Bioplastics are starting to take off, driven by sustainability concerns, particularly among major brands. GTForum investigates.
Global Technology Forum
Samuel Fenwick
02/09/2012
Poised for growth
The global bioplastics market is expected to reach revenues of over US$2.8 billion in 2018, according to Ceresana Research, with annual growth rates averaging 17.8%. While Europe was responsible for about 48% of the market in 2010, followed by North America and the Asia-Pacific, the latter is expected to catch up quickly, with South America also predicted to see strong growth, led by large capacity additions in Brazil.
In 2010, starch-based bioplastics accounted for the bulk of demand, with polylactic acid (PLA) in second place. Other bio-based plastics, such as PHA/PHB, cellulose, PBS and fossil fuel-based biodegradable plastics represented less than 17% of global demand. Ceresana expects non-biodegradable plastics made from renewable feedstocks to increase their market share from the 8% seen in 2010 to over 48% by 2018.
A similar study conducted by Lux Research is more bullish, expecting the market in bio-based chemicals and plastics to expand to US$19.7 billion in 2016, with capacity for 17 major bio-based materials rising to 9.2Mta, compared with the 3.8Mta estimated for 2011.
“Several strong forces – consumer preference, corporate commitment, and government mandates and support – are driving development in this space,” says Kalib Kersh, Lux research analyst and lead author of the report.
Lux expects growth in bio-based materials to start to moderate during its forecast period. It also expects the share of cellulose polymers and starch derivatives in total capacity to drop from the 45% seen in 2011 to 21% in 2016. Consolidation in the sector is predicted to take place by 2016, with leaders in the industry buying up technologies and access to feedstock.
Meanwhile, research firm Reportlinker expects the global bioplastics market to be worth US$2.9 billion in 2015. “Global demand for biodegradable and bio-based plastics will more than triple to over 1Mt in 2015…” It notes that biodegradable plastics accounted for 90% of the world’s bioplastics market in 2010, and predicts “excellent growth” for starch-based resins and polylactic acid, “both of which will more than double in demand through 2015”. It expects more rapid demand for PLA, due in part to “advancements in compounding polymerisation technology, as well as its relatively low cost compared to other bioplastics”.
Growing demand from major brands
One of the driving forces behind the push for more renewable and sustainable packaging is that of customer demand. Coca-Cola and PepsiCo are both moving in this direction, with Coca-Cola having recently introduced PlantBottle packaging, which is up to 30% plant-based, with the bioplastic contribution coming from monoethylene glycol (MEG), which the company can now make from renewable feedstock. Coca-Cola states that its ultimate goal is a “carbon-neutral, 100% renewable, responsibly sourced bottle that is fully recyclable”. It is currently exploring with partners the possibility of producing purified terephthalic acid (PTA) from plants.
Coca-Cola has also signed a partner agreement to further co-develop Avantium’s patented YXY technology for producing 100% bioplastic-based bottles using polyethylene furanoate (PEF). The YXY technology converts biomass into “furanics building blocks, such as FDCA (2,5-furandicarboxylic acid), the monomer for the production of PEF”.
In a December 2011 press release, Avantium’s CEO, To van Aken, said: “We have already made bottles with exceptional barrier and thermal properties and our production process fits well with existing supply chains. We plan to initiate commercial production of PEF in about three to four years.”
Avantium has also entered into a partnership with Rhodia, a member of the Solvay group, to jointly develop a range of bio-based polyamides, “targeting a variety of applications…based on Avantium’s YXY technology in the larger polyamide field”.
Meanwhile, PepsiCo has developed a “100% plant-based PET bottle made from fully renewable sources”, and is looking to start pilot product of the new bottle in 2012.
Another company working to reduce the environmental impact of its packaging through increased use of bioplastics is Proctor & Gamble, which has declared a “long-term vision” to have all its products and packages made from “100% renewable and recycled materials”, to increase the sustainability of its business model. P&G is also looking for opportunities to use bio-resin where it makes business and technical sense.
“Our 2020 goals [include] a 25% shift from non-renewable to renewable bio-based materials and a 20% reduction in packaging used per consumer,” a company spokesperson told GTForum.
