Nynoterat bolag satsar på att förebygga skogsbränder

Det amerikanska bolaget Perimeter Solutions, som börsnoterades den 9 november, är ett av de företag som väntas blomstra i den växande katastrofekonomin, skriver Bloomberg Businessweek.

Perimeter köpte förra året rättigheterna till en nyutvecklad gel som kan sprayas på gräs, träd och buskar för att förebygga skogsbränder och har sett sina intäkter växa i takt med att bränderna har ökat. Men en del kritiker menar att företaget, som också säljer kemikalier som dumpas från helikoptrar för att släcka bränder, har nästintill monopol på den amerikanska marknaden.

Wildfires Are Getting Worse, and One Chemical Company Is Reaping the Benefits

By Austin Carr, Bloomberg Businessweek, 22 November 2022

Along Via Volcano, a prairie road in Murrieta, Calif., acres of brush and grass have been sunbaked a dirty blond. Residents of the surrounding ranch homes call this dry vegetation “flashy fuel” because it burns fast. Here, 80 miles southeast of Los Angeles, the humidity is low and temperatures are often scorching. Even the tiniest spark, from the power lines overhead or a backfiring lawnmower, risks setting off an inferno. After a 2019 outbreak charred almost 2,000 acres and forced the evacuation of hundreds of nearby households, locals considered brush-clearing countermeasures, but mostly had to settle for staying alert all the time. “When you’re mowing weeds in the heat on the side of the road, you need to have a fire extinguisher,” says Susan Frommer, secretary of the community’s volunteer fire safety council.

During this year’s fire season, Frommer and her neighbors tested a more sophisticated approach. The safety council used a $30,000 state grant to hire Perimeter Solutions to spray the brush with a new fire-resistant gel called Fortify. Originally developed by Stanford biomaterials scientists before Perimeter acquired rights to the technology last year, the slightly sticky chemical is intended to coat areas prone to ignition—such as vegetation around utility poles, railroad tracks, rural highways, and so forth—and render them nonflammable. If a flareup runs into Fortify, the fire will smolder and then die in puffs of smoke.

“Five years from now, I think you’ll be negligent if you’re not doing this,” Perimeter business director Wes Bolsen said in June as his team treated the area along Via Volcano. Using a water cannon atop a slow-rolling tanker truck, the team sprayed either side of a mile-long stretch of road with 3,000 gallons of Fortify. They finished the job in a little less than an hour, leaving behind a pale residue, as if the brush had been splashed with skim milk.

Perimeter is best known for making Phos-Chek, the world’s market-dominating fire retardant, which can often be seen on television news funneling out of air tankers in chalk-red clouds to stop the spread of forest fires. But whereas Phos-Chek is generally dispensed from the sky over big blazes, Fortify is a preventive, ground-based remedy. Applied in the runup to wildfire season, it’s designed to stay glued to vegetation through the most dangerous months, typically June to November in California, and can withstand one to two inches worth of rain and high winds. Phos-Chek, on the other hand, washes away with even light precipitation and fades with sun exposure, usually weeks after an emergency airdrop.

Perimeter is betting that Fortify will appeal to desperate homeowners and corporations that face crushing liabilities, including insurance giants, utilities such as PG&E Corp., and government agencies. In a September press conference in front of a fire truck, President Joe Biden warned that some 44,000 wildfires in 2021 had already burned more than 5 million acres—nearly the size of New Jersey—and urged substantial investments in proactive firefighting. “These wildfires are being supercharged by climate change,” Biden said, labeling the catastrophes a “blinking code red for our nation.”

For many years the firefighting industry has answered that alarm with more reactive fixes than preventive measures: more first responders, more big planes, and more Phos-Chek. The U.S. dropped at least 50 million gallons of Perimeter’s retardants in 2020, roughly double the total a decade ago. That growth is why EverArc Holdings Ltd., a blank-check firm, acquired Perimeter this year for $2 billion and took it public on Nov. 9.

