Global concerns about the environmental impact from use of petroleum-based feedstock to produce chemicals have fuelled the rise of “green” chemistry. Typically, this includes the deployment of more environmentally friendly production technologies and use of biobased feedstocks to manufacture renewable chemicals, fuels and bioenergy. Use of these green chemicals is already underway with various products already in the markets. In 2011, the U.S. Department of Agriculture (USDA) estimated that there are 20,000 biobased products currently being manufactured in North America. Recent forecasts project the renewable chemicals market to reach $100 billion by 2020. The economic benefits from this sustainable approach is also significant, with potential savings of over $65 billion in the chemical industry that is expected to grow beyond $5 trillion value by 2020. Additionally, the growth of renewable chemicals provides a major opportunity for the chemical industry to reduce its carbon footprint.
While the value proposition is compelling, green chemicals are entering into existing markets dominated by petrochemicals and as such, success is dependent on economic competitiveness, equal or better performance and safety. Emerging companies that build their business model in the hope that customers will pay a “green” premium will be sorely disappointed. Other concerns are based on supply chain stability and the availability of ample supply of quality feedstock while not negatively impacting the food supply. While the production value chain is radically different from petrochemical production, companies still need a broad range of skill sets and tools to establish viable businesses.
Substitution of petrochemicals with these biobased-generated chemicals is spread out over large diverse industries that include personal care, food and beverage, packaging, industrial, pulp and paper, coatings, energy and agriculture. Both established corporations and emerging companies are actively involved in developing green chemistry technologies and already several venture-backed companies have completed IPOs to support major expansion. Many large commercial operations are already in place.
It’s no surprise that there is quite a diverse range of biobased feedstocks that include starch, cellulose, hemicellulose, lignins, oils from fruits, vegetables and algae. The feedstock is converted into platform chemicals that are transformed into key building blocks to produce secondary chemicals. Final products can then be manufactured from these intermediate materials. Sugars are key intermediates and these include sucrose, fructose, xylose, and arabinose. Building block molecules include succinic acid, lactic acid, adipic acid, glucaric acid, hydroxypropionic acid, propanediol, hydroxymethylfurfural and levulinic acid.
Production technologies are generally based on biological catalysis, chemical catalysis, thermochemical processing, wet chemistry and combinations of these techniques in biorefineries. Some biorefineries can be customized to yield combined heat and power. Biological catalysis utilizes synthetic biology tools to alter microbial genetics for optimal enzyme activity to yield specific molecules while chemical catalysis pathways make use of inorganic catalysts to facilitate conversion reactions. Many companies employ high throughput screening methods to accelerate identification of optimal genetic mutations and catalyst formulations. But there are major challenges. Conversion processes are not easy and issues of yields and selectivity make for a daunting task.
Succinic acid has received a lot of attention and many companies are pursuing the production of succinic acid that can be made directly from sugars. Intermediate products, such as, butanediol, tetrahydrofuran, pyrollidone, and esters are generated and can then be converted into everyday products, such as, polyesters, solvents and polyamides. Some groups are working on converting various plant-based oils into products for flavors, fragrances, and personal care.
At Pangaea Ventures, we enjoy an active deal flow with broad coverage of production technologies involving a large range of renewable chemicals. We have a keen interest in capital efficiency business models building on disruptive innovations and are currently evaluating emerging companies developing processes to manufacture sugars, aldehydes, organic acids, and surfactants.