27 September 2013 11:04 [Source: ICB]
The potential for alternative feedstocks and biobased chemicals in Europe is huge. But, the opportunities do not come without some key challenges that Europe needs to address.
Europe remains an important producer of chemicals on the global stage, but it has faced severe competition in recent years from a wave of lower-cost capacity in the Middle East. Now, another rival has emerged as the US reaps the benefits of large reserves of low-cost shale gas which has radically boosted its competitiveness.
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Tom Crotty, group director of corporate affairs at INEOS agrees. “If Europe misses out on shale gas development, it will be a huge mistake. It is essential,” he says emphatically. The pace of development is not going fast enough for Crotty, but INEOS is already taking steps to secure its own shale gas/ethane source for its cracker in Rafnes, Norway.
Under a 15-year shipping agreement with Denmark’s Evergas, three customised gas carriers are being built in China to transport ethane from Marcus Hook in Pennsylvania, US, to Rafnes. The vessels will enter into service in 2015 when a new ethane storage tank and expanded infrastructure at Rafnes is also expected to be commissioned. Investment is also being considered at the port in Grangemouth, UK, where INEOS operates its other gas cracker, to facilitate imports of US ethane.
European producers have been rationalising capacity to bolster their competitive position, and this will continue for the smaller, less efficient plants. But, the industry has also been considering alternatives to traditional production methods in a bid to address several factors, namely: the ongoing need to reduce emissions and energy use; expanding its use of renewable sources, and the ongoing volatility of oil-based feedstock prices.
BIOMASS PROJECTS COME ONSTREAM
Biomass and biobased feedstocks have been growing in importance and development. INEOS Bio has its own, proprietary, biomass technology and has been running a pilot plant for several years in Wisconsin, US. This year, the company, in partnership with New Plant Energy, has commissioned its first, full-scale commercial plant based on its gasification and fermentation technology which converts biomass from vegetative and wood waste to bio-ethanol and renewable power. Annual output is 24,000 tonnes/year of cellulosic ethanol and 6MW power. Crotty says INEOS Bio is looking to build a second facility in Europe, possibly in the UK.
Lars Hansen, president Europe of Danish industrial biotechnology firm Novozymes, says the availability of sustainably produced biomass in Europe is quite significant. “Studies have shown that if you take around 17% of the sustainable biomass available today, you can produce more than 60% of European gasoline,” Hansen says.
Novozymes is just one of 48 companies that are part of the European Commission’s €3.8bn ($5.0bn) Public Private Partnership (PPP) on biobased industries, proposed in July this year. The initiative – Bridge 2020 (Biobased and Renewable Industries for Development and Growth in Europe) – has been set up to accelerate the commercialisation of bio-based products in Europe. The Commission will invest €1bn, and industry €2.8bn, from 2014 to 2020 to boost market uptake of new biobased products that are made in Europe. It is envisaged that large-scale bio-refineries will be built in Europe as flagship projects, becoming a catalyst for future development work in different bio-residues and paving the way for the next generation of plants.
Hansen welcomes Bridge 2020 but suggests other criteria are also required to support and cherish international investment. These are the future availability of sustainable biomass; a review of the Common Agricultural Policy (CAP) so that it focuses not just on food, but also on biomass for industrial production; and legislation to underpin demand and provide support for bio-products (advanced biofuels, bio-chemicals and bio-materials) in the first steps.
“The realisation that our agricultural potential is much bigger in Europe than has been perceived is crucial. Agriculture is a huge opportunity for rural development and job creation, and to address some of our energy issues. We need to look at agriculture as an opportunity, not a liability, and a mindset change is needed in political and public perception,” states Hansen.
CHALLENGES FOR BIOMASS
Daniele Ferrari, CEO of Italy’s Versalis, says by 2030, a significant proportion of overall EU demand for chemicals, energy, materials and fibres, will be fulfilled using biomass feedstock, although he believes biomass production areas will remain fragmented in Europe. “A key challenge for Europe is to manage mid-term constraints on biomass availability without jeopardising long-term sustainability of supply,” he says.
