Uniteo States Environmental Protection Agency Office of Pesticides and Toxic Substances Washington, DC 20460 EPA-560/12-80-001b October 1980 Toxic Substances Regulating Chlorofluoro carbon Emissions: Effects On Chemical Production Support Document for Economic Implications of Regulating Chlorofluorocarbon Emissions from Nonaerosol Applications ------- EPA-560/12-80-OOlb October 1980 REGULATING CHLOROFLUOROCARBON EMISSIONS: EFFECTS ON CHEMICAL PRODUCTION Contract No. 68-01-3882 & 68-01-6111 Project Officer: Ellen Warhit REGULATORY IMPACTS BRANCH ECONOMICS & TECHNOLOGY DIVISION OFFICE OF TOXIC SUBSTANCES WASHINGTON, D.C. 20460 U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF PESTICIDES AND TOXIC SUBSTANCES WASHINGTON, D.C. 20460 ------- Disclaimer This document is a support document for a contractor's study done with the supervision and review of the Office of Pesticides and Toxic Substances of the U.S. Environmental Protection Agency. The purpose of the main study was to evaluate the economic implications of alternative policy approaches for controlling emissions of chlorofluorocarbons (CFCs) in the United States. The support document was submitted in fulfillment of Contracts No. 68-01-3882 and 68-01-6111 by the contractor, The Rand Corporation/ and by its subcontractor, International Research and Technology, Inc. Work was completed in August 1980. The study is not an official EPA publication. The document can not be cited, referenced, or represented in any court proceedings as a statement of EPA's view regarding the chlorofluorocarbon industries, or of the impact of the regulations implementing the Toxic Substances Control Act. ------- -iii- PREFACE Scientific studies indicate that atmospheric emissions of chloro- fluorocarbons (CFCs) contribute to depletion of the ozone layer that protects the earth from harmful ultraviolet radiation. Since 1978, almost all use of CFCs to propel aerosol products has been banned. As part of a study to examine the economic impact of regulating CFC emissions in nonaerosol applications, this Note assesses the im- plications of potential regulations for the CFC and precursor chemical producing industries. The research was performed under contracts P.C. 68-01-3882 and 68-01-6111 for the U.S. Environmental Protection Agency. It is part of a larger program sponsored by EPA in conjunction with the Consumer Product Safety Commission and the Food and Drug Administration. Other studies are concerned with evaluating the biological and economic im- plications of ozone depletion. The present study specifically considers the industries that use and produce CFCs. This Note focuses par- ticular attention on the manufacture of the CFCs themselves and their precursor chemicals. It should be of interest to readers in govern- ment and industry with a basic understanding of chemical production. Three other Rand reports documenting results of this study are being produced. The first presents the detailed results of the study: Adele R. Palmer et al., Economic Implications of Regulating Chloro- fluorocarbon Emissions from Nonaerosol Applications, R-2524^EPA. The second is based on a briefing to EPA summarizing the study results: Adele R. Palmer et al., Economic Implications of Regulating Nonaerosol Chlorofluorocarbon Emissions: An Executive Briefing (R-2575-EPA). The third provides greater detail on the analysis of flexible foam applications: William E. Mooz, Flexible Urethane Foams and Chloro- fluorocarbon Emissions (N-71472-EPA). ------- -V- SUMMARY Recent studies have indicated that chlorofluorocarbons (CFCs) reach the stratosphere intact and contribute to depletion of the ozone layer. Most uses of CFCs as aerosol propellants were banned in the United States in 1978. This work is part of a study to exam- ine the economic effects of regulations on nonaerosol CFG emissions. Specifically, it addresses the implications of limiting emissions on the CFG and precursor chemical production industries. One purpose of this work is to update and extend the data base on CFG and precursor chemical production. This document presents estimates of the CFG production, sales, and aerosol and nonaerosol use for 1970 through 1977. A method based on the chemical equations for CFG production is used to estimate precursor chemical requirements for the same historical period. Recent production capacity data for the producers of CFCs and the precursor chemicals are also presented. The second purpose of the work is to provide the framework for examining the implications of future CFC emissions reductions on the producing industries. Based on 1990 projections of CFC production, the techniques developed here are used to estimate 1990 CFC use and precursor chemical production requirements in the absence of policy action. Finally, to illustrate the applicability of the methods, two general policy strategies for limiting CFC emissions are con- sidered. The effects on CFC and precursor chemical production of five policy designs within the two general policy strategies were examined. These five policy designs lead to cumulative (1980-1990) CFC emissions reductions of between about 15 and 30 percent. The findings indicate that the aerosol ban has had a severe impact on production of CFCs used as propellants. Production of these CFCs (CFC-11, CFC-12, and CFC-114) is not expected to reach 1976 levels again until approximately 1990. The most stringent policy de- sign considered for limiting nonaerosol emissions would lead to a 17 percent decline over the projected base case production of carbon ------- -vi- tetrachloride, one of the precursor chemicals. For the other pre- cursor chemicals analyzed, the reduction would not exceed 7 percent. This document contains information of general use for assessing the effects on production of any proposed level of CFG emissions re- duction. A knowledge of the value of any one of three variables, CFC use, CFC production, or precursor chemical production, allows the estimation of the values for the other two variables. ------- -vii- ACKNOWLEDGMENTS We are indebted to a large number of people who contributed heavily of their time, knowledge, and ideas during this study. We are particularly grateful to those in industry who reviewed the ini- tial data and clarified many concepts. We deeply appreciate the efforts of Gary Mills in his thorough review of the draft. Finally, we wish to thank Anne Boren for typing this document. ------- -IX- CONTENTS PREFACE ..,..,,.,..,,,,.,,., , SUMMARY v ACKNOWLEDGMENTS vii TABLES xi Section I. INTRODUCTION 1 II. CFC PRODUCTION PROCESSES 5 CFC-ll/CFC-12 6 CFC-22 8 CFC-113/CFC-114 9 Precursor Chemicals 10 III. HISTORICAL PRODUCTION OF CFCs AND PRECURSOR CHEMICALS 11 CFC-ll/CFC-12 11 CFC-22 13 CFC-113/CFC-114 15 Precursor Chemicals 15 IV. HISTORICAL CFC END USE 18 Non-Use Emissions 18 Intermediate In-House Use 20 Inventories , 20 Exports , 21 Aerosol Use 21 Nonaerosol Use . , , 22 V. CFC AND PRECURSOR CHEMICAL PRODUCERS 26 CFC Producers , .., 26 Precursor Chemical Producers , 33 VI. FUTURE PRODUCTION AND THE EFFECTS OF POLICY ACTION >f 35 1990 CFC End Use 35 CFC Production and Sales ^ _ 35 Precursor Chemical Production ^ 39 Future Policy Action 41 VII. CONCLUSIONS 47 ------- -X- Appendix A. PRECURSOR CHEMICALS FOR CFC PRODUCTION . , , 49 B. HISTORICAL PRECURSOR CHEMICAL PRODUCTION , 60 C. HISTORICAL CFC APPORTIONMENT 72 D. CALCULATING CFC NONAEROSOL END USE . , , . . , 81 E. ALLOCATION OF CAPACITY ,. 85 F. CFC SALES ESTIMATES , 89 G. PRECURSOR CHEMICAL PRODUCERS 93 REFERENCES , , 103 ------- -XI- TABLES II-l. Precursor Chemicals for CFG Production 10 III-l. CFC-ll/CFC-12 Production and Sales—1970-1977 12 III-2. CFC-22 Production and Sales—1970-1977 13 III-3. CFC-113/CFC-114 Production and Sales—1970-1977 14 III-4. Precursor and Byproduct Chemicals for CFC Manufacture—1970-1977.. 16 III-5. Percentage of Precursor Chemical Production Devoted to CFC Manufacture—1970-1977 17 IV-1. CFC Apportionment—1976 23 IV-2. Estimated CFC Nonaerosol End Use—1976 24 V-l. CFC Capacity by U. S. Producers 27 V-2. 1977 Capacity Apportionment 29 V-3. CFC Sales and Sales Value 30 V-4. CFC Historical Prices—1970-1977 31 V-5. 1977 CFC Sales 32 V-6. 1977 CFC and Total Sales 33 V-7. Precursor Chemical Production for CFCs 34 VI-1. Estimated Nonaerosol CFC End Use—1990 36 VI-2. Estimated Nonaerosol CFC Production and End Use—1990 37 VI-3. Estimated Precursor Chemical and Byproduct Production—1990 40 VI-4. Reduction in CFC Use Under Benchmark Controls and Four Economic Incentive Policy Designs—1990 42 VI-5. Reduction in Precursor Chemical Requirements—1990 43 VI-6. Percent Reduction in Precursor Chemical Requirements—1990 45 A-l. Molecular Formulas and Weights 49 A-2. Chemical Equations for CFC Manufacture 50 A-3. Intermediate Precursor Chemical Factors 58 A-4. Preliminary Precursor Chemical Factors 58 A-5. Byproduct HC1 Factors 59 ------- -xii- B-l. CC1, Production for CFCs--1970-1977 60 B-2. HF Production for CFCs—1970-1977 61 B-3. CHC13 Production for CFCs—1970-1977 62 B-4. C Cl, Production for CFCs—1970-1977 63 B-5. C12 Production for CFCs—1970-1977 64 B-6. CS Production for CCl^—1970-1977 66 B-7. Cl production for CHC1—1970-1977 67 B-8. Cl Production for CC1, —1970-1977 68 B-9. C12 Production for C2C14—1970-1977 69 B-10. HC1 Production from CFCs—1970-1977 70 B-ll. HC1 Production from Precursor Chemicals—1970-1977 71 C-l. CFC-11 Apportionment—1970-1977 73 C-2. CFC-12 Apportionment—1970-1977 74 C-3. CFC-22 Apportionment—1970-1977 75 C-4. CFC-113 Apportionment—1970-1977 76 C-5. CFC-114 Apportionment—1970-1977 77 C-6. CFC Aerosol and Nonaerosol End Use—1970-1977 80 E-l. CFC Production and Capacity—1970-1977 86 E-2. 1977 CFC Capacity 88 F-l. 1977 CFC Sales from Production Figures 89 F-2. 1978 Price List—CFC-11 91 G-l. CCl^ Plant Capacity—1977 94 G-2. HF Plant Capacity—1977 96 G-3. CHC13 and C Cl, Plant Capacity—1977 99 G-4. CS2 Plant Capacity—1977 100 G-5. C12 Plant Capacity—1975 102 ------- -1- I. INTRODUCTION In recent years, scientists have hypothesized that chlorofluoro- carbons (CFCs) reach the stratosphere intact, and once there, con- tribute to depletion of the ozone layer. Although the problem is global, the United States has been the largest single user of CFCs. The Environmental Protection Agency (EPA) and the Food and Drug Administration (FDA) banned the use of CFCs as propellants in aero- sol products in December 1978. In mid-1977, the EPA, together with the FDA and the Consumer Product Safety Commission, asked Rand to study the economic implications of regulatory strategies for limiting nonaerosol CFC emissions. This document is part of a study of the economic effects of regulating CFC emissions. Its purpose is twofold. First, it up- dates and extends the data base on CFC and precursor chemical pro- duction, the production processes, and the producers. Second, it examines the implications of a mandatory control and economic incen- tives policy strategies for limiting emissions on future CFC and precursor chemical production. To accomplish the second objective, we developed techniques for relating precursor chemical production to CFC production, and CFC production to CFC use and emissions. Thus this document provides the framework for assessing the consequences of any future level of CFC emissions on the CFC and precursor chemical pro- ducing industries. CFC uses are diverse and pervasive. It is a blowing agent for flexible foam used in bedding and carpet underlay, a blowing agent for foam used in food packaging applications, and an insulating medium in foam used to insulate buildings and refrigeration devices. CFC acts as a refrigerant in automotive air-conditioning units, home refrigerators and freezers, retail food refrigeration systems and commercial air-conditioning units, and as a solvent for metal clean- ing and the defluxing of printed circuit boards. CFCs are used in a variety of other ways, including the liquid fast freezing.of foods and the sterilization of hospital goods. ------- -2- The CFC used in these numerous applications is manufactured by five chemical firms. The chemicals used as precursors to CFC manu- facture are produced by many chemical firms. All producers of these chemicals would be affected by regulatory policies that limit non- aerosol CFC emissions. Limiting emissions reduces use which in turn reduces production of the CFCs and the precursor chemicals used in their manufacture. Although approximately a dozen CFCs are manufactured presently in the United States, only three, CFC-11, CFC-12, and CFC-113, are of primary concern, both because they are fully halogenated, and because they are widely used. CFC-22, which is also widely used, is not as hazardous to the ozone layer as those CFCs listed above. Anal- ysis of CFC-22 is included here because it is a potential substitute for the more hazardous CFCs in refrigeration applications. Another chlorofluorocarbon, CFC-114, also fully halogenated, is used in relatively small quantities in a limited number of applications. CFC-502 and CFC-500, which are combinations of other CFCs in various proportions, are, like CFC-114, not widely used. This study provides estimates of production of the CFCs and the most important precursor chemicals as well as estimates of total CFC use from 1970 to 1977. Projections of annual production of the CFCs and precursor chemicals extend through 1990. These projections form a base case production profile in the absence of regulation. The implications on CFC and precursor chemical production of limiting CFC emissions and use under two general policy strategies which include five policy designs are evaluated. These five policy designs result in rather modest reductions in CFC emissions, between about 15 and 30 percent for the period 1980-1990. One important finding of this study is that the ban on CFCs for use as propellants has been very significant in decreasing CFC pro- duction requirements. For those CFCs that were heavily used in aerosols (CFC-11, CFC-12, and CFC-114), production will not again reach 1976 levels until the end of the decade. Alternatively, pro- duction of CFC-113 and CFC-22, neither of which was used as a pro- pellant, has continued to increase. A CFC that is fully halogenated contains no hydrogen. ------- -3- Limiting CFC emissions to the extent considered here will have a much smaller effect on CFC and precursor chemical production than has the aerosol ban. The precursor chemical that would be most affected by these regulatory policies is carbon tetrachloride, used to manu- facture CFC-11 and CFC-12. Even in this case, however, total pro- duction would decline, at most, by 17 percent over projected base case levels. The other precursor chemicals, since a smaller portion of their production is devoted to CFC manufacture, would decrease by less than 6 percent from the base case projections. Section II of this document presents the chemical equations for the production of the CFCs. The precursor chemicals that are most dependent on continuing CFC production are identified. Historical production of the CFCs from 1970 to 1977 is given in Section III. These data, together with the chemical equations in Section II, are used to develop estimates of the historical precursor chemical production requirements for CFC manufacture. The techniques for relating a particular level of CFC production to a particular level of precursor chemical production are useful in a more general sense. Production of a precursor chemical can be determined by mul- tiplying production of any CFC for any year by the appropriate "factor" (given in Appendix A) for the individual precursor chemical. In Section IV, we discuss the destinations of the various CFCs from the time they are produced until the time they are used. A model for estimating CFC end use from CFC production is developed using the historical production figures of Section III. In Section V, the producers of the CFCs and precursor chemi- cals are identified. We also assess the dependence of each pro- ducer on CFC manufacture for the historical period based on plant capacity and information obtained from industry sources. Base case projections of 1990 CFC production, derived from industry-supplied data, are given in Section VI. The techniques developed in Section IV are used to estimate 1990 CFC use. These use data are then compared with 1990 projections of CFC use developed in this study for most major and some minor CFC applications. The CFC production data are also used, together with the methods of ------- -4- Section III, to derive base case estimates of 1990 precursor chemical production. Reductions in CFG use resulting from five policy designs for reducing 1990 CFC emissions are presented. Using the techniques developed in Sections III and IV, these reductions in use are trans- lated into reductions in 1990 CFC and precursor chemical production. In Section VII, we present the general conclusions of this study. In addition, we stress the wider applicability of the methods developed here. If a future value for any of the three variables (CFC use, CFC production, or precursor chemical production) is available, values for each of the other two variables can be estimated. The data and methods of this document serve as a framework for assessing the effects of po- tential future CFC emissions limitations on the producing industries. ------- -5- II. CFC PRODUCTION PROCESSES The chemicals considered in this study are CFC-11, CFC-12, CFC-113, CFC-114, and CFC-22. Because they contain both chlorine and fluorine, they are referred to as chlorofluorocarbons (CFC). They are highly unreactive and may not decompose prior to entering the stratosphere. CFC-22, which contains a hydrogen atom, is hypo- thesized to be more susceptible to decomposition. Even so, it is important to consider CFC-22, both because it may reach the strato- sphere intact, and because it is often mentioned as a potential substitute for the fully halogenated CFCs in some applications. Five U.S. companies currently manufacture CFCs: E. I. DuPont de Nemours (DuPont), Allied Chemical Corporation (Allied), Kaiser Aluminum and Chemical Corporation (Kaiser), Pennwalt Corporation (Pennwalt), and Racon, Inc. (Racon), now part of Essex Chemical Company. Another company, Union Carbide Corporation, recently discontinued pro- duction of CFCs. All five producers manufacture CFC-11, CFC-12, and CFC-22, while only DuPont and Allied produce CFC-113 and CFC-114. As far as can be determined, similar production processes are 2 used by all the manufacturers. The pairs CFC-ll/CFC-12 and CFC-113/ CFC-114 are coproduced; plants designed for the production of one 3 pair cannot readily be converted to production of the other pair. This section describes the chemical processes for CFC manufacture. Some chemicals are highly dependent on CFC manufacture, either because a large percentage of the total production is used for CFC manufacture, or because they could not readily find use in other applications. These precursor chemicals are identified as each CFC production pro- cess is considered. Union Carbide has sold its production equipment to IPI of Wichita, Kansas, which may produce CFC-11, CFC-12, and CFC-22 in the future. 