“We have already started with our recent launch of Pantene Nature Fusion, which uses renewable HDPE sourced from sugar cane. This material is chemically identical to petroleum-sourced HDPE and equally recyclable.”
Meanwhile, food giant Nestlé is also working to increase its use of bio-based plastics. “We constantly look into new bio-based materials to identify potential applications within our product portfolio. Being from renewable sources is a very important positive element, but we also have to verify the environmental impact according to the life cycle analysis assessment of these materials, and in accordance with their specific application,” says a company spokesperson.
Finally, Toyota Motor Corp launched a bio-PET product in January 2011 and it is looking to “increase both the number of vehicle models featuring the new material as well as the amount of vehicle interior area covered by it”, according to its 2011 sustainability report. The bio-PET features conventional monoethylene glycol with a substance derived from sugar cane. Toyota is also seeking to “establish a technology that enables 20% usage of ecological plastics and recycled plastic materials in resin parts by 2015”.
NatureWorks received a US$150 million investment in October from Thailand’s PTT Chemical Public Company Limited. NatureWorks produces a wide range of polylactide biopolymers under the Ingeo brand. Prior to October, NatureWorks was entirely owned by Cargill. The company is looking to build a new plant in Thailand with completion scheduled for 2015 and in the past two years has doubled supply through expansion of its facility at Blair, Nebraska, which has a biopolymer capacity of 140,000tpa. A company spokesman told GTForum that the second plant will have a similar capacity to its first plant.
NatureWorks uses dextrose from field corn as its primary feedstock, but claims it could use sugar from wheat, sugar beets and sugar cane if required. It predicts that in the future, it will be able to use cellulosic raw materials, agricultural wastes and non-food plants in its production processes. Sales of its Ingeo biopolymer have been growing at 20-30% per year for the past several years, according to a company statement.
Last year, Marc Verbruggen, Natureworks CEO and president, testified before the US Senate Agriculture Committee. During his address, he said the carbon footprint of the bioplastic industry’s products is 50% or less than that of traditional plastics, and he stressed the need for “predictable, stable and multi-year” government support. He also noted: “Multiple sugar- or starch-producing countries in southeast Asia, Europe or South America are working hard to attract manufacturing investment that will benefit local farmers by maximising their crop value and while creating high wage jobs,” adding that one southeast Asian country is providing a 15-year tax abatement for investors in the bioplastic industry.
Cereplast, which specialises in bio-based compostable resins and plastics, recently announced the certification of three new resins for in-blown film bags “to better answer the demand of the European market for trash and shopping bags”. The company operates a 36,000tpa facility in the US and is looking to commission a 50,000tpa plant in Italy by 4Q12 with a second phase of a further 50,000tpa to completed on a timescale based on market demand.
The company has seen its revenue grow from US$2.7 million in 2009 to over US$20 million in 3Q11, while growing its core customer base from two to 12. Cereplast is expecting to benefit from the banning of non-biodegradable plastic bags in Italy and the introduction of a tax on the use of plastic bags in Bulgaria, both of which occurred in 2011. It has recently announced a three-year distribution agreement with GAMA Plastik AS, a Turkish firm, which the company views as an important development given that Turkey is “one of the fastest growing plastics markets in the world”.
One recent setback for the sector is Archer Daniels Midland’s (ADM) decision to terminate its Telles joint venture with Metabolix for PHA bioplastics. The effective date of the termination is February 8, according to the transcript of a conference call between Richard Eno, CEO of Metabolix and investors. The 50/50 joint-venture was originally established in July 2006 with the goal of building a 50,000tpa bio-based biodegradable PHA plant in Clinton, Iowa. ADM indicated to Metabolix that it made its decision to terminate the contract on the basis that “projected financial returns were too uncertain as the basis for the decision”. While Metabolix retains pilot manufacturing capabilities it no longer has a commercial-scale facility.
“Given Metabolix’s PHA intellectual property technology portfolio and longtime experience within the industry, we’re confident we’ll be successful in finding a new option for manufacturing and commercialisation. Right now, the company has the industry’s strongest PHA intellectual property technology portfolio and will retain a core bioplastics team to provide continuity with the bioplastics technology and market. In addition, the company plans to continue to focus on the development of renewable industrial chemicals,” Richard Eno, Metabolix’s president and CEO, told GTForum via email.
