Drawing from Lux Research’s ongoing Bio-based Materials and Chemicals Intelligence service, this whitepaper covers commercial scale-up, new technologies, and new feedstocks, as well as financing and partnering trends in the evolving bio-based chemicals space. (http://www.greenpowerconferences.com/)

1. Lux Research, Inc. Page 1
The Bio-based Chemical Industry through 2030
By Andrew Soare, Analyst, and Kalib Kersh, Analyst
Lux Research
The bio-based chemicals industry is scaling to commercial levels – driven by corporate partnerships,
private investment, and innovative technologies. As producers scale, competing on cost and
performance are essential to have a shot at taking market share from petroleum derived chemicals.
Drawing from Lux Research’s ongoing Bio-based Materials and Chemicals Intelligence service, this
whitepaper will cover commercial scale-up, new technologies, and new feedstocks, as well as financing
and partnering trends in the evolving bio-based chemicals space.
Ramping scale to compete with conventional chemicals
Competing against petrochemically-sourced chemicals like polyethylene, di-acids, di-ols, and polyesters
produced in the tens to hundreds of millions of tons each, bio-based materials and chemicals have
evolved from lab to commercialization at scale, totaling in excess of 4 million tons of production capacity
per year. To date, the market for bio-based materials and chemicals has been miniscule – less than a
percent of the fossil-derived materials and chemicals they are intended to replace. But several strong
forces – consumer preference for environmentally-friendly and biodegradable products, corporate
commitment to renewable and sustainable brand values, and government mandates – keep driving
development in the space.
Up to now, bio-based material and chemical developers have grappled with issues like quality,
consistency, and cost. With many of these technical hurdles directly addressed thanks to advances in
fields like synthetic biology, developers are turning to business issues, like forming partnerships up and
down the supply chain, as Unilever and Solazyme have done, to name one example. Most importantly
today, the technologies for converting biomass into this wide range of compounds have now matured to
the point that their cost and performance are comparable to incumbent materials for which they can
substitute. Today total bio-based material and chemical capacity stands just below 5 million metric tons,
but will grow to around 8 million metric tons by 2015.

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Graph: Bio-based Material and Chemical Production Capacity Growth Through 2015
Source: Lux Research
While bio-based chemicals with four carbons or more have received most of the limelight - think
biobutanol, succinic acid, butadiene, and isoprene developers, just to name a few chemicals - rock-
bottom natural gas prices have forced bio-PE producers to shift focus elsewhere. The Dow Chemical and
Mistui joint-venture postponed its Brazilian bio-polyethylene (bio-PE) project. It is currently farming
20,000 hectares of sugarcane, with the first harvest expected in 2014, which will still be used to produce
bio-ethanol, but it has delayed the second phase of the project, converting ethanol into bio-PE. Though
the companies blame rising capex and opex and legislative uncertainty for the delay, Dow has also
stated it will be focusing on shale gas projects in the Americas in the near future as the company restarts
ethylene production in Louisiana and builds an additional ethylene plant in Texas due to come online in
2017. Braskem also delayed two bio-PE plants last July with its planned bio-PP also affected. One of the
early innovators in bio-based polyolefins, Braskem first introduced bio-PE in 2010, and planned to co-
locate the plant next to a sugarcane mill and distillery.
Since many of the processes scaling up are new to the world processes, project finance remains an issue,
as financiers are reluctant to invest in unproven, risky new technologies. However, several creative
financing mechanisms are emerging, including bond finance, government loan guarantees, and
corporate investment from downstream partners. Government support is uncertain at best, and
countries like Thailand and Italy are aggressively pursuing bio chemicals as key domestic growth markets
and job creators.

