Document RangqVy4VGboV8VYOVD7eb0Zv

PFAS Study in Chemical Plants and Refineries Equipment France Final Report July 2023 > accenture oe:o~o= FRANCE a. ~ nergies et moilits Table of Contents 01 Executive Summary 02 Scope and methodology 03 Overview of PFAS 04 Impact analysis of PFAS partial or total ban 05 PFAS usage in Chemical and Refining plants 06 PFAS alternatives 07 Conclusion Executive Summary (1/4) PFAS are a large group of substances, both polymeric and non-polymeric, containing carbon-fluorine bonds (C-F) which is considered to be the strongest in organic chemistry, resisting heavily to degradation OECD lists around 5000* PFAS which are scientifically referenced by their chemical structure category name (e.g., polytetrafluoroethylene), but better known by industrials by their abbreviations (e.g., PTFE) or brand name (e.g., Teflon) While encompassing a very diverse portfolio of products, PFAS are predominantly used as raw material in chemical synthesis and are mainly found in solid form in equipment. Solid PFAS (mainly fluoropolymers) represent a small portion of the total PFAS substances (~5%) The future European project to restrict PFAS (Perfluoroalkyl and Polyfluoroalkyl Substance) in chemical plants equipment will have implications on the operations of existing assets and decision to invest in new ones The chemical and refining industries are highly CAPEX intensive and need to operate with high HSE standards, therefore there is a priority to operate with equipment fit for security, that can be used over a long period of time and maximize the return on capital employed The impact of a PFAS ban on the chemical and refining industries would be massive as few PFAS-based materials are used extensively in core equipment of chemical plants and refineries: - Technical substitutes for several PFAS based equipment are not available (e.g. membranes, ...), or do not ensure the same level of safety performance (e.g. joints, ...), hence several plants could no longer operate - For existing plants, impact of one-off cost represents up to 6 months to 1 year of revenue, and a reduction of 20-30% of EBITDA impact. This combines the required investments to replace core equipment of plants as well as the revenue losses linked to the interruption of production over a period of 6 months to 2 years - For new plants, higher CAPEX and increased running cost could deter new investments in France > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Source: *OECD Towards a new comprehensive global database of PFASs, Copyright 2023 Accenture. Ali rights reserved. 3 Executive Summary (2/4) In addition, where technical substitutes for materials used in chemical plants exists, the supply industry is not structured to supply required volumes over a short period of time and the timing to validate the feasibility at industrial scale would take several years Identifying PFAS in industrial equipment is a task that has been proven to be difficult to conduct, even for big chemical companies, mainly due to (i) the multiplicity & diversity of equipment that composes a chemical plant, (ii) the limited familiarity with the bill of material as equipment are predominantly specified by their functional performance, and (iii) the limited focus of the industry on the topic The chemical and refining industries have a limited set of PFAS used in plants, ~30 molecules. The main ones are fluoropolymers (plastics and elastomers), lubricants, foams, refrigerant gas. The use of theses materials is omnipresent in chemical and refining plants Many equipment containing PFAS are similar for the whole industry (piping, pumps, seals, refrigerant gas, etc.), while some are specific to certain chemical processes (membrane, mixer, etc.). Most of the uses are in core assets of the plants, close to the process Several properties are sought in fluoropolymers, the predominant category of PFAS found in chemical equipment: - Chemical resistance to a very corrosive environment - Strong mechanical properties - Thermal resistance at high temperature PFAS in joints, pipes, valves and refrigerant gases in chemical plants are chosen for one or more of these properties During the factory operation phase, the risks of accidental release in the environment varies by type of PFAS (e.g solid vs gaseous or liquid state, in contact with products or water,...) Some chemical companies that serve specific industries (e.g., semiconductors for microelectronics) requiring high level of purity in the final product are integrating into their operations the control of the presence of any undesirable substances at the end of their process > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Copyright 2023 Accenture. Ali rights reserved. 4 Executive Summary (3/4) Regarding the end-of-life of PFAS products/equipment, some measures exist for gases, while the disposal of solid PFAS is not subject to specific control The chemical industry and its suppliers have started investigating alternative to PFAS materials used in plant, providing similar properties (durability, resistance, ...) For some equipment, there currently are no identified viable alternatives (e.g., membrane, diaphragm) For some use cases only, technical alternatives to PFAS exist for some materials in the form of: - Replacement of Fluoropolymers: other polymers, Specialty metals, other materials (e.g., glass, ceramics, ...) - Non-fluorinated gases for refrigerants In particular, the industry has identified some potential substitutes for the following PFAS equipment working only for a limited number of use cases: - Joints: metallic (nickel), graphite, organic/mineral fibers - Piping: thermoplastics, Hastelloy, glass lining, nickel, titanium - Valves: polyethylene, Hastelloy, EPDM, Vespel - Refrigerant gas: Ammonia, CO2, propane/methane - Coating: PPV, Epoxy, Polyester, melamine However, they often do not match all the properties of the original substance, making them less desirable. In particular, they do not offer the same level of safety and environmental protection > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Copyright 2023 Accenture. Ali rights reserved. 