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Oil’s push in plastic dims as plant-based challenge grows

January 6, 2018 GMT

Companies that make packaging from plants instead of fossil fuels are starting to challenge the oil industry’s ambition to increase the supply of raw materials for plastics.

Use of bioplastics made from sugar cane, wood and corn will grow at least 50 percent in the next five years, according to the European Bioplastics Association in Berlin. German chemical giant BASF and the Finnish paper maker Stora Enso have stepped into the business to meet demand from the likes of Coca-Cola Co.

“Biochemicals and bioplastics could erode a portion of oil demand, much like recycling can erode overall virgin plastics demand,” said Pieterjan Van Uytvanck, a senior consultant at Wood Mackenzie, an energy research group.. “It will become a larger portion of the supply.”

Plastic packaging has left the world swimming in disused bottles, bags and wraps. There will be more plastic than fish in oceans by 2050, according to the Ellen MacArthur Foundation.

Bioplastics make up about 1 percent of the plastics market, according the industry’s organization in Europe. They are made by processing sugars from plants and tend to have a smaller carbon footprint than their conventional counterparts. Some are also designed to naturally degrade after use. Top producers include Sao Paulo-based Braskem, NatureWorks in the U.S. and Novamont of Italy.

“Attitudes are evolving,” said David Eyton, the head of technology at BP. “The question that faces the petrochemicals industry that has yet to really be answered is, ‘How are people going to deal with some of the environmental impacts of petrochemicals?’ ”

Oil companies make ethylene and other basic building blocks for plastic. They’ve been eyeing that market for growth as electric cars threaten to trim demand for gasoline.

Petrochemicals have taken off in the Houston area in recent years. Oil companies such as Exxon Mobil Corp., Occidental Petroleum Corp. and Chevron Corp. (in a joint venture with Houston refiner Phillips 66) are finishing multibillion-dollar projects along the Gulf Coast.

The International Energy Agency forecasts that plastics should boost petroleum demand.

“Petrochemicals will take center stage in driving oil demand,” IEA analyst Tae-Yoon Kim said. “This is why oil majors are focusing on petrochemicals.”

Company activity

But alternatives are appearing.

BASF set up a joint venture with Avantium Holding last year and is making bottles from cornstarch at a pilot plant. The partners are planning a plant with a capacity of 50,000 tons per year in Belgium. Coca-Cola has sold more than 50 billion so-called PlantBottles.

Stora Enso wants to reinvent itself as a renewable materials company. It sold close to 10 billion euros of paper and cardboard products last year and has a research center in southern Sweden where it’s testing plastic that’s 50 percent wood fiber.

Lego allocated $160 million to research more sustainable materials for its building blocks.

The new technology will have to compete against massive refineries that convert hundreds of thousands of barrels of every day into plastics.

“Alternative raw materials must be competitive,” Stora Enso chief financial officer Seppo Parvi said in an interview in London, anticipating eventual price parity with crude plastics. “I’m confident we’ll be able to do it.”

Demand for bioplastics also needs to grow among retailers and consumers, according to Coke.

“It won’t work if there’s just one big consumer company like a Coca-Cola trying to drive suppliers,” said Ben Jordan, Coke’s head of environmental policy. “You need more demand out there in industry.”

Jordan Blum of the Houston Chronicle contributed.