Thomas White Global Investing
Green Reports

March 17, 2010

The Green Report


Bioplastics Industry Emerges
Bioplastics Industry Emerges

It is everywhere. From cellphones to product wrappers to toys and even to something as tiny as the buttons on our clothes, versatile plastic is an integral part of our lives. But there is a dark side. The use of plastics also entails the use of fossil fuels and poses environmental concerns.

So in an age troubled by global warming, depletion in fossil fuels, and a race toward energy independence, there has been a call for a green replacement for the lowly plastic. With this, a new industry has emerged: Bioplastics. Ordering a takeout? Look closely and your plastic cutlery may no longer be made of plastic in the traditional sense. It may have a tiny engraving with the letters PLA inside a recycle symbol, which specifies a bioplastic.

What exactly are bioplastics? Often referred to by their chemical component, polylactic acid or PLA, bioplastics are formulated from 100% natural materials like corn, potato or sugarcane. Derived from renewable sources, the manufacturing of bioplastics consumes 65% less energy than the production of conventional plastic. What’s more, unlike normal plastic, bioplastics are disposable through composting. Bioplastics produce 70% less greenhouse gas emissions than standard plastic, and in a matter of months, they degrade naturally in landfills.

Ordinary plastic, on the other hand, is derived from petroleum and it is estimated that roughly 4% of the world’s oil is used in its manufacture. In fact, about 200,000 barrels of oil per day are poured into the manufacture of plastic packaging in the U.S. alone. Even worse, plastic debris can survive for years, releasing harmful chemicals into the air, affecting humans, animals and the environment. One of the most prominent plastic byproducts, Bisphenol A, is found in plastic bottles and the lining of beverage cans, and the chemical compound is thought to leach its way into food and drinks, a concern particularly for infants.

An industry that produced just 200,000 tons in 2006 and is set to grow to about five million tons by 2015, bioplastics is fast gaining prominence, observes the Germany-based Helmut Kaiser Consultancy. Currently, bioplastics production is concentrated in the U.S., Europe and Japan, with the largest market being Western Europe, which accounts for about 40% of the world’s demand for bioplastics. This region covers approximately 10% to 15% of the total plastics market and has recorded a fast-paced growth of about 8% to 10% per year. But a report by the market research group Freedonia, estimates that there will be a paradigm shift by 2013 when Asia will become the world leader in bioplastics production, clocking an annual growth rate of 39.1%. In the next decade, the global bioplastics market share is expected to jump up to 25% to 30%.

The concept of bioplastics was first conceived in the 1850s by British chemist Alexander Parkes who concocted a plastic from cellulose, derived from wood pulp. But the innovation was clouded over by the emergence of petroleum, which had more flexible properties than plant-based materials. It was only in the last couple of decades that bioplastics saw a revival, as people began to seek green alternatives.

Today, the green appeal of bioplastics is being embraced by an increasing number of brands to enhance product image. According to Andy Sweetman, chairman of the European Bioplastics’ Board, “Coca-Cola does it, Frito-lay does it and so too do Samsung and Hyundai.” Apart from reducing their environmental footprint, corporates are conceding to consumer demand, albeit nascent, as well as shielding themselves from volatile petroleum prices, which affect plastic costs.

But the bioplastics industry is still in its infancy. These plastics alternatives are slowly making a name for themselves in consumer products, but they are yet to prove themselves to be as durable and pliable as good old plastic. Bioplastics currently lack the heat resistance and impact absorbing powers of ordinary plastic. And, as with all new environment technologies, development costs can be very high and companies in the bioplastics industry have yet to achieve economies of scale, a benefit of mass production.

Performance apart, the manufacture of bioplastics is still an energy intensive affair, even though PLA manufacture consumes less energy overall than standard plastic. Behind the transformation of an ear of corn into a fork, lies the hard work of fuel-guzzling tractors and trucks, which translates into secondary energy that is needed indirectly for the creation of a bioplastic.

Even so, the drive continues to develop the cost-effective production of this plastic alter ego and a few manufacturers seem to have made some progress. Plantic Technologies, an Australia based bioplastics manufacturer is one of them. Brendan Morris, CEO of the firm tells BusinessGreen, “We have improved the manufacturing processes so that even with the energy associated with growing the corn included, the full lifecycle energy use is much lower than conventional plastics.”

But anxieties about depleting oil resources coupled with health concerns make people seek non-toxic green solutions. Already, bottles made completely from plants are becoming popular along with bioplastic cutlery. And despite the obstacles that this budding industry must overcome, bioplastics are increasingly becoming a viable option. Plastic, which is derived from the Greek word meaning “fit for molding,” may just get molded into something new.

 

 

 


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