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Capacity growth in Europe
Across Europe, manufacturing capacity for bio-based materials and chemicals climbed from more than
940,000 tons to 1.2 million metric tons from 2006 to 2011, a change of 4.7%. From 2012 to 2016, we
expect capacity to increase 16% to 2.5 million metric tons. The countries in this region usually have
science and engineering expertise, a powerful industrial base, huge demand stimulated by government
mandate, and consumers who prefer renewable. But biomass availability will eventually be limiting, in
turn capping the development of biorefineries across the continent. However, progress on developing
new, highly efficient configurations of biomass production is predicted to make an impact.
With tremendous demand from internal markets, Europe’s capacity expansion will continue until
biomass limits are reached. Proximity to regions with forecasted biomass surplus will lead to
importation of biomass. With long-standing bio-based industries, including forestry and agricultural
value chains, investment from the EU level down to the regional level plays significantly into the
development of the industry.
For instance, Lux Research has noted Germany, Italy, and the Netherlands as hotspots, though
biorefineries and biomass processing facilities are found wherever feedstocks are grown and harvested.
In these countries, some of the largest projects in the region produce cellulose-derived chemicals and
starch-based plastics. More mature companies like Lenzing, founded in 1892, as well as relative upstarts
Novamont, founded in 1990, bring this capacity on-line. Even countries with fewer plants, like France
and Spain, host first-of-a-kind technology producing chemicals like bio-based polyolefins developed by
Global Bioenergies and succinic acid in one instance by a partnership of BASF and Purac.
Substantial markets and a history of bio-based production are not enough to attract technology
developers, as developers are attracted to plentiful sources of affordable olechemical and sugar
feedstocks in North and South America. However, Europe has immense biomass production of its own.
In 2020, 726.2 million metric tons of primary sugar crop biomass is estimated to be available. In
comparision, North America is forecasted to produce 808 million metric tons at the same time.
Relation to biofuels industry
The biofuels sector shares many of the same feedstocks and technologies as the biochemicals sector,
though the biofuels industry is at much larger scale today. Because of volatile feedstock pricing and
inconsistent government support, among other issues, a large share of biofuel production capacity sits
idle today. Recently in the U.S., many corn ethanol producers, such as Valero, had to idle production
facilities as high corn prices prevented the plants from turning a profit. Underutilization has been
rampant in the biodiesel industry in Europe, North America, and South America as well. While these
underutilized biofuel producers are losing money for operators today, they represent a great

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opportunity for retrofit for biochemical producers. At these facilities, feedstock supply is already
available, and much of the process technology can be leveraged in retrofit.
Elevance, for example, is retrofitting underutilized biodiesel assets in the U.S., and is exploring further
relationships in Asia. Elevance produces specialty chemicals from plant oils via a metathesis reaction.
Similarly, Gevo and Butamax are both retrofitting corn ethanol plants to make isobutanol. Other
companies are also exploring bolt-on approaches, like cellulosic bolt on units to increase the feedstock
throughput of existing corn ethanol plants by tapping into corn stover. These various efforts can lower
capital costs of commercial facilities, and therefore be a less risky investor for financiers.
Table – Biofuel production capacity in leading countries
Country Ethanol Capacity Biodiesel Capacity
U.S. 14.9 billion gallons 3.1 billion gallons
Brazil 11.3 billion gallons 1.4 billion gallons
China 1.7 billion gallons 940 million gallons
Indonesia 810 million gallons 1.2 billion gallons
Germany 490 million gallons 1.5 billion gallons
Spain 370 million gallons 1.3 billion gallons
France 520 million gallons 710 million gallons
India 700 million gallons 210 million gallons
Italy 170 million gallons 830 million gallons
Canada 510 million gallons 420 million gallons
Downstream: Emerging technologies and companies likely to play a role through 2030
Today, bio-based materials mainly penetrate packaging, and only at a miniscule level. Renewable is a
“nice-to-have,” but end-users don’t always know how to value it and aren’t willing to pony up for a
premium, when faced with an equivalently-performing alternative. Low carbon is difficult to assess; just
because it’s bio, does not mean it’s better. Metabolix seemed convinced the market would prize its PHA,
but with performance in use similar to incumbents, processing idiosyncrasies, and rumors of
unreasonably high pricing and unlikely economic viability, ADM severed its ties to its JV with Metabolix.
Consistently, bio-based polymers don’t score high enough on a range of key performance metrics.
Natural, disposable, or biodegradable plastics must fight their entrenched reputations as low
performance materials.
The thrust of innovation today is around bio-based routes to a range of platform chemicals. These
platform chemicals – ranging from succinic acid, to propanediol, to terephthalic acid – are converted
into a range of downstream products. The downstream products are identical to their petro-derived
peers, and are therefore called “drop-in” chemicals.

