Global markets for chlorine and PVC: potential impact of political opposition.
Global Markets for Chlorine
Chlorine is a major chemical building block and one of the cornerstones of the chemical industry. It has been estimated that close to one half of the U.S.'s gross domestic product involves chlorine either directly or indirectly. The U.S. experience is typical of the global impact of chlorine. In Europe and Asia, the chlor-alkali business is robust, and reasonable growth continues to be projected. However, markets for chlorine are beginning to show signs of shifting emphasis. This article reviews some of these emphases and presents an estimation of how they may be changing in the next two to five years.
Indications are that use of chlorine for solvents and by the pulp and paper industries is declining. Although the mainstay of chlorine use--the manufacture of polyvinyl chloride (PVC) resin--has continued to grow at about 3%/yr, ozone water treatment, rather than chlorination, is being studied for use in water purification. Because PVC is the major outlet for chlorine manufacturing, the vitality of the chlor-alkali industry is linked to the PVC business. In environmental debates, PVC is regarded as "solid chlorine" and is inexorably connected to the basic chlorine industry. The reduction or demise of PVC use anywhere will affect the world markets for chlorine.
Knowledge of the global impact of PVC is therefore important and necessary to the understanding of chlorine markets. Western Europe uses PVC more for packaging (bottles), but is generally more aggressive relative to Greenpeace's environmental proposals Eastern Europe, with its capitalization and industrialization, is a growing market for PVC. The African market is growing and, by pulling resin from Europe, is contributing to rising prices. Asia and the Pacific Rim continue to have strong PVC markets. The new NAFTA and GATT agreements, with significantly improved tariff arrangements, should also promote growth of chlorine and PVC markets throughout the world.
Polyvinyl chloride is a unique product. Consisting mostly of chlorine (56% by weight), PVC is also extremely versatile, with applications ranging from rigid pipes and fittings to flexible food wraps, vinyl siding, and blood bags. Its versatility is combined with relatively low price; the result is a competitive resin that many would like to copy or replace, and which many love to hate. Having gone head-to-head with wood, metal, glass, paper, aluminum, and other plastics, PVC has mainly survived intact and retained substantial, robust markets.
Today, after two to four decades in which PVC has been used successfully, markets for the material could be considered mature. However, the perception is that PVC is an "unnatural" replacement product for materials previously used. The term "plastic" has had a negative connotation for some time; some environmentalists would have us return to the "simpler, safer" materials used a half century ago. The Charles River Associates report has, in fact, been used to demonstrate that these old "replacements" are viable for most PVC uses.
The history of PVC, however, demonstrates survival. In the last quarter century, PVC markets have incurred several major insults. A vinyl chloride (VC) cancer scare occurred in 1974, when a study found an association between VC and cancer in people who had been exposed to VC for extended periods while working as PVC reactor scrapers. As a result of the study, VC/PVC has become the single most regulated chemical and resin in the U.S. and, probably, the world. Today, production of PVC is within all government guidelines and regulations, and VC exposures are below de minimis levels.
In the mid-1980s, a series of toxicity claims and lawsuits alleged that in fires, PVC (including wire, conduit, upholstery, and wall covering) produced unusually toxic gases that led to incapacity and injury. All of the claims have been settled, as it has been realized that burning of PVC is no more harmful than wood burning. However, Greenpeace has dredged up the old allegations as part of the basis for "deselecting" PVC for new building and remodeling construction in particular towns in Germany.
The current claim is that PVC manufacturing is the largest source of dioxin, which immediately finds and poisons people. The debate over dioxin toxicity continues to be reviewed by toxicologists; so far, the politics of dioxin are much less acute in the U.S. than in Germany.
It is likely that PVC will survive the continuing onslaught of allegations. However, a future vulnerability may appear in bottom-line applications of PVC, such as garden hose and other market areas that do not have sufficient value-added potential to continue to be competitive with other plastics.
Impact on Markets
Several uses of chlorine derivatives are unchallenged. All inorganic chlorides, pharmaceutical applications, and the treatment of water to destroy human pathogens are regarded as beneficial. The problem is related to a few organic compounds--such as DDT and PCBs--that have been associated with specific health problems. Greenpeace has argued that these "bad actors" are sufficient evidence that the entire class of organic chlorides, including VC, ethylene dichloride (EDC), and PVC, should be eliminated. The industry's response is that the recommendation is equivalent to throwing out the baby with the bath water. The industry believes it is necessary to study specific compounds for their toxicity and risk assessment, and manage those that are found to be problematic. Greenpeace counters by arguing that people are vulnerable as test guinea pigs while new health responses to other organic chlorides are being developed.
If, as we assume, PVC is not "sunsetted" over the next five years, this major outlet for chlorine will continue in robust form. Estimated PVC growth during this time ranges from 2% to 6%. Reasons for the growth in PVC include cost/performance, versatility, compounding technologies, marketing and manufacturing experience, adaptability to all government regulations, and its being environmentally friendly for all solid waste management options. Factors that have a negative influence on growth include low-cost competitive resins, performance limitations, environmental control costs, and political attacks by Greenpeace.
Examination of the negative market influences led to the conclusion that not enough awareness of all the uses of chlorine and its derivatives exists--a realization that prompted the report of the Charles River Associates (CRA). However, a coordinated, peer-reviewed scientific study became necessary because antagonists of chlorine and PVC had bandied about propaganda concerning health effects. This led to the CanTox report, which is in its final draft as of this writing.
