The chemical industry is witnessing a rise in production driven by bio-based chemicals, causing a marginal decrease in overall production of chemicals through synthetic means. Bio-based chemicals account for about four to five percent of the entire chemical sales in the U.S. annually and as estimated by the Biotechnology Innovation Organization (BIO), it is expected to touch the double-figure mark by 2025. Few bio-based chemicals that attract most attention are biomethanol, bioethanol, glycerol, acetone, lactic acid, 1-butanol, and succinic acid. Bio-based production is slowly and steadily gaining importance globally as the entire chemical industry is estimated to account for about 30 percent of the total industrial energy demand worldwide (as estimated by the International Energy Agency) and is responsible for 20 percent of the industrial greenhouse gas emissions. All these factors are creating a huge opportunity for the bio-based chemical industry. Many studies are now being carried out to improve the overall economics and sustainability of biorefineries (facilities producing fuels, power, heat, and chemicals by converting biomass) since, at the end of the day, it all boils down to costs for the end users.
Promising Growth Trajectory
The market for bio-based chemicals looks promising, with an anticipated growth of around 15 percent over the next 10 years. Bio-based chemicals have widespread use in the industrial, pharma, agriculture, cosmetics, and food product sectors. Bulk of the application is in the industrial sector, where many chemicals are produced. Feedstock for bio-based chemicals includes cellulosic feedstock, corn, sugar, etc. Regionally, Asia-Pacific accounts for a significant share of the total market closely followed by Europe and the U.S.
The benefits of bio-based chemicals are enormous ― not only does it minimize the release of toxic products into the environment, but also mitigates the risk of pollution caused due to the disposal of harmful material in the ecosystem. Government initiatives and regulations play a crucial role in the promotion of bio-based products. For instance, the U.S. very recently introduced the Renewable Chemicals Act of 2017, which provides a tax credit of 15 cents per pound to producers producing bio-based content of each renewable chemical.
Declining Production Costs
The production cost of bio-based chemicals is of equal importance since a chemical cannot be assessed only on its green credentials. The bottom line of a manufacturing company should reflect some sign of positivity to sustain in this business. It is estimated that a bio-based product, on an average, costs around 30 to 35 percent more than its synthetic counterpart. In some cases, as high as two or three times. However, factors such as scalability of the producer, techniques used to produce the material and availability of cheap raw material play a key role in the overall cost curve. But, given that the industry itself is at a nascent stage, it is impossible for bio-based products to compete with the petrochemical-based industry, which has perfected its process of production with decades of practice. However, with different methods and techniques, and gradual improvements, the industry is slowly evolving. The overall cost of production is gradually decreasing and is expected to reduce further in the coming years. A few bio-based chemicals that are strongly competing with the traditional synthetic chemicals on the quality front are propylene glycol and pentylene glycol.
The Path Ahead
With the abundance of natural gas in the U.S., and the affordability factor, production of bio-based products would be clearly disadvantaged. This is simply due to the difference in feedstock costs. Methanol’s impending production capacity increase in the U.S. is expected to create problems for bio-based acetic acid as bio-based producers would not be able to compete in any way against the traditional setup.
The industry must start looking at alternative natural sources to produce chemicals and polymers in an environmentally friendly and sustainable way. The hope is that with the gradual improvement in the use of bio-based chemicals, the dependence on its synthetic counterparts decreases. Owing to the recent developments and investments in the biorefinery and biofuel technologies, the bio-based chemical industry is expected to become more competitive. The industry is moving in the path of establishing a global bio-based economy with an aim to contribute to the environment in a more meaningful way than ever.