Business cases Case studies on potentially attractive opportunities for bio-based chemicals in Europe Authors: Mladen Crnomarković1, Yamini Panchaksharam1, Jurjen Spekreijse2, Christopher vom Berg3, Ángel Puente3, Raj Chinthapalli3 1) E4tech, United Kingdom 2) BTG Biomass Technology Group B.V., the Netherlands 3) nova-Institute GmbH, Germany This project has received funding from the Bio-Based Industries Joint Undertaking under the European Union's Horizon 2020 research and innovation programme under grant agreement No. 745623. Consortium: Executive Summary This report provides an analysis of nine potentially attractive business opportunities (“sweet spots”) for the European bio-biobased industry. The “sweet spots” have been chosen by analysing the current landscape of bio-based chemicals and those that have reached an advanced development stage, and hence may represent a potential business opportunity for the European chemical industry (more details in an upcoming Deliverable). The selected “sweet spots” cover a range of biogenic feedstocks and represent different categories of bio-based chemicals. Bio-based chemicals categories Feedstock Sugar/Starch Vegetable oil Syngas & other Drop-in Ethylene Methanol Smart drop-in 1,4-Butanediol Dedicated PHA, Lactic acid, PEF, Furfural* Dodecanedioic Acid, Glycerol * C5 sugars The case studies were analysed using an in-depth assessment of the value chains, markets, potential and barriers of nine potentially attractive opportunities compared to their fossil-based equivalents. The analyses show that there are a number of potentially viable opportunities to replace fossil with bio-based chemicals. Cost competitiveness, sustainability impact and advanced functionality are the key factors in determining the displacement of fossil derived chemicals. The focus of future development will be on the production of bio-based chemicals from cheaper and more sustainable feedstock, economically viable commercial scale production and new and innovative products which outperform traditional fossil-based products. The bio-based chemicals business case studies will be useful in informing and illustrating the 2030 target of the European bio-based industry Roadmap and its related opportunities and barriers. 2 Approach to selecting “sweet spots” for business case studies A sweet spot in RoadToBio is defined as an attractive business opportunity. Nine sweet spots were selected by analysing a long Priorities of the chemical industry for list of bio-based chemicals across the product groups: Adhesives, Analysis of the bio- selection of business cases Agrochemicals, Cosmetics, Lubricants, Man-made fibres, based opportunities Criteria for the chemical Improvement in resource efficiency Paints/Coatings/Dyes, Plastics/Polymers, Solvents and Surfactants. Workshop industry Bio-based product has improved functionality The bio-based opportunities have been ranked by evaluating the High margin can be obtained 02.07.17 Del 1.1 Low risk for political or ethical disputes market potential criteria (market volume, market price and Savings in GHG emissions Phone Availability of biomass in the EU market growth) and ease of implementation which is measured Decrease in use of toxic /harmful substances interviews Potential for green premium EU has competitive advantages by the TRLs of bio-based chemicals. HIGH Opportunistic Sweet spots The sweet spots for business cases have then been chosen from the top of the list of the ranked bio-based opportunities by taking Ranking for `market Lower Invest to into consideration: potential´ and `ease Priority improve a. Priorities of the chemical industry when selecting the implementation of implementation´ of Ease LOW business cases LOW HIGH b. Representation of each of the three classifications of bio- Market potential based chemicals (drop-in, smart drop-in, and dedicated chemicals) c. Representation of different product groups In this way, the selected sweet spots will represent a wide variety Creating and ranking 9 business case studies of bio-based chemicals which will provide learnings and inform long list the Roadmap about opportunities and issues of different types of For each kind of bio-based within different product groups. chemical group You will find a detailed description of the approach in the → Sweet spots Workshop 19.06.18 upcoming Deliverable on the methodology of RoadToBio. 3 Contents 1. Introduction………………………………………………………………………………………………………………………… 5 2. Framework for developing business cases……………………………………………………………………………. 6 3. Drop-in chemicals………………………………………………………………………………………………………………… 7 3.1: Ethylene…………………………………………………………………………………………………………………………. 8 3.2: Methanol……………………………………………………………………………………………………………………….. 16 4. Smart drop-in chemicals…………………………………………………………………………………………………….