2 Although the same chemical equations apply for CFC manufacture, the process conditions may vary from producer to producer. Section V gives a brief discussion of plant conversion. ------- -6- CFC-ll/CFC-12 Two processes, commonly called the liquid phase process and the vapor phase process, may be used to coproduce CFC-11 and CFC-12. Both processes use the same chemical inputs, carbon tetrachloride (CC1,) and anhydrous hydrogen fluoride (HF), and both yield CFC-11 and CFC-12 as well as byproduct hydrochloric acid (HC1). The main differences between the two manufacturing methods are that the vapor phase process uses higher temperatures in general, and is subject to over-fluorination yielding CFC-13. According to knowledgeable industry sources, the HC1 produced as a byproduct in both processes is an extremely important factor in the economics of production. Markets for the HC1 are dynamic, and both the quality of the byproduct HC1 and CFC plant location can influence the salability of this chemical. Another important economic consideration to the producer is the precursor chemical requirement for CFC production. Industry sources estimate yields from the liquid and vapor phase processes as 98 and 97 percent respectively, which implies that the material costs for the two processes are almost the same. Reference 1 asserts that material costs represent more than 70 percent of the production cost in a CFC plant operating at full capacity. CFC-11 and CFC-12 are produced according to the following chemi- cal equations: CC14 + HF -> HC1 + CC1 F (II-l) (CFC-11) CC14 + 2HF •> 2HC1 + CC12F2 (II-2) (CFC-12) Nearly all of the CC14 and almost half of the HF2 produced domes- tically are used in CFC manufacture. According to Reference 1 and Industry individuals contend that there is very little market for this CFC. 2 A large amount of HF is also used in the aluminum industry. ------- -7- industry sources, CC1, can be produced in three ways: using pro- pylene (CLH,) and chlorine (Cl ) with coproduction of perchloro- .3 D i <— ethylene (C Cl,); using carbon disulfide (CS9) and chlorine; or 24 2 using methane (CH.) with chlorine. The three production processes 3 can be described as follows: (7a-2b) C1 + (a-2b) CCl + (a+b) CC1 + 6aHCl CS2 + 2C12 -> CC14 + 2S 4C12 + CC14 + 4HC1 C Hg, CH4, many of the chlorocarbons, and CH-OH are common raw materials in high demand, and therefore they could probably find use elsewhere if CFC production were in some way limited. The precursor to CC14 production that could be affected by a change in CC1, demand is CS2> Cl- would also be affected, but to a lesser extent. Chemicals other than propylene, including hydrocarbons and chlorocarbons, can be used to produce CC14. Industry sources indi- cate that chlorocarbon byproducts obtained from other processes such as vinyl chloride and propylene oxide production are frequently used as feed. 2 Some CC1, is obtained using methanol (CH-OH) or methylchloride (CH-C1) in the coproduction of methylene chloride (CH2C1 ) and chloro- form (CHCl^). For simplification, since the starting material can be traced to CH,, the process will be considered as described above. In Equation II-3, the small letters, a and b, are meant to indicate that the process can be varied to produce a different mix of CC14 and C Cl depending on the proportions of the input chemicals and reactor conditions. As will be seen later, C_C14 is used in the production of CFC-113/CFC-114. This method of producing C2C14 and CC14 is one of many examples which illustrate the interrelationships in the chemicals industry. If production of a given chemical were discontinued, all other downstream chemicals and possibly some up- stream chemicals would also be affected. ------- -8- The other input to CFC-ll/CFC-12 manufacture, HF, is produced using fluorspar (CaF^) and sulfuric acid (H-SO^) in the following way: CaF + H2SO, -»• 2HF + CaSO^ (II-6) Only a very small percentage of total H SO, goes toward CFC manufacture. Although about one-third of the fluorspar consumed in the United States is so employed, much of it is imported. Neither H-SO, or CaF- will be considered further here, H-SO, because of its minor use in CFC manufacture, and CaF« because much of it is mined outside the United States. Both precursors, however, would be affected by a change in CFC production. CFC-22 This CFC is produced using chloroform (CHC1_) and HF in the fol- i • 2 lowing manner: CHC1 + 2HF -> 2HC1 + CHC1F2 (II-7) (CFC-22) In this case, as with CFC-ll/CFC-12, the marketability of the byproduct HC1 can have a significant effect on the manufacturing economics. Equation II-7 illustrates that CFC-22 production requires HF, as does CFC-ll/CFC-12 production, but requires a different chlorocarbon. In fact, some plants are designed to manufacture either CFC-ll/CFC-12 or 3 CFC-22 by changing the chlorocarbon feed. Since much of the CHC1. produced goes toward CFC manufacture, this chemical is highly dependent on continuing CFC production. The CHC1_ is made from either CH, or methanol and Cl? as follows: There are, however, fluorspar mines within the United States owned by Allied and Pennwalt. 2 A small amount of coproduct CFC-23 is also produced in this process 3 Facilities of this type are referred to as campaign plants. ------- -9- CHC13 + 3HC1 CHC13 + HC1 HF manufacture was discussed previously, and the relevance of CH,, CILOH and C12 has already been addressed. CFC-113/114 There is less available information on the production of these two CFCs than for CFC-11 and CFC-12. There are only two producers, and frequently the data are considered proprietary. CFC-113 and CFC-114 are manufactured using perchloroethylene (C.C1,), HF, and Cl_ according to the chemical equations: C2C14 + 3HF + C12 ->• C2C13F3 + 3HC1 (11-10) (CFC-113) C2C14 + 4HF + C12 -*• C2C12F4 + 4HC1 (11-11) (CFC-114) Less than 20 percent of total U. S. perchloroethylene output is used in the manufacture of these CFCs. However, since much of it is coproduced with CC14 as shown in Equation II-3, the implications of limiting its production could be significant. Most of the remaining C2C14 is produced using ethylene (C H^) and Cl to produce C C14 and trichloroethylene (C HC1,,) according to Equation 11-12. 2C2H4 + 7 C12 -> C2HC13 + C2C14 + 7HC1 (11-12) One of the CFC-113/CFC-114 producers, DuPont, employs a vapor phase catalysis, while the other, Allied, utilizes a liquid phase catalysis. 2 The disposal of HC1 produced in the process described by Equa- tion 11-12 can be handled in a number of ways, according to industry sources. Although we do not know the manner for dealing with the HC1 we rely on the industry assessment. Thus the HC1 generated from the process given in Equation 11-12 will not be considered in the later analysis. ------- -10- C-H, , a hydrocarbon in high demand, could readily find other uses if CLC1, production were curtailed. The input Cl has already been 1 discussed. PRECURSOR CHEMICALS The production of each of the five CFCs is a final step in a complex series of chemical reactions. The intermediate precursors, those used directly in CFC manufacture, are, in turn, produced using preliminary precursors. Table 1-1 summarizes the preliminary and intermediate precursor chemicals that would be significantly affected by a change in CFC production levels. Table 'll-l PRECURSOR CHEMICALS FOR CFC PRODUCTION CFC CFC-ll/CFC-12 CFC-22 CFC-113/CFC-11A Intermediate Precursor CC1, 4 HF CHCL HF C Cl 2 4 HF Cl. 2 Preliminary Precursor C19 2 ci2 C19, CS. 2 2 Reference 2 states that 3 percent of the C Cl, is produced using C2H_. This process will not be considered here since the amount produced is negligible. ------- -11- III. HISTORICAL PRODUCTION OFCFCs AND PRECURSOR CHEMICALS In the last section, the processes for manufacturing the CFCs were described, and the precursor chemicals used in these processes were identified. Potential regulatory strategies for limiting CFC emissions would lead to lower CFC production levels and, consequently lower precursor chemical production requirements. The CFC aerosol propellant ban has had major effects on production of some CFCs and precursor chemicals. In light of future potential CFC emissions limitations, it is thus useful to examine the historical trends. In this section we present historical CFC production and sales data. These data, together with historical precursor chemical production figures, permit estimates of the portion of each precursor chemical used for CFC manufacture. CFC-ll/CFC-12 The historical production data on CFC-ll/CFC-12 are quite ex- tensive and show good general agreement from source to source. Table III-l shows production for 1970 to 1977 taken from Reference 3. His- torical sales, which differ from production for a number of reasons, are also shown in Table III-l. The values of Table III-l illustrate that CFC-11 and CFC-12 production increased through 1974 and exhibited an abrupt decline in 2 1975. Prices of all chemicals increased markedly in 1974 and this may have acted to reduce demand for CFCs. In addition, the fear of shortages in 1974 resulted in large inventories in the supply chain. One further event which almost surely contributed to the decrease in production was the initiation of discussions concerning proposed con- trols over CFC propellants. The reasons for this difference are discussed in Section IV. 2 This was, in part, a result of the increase in petroleum prices which occurred at that time. ------- Table III-l CFC-ll/CFC-12 PRODUCTION AND SALES--1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 o Production 244 258 300 334 341 270 256 213 CFC-11 (Percent of Total) (39) (40) (41) (41) (41) (41) (39) (37) Sales 237 237 286 329 321 254 239 197 *a Production 375 390 439 489 487 393 393 358 CFC-12 (Percent of Total) (61) (60) (59) (59) (59) (59) (61) (63) Salesa 356 372 419 464 449 375 371 340 Total Production 619 648 739 823 828 663 649 571 K3 I Figures were taken from Reference 3. ------- -13- CFC-22 Historical CFC-22 production and sales as given in various references is shown in Table III-2. Production of CFC-22, like that of CFC-11 and CFC-12, shows a decline from 1974 to 1975. However, unlike CFC-11 and CFC-12 production, CFC-22 production increased dramatically from 1975 to 1977. We note that CFC-22 sales as a fraction of production averaged about 72 percent for the period; the value for CFC-ll/CFC-12 sales was approximately 95 percent. The reason for this difference is discussed in Sections IV and V. Table III-2 CFC-22 PRODUCTION AND SALES—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 Production ioob 112b V, 123 136b 141b 132a 170a 179a Sales3 73 80 80 97 112 94 126 129 Values were taken from Reference 3. Values were taken from Reference 1. ------- Table III-3 CFC-113/CFC-114 PRODUCTION AND SALES—1970-1977 (millions of pounds) Reference 1 Year 1970 1971 1972 1973 1974 1975 1976 1977 Production CFC-113 CFC-114 36 22 43 23 50 25 59 26 64 27 — — — Estimates CFC-113 Production 43 44 51 68 72 65 72 84 Sales 41 42 49 64 69 62 69 80 CFC-114 Production 35 39 43 43 44 39 37 25 Sales 29 33 37 37 38 33 31 19 Total Production 78 83 £ 94 111 116 104 109 109 ------- -15- CFC-113/CFC-114 CFC-113/CFC-114 production is not as readily available as for the other CFCs. Reference 3 has a category entitled "all other fluorinated hydrocarbons," which presumably includes, but does not specify individually, CFC-113 and CFC-114 production and sales. Table III-3 shows CFC-113 and CFC-114 production and sales from Reference 1 and as estimated by Rand. For purposes of this study, the Rand estimates will be adopted since they derived from recent conversations with industry sources and therefore should be more reliable. Table III-3 also shows the familiar decline in production from 1974 to 1975 for both CFC-113 and CFC-114. One apparent difference between CFC-113 and CFC-114 is that CFC-113 shows an increase in sales from 1975 to 1977 while CFC-114 shows a decrease. CFC-113 and CFC-22 are the only two CFCs which do exhibit this behavior. The reason this trend might be expected for both CFCs is that only a miniscule amount of each has been used to charge aerosol products, and production would therefore not have been significantly affected by anticipation of the propellant ban. PRECURSOR CHEMICALS The precursor chemicals that are highly dependent on CFC manu- facture were identified in Section II as CC1,7 HF, CHC13, C-Cl,, CS2, and Cl . The chemical equations for CFC manufacture together with process efficiencies provide the basis for estimating precursor chemical requirements for CFC production. Appendix A presents the detailed procedure for calculating precursor chemical requirements. Using the chemical equations and industry-supplied data on individual process efficiencies, factors End uses for each CFC are discussed more fully in Section IV. ------- -16- representing the fraction of each precursor chemical necessary for a unit of CFC production were developed. These factors multiplied by a specific level of CFC production give the corresponding pre- cursor chemical requirements. To illustrate this procedure, Appendix B presents estimates of the precursor chemical requirements for historical CFC production. The estimates are compared with information contained in available data sources. Total production of the precursor chemicals is also given to determine the portion of each precursor chemical devoted historically to CFC manufacture. Table III-4 summarizes the estimates of each precursor chemical required for historical CFC production and also gives the quantity of HC1 produced as a byproduct in CFC and some precursor chemical pro- duction processes. The percent of total production of each precursor chemical which went toward CFC manufacture during this time are provided Table III-4 PRECURSOR AND BYPRODUCT CHEMICALS FOR CFC MANUFACTURE—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 cci4 766 801 913 1017 1022 819 803 708 HF 245 260 291 325 331 279 296 281 CHC13 145 162 178 197 204 191 247 260 C2C14 75 79 90 106 110 99 103 102 cs2 151 158 181 201 202 162 159 140 Cl Byproduct HC1 1438 1520 1722 1924 1945 1617 1690 1572 846 897 1014 1132 1146 957 1054 951 SOURCE: Tables B-l through B-ll ------- -17- in Table III-5. A significant portion of CC1, , HF, and CHC1., pro- duction demand was devoted to CFC manufacture. The techniques developed in this section are intended to illus- trate an approach for determining the precursor chemical requirements for CFC manufacture. With this framework, given CFC production for any future year, a simple calculation will yield the corresponding amounts of precursor chemicals needed. Table III-5 PERCENTAGE OF PRECURSOR CHEMICAL PRODUCTION DEVOTED TO CFC MANUFACTURE—1970-1977 Year 1970 1971 1972 1973 1974 1975 1976 1977 CC1. HFa 4 76 79 92 97 44 88 41 90 94 46 88 CHC13 60 70 76 78 68 73 85 86 r n PQ n ^24 2 2 10 11 12 23 15 — 9 15 26 9 14 15 17 ETotal production for HF is unavailable for the historical period. Reference 4 gives 1973 total production as 733 million pounds, and Reference 5 gives 1974 production as 799 million pounds. Industry sources have indicated that in 1976, 46 percent of total HF went toward CFC manufacture. References 6 and 5 give total 1972 and 1974 CS2 production as 775 and 772 million pounds respectively. °References 6 and 5 give total C12 production figures for 1973 and 1974 of 20,804 and 21,236 million pounds respectively. ------- -18- IV. HISTORICAL CFC END USE In the previous two sections, a method for estimating precursor chemical production requirements from CFC production data was devel- oped. To evaluate the implications of reducing CFC emissions, we also need techniques for relating CFC emissions to CFC use which can ultimately be translated into CFC and precursor chemical production. Reference 8 examines 1976 CFC use and emissions in detail. These data can be used to relate CFC emissions to CFC use in the historical case. In this section, we develop a method for translating historical CFC production into historical CFC end use. Estimates of historical CFC nonaerosol use, together with the data of Reference 8, show the method to be a reasonable one for translating a reduction in CFC non- aerosol use directly into a reduction in CFC production requirements. NON-USE EMISSIONS Section III implicitly assumed that emissions during the CFC production process occur prior to the reporting of production figures. Reference 4 cites emissions estimates from production, storage, and transport as 1 to 2 percent of total production. More recent esti- mates from industry sources of 2 percent from production and a fur- ther 2 percent from post-production activities (but prior to use) are adopted here. It will be assumed that the reported historical values for CFC 2 production already reflect the 2 percent production emissions loss. Although one producer reports 1 percent losses, the 2 percent loss is used as an industry average. 2 Those emissions which are classified as "production emissions" probably refer to losses of CFC which occur during the manufacturing process. It seems reasonable to assume that the reported production figures reflect the amount of CFC remaining after these losses have taken place. Many sources subtract production emissions from the pro- duction figures; however, in this study, values for production will be used with the assumption that these losses have already been taken into account. Thus, production refers to the amount of CFC present in the storage tanks of the producers. ------- -19- The additional 2 percent loss from such activities as distribution, storage, packaging, and transport, remains to be considered. In many cases, the CFC user does not purchase directly from the producer. The producer may sell the CFC to a distributor who will frequently repackage it before delivery to the user. Many large users also repackage CFC prior to use. Unfortunately, data specifying the losses during these different practices do not exist. Thus it will be assumed here that the sales figures refer to producer sales, and that the storage, packaging, and transport emissions occur after these sales take place. Undoubtedly, some of these emissions occur before and some after sales; however, since the sales and production values do not differ significantly, the error introduced by assuming that emissions occur following sales is insignificant. One of the purposes of this study is to estimate and examine the economic effects of reducing the emissions from nonaerosol CFC uses. Even though the emissions described above occur prior to use, they are nevertheless an emissions source of CFC. In our opinion, current emissions from production, storage, packaging and transport are prob- 2 ably as low as can reasonably be expected at current CFC prices. Because production emissions occur prior to producer sales, the pro- ducer has an economic incentive to be conservative with the CFC. The same situation applies to emissions from packaging by distributors or users since all parties involved are concerned with maximizing the amount of CFC ultimately available for sale or use. It is therefore Reference 3, from which the sales figures for CFC-11, CFC-12, and CFC-22 were taken, cites sales as those by the original manu- facturer. 