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“Drop-in” plastics and chemicals are familiar and fungible, yet renewable. In contrast to incumbent
bioplastics like PLA, new biomanufacturing technologies enable manufacturers to produce bio-based
materials that are chemically identical to fossil polymers. For example, the much-hyped successor to
ethanol, n-butanol, is a product of both the classic ABE fermentation using Clostridia species and new
synthetic biology-enabled pathways in yeast and Escherichia coli. Cathay Biotechnology, Green Biologics,
Cobalt, and several smaller players produce with the ABE process. Similarly, Solvay is dehydrating
ethanol to ethylene, which could also be used to make polyvinyl chloride (PVC) or polyethylene, as well
as a plethora of other chemicals; for example, a Novozymes / Braskem partnership converts ethanol-
derived ethylene into propylene to produce PP. Dow manufactures epichlorohydrin from the biodiesel
secondary product glycerine; Genencor (now DuPont) and GlycosBio are developing synbio routes to
isoprene; Global Bioenergies also uses synthetic biology to make isobutene, while Gevo and Lanxess use
chemical methods to convert isobutanol to the rubber precursor.
PURAC and Galactic partnerships ferment the bulk of lactic acid from the lowest-cost sugars, such as
corn sugar in the U.S. Much of lactic acid’s capacity has been devoted to production of precursors for
PLA, but this versatile molecule – as is true with all of the platform chemicals and some of their
derivatives, too – transform into a variety of other valuable targets, largely offsetting risk in bringing
production capacity online, since plants have an array of products to feed into rapidly changing markets.
A multitude of platform technologies are emerging, which allows incremental investment in research
and scale-up to yield completely new products. Isoprenoids are the products of secondary metabolism,
with multiples of five carbons going through the metabolic intermediate of farnsyl pyrophosphate (FPP),
with platforms in different strains commercialized by Allylix and Isobionics that produce the same two
products set to disrupt the flavors markets by providing consistent, lower-cost versions of flavoring
favorites with existing supply that is extremely volatile. Amyris takes the FPP central metabolic
intermediate in completely different directions, producing fuels, personal care products, and industrial
lubricants.
Table: Existing and Potential Routes to Bio-based Drop-in Monomers
Monomers Polymers Route Bio-based Feedstock Companies
Acrylic Sodium polyacrylate,
ACM, PVAc
Catalytic conversion of 3-
hydroxypropanic acid
Bio-based 3-
hydroxypropanoic acid
OPX Bio, Myriant
Methyl
methacrylate
PMMA Bio-based acetone and
hydrogen cyanide,
oxidation of isobutylene
Bio-based acetone or
isobutylene; bio-based
isobutyric acid
Mitsubishi Rayon
Acrylonitrile ABS, Styrene –
acrylonitrile,
polyacrylonitrile
Catalytic ammoxidation
of propylene
Bio-based propylene None to date
Butadiene ABS, synthetic
rubber, BR, SBR
Fermentation of sugar,
conversion from BDO
Sugar Genomatica

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Ethylene Polyethylene, EPDM Dehydration of ethanol Bio-based ethanol Dow & Mitsui,
Braskem
Ethylene EVA Dehydration of ethanol Bio-based ethanol None to date
Ethylene glycol PET Catalytic conversion of
sugars
Sugar, glycerin ADM, S2G
BioChem
Isobutene Butylene rubber Dehydration of
isobutanol
Bio-based isobutanol Gevo
Isobutene Butylene rubber Fermentation of sugar Sugar Global
Bioenergies
Isoprene Isoprene rubber Fermentation of sugar Sugar Aemetis,
GlycosBio,
Amyris, Danisco,
Global
Bioenergies,
Propylene Polypropylene Disproportionation of
ethylene
Bio-based ethylene Braskem, Global
Bioenergies
Styrene SBR, PS Fermentation of sugar Sugar University of
Arizona
Terephthalic
acid
PET Oxidation of p-xylene Bio-based p-xylene Toray
Terephthalic
acid
PET Synthesis from muconic
acid
Bio-based muconic
acid
Amyris, Myriant
Tetrafluoroethy
lene
PTFE Fluoronation of ethylene Bio-based ethylene None to date
Vinyl acetate EVA Condensation of ethylene
and acetate
Bio-based ethylene
and/or bio-based
acetate
None to date
Vinyl chloride PVC Chlorination of ethylene Bio-based ethylene Solvay
Source: Lux Research
Sometimes, bio-based really is better. Bio-lubricants are a hot application, lending lubricity, oxidative
stability, and performance at hot and low temperatures that exceed incumbent fossil-derived base oils.
Biosynthetic Technologies (once called LubriGreen), Amyris, Segetis, and Green Earth Technologies are
just a few of the companies leading the push. For dielectric fluids, Solazyme and Dow collaborate, and
bio-based plasticizers have begun to flow, especially to “green” PVC since pressure is mounting to phase
out phthalates. Amyris, Segetis, Dow and Teknor Apex, and Georgia Gulk and Galata Chemical all are
making plasticizers, some especially for PVC. Shrewd developers focus on applications with high
additional value in the use of bio-based, not just on renewability, low-carbon, and bio for the sake of

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bio. Ultimately, bio-based chemicals must compete with their petro-derived counterparts on two things:
cost and performance. The companies that have the best pathways to price and performance
competition continue to raise capital, secure key corporate partnerships, and scale initial production
facilities.
Table: Example private equity / venture capital deals in 2012
Company Amount Date
Elevance $104 million July 2012
BioAmber $30 million February 2012
Joule Unlimited $70 million January 2012
Allylix $18.5 million March 2012
Genomatica $41.5 million August 2012
Proterro $3.5 million December 2012
Upstream: Feedstock issues and opportunities
Today, sugar crops are the largest supplier to the biofuel and biochemical industry – dominated by
sugarcane, corn, and wheat. There are many other sources of demand for sugar crops, food and feed
being the two main ones. We measured the production of cassava, cereal, corn, potatoes, sorghum,
sugar beet, sugar cane, sugar crops, sweet potatoes, and wheat as the key sugar crops for bioproducts.
We compared this to the overall consumption of sugar crops to feed into biofuel and biochemical
capacity. Today, large percentages of Brazil’s sugarcane and the U.S.’s corn are used to make ethanol. In
2010, 16.4% of total sugar crops were used to make fuels and chemicals, and that number will roughly
double to reach a 32.2% share in 2030 in the current market model. Using nearly a third of global sugar
supply for fuel and chemicals will greatly stress supplies, but what’s worse is that in some regions,
demand will completely outstrip supply in 2030 – forcing those countries to turn to imports or new
crops to meet growth goals. Finding the key regions where this stress exists identifies the key locations
for new types of feedstocks.