Through the offices of the Chlorine Institute, the Chlorine Coordinating Council, the Vinyl Institute, and others, the industry had begun to take the Greenpeace attacks seriously and was beginning to respond. Only in Germany's most oppositional communities did PVC (and chlorine) begin to lose market share. However, the effect has since caused a backlash, and the markets have recovered.
The Charles River Associates Report
In Europe, much mention has been made of potential formation of chlorinated organics, including dioxins, in the manufacturing of PVC and its feedstocks. The strongest comment issues from the Greenpeace publication "Dioxin Factories," which claims that PVC manufacturing is the world's largest source of dioxins and concludes that all PVC plants should be shut down. In both Europe and the U.S., the allegations have provoked detailed scientific rebuttals.
Many environmentalists argue that because some unfriendly compounds contain chlorine, all chlorine and chlorine-derivative production should be banned. On the other hand, industry has applied a risk-benefit analysis to chlorine-containing products as a means of controlling high-risk materials. At the same time, the analysis permits continued use of chlorine-containing products that enhance our standard of living. The CRA report analyzes what would happen if all chlorine products were taken away, and offers the following major conclusions based on data from 1990:
* 1.3 million jobs depend on chlorine production.
* Forty-five percent of all industries are direct users of chlor-alkali chemicals, generating 40% of the economy's jobs and income. All industries are indirect consumers.
* Chlorine is involved in 60% of all commercial chemistry.
* Public health depends greatly on chlorine, which is used in 98% of drinking water supplies, 96% of crop protection chemicals, and 85% of all pharmaceuticals.
* Chlorine-dependent industries generate $80 billion in annual sales, provide a net trade balance of $2.9 billion (or 18% of total U.S. industry), and represent $57 billion in capital investment.
* To use a substitute for chlorine, consumers would bear a yearly tax of more than $90 billion.
Today, impacts would be even greater because of market growth since 1990. The CRA study demonstrates that the value of chlorine-derived products is very high because of the difficulty of finding suitable replacements. Chlorine is a fundamental building-block chemical; as such, it is part of the foundation of society.
The economic and societal effects of sunsetting PVC and chlorine would be staggering, to such an extent that the Greenpeace initiative would be completely untenable. However, Greenpeace has made inroads in a number of areas. The number of dry-cleaning establishments has been reduced, as has chlorine usage in the pulp and paper industry. The organization has also convinced American and Canadian commissioners in the International Joint Commission to be wary of chlorine as a feedstock material because, allegedly, it could be associated with the presence of potentially persistent toxic materials in the Great Lakes area. Therefore, the organization continues to attack PVC and the entire chlor-alkali industry.
The CanTox Report, which will be available soon, brackets the health effects of broad classes of chlorinated chemicals. The chemicals exhibit very different types of environmental behavior and biologic activity, depending on their physical and chemical properties. Such properties govern the chemicals' bioaccumulation potential and toxicological properties, and therefore their potential environmental impact.
The report uses scientific principles to determine dose-response, dose as a function of concentration, and concentration dependent on equilibrium in the environment. Application of the principles is used for the following purposes: to determine sources and amounts of chlorinated chemicals; to estimate exposure rates to various organisms; to determine the upper limits of exposure that are possible without harm to human health or environment; and to conduct risk assessments using the "no-effect" upper limits.
The report encompasses all the reported literature and science regarding health effects of chlorine and chlorine derivatives. It also establishes protocols for review and estimation of health and risk potential, particularly with regard to carcinogenesis. The data show that with regard to most chlorine compounds, including ethylene dichloride and PVC, no major concerns exist.
The health focus has shifted, however, away from cancer and toward reproductive toxicity, neurotoxicity, and endocrine, reproductive, and immunotoxicity effects. Unfortunately, little direct evidence shows either positive or negative effects. As a result, Greenpeace has been able to develop anecdotal references to health effects that are more than subtle. They have said that they do not want to wait years for scientific truth to catch up with their concerns.
Controversy exists over whether or not the political arena has room for emotive arguments that carry as much weight as scientific or economic arguments. If enough politicians agree that it does, then the PVC and chlorine industries have plenty of cause for concern.
The PVC market is highly competitive. If environmentalists make inroads that lead to increased manufacturing costs (as a result of remediation expenses), I predict that potential markets for PVC will shift to more value-added applications and products. I also believe that the lower end of the market will become more vulnerable to other plastics that do not require equally extensive regulatory remediation.
Longevity of PVC garden hose, shower curtains, and baseball-card holders may become questionable if we need to chase and correct every anecdotal toxicity. On the other hand, products with more value-added--such as PVC pipe and fittings, siding, and profiles--may become more valuable and continue to show strong growth. The history of PVC is one of survival, which should continue even if PVC use is limited only to credit cards.
The Debate Continues
Greenpeace did not achieve the goal of its slogan, "Chlorine free in '93." However, at a recent meeting of the International Joint Commission in Windsor, Ontario, Canada, it became apparent that the organization is not about to change its tactics. It has polarized its position in opposition to chlorine and chlorine derivatives. So far, U.S. legislators have not taken seriously the organization's anecdotal, emotive, and propagandist approaches. The situation in Germany serves as a model of what may happen if Greenpeace becomes a political influence in the U.S.
Fortunately, we have learned that free enterprise, scientific truth, and common sense have been a great stabilizing force in the United States. Industry has been slow to respond to the various attacks and insults. However, the chlorine and associated industries have begun to present effective outreach and advocacy programs in defense of their products and as counterpoints to their antagonists. The debate continues and may very well become heated.
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|Title Annotation:||polyvinyl chloride|
|Date:||Aug 1, 1994|
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