Bitting expects renewable diesel to make up 5% of the total diesel fuel consumed in the US, up from the current 2%.
Ecovysts provides materials to make dewaxing catalysts, which Bitting said are critical in producing renewable fuels. A large part of Chem32’s business is pre-activating sulphide catalysts for renewable fuels production.
“Those are emerging and fast-growing technologies that have a lot of runway when you’re talking about renewable fuels,” Bitting said. “We have a nice exposure in this sector.” So far, a lot of the growth in renewable diesel production has been the result of California’s Low Carbon Fuels Standard (LCFS).
The standard calls for a gradual reduction of the carbon intensity of gasoline, diesel and their substitutes used in the state. Other states are implementing their own versions of California’s LCFS. More demand could come from federal laws. The Inflation Reduction Act will extend the $1/gal tax credit for renewable diesel to 2024 from 2022.
It also increases the value of the fuel credit for SAF. The base credit would be $1.25/gal, and it could reach a maximum of $1.75/gal if the greenhouse gas (GHG) emissions from the aircraft are reduced by more than 50%.
The EIA’s short term energy outlook expects production of renewable diesel to grow, albeit from a low level.
POLYETHYLENE OUTLOOK
Ecovyst’s catalysts are directly consumed with PE production, so the company expects to benefit from robust demand and expanding global capacity of the resin over the next several years.
Among the new PE plants being built, Ecovyst is achieving higher adoption rates for its catalysts, Bitting said. For these projects, the PE producers want to produce resins with specific properties that target a particular application. Ecovyst can design catalysts that can help the plant produce PE with those properties.
“We develop the catalyst with them, and it’s a customised product for them,” he said. “We work hand in hand with them over time.”
For underlying PE demand, he expects that it should continue because the world’s population and economy will expand.
For pipes, companies are replacing steel with PE because it is more resistant to heating and cracking, Bitting said. If electric vehicles (EV) gain more market share, their growth should increase demand for PE and other plastics because they consume more resins on average than automobiles powered by internal combustion engines.
EVs require more wiring and electrical cabling, so that would increase demand for wire coatings made of PE.
Mid-decade, Ecovyst could start to benefit from catalyst sales to chemical recycling plants. These plants break down waste plastics into pyrolysis oil, which can then be used as feedstock to make plastic.
“We see that as a mid-decade opportunity,” Bitting said. It is potentially a large one for Ecovyst because of growing social pressure to address plastic waste.
“With our technologies, particularly our zeolite base, we can really bring a lot of value to that area,” he said.
COPPER OUTLOOK
In mining, sulphuric acid is used to leach copper oxide minerals. One of the main factors supporting more copper production is expected growth in the production of EVs. According to Ecovyst, EVs require four to five times more copper than automobiles powered by internal combustion engines.
Already, sales of EVs grew by 50% in 2020 and doubled to 7m units in 2021, according to the consultancy McKinsey.
Another trend supporting copper production is the need to upgrade the nation’s electric grid.
The US Department of Energy estimates that 70% of the nation’s transmission lines and power transformers are more than 25 years old. Last year’s infrastructure act set aside $65bn for power and grid.
The US power grid also will need investment to accommodate new wind turbines and solar panels. Bitting expects green energy will drive future demand for copper, be it from EVs, charging stations, wind turbines or solar panels. The sector could get another boost from the Inflation Reduction Act, which includes several provisions to encourage EVs and renewable energy.
LITHIUM OUTLOOK
Sulphuric acid is not used in lithium-brine extraction, but it is used to leach the mineral out of spodumene ores.
Demand for lithium could reach 3m-4m tonnes by 2030, up from 500,000 tonnes in 2020, according to McKinsey. It based its forecast on lithium carbonate equivalents.
For lithium and renewable products in general, keeping up with demand growth will be a challenge for Ecovyst and other companies that play a role in producing those materials.
“Our challenge is keeping up with the fast pace of demand for those end products. A lot of those things do not happen without sulphuric acid,” Bitting said.
For all of its businesses, Ecovyst will continue making safe and reliable plant operations a top priority. The company’s refining customers have been running their units at high rates to meet recovering demand in the US and the rest of the world.
“That rolls through to the reliability that we provide to our customers,” he said.
“Our challenge is keeping up with the fast pace of demand for those end products. A lot of those things do not happen without sulphuric acid”.
Kurt Bitting
CEO, Ecovyst
