Biodegradable Plastics – Are Costly
Green Products Still Relevant During
        an Economic Crisis?

                W.F....
Impact of Economic Crisis



                  Industry Survey on Environmental Issues




                      Global Bi...
Impact of Crisis on the Global Chemicals and
Materials Market
                           Europe
                          ...
Global Response: Massive Government Stimulus


USA                                   UK: £250bn bailout                   ...
What Will Catalyze the Turnaround for
Chemicals and Materials?

In spite of fiscal challenges, credit crunch and contracti...
Perceptions on Environmental Issues

  Q: How do you primarily view the current high profile of environmental/green issues...
Investment in Green Policies / Strategies

Q: Over the next year, my company’s rate of investment in green policies/strate...
Drivers for Environmental Investment

Q: There are many drivers which contribute to a company making environmental investm...
Poll 1



   Q1: In this economic downturn, do you think we should
   continue to invest in green technologies even if the...
Key Drivers for the Biodegradable Plastics Industry


 Driver                             1-3 years   4-7 years   8-12 yea...
Global Volume Forecast by Polymer Type

                         Global Volume Forecast by Polymer Type (2003 - 2013)

   ...
Volume Share by Polymer Type

                        2003                                 2007

          PLA     Starch ...
Existing and Emerging Application Sectors




                     Catering Products                       Healthcare




...
Key Players

                Polymer
 Player                              Existing Markets                   Emerging Mark...
Application Roadmap




                                                                       Medical Applications

     ...
Poll 2


   Q2: What application sectors would you like to have the option of
   using biodegradable plastics? (may choose...
Strategic Recommendations


   Challenges                Recommendations                           Implementation
        ...
Your Feedback is Important to Us


•            What would you like to see from Frost & Sullivan?

•   Growth Forecasts?

...
For Additional Information



  Steve Lee
  Strategic Account Manager
  Chemicals, Materials and Food, Asia Pacific
  (65)...
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Biodegradable Plastics – Are Costly Green Products Still Relevant During An Economic Crisis Mar09

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  • Actually, conventional plastics can be made biodegradable with an inexpensive additive, and the food supply is not reduced with this approach. See: http://earthnurture.com to learn more about this new technology.
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Biodegradable Plastics – Are Costly Green Products Still Relevant During An Economic Crisis Mar09