2 The energy crisis provides a useful analogy. As energy prices increased, conservation techniques and practices, which may have once seemed extreme, became commonplace. If CFC prices were to increase, industry would almost certainly find ways to reduce these emissions further. The technology for achieving this reduction is obviously currently available since emissions from production of chlorocarbons are negligible, as discussed in Appendix A. ------- -20- probably reasonable to assume that unless a program of specific regulation on CFC output were enacted, there would be no reduction in these emissions. INTERMEDIATE/IN-HOUSE USE The difference between the values given in Section III for CFC production and sales can be attributed to intermediate and/or in-house 2 use of the CFC by the manufacturers. One example of intermediate use by producers is the use of CFC-114 to produce CFC-115 which is com- bined with CFC-22 to produce CFC-502, a refrigerant. There are numerous other intermediate uses for each of the CFCs where emissions are negligible. We accept that most of the difference between the production and sales figures of Section III is due to these consumptive uses of CFC that are not directly categorized as emissions. Reference 9 details many small in-house uses of the CFCs, the most common of which are refrigerants and solvents. This reference includes CFC-113 in-house use in the sales figures. Consequently, for this CFC, it will be assumed that in-house uses do not account for the difference between production and sales. For the other CFCs, the in-house use, together with intermediate use, accounts for the total difference be- tween the sales and production figures. INVENTORIES The CFCs are inventoried in various places between production and use. They may be stored by the producer prior to delivery, quantities may be held at distribution or packaging points, and some may be in transit in tank cars, cylinders, or drums. Industry sources indicate that there is ongoing research intended to reduce these emissions so that yields can be increased and costs de- creased. 2 Intermediate use is defined here as use of the CFC for direct conversion into another chemical compound. In-house use is defined as use of the CFC itself. 3 CFC-502 is 48.8 percent CFC-22 and 51.2 percent CFC-115 by weight. ------- -21- Industry sources indicate that 15 to 30 days elapse between CFC sales and delivery for use. It therefore seems reasonable to assume that about 6 percent of each year's sales will not be available for emission until the following year." To a large extent, inventories available from a previous year will cancel those taken out in a cur- rent year. For this reason, inventories are not considered further in this analysis. EXPORTS We have been told by knowledgeable sources that CFC imports have historically been negligible. However, exports evidently account for a more significant portion of sales. Although there is no information on the amount of each CFC exported, there are some data on total CFC exports. Reference 4 indicates that 7 percent of the CFCs produced in 1973 fall into a category entitled "exports and other." In Reference 5, exports are listed as having accounted for 4 percent of 1973 production. Knowledgeable sources claim that CFC-113 annual exports are 4 to 6 per- cent of sales. Given these data, it will be assumed that annual exports were historically about 5 percent of sales. AEROSOL USE Each of the CFCs has more than one end use although, generally, one primary application consumes a very large portion of use in each case. Since we are concerned only with the nonaerosol uses and emis- sions of the CFCs in this study, we need to estimate the magnitude of historical use in aerosols, since the propellant ban will prevent CFC 4 from being used for this purpose in the future. Three of the CFCs One industry source states that this time is 24 hours for bulk sales. 2 It would serve no purpose to detail inventories on a more fre- quent basis than annually. In the future, this assumption may not be valid. 4 Anticipation of the aerosol ban led to many changes in the CFC and precursor chemicals industries, which are discussed in more detail in Section V. ------- under consideration in this study, CFC-11, CFC-12, and CFC-114 were used historically as aerosol propellants. There is no indication that significant amounts of either CFC-22 or CFC-113 were used in this way. Table IV-1 shows our estimates of 1976 production, intermediate use, sales, emissions, exports, aerosol use, and nonaerosol use for each CFC. Nonaerosol end use is the difference between the sales figures and emis- sions, exports, and aerosol use. Appendix C presents complete historical (1970-1977) estimates for the CFC apportionment, and discusses the values for aerosol use in detail. The method for allocating CFC to the various destinations of Table IV-1 is described mathematically in Appendix D. NONAEROSOL USE Reference 8 specifically addresses CFC nonaerosol use in all major and some minor applications. Estimates of current and future use for each CFC are presented. In most cases, 1976 was chosen as the most re- cent historical point for which data were available. Comparison of these data with the values for nonaerosol use in Table IV-1 provides an indication of the validity of the method of accounting for the CFC after it is produced. Table IV-2 presents the amount of each CFC that went toward selected end use categories in 1976 as taken from Reference 8. These include various foam and refrigeration applications as well as solvents, LFF (Liquid Fast Freezing), and sterilants. There are various other uses for the CFCs that have not been included in Table IV-2. We refer to the categories of CFC use included in Table IV-2 as analyzed applications while all other CFC uses are unanalyzed applications. The values of Table IV-2 for CFC-11 indicate that the major amount of this CFC was consumed in the manufacture of foams in 1976. Smaller quantities were used in refrigeration and miscellaneous applications in 1976. According to Reference 9, CFC-11 was also used in industrial refrigeration applications which could account for the balance of the 19 million pounds. Some CFC-113 is packaged in aerosols and used for cleaning pur- poses. In these cases, however, the CFC-113 is not used as the pro- pellant. In any event, this application accounts for a negligible percentage of total CFC-113 use. ------- Table IV-1 CFG APPORTIONMENT—1976 (millions of pounds) CFC CFC-11 CFC-12 CFC-22 CFC-113e CFC-114 Production 256 393 170 72 37 Intermediate Use 17 22 44 6 Sales 239 371 126 31 a Emissions 5 7 3 1 b Exports 12 19 6 2 Aerosol UseC 123 156 — — 26 Xonaerosol Use" 99 189 117 69 2 i N; u; 1 Emissions cited in the table are those resulting from storage, packaging, and transport and do not include CFC emitted during the production process. Estimated at 5 percent of sales. £ Estimated from available sources and industry-supplied data. See Appendix C for details. Sales minus emissions minus exports minus aerosol use. Reference 8 describes CFC-113 in detail. ------- -24- Table IV-2 ESTIMATED CFC NONAEROSOL END USE-1976 (millions of pounds) Analyzed Applications CFC-11 CFC-12 CFC-22 CFC-113 CFC-114 Flexible Foam a Solvents Rigid Foams: Urethane Nonur ethane Mobile Air Conditioning Other Refrigeration: Chillers Home Refrigerators and Freezers Retail Food Misc ellaneou s : LFF Sterilants Other TOTAL 34 — 35 2 — 8 — — — — 1 80 — 2 21 90 5 6 11 6 13 3 157 69 — — — 3 — 1 — 1 — — — — — 4 69 2 NOTE: Uses reported for individual applications exclude: 5 million pounds each of CFC-22 and CFC-115 used to form CFC-502; less than 1 million pounds each of CFC-12 and CFC-152a used to form CFC-500. ft Refrigeration and other relatively small miscellaneous uses of CFC-113 are included in the solvents data. Although most of the CFC-12 is used in refrigeration applica- tions, it is also used in numerous other applications. Comparison of the CFC-12 values of Tables IV-1 and IV-2 implies that more than 30 million pounds were used in unanalyzed applications in 1976. Indeed, Reference 9 indicates that a large amount of CFC-12 was used in industrial, transportation, and cold storage refrigeration. The values of Table IV-2 show that only a small amount of CFC-22 was used in the analyzed applications. Part of the balance was probably consumed in other refrigeration (primarily air condition- ing) applications. Industry sources have stated that a large portion ------- -25- of the CFC-22 Is used to produce tetrofluoroethylene (TFE) from which teflon is manufactured. Although the large intermediate use of CFC-22 may account for this use, it could be that a large amount of CFC-22 is also sold for TFE production. In the case of CFC-113, the solvent application accounts for 96.3 percent of the CFC-113 available for use. Although possibly 2 million pounds was used to manufacture foam and in refrigeration applications, all CFC-113 use is shown for solvents. Table IV-1 shows that about 2 million pounds of CFC-114 were available for nonaerosol end use. The values of Table IV-2 agree well with this estimate, allocating about 1 million pounds each to foam manufacture and use as a refrigerant in chillers. The method for relating CFC production to CFC end use seems to provide reasonable values for 1976 in light of the data of Refer- ences 8 and 9. There remains, however, some degree of uncertainty in the estimates of the parameters. For example, although industry sources cannot specify export levels for each CFC, they have indicated that the estimates derived here may be slightly high. However, with- out more detailed information on the magnitude of the exports, the estimates must suffice. ------- -26- V. CFC AND PRECURSOR CHEMICAL PRODUCERS An understanding of CFC and precursor chemical market features will provide insight into the possible behavior of the producers under the conditions that a given future policy might imply. The ban on CFC use as propellants had an influence on the CFC and precursor chemical markets even before it was fully effective. The responses of the producers to this impending limitation may provide an indi- cation of future behavior if regulations regarding nonaerosol CFC emissions were enacted. In this section, both historical and current market features are discussed and some implications of reduced pro- duction requirements are examined. CFC PRODUCERS DuPont is the largest U. S. producer with an annual capacity of more than half of the entire industry. Allied is the. second largest U. S. producer. These two producers manufacture all five CFCs. Only CFC-11, CFC-12, and CFC-22 are manufactured by the other three pro- ducers: Kaiser, Pennwalt, and Racon. Annual Capacity An important factor in a competitive market is the relative market share held by each of the participants. Unfortunately, for obvious reasons, production and sales data for each of the individual CFC producers are not publicly available; however, total industry data as given in Section II do exist for each CFC. These data, together with company specific production capacity, provide the basis for deriving estimates of each firm's portion of total sales. Various references list the capacities of each producer for particular years. As will be seen shortly, a number of changes have taken place since the information contained within these references was obtained. Table V-l gives the capacities specified by two refer- ences, and also the capacities which we believe are currently more accurate. ------- Table V-l CFC CAPACITY BY U.S. PRODUCERS (millions of pounds) Firm Allied DuPont Kaiser Pennwalt Racon Union Carbide TOTAL Reference 4 1973 Capacity 310 500 50 115 20 200 1195 •a Percent of Total 25.9 41.8 4.2 9.6 1.7 16.7 100.0 Reference 1 1976 Capacity 319 695 80 115 35 200 1435 Q Percent of Total 21.6 48,4 5.6 8.0 2.4 13.9 100,0 Estimated 1978 Capacity 240 600 80 90 50 — 1060 Percent of Total 22,6 56.6 7.6 8.5 4.7 — 100,0 aThe values may not add to 100 percent due to rounding. ------- -28- The differences between the estimated 1976 capacities and those of the other references may be attributable to plant closings. For example, Union Carbide recently discontinued direct CFC production, while DuPont, Allied, and Pennwalt closed entire facilities or por- tions of them. The closing of these plants undoubtedly resulted from anticipation of the aerosol ban, and should have involved pri- marily CFC-ll/CFC-12 plants. Capacity for CFC-114, which was also used in aerosols, would not be affected since the amount produced is relatively small and CFC-114 plants are also used to produce CFC-113. It is true, however, that within the last few years, two CFC-113/CFC-114 plants were closed by current producers, as old units were phased out to bring new units onstream. One notable event for which there is no obvious explanation is that several years ago, Pennwalt and Union Carbide joined the CFC-113 market, but left shortly thereafter. It may well be that the CFC-113 demand could not support plants owned by four producers. Table V-l shows the shift which occurred in the capacity share held by each producer in the time period reflected by the values of Reference 4 and those estimated for 1978. Racon, Kaiser, and DuPont increased their capacity shares significantly, while Pennwalt's and Allied's shares declined. The increase in share experienced by some of the producers was governed by Union Carbide's discontinuing pro- duction. It is clear, however, that the share held by Union Carbide was not subsequently spread evenly among the other five producers. Given the producers' total capacity, we now want to consider the capacity for each CFC held by each producer. It is estimated that DuPont holds about two-thirds and Allied one-third of total CFC-113/ CFC-114 capacity estimated at 150 million pounds. Reference 5 gives the capacity of DuPont's single CFC-22 production facility as 120 million pounds; that estimate will be adopted here. The balance of Although CFC-114 is largely used in aerosols, CFC-113 produc- tion currently represents about 76 percent of total CFC-113/CFC-114 production. Thus, CFC-113/CFC-114 plant closings would .be unlikely to occur based on less CFC-114 production. In fact, in 1977 only 14 million pounds of CFC-114 went toward aerosol uses. ------- -29- DuPont's capacity, 380 million pounds, can be allocated to CFC-11 and CFC-12 according to the 1977 relative production of each. After accounting for CFC-113/CFC-114 capacity, Allied has 190 million pounds of capacity remaining for CFC-11, CFC-12, and CFC-22. In 1977, CFC-22 production represented about 24 percent of combined CFC-11, CFC-12, and CFC-22 production. If this percentage is applied to Allied's capacity for these three CFCs, it is estimated that Allied's CFC-22 capacity is 45 million pounds. CFC-11 and CFC-12 capacities are then 54 and 91 million pounds respectively. It will be assumed that this same reasoning applies to Pennwalt and Kaiser, who each have one plant which produces the three CFCs. Racon has one CFC-ll/CFC-12 plant, and two plants devoted entirely to CFC-22 production. Thus, CFC-22 may account for as much as half of Racon's production, and it will be assumed that this is the case. Given these assumptions, Table V-2 presents the estimated capac- ity and percent of total capacity for each CFC held by the individual producers. Appendix E presents historical CFC capacity as well as a method of apportioning capacity to each CFC. Table V-2 1977 CAPACITY APPORTIONMENT (millions of pounds) Annual Capacity (Percent of Total Capacity) Producer Allied DuPont Kaiser Pennwalt Racon TOTAL CFC-11 54 142 23 26 6 251 (22) (57) (9) (10) (2) (100) CFC-12 91 238 38 43 19 429 (21) (56) (9) (10) (4) (100) CFC-22 45 120 19 21 25 230 (20) (52) (8) (9) (11) (100) CFC-113 38 77 115 (33) (67) (100) CFC-114 12 23 35 (33) (.67) (100) Total 240 600 80 90 50 1060 ------- -30- CFC Sales To gain a real understanding of the effects of potential regu- lations on the CFC industry, we would ideally like to have CFC sales data for the individual firms and total company sales data. Since these data are not available, estimation techniques are necessary. The apportionment of capacity to each producer in Table V-2 can be useful for determining the historical revenues derived from CFC sales. If the amount of each CFC sold historically is known, the apportionment scheme can be used, together with CFC prices, to determine the CFC sales revenue realized by each producer. In the previous subsection, estimated capacities for each CFC were apportioned to each producer based on available capacity data and historical production figures. The 1977 sales of each CFC can be apportioned to the individual firms according to the percentage allo- cations of Table V-2. Although this table was developed on the basis of 1978 estimated capacities, it should be applicable to 1977 as well. CFC pricing information is sparse and often does not refer to the actual price at which the CFC was sold. Reference 3 gives the sales value and amount sold for CFC-11, CFC-12, and CFC-22 for 1970 through 1977. These values are shown in Table V-3 and exclude any revenue derived from sale as an intermediate. Prices for CFC-11, CFC-12, and CFC-22 changed only slightly from 1976 to 1977. Table V-3 CFC SALES AND SALES VALUE3 CFC-11 Year 10 Pounds Million $ 1976 239 81.6 1977 197 66.9 CFC-12 10 6 Pounds Million $ 371 151.4 340 135.9 CFC-22 105 Pounds Million $ 126 88.3 129 88.1 The values in this table were taken from Reference 3. As will be seen shortly, CFC is often priced according to size of purchase. Thus, unknown amounts are purchased at prices which have a considerable variance. ------- -31- Unfortunately, the values of sales for CFC-113 and CFC-114 are unavailable. Table III-3 gave our estimates of the quantities of these two CFCs sold in 1977. Using this information in conjunction with 1977 CFC-113 and CFC-114 prices, a value of sales could be determined for each. Table V-4 gives our estimates of historical CFC-113 bulk prices and the only available CFC-114 price for the historical period. Use of these bulk prices will almost certainly lead to an underestimation of sales value. Nevertheless, the 1977 CFC-113 price of 56 cents per pound results in a 1977 CFC-113 sales value of 45.4 million dollars. Using 65 cents per pound as the CFC-114 selling price leads to a sales value of 12.4 million dollars. Table V-4 CFG HISTORICAL PRICES—1970-1977 (cents per pound) Year 1970 1971 1972 1973 1974 1975 1976 1977 CFC-113a 40 40 40 38.4 43.3 48.5 52 56 CFC-114 — — — 65b — — aThese prices for CFC-113 are bulk prices. bA "1974" price for CFC-114 and the other CFCs is given in Reference 2. These prices are 35, 42, 63, 63, and 65 for CFC-11, CFC-12, CFC-22, CFC-113, and CFC-114 respectively. The report is dated December 1975, and comparison with the prices implied in Table V-3 indicates that these are probably actually 1975 prices. Prices for CFC-114 for the other years are not available. ------- -32- Table V-5 shows the allocation of the 1977 sales for the five CFCs to each producing firm. The values were derived by assuming that sales value can be apportioned according to the portion of capacity held by each producer as given in Table V-2. The 1977 CFC sales of each firm may be more meaningful when compared with total company sales, as shown in Table V-6. The limitations of Table V-6 in representing the actual sales attributable to each firm are obvious. For example, it is true that all of Racon's sales are from sales of CFCs. The values of Table V-6 indicate that direct sales of CFC-11, CFC-12, and CFC-22 account for only about 55 percent of Racon's total sales. A number of factors could contribute to the understatement of Racon's sales and also to the understatement of the sales of all producers. These factors are discussed in Appendix F. Table V-5 1977 CFC SALES (millions of dollars) a Producer Allied DuPont Kaiser Pennwalt Racon Total CFC-11 14.7 38.2 6.0 6.7 1.3 66.9 CFC-12 28.6 76.2 12.2 13.6 5.4 136.0 CFC-22 17.5 45.6 7.0 7.9 9.6 72.7 CFC-113 15.0 30.4 — — — 45.4 CFC-114 4.1 8.3 — — — 12.4 Total 79.9 198.7 25.2 28.2 16.4 348.4 Assumes prices of 34 cents per pound for CFC-11, 40 cents per pound for CFC-12, 68 cents per pound for CFC-22, 56 cents per pound for CFC-113, and 65 cents per pound for CFC-114. This allocation method is based on the assumption that the amount of CFC produced by each firm is directly proportional to the fraction of total capacity held by that firm. This may not be valid in that some firms may produce at greater than stated capacity, and others at less than stated capacity. ------- -33- Table V-6 1977 CFC AND TOTAL SALES (millions of dollars) Producer Allied DuPont Kaiser Pennwalt Racon CFC Sales 79.9 198.7 25.2 28.2 16.4 Total Salesa 2922.8 9434.8 2179.6 834.9 29.7 CFC Percent of Total 2.7 2.1 1.2 3.4 55. 