5 Executive Summary (4/4) Beyond the material performance, the alternatives have other drawbacks: - Safety of the future installations to be demonstrated - Long alternative development process (R&D, testing, approval from client, confidence from supplier to provide same level of guarantees) - Production tools and supply chain adaptation to cope with sharply increased volumes - Possible same persistence characteristic of alternative materials with similar properties to PFAS - Some identified alternatives containing traces of PFAS (voluntarily or involuntarily) Many challenges are identified with a ban of PFAS in industrial equipment: - No known alternatives to date for some equipment and unfavorable performance of alternatives identified - Insufficient supply chain maturity for manufacturing of PFAS free equipment with little to no capacity for alternative identified - Substantial impact on direct costs (maintenance) and impact on utilization (more frequent failure/maintenance activities) - High CAPEX required to transform plants linked to the use of PFAS and severe commercial impact linked to interruption of production Workshops with chemical and refining companies allowed to identify potential improvement of PFAS management in plants: - Better traceability of PFAS in equipment like type, quantity, origin etc. (e.g in a material passport) - More stringent control of PFAS degradation and end-of-life management - Stronger collaboration between equipment suppliers and chemical companies to develop and test new alternatives to PFAS materials > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Copyright 2023 Accenture. Ali rights reserved. 6 Table of Contents 01 Executive Summary 02 Scope and methodology 03 Overview of PFAS 04 Impact analysis of PFAS partial or total ban 05 PFAS usage in Chemical and Refining plants 06 PFAS alternatives 07 Conclusion Accenture assessed PFAS use in French chemical and refining plants, alternatives and potential impacts of a ban Report based on workshops, interviews, and Accenture analysis Scope of the study The French Chemical and Refining sectors are covered, in particular: Chlorine chemistry, Petrochemicals / Refinery, Specialized (incl. Fine) chemistry PFAS inventory and alternative analysis: - Identification of the equipment containing PFAS in chemical and refining plants - Identification of the different type of PFAS and their properties - Exploration of the potential substitution solutions for affected equipment Expected impact of the regulation: - Operational - Economic - Social & Environmental > FRANCE~ 01:0~0~ = nergies etmolJilits Methodology Workshops with 10 companies part of the diverse French chemical industry landscape - 1st workshop: focus on the inventory of industrial equipment containing PFAS on selected industrial plants - 2nd workshop: analysis of the impact of a PFAS ban on the selected industrial plants +25 interviews conducted with chemical equipment manufacturers & associations (joints/gaskets, piping, valves, refrigerant gas, painting/coating, electronics) Accenture's research and analysis Copyright 2023 Accenture. Ali rights reserved. 8 Table of Contents 01 Executive Summary 02 Scope and methodology 03 Overview of PFAS 04 Impact analysis of PFAS partial or total ban 05 PFAS usage in Chemical and Refining plants 06 PFAS alternatives 07 Conclusion PFAS are a large group of substances, both polymeric and non polymeric, containing the strongest Carbon-Fluorine bond Key elements Carbonfluorine One of the strongest chemical bonds in organic chemistry resisting heavily degradation 5000 ~5000 PFAS substance in use (estimated), with various chain lengths (non-polymeric/polymeric) Raw materials Derivatives of fluorinated compounds: - F2 - HF - ClF2C-C-F2Cl - CH3CF2Cl - CHClF2 > FRANCE~ 01:0~0~ = nergies etmolJilits Sources: 1 SFEI, OECD, Accenture research PFAS product tree (simplified) Per and Polyfluoroalkyl Substances (PFAS) Nonpolymers Polymers Polyfluoroalkyl Substances Perfluoroalkyl Substances Side-chain fluorinated polymers Fluoropolymers Polyfluoroalkyl Ether Acids Fluorotelomer Substances Perfluoroalkyl Acids (PFAAs) Perfluoroalkane Sulphonamides (FASAs) Perfluroalkane Sulfonamido Substances Perfluoroalkyl Carboxylic Acids (PFCASs) Perfluoroalkyl Sulfonic Acids (PFSAs) ______________ Perfluoroalkyl Ether Sulfonic Acids (PFESAs) L----------------------------------------~ Perfluoroalkyl Ether Carboxylic Acids (PFECAs) i _______________ 1 1 1 1 _ ! -------------~ Precursor Transformation Pathway Key Potential Precursor Transformation to Terminal PFAS PFCAs 11 -------------~ PFSAs 1 Copyright 2023 Accenture. Ali rights reserved. 10 Predominantly used as raw material in chemical synthesis, PFAS are mainly found in solid form in industrial equipment, primarily as fluoropolymers Intermediaries PFAS distribution by main category 4 683 267 1 833 314 365 625 21 512 746 Fluoropolymers Fluorotelomer-related compounds Other PFAA precursors and related compounds - perfluoroalkyl ones Per- and polyfluoroalkyl ether-based compounds Perfluoroalkane sulfonyl compounds Perfluoroalkyl phosphate compounds Perfluoroalkyl carbonyl compounds Other PFAA precursors or related compounds - semifluorinated PFAS distribution by state 4 683 333 2 612 1 738 Primarily fluoropolymers Solid state Liquid state Gaz state Solid PFAS mainly fluoropolymers represent a small portion of the total substances (~5%) More than 90% of the PFAS are used in gaseous or liquid state * > FRANCE~ 01:0~0~ = nergies etmolJilits Source: Analysis based on OECD Database, under the following hypotheses: Chain length <5 = Gaseous state ; >20 = Solid state ; 5< & <20 = Liquid state Copyright 2023 Accenture. Ali rights reserved. 