"Green is now embedded in the DNA of every chemical industry's research and development activities"This is what industry analyst Chris Cerimele of Houlihan Lokey noted during the Question and Answer session at the Green Chemistry panel I co-moderated in New York last week.
The panel discussion and webcast hosted by the American Chemical Society's Chemical and Marketing Economics (CM&E) group - NY chapter - was well attended with over 60 audience in total (including in the webcast), according to co-moderator Neil Burns of Neil A. Burns LLC, who also helped organized the event.
Here are some of the interesting points that took my attention during the discussion:
- Bill Barclay, the co-founder of Martek BioSciences (now part of DSM) noted that investors are too impatient when it comes to the development of algae-based biofuel. According to Barclay, there are still some major technical issues needed to be resolved for algae biofuels which could take years and he is worried that there are people/companies that are promising short term returns.
Barclay predicts that there is going to be a negative impact on algae biofuels in the next year or two because of overpromising the technology too fast and too soon.
"On algae photosynthesis, the industry needs to have patience as it will take 10-15 years before that technology comes online for biofuels. They have to figure out how to harvest efficiently as well as deliver carbon dioxide efficiently as feedstock. This is an exciting area but they really need a strong dose of patience here." - Barclay
- Martek BioSciences is actually currently working with BP on algae biofuels since 2009 and said that the companies have already identified several processes in the last 5 years to be able to make cheaper biofuels. Barclay noted that they were able to change the fatty acid profiles to match those currently used for biofuels in Europe.
- Martek is also gearing up to enter the biochemicals market with its successful microalgae technology and noted polymers and surfactants as "potential areas" where their organisms can be very adaptable.
- Jason Anderson, manager of Novomer's Polymers Business Development, noted the biggest barrier for bioplastic in general is still performance. He cited the problems being encountered with using polylactic acid (PLA) resins (case in point is the SunChips bags) as well as in vegetable oil-based polyols (automotive companies can only use a very small portion of it in their overall foam use because of smell issue, not as reactive, etc..)
"We have to replace existing plastics which have been around for decades. It needs to match and exceed all the end product performance characteristics which is a huge challenge. There is also the entire processing infrastructure that the industry needs to adapt to. If you need a different type of extruder or film blower to make your polymer work -- that could be almost a game stopper." - Anderson
- Having a green product to offer is a door opener but the company does not count on getting any sort of premiums especially when competing in the commodity plastics market. Novomer is currently developing its polypropylene carbonate (PPC) made from carbon dioxide and propylene oxide, and polyethylene carbonate (PEC) made from carbon dioxide and ethylene oxide.
- Initial applications focus for the carbon dioxide polymers is in thermosets and eventually in thermoplastics. According to Novomer, application testing from customers is already underway for coatings, composite resins and foams application. Coating resins is especially an attractive application for Novomer's technology given the current issue surrounding bisphenol-A (BPA).
- Houlihan Lokey's Cerimele presented his views on mergers and acquisitions (M&As) and initial public offerings (IPOs) concerning green chemistry technologies. In the M&A area, the value is usually when a particular technology fits into the buyer's business needs (e.g, to solve their regulatory or technical problems such as having water-based or low-VOC solvents products). Development of green products in adhesives and sealants markets is particularly being driven by regulations.
"Right now there are traditional chemical companies who have green products on their portfolio but either it is too expensive or their efficacy is not up to par," said Cerimele.
- On the IPO front, Cerimele noted only five companies (associated with green chemistry) that venture into this area since 2008. Most of them were losing money when they went public (and are selling on a promise) but there had been continuous strong level of enthusiasm and interests from investors.
Cerimele noted industries such as adhesives and sealants, surfactants and preservatives (and other consumer products-oriented chemicals) as areas of opportunities for green chemistry companies to focus on.
"These IPOs generally traded up after they closed. There is significant investor interests in the equity community for these even though they tend to be in an earlier stage."- Cerimele