2b •a Total sales were obtained from Moody's Industrial News Report, Vol. 49, 1978. Racon1s CFC sales are actually 100 per- cent of total sales. PRECURSOR CHEMICAL PRODUCERS The market for the chemicals which are precursors to CFC manu- facture is more difficult to assess than the CFC market itself. The CFCs are the end product in a long chain of production involving a number of chemical processes. Many of the chemicals in this chain can be manufactured using two or more different processes, and most are used for a variety of purposes in addition to CFC manufacture. The details of the capacity allocation to the producers of each pre- cursor chemical are given in Appendix G. The results of the allocation indicate that the CFC manufacturers are heavily back-integrated into precursor production. Table V-7 indicates the magnitude of this involvement for each precursor chem- ical. No year is given in this table since the capacity allocations for the precursor chemicals were often given for different years. It should be stressed that the values of this table refer to precursor chemical production for CFC manufacture and not industry-wide pre- cursor chemical production. Of the CFC producers, the two largest, DuPont and Allied, are the most heavily integrated into manufacture of the precursor chemicals ------- -34- considered here. Two points to note are that Racon does not pro- duce any of the precursor chemicals, and that CS is not produced z 2 by any of the CFC manufacturers according to Table V-7. If future CFC production were limited, many of the precursor chemical producers who are not CFC manufacturers would also be sig- nificantly affected. Dow Chemical, the largest producer of the three chlorocarbons and Cl^, would undoubtedly be one of these. Other com- panies which appear to be heavily involved in precursor production include Stauffer and Vulcan Materials. Table V-7 PRECURSOR CHEMICAL PRODUCTION FOR CFCs (millions of pounds) Producer Allied DuPont Kaiser Pennwalt Racon Other Total cci4 151 399 __ — — 158 708 HF 98 88 60 30 — b 6 282 CHC13 52 — — — 207 259 C2C14 — 67 — — 33 100 cs2 — __ a — 140 140 C12 318 670 8 16 — 558 1570C CFC Producers' Percent of Total 78 98 20 67 0 64 a Pennwalt does produce CS_, although not for CC1,. There are other HF producers whose HF does not go toward CFC manufacture. c This value excludes the production by the paper companies as discussed in Appendix G. If other precursor chemicals were included, the other CFC produ- cers might show the back integration as markedly as DuPont and Allied. 2 The lack of CS2 back integration reflects the fact that most of the CC1, used in CFC manufacture is not produced using CS_. ------- -35- VI. FUTURE PRODUCTION AND THE EFFECTS OF POLICY ACTION The relationships developed here for determining CFC and pre- cursor chemical production based on a particular level of CFC use can be used to estimate future requirements. In this section, we present projections of base case 1990 CFC end use. We also provide CFC production estimates based on industry supplied data and the implied precursor chemical requirements. We then examine five scenarios for reducing CFC emissions and discuss the implications of each on the CFC and precursor chemical producing industries. 1990 CFC END USE In Reference 8, projections of 1990 base case CFC use for most CFC applications are developed. These data are shown in 2 Table VI-1. The analyzed applications did not include those in which CFC-22 is heavily used (for example, home air-conditioning), since that CFC is thought to pose less of a hazard to the ozone layer than the fully halogenated CFCs. CFC PRODUCTION AND SALES Two knowledgeable industry sources provided us with data from which projections of CFC production could be derived. The tech- niques developed here for relating CFC production to the CFC avail- able for use were then employed. Table VI-2 shows these estimates of future production and the amount of CFC available for use. The values of CFC-11 for use in analyzed applications in Table VI-1 conflict with the projections of use in Table VI-2. The large variation in the production data supplied by industry sources for this CFC might account for the discrepancy. The analyzed product areas account for about three-quarters of total CFC use. 2 Reference 8 provides a detailed description of the techniques used to derive the data. ------- -36- Table VI-1 ESTIMATED NONAEROSOL CFG END USE—1990 (millions of pounds) Analyzed Applications CFC-11 CFC-12 CFC-22 CFC-113 CFC-114 Flexible Foam Solvent sa Rigid Foams Ur ethane Non-ur ethane Mobile Air Conditioning Other Refrigeration Chillers Home Refrigerators and Freezers Retail Food Miscellaneous Liquid Fast Freezing Sterilants Other TOTAL 72 — 154 8 — 14 — — — — 4 252 __ 147 5 59 125 6 4 — Q 10 1 ]^5 __ 40 11 280 5 147 1 2 — — — — — 3 SOURCE: Values were taken from Table 3.3 of Reference 8. NOTE: Uses reported for individual applications exclude: about 7 million pounds of CFC-22 and 8 million pounds of CFC-115 used to form CFC-502; 2 million pounds of CFC-12 and less than 1 million pounds of CFC-152a used to form CFC-500. a Refrigeration and other relatively small miscellaneous uses of CFC-113 are included in the solvents data. Reference 9 indicates that CFC-12 is used in mobile and indus- trial refrigeration applications. These uses could account for the difference of 47 million pounds in the total CFC-12 figure of Table VI-1 and the end use value of Table VI-2. The accuracy of the CFC-22 end use projections of Table VI-2 cannot be confirmed by comparison with the value of Table VI-1 since Reference 8 analyzed very few CFC-22 applications. The end use values for CFC-113 in Tables VI-1 and VI-2 show perfect agreement since projections for both estimates were derived using the same data. The same holds true for CFC-502 end use, which is referred to in the note to Table VI-1. ------- -37- Table VI-2 ESTIMATED NONAEROSOL CFC PRODUCTION AND END USE--1990 (millions of pounds) CFC CFC-11 CFC-12 CFC-22 CFC-113 CFC-114 CFC-502 Production 262 363 385 147 32 16 End Use 228 327 265^ I47b 25 15 SOURCE: Industry supplied data and calculations as described in the text. *a The values for end use were calcu- lated under the assumption that use will continue to be the same fraction of pro- duction as in 1976. The end use values for CFC-113 include estimates of imports, while those for the other CFCs do not. The value for 1990 end use of CFC-114 in Table VI-2 is far higher than the total value for analyzed uses in Table VI-1. The analyzed applications do not include intermediate use of CFC-114 for the production of CFC-115. Most of this intermediate use is reflected in the difference between the values for production and end use in Table VI-2. There are numerous specialty applications in which CFC-114 acts as a refrigerant. Furthermore, the CFC is used in various exempted aerosol applications, including some for defense purposes. Although there are no available data on these uses, they may account for the balance of CFC-114 end use. ------- -38- The 1990 values for CFC production given in Table VI-2 provide the basis for considering the future CFC production capacity require- ments. As mentioned earlier, the design capacity of a particular production plant is only an approximation to the amount of the chemical that is actually produced. Production of a chemical may be less than the design capacity if the capacity is not fully utilized. Alternatively, actual production may exceed the design capacity, some- times by as much as 100 percent. Although the "rule of thumb" which indicates that design capacity remains about 15 percent ahead of actual production is useful, it is not necessarily always accurate. Industry sources indicate that, in certain cases, plants may be run at 200 percent of rated design capacity. Thus, any assessment of the adequacy of current capacity for future production requirements is necessarily somewhat speculative. The values of Table VI-2 indicate that combined 1990 CFC-ll/CFC-12 production will be 625 million pounds. Existing capacity of CFC-11/ CFC-12 plants is about 680 million pounds according to the values of Table V-2. This implies that if no policy action for limiting CFC emissions is taken prior to 1990, current capacity will be sufficient to produce CFC-11 and CFC-12 through 1990. By 1990, CFC-22 production is estimated to be 385 million pounds in the absence of policy action. The 1977 CFC-22 capacity cited in Table V-2 is 230 million pounds. Some existing facilities were designed to produce either CFC-ll/CFC-12 or CFC-22 by simply varying the pre- cursor chemical feed. These plants could produce a mix of CFC-11/ CFC-12 and CFC-22. The 230 million pounds of CFC-22 capacity together with the 55 million pounds of excess CFC-ll/CFC-12 capacity would not be adequate to produce 385 million pounds of CFC-22 in 1990. However, it is certainly possible that all plants could be run at higher than design capacity. It seems reasonable to assume that existing capacity will probably be adequate through 1990, but that shortly thereafter, additional capacity will be necessary. Current CFC-113/CFC-114 capacity is about 150 million pounds according to the values of Table V-2. Combined CFC-113/CFC-114 produc- tion in 1990 in the absence of policy action will total 179 million ------- -39- pounds. The production exceeds the existing design capacity by only about 19 percent. Moreover, industry sources indicate that it takes less capacity to produce one pound of CFC-113 than it does to produce one pound of CFC-114. The same reasoning may also apply to CFC-11/ CFC-12 production. It seems reasonable to conclude that the current capacity will probably suffice for the 1990 production levels, but additional capacity will likely be needed a short time later. Capacity for CFC-502 need not be considered. This CFC is pro- duced by combining CFC-22 and CFC-115 which is in turn produced using CFC-114. The 1990 production estimates of CFC-114 and CFC-22 given in Table VI-2 include the CFC-114 used to manufacture CFC-115 and the CFC-22 combined with it to form CFC-502. PRECURSOR CHEMICAL PRODUCTION Based on the CFC production levels of Table VI-2 and the methods developed in previous sections, the 1990 baseline precursor chemical requirements can be derived. These are shown in Table VI-3. The values of Table VI-3 reflect only the amount of each pre- cursor chemical required for CFC manufacture. They do not include requirements for other applications. In other words, the values of Table VI-3 represent the baseline 1990 precursor chemical require- ments for the CFC production of Table VI-2. By 1990, the baseline HF requirements for CFC production will be 422 million pounds. According to the values of Table III-5, in 1976, 46 percent of the HF went toward CFC manufacture. Assuming this same percentage to hold through 1990, the total HF requirement in that year would be about 900 million pounds. If the "rule of thumb" that plant capacity is 15 percent higher than production is a reasonable estimating tool, HF capacity in 1990 should be about Values for HF, C-C1,, CHC1_, and CS,., differ from those presented in Table A-4 of Reference 8. In this case, precursor chemicals for CFC-22 and CFC-114 are included, whereas they were not in Reference 8. ------- -40- Table VI-3 ESTIMATED PRECURSOR CHEMICAL AND BYPRODUCT PRODUCTION—1990 (millions of pounds) Year HF CCl, C0C1. CHCl,. CS_ Cl- HC1 424 3 2 2 1990 422 771 167 558 152 2224 1534 SOURCE: Derived as explained in the text. 1050 million pounds to produce the required HF. Since this is significantly higher than the 1977 capacity of 683 million pounds in Table G-2, HF capacity will probably be added by 1990.1 The values of Table VI-3 indicate that, by 1990, baseline requirements of CCl, will be 771 million pounds. Assuming this value represents 88 percent of total 1990 CCl, production and adopting the "15 percent rule of thumb," 1990 CCl, capacity should be about 1000 million pounds. The total 1977 CCl, capacity (1205 million pounds) o given in Table G-l should therefore by adequate through 1990. The 1990 C2C1^ baseline requirement for CFC manufacture of 167 million pounds leads to an implied capacity of about 1130 million pounds assuming the "15 percent rule of thumb," and that 17 percent of C2C14 will be devoted to CFC manufacture in that year. The 1977 total C2C14 capacity of 1180 million pounds given in Table G-3 should be sufficient through that year. The CHCl- baseline requirement in 1990, according to Table VI-3, will be 558 million pounds. If 86 percent of the CHCl goes toward CFC production in that year, the implied capacity will total about 750 million pounds. The current total capacity of approximately Even more capacity would be necessary if Kaiser and Stauffer were to close their HF facilities. 2 If FMC closes its facility, however, the capacity would not be adequate. ------- -41- 300 million pounds (Table G-3) would certainly be inadequate to satisfy the need. To meet the 1990 requirement, current CHC1 capac- ity would have to approximately double by that year. According to Table VI-3, 1990 baseline CS2 requirements for CFC manufacture will be 152 million pounds, only slightly larger than the 1977 production of 140 million pounds. Existing capacity should prove sufficient to satisfy the need. Table VI-3 shows 1990 baseline Cl requirements for CFC produc- tion as 2224 million pounds. Assuming that 9 percent of the Cl_ is used for CFC manufacture in that year, the implied 1990 capacity would be about 28,400 million pounds, about 6000 million pounds higher than the 1977 capacity (Table G-5). Because this is only a small percentage of the design capacity, Cl_ capacity for CFC manu- facture probably will not be added before that time. Table VI-3 also illustrates that in 1990, as a result of the CFC and precursor chem- ical production requirements, there will be 1534 million pounds of HC1 manufactured. This may or may not be a cost advantage depending on the market for HC1 at that time. The base line precursor chemical requirements serve as a basis for determining the impacts on the producers if no policy action is taken. However, in the event that policies for limiting emissions are adopted, precursor chemical requirements will also be reduced. FUTURE POLICY ACTION In Reference 8, two general policy strategies for reducing future emissions are discussed. The first strategy, mandatory con- trols, involves setting rules and regulations requiring firms to limit emissions by the use of specific technologies such as recovery and recycle of CFC, equipment improvements, or chemical substitution. The second strategy, economic incentives, entails manipulating CFC prices so that it becomes profitable for firms to reduce emissions. The implications of five policy designs involving these two strategies were examined in Reference 8. The first, the benchmark controls, is a mandatory control strategy. The other four policy ------- -42- designs are economic incentive strategies. Two of these, the con- stant price design and the cost-minimizing design, achieve the same reduction in emissions obtained through mandatory controls, about a 15 percent reduction in emissions between 1980 and 1990. The third economic incentives strategy is a low-growth scenario in which emissions would be reduced slightly more than under mandatory con- trols. The final economic incentives strategy is zero-growth, which would be equivalent in cumulative emissions reduction to prohibiting growth in CFG use after 1980. A complete description of the features of each policy is available in Reference 8. Each of the five policies leads to a reduction in CFC emissions, and thereby, to a reduction in CFC use. Table VI-4 presents these CFC use reductions for the various policy cases for 1990. It should Table VI-4 REDUCTION IN CFC USE UNDER BENCHMARK CONTROLS AND FOUR ECONOMIC INCENTIVE POLICY DESIGNS—1990 (millions of pounds) Policy Design Benchmark controls CFC-11 40.5 CFC-12 20.3 CFC-113 32.5 CFC-114 -8.8 Economic Incentives Policies That Achieve The Benchmark Reductions Constant price design 30.3 11.9 49.3 -8.8 Co s t-m in im iz ing design 37.5 17.6 56.1 -8.8 Economic Incentives Policies for Low- and Zero-Growth Low-growth 57.8 36.4 79.3 -8.8 Zero-growth 57.8 36.4 79.3 -8.8 SOURCE: Table A-l of Reference 8. ------- -43- be emphasized that Reference 8, from