November 12, 2020

Bioplastics Supply to See Significant Growth as New Varieties Near Commercial Production

Stratas Advisors

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Although it currently represents only about one percent of the global plastics market, bioplastics are increasingly in the spotlight as companies invest in this fast-growing market. Just like is the case for conventional plastics, bioplastics is a catch-all term for a wide range of polymers, produced from various feedstocks, with different properties and different uses. To structure this discussion, a distinction is made between bio-based plastics and biodegradable plastics. As the name suggests, the latter subcategory consists of plastics that are, under certain circumstances, biodegradable. The former, which currently makes up around 45% of the global bioplastics market, is produced from organic material, but is identical to petrochemical plastics in that it takes a very long time to degrade.

Turning first to bio-based, biodegradable plastics, around 940 KT were produced in 2019. The majority of bio-based plastics produced are currently bio-PE, which is used almost exclusively for use in packaging materials. Second, are PA, or polyamides, which is produced predominantly from castor oil. PA plastics are so-called high-performance plastics and are used to produce more high-end plastics, used in the automotive and electronics industries.

Overview of bio-based, non-biodegradable plastics

Bioplastic type

Predominant Feedstock

Predominant uses

Bio-PE

Sugar

Packaging material

Bio-PET

Sugar

Packaging material (mostly bottles)

PA

Castor oil

High performance plastic, used in automotive, electronics and sports materials

Bio-PP

Oils and fats

Textiles, car parts, furniture, rigid packaging

 

Bio-based, non-biodegradable plastics are currently produced in relatively modest volumes, with production capacity at around 1 MMT in 2019. This subgroup of bioplastics is called a drop-in solution since the resulting products are virtually identical to their fossil alternatives. As a result, companies can seamlessly integrate them into their supply chains without having any concerns about different specifications and resulting quality issues. At the same time, the higher cost of the bio-based versions of the mentioned plastic types makes that wide uptake would seem unlikely – and would have to be driven mostly by ESG motives. Also, although these plastics are produced from organic material, the recycling issue associated with plastics remain, meaning that these plastics would not degrade over time – potentially causing pollution issues.

The Coca Cola Company has been one of the most prominent offtakers of these bioplastics, embodied by the introduction of their “plant bottle” in 2009. This bio-PET bottle contains around 30% of organic material, produced from sugarcane. Coca Cola uses around 3 MMT of plastics per year, against a global plastics consumption of around 360 MMT in 2019 – 7% of Coca Cola’s bottles were bio-PET bottles in 2019.

One plastic type that is expected to show considerable growth in the short term is bio-PP (biopropylene). Production capacity for renewable diesel/HVO is ramping up around the world, driven by government mandates that stimulate demand for HVO, bionaphtha and sustainable aviation fuel (SAF). There is, however, another product stream for which a wider uptake as a renewable transport fuel is less likely: biopropane. Typically, around 3% of the HVO product output is made up of biopropane. In some cases, HVO refineries use this product to fuel the refinery’s operation, some part of it can also be blended and sold as bionaphtha. More recently, however, HVO producers such as Neste and UPM have been seen setting up initiatives with companies such as Borealis, Lyondell Basell and SABIC to produce bio-PP. Borealis mentioned that they used a mass balance approach to account for the bio-content in their PP, which means that very little investment would be needed for them to integrate biopropane in their supply chain. Based on the growing supply of biopropane, and its compatibility with existing petrochemical supply chains, we believe that bio-PP will see strong growth in the short and medium term.

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Source: European Bioplastics Association

Although plastics such as bio-PE and bio-PP are easy to produce and fit into existing supply chains, it does not solve one of the main issues associated with plastics: degradability. The holy grail for many people in the plastics and wider chemicals industry has been to find a polymer that is bio-based, affordable and biodegradable. The last two issues have proven most difficult to tackle. Perhaps the most known plastics type in this subcategory is PLA (polylactic acid), which is produced predominantly from sugar crops. Multinational companies such as Cargill (NatureWorks, JV with PTT) and Total (Total Corbion) have invested in commercial-scale PLA production facilities. PLA’s chemical properties are slightly suboptimal, with brittleness and low thermal stability often mentioned as factors that make it unsuitable for certain uses. However, its properties are perfect for 3D printing, where it is currently the most widely used polymer. Total Corbion recently announced a €200 million investment in an additional 100 KT/y of PLA production capacity, to be situated on the site of Total’s current Grandpuits refinery in France. Furthermore, Belgian Galactic Group recently opened a 30 KT/y PLA production facility in Anhui, China – with further plans to increase the capacity to 180 KT/y currently under discussion.

Overview of main bio-based biodegradable plastics types:

Bioplastic type

Predominant Feedstock

Predominant uses

PLA

Sugar

Packaging material

PEF

Sugar

Packaging material (mostly bottles)

PHA

Oils and fats

Packaging material

PLA is marketed as a plastic that is compostable and therefore less taxing on the environment. Although this is not completely untrue, it has to be mentioned that PLA can only be composted in industrial facilities, under circumstances that are very hard to imitate in a natural environment. Meaning that infrastructure investment is needed to be able to compost PLA, which also would need to be separated from other plastic types.

Other bio-based, bio-degradable plastic types that are nearing commercial-scale production are PHA and PEF. PEF is currently being developed by a Shell-spinoff: Avantium. According to Avantium, PEF is a bioplastic that is produced from sugars, and has chemical properties that allow it to resist high temperatures, while also having good barrier performance. The latter would mean, among other things, that products packed in PEF would have a longer shelf life. Avantium signed a deal with BASF in 2016, aiming to build a commercial PEF facility in Antwerp, Belgium. Amid a low oil-price environment, BASF ultimately pulled out. In June 2020, however, Avantium announced new plans to build a 5 KT/y biochemicals facility in Delfzijl, Netherlands. This facility would produce the building blocks needed to ultimately make PEF.

Finally, PHA is a group of plastics, which is currently most prominently promoted by Danimer Scientific, a US company set to merge with a SPAC called Live Oak Acquisition Corp. Danimer is currently producing its PHA (polyhydroxyalkanoates) at a commercial scale in Winchester, Kentucky. The company produces its PHA resins from vegetable oils and claims that its bioplastics can degrade in a marine environment in six months. Danimer is currently producing its PHA from canola oil, but claims that other vegetable oils can also be used in the production process. Recent research by the University of Queensland has shown that a PHA bottle could actually take between 1.5 and 3.5 years to biodegrade in a marine environment, which is longer than the six months claimed by Danimer – but still a lot shorter than fossil plastics.

With such a wide range of bioplastics expected to hit the market, it is clear that there is no silver bullet when it comes to decarbonizing the plastics value chain. As pressure on large plastic consuming companies such as PepsiCo, Nestle and Coca Cola increases, they will be more likely to turn to some of the mentioned bioplastics as alternatives to the fossil plastics they currently use. Based on this trend, bioplastics production capacity that is currently proposed or under construction should be met with sufficient demand. From a recycling perspective, however, none of these bioplastics fully solves the pollution problems that are caused by plastics, and the real solution will need to come from reducing the ubiquity of single-use plastics. At the moment, China, the EU, California, NY, Malaysia and Hawaii have all announced plans to ban single-use plastics, although the scopes and timelines of these bans differ. Bioplastics can supplement this movement, providing consumers with greener alternatives in plastics categories where less consumption is not an option.   


This report is from our Renewable & Alternative Fuels offerings.

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