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.
Outside experts say these companies can succeed if they play their cards right. Many brand owners see value in bringing biobased chemicals and materials into their supply chains because consumer attitudes are changing, says Anthony Schiavo, an analyst at the market research firm Lux Research. He says concerns about plastic waste and greenhouse gas emissions are making an impact on shopper’s choices.
“We’re no longer living in a world where getting a premium for biobased materials is totally crazy,” Schiavo says. “Common knowledge was adamantly against paying a premium; that is slowly beginning to change.”
It’s too soon to know how much of a premium customers will be willing to pay for the new biobased options. And the magnitude of the sustainability improvement they can deliver is also unclear.
The challenges facing biobased companies can differ based on how they plan to compete, Lux points out in a recent report on biobased chemicals. Companies making biobased versions of existing intermediates, the report says, need to target “niche markets where labeling products as being ‘biobased’ is an asset.”
In contrast, companies making higher-performing alternatives to traditional chemicals and materials need to sell downstream customers on the benefits of switching. Cost may be less of a consideration for such a performance material, but the process of trialing new products can take years and be financially risky. To be successful, Lux advises, firms should target applications where customers, under pressure to make a change, already have a reason to reformulate.
A low-CO2 diaper
Among the many questions that new parents face, one of the most immediate is what type of diapers to buy. Surveys show the first priority for moms is to protect tender bottoms from diaper rash, according to Procter & Gamble, owner of the Pampers and Luvs brands.
The introduction in the 1980s of diapers made with acrylic acid–based superabsorbent polymers decreased incidence of diaper rash by 50% compared to those made only with traditional wood pulp absorbents, P&G says. In addition to boosting safety and comfort, the new designs provided better fit and leak protection and reduced the number of diapers needed.
But these days, consumers’ view that products made from natural ingredients are safer and healthier has trickled down to the diaper industry. In a research paper last year, P&G scientists observed that “diaper design has been evolving alongside increasing demand from consumers for products that are natural or naturally derived as these are perceived by some to be better for infant skin” (Clin. Pediatr. 2019, DOI: 10.1177/0009922819841136).
Common knowledge was adamantly against paying a premium; that is slowly beginning to change.
Anthony Schiavo, analyst, Lux Research
Products deemed more natural are also perceived as more environmentally friendly. Caregivers of infants are intimately aware of how much waste disposable diapers generate—and they may mull the associated climate impact from the carbon dioxide generated in making those diapers. In the US, 3.6 million metric tons of diapers and adult hygiene products are thrown away every year, according to the US Environmental Protection Agency.
In response to changing demands from conscious consumers, diaper companies including P&G, Seventh Generation, and the Honest Company have rolled out brands touting natural, biobased, and ecofriendly attributes. Packages brag about the lack of fragrance, parabens, and chlorine bleach and advertise sustainably sourced cotton and wood pulp. But the core of all these diapers continues to be petrochemical-based superabsorbent polymers.
For well over a decade, large and small companies specializing in chemistry and biotechnology have sought to develop a way to make the raw material for superabsorbent polymers—acrylic acid—from sugar. In petrochemical plants, acrylic acid is made by oxidizing propylene. In 2008, Cargill joined with enzyme experts at Novozymes to produce a completely new acrylic acid raw material, 3-hydroxypropionic acid (3-HP), by fermenting sugar with a modified microbe.
BASF later joined the effort, but the big German company pulled out in 2015, saying its hygiene business could not reach internal targets for commercialization. Dow Chemical and Evonik Industries similarly abandoned projects to make biobased acrylic acid.
But Cargill soldiered on, acquiring the microbial-engineering platform of OPX Biotechnologies, a start-up that had tried to commercialize its own 3-HP-from-sugar pathway.
“When BASF exited, we still had a commitment,” recalls Jill Zullo, Cargill’s vice president for North American bioindustrials. “Acrylic acid is still a very interesting molecule, as an intermediate in a wide variety of applications.” In particular, Zullo says, consumer interest in lower greenhouse gas–intensive diapers stayed on Cargill’s radar. “We like an anchor application to drive a product through.”
Meanwhile, scientists at P&G, motivated to appeal to a new generation of parents, were experimenting with other ways of making acrylic acid from sugar. Rather than invent a microbe to ferment a new starting molecule like 3-HP, they looked to start with lactic acid, which was already being made in high volumes via fermentation.
We like an anchor application to drive a product through.
Jill Zullo, vice president for North America bioindustrials, Cargill
The key was a new catalyst, which a P&G patent describes as a mixture of metal-containing phosphate salts. The technology won P&G the American Chemical Society’s 2020 Award for Affordable Green Chemistry.
