Group Head, Global Services
Equity Research Analyst, Energy and Sustainability
Across the country, we're hearing more and more news reports about this substance called PFAS. Many people are learning about it for the first time, but the chemistry's been around for almost a century. Some folks refer to us as forever chemicals because they don't easily break down in the natural environment. This is due to the strong chemical bond between the carbon and fluorine atoms. The same bond is what gives the first molecule its special properties and why it's so useful for many applications today.
From rain proof gear to non-stick pans, personal care products, and firefighting foam to stain resistant coatings, these forever chemicals have proliferated over the last 70 years and have spread across the world; Building up over time in our water sources, our soil, and even within our own bodies.
As research builds up that confirms the negative health effects associated with these chemicals we expect the market for PFAS solutions to grow exponentially over the next decade. This includes activities associated with the consulting, testing, remediation, and ultimately destruction of PFAS compounds. Organizations around the world will need help understanding what their PFAS exposure level is and how to navigate regulations, reporting requirements, liabilities, and options to remove or destroy these substances if needed.
Because this is still an emerging area, the patchwork of various federal and state regulations can be overwhelming, particularly for companies that operate in more than one region. Each state has a growing mosaic of regulations, data collection and reporting requirements.
However, we believe that there are two major near-term catalysts that would stimulate a step-function increase in demand for PFAS services and solutions.
The first is the EPA establishing a national primary drinking water regulation for PFOA and PFAS, establishing the enforcement of maximum contamination limits. We don't know where these limits will ultimately shake out, but once established, they will be enforceable, something that's not the case today. The EPA is going to have to strike a balance between public health outcomes and burdening certain industries with too much cost
The second catalyst is designating PFOA and PFOA this hazardous substances under the CERCLA Superfund. Although timing's uncertain, we expect both of these events to occur towards the end of 2023 or in the early part of 2024.
It's difficult to put accurate numbers around addressable market for PFAS solutions, which is a common question we receive from clients. This is because the full size and scope of the problem is not yet well understood.
It's a nascent market and the variance between estimates can be pretty large.
But there is a growing body of scientific data and research which has enabled several reputable sources to come out with estimates that have independently converged around 57,000 potentially contaminated sites in the U.S. alone. This implies remediation costs in excess of $200 billion over the next 10 years, and that estimate continues to climb.
It's surely subject to change again. But the broader point is that the magnitude of this problem implies a large and growing addressable market for solutions over the next decade. This market continues to evolve literally by the day. There are several different types of technologies to address PFAS remediation, the most prominent of which include granulated activated carbon, ionic strange resins, and high-pressure membranes.
Each of these technologies have pros and cons, and we believe each will have a role to play depending on the use case and customer preference
There are industrial sites, military bases, airports and wastewater treatment facilities, each with varying degrees of PFAS contamination, different topography, cost outlays and other factors that will help determine the best remediation technology for each site.
And there are definitely certain types of technologies that are better suited towards certain types of applications. In fact, there are a handful of companies with profitable commercial scale solutions that exist in the market today. And there are others with promising emerging technologies that may expand beyond the research lab in the coming years. We believe the growing awareness around the ubiquity and dangers of PFAS, combined with stricter regulatory statutes, is driving rapid growth in the far solutions market, a market that we believe is timely and investable.
As scientists, engineers and capital continue to work together to address this critical environmental issue.