  1. 1. Biodegradable Plastics – Are Costly Green Products Still Relevant During an Economic Crisis? W.F. Kee Research Analyst Technical Insights March 10, 2009
  2. 2. Impact of Economic Crisis Industry Survey on Environmental Issues Global Biodegradable Plastics Market Focus Points Key Drivers for Growth Existing and Emerging Applications Strategic Recommendations 2
  3. 3. Impact of Crisis on the Global Chemicals and Materials Market Europe Europe Decline in consumer demand resulted in Decline in consumer demand resulted in scaling-down of production and redundancies scaling-down of production and redundancies Russia across all industries. Russia across all industries. Russia is affected by the Construction. automotive and real estate Russia is affected by the Construction. automotive and real estate economic downturn but its industries and the finance and banking economic downturn but its industries and the finance and banking strong position in oil and gas sectors have already been hit, affecting the strong position in oil and gas sectors have already been hit, affecting the reserves suggest a quick chemicals and materials markets reserves suggest a quick chemicals and materials markets comeback comeback USA USA Housing market collapse affected a wide range of Housing market collapse affected a wide range of chemicals and materials markets Japan chemicals and materials markets Japan Significant job losses in the industry and plant Automotive giants are hit hard by Significant job losses in the industry and plant Automotive giants are hit hard by closures (Dow, BASF, Rohm & Haas and others) economic recession and closures (Dow, BASF, Rohm & Haas and others) economic recession and resulting drop in global demand; Decline in consumer demand affects end-market resulting drop in global demand; Decline in consumer demand affects end-market this directly affects all dependent pricing, which in turn led to volume reduction this directly affects all dependent pricing, which in turn led to volume reduction chemicals and materials markets chemicals and materials markets 3
  4. 4. Global Response: Massive Government Stimulus USA UK: £250bn bailout Russia • $787bn American Recovery Germany: $700bn relief package • Support for Russian and Reinvestment Bill Belgium and Switzerland: Capital infusion ruble • $700bn bailout rapid interest ECB: Interest rate cuts • $20bn stimulus package rate cuts France: $50bn stimulus package • $23bn support for top three auto companies; Japan: • Plan to create 2.5 million China • Interest rate cuts jobs by 2011 • Interest rate cuts • 447bn yen stimulus • $586bn stimulus (infrastructure, rural) package India • Interest rate cuts South Korea: • $4bn stimulus package (infrastructure, • Interest rate cuts and exports, textiles) efforts to keep Brazil • Infrastructure development under PDP currency stable (more than $64bn into country’s financial • $11bn stimulus system) package Global Response • Governments infusing capital into financial institutions • Globally coordinated interest rate cuts • IMF (International Monetary Fund) offers bridge loan to meet foreign exchange requirements • Discussions, coordinated efforts (G20 summit) 4
  5. 5. What Will Catalyze the Turnaround for Chemicals and Materials? In spite of fiscal challenges, credit crunch and contraction of consumer markets, there are still a number of drivers creating growth opportunities in the global chemicals and materials markets. Green Chemicals & Materials Logistics and Supply Chain Acquisitions Renewable Sourcing & Feedstock E-commerce Geographic Regions • Green Chemicals and Materials – Biodegradable products, sustainably sourced chemicals, bioenabling chemicals and materials will drive growth in market segments from solar cell chemicals to bioplastics and from detergents to next generation biofuels • Renewable Sourcing and Feedstock – The sourcing and utilization of renewable chemicals and materials can provide a competitive advantage to companies that suffer from price fluctuations in traditional feedstock 5
  6. 6. Perceptions on Environmental Issues Q: How do you primarily view the current high profile of environmental/green issues? Perceptions of Environmental/Green Issues Total Sample (N=593) CEOs (N=248) Other Organization Leaders (N=345) 30% Moral, ethical obligation 29% 30% 30% Critical to growth of company 23% 34% 18% Important to customers 15% 20% 12% Good public relations 12% 12% 9% Irrelevant 19% 3% 1% Don't know/care 2% 1% 0% 10% 20% 30% 40% Note: The Industry Survey on Environmental Issues was presented during Frost & Sullivan’s Growth, Innovation and Leadership (GIL) event in Sept, 2008 6
  7. 7. Investment in Green Policies / Strategies Q: Over the next year, my company’s rate of investment in green policies/strategies will…? Rate of Green Investment (N=593) Increase 67% Remain Unchanged 33% Decrease 0% 0% 20% 40% 60% 80% 7
  8. 8. Drivers for Environmental Investment Q: There are many drivers which contribute to a company making environmental investments, what are the main reasons driving your decision to “go green”? Drivers of Going Green (N=400) Potential competitive advantage 69% Growth opportunity for company 67% Corporate social responsibility 62% Meeting customer expectations/requirements 61% New technology opportunities 59% Ability to enter new markets 54% Greener Image 50% Product development 46% Potential cost savings 38% 61% Leverage existing markets 33% 0% 20% 40% 60% 80% Note: Multiple mention question. Only top ten responses shown. 8
  9. 9. Poll 1 Q1: In this economic downturn, do you think we should continue to invest in green technologies even if the technology is more expensive? A. Yes B. No Please respond A or B on the textbox of your screen. 9
  10. 10. Key Drivers for the Biodegradable Plastics Industry Driver 1-3 years 4-7 years 8-12 years Climate change High High High Trend of going “green” High High High Regulations – EU, Japan High High High Green procurement policies High High High Drive for less dependence on oil High High High Improvements in R&D – impact of Medium High High biotechnology Increased demand from educated Medium High High consumers Eco-labeling Low Medium Medium 10
  11. 11. Global Volume Forecast by Polymer Type Global Volume Forecast by Polymer Type (2003 - 2013) 450 Others 400 PHA 350 Starch-based PLA 300 Volume (kt) 250 200 150 100 50 0 2003 2007 2010 2013 Year 11
  12. 12. Volume Share by Polymer Type 2003 2007 PLA Starch PHA Other PLA Starch PHA Other 8.0% 7.4% 0.8% 1.4% 27.3% 51.8% 39.4% 63.9% 2010 2013 PLA Starch PHA Other PLA Starch PHA Other 5.7% 4.7% 11.2% 18.6% 38.6% 43.3% 39.8% 38.2% 12
  13. 13. Existing and Emerging Application Sectors Catering Products Healthcare Film and Rigid Packaging Automotive Existing and Compostable Waste / Emerging Carrier Bags Applications Electronics Agriculture - mulching film Toys Existing Application Sectors Emerging Application Sectors 13
  14. 14. Key Players Polymer Player Existing Markets Emerging Markets Type Packaging film, agricultural Injection molding, foams, Novamont Starch applications, waste and shopping thermoforming, extrusion, tire bags, catering additive Plastic replacement, automotive, Rodenburg Starch Flower pots, agricultural films electronic packaging Rigid packaging, injection Water flushable applications – Plantic Starch molding, flexible films, barrier water dispersible labels, health & resins hygiene Injection molding, thermoforming, Hybrid resins for automotive, Starch / PLA Cereplast extrusion coating and blow consumer electronics, toys, blend molding applications cosmetic packaging Fiber and nonwovens, films, Apparel, furnishings, carpets, Natureworks PLA water bottles, catering products plastic cards Consumer goods - cosmetic Disposable cutlery, agricultural packaging, razors, brushes, Metabolix PHA film applicators, cell phones, pens and office supplies 14
  15. 15. Application Roadmap Medical Applications Automotive components Application Electronic Applications Toys Rigid and flexible plastic replacement TIMELINE Present 2015 2020 2025 15
  16. 16. Poll 2 Q2: What application sectors would you like to have the option of using biodegradable plastics? (may choose more than one) A. Food packaging B. Carrier / waste bags C. Disposable cutlery D. Textiles E. Toys F. Electronic casings G. Others Please respond A/B/C/D/E/F or G on the textbox of your screen. 16
  17. 17. Strategic Recommendations Challenges Recommendations Implementation Seek cheaper feedstock Improve upon processing economics Integrated process Cost Develop more efficient technologies Process optimization Competitiveness Monitor new technological developments, Genetically modified bacterial especially biotechnology strains Develop new and better technologies Structural modification of polymers Improvement of Improve blending prospects Cross linkage Properties Reinforcement using natural fibers Development of biocomposites or Consider incorporating nanotechnology nanocomposites Indecision Develop products that can act as “drop-in” Regarding replacements Sustainability as a branding tool Positioning of Introduce innovative products that open new Investigate emerging markets markets Products Environmental, Carbon footprint assessment Closed loop process Proper disposal guidelines Life cycle analysis, or similar Health and Cradle to cradle concept Low energy Safety Issues Ensure proper ESH testing Efficient green processes 17
  18. 18. Your Feedback is Important to Us • What would you like to see from Frost & Sullivan? • Growth Forecasts? • Competitive Structure? • Emerging Trends? • Strategic Recommendations? • Other? Please inform us by taking our survey. 18
  19. 19. For Additional Information Steve Lee Strategic Account Manager Chemicals, Materials and Food, Asia Pacific (65) 6890 0914 steve.lee@frost.com 19
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