Back 19.02.2016

Biochemicals and biomaterials are attracting investments

Many biofuel investments face regulatory risks and lowering reference prices. However, investments in the production of biomaterials and biochemicals benefit from an increasing market pull and more favorable pricing scenarios.

Investments in biochemicals and biomaterials are growing globally. In the center of this trend are products that can directly replace their fossil-based alternatives, like bioplastics and bioresins used in packaging and construction materials. The market for bioplastics is expected to triple by 2018, with a large share of the capacity increase in Asia.

The production of biomaterials is now largely based on refining sugars from agricultural crops. Novel approaches are emerging, though, including waste and residue based production. New concepts facilitate scaling up production without compromising sustainability.

The market for biochemicals with unique properties is also growing. They include biobased chemicals with functionalities that are useful in various products, for example food ingredients, nutritional supplements and specialty chemicals. These valuable components are typically extracted from the side streams of existing biobased industries, which offers benefits for both the primary and the secondary business.

What is common for the biomaterials and biochemicals markets is the general design principle of utilizing raw materials in a holistic manner. Raw materials are used for various products ranging from high-value niche products to biofuels and energy stemming from residual streams. This enables efficient production, which can compete on the global marketplace without subsidies.

Another increasingly important aspect in the biorefinery business is feedstock and product flexibility. How can a company adjust its feedstock supply and product portfolio to changing market conditions? This requires untapping the whole potential of side stream synergies between various sectors and utilizing modular processing. By diversifying its raw material portfolio and increasing the use of raw material based on side streams and waste, a company can significantly reduce risks while improving its overall sustainability.

With these principles in mind, a biorefinery business can continue to grow in spite of a limited primary biomass supply, changing regulatory landscape and low oil prices. Diverse product portfolios that include biomaterials, biochemicals as well as residual biofuels and bioenergy give a company the edge it needs to compete on the global market.

Tiina Pursula

Business Director Tiina Pursula leads Gaia’s services for bio-based and other process industries.