Subsectors | Green Materials & Chemicals

  • The green chemicals / materials (‘bio-based’/ renewable chemicals) industry is driven by climate change & energy security concerns as well as increasing consumer ecological awareness
  • Adoption is affecting sugar, oil/fats & lignin supply chains, but in turn is affected by increasing shale gas availability (feedstock, energy costs) especially in C1-C3
  • Established chemical and agri-food majors are showing strong interest in green chemicals & materials, in-house & externally
  • From a small base (2%-3%) green chemicals are expected to capture a growing share of the ~US$2 trillion chemicals market in coming years; but product not sellable on “green” credentials alone (vs. cost, “functionality” …)
  • Relative economics (and sensitivity to fossil fuel prices) dictate that the adoption of green chemicals is being led by the (smaller) Specialty & Fine chemicals segments, in particular bioplastics (packaging, bottles …)
  • While the EU & US lead in bio-chemicals start- ups, China, Brazil, US and SEA are leading in large-scale bio-chemicals plant construction
  • Despite notable exits, as with other renewables subsectors, green chemicals is currently going through a consolidation phase, given depressed fossil fuel prices, long market adoption cycles, under-performing investments and capital intensity (at plant stage)
  • Interest has shifted from 1st gen to 2nd generation bio-chemicals feedstocks, due principally to concerns on resource utilisation (land, food, water …); 3rd generation initiatives have are slow
  • VC interest is tempered by CapEx intensity (commercial scale-up), with preferences for companies with strategic backing, low capital requirements (e.g. licensing models), drop-in solutions …; as a result, sometimes creative funding approaches are required