In a bit of chemical serendipity, the interests of these two corporate giants converged because Cargill happens to be one of the world’s largest producers of lactic acid. It has made the organic acid from corn for nearly 20 years in Blair, Nebraska, as a raw material for the biodegradable polymer polylactic acid (PLA).
In May, Cargill took out an exclusive license to P&G’s technology. “We’re completely back integrated from corn to dextrose to lactic acid, and now we’re taking the next step to acrylic,” Zullo says.
Lux Research’s Schiavo likes what he sees. “Fundamentally, this route, not being a new fermentation route, does have upside and will be easier to scale up compared to what Cargill has tried in the past,” Schiavo says. “I do somewhat agree that the hard part has been done. The scale up of a fermentation process is generally more difficult compared to a catalytic process.”
Schiavo cautions, and Cargill acknowledges, that it will take several years for biobased acrylic acid to make inroads into the diaper market. Another concern is that, historically, biobased chemicals identical to their petroleum-derived counterparts have struggled to find big markets because they can’t compete on price.
For some consumers, “sustainability is a not trivial angle,” Schiavo says, and they will be willing to pay more for an environmentally friendly product. But to win over such shoppers, he adds, P&G will have to present data to back the claim that its biobased polymers have a lower carbon footprint than conventional ones.
A new performance polymer
While superabsorbent polymers made from biobased acrylic acid will perform exactly like the ones on the market today, some consumer applications need higher-performing materials that do not yet exist.
In March, a little-noticed announcement from Zymergen signaled the first success from the California-based start-up’s cutting-edge approach to discovering and developing new materials. The company and its partner, Sumitomo Chemical, commercialized a high-performance biobased film called Hyaline for use in electronic touch-screen displays. Like the new superabsorbent polymers, Hyaline is made from a sugar-derived monomer, only in this case it is not being disclosed.
The news arguably deserved more attention. After all, these days a new commercially successful polymer comes around only about once in a generation.
In the 1930s through the 1960s, the heyday of synthetic chemistry, scientists developed new plastics at a furious pace, thanks to the handy mix of hydrocarbon raw materials in petroleum. However, invention of new commercial polymers tapered off in the 1970s.
Indeed, it was back in the 1990s that the world got the most recent mass-produced polymer, PLA, and it wasn’t made from petroleum.
Scientists at Zymergen say the assist from biology that delivered PLA was just a preview of things to come. The firm was founded in 2013 on the premise that the modern tools of synthetic biology, machine learning, and lab automation would revolutionize how materials scientists take advantage of the chemical abilities of microbes. Investors flocked to the company, pitching in nearly $575 million in funding.
Hyaline is Zymergen’s first product announcement. The company and Sumitomo not only discovered and produced the monomer but created and manufactured the polymer and the resulting film.
“I’m particularly fond of Hyaline. It’s the first proof point that our grand hypothesis is true,” says Zach Serber, Zymergen’s chief science officer and one of its cofounders. “You can create new materials with performance beyond what was possible before.”
The partners developed the film for use in electronic displays, a major market for Sumitomo. They say it is thinner, more durable, and more optically transparent than the petroleum-based films used now. Device screens are made with about eight layers of film with different functions, so the benefits of a thinner, stronger material really stack up, says Richard Pieters, Zymergen’s president of products.
Electronics companies are busy developing mobile and wearable devices that require thin and lightweight nonglass screens. And users must be able to read the little screens without squinting. What’s more, screen materials can’t interfere with the ability of underlying electronics to capture tricky biometrics like fingerprints. Hyaline can hit all those performance requirements, Pieters says.
And it’s proof that creating a new polymer is no longer a once-in-a-generation struggle, Serber contends. “Our platform moves so fast we can create a novel molecule from a microbe and assess its performance in three months. We can go from unmet market need to product launch in 3–5 years.”
The partners have more performance materials in the pipeline, according to Serber. Separately, Zymergen’s plans also include making new molecules for a range of markets including agriculture, personal care, and plastics recycling.
“We’ve recruited a lot of material scientists, and Zymergen’s most attractive feature is the opportunity to work with novel ingredients,” Serber says. About half of the company’s 750 employees are chemists, materials scientists, or biologists.
“The molecules you generate from biology look quite different than those from petroleum intermediates,” Serber points out. “They might be chiral, asymmetric, have oxygen, or other heteroatoms that come easily to biology but are nearly impossible or expensive compared to synthetic routes. Asymmetry is a feature we play around with a lot, and that is hard to arrive at from petrosynthesis.”
Going from material discovery to product is not easy, however. Zymergen developed a number of films but would not have had a marketable product without Sumitomo’s input and expertise.
