Market Players are Upbeat for the Prospects of Bioplastics
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A slow but steady realization that some resources are finite has been a strong driver for biopolymers, and market players are upbeat about the sector's potential
The bioplastics market is poised for "incredible growth," says Richard Eno, president and CEO of US-based bioscience firm Metabolix. In spite of the company recent troubles, this is a view shared by many players and analysts.
The company believes that growth is being driven by consumer demand for biodegradable materials, combined with municipal initiatives to promote composting and responsible waste management practices, as well as companies' sustainability objectives.
"The sector is set to see an explosion of growth in the next five to seven years," says Ria Harracksingh, energy and chemicals analyst for the US-based consultancy Nexant. The consultancy expects demand for bioplastics to grow at over 20%/year in the next few years.
Today, bioplastics account for less than 1% of total annual global polymers demand of 230m tonnes, according to US consultancy Jim Lunt & Associates.
"Double-digit demand growth rates have been common in this sector post-2005, and even through the recession growth remained strong," says Harracksingh.
Also, bioplastics producers' "emphasis is shifting from 'doing good,' to 'doing well;' that is, [shifting] from social benefits to lower long-term cost and supply stability," she says.
US-based bioplastics manufacturer Cereplast sees bioplastics becoming "a way of life" that will substitute part of the traditional plastics industry. "First for single-use disposables, it is environmentally wrong to use our limited supply of petroleum for a cup or fork that we will use for a few minutes then throw in the trash," says Cereplast chairman and CEO Frederic Scheer. "As the price of oil continues to rise, bioplastics will also become a money saver, which will help force the transition from traditional plastics to a more sustainable option."
According to Switzerland-based Helmut Kaiser Consultancy (HKC), bioplastics have the potential to reduce the petroleum consumption for plastics by 15-20% in 2025.
The numbers will become significant when the large plastics companies switch from traditional polyolefins to bioplastics for some applications, says Scheer. "I think we will be at 10% [of global plastics demand supplied by bioplastics] in the next 10 to 15 years, and that it will take another three to five years after that to get to 25%. It's not just a matter of supply. When bioplastics are cheaper than traditional plastics, they will become more widespread."
Nexant believes the 10% mark may not be reached for a decade, with 25% coming "a relatively shorter period thereafter, as all the kinks in quality and production are expected to have been dealt with," says Harracksingh. "Bioplastics may account for 25% of plastics demand in as little as 15 to 20 years."
Several traditional petrochemical producers - such as INEOS, Dow, Braskem, ExxonMobil, Mitsui, and Mitsubishi - are producing bio-based products or are doing research and development for "green" technology routes, says Nexant's Harracksingh. "With heightened social awareness about environmental concerns, consumers are demanding products that are held to higher standards, and most producers understand the need to evolve with their major client base," she adds.
Because the field is relatively new, there are contrasting views. Cereplast's Scheer feels the greater penetration of bioplastics into the marketplace will be hard because of the entrenchment of traditional petroleum providers, "until the day that the big petroleum suppliers accept their limited supply and rising costs. They need to diversify, and we need to work with them, not against them," he says.
On the other hand, Eno of Metabolix says: "Typically, bioplastics offer different attributes and serve applications that petroleum-based plastics cannot, such as compostable bags and anaerobic digestable parts. Our polyhydroxyalkanoate (PHA) plastic is marine-degradable as well. There is a big enough market for both to coexist for some time."
PHAs are linear polyesters naturally produced by bacterial fermentation of sugar or lipids, which Eno says can replace many petroleum-based plastic materials, from olefins and styrenics to acrylonitrile butadiene styrene (ABS) and polycarbonate (PC). Nexant estimates the total global bioplastics capacity to have been about 700,000 tonnes in 2010, reaching more than 1m tonnes in 2011. Capacity is forecast to be 1.7m tonnes by 2015. "With companies such as Dow, Mitsui and Braskem investing large amounts of capital in bio-polyethylene (PE) and bio-polypropylene (PP), these capacities are forecast to account for much of this growth," notes Harracksingh.
Germany-based consultancy Ceresana Research says the worldwide bioplastics market will reach revenues of more than $2.8bn (€2.1bn) in 2018, with annual growth rates of 17.8%. With a 48% share of global demand, Europe was the largest outlet for bioplastics in 2010, followed by North America and Asia-Pacific. By 2025, says HKC, Europe will have 31%, US 28%, and Asia 32% of the market.
Although Europe and the US are leading the way in research and development, Nexant notes Latin America and Asia are leading in bioplastics production capacity, essentially because of the lower capital expenditure and labor costs found in developing nations.
Additionally, Asia and Latin America - specifically Brazil - also have an advantage in land available to produce the "green" feedstocks, such as sugarcane and grasses, that are used for bioplastics. "It is expected that because of these advantages, Latin America and Asia will continue to lead in production capacity volumes," says Harracksingh.
In 2010, most demand was for starch-based plastics, followed by polylactic acid (PLA), says Ceresana Research. Others, like PHA or poly-3-hydroxybutyrate (PHB), cellulose, polybutylene succinate (PBS), as well as fossil-based biodegradable plastics, accounted for just less than 17% of global demand. PLA can be an alternative for PE, PP, polyethylene terephthalate (PET), ABS, and polystyrene-based products. While PLA demand in North America is set to rise by 12%/year by 2018, it will soar by almost 17%/year in Asia-Pacific.
Biodegradable plastics are dominating the bioplastics market, with a roughly 92% share. Non-biodegradable plastics based on renewable resources are forecast to increase their market share from 8% in 2010 to more than 47% in 2018, says Ceresana Research.
But the PLA substitution potential is limited by some factors, says HKC: while PLA prices fell in the past 10 years, it still costs about 25% more than conventional polymers. That said, Ceresana Research expects rising petroleum costs to allow some bioplastic resins to be able to achieve price parity with conventional plastics by the end of the decade.
Through thick and thin, US-based beverage company Coca-Cola has remained emphatic about its commitment to bioplastics, and the soda maker intends to continue using 100% bio-based PET in its PlantBottle packaging. Coca-Cola was the first company to introduce bottle recycling about 20 years ago, "Coca-Cola's initiative towards bioplastic is not purely cost-driven or capital-driven," said Shell Huang, Coca-Cola's director of packaging research, at a mid-February PLA conference in Orlando, Florida, US. "It is really part of the corporate responsibilities. Somebody needs to lead this [initiative] and the leader sometimes has to pay more."
HKC says bio-PET gives the same performance as fossil fuel-based PET; bio-PET usage does not need additional investments of machinery and processes; and it can be recycled and handled together with conventional PET.
Coca-Cola is expected to continue using bio-PET because, compared with natural gas or petroleum oil feedstocks that have to be shipped long distances, locally sourced biomass feedstocks in certain countries are projected to be competitively priced.
Coca-Cola has already sold 10bn bottled beverages since the start of their PlantBottle PET packaging in 2009. The bio-PET packaging contains 30% sugarcane-based monoethylene glycol (MEG) by weight and 70% petroleum-based purified terephthalic acid (PTA).
Meanwhile, Italy-based PET manufacturer M&G Group plans to enter the bio-PET market as it develops lignocellulosic-based feedstock MEG, paraxylene and other polyester feedstocks. To make bio-MEG, it will use lignocellulosic-based ethanol. M&G is building a 44,000 tonne/year industrial-scale bio-ethanol plant in Crescentino, Italy, set to start by mid-2012.
Additional reporting by Doris De Guzman in New York and Brian Balboa in Houston.
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