I am quite impressed by the industry association European Bioplastics – an association of about 68 members ranging from bioplastics manufacturers, converters, end users, research groups and machinery suppliers. Registered in 2006 as a successor to the “International Biodegradable Polymers Association and Working Groups” (IBAW), its main mission is to support and promote market introduction of bioplastics. In particular, I liked their balanced approach reflected by the maxim “promote bioplastics rather than discriminate against conventional plastics”. Certainly, a key aspect of their strategy is to lobby for subsidies that can promote mass commercialization of bioplastics and lower risks for the much-needed investment of several billion euros in manufacturing capacities and infrastructure. To this effect, they have proposed several ideas on potential subsidies/developmental opportunities under Framework Conditions.
Although bioplastics account for only 1% of the total current plastics consumption in Europe, they are estimated to have the potential of nearly 4 million tons; i.e. about 10% of the current total market. This is huge – it translates to about 9 billion pounds, which nearly equals the estimated 9.7 billion pounds of low density polyethylene film for packaging applications (see my previous post) by 2010. Even if only 50% of this potential is eventually realized, it will still be about 10 times higher than what is projected for the US market for bioplastics by 2010. Therefore, the projected demand in Europe is much higher than anywhere else in the world.
There seem to be a few major trends driving this demand:
- Environmentally sensitive consumer population willing to pay a little more for products made from renewable sources
- Companies responding to the consumer sentiments by creating an image of sustainable development through such products
- Government regulations such as the EU landfill directive and German packaging directive, plus the overall EU political strategies on renewable resources and recycle
- Sharp rise in material and energy prices, not to mention the extreme volatility arising from crude oil prices
Contrast this to the near-term projected capacity for PLA and starch-based bioplastics. According to my post “Bioplastics Production Capacity Building Up” of May 12, the total projected production capacity of PLA and starch polymers is not even 5% of this ultimate demand of 4 million tons! Also, strangely enough, most of the PLA capacity is being established in the US, while a majority of the demand is projected in Europe (or even Japan). How come investment is not flowing into the EU for new capacity in bioplastics? Are these projections realistic?
I am hoping that the European Bioplastics will provide better research in future so we can gain a better understanding of this interesting market dynamics.