11 Table of Contents 01 Executive Summary 02 Scope and methodology 03 Overview of PFAS 04 Impact analysis of PFAS partial or total ban 05 PFAS usage in Chemical and Refining plants 06 PFAS alternatives 07 Conclusion The chemical and refining industries are generally highly CAPEX intensive and needs to operate with high standard HSE Characteristics of chemical industry: strong difference across segments Chemical industry asset intensity 10% 180% lHigh pressure and high temperature processes 30% 5% 15% 50% Formulation business Capex / Revenue > FRANCE~ 01:0~0~ = nergies etmolJilits Gross asset value / Revenue Source: Accenture research Capex / EBITDA Priorities for Chemical Plants Design Safety management High pressure High temperatures Potential hazardous materials Durability management Resistance to corrosion Mechanical stress and fatigue Return on Capital Employed Process optimization Maintenance requirements Maximize production efficiency Minimize energy consumption Copyright 2023 Accenture. Ali rights reserved. 13 The impact of potential PFAS ban will depend on extent and duration of potential derogations - long lead time to adapt No alternative for core equipment Business case Closure -........ ------------------------------------------------------------------------------------------------------------ Mothballing R&D to identify alternative technologies (10 yrs. +) Plant transformation Existing Plants New Investments Identified alternatives No alternative for core equipment Identified alternatives Business case (ROCE) C.lo.s.u.r.e... Engineering (6 months - 1 yr.) ..,_<.!)Pla--n--t-S--h..u--t+down Plant transformation (6 months - 2 yrs.) Procurement of alternative materials and ramp up of new supply chains (1 - 10 yrs. depending on equipment) Investment in alternative location -- - Client qualifications ' ' ' ' (where relevant) ""' 1 - - - - - - - - - - - - - " .," Business case / feasibility Investment in alternative location Engineering Procurement Construction > FlRtA:NnC~En~'=(:0)(0)etnmeorglJieilsits Sources: Survey of Chemical players, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 14 The impact of a PFAS ban on the chemical industry would be massive both for existing plants and new investments Expected impact from PFAS ban on chemical and refining plants in France Existing plants (when alternative exists) New investments Increased maintenance expenditure: x [2-3] vs baseline Potential temporary shutdown of plant to adapt installation with PFAS free alternatives when available: 6 months - 2 years CAPEX requirements to modify plants: 20 to 50% of plant to be rebuild Client requalification of process (lost revenue): 6 months to 2 years Higher CAPEX than existing plants: + [15-60]% increase Higher running cost: increased maintenance cost x [2-3] Impact on plant availability Decision: Transformation of plant or shutdown Timing: Depending on potential derogations and timeline > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Sources: Survey of Chemical players, Accenture analysis Decision: Go / No go for new plant in Europe Timing: Immediate Copyright 2023 Accenture. Ali rights reserved. 15 For existing plants, impact of one-off cost could represent up to 6 months to 1 year of revenue and 20-30% of EBITDA impact Expected impact from PFAS ban on chemical and refining plants in France Dimension Increased maintenance expenditure: [2-3] x baseline Impact x[2-3] higher maintenance cost Potential shutdown of plant to adapt installation with PFAS free alternatives when available 6 months - 2 years shutdown CAPEX requirements to modify plants 20-50% of plant to be rebuild with higher cost materials Baseline Maintenance cost index: maintenance cost / gross asset value = 1.5-3% Asset intensity: Gross asset / revenue = x [0.5-2] Loss of revenue and gross margin = 50-100% Gross margin = 30-50% of revenue Financial estimate 3-5% of revenues every year (approximatively 20-30% of EBITDA) One off impact: 25-50% of revenue over 6 months to 2 years Potential longer-term loss of clients due to supply interruption Asset intensity in chemical: gross asset value / revenue = x [0.5-2] 15-60% CAPEX increase for PFAS free alternative (when existing) One off impact: 30-50% of revenue for medium asset intensity business Client requalification of process (loss of revenue): 6 months to 2 years Loss of revenue or reduction in gross margin due to the sale of products to alternative channels Highly variable depending on the customer segment (commodity vs specialties in highly demanding sector e.g., semi conductor) To be confirmed Potential decision to shut down plant or part of the plant due to unfavorable ROI > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Sources: Survey of Chemical players, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 16 For new plants, higher CAPEX and increased running cost could deter new investments Expected impact from PFAS ban on chemical and refining plants in France Dimension CAPEX requirements to modify plants Increased maintenance expenditure: x 2-3** vs baseline Impact 15-60% CAPEX increase for PFAS free alternative (where existing) * x [2-3] higher maintenance cost Baseline Asset intensity in chemical (gross asset / revenue) = [0.5-2] Maintenance cost index: maintenance cost / gross asset value = 1.5-3% Asset intensity: Gross asset / revenue = [0.5-2] Financial estimate One off impact: 15-60% of revenue for medium asset intensity business Potential decision to build plant in alternative location, especially for export business 3-5% of revenue every year (~20% of EBITDA) Potential decision to relocate the investments abroad > ut:n~n: FRANCE'=00nergies ~()()etmolJilits *Procurement cost of chemical plant EPC project: ~30% of total CAPEX . Procurement is estimated to increase by 1.5 to 3x for PFAS-free alternatives based on data collected from chemical companies. **According to chemical companies' maintenance cost assessment Sources: Survey of Chemical players, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 17 The chemical industry highlights the potential need to close sites in order to comply with an eventual PFAS-ban regulation Operational impact [50-60]% of the lined piped and accessories of the site need to be replaced. It will be very difficult for us in terms of cost and time if we face an immediate ban If there is an immediate ban on all electrolysis membranes, we will have to shut down all the facilities on the platform On some occasions, replacements of equipment with substitutes are possible Customer qualification will last between 6 to 18 months to confirm that product