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Graph: Global Supply vs. Demand for Sugar crops through 2030
Source: Lux Research
Table: Sugar Crops Supply vs. Demand Regionally
2010 2020 2030
Region Demand
(Mln
tons)
Supply
(Mln
tons)
% Demand
(Mln tons)
Supply
(Mln
tons)
% Demand
(Mln
tons)
Supply
(Mln
tons)
% Penetration Scale
Africa 0.4 371.4 0% 23.0 452.7 5% 28.0 551.9 5% Low High
ANZ 7.5 60.1 12% 13.7 73.3 19% 16.0 89.3 18% Low Low
ASEAN 18.3 263.9 7% 73.2 321.7 23% 201.1 392.1 51% High High
Central
Asia
- 29.6 0% - 36.0 0% - 43.9 0% Low Low
East
Asia
0.1 8.7 2% 10.5 10.6 99% 14.1 12.9 109
%
High Low
Europe 33.1 595.7 6% 58.4 726.2 8% 124.9 885.3 14% Low High
Middle
East
- 48.2 0% 0.1 58.7 0% 0.1 71.6 0% Low Low
North
America
145.4 663.0 22% 169.7 808.2 21% 315.6 985.3 32% High High
North
Asia
18.8 581.5 3% 42.4 708.9 6% 78.1 864.1 9% Low High
South
America
428.2 993.7 43% 797.9 1,211.3 66% 1,159.6 1,476.5 79% High High
South
Asia
31.1 550.3 6% 42.2 670.8 6% 56.9 817.7 7% Low High
Source: Lux Research

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As biochemical producers aim to compete on costs, cheaper feedstock may hold that key, possibly
delivered by cellulose-to-sugars processes. As sugar prices explode in key geographies, many bio-based
developers are focusing on acquiring cheaper feedstock, and in particular the range of processes to
convert waste biomass into fermentable sugars. Cellulosics could provide the low-cost feedstock that
could dramatically alter the cost structure of producing bio-based chemicals, since a large fraction of the
cost of production comes from feedstock expense. Companies like Virdia, BlueFire Renewables,
Renmatix, and Beta Renewables are racing to be the low-cost sugars producers for ethanol and bio-
based chemicals.
Today, relatively small amounts of cellulosic material are used to make biofuels. In fact, less than 3
million tons of cellulosic materials are used to make biofuels worldwide. In the biochemicals space,
however, there is a larger demand for cellulosic material to make a range of cellulose fibers and
acetates. 42% of all cellulosic biomass demand, or 3.4 million tons, comes from Europe, where cellulose
based materials are prolific. For example, Lenzing is producing over 500,000 tons per year of cellulose
acetate in Germany. North America consumes just over 1.5 million tons of cellulosic biomass, over 46%
of this coming from woody biomass. ASEAN has the third highest consumption of cellulosic biomass,
consuming 1.3 million metric tons annually.
Though cellulosic feedstocks are often hailed as the saving grace of an alternative fuel industry
struggling to find a cheap and non-competitive feedstock, there are a number of issues with cellulosic
biomass. It can be difficult to aggregate and expensive to convert, and several developers have struggled
to make the economics work through gasification or conversion to sugars and subsequent fermentation.
Other non-biomass options exist as well, tapping into cheap (sometimes free) feedstocks like CO2,
sludge, and municipal waste. LanzaTech, for example, is converting flue gas from steel mills into ethanol,
as companies like Novomer and Bayer attempt to convert CO2 into polymers. Capitalizing on cheap and
available feedstock is the next frontier for the bio-based industry, and will be instrumental as the
industry scales and increases its strain on biomass value chains.
About the Authors
Andrew Soare leads the Alternative Fuels Intelligence service at Lux Research and Kalib Kersh leads the
Bio-based Materials and Chemicals Intelligence service. Lux Research provides strategic advice and
ongoing intelligence for emerging technologies. Leaders in business, finance and government rely on Lux
Research to help them make informed strategic decisions. Through their unique research approach
focused on primary research and their extensive global network, they deliver insight, connections and
competitive advantage to their clients. Visit www.luxresearchinc.com for more information.