“It is a challenge for a California-based, venture capital–backed start-up to get an audience with any established, large company, not to mention a Japanese one,” Serber says. But Zymergen did, and arrived at the meeting with materials in hand to demonstrate its capability for novelty and speed. That was enough to convince Sumitomo to work with the start-up, Serber says.
Zymergen will need many partners like Sumitomo and many products like Hyaline to grow large enough to pay back its investors.
One investor, Mark Cupta, managing director at the climate-focused venture capital firm Prelude Ventures, says his optimism about Zymergen is well founded. “Their current collaborations and partnerships are early examples of the power of the unique data set they have generated and the discovery engine they have developed. That’s a high barrier for anyone else to meet.”
The molecules you generate from biology look quite different than those from petroleum intermediates.
Zach Serber, chief science officer, Zymergen
In contrast to many start-ups he meets with, Cupta says, Zymergen already had customers and significant revenue when it raised its largest round of funding. He says the company’s founders learned from past experience not to try to compete with petrochemicals on price but instead to develop products that add value and solve user problems that petrochemicals can’t. “If they can achieve a fraction of what’s in their current pipeline, that is already a very valuable business,” Cupta says.
And in contrast to other biobased chemical companies, Serber says, Zymergen is committed to marketing finished materials, not chemical intermediates. “We go from fermentation to packaging—the whole works.” That strategy requires investment but also allows the company to charge much higher prices. It is now taking orders for Hyaline and plans to start shipping later this summer, Serber says.
Low-volatility auto coatings
Materials used on surfaces are also an important early market for Lygos, a California-based microbe engineering firm. Founded in 2010, the company makes malonic acid and derivatives from sugar. Lygos and its partners say their cost-efficient ingredients will open new vistas in high-value industrial polymers for coatings and adhesives.
At present, malonic acid is used mainly to produce flavors, fragrances, and pharmaceuticals. It’s an organic acid, like lactic acid, but until now has not been made from sugar. Instead, other producers use “a nasty process,” Lygos CEO Eric Steen says, that starts with chloroacetic acid and requires a reaction with sodium cyanide.
“We don’t make it in the US or Europe,” Steen says about the chemical industry. “Manufacturing has been pushed to places where safety regulations are more lax.”
Lygos’ fermentation route to malonic acid has its origins in Steen’s work at the Joint BioEnergy Institute at the University of California, Berkeley, on organism engineering to produce biofuels. He helped spin off the firm to develop enzymes in yeast, called polyketide synthases, that turn corn sugar into malonic acid.
To make its fermentation bet pay off, Lygos wanted to find a larger market for malonic acid than the current small-scale applications in specialties like fragrances. It linked up with Sirrus Chemistry, a company developing coating and adhesive ingredients based on diethyl malonate, a derivative Lygos also makes. Sirrus has a partnership with BASF, a major supplier to General Motors, to develop improved automotive coatings.
Sirrus was founded in 2009 when the idea of biobased malonates was new. The firm developed its products with traditionally made diethyl malonate as the starting material. But for the past four years, Sirrus and Lygos have been working together to trial the biobased alternative. Sirrus says it hopes to switch when the Lygos process scales up.
In 2017, Sirrus was acquired by Nippon Shokubai and got a new CEO, Kenta Kanaida, from the much larger Japanese firm. Nippon Shokubai is enthusiastic about malonate monomers, Kanaida tells C&EN. The company’s overall strategy is to develop unique monomers and grow a portfolio of derivatives—so Sirrus and its partnership with Lygos was a good fit, he says.
Coatings based on Sirrus’s chemistry contain lower amounts of volatile organic compounds compared to traditional epoxy or urethane coatings made with organic solvents, Kanaida says. In addition, the coatings cure at lower temperatures. As a result, customers such as auto manufacturers will benefit from lower emissions and energy use.
Sirrus is now making samples for customers at its pilot plant in Dublin, Ohio. Last year, it verified that Lygos’s biobased diethyl malonate works just fine, and with no added cost, in the catalytic process to make derivatives such as dihexyl methylene malonate, diethyl methylene malonate, and dicyclohexyl methylene malonate.
Meanwhile, Lygos has raised roughly $50 million from investors and government grants and has partnerships with other firms interested in organic acids, including South Korea’s LG Chem and the coating resin maker Allnex.
Steen says Lygos will scale up biobased malonic acid production to 20,000 metric tons per year by 2024. Like others trying to find a path for biobased offerings, he is confident that the customers Lygos is working with will transform into committed buyers driven by their own needs for greener, high-performing products.
“Ultimately,” Steen says, “the vision is to go beyond building the first facility. We believe there will be facilities across the world when this takes off.”