which the values of Table VI-4 were taken, considered policies that would reduce CFC use only in the applications analyzed in that document. Since no applications using CFC-114 were analyzed, the table shows no reduction in CFC-114 resulting from the policy actions. The precursor chemical requirement reductions that correspond to the CFC reductions are shown in Table VI-5. The values were deter- mined using the techniques developed here for relating CFC to pre- cursor chemical production. The values of Table VI-5 show an increase in CHCl- requirements for all policy designs. This occurs because in each design, there is a control strategy involving the substitution of CFC-502 for CFC-12 Table VI-5 REDUCTION IN PRECURSOR CHEMICAL REQUIREMENTS—1990 (millions of pounds) Policy Design Benchmark controls HF 21 CCIA 82 C2C14 24 CHC13 -7 cs2 16 C12 143 Economic Incentives Policies That Achieve the Benchmark Reductions Constant price design 17 57 40 -7 11 122 Co s t-m in im iz ing design 27 74 46 -7 15 155 Economic Incentives Policies for Low- and Zero-Growth Low-growth Zero-growth 46 46 128 128 68 68 -7 -7 25 25 260 260 SOURCE: Derived as explained in the text. ------- -44- in all new medium-temperature retail food applications. Since CFC-502 is a combination of CFC-22 and CFC-115, substitution of CFC-502 for CFC-12 leads to an increased demand for CHC1,. used to manufacture CFC-22. The results of Table VI-5 are perhaps more meaningful when com- pared with the future baseline precursor chemical requirements, assum- ing no policy action is taken (Table VI-3). The percentage reductions in precursor chemical requirements for CFC manufacture and for all use under each of the policy designs over the baseline requirements are given in Table VI-6. The largest percentage reduction is shown for C^Cl, in both the low-growth and zero-growth cases. If, in 1990, the same percent of C?C1, goes toward CFC production as in 1977, then the reduction will only affect 6 percent of total C~Cl, production. In fact, the only precursor chemical for which total production would decline more than 6 percent over expected baseline levels is CCl,. Assuming 88 percent of CCl, production is still devoted to CFC manufacture in 1990, total CCl, production would decline about 15 percent over projected levels. If FMC (as indicated in the footnote to Table G-l) indeed closed its CCl, facility, the 1990 capacity requirement if either the low-growth or the zero-growth policies were adopted would be about the same as the current capacity available. In 1976, aerosol applications of CFCs generated a significant share of the market for each of the precursor chemicals except chloro- form. This part of the precursor chemical market has now virtually disappeared in the wake of the aerosol ban. It appears that the effects of CFC nonaerosol regulation would be quite modest in comparison with the effects of the aerosol ban. The largest impact of nonaerosol regu- lations would occur in the CCl, market, where the reduction in total The values for Table Vl-6 differ from those of Table A-6 of Reference 8. Since this reference does not include baseline require- ments for CFC-22 and CFC-114 production, only the values for CCl, and CS~ agree with those presented here. 2 Since the assumption is that only 17 percent of C^Cl, went toward CFC manufacture, only 6 percent reduction in C-C1, total production would result. ------- Table VI-6 PERCENT REDUCTION IN PRECURSOR CHEMICAL REQUIREMENTS —1990 (millions of pounds) Policy Design HF Benchmark Controls 5 Constant Price Design 4 Cost -Minimizing Design 6 Low-Growth 11 Zero-Growth 11 FOR CFC PRODUCTION CC14 C2C14 CHC13 CS2 C12 11 14 -I Economic 7 24 -1 10 28 -1 Economic 17 41 -1 17 41 -1 11 6 HF 2 Incentives Designs that Ac The Benchmark Reduction 7 5 10 7 Incentives Designs to Low Growth 16 12 16 12 2 3 FOR ALL USE3 CC1. C0C1, CHC10 CS0 C10 4/4 J / / 10 2 -1 3 1 hieve i 6 4 -1 2 — b V1 7 5-1 31 Corresponding 5 5 15 7 -1 4 1 15 7 -1 4 1 SOURCE: Calculations explained in the text, a. Calculations assume that 46 percent of the HF, 88 percent of CC1,, 17 percent of C Cl 86 percent of 26 percent of CS?, and 9 percent of C12 are used in CFC manufacture. Less than 1 million pounds. ------- -46- annual production could be as high as 15 percent. For the other precursor chemicals, the effects of nonaerosol CFG regulation would generally amount to less than a 7 percent reduction in the overall markets. ------- -47- VII. CONCLUSIONS The aerosol ban has had a significant effect on the CFG and precursor chemical producing industries. Production of CFC-22 and CFC-113, both of which were not widely used in aerosol products, has steadily increased. In the absence of policy action between now and 1990, growth for the two CFCs will continue. Alternatively, production of CFC-11, CFC-12, and CFC-114, all of which were used as propellants, will not again reach 1976 levels until about 1990. In the absence of any policy action, we anticipate continued growth in CHC1-, C Cl,, HF, and production of CC1, and CS_ to have been adversely affected by the aerosol ban. Comparison of the values of Tables VI-3 and III-4 indeed indicates continuing growth for CHC1~, C2C1^, HF, and Cl , while production of CC1, and CS2 will not reach 1976 levels again until about 1990. Of the two precursor chemicals, CC1, was affected more severely by the aerosol ban. This follows from the fact that almost all of the CC1, produced is used in CFC manu- facture, whereas only about one-fourth of the CS« production is devoted to this use. The effects of two general policy strategies for limiting non- aerosol CFC emissions on precursor chemical production were examined. One of these, a mandatory control strategy, requires firms to reduce emissions by the use of specific technology. The second strategy, economic incentives, involves manipulation of CFC prices so that it becomes desirable to limit emissions. CFC emissions reductions that would occur under five policy designs were used to determine the cor- responding reductions in precursor chemical production requirements. The first design, the benchmark controls, is a mandatory control strategy; the other four designs are economic incentive strategies. The five policy designs would lead to CFC emission reductions of be- tween 15 and 30 percent over the period 1980 to 1990. ------- -48- The aerosol ban that primarily affected use of CFC-11 and CFC-12 reduced the production requirements of those precursor chem- icals used exclusively in their manufacture, CC1, and CS_. The five policy designs for limiting nonaerosol emissions would lead to reduc- tions in the use of CFC-113 in addition to CFC-11 and CFC-12. Pro- duction requirements of several precursor chemicals—HF, CC1, , C_C1,, CS,,, and Cl«—would also decline. The most stringent policy designs for limiting emissions are the zero-growth and low-growth policies. Under these policies, 1990 CC1, production would be about 15 percent less than under base case projections which assume no policy action will be taken. Production of the other precursor chemicals would decline by 7 percent at most under the two policy designs. That the greatest impact would be felt in the CC1, market is not surprising. A very large amount of the total CC1, produced, 88 percent, is used in the manufacture of CFCs. The very modest impact on the other pre- cursor chemicals is also to be expected since much smaller percentages of total production are devoted to CFC manufacture. The techniques developed in this document have wide applicability. They can be used to assess the effects of any level of CFC emissions reduction on the precursor chemical production industries. An emis- sions limitation imposed on a particular CFC implies a corresponding limitation on its use. Reduced use leads to a reduction in CFC pro- duction which, in turn, leads to a reduction in precursor chemical requirements. This work provides the basis for translating a change in any one of the three variables, CFC use, CFC production, and pre- cursor chemical production into a change in any one of the other variables. ------- -49- Appendix A PRECURSOR CHEMICALS FOR CFG PRODUCTION The purpose of this appendix is to develop factors that can be used to calculate the amount of each precursor chemical used in CFC manufacture. Given a level of CFC production and a knowledge of the chemical equations and efficiency of the processes, this can be accomplished readily. The molecular weights of each compound neces- sary for the calculation are listed in Table A-l. For convenience, Table A-2 reproduces the chemical equations presented in Section II. Table A-l MOLECULAR FORMULAS AND WEIGHTS Compound Name carbon disulfide carbon tetrachloride CFC-11 CFC-12 CFC-22 CFC-113 CFC-114 chlorine chloroform hydrogen fluoride hydrochloric acid methyl alcohol perchloroethylene trichloroethylene Molecular Formula cs2 cci4 CC13F CC12F2 CHC1F2 C2C13F3 C2C12F4 C12 CHC13 HF HC1 CH3OH C2C14 C2HC13 Molecular Weight 76.14 153.84 137.38 120.93 86.48 187.39 170.94 70.91 119.39 20.01 36.47 32.04 165.85 131.39 ------- -50- Table A-2 CHEMICAL EQUATIONS FOR CFC MANUFACTURE HF ->- HC1 H J (CFC-11) (A-l) CC14 + 2HF -> 2HC1 (CFC-12) (A-2) a C H, + (7a-2b)Cl2 -»• (a-2b)CC!4 + (a+b)C2Cl4 + 6a HC1 (A-3) 2C12 -> CC14 + 2S (A-A) CH. + 4C1,-. -* CC1, + 4HC1 (A-5) 4 i. 4 CHC13 + 2HF -»- 2HC1 + CHC1F2 (CFC-22) (A-6) 3C12 -> CHC13 + 3HC1 (A-7) CH3OH + 2C12 -> CHC13 + HC1 + H20 (A-8) 3HF + C12 -> C2C13F3 + 3HC1 (CFC-113) (A-9) 4HF + C12 -»• C2C12F4 + 4HC1 (CFC-114) (A-10) 7C12 ->• C2HC13 + C2C14 + 7HC1 (A-ll) ------- -51- In addition to molecular weights, the calculations require knowl- edge of emissions and production process efficiencies. Generally, industry defines "process efficiency" as the product of an efficiency factor and an emissions factor. In this work, the efficiency factor will be considered to account for unreacted chemical inputs or un- desirable byproducts, while the emissions factor will be assumed to address mechanical losses after reaction of raw materials. CFC emissions from the production process have been estimated by knowledgeable sources at 2 percent of total production. Since it is not known how this value varies depending on the CFC being produced, the 2 percent loss figure will be adopted here for all CFC manufac- turing processes. Emissions in the production of the intermediate precursor chemicals are negligible according to industry sources. This is probably due to the stringent emissions standards for the chlorocarbons and also their much lower vapor pressures. The second factor, the process efficiency, does vary somewhat according to the chemical being produced. Through conversations with industry individuals, we have made estimates of the magnitudes of these factors for each process. These are explained in the develop- ment of the factors for each precursor chemical below. The general formula for calculating the precursor chemical factors is as follows: „ _ Precursor Molecular Weight CFC Molecular Weight X Efficiency A (1-fraction Emitted) INTEEMEDIATE PRECURSOR CHEMICALS Equations A-l and A-2 may be used to determine the amount of CC1, needed to produce one unit each of CFC-11 and CFC-12. The These emissions are discussed in more detail in Section IV. ------- -52- losses here are primarily due to CFC production emissions. The efficiency of producing CFC-11 and CFC-12 from CC1, is extremely high, For CFC 11. 153.84 x For CFC-11. 137_38 >999 For CFC-12: x __ x __ = ^30 HF Equations A-l, A-2, A-6, A-9, and A-10 may be used to calculate the amount of HF necessary per unit of CFC output. The efficiency of producing CFC-11 and CFC-12 from HF is significantly higher than that for producing CFC-22, CFC-113, and CFC-114. F°r CFC-11: x rorCFC.12: _ For HCFC-22: • x - x -_ , 0.48 ForCFC.113; _ x __ . 0.49 In this case, only Equation A-6 is needed. The production of CFC-22 from CHC1 is extremely efficient, but to account for pro- duction of CFC-23, a minor co-product, a value of .97 has been used. ------- -53- ForCFC-22: C2C14 Equations A-9 and A-10 are necessary. Production of CFC-113 and CFC-114 is not as efficient as the production of CFC-11 and CFC-121 ForCFC-113: For CFC-114: C12 Equations A-9 and A-10 are again those which are needed. The consumption of Cl in the manufacture of CFC-113 and CFC-114 is relatively inefficient. For CFC-113: , ';L x ~^r x —^ = 0.42 For CFC-114: x -- x - = 0.46 PRELIMINARY PRECURSOR CHEMICALS The relevant equation is Equation A-4 . As indicated previously, the emissions of CCl, are negligible. For CC14: >< X = °'52 ------- -54- The necessary equations In this case are A-3, A-4, A-5, A-7, A-8, and A-ll. Again, in each case, chlorocarbon emissions during the production process are considered negligible. For CHC1 •3 x 70 QI 1 I in Equation A-7: - * -^ x _L = 1.94 For CHC1 in Equation A-8: For CCl, q, in Equation A-4: 91 x x = 0.97 For CC14 in Equation A-5: The Cl factors for CCl, and C^Cl, in Equation A-3 are more complicated to derive because of a and b. One way to determine values for these constants is to examine actual production for a given year. In 1973, 1047 and 706 million pounds of CCl, and C Cl, were produced respectively. Reference 1 states that 39 percent of CCl, capacity is based on Equation A-3. Reference 2 asserts that 34 percent of C.C1, production is based on a process similar to 1 Equation A-3. It is a generally accepted fact that the inputs to Equation A-3 can be continuously varied to provide different propor- tions of C.Cl, and CCl,. 24 4 See Appendix B for a more complete discussion. ------- -55- On this basis, values for a and b can be derived in the follow- ing way: For CC14 produced in 1973: 1047 x 0.39 = 408 For C2C14 produced in 1973: 706 x Q.34 = 240 408 240 (a - 2b) 153.84 (a + b) 165.85 b = -0.22a If a is assumed equal to 1, then b is -0.22 and Equation A-3 becomes: 4- 7.44 C12 + 0.78 C2C14 + 1.44 CCl^ + 6HC1 Of the 7.44 moles of Cl required to produce C Cl, and CC1, in this equation, 63 and 37 percent were used to produce CC1, and C Cl, respectively. Thus, the factors for Cl_ in this equation become: For CC1, 7 44 x 70 91 1 1 in Equation A-3: . 63 x _;__^. x _ x ^-^ = 1 . 63 For C Cl, 2 * 0^ 7.44 x 70.91 1 v 1 _ . ,. in Equation A-3: .37 x >78 x 165.85 792" ITOO ~ One industry source recommends that the input hydrocarbon in this equation be treated as CH2 and multiple units of CH2. The fac- tors resulting from this analysis do not differ significantly from those shown above. The Cl factor for C Cl, in Equation A-ll is also more difficult to obtain because C Cl and C2HC13 are co-produced. Reference 2 states that about 90 percent of the C2CHl3 and 63 percent of the ------- -56- are manufactured using a method similar to Equation A-ll. For 1973, Reference 3 gives total C.HCl. and C_C1, production as 452 and 706 pounds respectively. On this basis, Equation A-ll was used to manufacture 407 and 445 million pounds of C^HCl and C2C14 respectively. This implies that 54 and 46 percent of the Cl. in Equation A-ll went toward C HCl,, and X— £., -J CC1, manufacture respectively. Thus, the Cl factor becomes: For C2C14 in Equation A-ll: .46 x \ * ^'^ x _|_ x _i_ = 0.36 BYPRODUCT HCl HCl is produced as a byproduct as a result of CFC manufacture according to Equations A-l, A-2, A-6, A-9, and A-10. It is also pro- duced in the preparation of the chlorocarbons for CFC manufacture in Equations A-3, A-5, A-7, and A-8. Factors for each of these equa- tions are developed below. The efficiency of the HCl recovery pro- cess has been assumed to be 0.95 except in the case of CHC1« where it is estimated at 0.90. From CFC-11: —„ ' n x .95 x —— =0.26 x 36 47 1 From CFC-12: T * '95 X T98 ' °'58 2 x 36 47 1 From CFC-22: Q, . ' x .95 x -±- = 0.82 ob.4o . yo From CFC-113: -\'^1- x -95 x _L = 0.57 The HCl byproduct from Equation A-ll is not included here. See Section II, ------- -57- From CFC-114: 4 ** x.95 x -L- = 0.83 From CC1, in Equation A-3 : .63 x * 6.47 _ ___ From CC1, in Equation A-5: ±±- x .95 x = 0.90 From CHC1 in Equation A-7 : 3 * -90 x = Q.82 From CHC1 in Equation A-8: ' x .90 x - = 0.27 From C-Cl, in Equation A-3: .37 x x .95 x = 0.59 Table A-3 summarizes the intermediate precursor chemical factors derived above. The preliminary precursor chemical factors are given in Table A-4. Finally, a summary of the factors for byproduct HC1 is provided in Table A-5. These factors have been determined on the basis of the production of one unit of product. It is a simple matter to multiply each factor by the production of each chemical in a given year to obtain the total amount of the precursor chemical which was used in the manufacture of each CFC or intermediate precursor chemical that year. Comparison of the factors determined for CC1,, HF, CHC1,, and C»C1, with those provided by two of the CFC manufacturers shows good agreement. ------- -58- Table A-3 INTERMEDIATE PRECURSOR CHEMICAL FACTORS (units of Precursor/Unit of CFG) CFC Produced CC14 CFC-11 1 . 