The green blogger is, unfortunately suffering from the flu, but I have been working on this for the past few days and wanted to post this before the year ends.

All in all, it has been a hectic but personally a productive year for the green blogger although this has somewhat impacted the number of contents for the blog as I work on Tecnon OrbiChem’s Bio-Materials newsletter, which is now my first priority. I do hope you would check it out as this contains all the information I know about renewable chemicals with the addition of information on several petrochemicals markets.

As I start on the January 2015 issue of the Bio-Materials newsletter, let us look back and see the big news and events within the renewable chemicals market worldwide.

COMMERCIAL PRODUCTION
2014 is the year of commercial production for cellulosic ethanol and further commercial production and marketing milestones for bio-succinic acid. Myriant, Succinity and Reverdia are all now in commercial bio-succinic acid production while BioAmber expects its own to start in the first half of 2015.

In the cellulosic ethanol space, the big players – POET-DSM, Abengoa Bioenergy, and GranBio have all started their first facilities within weeks of each other. DuPont Industrial Biosciences, meanwhile, noted the delay on the completion of its Iowa cellulosic ethanol facility from this year to the first half of 2015.

However, it has been a difficult year for public companies such as Gevo, Amyris and Solazyme when the companies were unable to hit their production targets. Gevo was finally producing bio-isobutanol but only in the second half of the year after re-configuring their isobutanol/ethanol production to avoid contamination (the bane of working with bugs in fermentation processes). By the end of 2014, Gevo expects to achieve production levels of 50,000-100,000 gal/month of bio-isobutanol and ultimately to its full capacity rate of 2-3 mgpy running at one fermenter, while running at a rate of 18 mgpy of ethanol in the other three fermenters. The company’s focus is to improve batch size while avoiding infections.

In 2015, Gevo expects to make a decision on how much bio-isobutanol will be produced in Luverne, Minn., and whether the company should switch one or more of its ethanol fermenters over to isobutanol. The decision will be based upon the technical capability of the equipment and the potential profit margins of both ethanol and isobutanol.

Amyris seems to be doing much better than Gevo as the company now expects revenue growth in 2015 while Solazyme hit a snag later this year as the company’s stock value was cut in half in November after reporting challenges in ramping up its 100 ktpa algal oil/derivatives production at its Moema, Brazil, facility, which also started this year. During the company’s third quarter earnings conference call, Solazyme announced that it is shifting its production focus to lower-volume, higher-value specialty niche products as it faces volatility in crude oil and vegetable oil markets.

Speaking of the effects of crude oil price cash to renewable chemicals, the blog will analyze more of this later on…

Meanwhile, there are several companies who are planning to start commercial production or already in the middle of constructing commercial-scale facilities:

• Rivertop Renewables to start construction of its first commercial plant
• Verdezyne to build diacids plant in Malaysia
• Green Biologics plans to begin production of biobased n-butanol and acetone in 2016
• Corbion plans to build its first PLA facility
• SK Chemicals is building a facility to produce glycerol- based PDO licensed from METEX’s technology
• Segetis planning a commercial plant in Minnesota
• Elevance constructing its second biorefinery in Natchez and planning a third in Malaysia
• Novamont is building a bio-BDO facility in Italy using Genomatica’s process

This is not  a complete list but it is proof that the renewable chemicals industry is forging ahead with its promise of commercialization despite challenges especially when the investor landscape is not as robust as it once was.  The good news it seems is that with the cooling investor interests in pure-play biofuel companies, renewable chemicals – with its higher-margin, lower volume requirements, is now getting more attractive.

RESTRUCTURING
There are several casualties and buy-outs this year as well. In the US, bioplastic producer Cereplast filed for bankruptcy in February and Kior in November, while in the UK, TMO Renewables filed an insolvency in January.

Some of the recent buy-outs and acquisitions:

• Renewable Energy Group (REG) acquires LS9
• Givaudan acquires Soliance
• Trellis Earth Products buys Cereplast
• Stora Enso acquires Virdia
• Lesaffre acquires Butalco
• Cardia Bioplastics merges with Stellar Films
• Evolva buys Allylix

INVESTMENTS
There had been too many announcements of companies getting grants, investment money or loans and I can’t list them individually. One thing that is noticeable is that there is still an increasing number of large multi-national companies investing in technology companies in the renewable chemicals space.