quality is not affected by the change If alternatives exist, it will take up to [1-2] years to replace all equipment and get the regulatory validations The difference in weight with PFAS-free equipment could compel us to undertake reinforcement work on the structures of our installations Depending on the substitute, maintenance will have to be more frequent (from 1 every three years to 1 every year), and therefore more costly Since all the facilities are interdependent, we will have to shut down the whole plant Economic impact If we obtain a time derogation, we will be able to smooth the Decrease in turnover caused by relocated investments and loss of clients CAPEX over years. Otherwise, the cost will be unbearable Substitutes for gaskets are 2 times more expensive than PTFE, The activities to discontinue represent a turnover of 50-100M in 2022 substitutes for equipment made or coated in PVDF are 5 times more expensive and substitutes for equipment with small parts in PFAS are 3.5 times more expensive It might be more convincing to rebuild "PFAS free" plant out of scratch then replacing an existing site with PFAS 1 year of shutdown will cost us 1 year of turnover Social and Environmental impact > FlRtA:NnC~En~'=(:0)(0)etnmeorglJieilsits The totality of jobs on the site will be affected by a shortterm PFAS ban Review of all waste treatment processes and introduction of emission controls with analytical monitoring of water and air An immediate ban will impact our employees: up to 240 direct jobs and 1000 indirect jobs could be lost Hazard study will need to be revised Reinforced medical monitoring of personnel Source: Survey from a sample of 10 chemical companies' representative of the industry Copyright 2023 Accenture. Ali rights reserved. 18 Table of Contents 01 Executive Summary 02 Scope and methodology 03 Overview of PFAS 04 Impact analysis of PFAS partial or total ban 05 PFAS usage in Chemical and Refining plants 06 PFAS alternatives 07 Conclusion Identifying PFAS in chemical and refining plants is a challenge for many players Limited focus from Engineering and Regulatory Teams on PFAS used in industrial equipment Engineering responsibilities often lie within external parties Equipment and material selection prioritize functional specification such as temperature, pressure and chemical compatibility requirements over PFAS presence Regulatory teams primarily concentrate on assessing the compliance and safety of raw materials and additives used in final products Widespread presence of various PFAS in many equipment Multiple and different equipment exist in a chemical plant PFAS are used in a wide range of equipment such as: - Pipes - Valves (Body, Washers & Gaskets) - Pumps (Coating & Gaskets) - Columns - Sensors ... > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Source: Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 20 Many equipment containing PFAS are similar for the whole industry while some are specific to certain chemical processes Core equipment containing PFAS identified during the workshops and through report analysis* Equipment containing PFAS common to all companies** Category of equipment Process units Other Products Power, Utilities & Electronics Safety and Protection Joints/ Gaskets Valves Piping Vessels Pumps Refrigerant gas Paint*** Grease Lubricants Electric cables/ wires Semi- conductor Measuring instrument Batteries Circuit Breakers PPE Firefighting Foams Equipment containing PFAS specific per company Company groups Chlorine #1 chemistry #2 Petrochem/ #3 Refinery #4 #5 Specialized #6 chemistry #7 (incl. fine #8 chemicals) #9 #10 Aneaqluyitpic.al Membrane Filter Balloon Ejector Reactor ExcHheaantger LabEqouraipto. ry Decanter Hydrolyser Separator Agitator Mixer Exppaontsion Emulsifier Micronizer > te:o~o= FRANCE~ ~ nergies etmolJilits *This table is not exhaustive. **The 10 companies have the following equipment containing PFAS in their plants. ***Paint for buildings & external structures. : equipment containing PFAS Source: Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 21 Companies identify 3 groups of PFAS, representing ~30 types of PFAS - a small subset of the overall PFAS landscape Identified PFAS substances Solid State Fluoropolymers FKM (Viton, Tecnoflon, Dyneon,...) FFKM (Kalrez, Tecnoflon,...) PTFE (Teflon, Gylon) FEP PFA PVDF (Kynar, Hylar, Solef) ETFE PCTFE ECTFE PFAS compounds PFSA** PFCA** Liquid State Lubricants PFAE PFPE PFPAE PCTFE (Voltalef) Firefighting foams C6 Foams (SFPM***) Gaseous State Refrigerant gases R22 R134 a R404 a R407 a R407 c R410 R427 a R507 > ut:n~n: FRANCE'=00nergies ~()()etmolJilits *PFAS lists are not exhaustive, the brand names identified are presented in (italic), **PFSA and PFCA are not fluoropolymers, ***Film-forming alcohol-resistant fluor synthetic emulsifier Source: Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 22 Different types of PFAS can be found in various equipment, depending on their use (1/2) Identified PFAS in process units' equipment during the workshops and through report analysis Equipment Process unit equipment Gaskets Valves Vessels Piping Pumps Reactors Membranes Ejectors Laboratory Equipment Filters Agitators Balloons Decanter Hydrolyser Micronizer Separator Heat Exchanger Analytical Equipment Expansion Pot Mixer PTFE PVDF PFA FFKM FKM PCTFE FEP ECTFE PFSA PFCA > FRANCE~ 01:0~0~ = nergies etmolJilits Source: Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 23 Different types of PFAS can be found in various equipment, depending on their use (2/2) Identified PFAS in three other categories of equipment during the workshops and through report analysis Equipment Other Products Lubricant Grease PTFE PVDF PFA FFKM FKM PCTFE FEP ECTFE ETFE PFPE PFAE PFPAE SFPM* Pexatinetrnfoalr sbturuilcdtiunrges & Power, Utilities and Electric wires Electronics Circuit Breakers Semi-conductors Batteries Minestarsuumrienngts Safety and Protection PPE Firefighting foams > FRANCE~ 01:0~0~ = nergies etmolJilits *C6 Foams Source: Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 24 Different types of PFAS can be found in various equipment Identified PFAS during the workshops and