APPENDIX 3B. XENON AVAILABILITY AND PRICING

TABLE O F CONTENTS

**3B.1 I**  **NTRODUCTION .........................................................................................................3B­1** 

**3B.2 SUPPLY.........................................................................................................................3B­1** 

**3B.2.1 Production**  **Process.............................................................................................3B­1**

**3B.2.2 Key**  **Players ........................................................................................................3B­1** 

**3B.2.2.1 Praxair................................................................................................**  **3B­1**

**3B.2.2.2 Air**  **Liquide......................................................................................... 3B­2** 

**3B.2.2.3 Linde** 

**.................................................................................................. 3B­2** 

**3B.2.2.4 Iceblick...............................................................................................**  **3B­2**

**3B.3 APPLICATIONS**  **...........................................................................................................3B­2**

**3B.3.1 Lighting**  **Industry ...............................................................................................3B­2** 

**3B.3.2 Medical**  **Applications.........................................................................................3B­2**

**3B.3.3 Space**  **Industry....................................................................................................3B­3**

**3B.3.4 Semiconductor**  **Industry.....................................................................................3B­3**

**3B.4 PRICE**  **............................................................................................................................3B­3**

**3B.4.5 LCC**  **Analysis.....................................................................................................3B­4**

**3B.5 CONCLUSION..............................................................................................................3B­5** 

**3B.5.6 Supply**  **................................................................................................................3B­5**

**3B.5.7 Demand..............................................................................................................3B­5** 

**3B.5.8 Price**  **...................................................................................................................3B­5**

**REFERENCES ..........................................................................................................................3B­7** 

LIST O F FIGURES

**Figure 3**  **B.1 Xenon**  **Supply and**  **Demand ..................................................................................3B­4** 

**3B­i**APPENDIX 3B. XENON AVAILABILITY AND PRICING

3B.1 I NTRODUCTION

**In t**  **he screening**  **analysis (chapter**  **4 of**  **technical support**  **document (TSD)),**  **the**

**Department of**  **Energy (DOE)**  **identified a**  **number of**  **technology options**  **that could**  **be used**  **to**

**increase the**  **efficacy of**  **incandescent reflector**  **lamps (IRL).**  **Using the**  **screening criteria,**  **DOE**

**determined higher­efficiency**  **inert fill**  **gas warranted**  **further consideration**  **as a**  **design option**  **for**

**IRL.**

**One o**  **f the**  **screening criteria**  **is the**  **practicability to**  **manufacture, install,**  **and service.**  **If**

**mass production**  **and reliable**  **installation and**  **servicing of**  **a technology**  **in commercial**  **products**

**can be**  **achieved on**  **the scale**  **necessary to**  **serve the**  **relevant market**  **at the**  **time the**  **standard**

**comes into**  **effect, then**  **DOE will**  **consider that**  **technology practicable**  **to manufacture,**  **install,**

**and service.**  **Due to**  **concerns voiced**  **during manufacturer**  **interviews, DOE**  **conducted this** 

**additional analysis**  **to explore**  **the xenon**  **market and**  **confirm the**  **ability of**  **higher­efficiency inert** 

**fill gas**  **to meet**  **this screening**  **criterion. The**  **sections below**  **evaluate how**  **the supply,**  **market,**

**and price**  **of xenon**  **affect its**  **ability to**  **be used**  **as a**  **higher­efficiency inert**  **fill gas.** 

3B.2 S UPPLY

3B.2.1 P roduction Process

**Xenon i**  **s one**  **of three**  **rare gases**  **(along with**  **neon and**  **krypton) produced**  **by cryogenic**  **air**

**separation. Given**  **the low**  **concentration of**  **the rare**  **gases in**  **the air**  **(Neon 0.002**  **percent,**

**Krypton 0.0001**  **percent, and**  **Xenon 0.00001**  **percent), the**  **only cost­effective**  **recovery option**  **is**

**a large**  **air separation**  **unit. Most**  **worldwide supply**  **is met**  **by the**  **three largest**  **industrial gas** 