14 CFC-12 1.30 CFC-22 CFC-113 CFC-114 HF 0.15 0.34 0.48 0.34 0.49 CHC13 C2C14 C12 — — 1.45 0.92 0.42 1.01 0.46 Table A-4 PRELIMINARY PRECURSOR CHEMICAL FACTORS (units of Preliminary Precursor/ unit of Intermediate Precursor) Intermediate ,, - Precursor Produced 2 2 CC14 0.52 1.45a CHC13 — 1.62b C2C14 ~ 0.81° Q Calculated assuming 38, 39, and 23 percent of the CC14 for CFC produc- tion was manufactured according to Equations A-3, A-4, and A-5 respectively. Half the CHCl- was produced accord- ing to Equation A-7, and half according to Equation A-8. Q Calculated assuming 35 percent of the C_C1, used in CFC manufacture was produced according to Equation A-3, and 65 percent according to A-ll. ------- -59- Table A-5 BYPRODUCT HC1 FACTORS (Units of HCl/Unit of Chemical Produced) Chemical Produced CFC-11 CFC-22 CFC-22 CFC-113 CFC-114 cci4 CHC13 C2C14 HC1 0.26 0.58 0.82 0.57 0.83 0.43a 0.55b 0.21° Q Calculated assuming 38 percent of the HC1 was produced according to Equation A-3 and 23 percent according to Equation A-5. Calculated assuming half the HCl was produced according to Equation A-7 and half according to Equation A-8. Q Calculated assuming 35 percent of the HCl was produced according to Equation A-3. ------- -60- Appendix B HISTORICAL PRECURSOR CHEMICAL PRODUCTION The purpose of this appendix is to establish the amount of each precursor chemical used in CFG manufacture during the period 1970-1977 INTERMEDIATE PRECURSOR CHEMICALS The intermediate precursor chemicals that would be greatly af- fected by a change in CFG production were identified as CGI, , HF, CHC1 , and C Cl , . Cl_ would also be affected, although to a lesser extent. Each of these precursor chemicals is treated individually below. Table B-l shows total historical CCl^ production and the amount that went toward CFC-11 and CFC-12 manufacture, derived using the factors of Appendix A. Reference 1 states that in 1973, 97.2 percent of CC14 went toward the production of CFC-11 (36.6 percent) and CFC-12 (60.6 percent). Table B-l shows excellent agreement, indicating that 97 percent of the 1973 CC1, production was used in CFC manufacture: 36 percent for CFC-11, and 61 percent for CFC-12. Table B-l CC1. PRODUCTION FOR CFCs— 1970-1977 4 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 Total3 1011 1009 997 1047 1163 906 857 809 For CFC-llb 278 294 342 381 389 308 292 243 For CFC-12b 488 507 571 636 633 511 511 465 Percent CC1, Used For CFC Production 76 79 92 97 88 90 94 88 o From Reference 3. Calculated using the factors 1.14 and 1.30 for CFC-11 and CFC-12 respectively, given in Appendix A, and the production values of Table III-l. ------- -61- HF The historical HF production and the portion going toward CFC manufacture are shown in Table B-2. Values for total HF production for each year are not available. Reference 4 does state that, in 1973, 305 million pounds or 41.6 per- cent of total HF production went toward CFC production. This implies a 1973 total production of 733 million pounds. Assuming this value for total 1973 HF production, the estimates from Table B-2 imply that 44 percent of HF production was devoted to CFC manufacture, fairly close to Reference 4's 41.6 percent. Reference 5 gives 1974 total HF production as 799 million pounds. On this basis, CFC manufacture accounted for 41 percent of total HF production. The values for 1973 in Table B-2 also agree fairly well with Reference 4 which states that 55, 180, and 70 million pounds of HF went toward CFC-11, CFC-12, and CFC-22 production, respectively. Table B-? HF PRODUCTION FOR CFCs—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 Fora CFC-11 37 39 45 50 51 41 38 32 For CFC-12 128 133 149 166 166 134 134 122 For CFC-22 48 54 59 65 68 63 82 8<6 Forc CFC-113 15 15 17 23 24 22 24 29 ForC CFC-114 17 19 21 21 22 19 18 12 Total for CFC Production 245 260 291 325 331 279 296 281 Calculated using the factors 0.15 for CFC-11 and 0.48 for CFC-12 given in Appendix A, and the production values of Table III-l. Calculated using the factor 0.48 for CFC-22 given in Appendix A, and the production values of Table III-2. Calculated using the factors 0.34 for CFC-113 and 0.49 for CFC-114 given in Appendix A, and the production values of Table III-3, ------- -62- CHC13 Table B-3 shows total historical CHC1 production and the por- tion that was used to manufacture CFC-22, determined using the factor derived in Appendix A. The 1973 value of Table B-3 agrees fairly well with Reference 4 which gives the amount of CHC1 going toward CFC-22 production as 205 million pounds or 81 percent of total CHCL, production. Table B-3 CHC1 PRODUCTION FOR CFCs—1970-1977 (millions of pounds) Year Total For CFC-22 Percent Used For CFC-22 Production 1970 1971 1972 1973 1974 1975 1976 1977 240 231 235 253 302 262 292 302 145 162 178 197 204 191 247 260 60 70 76 78 68 73 85 86 From Reference 3. Calculated using the factor 1.45 for CFC-22 from Appendix A, and the production values of Table III-2. ------- -63- Historical production of C Cl, and the amounts that were used 1 to manufacture CFC-113 and CFC-114 are given in Table B-4. Reference 4 states that of the total 1973 C-Cl, production of 706 million pounds, 58 million pounds went toward the manufacture of CFCs. Table B-4 indicates almost twice that amount. It is pos- sible that Reference 1 was referring only to C-Cl, for CFC-113. Table B-4 PRODUCTION FOR CFCs—1970-1977 (millions of pounds) Year Total' For CFC-113 For CFC-114 Percent Used For CFG Production 1970 1971 1972 1973 1974 1975 1976 1977 707 705 734 706 734 679 669 603 40 40 47 63 66 60 66 77 35 39 43 43 44 39 37 25 11 11 12 15 15 15 15 17 Historical production was taken from Reference 3. Calculated using the factors 0.92 for CFC-113 and 1.01 for CFC-114 from Appendix A, and the production values of Table III-3, A large portion of C2C1, is used as a solvent; in fact, it is one of the potential substitutes for CFC-113. ------- -64- This compound is used as an intermediate precursor chemical directly in the manufacture of CFC-113 and CFC-114. Table B-5 shows historical production of Cl for the two CFCs. Reference 4 gives total 1973 Cl_ production as 20,804 million pounds, while Reference 5 states that in 1974, 21,236 million pounds of Cl was produced. Thus, an almost negligible percent of the total Cl? is used to produce CFC-113 and CFC-114. A much larger portion of Cl? is used as a preliminary precursor chemical as discussed below. Table B-5 C12 PRODUCTION FOR CFCs—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 For CFC-113a 18 18 21 29 30 27 30 35 For CFC-114a 16 18 20 20 20 18 17 12 Total Used For CFC Production 34 36 41 49 50 45 47 47 a Calculated using the factors 0.42 for CFC-113 and 0.46 for CFC-114 of Appendix A, and the pro- duction values of Table III-3. ------- -65- PRELIMINARY PRECURSOR CHEMICALS The significant preliminary precursor chemicals were identified in Section II as CS and C10. They are used to make other chemicals which, in turn, are used to produce CFCs. Both CS and Cl used in this capacity are discussed below. cs2 "CS is used to make CC1, which goes toward CFC-11 and CFC-12 manufacture. The calculation of the amounts of preliminary pre- cursor chemicals used in CFC manufacture is not as straightforward as that of the intermediate precursor chemicals. In general, the only method for CFC preparation is one which uses the intermediate precursor chemical, but the intermediate precursors are often pro- duced from the preliminary precursor chemicals by several different processes. For example, CC1, is produced using three different methods, only one of which involves CS«. According to Reference 1, about 38 percent of the CC1, capacity uses the process described by Equation II-4. It will be assumed that 38 percent of CC1, is produced using CS« and further, that the same percentage holds for the CC1, used in CFC-11 and CFC-12 manufacture. On this basis, Table B-6 shows total historical CS? production and the amount which went toward CFC manufacture. Reference 4 gives 1972 CS? production as 775 million pounds, and Reference 5 gives 1974 CS? production as 772 million pounds. From Table B-6, it can be determined that CS« production for CFC manufacture represented 23 and 26 percent of total production for 1972 and 1974 respectively. These values agree well with Reference 4 which states that 25 per- cent of the CS,, was used to produce CFCs. C12 In the discussion of intermediate precursor chemicals, the amount of Cl_ which is used to produce CFC-113 and CFC-114 was calculated. These are the only CFCs which directly employ Cl_ in ------- -66- Table B-6 CS- PRODUCTION FOR CCl^—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 For CCl4a 200 199 197 207 230 179 169 160 For CFC-lla 55 58 68 75 77 61 58 48 For CFC-12a 96 100 113 126 125 101 101 92 Total Used For CFC Production 151 158 181 201 202 162 159 140 a Determined using the factor of 0.52 of Appendix A and the val- ues of Table B-l and multiplying by 0,38. their manufacture. Indirectly, however, Cl_ is necessary in the preparation of some of the intermediate precursor chlorocarbons, CHC13, CC14, and C2C14. One knowledgeable source indicates the fraction of CHC1_ pro- duced according to Equation II-9 is 50 percent or more. It will be assumed here that half the CHCl, is manufactured using this pro- cess. Table V-7 shows the amount of Cl which went toward CHCl,. and, ultimately, CFC-22 manufacture. See Equations 11-10 and 11-11. ------- -67- Table B-7 C12 PRODUCTION FOR CHC1.J—197 0-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 For CHC13 388 373 380 409 488 423 472 488 For CFC-22a 234 262 287 318 329 308 399 420 ft Calculated using an equal weighting of the factors 1.94 and 1.29 and the values of Table B-3. Table B-7 is in reasonable agreement with Reference 4 which states that in 1973, 368 and 454 million pounds of Cl_ were used for CFC-22 and CHC1, production, respectively, Given total Cl- production of 20,804 million pounds in 1973 (Reference 6) and 21,236 million pounds in 1974 (Reference 5), only about 2 percent of Cl_ was used in CFC-22 manufacture. CCl, can be prepared by three methods described by Equations II-3, II-4, and II-5. According to Reference 7, about 23 percent of the CCl, capacity is available to produce CCl^ by Equation II-5, 38 percent by Equation II-4, and 39 percent by Equation II-3. It will be assumed that the percentage capacity devoted to each process is the same as the percentage actually used in CCl, production. With this in mind, Table B-8 shows the amount of Cl- which was used his- torically to produce CCl, by the three methods, and finally, to produce CFC-11 and CFC-12. Reference 4 gives the amount of Cl? which went toward CFC-11 and CFC-12 production in 1973 as 640 and 970 million pounds, respec- tively. The values of Table B-8 for 1973 are somewhat lower than ------- -68- Table B-8 C12 PRODUCTION FOR CC14—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 For CCl4a 1462 1459 1442 1514 1682 1310 1239 1170 For CFC-lla 402 425 495 551 562 445 422 351 For CFC-12a 706 733 826 920 915 739 739 672 Total Used For CFC Production 1108 1158 1321 1471 1477 1184 1161 1023 Determined using a weighting of 38 percent of the factor 1.63, 39 percent of the factor 0.97, and 23 percent of the factor 1.92 to- gether with the values of Table B-l. these numbers. From the total Cl_ production given in References 5 and 6, it can be determined that about 8 percent of Cl« is used to manufacture CFC-11 and CFC-12. Reference 1 disagrees somewhat with Table B-8 stating that 5.1 percent of Cl production went toward the manufacture of CCl, . A quick calculation indicates that this would be the case if all CCl, were produced using methane and Cl«. However, Reference 7, an appendix to Reference 1, also gives the percentage breakdown of each of the three methods for CCl, production used in this work. We do not have an explanation for the discrepancy. Cl is used to produce C_C1, according to Equations II-3 and 11-12. Reference 2 claims that 34 percent and 63 percent of the C-C1, are produced according to Equations II-3 and II-2, respec- 1 tively. Table B-9 gives the amount of Cl,; required for C9C1, pro- duction which then translates into CFC-113 and CFC-114 manufacture. This reference also states that the remaining 3 percent of the C?C1, is produced using acetylene (C9H~), but industry sources indi- cate that this process is no longer used. We will assume here that 35 percent is manufactured according to Equation II-3 and 65 percent according to Equation 11-12. ------- -69- The percent of total Cl used in the production of CFC-113 and CFC-114 is very small, less than 1 percent. Reference 4 states that the amounts of C12 used to make C Cl, and the CFCs in 1973 were 1062 and 88 million pounds respectively. Table B-9 gives a value for CC1 about half of this, but agrees well for the CFCs. Table B-9 C12 PRODUCTION FOR C2C14~1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 For C2C1 a 571 570 593 570 593 549 541 487 For CFC-113a 32 32 38 51 53 48 53 62 For CFC-1143 28 32 35 35 36 32 30 20 Total Used For CFC Production 60 64 73 86 89 80 83 82 Determined using 35 percent of the factor 1.64 and 65 percent of the factor 0.36 together with the values of Table B-4. BYPRODUCT HC1 The HC1 produced in the manufacture of the CFCs is, as mentioned previously, an important consideration. The market for the HC1 is dynamic; at times, demand for the chemical is heavy; at other times, neutralization or deepwelling must be used to dispose of it. Thus, HCl conditions may have a significant economic impact on production. Table B-10 presents the amount of HCl which was produced histor- ically in the manufacture of each of the CFCs according to Equations II-l, II-2, II-7, 11-10, and 11-11. ------- -70- Table B-10 HC1 PRODUCTION FROM CFCs—1970-1977 (millions of pounds) From Year CFC-11£ From From From From CFC-12S CFC-22 CFC-113C CFC-114C Total 1970 1971 1972 1973 1974 1975 1976 1977 63 67 78 87 89 70 67 55 218 226 255 284 282 228 228 208 82 92 101 112 116 108 139 147 25 25 29 39 41 37 41 48 29 32 36 36 37 32 31 21 417 442 499 558 565 475 506 479 Determined using the factors of 0.26 for CFC-11 and 0,58 for CFC-12 of Appendix A and the values of Table III-l. Determined using the factor 0.82 for CFC-22 of Appendix A and the values of Table III-2. CDetermined using the factors 0.57 for CFC-113 and 0.83 for CFC-114 of Appendix A and the values of Table III-3. Table B-ll shows the amount of HC1 produced in CCl,, CHC13, and C Cl, production for the manufacture of CFC-ll/CFC-12, CFC-22, and CFC-113/CFC-114. A summary of the amounts of each precursor chemical which historically went toward CFC manufacture is provided in Section III, Table III-4. ------- -71- Table B-ll HC1 PRODUCTION FROM PRECURSOR CHEMICALS--1970-1977 (millions of pounds) From CC1, For Year CFC-113 1970 1971 1972 1973 1974 1975 1976 1977 122 129 149 167 170 135 128 106 From CC1 For CFC-12a 213 222 250 278 277 223 223 203 From CHC1- For CFC-22 79 88 97 107 111 104 135 142 From C7C1, For CFC-113C 8 8 10 13 14 12 14 16 From C Cl For CFC-1140 7 8 9 9 9 8 8 5 4 Total 429 455 515 574 581 482 508 472 'Determined using 39 percent of the factor 0.59 and 23 percent of the factor 0.90 and the values of Table B-l. Determined using 50 percent of the factor 0.82 and 50 percent of the factor 0.27 and the values of Table B-3. Q Determined using the factors of Appendix A and Table B-4. ------- -72- Appendix C HISTORICAL CFG APPORTIONMENT The purpose of this appendix is to apply the method of allocating CFC to its various destinations after it is produced to the period 1970-1977. We first discuss the activities before the CFC is used, and then address aerosol use. PRE-USE ACTIVITIES Tables C-l through C-5 summarize historical production, inter- mediate use, sales, emissions, exports, and nonaerosol use of the five CFCs. For CFC-113, Table IV-4 presents values for only pro- duction, sales, and nonaerosol use. A more detailed analysis of this CFC is provided in Reference 3. The values of Tables C-l and C-2 indicate that intermediate use of CFC-11 and CFC-12 averaged about 5 percent of total production for the historical period. Small quantities of both CFCs are used in- house as refrigerants. Although there are no supporting data, they may also be used consumptively as chemical intermediates. For the same period, according to Table C-3, CFC-22 intermediate use represented approximately 28 percent of production. This CFC is used as one component of the refrigerant, CFC-502, and this would account for part of the intermediate use. In 1976, approximately 10 million pounds of CFC-502 were sold as a refrigerant. About half of this, or 5 million pounds, was CFC-22 and half was CFC-115. Some CFC-22 is also converted to TFE which is used in the manufacture of teflon. This apparently accounts for the balance of CFC-22 inter- mediate use. ------- Table Ol CFC-11 APPORTIONMENT—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 Production 244 258 300 334 341 270 256 213 Intermediate Use 7 21 14 5 20 16 17 16 Sales 237 237 286 329 321 254 239 197 Emissions 5 5 6 7 6 5 5 4 b Exports 12 12 14 16 16 13 12 10 Available For Use 220 220 266 306 299 236 222 183 u> I Emissions cited in the table are those resulting from storage, packaging, and transport and do not include CFG emitted in the production process. Assumed to be 5 percent of sales. c The figures in this column represent salss minus emissions minus exports. See Appendix D for more detail. ------- Table C-2 CFC-12 APPORTIONMENT--1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 Production 375 390 439 489 487 393 393 358 Intermediate Use 19 18 20 25 38 18 22 18 Sales 356 372 419 464 449 375 371 340 o Emissions 7 7 8 9 9 8 7 7 Exports 18 19 21 23 22 19 19 17 Available For Use0 331 346 390 432 418 348 345 316 Emissions cited in the table are those resulting from storage, packaging, and transport and do not include CFG emitted in the production process. Assumed to be 5 percent of sales. The figures in this column represent sales minus emissions minus exports. See Appendix D for more detail. ------- Table C-3 CFC-22 APPORTIONMENT--1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 Production 100 112 123 136 141 132 170 179 Intermediate Use 27 32 43 39 29 38 44 50 Sales 73 80 80 97 112 94 126 129 0 Emissions 1 2 2 2 2 2 3 4 Exports 4 4 4 5 6 5 6 6 Available For Use0 68 74 74 90 104 87 117 119 Emissions cited in the table are those resulting from storage, packaging, and transport and do not include CFC emitted in the production process. Assumed to be 5 percent of sales. f* The figures in this column represent sales minus emissions minus exports. See Appendix D for more detail. Ui I ------- Table C-4 CFC-113 APPORTIONMENT—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1977 Production 43 44 51 68 72 72 84 Sales 41 42 49 65 69 69 80 Available For Use3 41 42 49 65 69 69 80 The CFC-113 apportionment was accomplished differently from other CFCs. The method is described in Reference 8. ------- Table C-5 CFC-114 APPORTIONMENT—1970-1977 (millions of pounds) Year 1970 1971 1972 1973 1974 1975 1976 1977 Production 35 39 43 43 44 39 37 25 Intermediate Use a 6 6 6 6 6 6 6 6 Sales 29 33 37 37 38 33 31 19 b Emissions 1 1 1 1 1 1 1 0 c Exports 1 2 2 2 2 2 2 1 Available, For Use 27 30 34 34 35 30 28 18 Intermediate use for the historical period averaged about 6 million pounds per year. Emissions cited in the table are those resulting from storage, packaging, and transport and do not include CFC emitted in the production process. Q Assumed to be 5 percent of sales. The figures in this column represent sales minus emissions minus exports. See Appendix; D for more detail. -vl I ------- -78- For CFC-113, industry sources indicate that intermediate use is negligible as indicated in Table C-4. For CFC-114, the values of Table C-5 show that intermediate use averaged approximately 16 percent of production for the period. Most of the CFC-114 used in this way is converted to CFC-115, one component of CFC-502. As discussed before, about 5 million pounds of CFC-115 were produced in 1976 for CFC-502. The CFC-114 requirement was about 6 million pounds, which agrees exactly with the 1976 value for CFC-114 intermediate use in Table C-5. Emissions, as given in the tables, represent 2 percent of sales, while exports represent 5 percent. AEROSOL USE References 1 and 4 claim that, in 1973, 237 million pounds of CFC-11, 249 million pounds of CFC-12, and 25 million pounds of CFC-114 were used as propellants. Information provided by a knowledgeable industry source indicates that, although the total amount of CFG used in this way is in relatively good agreement with Reference 4, the mix was quite different. According to these data, 1973 aerosol use ac- counted for 170 million pounds of CFC-11, 265 million pounds of CFC-12, and 45 million pounds of CFC-114. Since the information of the industry source is more recent and also more complete (values are given for 1973 through 1979), it will be adopted here. Unfortunately, no data for 1970 to 1972 are avail- able. Reference 4 states that the aerosol application accounted for 45 and 49 percent of total CFC use in 1968 and 1973 respectively. The implication is that aerosol uses of the CFCs were slightly less in 1970 than 1973 on a percentage basis. Table C-6 lists the annual amount of CFC-11, CFC-12, and CFC-114 available for use and the amounts used in aerosols and nonaerosol applications. The data in this table were derived in the following manner: 1. The CFC available was taken from Tables C-l, C-2, and C-5 of this work. ------- -79- 2. The industry-supplied figures for CFC-11 and CFC-12 aerosol use were adopted for 1973 through 1977. This source gives ranges for 1974 and 1975, and the mid- points of these ranges are given in Table C-6. 