According to this year’s Industrial Biotech report from investment firm, Jefferies, companies such as BASF, DuPont, DSM, Lanxess, Mitsui, M&G, etc., expect to validate by 2016-2017 a wide range of process economics for biobased chemicals production that they have invested in. The reasons behind these investments range from new market spaces or feedstock differentiation to straightforward defense.

Governments around the world are also seem to be now becoming more receptive towards investing in biorefineries and recognizing the potential contribution of renewable chemicals in the economy. One example, here in the US, is the new Farm Bill that enables production of renewable chemicals and biobased products to be eligible for loan guarantees.  There are also several government programs in the EU that help advance commercialisation of bioplastics and biobased chemicals under the Seventh Framework Programme, e.g. Bio-QED, Bio-TIC, Agrocos, Bugworkers, etc. Malaysia’s Biotech Corp. and Bio-XCell has been busy this year trying to attract companies to build their facilities in the region using palm for feedstock, while bioeconomic development representatives from Canada and Scotland were also in full force in several major industrial biotech events worldwide.

FEEDSTOCK
The major buzz in the renewable chemicals space (as is in the chemicals market in general), is the plunge of crude petroleum oil price where crude futures recently settled at five-year lows with WTI now at around $53/bbl and Brent at around $56/bbl.

The question is, will this new low crude oil price continues to linger in 2015, and if so, how will this affect renewable chemicals investments and developments especially for drop-in chemicals and for bioplastics? It will be difficult to compete with cheaper and plentiful petro-based chemicals. In North America, ethane is king and it will be challenging for renewable chemicals to compete in the ethylene-based chemical space. Although the blog does know two companies who are looking to invests in bio-based ethylene oxide and ethylene glycols  in the US. Cheap crude oil also translates to cheaper naphtha, which translates to cheaper C3s, C4s and aromatics. Developers of bio-based C4s and aromatics, however, are counting on long-term shortage projection for these types of chemicals as more and more naphtha crackers in Europe and Asia are closing down because it is not as competitive as shale gas-based chemicals in North America.

In 2014, the renewable chemicals space in the US also benefitted from cheaper natural gas (as energy source) and cheaper corn costs. Sugar production worldwide has also increased in 2014, and therefore global sugar prices have not been too costly for renewable chemicals and bioplastics producers. In the fats and oils space, global production of soy and palm have also increased this year, which has pressured most vegetable oil prices to go down.

Developments in biomass as well as the use of greenhouse gas emissions (CO, CO2, methane) for potential feedstock has accelerated this year. Novomer and Bayer MaterialScience have now started commercializing polyol products made from CO2. There are also several new companies that the green blog has heard for the first time working in this burgeoning field. Tecnon OrbiChem presented its insight on this field at the 3rd Conference on CO2 as Feedstock for Chemistry and Polymers, which was held in Essen, Germany, early this month.

WHAT’S IN STORE FOR 2015?
It will be another interesting year for renewable chemicals next year as nobody knows if crude petro oil prices will remain below the $50/bbl level or not. A more volatile crude oil price scenario, however, will emphasize the need for a more stable feedstock found in agriculture and even in waste materials.

More commercialization milestones are expected this year and maybe investors will be more patient when it comes to production ramp-ups. The US Congress is now presided by Republicans, and it remains to be seen whether the ag sector will benefit from this shake-up or will the oil/petro industry gain the upper hand?

Will the focus on climate change intensify next year? Will GDP growth in China and Brazil improve in 2015? Will European economy and demand improve? There are so many factors needed to consider (and I’m having a headache already), but one thing is for sure, the renewable chemicals industry is definitely a growing force to consider as governments worldwide are now recognizing its potential.

Let me know your thoughts and predictions for 2015! Happy New Year and wishing you a prosperous 2015!

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