“Metabolix has been in contact with potential partners who expressed interest – these include raw materials suppliers, manufacturers, industry players and customers. Metabolix will continue to engage in new partnering discussions and evaluate options to launch its PHA bioplastics business with a new model,” he says
As noted in our recent article on Thailand’s petrochemical sector, Thailand has been seeking to develop a bioplastics industry of its own since 2006, and currently offers a number of incentives such as a corporate income tax exemption for up to eight years and an additional 50% cut in corporate income tax for five years. In addition to PTT Chemical’s recent investment in NatureWorks, PTT and Mitsubishi have formed a 50/50 joint-venture, PTT MCC Biochem, to produce biosuccinic acid and polybutylene succinate from sugar, with construction planned for 2012.
The joint-venture will begin with production capacities of 20,000tpa of PBS and 30,000tpa of biosuccinic acid. “China and Thailand plan to open over 100,000tpa of new bioplastics capacity by 2020,” says Reportlinker, which believes that the fastest gains in bioplastics demand through 2015 will be seen for the Asia-Pacific region, “driven by robust growth in Japan and China”.
A research paper presented at the European Association of Environmental and Resource Economists’ 18th annual conference in Rome in 2011, by Siriluk Chiarakorn and Papondhanai Nanthachatchavankul, found that it is economical to produce PLA resin from cassava root and the economics outweigh those of HDPE production, but only if cassava meal is sold as a by-product.
The paper also notes that the greenhouse gas emissions from PLA production are about seven times lower than from PE production, implying that PLA has less environmental impact than HDPE. However, it notes: “Even though the indirect cost of PLA is lower than that of HDPE, its investment cost is approximately three times higher,” suggesting a need for government subsidy.
GTForum sought out Brian Balmer, industry principal, performance materials at Frost & Sullivan, a research firm, for insight into this topic.
When asked if he considered any companies in the sector as being particularly promising, Balmer said: “There are so many companies doing so many different things, but nobody stands out from the crowd. There are a lot of small start-ups. When you look at the technology companies, you’ve got a 50/50 split. Half of them are developing technology and looking to license it to, say, a big plastic producer. The other half are building their own production plants and using their own technology.
“You’ve also got the oil-based plastic companies investing in their own technology or bringing in licensed technology. And there’s a third type – companies that traditionally make food ingredients and things like that, for example ADM. They are big established companies but they are getting more and more into the supply of materials for bioplastics, because of their knowledge of working with sugars and starches.”
The market is being driven by both sustainability and feedstock price concerns, Balmer says, adding that “a lot of people will say that the price argument isn’t a huge one as whenever the oil price goes up that tends to push up the price of corn and various renewable materials as well. So when the oil price goes up, then to some extent bioplastic prices will also go up. But I think it would still be useful to have some flexibility in supply for companies using these monomers.”
When asked if the growth of bioplastics will impact on naphtha and ethylene demand, Balmer said that this would be very long-term.
“When you compare some of the capacities being built – for example, Braskem’s green polyethlyene unit – with the total polyethylene market, it’s a tiny percentage. So, it will be quite a few years before there’s any real impact. There’s still growth in ethylene demand anyway, so a lot of the growth in bio-based ethylene may just take off that growth. For several years there won’t be any need to shut down ethylene plants or reduce capacity, it may just restrict growth for oil-based ethylene,” he says.
Balmer sees land-use concerns as being less of an issue for bioplastics than biofuels, due to the difference in scale between the two industries.
“When you look at all the oil that comes out of a crude oil refinery… the amount of it that actually gets used as a feedstock for plastics versus the amount that gets used as fuel, about 4% of the total goes into chemical feedstocks and 90% gets used as fuel. You can see that the amount of material we would need to produce all the world’s bioplastics is an awful lot less than you’d need to replace all the world’s fuel with biofuel,” he says.
“There have been advances in how you produce succinic acid, ethylene, propylene, butanediol. Some companies are trying to develop much more integrated bio-refineries that produce a wider range of products.”
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