The rising dependency on Perimeter in the U.S., where the company generates 78% of its revenue, has attracted complaints from competitors who claim it has a monopoly on the retardants business and from critics who say its products are unproven, environmentally fraught, and wasteful. Phos-Chek sells for about $3 a gallon, which doesn’t include the high cost of personnel and the equipment needed to dump it from planes. “It’s like dropping Fiji Water over a fire,” says Andy Stahl, executive director of advocacy group Forest Service Employees for Environmental Ethics. “No one really knows whether retardant makes a difference in firefighting outcomes. No one has done the controlled experiments that we do, say, with vaccines.”

Edward Goldberg, Perimeter’s chief executive officer, says Phos-Chek saves lives and has been rigorously proven to suppress fires, which is why the U.S. Forest Service includes the company’s retardants on its list of qualified products. (Remarkably, the list only included Perimeter products for much of the past two decades.) And for those who gripe about the price and difficulty of delivering Phos-Chek, Goldberg now has a ready answer in Fortify, which received USFS approval on Oct. 5, opening it up for federal contracts. If projects like the one at Via Volcano yield results, Perimeter could boom in the emerging disaster economy, dousing the Earth with ever more chemicals. “Everybody sees what’s happening with fire issues,” says Goldberg. “It’s hard to envision that the problem is going to get better before it gets a lot worse.”

During the hottest months, Perimeter’s production lines are frequently running up to 12 hours a day, seven days a week, to keep up with demand. At the company’s 103,000-square-foot plant in Rancho Cucamonga, Calif.—the largest among its factories and distribution hubs in the U.S., Canada, Europe, and Australia—retardant powders travel up escalator-like conveyors and are dumped into paddle blenders capable of swirling 15,000 pounds of the stuff at once. It is then packaged by the ton for transport and mixed with water to the right viscosity inside enormous tanks at air bases that fight fires. Huge orders often come in at the last minute by phone. “At any one airport, there’s only enough retardant inventory to last one day of flying, so we’re shipping 20, 30, or 40 truckloads a day,” Goldberg tells me earlier this year in a videoconference call from his office in St. Louis.

Perimeter markets a variety of retardants under the Phos-Chek brand, including foams, gels, powders, and liquid concentrates, each with different suppressing functions and delivery equipment. Its flagship aerial product, Phos-Chek MVP-FX, is dropped around fires to box them in. The Hawaiian Punch color helps pilots and ground firefighters track the boundary lines; Perimeter has tested formulations of blue and white, but bright red proved most visible on vegetation. A thickening agent, like what’s in toothpaste, holds the retardant slurry together in the air until it drops onto branches and brush in a goopy, Nickelodeon-style mess.

While the exact recipe is a trade secret, the key ingredient is ammonium phosphate, a salt that inhibits combustion. Goldberg likes to note that it’s the stuff in fertilizer—a selling point since the 1960s, when Monsanto developed the Phos-Chek formula and promoted it as “a low-cost chemical that not only fights raging forest fires … but actually nourishes the soil.” Still, it’s not entirely benign: Studies have shown that Phos-Chek can kill fish while nurturing algae blooms and invasive plants. Conventional wisdom has held that an unmitigated wildfire would be a lot worse. (Perimeter has acknowledged that toxicological studies have been limited and “as a result, our products could have certain impact on the environment or the animal population that is currently unknown.”)

Along with Fire-Trol, a popular competing product with a different chemical makeup, aerial retardants were seen as a strong weapon in the U.S. government’s war against fire. An early newspaper depiction of Phos-Chek described how a converted “torpedo bomber” flew “sorties” to attack flames, “brushing the treetops at 140 miles an hour and dumping on each pass 650 gallons.” Phos-Chek grew but was a mere ember of a business at Monsanto by the 1990s, when the chemical company spun it off to focus on agriculture. It was lumped into a debt-saddled conglomerate of discarded units that produced everything from windshield plastics to nylon carpet fibers, and changed owners several times, eventually ending up at Israel Chemicals Ltd., a phosphate manufacturer, until 2018. “It really got lost in those companies,” says Goldberg, who began overseeing the Phos-Chek division in 2001.

The issue was partly that fires weren’t yet causing constant crises. A particularly wet season might cut purchases in half for the year. Gene DeJackome, a former sales leader at Monsanto and at subsequent Phos-Chek parent organizations, estimates that revenue hovered around $20 million in the early aughts. At one point the company made a lucrative deal with the Turkish government to address unusual wildfires, but Turkey dropped the contract when the fires stopped. “How do I make up that revenue?” DeJackome remembers thinking. “I got to find a new Turkey.”