**companies (Air**  **Liquide, Praxair,**  **and Linde);**  **another major**  **supplier, Iceblick,**  **a former**  **State**

**controlled enterprise**  **of the**  **Soviet Union.**  **1**

**, 2**  **Together these**  **four companies**  **control more**  **than 80** 

**percent of**  **the global**  **supply of**  **rare gases.**  **2**

3B.2.2 Key Players

3B.2.2.1 P raxair

**With 2**  **8,000 employees**  **and operations**  **in more**  **than 30**  **countries, Praxair**  **posted annual** 

**sales of**  **$9.4 billion**  **in 2007.**  **Its primary**  **products are**  **atmospheric gases**  **(produced when**  **air is** 

**purified, compressed,**  **cooled, distilled**  **and condensed)**  **and specialty**  **gases (produced**  **as by** 

**products of**  **chemical production**  **or recovered**  **from natural**  **gas). 3**  **Praxair also**  **is one**  **of the**  **four**

**major worldwide**  **gas companies**  **and a**  **significant supplier**  **of xenon.** 

**3B­1**3B.2.2.2 Air Liquide

**With m**  **ore than**  **40,000 employees**  **in 72**  **countries, Air**  **Liquide states**  **it is**  **the world** 

**leader in**  **industrial and**  **medical gases**  **and related**  **services. 1**  **Founded in**  **1902, Air**  **Liquide**

**achieved sales**  **of 11.8**  **billion euros**  **in 2007.**  **Besides manufacturing**  **industrial grade**  **xenon, Air** 

**Liquide manufactures**  **and markets**  **LENOXe, the**  **first xenon­based**  **anesthetic. It**  **was used**  **for the** 

**first time**  **in France**  **on December**  **18, 2007.**  **In conjunction**  **with LENOXe,**  **Air Liquide**  **also**

**developed the**  **anesthesia workstation**  **FELIX DUAL.**  **4**

3B.2.2.3 Linde

**Based i**  **n Germany,**  **The Linde**  **Group (Linde)**  **had 2007**  **sales of**  **12.3 billion**  **euros. With** 

**more than**  **50,000 employees**  **after acquiring**  **The BOC**  **Group, Linde**  **has a**  **large engineering** 

**division to**  **compliment its**  **industrial gas**  **operations. 5**  **One of**  **four major**  **industrial gas**  **companies**

**worldwide, Linde**  **also is**  **a major**  **manufacturer of**  **xenon.**

3B.2.2.4 I ceblick

**Iceblick, f**  **ounded in**  **1992, produces**  **about 60**  **percent of**  **the world’s**  **supply of**  **neon and** 

**more than**  **20 percent**  **of the**  **supply of**  **krypton and**  **xenon. 6**  **It obtains**  **its raw**  **materials from** 

**chemical companies**  **based in**  **Russia, Ukraine,**  **Kazakhstan, and**  **Romania. Iceblick**  **then purifies** 

**the gases**  **and sells**  **the products**  **to consumers,**  **which are**  **predominantly industrial**  **gas companies.** 

3B.3 A PPLICATIONS

3B.3.1 L ighting Industry

**The m**  **ost common**  **application for**  **all rare**  **gases is**  **lighting. 2**  **Using xenon**  **instead of** 

**argon as**  **a fill**  **gas in**  **incandescent lamps**  **increases the**  **life of**  **the filament**  **because it**  **allows the** 

**lamp to**  **produce the**  **same amount**  **of light**  **output while**  **using less**  **energy. Xenon**  **lighting is**  **used**

**in stadiums,**  **aviation, automotive**  **headlights, IMAX**  **theaters, photography,**  **and other** 

**applications where**  **bright light**  **is desired.** 

3B.3.2 M edical Applications

**Xenon’s a**  **nesthetic properties**  **were first**  **discovered in**  **1939, though**  **it was**  **not used**  **as a** 

