Price and market trends: Green chemicals to serve niche markets, but challenges remain

08 May 2014 17:26 Source:ICIS Chemical Business

Consumers are driving demand for renewable-based materials but technology and feedstocks will limit its expansion

Green chemicals will serve niche markets, as more companies become willing to use them, but they will remain in the minority compared to chemicals derived from conventional sources, according to several industry figures.

Challenges remain for green chemicals in term of the cost and availability of feedstocks, and the price of biochemicals compared to conventional petrochemicals, according to several players attending the Going Green Chemicals symposium in Groningen, the Netherlands.


 Feedstock constraints will hold back green chemistry expansion

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The forum was set up to discuss the possibilities green chemicals offer for the industry in Europe, and while some players expressed optimism about the sector and how it could revive some areas of activity in the European chemicals industry, the consensus held that the use of green chemicals will remain low for the time being.

“When a chemical company visits us and asks if we could deliver cheaper raw materials in the form of sugars than oil products to produce plastics, for example, I inevitably need to say I couldn’t possibly do that,” Albert Markusse, the CEO of major Dutch sugar producer Suikerunie, told ICIS.

Markusse explains that in the sugar beet they grow, there are many parts which can be used for green chemicals, without necessarily affecting the output of sugar aimed for food provision. He says by using every component left from the sugar beets not used for crystal sugar, the one used for food production, the company is able to produce green gas.

But green chemicals present the risk of increasing food prices, he said. This tension between biomaterials and food production has already been seen with corn and biodiesel, where certain countries moved to produce corn for fuels because it was profitable, consequently leading to price increases for corn-based food products.

“Those products [corn, wheat, maize] have an emotional component associated with them, because their extended use in alimentation, and that is clearly an issue you have to carefully treat. But we don’t have that problem with sugar and we are open to explore possibilities,” says Markusse.

Harm Post, director of Groningen Seaports and director of the symposium, agrees. According to Post, the different uses for bio-based feedstocks remain the “big discussion” the green chemical industry faces. Nevertheless, according to feedback he has received from the public and the chemical companies he deals with, “it is clear the society in general wants to move more to green raw materials.”

He mentions several initiatives taking already place in the Netherlands which encourage the use of green chemicals. He specifically mentions Wood Spirit, by Dutch company BioMCN, which produces biomethanol from waste wood, and says that could be the way forward for the chemical industry.

“There is also a promising market: the general public wants more and more greener products. Companies are talking about biomethanol, green chlorine, etc. and I sense the companies based in Groningen area are quite optimistic about it. That’s a long-term view, it is not going to happen tomorrow, but they see the markets asking for green chemicals in the long-term,” says Post.

Despite Post’s optimism, Markusse is pragmatic in admitting that at present it is unlikely any feedstock could replace oil and gas to produce chemicals, because of its low price compared to green feedstocks.

However, he is also convinced there is a niche market which demands added value products, such as food companies demanding bioplastics for their packaging. Green products are perceived as more fashionable, and there will be people willing to pay extra for it, he says.

“Coca Cola announced that in 2020 they want to have a high percentage of plastic bottles made out of renewable products, and I know a lot of other food companies are willing to work on biodegradable plastics. So I think there is a market which is not really big, but step by step it will grow,” he says.

Markusse also cited the the example of American company Nature Works, a producer of corn-based biodegradable polylactide (PLA) which struggled at its inception in 2003 but is performing positively now. “They are growing, they need more volumes, their customer [base is] growing. That is an investment in the future. It takes a while to convince customers but step by step you are able to achieve it,” he says.

Both Markusse and Post agreed the chemical industry in Europe is in deep trouble, will have to make changes if it is to survive in the long-run. Markusse stipulated that green chemicals could come to revive some chemical sectors which would have otherwise be extinct in a few years.

By Jonathan Lopez