Despite record-low oil prices, companies say their biobased alternatives are in demand
The world is drowning in oil. Sometimes there’s no place to store even an extra drop. As the cost per barrel struggles to breach $40 and transportation fuels seem to be entering their sunset years, giant oil companies are pushing into chemical manufacturing. For chemical buyers, the outlook is for years of heavy competition and low, low prices.
Companies trying to make and market biobased chemicals tend to struggle when oil prices fall. But now, in the midst of an historic oil surplus and the start up of mega factories making cheap petrochemicals, some firms say biobased ingredients are what their customers want to buy. None aim to compete with petroleum-derived chemicals on price. Instead, they say their supply chain partners require materials that are more sustainable, or higher performing, than incumbent materials. C&EN takes a look at three very different companies: agribusiness giant Cargill, machine-learning-powered Zymergen, and organism-engineering firm Lygos to learn how their offerings could fill important customer needs in the markets of diapers, consumer electronics, and automotive coatings.
In this environment, it is perhaps surprising that any company would bet on chemicals and materials made from sugar, rather than petroleum. Biobased chemical makers did briefly flower a decade ago when oil prices soared. High fliers like BioAmber, KiOR, Metabolix, Solazyme, and ZeaChem attracted hundreds of millions of dollars in investments and government-backed loans on the promise that fuels and chemicals made from biobased feedstocks would be cost competitive. But when oil prices went down again, so did those companies, and much of the rest of the nascent industry with them.
Yet today, agribusiness giant Cargill, machine-learning specialist Zymergen, and Lygos, an organism-engineering firm, say they are commercializing biobased chemicals and materials thanks to strong demand from their partners in the supply chain.
These companies say their offerings stand out because they solve problems for customers—makers of diapers, mobile devices, and automobiles—where petroleum-based chemicals fall short. Those customers are focused not on price but on requirements for sustainability, better performance, or both.