Replacing Materials from Chemicals Industry with Renewables
The author is an analyst of NH Investment & Securities. He can be reached at ys.hwang@nhqv.com. -- Ed.
In order to reduce demand for petroleum-based plastics that result in environmental harm (eg, in the form of excess waste and global warming), ‘white bio’ revitalization policy is being promoted. From 2020, a range of domestic companies have been entering the white bio industry in preparation for the post-Covid-19 landscape
Plans announced for promotion of white bio industry
In early December, the Ministry of Trade, Industry, and Energy (MOTIE) announced its White Bio Industry Revitalization Strategy (prepared by the Bio Industry Innovation Task Force). ‘White bio’ refers to replacing materials from the chemicals industry with renewables such as plants, microorganisms, and enzymes. Petroleum-based plastics are associated with CO2 emitted during production and waste issues after use (eg, microplastics). However, via the use of biodegradable bioplastics (a form of white bio), greenhouse gas and waste-related issues can be addressed, and associated human health-related concerns can be limited as well.
The scope of application of biotechnology is expanding from red bio (health/medical) to green bio (agriculture/food/resources) and white bio (chemicals/energy/cosmetics/food, etc). In the white bio industry, the biofuel arena bloomed first, but we expect the bioplastics and fine/special chemicals fields to take off in the future. As of 2018, the global bioplastics market was sized at US$2.9bn (about 0.5% of the plastics market), and the biosurfactant and enzyme markets of the fine/special chemicals sector were estimated at US$4.4bn and US$8.2bn, respectively.
In the case of petroleum-based plastics (PP, polypropylene), 2.4kg of CO2 is generated per 1kg of product, and decomposition takes tens to hundreds of years, with microplastic-related issues also presenting a concern. Biodegradable bioplastics (PLA, polylacticacid) are eco-friendly alternatives that generate around 1.2kg of CO2 per 1kg of product and decompose rapidly in landfills.
Shift to eco-friendly product mix required
To limit air/marine pollution, the government is planning to support the white bio industry from a range of angles. With the market still in a nascent stage, regulations that could hinder development of the industry are to be revised, and local governments and public institutions are devising plans to review projects and offer financial assistance. Going forward, the government is to strengthen R&D support for the development of high value-added white bio products.
BASF, Evonik, and Natureworks (a biodegradable plastic materials JV of Dow and Cargill) are currently investing in large-scale R&D and related facilities. In Korea, the domestic industry remains in the early stages of formation. Having started development of biodegradable plastics in 2020, SKC, LG Chem, Lotte Chemical, and CJ CheilJedang are in the R&D phase. After Covid-19, the use of eco-friendly plastics is expected to be encouraged in earnest. Moving ahead, it should become increasingly necessary for firms to create white bio-focused product mixes via preemptive technology development.