**medical anesthetic**  **until 1951.**  **7 Its**  **use as**  **an anesthetic**  **had been**  **largely forgotten**  **until about** 

**1990, mainly**  **because of**  **the high**  **cost. 8**  **Since that**  **time, a**  **large amount**  **of research**  **has analyzed** 

**the pros**  **and cons**  **of using**  **xenon. The**  **first large**  **scale study**  **that evaluated**  **the use**  **of xenon** 

**anesthesia in**  **humans concluded**  **that xenon**  **is at**  **least equivalent**  **to nitrous**  **oxide­isoflurane in** 

**efficacy and**  **safety. 9**  **Compared to**  **nitrous oxide,**  **xenon’s other**  **benefits include**  **a faster**  **recovery**

**time and**  **environmental friendliness.**  **High cost**  **is the**  **only thing**  **prohibiting xenon**  **from**

**widespread use**  **as an**  **anesthetic. Currently**  **a recovery**  **system must**  **be used**  **for xenon**  **to remain** 

**cost­effective.**

**3B­2 Besides**  **its use**  **in anesthesia,**  **Xenon is**  **also used**  **in the**  **medical industry**  **to enhance** 

**imaging in**  **X­rays, CAT**  **scans, and**  **MRIs. 2**  **Xenon makes**  **it possible**  **to obtain**  **better x­rays**  **with**

**reduced amounts**  **of radiation.**  **Finally, when**  **mixed with**  **oxygen, xenon**  **enhances contrast**  **in CT** 

**imaging and**  **can be**  **used to**  **determine blood**  **flow. 10** 

3B.3.3 Space Industry

**Xenon i**  **s used**  **in the**  **space industry**  **for ion**  **engines and**  **ion plasma**  **thrusters for**  **satellites.**

**Ion engines**  **depend on**  **electrically charged**  **atoms to**  **generate thrust.**  **They are**  **ten times**  **more**

**efficient than**  **the alternative**  **chemical propulsion**  **systems. Using**  **xenon reduces**  **the required** 

**propellant mass**  **by up**  **to 90**  **percent, thereby**  **reducing launch**  **costs due**  **to a**  **lighter spacecraft.**  **11**

**Newer satellites**  **use xenon**  **ion propulsion**  **systems (XIPS),**  **which have**  **about four**  **ion engines,** 

**for repositioning.** 

3B.3.4 S emiconductor Industry

**Plasma d**  **isplay panels**  **(PDPs) are**  **commonly used**  **for large**  **TV displays**  **(typically larger** 

**than 37**  **inches) and**  **compete directly**  **with liquid**  **crystal displays**  **(LCDs). PDPs**  **have many**  **tiny**

**cells between**  **two plates**  **of glass**  **which contain**  **a mixture**  **of xenon**  **and neon**  **gas. Passing**  **a**

**voltage across**  **the cell**  **ionizes the**  **gases and**  **forms a**  **plasma. Photons**  **emitted by**  **the plasma** 

**excite the**  **phosphors coating**  **the back**  **of each**  **cell, emitting**  **colored light.**  **Thus, the**  **operation of** 

**each cell**  **is similar**  **to that**  **of a**  **fluorescent lamp.** 

**Xenon i**  **s also**  **used in**  **electronic chip**  **manufacturing. Companies**  **utilize xenon**  **plasma**

**etching to**  **manufacture micro­electro­mechanical**  **systems (MEMS).**  **Demand for**  **this industry** 

**alone increased**  **from under**  **one million**  **liters of**  **xenon per**  **year to**  **almost three**  **million liters**  **per**

**year in**  **twelve months.**  **In response**  **to this**  **rapid increase**  **in demand,**  **Air Products,**  **an industrial** 

**gas company,**  **introduced a**  **xenon recovery**  **system for**  **the semiconductor**  **and MEMS**  **industries**

**in July**  **2008. 12**  **This technology**  **uses vacuum**  **swing absorption**  **to extract**  **xenon from**  **process**