through report analysis* Type of industrial Cchhelomriisntery #1 #2 Petrochem/ Refinery #3 Fluoropolymers Lubricants/ R-gas PTFE PVDF PFA FFKM FKM PCTFE FEP ECTFE PFSA PFCA Grease #4 SCpheecmiaislitzreyd #5 (incl. fine chemicals) #6 #7 #8 #9 #10 Firefighting Foams Main equipment Gaskets, Piping, Valves, Vessels, PPE Gaskets, Piping, Valves, Vessels, PPE Pumps, Analytical equip., Membranes, Filters Gaskets, Piping, Valves, Vessels, PPE Balloons, Ejectors, Reactors, Heat Exchanger GPuamskpests, Piping, Valves, Vessels, PPE GPuamskpest,s,MPeipminbgra,nVeaslv, eLsa,bVoerastsoerlsy,ePqPuEip. GPuamskpest,s,MPeipminbgra,nVeaslv, eRse,aVcetossrsels, PPE GMaesmkebtrsa,nPeisp,inHge,aVt aElxvcehsa, nVgeessr,eRlse,PaPcEtors Gaskets, Piping, Valves, Vessels, PPE Decanter, Heat Exchanger, Hydrolyser, Reactors, Filters, Separator Gaskets, Piping, Valves, Vessels, PPE Pumps, Agitator, Ejectors, Mixer, Filters, Expansion Pot GEmasuklesitfsie, rPsip, Minigc,roVnailzveers, Vessels, PPE > FRANCE~ 01:0~0~ = nergies etmolJilits *Note that this table is not exhaustive Source: Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 25 Several properties are sought in Fluoropolymers, making them the predominant category of PFAS found in chemical equipment Properties of PFAS Chemical Properties High resistance to corrosion: Resistance to aggressive products (pH<1) such as nitric acid and chloride acid Chemical inertia: Material that degrades little over time, limited product contamination (i.e., no impurities) Resistance to permeation and capacity to prevent migration of gases, liquids, and chemicals through material Thermal Properties Wide operating temperature range: As example, PTFE has a temperature range of [-240-260] C and can withstand high temperatures without degradation Mechanical Properties Resistance to pressure: Some chemical processes require high pressure High tensile strength: Can withstand mechanical stress and deformation Low friction coefficient: Non-stick and lubricants properties > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Sources: Survey of Chemical players and suppliers, Desktop research, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 26 PFAS joints, pipes, valves and refrigerant gases in chemical plants are chosen for one or more of these properties (1/4) Focus on joints Type of joints Static joints Dynamic joints Common functions Static sealing: Sealing between two parts with no (or very low) relative movement Dynamic sealing: Sealing between two parts with relative rotational and/or translational movement Types of PFAS present e.g., PTFE, PVDF, PFA, FFKM, FKM, PCTFE, FEP, ECTFE Desired properties Mechanical resistance: tensile strength and limited swelling Chemical resistance: resistant to chemical attacks Mechanical resistance: high pressure (0 to 750 bar), low fatigue, high tensile strength Thermal resistance: very low and high temperatures (-260 to +300 C) Used when the application goes beyond the limits of traditional lip seals > te:o~o= FRANCE~ ~ nergies etmolJilits Sources: Eriks, Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 27 PFAS joints, pipes, valves and refrigerant gases in chemical plants are chosen for one or more of these properties (2/4) Focus on piping Type of piping Internal coating Solid piping Common functions Transport of highly acid or basic fluids under extreme temperatures Transport of highly acid or basic fluids Types of PFAS present e.g., PTFE, PVDF, PFA, FFKM, FKM, PCTFE, ECTFE Desired properties Chemical resistance: corrosion resistance Thermal resistance: operating temperatures from -200 to +260C Chemical resistance: highly resistant to chemicals, rot-proof and mildew-proof Thermal resistance: operating temperatures from -20C to +150C Other properties: insensitive to ultraviolet rays, Highly waterproof, Non-flammable (UL V0) > te:o~o= FRANCE~ ~ nergies etmolJilits Sources: Mersen, Tecalemit, Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 28 PFAS joints, pipes, valves and refrigerant gases in chemical plants are chosen for one or more of these properties (3/4) Focus on valves Type of valves Valves with some PFAS components Common functions Control flow of highly acid or basic fluids under extreme temperatures Types of PFAS present e.g., PTFE (sleeve) Desired properties Chemical resistance: chemical resistant lining Thermal resistance: -30 < T < 210C Mechanical resistance: vacuum-proof lining PFAS-only valves Control flow of highly acid or basic fluids under extreme temperatures and high purity standards e.g., PVDF (body), FPM (gaskets), PTFE (membrane) Chemical resistance: resistant to acid and basic liquids Thermal resistance: -30 < T < 120C > te:o~o= FRANCE~ ~ nergies etmolJilits Sources: Az-Armaturen, Sectoriel, Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 29 PFAS joints, pipes, valves and refrigerant gases in chemical plants are chosen for one or more of these properties (4/4) Focus refrigerant gas Types of F-gases Common functions Act as cooling agent in industrial applications by having a low boiling temperature Types of PFAS present e.g., R-134a, R-410a, R22, R323, R404a, R407 a, R407c, R427a, R507 Desired properties Heat transfer capacity Pressure-drop performance Chemical resistance: non-corrosive, non-flammable Boiling temperatures match required levels > te:o~o= FRANCE~ ~ nergies etmolJilits Sources: VISIOTECH, Survey of Chemical players and suppliers Copyright 2023 Accenture. Ali rights reserved. 