Not All Chemicals Are Created Equal™

Here’s another sign of the times and the mounting trend. Coming on the heels of our mid-February announcement that we supplied commercial quantities of bio-succinic acid to Oxea for use in the production of their bio-based, phthalate-free plasticizers, another major specialty chemicals company has announced its intended use of our solution for their Quinacridone pigment. The company is Clariant, a multibillion dollar, publicly-traded global entity with more than 21,000 employees worldwide and headquartered in Muttenz, Switzerland.

The news release about this decision from Clariant is here. Of special note, it includes this all-important quote from Marco Cenisio, Senior Vice President and Head of Clariant’s Business Unit Pigments: “Optimizing our own pigment production processes to incorporate renewable raw materials is part of our strategy to help address global challenges and megatrends. We are very excited about what this achievement means both in terms of improving the ecological footprint of our products and in helping our customers to be more sustainable.” 

Sound familiar? Watch this space for more news in the coming quarters about more major organizations moving toward renewable raw materials.

You’ve certainly heard the old adage that real estate is all about location, location, location. Well, in our industry, where long-held doubts have been held about whether or not the players can reach critical mass at the commercial level, it is all about capacity, capacity, capacity. And now researchers calculate that capacity levels projected through 2017 are building fast. While many may not have noticed, the separate, fledgling, and piecemeal efforts of many have set the pace for a doubling of bio-based materials and chemicals to 13.2M tons by 2017. That’s according to Lux Research and this article in Power Engineering. In the article, Julia Allen, Lux Research analyst and the lead author of a report titled, “Cultivating Capacity for Bio-based Materials and Chemicals through 2017,” is quoted saying: “The basic science of bio-based materials and chemicals has advanced to the point that dozens of chemicals can now be produced from multiple feedstocks, at costs that are competitive with petroleum…”

The news is even better for companies in North America. Lux predicts our region will become the global leader in capacity by 2017. Hey, that’s only three years from now.

If you’re familiar with our news releases, you know they are straightforward. But here, where interpretation is expected, permit me to add some meaningful perspective about today’s news which is that we are supplying commercial quantities of bio-succinic acid to Oxea for use in their production of bio-based, phthalate-free plasticizers.

Number one: Oxea is owned by Oman Oil Company S.A.O.C. For anyone who may still be doubtful that mainstream petroleum companies understand the biochemical opportunity, today’s news validates the trend that traditional mainstream oil companies see the green alternative market potential. And Oxea is not a small organization. They have 1,400 employees worldwide.

Two:  In our news release as well as at this Oxea site, there is strong validation that Myriant’s bio-succinic acid is a high performance solution. For years, in the bio-based products industry, some have had their doubts about green alternative performance capabilities. Oxea wouldn’t use a green alternative if it were not up to performance standards.

The third and final point is this: We’ve been saying all along that consumers will generate a pull-through for green solutions and that suppliers will find this difficult to ignore or resist. Oxea obviously isn’t in the business of doing either. From their website on this topic (link above):  Facing the rising health and image concerns of consumers, the industry is calling for safe, high-per-forming and affordable plasticizers to meet the market requirements.

At long last, a Farm Bill has passed both houses of Congress and has been signed by the President. It has been a long and grueling process, but the outcome for us and our colleagues in the green chemicals industry is tremendous. The new legislation includes $881m in mandatory spending on energy programs; important legislative language ensuring parity for renewable chemicals; new funding for the Biomass Crop Assistance Program and Biomass R&D Initiative, and a pathway to crop insurance options for purpose-grown energy crops.

Many, many people – too many to mention here — deserve credit for their contributions to this outcome. But one organization stands out for its unflagging work to foster a better understanding among legislators about the pivotal role of biochemicals and the impact their development can have on our economy, our environment, and people. That would be BIO, the world’s largest trade association representing biotechnology companies, academic institutions, state biotechnology centers and related organizations across 34 nations.

In short, passage of the Farm Bill represents the successful culmination of BIO’s strenuous, two-year effort to reauthorize the energy title with mandatory funding and parity for renewable chemicals.  BIO helped found and form a coalition to work on this legislation called the Agriculture Energy Coalition and worked to garner the support of Senator Stabenow and other key Senators in support of funding an Energy Title that benefits both renewable fuels and chemicals. They used every aspect of BIO advocacy capabilities including communications, and state level activities to maintain support and interest in the legislation. The organisation is to be commended and congratulated.

It ain’t over ‘til it’s over, as they say, but on January 27, the House and Senate Agriculture Committees released the long-awaited conference report of the 2014 Farm Bill and it provides $881 million in mandatory funding for the Energy Title

IX programs. This means, for the very first time, it contains significant language for “renewable chemicals,” therefore providing tremendous benefits for our renewable chemical innovative technologies, domestic manufacturing, and creating jobs in U.S.!

A vote in favor is still needed from the full House and Senate. This hasn’t always been such an automatic thing. As you know, House and Senate leadership can simply stall any bill from being voted upon in either chamber, or both. But reports are that both House Speaker John Boehner and Senate Majority Leader Harry Reid are signaling that they plan to bring the legislation up for a vote in the next few weeks, and Congress is expected to enact it.

Courtesy of ML Strategies, LLC, which is a government relations consulting group and a trusted resource for Myriant, we have received the following three bullet points which summarize the critical importance of this conference report for companies in the renewable biochemicals industry:

•The legislation would create a statutory definition of renewable chemical.

•The Biopreferred program, which creates a federal demand for biobased and forestry products, is amended and expanded.

•Eligibility for the Biorefinery Assistance Program (Sec. 9003) is expanded from biofuels to include renewable chemical and biobased product manufacturing as well. One hundred million dollars of mandatory spending is available in FY 2014, and $50 million per year is available in FY 2015 and 2016. The loan guarantee program leverages private investment so that the $200 million in mandatory funding can effectively support an even larger number of loan guarantees. Typically, the credit subsidy costs of the loan guarantees (meaning the cost to the government when evaluating the risk of default) averages about 30 percent, so the $200 million in total mandatory funding could leverage upwards of $700 million in loan guarantees. Up to 15 percent of the funding for loan guarantees can be used to cover the expenses for renewable chemical and biobased manufacturing.

In short—this is huge!

Much thanks, by the way, is due the Biotechnology Industry Organization (BIO) which represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. It has been working tirelessly and obviously quite effectively to foster this legislative initiative.