… 26 4.1: Dodecanedioic acid (DDDA)……………………………………………………………………………………………. 27 4.2: 1,4-Butanediol………………………………………………………………………………………………………………… 34 5. Dedicated chemicals……………………………………………………………………………………………………………… 41 5.1: Polyhydroxyalkanoates - PHA………………………………………………………………………………………..… 42 5.2: Polyethylene furanoate - PEF………………………………………………………………………………………….. 49 5.3: Lactic acid…………………………………………………………………………………………………………………….... 59 5.4: Furfural………………………………………………………………………………………………………………………….. 66 5.5: Glycerol………………………………………………………………………………………………………………………….. 73 6. Conclusions…………………………………………………………………………………………………………………………. 81 7. Acronyms……………………………………………………………………………………………………………………………… 82 References 4 1. Introduction 1. About RoadToBio This report was prepared as part of RoadToBio, a European Union funded project to explore the opportunities to increase the share of bio-based chemicals in the European chemicals industry. The project will deliver a roadmap and an action plan to exploit “sweet spots” (potentially attractive business opportunities) for Europe’s chemical industry in the bioeconomy space from present day to 2030.1 The roadmap developed in RoadToBio will be based on an analysis of the most promising opportunities for the chemical industry to increase its bio- based portfolio as well as the technological, commercial, regulatory and public acceptance barriers to these opportunities. The roadmap will include an action plan and engagement guide to support the sustainable growth of the sector. 2. Goal and scope of this report This report presents the business case studies for nine potentially attractive opportunities that were identified during the course of the RoadToBio project. These opportunities are spread over three groups of chemicals (defined on subsequent pages), namely: - Drop-in chemicals - Smart drop-in chemicals - Dedicated chemicals Notes: 1. More information about the project, its goals and plans, and how you can contribute to this roadmap for the chemical industry can be found on www.RoadToBio.eu 5 2. Framework for developing business case studies The main objective of this task is to identify representative opportunities and barriers associated with potentially attractive bio-based chemicals across different product How is the chemical produced groups. The analysis of nine case studies was completed in three stages: and where is it used? Stage 1. Development of case studies: for the nine “sweet spots” key information Market outlook, trends and about the bio-based chemicals value chains, markets (supply & demand) and industry structure? production costs was collected, analysed and benchmarked against the fossil equivalents. What drives the production Stage 2. SWOT analysis: the strength of the opportunity for the nine case studies was costs? illustrated by a SWOT analysis, which was discussed with industry stakeholders at a dedicated workshop organized by the RoadToBio consortium. Assessment of business opportunity of bio-based chemicals. Stage 3. Analysis of potential and barriers: the results of the case studies have been summarized into opportunities and issues. Learnings from these opportunities and issues will provide valuable input for the 2030 RoadToBio roadmap and action plan Results summary and key learnings from business cases. for the European bio-based industry. 6 3. Drop-in chemicals Bio-based drop-in chemicals are bio-based versions of existing petrochemicals that already have established markets. They are chemically identical to existing fossil-based chemicals and are produced using a similar pathway.1 Business case studies for the following drop-in chemicals are presented in this report: 1. Ethylene Notes: 2. Methanol 1. Carus et al. (2017). Bio-based drop-in, smart drop-in and dedicated chemicals https://www.roadtobio.eu/uploads/publications/articles/17- 12-18-RoadToBio-Drop-in-paper.pdf 7 3.1 Ethylene Ethylene or ethene is a hydrocarbon that belongs to the family of alkenes (olefins), being the most simple one (CH2=CH2). Ethylene is one of the basic organic chemicals serving as feedstock for a number of downstream chemical products. With a current global production exceeding 150 million tonnes per year, it is by far the largest bulk chemical used for the production of around half of the plastics. It is used for direct or indirect production of most important synthetic polymers, including high- and low-density polyethylene (HDPE and LDPE), polyvinyl chloride (PVC), polystyrene (PS) and polyethylene terephthalate (PET). Today, almost all ethylene is produced from petroleum derivatives, including naphtha (mostly Europe and Asia), ethane and, to a lesser extent, propane and butane in the Middle East and North America. However, increasing concerns over greenhouse gas (GHG) emissions