Versalis, which will be joining Bridge 2020 soon, is growing its own on-purpose biomass to feed its biobased chemical production. The company is building a biobased complex in Sardinia through its Matrica joint venture with Novamont. Matrica products will be available soon through two of the six planned facilities which will be operational by end 2013.
Other partnerships have been formed with Genomatica to produce bio-butadiene, with Yulex for guayule-based natural rubber, and with Pirelli in a joint research project on using guayule-based natural rubber in tyre production.
“Bio-butadiene is a significant example of unlinking the production process of a key building block material from a fossil source,” says Ferrari. He believes too that guayule, a desert shrub that produces latex and is adaptable to the Mediterranean climate, is the answer to Europe’s need to grow a renewable key raw material like natural rubber which today is totally imported.
Much progress is being made on biobased chemicals and one example of successful commercialisation is bio-succinic acid. Both BioAmber and Reverdia, a joint venture between the Dutch material and life sciences company DSM and French starch firm Roquette Freres, have made strategic advances here.
Last December, Reverdia started up the world’s first large-scale plant for sustainable succinic acid (Biosuccinium), which can be used to make polyurethanes (PU), polybutylene succinate (PBS), phthalate-free plasticisers, coating and composite resins, and Spandex/elastane fibres. The facility in Cassano Spinola, Italy, produces about 10,000 tonnes/year and is based on proprietary, low pH technology that converts sugar into succinic acid. According to a study by the Netherlands Copernicus Institute, Reverdia’s yeast-based process generates less waste and impurities than the bacteria-based route.
Reverdia’s general manager, Will van den Tweel, says the Cassano plant is a first step in the company’s strategy towards a larger production facility which is expected to be operational in early 2016. The company is evaluating locations worldwide and should make a selection towards the end of this year. Longer-term, Reverdia anticipates that, by 2020, multiple plants could be built via licensing alliances.
Although the existing market for succinic acid is small (about 30,000 tonnes/year for petrochemical-based product), the market for PBS, a fairly new biodegradable polymer, is expected to grow rapidly. “We are getting close to a tipping point where the market for PBS will grow significantly. Increasing product development is being done and we will get better economies of scale that will contribute to lower prices and accelerate growth,” says van den Tweel.
At present, PBS is 50% biobased and it could reach 100% in the future, once commercially available quantities of bio-butanediol (BDO) are available – PBS is made by reacting succinic acid with BDO. He says various technologies will be available to make bio-BDO in the future, once economies of scale are reached to be competitive with petrochemical-based BDO.
Another potential application for bio-succinic acid is in replacing adipic acid where it is virtually a “near drop-in” in molecule terms. Van den Tweel says this could open up opportunities in polyester polyols used in the foam, footwear, coatings, and automotive industry.
BioAmber’s chief commercial officer, Babette Pettersen, says the market for bio-succinic acid is projected to grow at 25-30% in the next 10 years based on the unique combination of performance, economics and sustainability that it offers across various applications. “Bio-chemicals offer a whole new chemistry set with competitive performance and different functionality. Customers are looking for performance; customers pay for performance; it is not just about being green,” she comments.
A successful initial public offering (IPO) in the US and France raised $80m to fund investment in what will be the world’s largest bio-succinic acid plant. The 30,000 tonne/year facility in Sarnia, Canada, will be mechanically complete in quarter four 2014. The company has been operating a 3,000 tonne/year commercial scale plant in France since 2010.
Some of the money raised will be used to scale up BioAmber’s process for converting succinic acid to BDO and further development of its C6 technology platform. Pettersen believes BioAmber could have commercial-scale production of bio-BDO within the next four years. Toll production of 2,000-4,000 tonne/year bio-BDO will start in the US by early 2015.
Support for bio-chemicals has undoubtedly grown, but, stresses Pettersen: “We need more initiatives to create and build awareness that biobased chemicals offer not only an improved environmental profile, but also differentiated performance and competitive economics, which is better for profit, people and planet.”
Bio-chemicals will be a significant complement to petrochemical-based products. But government policies and incentives, technology and market development, and consumers’ attitude will be major factors in how the biobased chemical industry evolves.
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