Goldberg focused on logistical efficiencies. He sought to build a supply chain that could deliver an urgent order to most parts of North America within eight hours of factory production. His team also helped run air bases and train firefighters, all the while peddling Phos-Chek products. The goal was to have continuous contact with the biggest customers—the USFS and Cal Fire, California’s forestry and fire department—and not only when the red stuff was flying. The USFS and state of California account for 58% of Perimeter's fire-safety product sales.

Tim Wight, a Perimeter consultant and former Monsanto sales manager, argues that the secret of Phos-Chek’s success isn’t its sauce. He says Goldberg leaned into providing remote deliveries and disaster-management services and equipment to the “ass end of the U.S.,” making Perimeter products appealing to bureaucratic gatekeepers. “You can’t just walk up to a fire guy in Idaho and say, ‘Hey, here’s a couple tons of retardant. Bye!’’ Doesn’t work that way,” Wight says. “You got to lead them by the hand: ‘Look, we’re not just selling this bag of powder. No, no, we’ll mix it for you. And then we’ll put it into trucks. And then we’ll load it into the aircraft for you. And we’ll do this and that.’” It helped that the company behind Fire-Trol, then Phos-Chek’s only real rival, saw sales drop after the USFS prohibited the use of sodium ferrocyanide, an important ingredient in its retardants that had been found to be toxic. Goldberg acquired the brand in 2007.

Over the next decade, with the market cleared of any significant competitors and with wildfire seasons getting increasingly worse, annual Phos-Chek revenues rose into the nine figures. The carrying capacity of planes and helicopters ballooned; a 747 supertanker can haul almost 30 times as much retardant as the torpedo bombers used in the 1970s. In 2017, U.S. agencies used a record 57 million gallons of Phos-Chek produced by Goldberg’s division.

The following year, SK Capital, a private equity firm, bought the retardants group from the Israeli manufacturer for $1 billion and turned it into standalone business named Perimeter Solutions. Goldberg, who became Perimeter’s CEO, says that with fire safety the sole core of the new company, he finally had the freedom and resources to go after an untapped market: wildfire prevention. “The holy grail,” he says.

Jesse Acosta was sweating inside a Smokey Bear suit at a Lowe’s parking lot when he realized this might not be the only way to prevent forest fires. He’d been working with Hawaii’s Department of Land and Natural Resources after graduating college with a forestry degree, but the state’s public awareness campaigns seemed fruitless. In his non-costumed hours as a fire prevention forester, Acosta says he was digitizing “a forklift full of boxes of manila folders” containing state reports and historical data on wildfires. An odd thing stood out: Year after year, pretty much all of the fires were starting in the same places.

He searched for retardants to preemptively treat those high-risk spots, but products like Phos-Chek were only effective up to around a quarter-inch of rain, after which they washed away or blew off. A few years later, in 2015, the issue popped back into his brain while he was visiting Eric Appel, his brother-in-law and a postdoctoral fellow at the Massachusetts Institute of Technology with a Ph.D. in chemistry from the University of Cambridge. Appel specializes in supramolecular biomaterials with a focus on developing gels that coat drugs so they dissolve more gradually to release medicine inside the human body.

Acosta and Appel got to chatting: Could a similar polymer coating work to improve the durability of fire retardants? Appel poked around and was shocked to discover how little new chemistry had been conducted in the field over the past 60 years. He was also miffed that newer wildfire “prevention” tools were aimed at shaving time off red alert responses. “That word was being used wrong. ‘Prevention’ means you stop it from happening, not that you get there faster,” he says. “Most of the projects were fundamentally reactive.”

