INSIGHT: Biotech can rescue chemical innovation

06 March 2009 15:48  [Source: ICIS news]

By Will Beacham

LONDON (ICIS news)--Despite all the noise the chemical industry makes - and money it spends - on innovation, the fact is there have been few big advances in recent years in petrochemical-derived polymers.

From the 1920s through to its peak in the 1940s-70s, the invention and commercialisation of products such as polystyrene (PS), polyvinylchloride (PVC) and low and high density polyethylene (PE) went on to stimulate massive growth in the chemical industry. Not so in the past 10-20 years which have seen – in the main - a focus on re-engineering new grades and applications in existing product areas and the development of catalyst technology.

It looks like innovation around the fossil-fuel, traditional chemical building blocks, has waned, as the easy wins have been achieved. Great advances appear thin on the ground. Add to this the undeniable fact that – long term - fossil fuels are finite and environmentally unsustainable, and the need for a new direction is obvious.

Biotechnology – technology which is derived from biology – is already making big strides in agriculture (“green” biotech) and pharmaceuticals (“red” biotech). But its potential for industry (“white” biotech) – particularly the chemicals industry - is only just becoming apparent.  

According to a recent press briefing by consultants McKinsey and Dutch chemicals group DSM white biotech could be a huge engine for chemicals growth.

McKinsey’s leader of global biosystems practice, Jens Riese, said biotech could create totally new polymers or be used to produce existing ones using a bio-based feedstock.

The feedstocks for developing new bio-based polymers already exist. These include lactic acid and succinic acid. Examples of polymers currently under development or at market include DuPont’s Sorona and polylactic acids.

Riese also suggested petrochemical companies could hedge against fluctuations in oil prices by switching between oil-derived ethylene production and sugar cane to ethanol to ethylene. A McKinsey study suggests that it is cheaper to use the bio-route when oil prices are around $50bbl, assuming a five year average sugar price of $100/tonne.

Of course having the technology is one thing, proving it on a commercial scale and bringing it to market is another. Large investments are required to build and test pilot plants, and to upscale. The logistics of ensuring a reliable and secure supply chain for raw materials is quite another question.

The sort of investments needed to kick-start bio-refineries require state-sponsorship – and preferably tax incentives – to get them off the ground. The US is doing a huge amount, with around $1bn being invested in the establishment of six demonstration biorefineries. Europe lags behind, with an investment in biorefineries of only €100m ($125m), €45m of that from the private sector.

White biotech in chemicals is still in its infancy. Brazil’s Braskem is making progress on an ethanol to ethylene facility, but US Dow is reported to have postponed an ethanol to polyethylene facility in the same country.

In Europe DSM is making good progress with its partner, the French group Roquette on a biorefinery to produce fermented succinic acid derived from starch. Located at Lestrem in France, the demonstration plant is scheduled for start up by the end of 2009. If successful, full scale production should begin within two years.

DSM White Biotechnology vice president Volkert Claassen told reporters this product shows promising applications as a feedstock for polymers used for agricultural film (using butanediol and succinic acid), resins for coatings, solvents and tetra hydro furanes used for Spandex and Elastane.

Fermentation uses 30-40% less energy than conventional methods and absorbs carbon dioxide during the production process, further cutting its carbon footprint.

There is no doubt that biotech-derived chemicals will form an ever increasing proportion of total chemical output. McKinsey projects that white biotech sales in chemicals will grow from €100bn in 2007 to €150bn by 2012 to account for some 9% of projected total chemicals sales.

Longer term, the success of this sector as a stimulant for innovation will depend on a willingness by the chemical-industry to embrace and invest in the technology plus plenty of state incentives.

($1 = €0.80)

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By: Will Beacham
+44 20 8652 3214

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