3. For 1970, 1971, and 1972, it was assumed that 54 per- cent of CFC-11, 60 percent of CFC-12, and 96 percent of CFC-114 were used in aerosol applications. 4. Figures for nonaerosol end use are the difference between the total amount of CFG available and the amount used in aerosol applications. Table C-6 illustrates a number of points. CFG used as a propel- lant began declining in 1975, probably in anticipation of the propel- laiit ban. In addition, the amount of the three CFCs available for use (and thus their production and sales) has also declined. As was men- tioned previously, this is not the case for CFC-22 and CFC-113, both of which were not widely used as propellants. Tables C-l through C-6 are summarized in Table IV-1 of Section IV and compared with nonaerosol end use data from Reference 8. ------- Table C-6 CFC AEROSOL AND NONAEROSOL END USE--1970-1977 (millions of pounds) Year3 1970b 1971b 1972b 1973 1974 1975 1976 1977 Available For Use 220 220 266 306 299 236 222 183 CFC-11 Aerosol 119 119 142 170 168 143 123 70 Non- Aerosol 101 101 124 136 131 93 99 113 CFC-12 Available For Use 331 346 390 432 418 348 345 316 Aerosol 199 207 232 265 235 186 156 91 Non- Aerosol 132 139 158 167 183 162 189 225 CFC-114 Available For Use 27 20 34 34 35 30 28 18 Aerosol 26 29 33C 33d 34e 29 26 14 Non- Aerosol 1 lc 1C 1C 1C 1 2 4 00 o Total CFC here does not include CFC-22 or CFC-113 since both are used exclusively in nonaerosol applications. The values for these three years are constructed numbers. See the text for more detail. Q Values do not represent the percentages indicated due to rounding errors. The industry source reports that 45 million pounds of CFC-114 were used in aerosol applications in 1973. It is unlikely, given the emissions, exports, captive, and in-house uses, that the amount available for use could be as high as 45 million pounds. Reference 1 gives 1973 CFC-114 aerosol use as 25 million pounds. It will be assumed here that 96 percent of the CFC-114 available for use was used in aerosol applications in 1973. The industry source reports that 39 to 40 million pounds of CFC-114 were used in aerosol appli- cations in 1974. Since the total amount available for use is not that high, it will again be assumed that 96 percent of the CFC-114 went toward aerosol applications. ------- -81- Appendix D CALCULATING CFG NONAEROSOL END USE This appendix describes a model for calculating the amount of each CFG available for nonaerosol use based on production and/or sales figures. Between the time the CFC is produced and the time it is used, the CFC has various destinations. Each of these destinations was discussed in detail in Section IV, and a summary is given here. 1. Production Emissions Emissions occur during the production process prior to the reporting of production figures. The production figures represent 98 percent of the CFC originally manufactured. 2. Storage, Packaging, and Transport Emissions These emissions occur sometime between production and use of the CFC. For convenience, they amount to 2 percent of the reported sales figures. 3. Intermediate Use This use of the CFC accounts for part of the difference between reported production and sales figures, and its magnitude varies among the CFCs. Since this use involves converting the CFC to another chemical compound, emission of the CFC itself is unlikely to occur. 4. In-House Use This use, together with captive use, accounts for the difference between the reported production and sales figures. In-house use involves use of the CFC itself by the producer. Some emissions may occur during this use, but will be considered negligible. ------- -82- 5. Market Inventories Inventories may amount to 6 percent of each year's sales. Since inventories in successive years frequently cancel one another, they are not considered here. 6. Exports CFC exports are assumed to be 5 percent of sales. THE MODEL The quantities for establishing the historical material balance can be defined for a given year as follows: M = the amount of CFC originally manufactured. P = the reported CFC production. PE = the quantity of CFC emitted during the production process. S = the reported CFC sales. SPTE = the quantity of CFC emitted during storage, packaging, and transport. E = the amount of CFC exported. CU = the quantity of CFC used as an intermediate. IU = the quantity of CFC used in-house by the producers. AU = the amount of CFC used in aerosol applications. EU = the amount of CFC used in nonaerosol applications. The relationships relating one variable to another are as follows: P = 0.98 M PE = 0.02 M P - S = CU + IU SPTE = 0.02 S E = 0.05 S ------- -83- The total amount of CFC available for end use in a particular year is as follows: EU = M - PE - SPTE - CU - IU - E - AU (C-l) Since production figures for CFC are often available, this can be rewritten: EU = P - SPTE - CU - IU - E - AU =0.93 (P - CU - IU) - AU (C-2) If, alternatively, sales figures are given, the relationship is simplified to: EU = S - 0.07 S - AU = 0.93 S - AU (C-3) All of these relationships apply to CFC-11, CFC-12, CFC-22, and CFC-114, but not to CFC-113. The material balance for CFC-113 was addressed in more detail in Reference 8. AN EXAMPLE As one sample application of the model, the production figures of Table VI-2 can be used to determine the CFC available for end use. For CFC-12, 1990 production is estimated at 365 million pounds. Intermediate and in-house use of CFC-12 in 1976, the reference year, were about 3 percent of production, and will be assumed to remain at that level through 1990. Since propellant use has been banned, AU is zero. Thus, using Equation C-3, the amount of CFC-12 available for end use in 1990 is 327 million pounds which agrees with the end use value in Table VI-2. End use of CFC-11, CFC-22, and CFC-114 for 1990 can be deter- mined in the same manner by using the 1976 level of intermediate and in-house use. CFC-113 was treated somewhat differently and is discussed in detail in Reference 8. ------- -84- The model is useful for estimating future production, sales, or end use when one of the three variables is known. However, some of the assumptions on which the model was based may not hold in the future. For example, exports may not remain at 5 percent of sales, or imports may increase. Nevertheless, the model does provide the framework for calculating future production or end use by simply varying the export level or including imports. ------- -85- Appendix E ALLOCATION OF CAPACITY The purpose of this appendix is to evaluate the applicability of a technique for allocating capacity available for producing each CFC. We first present historical total capacity estimates based on an industry "rule of thumb." We then show a capacity allocation to each CFC for 1977. HISTORICAL TOTAL CAPACITY We have been told by knowledgeable industry sources that plant capacities historically remained approximately 15 percent ahead of production requirements. Since production of the five CFCs represents about 99 percent of total CFC production, the applicability of this rule can easily be determined. Total historical production, obtained by summing the values of Tables III-l through III-3, is given in Table E-l with the implied capacity according to the "rule of thumb" given above. The 1977 implied capacity value agrees very well with the esti- mated 1978 total capacity of 1060 million pounds given in Table V-l. The historical trend in total production may also lend credence to the difference in capacities specified by the two references in that table. Reference 4's total capacity of 1195 million pounds would have been adequate for the demand prior to 1973. Additional capacity was obviously necessary to meet the increased production levels of 1973 and 1974. Reference 1's higher total capacity of 1435 million pounds could reflect the fact that further capacity was added in this period. The design capacity of a plant is often not a true indication of the production capability. Frequently, with relatively modest capital expenditures, a plant may have the capability to actually produce at as much as 200 percent of design capacity. It should be kept in mind that the use of design capacity for production allocation does have limitations. The claim by industry that capacities have historically remained 15 percent ahead of production may be a useful relationship for the long-term situation; nevertheless, it is sometimes true that short-term production can far exceed plant design capacity. ------- -86- Table E-l CFG PRODUCTION AND CAPACITY—1970-1977 (millions of pounds) Year Production Implied Capacity 1970 797 917 1971 843 969 1972 956 1099 1973 1070 1231 1974 1085 1248 1975 899 1034 1976 928 1067 1977 859 988 The decline in production which began in 1975 probably led to the plant closings which are reflected in 1978 estimated total capac- ity. In any case, the 15 percent rule of thumb provided by industry sources seems to give a fairly good estimate of total capacity given the total historical production data, and it is therefore useful for predicting future capacity based on production projections. It is necessary to have information detailing the plant capacity of each producer by individual CFG in order to assess and possibly separate the effects on the different firms of limitations of emissions from the various end use areas. Unfortunately, no current data of this type exist. However, some of the references do provide information that can be used to allocate the current industry capacity for each CFC to a particular firm. Plants designed to produce CFG-113/CFC-114 are not presently used to produce the three other CFCs. However, since these plants have the most stringent construction requirements, they could, with some invest- ment, be converted to CFC-ll/CFC-12 or CFC-22 production. The opposite, however, does not obtain. CFC-ll/CFC-12 and CFC-22 plants are con- structed for less stringent processing conditions and, therefore, they cannot, without virtually being rebuilt, be converted to produce CFC-113/ Some storage facilities, however, can be used interchangeably for CFC-ll/CFC-12 and CFC-113/CFC-114. ------- -87- CFC-114. Thus, it seems reasonable to assume that currently existing plants either produce CFC-113/CFC-114 or the other three CFCs. Reference 1 indicates that DuPont's one remaining CFC-113/CFC-114 plant has 100 million pounds of capacity. This reference also assigns 100 million pounds to one of Alliedfs locations where all five CFCs are produced. This is the only Allied facility which presently pro- duces CFC-113/CFC-114. According to industry sources, Allied's esti- mated CFC-113/CFC-114 capacity is about 50 million pounds. Total 1977 CFC-113 and CFC-114 production was 109 million pounds, which, using the "rule of thumb," would imply a combined capacity of 125 million pounds for the two producers. This does not differ drastically from the industry source estimate of 150 million pounds. The current 1978 estimate of total CFC-113/CFC-114 capacity by industry sources will be adopted here, leaving 910 million pounds of capacity for CFC-11/ CFC-12 and CFC-22. It is difficult to separate CFC-ll/CFC-12 from CFC-22 capacity. Some plants were designed as "campaign plants." Such plants are capable of producing either CFC-ll/CFC-12 or CFC-22 simply by varying the feed. Thus, design capacity itself is not meaningful in this case. What is meaningful is the portion of design capacity which was used annually to produce CFC-22. It will be assumed that the 910 million pounds of capacity re- maining after CFC-113/"CFC-114 capacity has been taken into account can be allocated according to the relative amounts of CFC-11, CFC-12, and CFC-22 produced in 1977. It will also be assumed that the 150 million pounds of CFC-113/CFC-114 capacity can be apportioned accord- ing to the relative 1977 production of each. Table E-2 shows the results of this allocation scheme. Total 1977 CFC-22 production was 179 million pounds. Using the 15 percent rule of thumb, this latter value implies a capacity of about Although apportioning individual CFG capacities to plants pro- ducing more than one CFC is not strictly correct, it does provide a rough idea of capacity share devoted to each. ------- -88- Table E-2 1977 CFC CAPACITY (millions of pounds) CFC CFC-11 CFC-12 CFC-22 CFC-113 CFC-114 TOTAL Annual Capacity 259 434 217 115 35 1060 Percent of Total 24 41 21 11 3 100 205 million pounds for CFC-22, which agrees well with the value of Table E-2. Actual 1977 combined production of CFC-11 and CFC-12 was 571 million pounds. Again, using the "rule of thumb," this would imply a capacity of about 660 million pounds which, again, agrees fairly well with the amount estimated in Table E-2. ------- -89- Appendrbc F CFC SALES ESTIMATES The estimates of Table V-6 understate CFC sales for Racon in particular and probably for the other producers as well. The factor that is probably most responsible for the under- statement of the sales is intermediate CFC use. The figures for the sales value of CFC-11, CFC-12, and CFC-22 given in Reference 3 do not include sales of CFC used as an intermediate. For example, much of the CFC-22 that is produced is used as an intermediate in a process for manufacturing teflon which is marketed by DuPont. Clearly, part of the sales of teflon is attributable to CFC-22. The same applies to CFC-11, CFC-12, and CFC-114 which are also used to a lesser extent as intermediates. Perhaps a more accurate estimate of sales allocation to each firm could be made by assuming that all the CFC that is produced is sold at the average unit selling price for each CFC. Apportionment could still be accomplished on the basis of portion of capacity held but would include all the CFC that is produced. Table F-l presents the 1977 CFC sales allocation .by firm based upon the production of each CFC . Table F-l 1977 CFC SALES FROM PRODUCTION FIGURES (millions of dollars) Producer Allied DuPont Kaiser Pennwalt Racon CFC-11 15.9 41.2 6.5 7.2 1.5 CFC-12 30.1 80.1 12.9 14.3 5.7 CFC-22 24.5 63.6 9.8 11.0 13.4 CFC-113 15.0 30.4 CFC-114 5.4 10.9 Total 90.9 226.2 29.2 32.5 20.6 TOTAL 72.3 143.1 122.3 45.4 16.3 399.4 ------- -90- Comparing the total sales in Table F-l with that of Table V-5 shows that the allocation scheme based on production increases the total sales by about 15 percent. In addition, Racon's sales, given in Table F-l, are higher and thus closer to the actual sales of $29.7 million. In fact, the sales of all firms are higher in Table F-l than they are in Table V-5. Racon's sales are still too low, probably for a number of reasons. First, the sales allocation scheme, whether based on the amount of CFC produced or the amount sold, assumes that sales is proportional to the fraction of total industry capacity held by a particular firm. Racon may run its plants at higher capacity and therefore be responsible for a larger percentage of total sales. For this to be true, however, it is required that one or more of the other producers' sales be less than that indicated in Table F-l. That is, if Racon's sales share is higher, since the total sales is constant, sales of the other pro- ducers must be lower. To illustrate the sensitivity of the allocation scheme, we note that if Racon actually sells 15 percent of the CFC-22 rather than 11 percent as indicated by the capacity apportionment, then Racon's total sales in Table F-l would increase to $25.6 million which is much closer to Racon's actual sales. If Racon's share of CFC-11 and CFC-12 sales were also increased slightly, it is easy to see how the actual sales of the firm could be realized. Another factor that may contribute to the low estimate of Racon's sales is sales of azeotropes. Racon markets two azeotropes, CFC-500 2 and CFC-502, which are sold as refrigerants. The price of CFC-502 is nearly three times that of CFC-12. On this basis, if only a few million pounds of Racon's CFC-22 were sold as one component of the azeotrope R-502 instead of in the pure form, Racon's CFC sales would be much larger. Since azeotrope formulation is accomplished with CFC used as an intermediate, this same factor may also contribute to understatement of the other producers' sales. Azeotropes are combinations of two or more chemicals. 