Their timing was good. For the past half-century, state and federal agencies have struggled to strike a healthy balance between fire suppression and prevention. The government’s chemical war against fire had led to decades of overgrowth that inadvertently contributed to future fires. The U.S. started investing more in forest management, including brush removal and prescribed burns—controlled fires that essentially refresh the ecosystem and minimize the risks of overgrowth. But the scale and frequency of wildfires had gotten so bad that preventive solutions lost priority. The problem was complicated by construction of more homes in fire-susceptible areas. In 2017, U.S. Secretary of Agriculture Sonny Perdue complained that suppression costs had rocketed in recent years, from 15% of the multibillion-dollar USFS budget to 55%. “We end up having to hoard all of the money that is intended for fire prevention because we’re afraid we’re going to need it to actually fight fires,” he said. As if to exemplify the dearth of available fixes, President Donald Trump later suggested the answer was for the U.S. to rake more leaves.

Appel began serious research into a preventive technology after becoming a Stanford professor. His objective wasn’t to reinvent retardant but to create an adherent and durable layer to envelop it. In replicating features of his drug-delivery gel over the next few years, Appel and a team of scientists crafted a molecular lattice that would hold a retardant like Phos-Chek on vegetation until a certain amount of water fell on it, at which point it would biodegrade to avoid long-term environmental impact. He compares the process to a fishing net designed to release fresh catch if submerged in the ocean long enough. Appel and Acosta lab-tested hundreds of ratios of cellulose and silica, using small burn chambers packed with grass or wood chips.

In summer 2018, with grant support from Stanford and California Polytechnic State University, they were finally able to run larger outdoor trials on the resulting formula. Acosta mowed rows of separate square plots of tall grass in a massive field in Santa Margarita, Calif., with each patch like an oversize Triscuit. He sprayed the blocks with the white gel and let them sit exposed to the elements for a month. Next, to simulate varied levels of rainfall, he drowned the plots with water. “A half-inch of rain may sound like nothing, but in terms of volume it was like 30 gallons of water,” Acosta recalls. “Then I called Cal Fire and basically said: ‘I want to burn this field. Can you guys come watch?’”

With a handful of local firefighters observing, he and his team torched the center of each square. The untreated control plot erupted outward. By contrast, the flames on some of the patches of treated grass almost immediately went out. “We didn’t think it would stop a fire in its tracks,” says Cal Fire battalion chief David Fowler, who attended the demo. “It was like, ‘Wow, that’s cool.’” Friends living in the Stanford foothills even started asking how they could buy the potion: “‘I hear you’ve got this magic sauce. Can you treat my house?’” Appel remembers one asking.

The brothers-in-law soon founded LaderaTech Inc. and hired a CEO, Wes Bolsen, in early 2019 to commercialize Appel’s formula, which they licensed from Stanford. They named the product Fortify. For additional tests that year, the startup targeted areas for which data showed chronic fires. “You don't want to just drop it out of aircraft all over the place—that's a dumb way of doing it,” Bolsen says. Four miles of Southern California’s Route 118, a roadside that the county says had dozens of ignitions in the prior two years, experienced virtually no fires that fall after a Fortify application.

Goldberg was smitten when he came across Appel’s August 2019 scientific paper on the technology, entitled “Prophylactic Treatment of High-risk Landscapes Using Viscoelastic Retardant Fluids.” His team had worked for several years on a similarly durable product, but they had failed to find a formula that could retain its efficacy through season-long weathering. He got in touch with LaderaTech about an acquisition. With Perimeter’s global supply chain and government contracts, Bolsen says, it was a no-brainer. The two companies closed the sale in May 2020 in a deal valued at $22 million, and Perimeter took over the Stanford license.

Perimeter started ramping up Fortify production at its Rancho Cucamonga factory even before it earned a spot on the U.S. Forest Service’s qualified-product list in October of this year. Federal evaluation can take years and purports to assess everything from a chemical retardant’s toxicity to its “pumpability.” (The minimum flow rate out of tankers is 18 gallons per minute.) Competitors say the slow process is anti-competitive and favors incumbent Phos-Chek products. “This has been a monopoly for far too long,” says Robert Burnham, CEO of rival Fortress North America LLC, which finally secured conditional USFS approval for an aerial retardant last fall after spending four years developing it. He says the company ran into huge expenses and “powerful bureaucratic indifference” during the government’s lab analysis and field tests. “It’s appalling,” Burnham says. “But quite frankly, this new product frightens the hell out of Perimeter because it’s more price-competitive.” A Perimeter spokesperson says the company has won customers “based on delivering quality products and exceptional services consistently.”

