90% of the CO2 associated with primary production, and saving 1GTpa of global CO2 (models here and here). This is also the area where economic opportunity seems largest: at 6c/kWh average energy prices and a $50/ton CO2 price, these ‘savings’ can avoid half of the typical costs of primary steel production. Leading steel-recycling companies, in electric arc furnaces include Nucor, CMC and Celsa Group.

Paper is the second largest category, as more than half of the world’s 400MTpa paper market is sourced from recycled pulp. Energy, CO2 and energy/CO2 cost savings are around 30-40%, compared with virgin paper (model here). One of Europe’s largest listed paper recyclers is DS Smith, managing 6MTpa of material each year.

Aluminium offers the third largest energy and CO2 savings from recycling, out of the materials in our data-file. Despite a smaller market by mass, at c70MTpa, the energy and CO2 associated with secondary production is around 90-95% lower than primary production (model here), which also helps avoid c40% of production costs (at 6c/kWh energy, $50/ton CO2). The world’s largest aluminium recycler is Novelis, which is owned by Hindalco.

Copper recycling has mixed numbers. In absolute terms, around one-third of the world’s 28MTpa copper demand comes from secondary sources. And, secondary production saves c75% of the energy and CO2 of primary copper production, avoiding 4-5MWH/ton of energy and around 3 tons/ton of CO2 (model here). However, the value of these savings is relatively low in normal times, compared to $7-10/kg copper prices. But higher energy and CO2 prices in the 2020s may increase the relative value of secondary production. One of the world’s largest copper recyclers is Aurubis (TSE note here), while Boliden recycles copper and other metals, such as nickel (TSE note here).

The glass industry comprises over 1,200 companies, across 2,160 sites, outputting over 200MTpa of products. c20% is from recycled material. However, this is likely to be the category with the energy and CO2 savings from recycling, both in absolute and relative terms, at about 25-35% (morel here).

Global plastics only see a c10% recycling rate, which in turn is dominated by PET and HDPE. Energy and CO2 savings in these categories are estimated at 50-60% (models here and here). An array of next generation plastic recycling companies, which can handle a wider variety of feedstocks, has excited us in our research (screen here, note here).

The data-file linked below contains our numbers and workings, to derive the energy, CO2 and cost savings in each category, as a useful reference.

Further research. Our recent commentary on global recycling and energy savings is linked here.

Capacitor banks: raising power factors?

Wind and solar power factor corrections

Power factor corrections could save 0.5% of global electricity, with $20/ton CO2 abatement costs at typical facilities in normal times, and 30% pure IRRs during energy shortages. They will also be needed to integrate more new energies into power grids. This 17-page note outlines the opportunity in capacitor banks, their economics and leading companies.

Oil demand: how much can you save in a crisis?

oil demand in a crisis

Countries are encouraged to hold 90-days of emergency oil imports in inventory and have plans to reduce their oil use by 7-10% in emergency times. This has long been IEA guidance to reduce oil demand in a crisis.

Hence this data-file tabulates proposals from the IEA to quantify how these reductions (5-10Mbpd globally) could be achieved.

It is important to be realistic. Implementing all of these measures on a global basis would be extremely painful and could still only cut 10Mbpd of global oil demand at most. But a selective combination of measures would not be unsensible, and could realistically take the edge of the most extreme possible price spikes.

The largest measures are odd-even rationing (up to 6Mbpd), ride-sharing (up to 2Mbpd), free public transport (up to 2Mbpd) and slower driving mandates (up to 1.5Mbpd).

Further research. Our outlook on global oil demand during COVID pandemic is linked here. Our key points on oil demand in a crisis and how we could reduce the use of it are highlighted in our recent commentary, here.

CO2 emissions per hour of activity?

CO2 emissions per hour of activity

The purpose of this data-file is to tabulate our best estimates for the CO2 associated with different activities. It is not intended to be preachy, just present some data-driven conclusions…

(1) The tyranny of choice. Every activity in the data-file has some CO2 footprint, but the axes are logarithmic. Thus 1-hour of higher-carbon activity emits 100-1,000x more CO2 than a lower-carbon activity. 1-hour of flying emits as much CO2 as watching Netflix for 17-days.

(2) You can weight the numbers into an average. A weekend ‘mini break’ might average together into 8kg CO2e per person per hour, while a weekend of solid reading is 500g pp ph.

(3) The average US person has a CO2 footprint of 20 tons per year (data here), which is 2.2kg per hour (coincidentally, or not, about the same as going to play a round of golf). Hence 2kg/hour is a good yardstick for segmenting higher- and lower-carbon activities on the chart above.

(4) Food choices have a surprisingly large impact (blue bars above), from <1 kg CO2e for a lower-carbon meal per person, 4kg for a higher-carbon meal, 10kg for an hour of baking and 20kg for an hour of barbecuing. I am not saying there is anything inherently evil about brownies or ribs. Simply that you can lower your CO2 by 20-70% through dietary choices (note here).

(5) The lowest carbon activities emit 50-100g of CO2 per hour. For example, this is the full life-cycle CO2 for reading on your iPad or desktop, and even comes out 30-90% lower-carbon than reading a physical newspaper. So with that said, here is a link to our PDF research.

Copyright: Thunder Said Energy, 2022.