Infocast in Milan: Peter Nieuwenhuizen on Challenges and Opportunities for Biobased Chemicals

Peter Nieuwenhuizen, until recently an Arthur D Little Strategy Consultant, now Director of Future-Proofing supply chains at Akzo Nobel, presented on the opportunities and challenges for biobased chemicals, particularly for automotive applications.

In recent times new partnerships and investments are announced frequently in the biobased chemicals sector, for example recent high profile partnerships between Dupont and Danisco, Shell and Cosan, BASF and CSM. Numerous parties have made projections for the value of various parts of the bio based economy, for example Cereplast putting the value of the US bioplastics sector at $10bn by 2020. New demonstration facilities have been announced; for example, BioMCN’s new 2nd gen biofuel plant with a 250 million liter annual output and Abgenoas demonstration plant with an output of 2,500 tons a day. 

Biobased chemical industry at the moment is small in relation to the conventional chemical industry, but its market share is growing and this is expected to continue due to preferences for renewable feedstocks. Based on growth patterns from 2003, they predict that biobased chemicals will have grown 40% on 2003 levels by 2013. Annually, they predict growth of between 5% and 10% for the biobased chemicals industry through to 2025; growth that is ahead of the petrochemicals industry.

ADL looked at the impact that Industrial Biotechnology will have on the petrochemical industry and found that a useful way to view the issue is in three platforms; dedicated production, Biofuel derived and in planta. Dedicated production refers to chemicals which are the focus of supply chains, such as fine and specialty chemicals. Examples would be penicillins, amino acids and stereospecific chemical isomers (which are easier to produce with Biotechnology). The most common production methods here revolve around fermentation and biocatalysis. Biofuel derived refers to chemicals produced either as a side product of biofuel production, or non-fuel uses of biofuels as platform chemicals in the chemical industry. For example, using bioethanol in the chemical industry, or producing 1,3 propandiol from glycerol. Finally, the in planta platform refers to producing chemicals in crops and extracting them after harvesting. In the pharmaceutical industry, producing drugs in crop plants by GM is known as pharming, but the concept is applicable in the chemical industry. This is largely theoretical at the present, though a natural example that doesn’t involve GM is production of natural rubber (isoprene).

They predicted the growth of each of these platforms in a number of scenarios; Stuck, Green Bloom, and Electrified. Across these scenarios, the dedicated platform consistently performs well. Stuck refers to a scenario where there are no significant technology breakthroughs and in planta/biofuel derived chemicals don’t take off. This scenario still sees the value of dedicated production increase by approximately 100-150% from 2007 to 2025 with a 7% market share. The Green Bloom scenario is a “best case“ scenario in which biofuel production grows strongly and in planta production becomes commercialized. The value of all three platforms grows by a combined total of approximately 300-700%, with dedicated production and in planta production making up the largest portions. The overall market share of biobased chemicals in this scenario is roughly 17%. The electrified scenario is one in which green technologies other than biobased alternatives proliferate and the price of oil drops. In this scenario, biofuel does not grow, oil remains the preferred feedstock of the industry (so the dedicated platform doesn’t grow a great deal either), however in planta production grows strongly. Due to growth in in planta production, from 2007 to 2025 they predict the industry will grow by 150-400% with a 10% market share.

What they did not consider was the likelihood of each of these scenarios occurring. Given recent trends, growth and regulatory reform in the biofuel industry, and also limited market penetration of other green energy technologies, we might be more likely to see a reality between the Stuck and Green Bloom scenarios rather than the Electrified scenario. From this, we can conclude that operations in the dedicated platform are safer investments for growth, in planta production is more of a variable prospect, but the more investment it receives the more likely it is to yield high returns. The biofuel derived platform depends on the growth of the biofuel industry, which is generally predicted to grow in coming years but by how much relies on a number of factors such as regulation and the price of oil.

ADL also considered the applications of biobased chemicals in the automotive industry, which are potentially broad. Excluding fuel applications of biotech, a large number of components in cars can be made using various biopolymers. From biopolyesters and biopolyols used in the interior furnishings an upholstery to using bio-derived isoprene in the tyres (as Goodyear and Danisco recently partnered to do). There are applications for biopolyamides and PLA in the engine of the car, due to their higher thermal stability and performance. A number of automotive manufacturers such as Toyota, Ford, Honda and Mazda are exploring and applying these biobased alternatives in their new cars, largely in the interiors due to the energy saving use of these materials gives when a life cycle analysis is carried out.