Perimeter’s sales, meanwhile, have continued growing as wildfire seasons have gotten longer and more severe. Revenue last year jumped to $339.5 million, with profits of $24 million. California’s recent Dixie Fire alone consumed millions of gallons of Phos-Chek, and the company sees big potential in international markets, which account for just about one-fifth of sales. “This year is quite terrible. Every guy I know at Perimeter is working 24/7—they are haggard,” says Tim Wight, the Perimeter sales consultant. But a terrible year of fires is great for Perimeter. “From a business perspective, the money is just rolling in,” Wight says.

S&P analyst Edward Hudson sees Perimeter becoming “the one-stop shop globally” for both prevention and suppression retardants, especially given the company’s strong government ties. Those ties were evident during a visit to Redding Air-Attack Base several hours north of Sacramento, where Phos-Chek-branded mixing tanks are piped to a fleet of Cal Fire planes. Dozens of firefighters, pilots, and logistics personnel were there for training, and it was difficult to tell who worked for state or federal agencies and who worked for Perimeter. Boulder-size totes of unused Phos-Chek powder sat near the red-stained tarmac. A Perimeter worker estimated the bags were worth almost $100,000 together.

Andy Stahl, the Perimeter critic, says the logistics of these operations amounts to a taxpayer-funded “military industrial complex of contractors.” Despite cost and efficacy concerns, he argues that politicians are unlikely to change the model because retardant drops offer a reassuring spectacle to their constituents. Goldberg finds this, and Stahl’s claims in general, ridiculous. He says retardant sales represent a small percentage of the USFS suppression budget (though that doesn’t include the hundreds of millions of dollars spent on supporting operations) and points to a multiyear government study on aerial firefighting published last year. But that study mostly analyzed aircraft performance and did not assess retardant efficacy, according to Tom Harbour, the USFS’s former director of aviation management. After acknowledging that he consults for Perimeter and is friends with Goldberg, he adds, “Retardant thoughtfully, purposefully placed to achieve objectives is an effective tool.” USFS spokesperson Babete Anderson declined to comment.

In many ways, Fortify offers an antidote to Perimeter skeptics. Even an accurate Phos-Chek dump from a supertanker might red-slime you 300 yards from its crosshairs, whereas a Fortify treatment should never miss—in theory. “Any time you apply [retardant] ahead of time, it’s like playing Russian roulette,” says Dan Reese, a wildfire adviser and former aviation contractor and Cal Fire deputy chief.

A new generation of companies is moving toward similarly targeted products. Silicon Valley startup Rain Industries is building networks of drones that can make rapid retardant drops after an ignition is detected. Data companies such as Zonehaven and Technosylva Inc. are creating tools to predict fire patterns and manage evacuations. David Buckley, chief operating officer of Technosylva, recalls PG&E interim CEO Bill Smith talking to his team after the California utility went bankrupt because of billions of dollars of liabilities stemming from blazes caused by its equipment. “He said, ‘I have three priorities: ‘Wildfire, wildfire, and wildfire,’” Buckley remembers.

Perimeter expects the threat to drive the prevention business. Bolsen, who joined the company after it acquired LaderaTech, has now overseen Fortify treatments on hundreds of homes and at Reagan Ranch, the late president’s onetime vacation spot. He acknowledges it won’t stop every fire, but given the possible consequences without Fortify, Bolsen is certain that governments and companies have no choice but to buy it in bulk. “What’s your liability if you burn down a community and kill people?” he says. “Was it over a couple million dollars you decided not to spend on wildfire prevention? That you caused $10 billion in damage?”

Back at Via Volcano, Susan Frommer, the safety council secretary, has been thinking about the same question, albeit on a much more modest scale. Since the June spray, she’s conducted meticulous roadside surveys of cigarette butts and broken glass, which have yet to spark a fire. The funny thing, she’s concluded, is that if Fortify is working properly, nothing happens. Now that it recently rained an inch or two, she wonders if the application is still working. “You can’t prove a negative,” she jokes. But at least the pale, sticky stuff on the weeds offers some measure of peace of mind. Frommer says she’s planning to do a fresh treatment next summer.

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