**effluent streams.**  **A mixture**  **containing high**  **levels of**  **xenon is**  **recovered and**  **sent offsite**  **for**

**distillation once**  **storage vessels**  **are full.**  **Air Products**  **estimates customer**  **cost savings**  **could**

**reach up**  **to 67**  **percent.**

3B.4 P RICE

**The p**  **rice of**  **xenon is**  **highly dependent**  **on the**  **demand for**  **the applications**  **in which**  **it is** 

**used. Major**  **applications for**  **xenon include**  **the lighting**  **industry, the**  **television industry**  **(flat**

**panel displays),**  **the space**  **industry (ion**  **engines, satellite**  **repositioning), the**  **medical industry**  **(i.e.**

**imaging, anesthesia),**  **and the**  **semiconductor industry**  **(electronic chip**  **manufacturing). All**  **of the** 

**applications are**  **growing rapidly.**  **The demand**  **from the**  **semiconductor industry**  **alone increased** 

**from under**  **one million**  **liters per**  **year to**  **almost three**  **million liters**  **per year**  **between June**  **2007**

**and June**  **2008. 13** 

**3B­3**Figure 3B.1 Xenon Supply and Demand

**Figure 3B.1**  **above tracks**  **and forecasts**  **xenon supply**  **and demand**  **(as of**  **June 2007).**  **2**

**Total production**  **of xenon**  **was just**  **over nine**  **million liters**  **in 2007.**  **Responding to**  **increasing**

**demand, production**  **increased in**  **the last**  **year, reaching**  **12 million**  **liters in**  **June 2008.**  **13 With**  **the**

**development of**  **new applications**  **and growth**  **of existing**  **ones, demand**  **for xenon**  **is predicted**  **to**

**grow. Additionally,**  **because significant**  **time is**  **required to**  **increase production,**  **xenon demand**  **is**

**forecasted to**  **continue to**  **exceed supply**  **in the**  **near future**  **(as seen**  **in Figure**  **3B.1). While**  **there**

**remain essentially**  **inexhaustible supplies**  **of xenon**  **in the**  **atmosphere, considerable**  **investment**

**would be**  **required to**  **expand global**  **production substantially.** 

**Since i**  **t is**  **impossible to**  **immediately ramp**  **up supply,**  **spot prices**  **have increased**  **from**

**$3.00­$4.00 per**  **liter to**  **$28.00­$35.00 per**  **liter for**  **large cylinders**  **14**

**. These**  **higher prices**  **are**

**expected to**  **be sustained**  **in the**  **near­term until**  **supply can**  **meet the**  **growing demand.**  **13**

3B.4.5 LCC Analysis

**DOE performed**  **an analysis**  **to determine**  **by how**  **much the**  **price of**  **xenon could**  **increase**

**before it**  **negatively impacted**  **LCC savings.**  **For this**  **analysis, DOE**  **assumed that**  **the cost**  **of the** 

**lamp to**  **the end­user**  **would need**  **to increase**  **by at**  **least the**  **same amount**  **as the**  **LCC savings** 

**before the**  **cost of**  **xenon negatively**  **impacted the**  **consumer savings.**  **Because the**  **LCC savings** 

**represent savings**  **to the**  **end­user, DOE**  **divided the**  **LCC savings**  **by the**  **mark­up used**  **in the** 

**manufacturer impact**  **analysis to**  **determine how**  **much the**  **xenon manufacturing**  **input cost**  **would**

**3B­4 impact**  **the end­user.**  **DOE assumed**  **that this**  **cost increase**  **would be**  **completely attributable**  **to an** 

**increase in**  **the cost**  **of xenon.**  **Through manufacturer**  **interviews, DOE**  **estimated the**  **quantity of** 

**xenon that**  **would be**  **required to**  **achieve the**  **desired efficacy**  **in an**  **individual lamp.**  **DOE used** 

**this average**  **volume per**  **lamp and**  **the cost**  **to the**  **manufacture to**  **calculate a**  **cost per**  **volume of** 

