Good morning. Welcome to the May 2023 Round-Up! The goal here is to give you a chance to look back at what we talked about last month and to revisit a couple of topics worth some extra discussion.

What we covered in May:

• May 3rd ($): Air Liquide's cryo-capture and LyondellBasell's mechanical recycling acquisition

• May 5th ($): SABIC is upcycling PET and Shell's Pennsylvania polyethylene shutdown

• May 8th: DuPont's medical plastic acquisition and a new green H2 joint venture

• May 12th ($): Livent and Allkem's merger and Entegris' CMP divestment

• May 15th: Tosoh and MCC's CO2-based isocyanates and Graforce's methane plasmalysis

• May 17th ($): Trinseo's polycarbonate dissolution pilot plant and a new herbicide for rice protection

• May 19th ($): UDC and PPG's new OLED plant and LyondellBasell's green bonds

• May 22nd: Idemitsu is offsetting styrene transport and BASF's sustainable propylene glycol

• May 24th ($): Exxon’s lithium mining acquisition and Nippon Shokubai’s new acrylic acid plant

• May 26th ($): Lanxess’s benzyl alcohol expansion and Arlanxeo’s new elastomer plant

• May 31st: Cellulosic ethanol for Dow Chemical and Avantium’s electrochemical CO2 conversion process

The highlights...

1. Finding ways to use CO2!

We saw a couple of CO2 utilization examples last month. First it was Tosoh and Mitsubishi Gas Chemical’s (MCC) efforts to knock phosgene out of the polyurethanes chain (by making isocyanates with CO2 instead of phosgene). And later we saw Avantium receive a grant to develop its CO2 reducing technology.

The idea here is the same across the board: if you want CO2 to be captured, companies need to find it to be a valuable endeavor. Investors won’t be pleased with their returns if you’ve reduced their dividend for the sake of carbon capture and sequestration. They’ll just go invest their money elsewhere. If you want everyone on-board you need to figure out where CO2 can fit into existing value chains, or where it can form the basis for creating new ones.

Tosoh and MCC are looking for a thermochemical approach to tackle the former, and Avantium is looking for an electrochemical approach to tackle the latter.

2. Innovation in materials isn’t in the materials?

In the world of chemicals and materials, it has become pretty rare for a brand new material to enter the market and dominate the scene. So a lot of recent innovation has come from manipulating existing materials to enable new applications (instead of relying on new material properties to enable those new applications).

DuPont’s $1.75 billion acquisition of Spectrum Plastics Group is a great example of this. Spectrum is just very good at making plastic tubes—they don’t have some sort of magic material that they’ve been using to get the job done. DuPont wanted to acquire them because they see Spectrum as a growing channel to market for their polymers, and owning Spectrum will let them grow that channel while simultaneously allowing them capture the value that Spectrum was creating.

3. Downcycling, recycling, and upcycling.

A lot of the discussion around recycling has to do with taking the waste version of some material and converting it into the “like new” version of itself. But that’s just part of the picture—recycling, as described above, aims to solve two issues: reduce waste, and reduce raw material consumption. This paints a simple and easy-to-communicate picture, but also a rather limited one.

If, instead of creating a perfect recycling loop, you choose to downcycle (incorporate your waste material into some lower value product) or upcycle (incorporate your waste material into some higher value product), the degree and ratio to which you reduce waste and raw material consumption will vary, and sometimes for the better.

For example, last month we saw SABIC’s plans depolymerize PET to make PBT ($). And while this narrative is harder to sell to the general public, it effectively solves the same problem but with a much more compelling business case. (PBT costs more than PET because of the applications it’s used for, not because it costs significantly more to make it.)

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