2 CFC-500 consists of 74 percent CFC-12 and 26 percent CFC-152a by weight. ------- -91- Probably the most important reason for Racon's low sales esti- mate involves prices. The sales value of Reference 3 for CFC-11, CFC-12, and CFC-22 is a total industry value. This number divided by the amount sold gives an average industry selling price but does not necessarily reflect the average selling price for a particular firm. Racon may have sold less of these CFCs in large quantities and more in smaller quantities with higher prices. To emphasize the possible variations in price, a 1978 price list for CFC-11, according to packaging for refrigeration, is given in Table F-2. The values of this table indicate that price is highly influenced by the type of packaging and the total amount delivered. CFC-11 is also used in the foam-blowing industry, and it is likely that a price list of CFC-11 for this application would differ significantly from that shown in Table F-2. Table F-2 1978 PRICE LIST—CFC-11 (cents per pound delivered) Container Price Bulk 40 One Ton Cylinder 52 650 Pound Drum 50 200 Pound Drum 54 100 Pound Drum 61 30 Pound Pressurized Cylinder 80 In deriving the values of Table V-6, a unit value of about 34 cents per pound was used for CFC-11 in 1977. This price is lower than any of the prices in Table F-2, which could indicate a price increase occurred from 1977 to 1978. Nevertheless, the table serves to emphasize that there is a large variation in the prices at which the CFC is sold and that caution must be exercised when using the numerous quoted prices. This unit value is calculated by dividing CFC sales value by quantity sold. ------- -92- The final factor which may contribute to sales underestimates involves the CFC-113 and CFC-114 prices. Eacon purchases these two CFCs from their producers and sells them as refrigerants. Racon's purchase is probably at bulk price and the subsequent sales are likely in smaller packages at higher prices. These sales also have not been included in Racon's calculated sales in Table V-6. Because we know that 100 percent of Racon's sales derives from sales of CFCs, we know that Table V-6 underestimates Racon's sales. Some of the factors presented here provide possible reasons for the low estimates. The fact that intermediate use of the CFCs is not included in the sales values of Table V-6 implies that sales for all producers are probably understated. ------- -93- Appendix G PRECURSOR CHEMICAL PRODUCERS In this appendix, we identify the producers of the precursor chemicals, and apportion precursor chemical production to each pro ducer based on capacity. Each precursor chemical identified in Section II as being highly dependent on CFG manufacture is treated in turn. As Appendix B indicates, almost all of the CCl, which was pro- duced historically has been used in CFG manufacture. Limitation of CFC-11 and CFC-12 production would cause all CCl, manufacturers to suffer. Reference 1 gives the 1976 annual capacity of CCl, as 1325 mil- lion pounds, while recent industry estimates indicate a lower value of 1205 million pounds. The 1977 production of CCl, for CFCs totaled 708 million pounds, 243 and 465 million pounds of which went toward CFC-11 and CFC-12 manufacture, respectively. Table G-l shows the CCl, producers and their capacities from recent industry estimates. The 1977 production of CCl, by each firm for CFC-11 and CFC-12 is also given in the table. Allocation of the production was based on a number of assumptions. First, for DuPont, the only CFC pro- ducer listed, it was assumed that CCl, production was equal to the amount needed for its own CFC-11 and CFC-12 manufacture. Vulcan materials is the precursor chemical supplier for Racon, and CCl, production was assumed sufficient for Racon's CFC manufacturing needs. Production allocation to the other two firms, Dow and Stauffer, was accomplished on the basis of the relative capacity share held. It should be mentioned here that CCl, "capacity" is somewhat misleading since much of this chemical is manufactured with the co- product C_C1,. Thus, in a sense, some portions of CCl, and C^Cl, capacity are interchangeable. ------- -94- Table G-l CCl, PLANT CAPACITY--1977 (millions of pounds) Producer Dow Chemical DuPont FMC3 Stauffer Chemical Vulcan Materials TOTAL Annual 290 300 280 225 110 1205 Capacity (24) (25) (23) (19) (9) (100) 1977 CC14 For CFC-11 26 139 53 20 5 243 Production For CFC-12 50 260 98 38 19 465 Q Joint venture with Allied which apparently shut down in mid-1979. According to Table III-5, 88 percent of the CCl, manufactured in 1977 was used for CFG production. The total amount of CCl, pro- duced that year was 809 million pounds. Using the same 15 percent rule of thumb as applied to CFG capacity implies a 1977 CCl, annual 1 ^ capacity of about 930 million pounds. This is smaller than the total 1977 capacity indicated in Table G-l. In 1974, CCl, production was 1163 million pounds, which leads to a required capacity of about 1340 million pounds. This value agrees well with the total capacity of Reference 1, but is higher than the industry estimates of Table G-l. It may be that some plants have been closed since CCl, pro- duction peaked in 1974 or it may be that C_C1, capacity has been included in these estimates. Nevertheless, current CCl, capacity is apparently underutilized. One very interesting point concerning CCl, is the extremely large difference between the production and sales reported in Ref- erence 3. The 1976 total CCl, production was 857 million pounds If FMC did, indeed, close its plant in mid-1979, the total annual CCl^ capacity would be 925 million pounds, which agrees well with the implied capacity for current production. ------- -95- while the sales total was only 459 million pounds, which indicates a captive use of 398 million pounds, 46 percent of the amount pro- duced. Since most CC1, is used to manufacture the CFCs, it might be expected that the CC1, is used captively by the producers them- selves for this purpose. According to Table G-l, DuPont and Allied (with FMC) are the only CFC producers who also manufacture CC1,. Although Vulcan Materials is the precursor chemical supplier for Racon, its produc- tion would probably be reported in the total sales figures of Ref- erence 3. Combined CC1, production by FMC and DuPont, from Table G-l, is about 550 million pounds, which is somewhat higher than the captive use from Reference 3. However, it does not seem unreasonable to assume that much of the CC1, is used captively by the CFC pro^ ducers themselves. HF Appendix B gives the quantities of HF used in CFC-11, CFC-12, CFC-22, CFC-113, and CFC-114 manufactured in 1977 as 32, 122, 86, 28, and 12 million pounds respectively. Reference 1 indicates that in 1976 there were nine HF producers with a combined annual capacity of 738 million pounds. Recent industry estimates give a current total capacity of 683 million pounds. These capacities and the producers who hold them are given in Table G-2 with an apportionment of the HF to each producer. Industry sources claim that Alcoa, Kewanee Industries, Ashland Oil, and Stauffer Chemical produce no HF for CFC manufacture. Thus, for these producers, Table G-2 shows no production of HF for CFCs. The sources further indicate that Essex Chemical devotes about 50 percent of its HF production to CFC needs. All the other pro- ducers produce most, if not all, of their HF for CFC manufacture. For the remaining producers, the production apportionment given in Table G-2 again assumes that production is proportional to relative capacity. Some HF for CFC manufacture is imported from Mexico, but this will not be considered here. ------- Table G-2 HF PLANT CAPACITY—1977 (millions of pounds) Annual Capacity (Percent of Total) Producer Allied Alcoa DuPont Essex Chemical Kewanee Industries Kaiser Ashland Oil Pennwalt Stauffer Chemical TOTAL f\ Total 169 110 150 22 36a ioob 10 50 36b 683 For CFC Manufacture 169 (35) — 150 (31) 11 (2) — 100 (21) — 50 (11) — 480 (100) T CFC-11 11 — 10 1 — 7 — 4 — 33° CFC-12 43 — 38 2 — 26 — 13 — 122 g CFC-22 30 — 27 2 — 18 — 9 — 86 CFC-113 10 — 9 1 — 6 — 3 — 29° CFC-114 4 — 4 0 — 3 — 1 — 12 References 4 and 6 give 36 million pounds. Reference 1's total of 738 million pounds is not correct unless this company's capacity is 36 million pounds. Industry sources claim that both Kaiser and Stauffer will shortly close their HF plants. £• Due to rounding, the values do not add to the actual total given in the text. ------- -97- Racon is the only CFG producer who does not manufacture HF. However, the firm is now wholly owned by Essex, which does produce HF. The four CFG producers — Allied, DuPont, Kaiser, and Essex (via Racon) — together hold 72 percent of the total HF capacity. Industry sources have indicated that Kaiser and Stauffer will shortly close their HF manufacturing facilities. There are, however, no published data which confirm this. Since Allied and DuPont are the only producers of CFC-113 and CFC-114, it might be reasonable to assume that only HF produced by these two companies is used to manufacture CFC-113 and CFC-114. Unfortunately, the situation is not this straightforward. Although the mandate of this study does not include a detailed examination of the interrelationship among the various chemicals producers, many informal conversations with industry sources have led us to believe that there exists among chemical producers a high degree of mutual "cooperation." That is, companies often accommodate the shortage or surplus of a particular chemical on the part of one company by a sale or purchase. Thus, although DuPont and Allied may use their own HF for CFC-113 and CFC-114 manufacture, they probably also use some manufactured by other producers. According to Appendix B, 1977 HF production for CFCs totaled 280 million pounds. Assuming that this represents 46 percent of total HF production (as indicated for 1976 in Table III-5) , and using the 15 percent rule of thumb as before, the implied 1977 total HF capacity would be about 700 million pounds. This agrees well with the value given in Table G-2. CHC13 AND Appendix B gives the quantities of C~Cl, which went toward CFC-113 and CFC-114 manufacture in 1977 as 77 and 25 million pounds respectively. Also, according to Appendix B, 260 million pounds of CHC1- were used in CFC-22 production that year. This is, in fact, widely practiced for the purpose of saving freight. ------- -98- Reference 4 is the only reference to list the producers and the corresponding capacities for CHC1., and CLC1, . Unfortunately, this information is dated 1973, and some changes have taken place since that time. However, these data together with recent data from in- dustry sources should be adequate. Table G-3 shows the producers, their capacities, and the amount of CHC1., and C«C1, estimated to 1 have been used in CFC-22 and CFC-113/CFC-114 production in 1977. The table indicates that CHC1, is produced by Allied, but not DuPont, and CoCl, is produced by DuPont, but not Allied. Appendix B indicates that total 1977 production of CHC1_ and C Cl, were 302 and 603 million pounds respectively. These production levels imply total capacities of about 350 million pounds for CHC1_ and 690 million pounds for C-Cl, according to the 15 percent rule of thumb. The agreement with the CHC1. capacity of Table G-3 is fairly good, while that for C?C1, is very poor. In the latter case, either the data of Table G-3 are not current or the C?C1, capacity is far in excess of that necessary for current production levels. One factor that may account for the discrepancy is that some of the C^Cl, and CC1, are co-produced and many of the plants that produce C_C1, may have been originally sized for CC1, production. A comparison of CjCl, and CC1, producers shows that four — Dow, DuPont, Stauffer, and Vulcan Materials — are common to both. The CHC1,, production has been apportioned to Allied and Vulcan Materials based on the amount of CFC-22 produced by Allied and Racon. The remaining producers were allocated CHC1- production according to the portion of capacity held. For C«C1, , DuPont ' s production was assumed equal to the need for CFC-113 and CFC-114 manufacture, and the other producers were al- located production according to the percent of capacity held. The producers of CS_ and their capacities are given only in Reference 6 for an unspecified year. Table G-4 shows this informa- Capacity of both C?C1, and CHC1_ are somewhat elusive in that the former is produced as a co-product with CCl^ and the latter with methylene chloride -^ ------- Table G-3 CHG13 AND C2C14 PLANT CAPACITY—1977 (millions of pounds) Producer Allied Diamond Shamrock Dow Chemical DuPont Ethyl Corporation Occidental /Hooker Chemical PPG Stauf f er Vulcan Materials TOTAL Annual Capacity Production (Percent) For CFC-22 30 (10) 18 (6) 130 (44) — — — 75 (26) 40 (14) 293 (100) 52 14 104 — — — — 60 29 259a Annual Capacity Production (Percent) For CFC-113 - 160 290 160 50 50 200 70 200 1180 - (14) (24) (14) (4) (4) (17) (6) (17) (100) — 4 8 50 1 1 5 2 5 76a Production For CFC-114 — 1 2 17 0 0 2 1 2 25 aValues listed here may not add to the total given in the text due to rounding. ------- -100- tion and the apportionment of the 1977 CS2 production of 51 and 87 million pounds for CFC-11 and CFC-12 respectively, to each producer. Although Pennwalt and PPG do produce CS^, they do not use CS~ to manufacture CGI, for CFC-11 and CFC-12, according to industry sources. Thus, the apportionment of CS_ in Table G-4 only includes FMC and Stauffer. It was assumed that the FMC production of CS2 was suf- ficient for the CC1, requirements needed to manufacture CFC-11 and CFC-12 by Allied Chemical. The balance of CS? production was al- located to Stauffer. Appendix B shows that 140 million pounds of CS~ went toward CFC-ll/CFC-12 production in 1977. Assuming that this amount repre- sents 26 percent of total CS2 production (given in Table III-5 for 1974) and that the 15 percent rule of thumb also holds, a 1977 ca- pacity of about 620 million pounds is implied. This value is quite a bit less than the figure shown in Table G-4. Perhaps the latter capacity estimate is not recent. The 1974 total production of CS,, was 772 million pounds, which agrees well with the capacity value of Table G-4. It is possible that reduced CFC-ll/CFC-12 production since 1974 may have caused some CS2 plant closings in recent years. Table G-4 CS PLANT CAPACITY—1977 (millions of pounds) Annual Capacity (Percent of Total) CS Producer Total For CFCs For CFC-11 For CFC-12 Total FMC 180 (21) 180 (23) 28 51 79 Pennwalt 10 (1) PPG 60 (7) Stauffer 600 (71) 600 (77) 20 41 61 TOTAL 850 (100) 780 (100) 48 92 140 ------- -101- This, however, is only speculation, and it may be that CS2 capacity is simply in excess of that required currently. Industry sources have mentioned the possibility that Stauffer has closed or may close its plant in the near future. This chemical, since it is used both as a preliminary and inter- mediate precursor, is more complicated to assess. According to Reference 4, intermediate use of chlorine accounts for about 47 per- cent of the amount produced in 1973. This reference also provides a list of 1975 Cl_ producers and their capacities. This list is shown in Table G-5 with the relative capacity share of each producer and the estimated 1977 Cl» production devoted to each CFC. The amounts of Cl used to produce CFC-11, CFC-12, CFC-22, CFC-113, and CFC-114 in 1977 taken from the text here were 351, 672, 420, 97, and 33 million pounds, respectively. Table G-5 indicates that Allied, DuPont, Kaiser, and Pennwalt, four of the CFC producers, are involved in Cl? production in addition to Vulcan Materials, the raw materials supplier for Racon. It is likely that the CFC manufacturers listed in Table G-5 (including Vulcan Materials, the supplier for Racon) produced the Cl- needed for their CFC production. DuPont, Allied (through the joint venture with FMC) , and Vulcan Materials are CCl, producers for which Cl_ is necessary. Thus, the Cl_ production for CFC-11 and CFC-12 in Table G-5 was allocated to these three producers based on their CCl, needs. The balance was allocated to the other producers. Allied and Vulcan Materials also produce CHC13 . The C12 for CFC-22 was apportioned to these two firms according to their CHC1« needs and the balance to the other producers. The Cl- for CFC-113 and CFC-114 was allocated to DuPont for both C^l^ and direct CFC-113/ CFC-114 production and to Allied for CFC-113 /CFC-114 production in the same manner . ------- Table G-5 Cl PLANT CAPACITY—1975 (millions of pounds) Producer Dow Chemical PPG Industries Diamond Shamrock Occidental Petroleum Allied Chemical 01 in BASF Wyandote DuPont Stauffer Chemical Pennwalt FMC Ethyl Corporation Kaiser Shell Oil Vulcan Materials B. F. Goodrich Monsanto Total Capacity (Percent) 7920 2400 2304 1930 1188 1170 1116 720 706 684 568 460 386 270 270 216 180 22488 (35) (11) (10) (9) (5) (5) (5) (3) (3) (3) (3) (2) (2) (1) (1) (1) (1) (100) b For CFC-11 26 8 8 6 77 4 4 201 2 2 2 1 1 1 7 1 1 352° For CFC-12 50 15 14 12 142 7 7 376 4 4 4 3 2 2 27 1 1 671° For CFC-22 109 33 32 27 84 16 15 10 10 9 8 6 5 4 47 3 2 420 For CFC-113 9 3 3 2 11 1 1 62 1 1 1 1 0 0 0 0 0 96C For CFC-114 3 1 1 1 4 0 0 21 0 0 0 0 0 0 0 — — 31c Total 197 60 58 48 318 28 27 670 17 16 15 11 8 7 81 5 4 1570C •a AT- *». - 4- 1 0 Q /"\ «. -! 1 1 -! n« _ «. . « .4 ,« **. C ^l .« « _ J j- ._ -J_ 1_ ,^ 1 J 1 ._ .__ _ • ___._! .1 •* • ALfuuu £. -ju u ui j_- u j_ j.un puuLiuo u j. ^-^-fj to Reference 3, and these are not included here. held by others according Because of rounding, the percent values do not add to 100 percent. ** Because of rounding, the values do not add to the totals given in the text. o S3 I ------- -103- REFERENCES 1. International Research and Technology Corporation, The Economio Impact of Potential Regulation of Chlorofluorocarbon-Propelled Aerosols, EPA Contract No. 68-01-1918, April 1977. 2. Lapp, T. W., et al., An Assessment of the Need for Limitations on Trichloroethylene, Methyl Chloroform, and Perchloroethylene, Volume I, Midwest Research Institute, Draft Final Report, EPA Contract No. 68-01-4121, September 1977. 3. United States International Trade Commission, Synthetic Organic Chemicals, United States Production and Sales, 1970-1976. 4. Arthur D. Little, Inc., Preliminary Economic Impact Assessment of Possible Regulatory Actions to Control Atmospheric Emis- sions of Selected llalocarbons, September 1975. 5. Bureau of Domestic Commerce, Economic Significance of Fluoro- carbons, December 1975. 6. Midwest Research Institute, Chemical Technology and Economics in Environmental Perspectives, Task I—Technical Alternatives to Selected Chlorofluorocarbon Uses, February 1976. 7. International Research and Technology Corporation, Short Range Marginal Costs for Production of Fluorocarbons 11 and 12, EPA Contract No. 68-01-1918, July 1978. 8. Palmer, Adele R., et al., Economic Implications of Regulating llonaerosol Chlorofluorocarbon Emissions: An Executive Briefing, The Rand Corporation, R-2575-EPA, March 1980. 9. E. I. DuPont de Nemours and Company, Nonaerosol Propellant Uses of Fully Ealogenated Halocarbons, information requested by the Environmental Protection Agency, March 1978. ------- Sample C. Technical Report Data Sheet, EPA Form 2220-1 TECHNICAL REPORT DATA (Please read Instructions on the reverse before complennzi 1. REPORT NO. EPA-5fiO/12-80-00lb 3. RECIPIENT'S ACCESSION NO. 4. TITLE AND SUBTITLE 5. REPORT DATE 1no_ August, 1980 Regulating Chlorofluorocarbon Emissions; Effects on Chemical Production 6. PERFORMING ORGANIZATION CODE 7. AUTHOH(S) Kathleen A. Wolf 8. PERFORMING ORGANIZATION REPORT NO. N-1483-EPA 9. PERFORMING ORGANIZATION NAME AND ADDRESS The Rand Corporation 1700 Main Street Santa Monica, California 90406 10. PROGRAM CLEMENT NO. B2CL2S 11. CONTRACT/GHANT NO. 68-01-3882 68-01-6111 12. SPONSORING AGENCY NAME AND ADDRESS Environmental Protection Agency OTS/ETD/RIB (TS-779) 401 M Street, S.W., Washington, B.C. 20460 13. TYPE OF REPORT AND PERIOD COVERED Final 14. SPONSORING AGENCY CODE 15. SUPPLEMENTARY NOTES 16. ABSTRACT This report focuses on the manufacture of chlorofluorocarbons and the precursor chemicals. It is a support document for the Rand Corporation study: ' Adele R. Palmer, et. al., Economic Implications of Regulating Nonaerosol Chlorofluorocarbon Emissions, R-2524-EPA. 17. KEY WORDS AND DOCUMENT ANALYSIS DESCRIPTORS b.IDENTIFIERS/OPEN ENDED TERMS C. COSATI Field-Group 18. DISTRIBUTION STATEMENT 19. SECURITY CLASS {This Report! non-sensitive Unlimited Distribution 21. NO. OF PACES l"^4- 20. SECURITY CLASS /This page I non-sensitive 22. PRICE CPA Form 2220-1 (»-7J) 12 •CIU.S. GOVERNMENT PRINTING OFFICE! 1980-341-085/4608 ------- |