**xenon. Using**  **this method,**  **DOE was**  **able to**  **calculate how**  **much the**  **price of**  **xenon could** 

**increase before**  **it would**  **negatively impact**  **LCC savings.** 

3B.5 C ONCLUSION

3B.5.6 S upply

**As s**  **hown in**  **Figure 3B.1,**  **the supply**  **of xenon**  **has increased**  **each year.**  **However, the** 

**supply increases**  **have been**  **modest and**  **have not**  **kept pace**  **with the**  **demand in**  **recent years.**  **This**

**supply lag**  **is likely**  **due to**  **the process**  **by which**  **xenon is**  **separated, which**  **requires significant** 

**time to**  **design and**  **construct additional**  **capacity. Due**  **to the**  **increased demand**  **in the**  **past few** 

**years and**  **the corresponding**  **price increase,**  **supply will**  **likely continue**  **to increase**  **as it**  **becomes**

**more cost**  **effective to**  **build air**  **separation units**  **with additional**  **capacity. Based**  **on historical** 

**trends, it**  **is unlikely**  **that the**  **supply of**  **xenon will**  **become limited**  **or significantly**  **decrease from** 

**its current**  **level over**  **the analysis**  **period. Therefore,**  **DOE believes**  **the availability**  **of xenon**  **will**

**not be**  **impacted by**  **this rulemaking.**  **DOE concludes**  **that the**  **supply of**  **xenon will**  **not affect**  **the**

**practicability to**  **manufacture, install,**  **and service**  **IRL with**  **higher­efficiency inert**  **fill gas.** 

3B.5.7 D emand

**DOE e**  **stimates that**  **the increased**  **demand for**  **xenon as**  **a result**  **of this**  **rulemaking will** 

**range from**  **3.2 to**  **12.8 percent**  **of current**  **worldwide production**  **in the**  **year the**  **IRL rulemaking** 

**takes effect.**  **Over the**  **thirty year**  **analysis period,**  **the increased**  **demand for**  **xenon could**  **range**

**from 0.5**  **percent to**  **18 percent**  **of current**  **worldwide production,**  **depending on**  **the shipment** 

**scenario selected**  **for the**  **base and**  **standards case.**  **This increased**  **demand is**  **expected to**  **have**

**little long­term**  **effect on**  **the price**  **or availability**  **of xenon,**  **considering the**  **other contributing** 

**factors. Rapid**  **growth or**  **decline of**  **existing markets**  **or the**  **discovery of**  **a new**  **application could** 

**significantly impact**  **the total**  **demand for**  **xenon, perhaps**  **even more**  **so than**  **this rulemaking.** 

**Furthermore, the**  **above numbers**  **are based**  **on the**  **current worldwide**  **production (12**  **million**

**liters) and**  **assume no**  **increase in**  **production over**  **the analysis**  **period. This**  **is highly**  **unlikely,**

**given that**  **current demand**  **substantially exceeds**  **supply. Any**  **future increase**  **in xenon** 

**production would**  **decrease the**  **percentages mentioned**  **above. DOE**  **concludes that**  **the increased** 

**demand as**  **a result**  **of this**  **rulemaking will**  **not affect**  **the practicability**  **to manufacture,**  **install,**

**and service**  **IRL with**  **higher­efficiency inert**  **fill gas.** 

3B.5.8 P rice

**Because b**  **oth NEMA**  **and major**  **lamp manufacturers**  **expressed concern**  **specifically**

**regarding the**  **recent rise**  **in the**  **price of**  **xenon, DOE**  **analyzed the**  **effect of**  **price on**  **LCC savings,** 

**as discussed**  **in section**  **3B.4.5. DOE**  **concluded that**  **the price**  **of xenon**  **could increase**  **to over** 

**$100 per**  **liter before**  **it started**  **to negatively**  **impact LCC**  **savings. As**  **the average**  **price of**  **xenon**

**3B­5 is**  **currently $31.50**  **per liter,**  **the price**  **could more**  **than triple**  **before the**  **cost of**  **manufacturing a** 

