Follow us on LinkedIn - The world is now moving ahead beyond opportunities presented by fossil fuels into a realm that is characterized by emerging renewable energy technologies. With fossil fuels causing irreparable damage to the fragile ecosystem, the transition towards renewable energies is presenting immense opportunities. A fundamental driver in the push to incorporate renewable chemicals is the industrys excessive dependence on crude oil. Rising energy resource depletion and advances in renewable technologies mean today's renewable sources play a much larger role and even a major decline in petrochemical prices will not subdue the impetus already generated. Use of renewable raw materials in production of chemicals, such as, plant based sources, enzymes, vegetable oils, fatty acids and microorganisms, is also attracting immense interest given its potential in reducing the chemical industrys much debated and resented impact on human health and environment. Most players in the market are primarily university spinouts and agricultural companies. The future impact of renewable chemicals on the traditional chemicals industry is forecast to be immense and this current scenario is forecast to change as traditional chemical giants eye the potential in this space with more than a passing interest. In other words, growing opportunities in the renewable chemicals space, will witness an influx of newer players, especially large conventional chemical companies.
The world market for renewable chemicals rebounded in 2010, following a temporary slide in growth in the year 2009, and is expected to witness a robust double-digit growth in the ensuing years. Concerns for reducing greenhouse gas emissions and efforts for reducing dependence on petroleum feedstock have helped the market post gains during the recession period. This is primarily because these factors represent ideologies for a sustainable future, the business case of which extends beyond the temporary weakness in economic climate. The industry has admirably withstood the slowdown in venture capital investment activity, patent activities, other funding and access to capital issues, declines in purchases of expensive renewable chemicals based products, and deferred investments in renewable chemicals manufacturing. Government support and intervention is expected to grow stronger in the upcoming years given the waxing urgency of replacing petroleum-based materials and the need to artificially support bio-based chemicals, which have long been cost disadvantaged, through government subsidies and incentives. Given the governments role in helping start-up renewable chemical companies achieve the first level of economies of scale, and cost competitiveness, opportunities are forecast to continue to emerge despite the prevailing economic situation, given most governments continued and dedicated role in stimulating investments through appropriate pilot plant programs.
Growth in the next few years is expected to be driven by continuous rise in oil/petroleum prices, need for environmentally friendly feedstocks, new technology development induced cost reduction of bio-based chemicals, toxic chemical restrictions (legislated, lobbied/debated, proposed & planned) and growing consumer awareness and acceptance, which remains critical to the final switch to green chemicals. Optimism prevailing over the industrys ability to develop new innovative green chemicals that enable easy substitution with lower transition costs is forecast to benefit the market. In addition, development of drop-in renewable chemicals as chemical intermediaries, which can be directly used in existing chemical formulations/products, is expected to fuel market revenues in the immediate short-term, while in the longer term, next-generation novel chemicals will emerge to drive growth.
On the flip side, although robust future in store for renewable chemicals is undeniable, the market still has to overcome several hurdles on the way to achieve accelerated growth and live up to the hype surrounding renewable products. And this is reflected by the fact that government expenditures on non-renewable subsidies is far greater that the current renewables subsidies. Although, current efforts taken by governments worldwide to decouple non-renewable resource usage from economic growth (GDP) acts as a direct driver for growth of renewable chemicals, the absolute decoupling is still a long way from fruition in most countries across the globe. For instance, in most countries worldwide, non-renewable resource use continues to increase with increasing GDP/capita. This is especially so in developing countries where current focus on environmental footprint, resource flow analysis, sustainability planning frameworks, leave a lot to be desired. This is largely because the challenges of economic development attain more significance than the threat of environmental degradation. Economic activity that hypothetically violates the laws of sustainability continues to be carried out in these countries. Lack of direct government support for renewable chemicals, misplaced subsidies, inadequate tax credits, tax incentives and loan grant programs to provide the much required yet elusive capital leaves a portion of the markets potential in the shadows.
The science of sustainability, and visions of a sustainable society, is still niche to replace the current economic system. In short, renewable chemicals have still not seen the expected and much awaited federal support, which punctures the overly optimistic hype surrounding the market. Against this backdrop, companies are modeling their business structure so as to reduce dependence on government subsidies. This is primarily because the longer-term sustainability of business operations cannot rely exclusively on politically sensitive government policies and the ultimate winners in the market will be products that are inherently cost-effective to produce and not artificially supported by capricious subsidies.
As stated by the new market research report, Europe and United States accounts for a major share of the global Renewable Chemicals market. In the coming years, developing countries such as Asia-Pacific, Middle East, and Latin America are expected to take center stage in the global renewable chemicals market. Countries in these regions, which largely consume chemicals developed from petrochemical feedstock, are expected to offer immense opportunities for renewable chemicals. By end-use application, Renewable Chemicals in Transportation Applications is the largest contributor to worldwide market revenues. Food industry, currently, is showing significant interest in production of basic chemicals from renewable feedstock. Active companies in food industry are tying to convert the advantage they enjoy in terms of wider upstream access into food supply chain including renewable feedstock into an opportunity to manufacture basic chemicals. Global market for Renewable Chemicals in Food Safety Applications is expected to surge at a fastest CAGR of 13.4% over the analysis period.
Major players in the global marketplace include Archer Daniels Midland Company, BASF Group, Bioamber, Cargill Incorporated, NatureWorks LLC, Chevron Corporation, Codexis Inc, Dow Chemical Company, E. I. Dupont De Nemours & Company, Genencor International Inc., Metabolix Inc, Novozymes A/S, and PureVision Technology Inc among others.
The research report titled Renewable Chemicals: A Global Strategic Business Report announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, issues, drivers, company profiles, mergers, acquisitions and other strategic industry activities. The report provides market estimates and projections (US$ Millions) for major geographic markets including the United States, Europe, and Rest of World. End-use applications analyzed include Food Safety, Transportation, Health & Hygiene, and Others.
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