Consumers Push Plastics Industry to Find Bio-Based Solutions

Source: Stonyfield Farm

Stonyfield Farm yogurt cup made from plant-based Ingeo

When consumers protested with Facebook pages like “I hate the noise the Sun Chips bags make,” chip maker Frito-Lay came up with a quieter biodegradable bag instead of simply scrapping the whole idea. That’s not just because SunChipsconsumers wanted a quieter bag. It’s because they didn’t want the bag to be made out of plastic.

A growing industry of so-called bioplastics — plastics made out of plants like corn or sugarcane, or plastics that simply biodegrade — is rising to meet the need of a small but dedicated group of consumers who want green products.

“Really, it has come down to consumer demand, and consumers being willing to pay a little bit of a premium for products that contain bioplastics,” said Kent Furst, author of a report on the bioplastics industry for The Freedonia Group, a research firm.

Also driving demand are consumer products makers who are willing to pay a premium for materials “to have eco-friendliness, to say their package is packed in bioplastics,” Furst says.

Bioplastics are showing up in all kinds of packages. Procter & Gamble uses sugarcane-based high-density polyethylene, HDPE, made by Braskem in some of its Pantene, Covergirl and MaxFactor brands, while Papermate has a line of pens made with Mirel, a bioplastic made by Metabolix .

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The plant plastics are in autos and the liners of coffee cups. Dorel Industries, a Canadian company that makes baby furniture, developed a line blended with Cereplast’s bio-resins, to meet Wal-Mart’s demands for products with a smaller “carbon footprint,” says Cereplast CEO Frederic Scheer.

“It’s under consumer pressure, client pressure, that Dorel decided to switch,” Scheer says. “It wasn’t a financial incentive.”

The bioplastics industry has been growing at a rate of 35 percent a year since 2008 and is expected to reach $5 billion by 2018, according to Furst’s December 2009 report for the Freedonia Group. Still, that’s a tiny fraction — just 0.1 percent — of total global plastics demand, Furst says.

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Yet the emerging industry continues to draw in big companies, like Dow Chemical , Braskem, and BASF , as well as smaller ones, including Cereplast and Cargill’s NatureWorks, because companies have determined there are enough consumers willing to pay a premium, he says.

Also fueling demand is a rapidly growing segment of the bioplastics industry that creates non-biodegradable plastics and bioplastics that can be blended with fossil-fuel-based resins, allowing them to be processed as if they were regular plastics.

Another reason bioplastics is a growing segment is that the blending process allows plastics manufacturers to “lock in known prices” for resins, says Jeff Osborne, clean-tech analyst at Stifel Nicolaus.

That's because the price of so-called plant "feedstocks" are less volatile than prices of fossil fuels.

Cereplast, based in El Segundo, California, makes two forms of bioplastic resins, one that can be used in products that are composted, and one that can be blended with traditional plastics. NatureWorks, a wholly-owned subsidiary of Cargill, makesIngeo, a bioplastic resin that can be used in both biodegradable and non-biodegradable end products.

“The longer term market opportunity is what Cereplast or NatureWorks is trying to do, from a blended perspective,” Osborne says.

The cost of bioplastics

Bioplastics generally are more expensive to produce than traditional plastics, but the math isn’t simple. It's also important to consider the cost of source materials (fossil fuels vs. plants), the cost of processing a new material in existing facilities, and the amount of resin needed to make a final product.

When oil trades at more than $100 a barrel, as it is now, Cereplast says the costs of its plant-based resins are comparable with petroleum-based resins.

“It’s something that’s a game changer for the bioplastics industry,” says Scheer.

But the price of bioplastics can vary widely depending on the type. Mirel, a bioplastic developed in a joint venture between Metabolix and Archer Daniels Midland , is bio-based and biodegradable (chemically it’s called polyhydroxyalkanoate or PHA). Mirel costs about $2.25 to $2.75 a pound vs. 50 cents to $1 a pound for an oil-based resin, says Osborne at Stifel Nicolaus.

“The segment of the population willing to spend double the traditional price is limited,” Osborne says.

But Steve Davies, director of marketing at NatureWorks, says Ingeo, made from polylactic acid or PLA, is comparable with the most common plastics — polyethylene terephthalate, PET, and polystyrene — in price, and Davies expects Ingeo will be more competitive as NatureWorks takes on more capacity at its 140,000 ton-manufacturing facility in Blair, Nebraska.

Moreoever, NatureWorks said it has found that in some applications customers can use less Ingeo than other resins, ultimately reducing the costs for the customer. “Pound for pound discussions can be misleading,” Davies says.

Groupe Danon's Stonyfield Yogurt unit found NatureWorks’ Ingeo to be a cost-effective choice for its multipack yogurt cups in part because the packaging didn’t break open as much during shipping, he says.

Land for plastics

Another cost factor for bioplastics is land to grow corn and sugarcane, currently the main feedstocks for bioplastics. As demand for bioplastics grows, the need will only become greater, says Furst at Freedonia. Many manufacturers are hoping to use non-edible plants and parts, such as switchgrass or corn husks, and maybe someday algae, but research is in early stages.

Another hurdle is processing. One reason Furst thinks non-biodegradable plastics are likely to take off more quickly than the biodegradable type is that processors and compounders that convert the resins into plastics can more easily deal with non-biodegradable bioplastics.

Chemically, Braskem’s bio-based polyethylene, made out of ethanol derived from sugarcane, is the same as polyethylene made from petroleum, so “there’s no learning curve as far as processing it, compounding it,” Furst says.

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NatureWorks, which only makes bio-based, biodegradable resins, says its strategy has always been to create a product that could be dropped into traditional processing. While that’s not possible yet, some of NatureWorks’ processors are beginning to sell enough PLA to reach the economies of scale necessary to make Ingeo more cost competitive, Davies said.

End of life

One of the biggest issues in the bioplastics industry is what happens to the products after they’re not needed. Biodegradable plastics can, of course, biodegrade, but usually only if composted properly. And as of right now, the U.S. doesn’t have an infrastructure to handle widespread municipal-level composting.

Another solution is to recycle the materials. Products made of Ingeo, for instance, can be returned to lactic acid, the ingredient created when plant sugars are fermented, and then made into a virgin polymer again. Currently, NatureWorks does this with waste at its plant.

Another solution is one both Coca-Cola and Pepsi are after: Creating a 100-percent, bio-based PET plastic bottle that can be recycled along with anything else made of plastic PET (the No. 1 plastic for those who recycle.)

“A lot of people look at environmental sustainability as disruptive technologies, a niche that can’t compete economically,” says Vitters. “We’ve come up with a solution that keeps the infrastructure in place.”

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Coke has already created Plant Bottle, 30 percent of which is made from plants, and now has the technology to get the bottle to 100 percent — as does Pepsi — but the process of bringing the bottle to market remains complex.

“The challenge is getting scaled up, creating supply chains, getting the yield and efficiency so the economics get to where we think we can go forward,” says Rocco Papalia, senior vice president of advanced research at PepsiCo.

Coke hopes to break through these hurdles to have half of all its bottles and cans made from bio-plastics by 2015, and 100 percent by 2020, says Vitters of Coke.

“Innovation isn’t worth much until you can commercialize it and make it available to consumers,” he said.