**lamp with**  **higher­efficiency inert**  **fill gas**  **outweighed the**  **efficacy benefits.**  **Therefore, DOE**  **does**

**not believe**  **that further**  **price increases**  **will affect**  **product availability.**  **Thus, DOE**  **concludes that** 

**any increases**  **in price**  **as a**  **result of**  **this rulemaking**  **will not**  **affect the**  **practicability to** 

**manufacture, install,**  **and service**  **IRL with**  **higher­efficiency inert**  **fill gas.** 

**3B­6**REFERENCES

**1 Air**  **Liquide. 2007**  **Annual report.**  **Last viewed**  **on December**  **23, 2008.**  **Available at** 

**< http://www.airliquide.com/file/otherelementcontent/pj/airliquide­radd2007­en58122.pdf**  **>**

**.**

**2 Betzendahl,**  **Richard. “Rare**  **Gases: A**  **Fast Growing**  **Global Commodity.”**  CryoGas

International

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**<http://www.praxair.com/praxair.nsf/AllContent/CD937FF096576A6585256A92006E6ED5?Op**

**enDocument&URLMenuBranch=2172D0A50585464685257035005ED87>.**

**4 Air**  **Liquide. “First**  **Anesthesia with**  **LENOXe in**  **France, at**  **the Nimes**  **Teaching Hospital.”** 

**March 2008.**  **Last viewed**  **on December**  **23, 2008.**  **Available at** 

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**5 Linde**  **AG. “General**  **FAQ.” Last**  **viewed on**  **December 23,**  **2008. Available**  **at**

**< http://www.linde.com/international/web/linde/like35lindecom.nsf/docbyalias/nav_generalfaq**  **>**

**.**

**6 Iceblick.**  **“About Us.”**  **Last viewed**  **on December**  **23, 2008.**  **Available at** 

**< http://iceblick.t**  **enet.odessa.ua/eng/ >.** 

**7 Marx,**  **Thomas M.D.,**  **M. Schmidt**  **M.D., U.**  **Schirmer M.D.,**  **and H.**  **Reinelt M.D..**  **“Xenon**

**anesthesia.” Journal**  **of the**  **Royal Society**  **of Medicine:**  **Volume 93.**  **October 2000.** 

**8 Goto,**  **Takahisa M.D.;**  **Nakata, Yoshinori**  **M.D., M.B.A.;**  **Morita, Shigeho**  **M.D. “Will**  **Xenon**

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**9 Rossaint,**  **Rolf M.D.**  **et. al**  **“Multicenter Randomized**  **Comparison of**  **the Efficacy**  **and Safety**  **of**

**Xenon and**  **Isoflurane in**  **Patients Undergoing**  **Elective Surgery.”**  **Anesthesiology: Volume**  **98 (1),** 

**January 2003.** 

**3B­7 10**  **Praxair, Inc.**  **“Xenon Applications.”**  **Last viewed**  **on December**  **23, 2008.**  **Available at** 

**< http://www.praxair.com/praxair.nsf/0/32F3A328E11BB600052565660052C139?OpenDocume** 

**n t**  **>.**

**11 Boeing**  **Integrated Defense**  **Systems. “NSTAR**  **Ion Engine.”**  **Last viewed**  **on December**  **23,**

**2008. Available**  **at <**  **http://www.boeing.com/defense**

**s pace/space/bss/factsheets/xips/nstar/ionengine.html**  **>.**

**12 Air**  **Products Press**  **Release. “Air**  **Products Introduces**  **XeCovery On­Site**  **Xenon Recovery** 

**System. Last**  **viewed December**  **23, 2008.**  **Available at** 

**< http://www.airproducts.com/PressRoom/CompanyNews/Archived/2008/15Jul2008.htm**  **>**

**.**

**13 Betzendahl,**  **Richard. “The**  **Rare Gets**  **More Rare:**  **The Rare**  **Gases Market**  **Update.”** CryoGas

International

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**3B­8**