30 Risks of accidental release of PFAS in the environment varies by type of PFAS Focus on factory operation phase PFAS State PFAS Solid Fluoropolymers: Fluoroelastomers Fluoroplastics Liquid Lubricant Grease Firefighting Foams Gaseous Refrigerant gas PFAS in contact with product X X Release risk 1. Environmental factors - Degradation over time: a. Heat b. Erosion c. Chemical reaction or mechanical stress 1. Accidental spills or leaks during storage, transportation or handling 2. Evaporation due to over-heating 1. Leaks Comments Release of microplastics Leaching Lubricant/grease mainly in contact with chemical equipment if released accidently during the process Firefighting foam is released in the air after usage Decomposition of gas in environment > FRANCE~ 01:0~0~ = nergies etmolJilits Sources: Survey of Chemical players and suppliers, Desktop research, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 31 Few companies measure the presence of PFAS in their products Company Groups Chlorine chemistry Company #1 Company #2 Petrochemicals /Refinery Company #3 Company #4 Company #5 Company #6 Specialized chemistry (incl. fine chemicals) Company #7 Company #8 Company #9 Company #10 Measurement in final product X X X X X X Particle presence in the final product X X X > te:o~o= FRANCE~ ~ nergies etmolJilits Source: Survey of Chemical players Measurement in waste water Planned with evolution of regulation One company interviewed serving specific industry (semiconductor) mentioned that they measure the presence of particles in the final product at ppb levels and that no PFAS traces are found For a typical equipment (piping), the degradation of the PFAS is assessed by visual check of the damage to the pipe (perforation of the pipe due to permeation of chemical product through PFAS potentially creating leakage) Copyright 2023 Accenture. Ali rights reserved. 32 For end-of-life, some measures exist for gases and liquids, while solid PFAS elimination is not controlled specifically Focus on PFAS disposal phase PFAS State Solid Liquid Disposal method in chemical plant 1. Ordinary Industrial Waste (OIW) i. Metallic Metal-specific waste bucket ii. Common Ordinary waste bucket 2. Hazardous Industrial Waste (HIW) i. Equipment-Specific/PFAS-Specific End of Life Incineration Recycling Specific treatment 1. Stocked in special drums For lubricants/grease: Incineration Recycling: regeneration to obtain a new lubricant Gaseous 1. Gas capture with specific treatment Mandatory Maintenance Periodic recycling Organized recovery Measure specific in place X Comments Release of pollutants and ash residues into the atmosphere if incinerated Regulation for the recycling of lubricants Release of pollutants and ash residues into the atmosphere if incinerated EU F-gas regulation in place Gas treatment is subcontracted to specific companies > te:o~o= FRANCE~ ~ nergies etmolJilits Sources: World Health Organization, Survey of Chemical players, Desktop research, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 33 Table of Contents 01 Executive Summary 02 Scope and methodology 03 Overview of PFAS 04 Impact analysis of PFAS partial or total ban 05 PFAS usage in Chemical and Refining plants 06 PFAS alternatives 07 Conclusion PFAS have technical alternatives for some applications, coming from different material classes Focus on identified PFAS alternatives by categories In chemical plants, most PFAS exist in solid state Solid State Materials in Chemical Equipment Liquid State Gaseous State Polymers Plastics PVC (PVC is x15 less expensive than PVDF)* PEEK (PEEK is x10 more expensive than PTFE )** PPS PSU Elastomers NBR EPDM Metals Other Materials Stainless Steel Glass Nickel Alloys Ceramics Hastelloy (An Hastelloy Graphite valve is 7-12 more expensive than one in PTFE)*** Exotic material (Tantalum, Zirconium, Titanium) Lubricants / Grease Graphite Molybdenum Foams Hydrocarbons Detergents Siloxanes Proteins R-gas Ammonia CO2 Hydrocarbons (e.g., Propane/Methane) For some applications, such as electrolysers membranes, there are no substitutes identified to this date > FRANCE~ 01:0~0~ = nergies etmolJilits Sources: *Valve supplier interview (however chemical / thermal resistance of PVC not suitable for all applications . **Performance plastics supplier. ***French ChemCicoapl yprliagyhetr 2023 Accenture. Ali rights reserved. interview | Desktop research, Accenture analysis 35 However they often do not match all the properties of the original substance, making them less desirable (1/3) Other polymers: focus on Thermoplastics Thermal Resistance Symbol Material name Fluoropolymer PTFE PFA Alternatives PVDF PEEK PPS PSU PEI Polytetrafluoroethylene Perfluoroalkoxy polymer Polyvinylidene fluoride Polyetherketone Polyphenylene sulfide Polysulfone Polyetherimide Table 1: List of selected heat-resistant plastics Max. working T. [C] 260 150 150 250 240 150 170 Hydrochloric acid Sulfuric acid Nitric acid Tetrahydrofuran (THF) Dimethyl sulfoxide (DMSO) Chloroform PEEK Fair Poor Poor Poor Poor Poor Table 2: Chemical resistance PEEK | PTFE PTFE Good Good Good Good Good Fair In terms of working temperatures alone, there are alternative plastics available for certain PFAS. For instance, PEEK is a possible alternative for PTFE in a very large domain of chemicals but with limitations in some applications (e. g. in strong or oxidizing acid and in some solvents) (ASTM 2000, SAEJ20) Heat Resistance* 325 300 275 250 225 200 175 150 125 100 75 50 FFKM VQM AEM Fluoroelastomers FVQM FKM/TFE-P EPDM + + CSM CPE + CR + + - ACM- HNBR ECO + NBR IIR SBR NR Not required 140 120 100 80 60 40 30 20 10 Oil Resistance, [%] Volume Swell in ASTM No. 3 Oil, 70 hours exposure Figure 1: Elastomer families plastics rated against heat and oil resistance3 The ASTM swelling test for elastomers show that in the domain of high temperature (>200C), there is no alternative for fluor elastomers > te:o~o= * Maximum time at which vulcanizates can be aged for 70 hours with changes in tensile strength 30%, elongation -50% and hardness 15points FRANCE~ ~ nergies etmolJilits Sources: 1.Design and Manufacturing of Micro-Turbomachinery Components with Application of Heat Resistant Plastics, June 2018. 2.https://www.glsciences.com/technique/technique_data/lc/usage_of_hplc_1/column12.html. 3.Choosing the right elastomer for the right application Stahl W, WorldCopyright 2023 Accenture. Ali rights reserved. 