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Report: biobased chemicals industry reaches tipping point

By Erin Voegele | December 15, 2011

A report recently completed by Lux Research found that the biobased chemicals and materials industry has reached a tipping point, with capacity expected to double in market potential to $19.7 billion in 2016 as global manufacturing capacity increases by 140 percent. According to the report, titled “Global Bio-based Chemical Capacity Springs to Scale,” the global capacity for 17 major biobased materials doubled to 3.8 million tons this year. Over the next five years, capacity is expected to climb to 9.2 million tons.

“Several strong forces—consumer preference, corporate commitment, and government mandates and support—are driving development in this space,” said Kalib Kersh, Lux Research analyst and lead author of the report. “For an industry with the scale of plastics, polymers and chemicals, no business issue is as big as that of capacity. For biobased alternatives to compete with petroleum, they have to match billion-dollar businesses producing at megaton levels.”

To complete the report, Kersh said he collected and compiled information from secondary sources. Primarily, he said, the data was sourced from publically available announcements, presentations, and similar sources. The resulting report included the capacity of 151 identified global facilities and captured their intended operational dates, products and capacities, and added 87 additional facilities for which conservative estimates were made.

The data yielded several key findings. According to Kersh, the data in report shows that the drop-in biochemical sector is poised to explode. In addition, platform biochemicals are also expected to grow substantially over the next five years.

Information released by Lux shows that the report found that the bioplastics sector will continue to grow, but at a slightly slower rate. From 2006 to 2011 bioplastic production grew by 1,500 percent to an aggregate capacity of 470,000 tons and a 10.9 percent share of all biobased materials. The report shows that this level of expansion is expected to moderate and that capacity will grow by about 57 percent from 2011 to 2016. It also shows that cellulose polymers and starch-derived materials will continue to be dominant products in the sector. Lux estimates that their share of total production capacity, however, will slide from 45 percent in 2011 to 21 percent in 2016.  In addition, the report forecasts that there will be more consolidation in the biochemical sector moving forward.

Kersh also noted that different regions of the globe will experience slightly different growth trends. In the Asia-Pacific region, which includes Japan and Korea, he said that growth is expected to occur in drop-in and platform biochemicals that are application specific, while in the Southeast Asian countries, such as Thailand, growth will encompass platform chemicals, derivates, and other chemicals that are driven by access to raw materials. In China, he continued, there is growth in all sectors of the biochemicals market with several small, locally, domestically oriented companies operating in the biochemical space. In Europe, solid growth is expected in all sectors, particularly drop-in and platform biochemicals. Kersh said that the North American sector features a variety of diverse projects. “The really notable thing is that some of the players here have extremely ambitious targets for growth,” he said. Finally, Kersh noted that the South American sector is being primarily driven by the abundance of ethanol and the conversion of ethanol into other products such as ethylene.

 

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