Petrochemicals in insulation: a conundrum for sustainable investors

Petrochemicals have been in use for decades and society’s dependence on them has only increased over time. Can they be compatible with a net-zero economy?

 

Need to know: Petrochemical use contributes to global warming and is a leading industrial cause of air pollution. But insulation made from these substances can save energy, reducing emissions  Foam insulation currently provides a significant overall net reduction in greenhouse gas emissions – potentially outweighing the carbon released during production

 

Petrochemicals: helpful, harmful

Products derived from petrochemicals include fertiliser, pesticides, plastics, medical products and equipment, clothing, soaps, insulation material and much more. They are fundamentally integrated into our daily lives. Unfortunately, there is a catch: petrochemicals’ primary feedstocks are oil, gas and coal.  

Moreover, before these fossil-fuel sources appear in petrochemical products, they undergo various chemical transformations, which generate further emissions.

In 2022, the production of primary chemicals¹ accounted for 935 Mt of CO₂ emissions, or around 2.5% of global energy-related emissions². In a world under increasing threat from climate change, reducing every source greenhouse gas (GHG) is vital. 

Not only does the petrochemical sector contribute to global warming, it is also one of the leading industrial causes of air pollution, which is estimated to cause millions of premature deaths annually³. Further environmental impacts include significant demand on ever scarcer fresh water sources and the waste caused by end products. 

Can the negative attributes of petrochemical products and society’s demand for them be reconciled?
 

A centuries-old solution

Insulation is any type of material that reduces the loss of heat or cold through an object, such as a wall. The practice dates back centuries, with evidence of Vikings using straw between logs to retain heat.

In 2022, emissions generated to heat buildings amounted to 4.2 Gt of CO₂, while around 1 Gt of CO₂ was emitted globally for space cooling⁴. Together, these two areas contributed to ~14% of total global energy-related emissions⁵. This is because households are primarily heated through the direct or indirect burning of fossil fuels.

Limiting the loss of hot and cold air from buildings can therefore contribute to the fight against climate change by cutting emissions. Insulation is one of the most effective and cheapest levers to stop hot or cold air escaping from a building, thereby reducing the overall amount of energy consumed and emissions produced.

There are many types of insulation, including sheep wool, cork and cellulose. However, the three products that dominate household insulation today, with an estimated 95% of the European Union and US markets, are glass wool, mineral wool and foam. 
 

Petrochemical content

These three materials contain varying levels of substance derived from petrochemicals. For example: binders are an integral component of glass wool and mineral wool, used to bind together the different strands of fibres made from glass or rock and slag. Binders typically make up less than 10% of the product and have traditionally been derived from petrochemicals. Some companies are starting to explore new non-petrochemical replacements, such as bio-based binders.

Foam insulation, on the other hand, is primarily made up of petrochemical products, making it significantly more difficult to replace these petrochemical inputs. Therefore, we must ask whether the advantages of foam insulation outweigh the GHGs emitted in its production and any other environmental risks it may pose? Let’s weigh the pros and cons.
 

Foam insulation: disadvantages

In addition to their petrochemical content, foam insulation has other drawbacks. Most types have lower fire safety classifications compared with glass and mineral wool. This makes them less safe and less desirable in taller buildings.

On average, foam insulation is also more expensive to buy and install, which must be done professionally and usually takes longer. While foam boards can technically be recycled, spray foam cannot, potentially increasing its environmental impact.
 

Foam insulation: advantages

The overriding benefit of foam is its heat-retention capability, which can be up to double those of other insulation materials.

This means that foam can, over time, help to counteract the emissions embodied in the material during its production. This is known as its carbon-payback period. It reflects the amount of time taken for an insulation material’s embedded carbon footprint to be offset by the reduction in heat consumption and related emissions due to a building being better insulated. For foam insulation, this period currently can be as little as ~0.7 to 2.5 years⁶. 

Furthermore, although foam insulation contains more petrochemical-derived products, it requires significantly less energy to produce, meaning its carbon-payback period is presently on average lower than that of mineral wool⁷. 
 
FIG 1. Carbon-payback periods for different insulation materials⁸

 

Source: Sadowski, K. “Comparison of the Carbon Payback”. Published in November 2022. For illustrative purposes only.

As figure 1 shows, glass wool has the shortest carbon-payback period. However, this is because far less carbon is produced in its manufacture, rather than because of superior heat retention. Over the lifetime of the various materials, foam insulation is more likely to reduce heat loss and therefore heat demand.

Foam insulation has a lifespan of up to 80-100 years, which is decades longer than those of other materials, and can cumulatively reduce energy consumption and emissions to a far greater extent than the alternatives. Foam offers other advantages as well, such as air sealing and moisture-resistance, and is more effective in extremely cold regions.
 

When to use petrochemicals?

Given that insulation – even types made primarily from petrochemicals – can have a net positive impact on the climate transition, is there a place for petrochemicals in a net-zero economy?

In reaching an answer, the challenge is determining whether the environmental benefits outweigh the drawbacks. Investors can reach a judgement by finding a robust answer to the question: do petrochemical-derived goods help reduce significantly more GHGs than are emitted in their production? 
 

Portfolio implications

In our analysis, we aim to identify insulation manufacturers that meet key sustainability criteria. Above all, the insulation material produced must benefit the climate over its lifetime. This is achieved through a net reduction in GHGs emitted during production, measured against emissions saved through the material’s use and carbon-payback period. Further consideration is given to the circularity of the product or its expected lifetime to ensure minimal environmental damage⁹. 

In the case of ROCKWOOL¹⁰, the carbon-payback period is estimated to be ~1-3 years. We also look for evidence of lifetime carbon savings. ROCKWOOL products can, over their lifetime, save 100 times the carbon emitted and energy consumed during production¹¹. 

In terms of lifetime and circularity, ROCKWOOL claims its products can last up to 65 years without losing effectiveness and, on average, contain 25% non-virgin material, using slag-waste streams from the steel industry. Furthermore, they can be recycled. The company also aims to reduce landfill waste from production facilities by 85% by 2030¹². 

For a company like Owens Corning¹¹, which has a wider range of insulation offerings, we look at the average carbon-payback period of each of the products. In addition to mineral wool, this includes glass wool and foam insulation, which can have average carbon payback periods of ~1-1.5 years, and 1-2.5 years, respectively. The company goes further in claiming that some of its fiberglass products can save up to 12 times as much energy as was required in the manufacturing process, and that is in the first year alone¹³. 

In terms of circularity, Owens Corning states that it requires that its North American fiberglass insulation products contain a minimum of ~55% recycled content. Similarly, it claims its North American XPS foam insulation is certified as containing 20% pre-consumer content, while its mineral wool insulation products contain around 70% recycled content. These are validated through third-party verification bodies and disclosed in the firm’s sustainability report¹⁴.  
 

The outlook

Some petrochemical products, such as foam insulation, may have a critical role to play in our future – but their use must be considered in the context of their potential climate, environmental and social impacts. Therefore, precautions will have to be taken to reduce emissions and negative environmental impacts generated during their production, lifespan and end-of-life processes.

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