36 Pumps, 2006, 481, 2006 Oct, pp 30-33 However they often do not match all the properties of the original substance, making them less desirable (2/3) Other polymers: focus on Thermoplastics Overview of Chemical Resistance of Resins to Chemicals at 20C 30 Days of constant exposure causes no damage. Plastic may E tolerate for years Little or no damage after 30 days of constant exposure to the reagent G Some effect after 7 days to reagent. The effect may be crazing, F cdrisaccoklionrga,tlioosns of strength or Not recommended. Immediate damage may occur. Depending on the plastic, the effect may be N severe crazing, cracking, loss of strength, discoloration deformation, dissolution or permeation loss PFAS ETFE FEP/TFE/ PFA FLPE Awceiadks, dilute or E E E Acids, * strong/concen E E G trated Alcohols, aliphatic E E E Aldehydes E E G Bases/Alkali E E F Esters G E G Halyipdhroatcicarbons, E E E Haryodmroactiacrbons, G E E Hhayldorgoecnaartbeodns, G E G Ketones, aromatic G E G OAgxeidnitzsin, gstrong E E F FLPP E G E G E G G N F G F Alternatives HDPE LDPE PC E E E G G G E E G G G G E E N G G N G F G N N N N N N N N N F F F PETG G N G G N G G N N N F PP E G E G E G G N N N F PVC E G G G E N G N N F G TPE** G F E G F N E N F N N For thermoplastics, PFAS alternatives cannot offer the required broad chemical resistance combination for all industrial applications > FRANCE~ 01:0~0~ = nergies etmolJilits * Except for oxiding acids. ** TPE gaskets Sources:. Chemical Compatibility Chart - LDPE, HDPE, PP, Teflon Resistance Copyright 2023 Accenture. Ali rights reserved. 37 However they often do not match all the properties of the original substance, making them less desirable (3/3) Focus on Metals & Glass Comparing the properties of metals and glass with fluoropolymers Metals and glass offer lower levels of resistance in terms of chemical resistance and formability as fluoropolymers when compared Potential alternatives to fluoropolymers Thermal resistance Mechanical resistance Chemical resistance Metals (eg. Rare Metals, Alloys, SST) Equivalent or better Equivalent or better Worse or equivalent (eg. Ta) Glass Equivalent Worse Worse Formability Equivalent or worse (shape creation) Worse ~------------------, Metals and glass rated against corrosion resistance and thermal conductivity high SiC Thermal conductivity Ta Ni alloys / Ti /Zr Graphite low low Stainless steel Glass Corrosion resistance > FRANCE~ 01:0~0~ = nergies etmolJilits Sources: 1.SGL carbon, Desktop research, Accenture analysis PTFE 1 L------------------ high Graphite, SiC (Silicium Carbide) and Tantalum can offer alternatives to PTFE in terms of chemical resistance The brittleness of SiC makes it not ideal for equipment as reactors, agitators or columns Copyright 2023 Accenture. Ali rights reserved. 38 Chemical companies have started identification of some alternatives to PFAS-based equipment Alternatives* identified by chemical companies in workshops Type of industrial Equipment PFAS Alternative Chlorine chemistry #1 Common** Piping Refrigerant gas PTFE, PVA, PVDF No information Enameled steel Propylene (R-1270) #2 Considers that alternatives exist depending on the use case but did not identify specific alternatives Petchems/Refinery #3 Did not identify alternatives for the moment #4 Did not identify alternatives for the moment Gaskets PCTFE Nickel gaskets #5 Common Valves - body PCTFE Vespel Piping (tubes) PFA Natural PEHD Gaskets PTFE EPDM, NBR #6 Common Refrigerant gas R407, R410, R22 Ammonia Vessels PVDF Polyethylene and polypropylene, Stainless steel Gaskets PTFE Metallic gaskets, graphite gaskets #7 Common Piping Vessels PTFE PVDF, ECTFE Hastelloy, glass lining, Nickel, TPM, FRP, Stainless steel Graphite, SiC (silicium carbide) Specialized chemistry (incl. fine chemicals) Specific Valves Heat Exchangers Piping PTFE, PFA, PVDF PVDF, ECTFE PVDF Exotic metallurgic, TPM or FRP (no return of experience) Graphite, SiC (silicium carbide) PVC/SVR, Steel Common Piping PTFE Enameled steel #8 Vessels PDF Stainless steel, Nickel-based alloy Specific Filters Heat Exchangers PTFE PTFE Stainless steel Graphite #9 Common Piping Refrigerant gas PVDF, PTFE R22, R134a,R404 a, R407, r427a, Enameled steel, glass CO2 or Ammonia Piping PTFE Hastelloy, glass lining #10 Common Valves PTFE Enameled steel, Hastelloy Refrigerant gas No information Ammonia > te:o~o= FRANCE~ ~ nergies etmolJilits *Alternatives have been identified only for certain use cases and limits to alternatives are presented in slide 34 and 35. **Common as common equipment to all the companies Copyright Sources: Survey of Chemical players and suppliers 2023 Accenture. Ali rights reserved. 39 The industry has identified some potential substitutes for the following PFAS equipment for certain use cases (1/2) PFAS and alternatives identified in gaskets and piping equipment* Equipment Gaskets Illustration Piping PFAS PCTFE, PTFE PTFE PTFE, PFA, PVDF Alternative Metallic (e.g., Nickel) gaskets Graphite or Mica (silicate) gaskets EPDM, NBR** Organic/mineral fibre gaskets TPM (Thermoplastics materials) (HD-PE, PP, U-PVC, C-PVC), SVR FRP (Fiber Reinforced Plastic) Hastelloy Glass lining Alternatives' limits Compatibility issues with some gases (e.g. CO), very high cost, requires the replacement of all affected fittings Possible contamination issues Lower Chemical resistance (less safety in chemical plants, higher emissions) Sealing level reduced by x(100-1000), Shorter life span Lower upper temperature limit and lower chemical resistance Lower upper temperature limit and lower chemical resistance Material heavy weight can induce changes in structural design changes of supports and civil construction Mechanical fragility Enamelled Steel, Nickel, Mounting constraints, Lower resistance to chemical reaction Titanium > te:o~o= FRANCE~ ~ nergies etmolJilits *The list of PFAS and alternatives identified is not exhaustive. **EPDM and NBR have insufficient chemical resistance for chlorine, sulfuric acid and nitric acid. In addition, NBR has insufficient chemical resistance for ammonia Copyright Sources: Unique Polymers; sgl carbon; Debrunner Acier, Survey of Chemical players and suppliers, Desktop research, Accenture analysis 2023 Accenture. Ali rights reserved. 40 The industry has identified some potential substitutes for the following PFAS equipment for certain use cases (2/2) PFAS and alternatives identified in valves, refrigerant gas and coating* Equipment Valves Bodies (large components) Illustration Valves - Washers** (Intermediate components) Valves - Gaskets Refrigerant gas Coating PFAS PCTFE PTFE PTFE Alternative Vespel Enamelled steel valves, Hastelloy Noble metal grade Polyethylene Alternatives' limits No specific limits identified except high cost Higher friction coefficient and lower sealing capacities, low availability Lower upper temperature limit FPM, FKM, Viton, PTFE R-Gas EPDM Ammonia CO2 Hydrocarbons (e.g., Propane/Methane) PTFE, PVDF PPV, Epoxy, Polyester, Melamine Lower chemical resistance (less safety in chemical plants, higher emissions), not suitable for all application Higher risks due to toxicity, not suitable for chlorine processes, impact on refrigerant auxiliary system design and on energy consumption Much higher-pressure requirements than r-gas for cooling, impact on refrigerant auxiliary system design and on energy consumption, narrower applicable temperature range, mainly applied in commercial refrigeration Highly flammable gas, impact on refrigerant auxiliary system design and on energy consumption, high GHG impact, mainly applied in commercial refrigeration, temperature of use must not be too high*** Lower UV durability, corrosion resistance (e.g., for seaside applications) and resistance regarding high temperatures > te:o~o= FRANCE~ ~ nergies etmolJilits *The list of PFAS and alternatives identified is not exhaustive. **Parts ensuring friction and sliding. ***The temperature difference between the desired cooling temperature and the outside temperature should not be too great, this is due to the specific properties of propane as a refrigerant. Sources: Fergusonindustrial, Alundong, BuyBestAc, Survey of Chemical players and suppliers, Desktop research, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 41 Although for some equipment, it's very challenging to find an alternative Equipment Membranes & diaphragms for Electrolysis Illustration PFAS PFSA, PTFE (Nafion, Aquivion) Why no alternatives Some alternatives banned in Europe (mercury, asbestos) There is no technical solution to date that can perform efficiently the filtration, the separation and the selectivity > FRANCE~ 01:0~0~ = nergies etmolJilits Sources: Denora, Survey of Chemical players and suppliers, Desktop research, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 42 Aside the material performance, the alternatives have other drawbacks that would make substitution challenging Safety of the future installations As they are not widespread use material, need to demonstrate performance in the long term of existing alternatives. Some known reduced performances: sealing performance, emission International design standards for PFAS based equipment well established in the industry Alternatives development Process potentially lasting many years, requiring: - R&D - Testing - Approval from certifying bodies and clients Long guarantee of new products required by clients (typically around 10 years) Production asset and supply chain adaptation Production asset debottlenecking: - New sites to be build from scratch for some materials and equipment (e.g., high nickel alloy or ceramic piping used in niche applications) - Important brownfield modifications on existing installations (e.g., gaskets) Challenges in procuring potential alternative material (e.g., tantalum) > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Sources: Survey of Chemical players and suppliers, Accenture analysis Properties of alternative materials To satisfy the desired properties for equipment the alternative materials to PFAS will also be persistent materials, which will could bring similar challenges to PFAS long life PFAS presence in alternative materials / equipment PFAS potential used to improve performance of alternatives: - Some alternatives coated with thin layer of PFAS - PFAS surfactants used in the production of nonPFAS polymers identified as theoretical substitutes to PFAS polymers Copyright 2023 Accenture. Ali rights reserved. 43 Table of Contents 01 Executive Summary 02 Scope and methodology 03 Overview of PFAS 04 Impact analysis of PFAS partial or total ban 05 PFAS usage in Chemical and Refining plants 06 PFAS alternatives 07 Conclusion Chemical and refining companies identify 4 sets of challenges associated with a ban of PFAS use in industrial equipment Summary of challenges identified by chemical companies No known alternatives to date for some equipment and unfavorable performance of already identified materials ~o Insufficient supply chain maturity with little to no capacity for alternatives J, OD identified Substantial impact on indirect costs (maintenance) and impact on utilization (more frequent failure / maintenance activities) IlJ1 t:J) High CAPEX required to transform plants linked to use of PFAS in core equipment and severe commercial impact linked to interruption of production > FRANCE~ 01:0~0~ = nergies etmolJilits Sources: Survey of Chemical players and suppliers, Desktop research, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 45 Workshops with the chemical companies allowed to identify potential improvement of PFAS management in plants Potential improvement of PFAS management 1 Traceability of PFAS in Equipment Attributes like type, quantity, origin, ... of PFAS needs to be identified in each chemical equipment (e.g., material passport) Manufacturers of PFAS containing equipment to be made accountable 2 More stringent control of PFAS degradation and end-of-life management Chemical and refining companies to enforce more stringent control of PFAS degradations (e.g., monitoring of potential degradation of PFAS materials, measurement of traces in end products and waste waters, ...) C) IlJi Potential more stringent segregation of PFAScontaining equipment at end-of-life by industrials Communication with regulators and the public to be reinforced 3 Collaboration between suppliers and chemical companies Chemical companies to jointly work with equipment and material suppliers to accelerate development of alternatives Need to provide more specific requirement for chemical plant operations and to test new products from suppliers > ut:n~n: FRANCE'=00nergies ~()()etmolJilits Sources: Survey of Chemical players and suppliers, Desktop research, Accenture analysis Copyright 2023 Accenture. Ali rights reserved. 46