Biobased ProductsMinnesota’sOpportunityand ChallengeA Focus on BioPlastics

AgriculturAl utilizAtion reseArch institute

Foreword

MMinnesota-based organizations have been at the forefront of early development of biobasedproducts and biobased plastics. e Agricultural utilization research institute (Auri), theMinnesota soybean growers Association and the Minnesota soybean research and Promotioncouncil (MsrPc) believe that this industry is an emerging opportunity for Minnesota busi-nesses to capitalize on consumer demand. For this reason, our organizations partnered to bringforward a comprehensive report exploring the opportunities and challenges facing the industry.

While the biobased products industry is extensive, this report focuses on bioplastics.e report emanated from the West central Minnesota renewable Materials coalition’s interestin developing renewable materials cluster. e coalition has already begun to work with localmanufacturers with an interest and capabilities to manufacture products using bioplastics thatmeet targeted client company specifications. Due to the significant potential statewide impact,this report was expanded to address the assets and opportunities across Minnesota.

During the past several months, Auri has worked with russell herder, a Minnesota-based market research firm, to systematically garner the insights of key players in the bioplasticsindustry. in addition, the student Marketing Advisory center at southwest Minnesota stateuniversity conducted a survey of manufacturers. e survey gauged perceptions and awarenessof biobased alternatives. using this information, the project team developed a comprehensivereview of opportunities and recommendations.

is report is only the first step. Development of innovative solutions requires commu-nication among multiple stakeholders across a wide spectrum of interests; collaboration is neces-sary to advance mutual interests. is growing network will require extensive and deliberateplanning. Auri, with the help and support of partners like the Minnesota soybean growers,will convene and develop a network centered on innovation in the biobased materials sectorthat generates economic impact across the state.

Auri and the Minnesota soybean growers look forward to continuing to partnerwith agriculture, academia, government and the state’s processing industry to grow the biobasedproducts industry in the state and nation. We hope that you will join us in this exciting work.

sincerely,

Al christopherson gene stoelchairman of the Board chairman of the BoardAgricultural utilization research institute Minnesota soybean research and

Promotion council

Note from the Authors:While specific companies and products arementioned within this study, this documentis not intended to provide an exhaustive orcomprehensive review of the entire bioplas-tics industry and all who are involved in it inMinnesota, the United States or around theworld. This study is not intended to showpreference to any specific companies, prod-ucts or technologies. Rather, information in-cluded in this report is a snapshot in time.We have included examples of companiesand products mentioned to provide an over-all framework for discussion and to under-score significant points. We deeplyappreciate the cooperation of those whograciously gave of their time and expertisein the preparation of this report, and inviteothers with an interest or experience in thisarea to contact AURI for possible inclusionin future updates.

Carol Russell and David Buchholz–Authors

eXecutiVe suMMArY

sustAinABilitY: reshaping corporate strategy ....................................................1

the PlAstics lAnDscAPe: A snapshot of the Plastics industry ..................5our Plastic Planet ..................................................................................................................5consumer concern ..............................................................................................................6

MArKet interest: Momentum is Building ..........................................................9Big Brands Adopt Bioplastics ..............................................................................................9sustainable Packaging gets traction..................................................................................13growth Forecasts....................................................................................................................14

MArKet DriVers: it's About oil ... and Much More ............................................19replacing Petroleum..............................................................................................................19human health concerns ....................................................................................................20Manufacturer Acceptance ....................................................................................................21usDA BioPreferred Program ..............................................................................................26

MArKet chAllenges: overcoming a century of Petroleum Dominance ..29economics................................................................................................................................29reliable supply........................................................................................................................33specifications and standards................................................................................................34Manufacturing challenges ..................................................................................................38Product Misperceptions ........................................................................................................41regulatory issues ....................................................................................................................43e need for education ......................................................................................................44confidentiality Versus collaboration................................................................................45Food Versus industrial use ..................................................................................................47Waste stream Management ..................................................................................................52Funding ....................................................................................................................................54

the ProMise AnD PotentiAl oF BioPlAstics: Where opportunity lies for Minnesota ..............................................................................................................55

Promising Product sectors ..................................................................................................55e Minnesota Advantage....................................................................................................57leveraging Minnesota's strength in Biofuels....................................................................58e Potential of Public-Private Partnerships....................................................................61

MAKing it WorK: e Process to successful Adoption of Biomaterials in Plastics Manufacturing ..................................................................................................65

Building on the Petroleum experience ..............................................................................65supplier-Manufacturer collaboration ..............................................................................65Managing costs for competitiveness ................................................................................68Partnership rough the Value chain ..............................................................................70

recoMMenDAtions: What should happen next ............................................73

ADDenDuM: ought leader Forum..........................................................................75

APPenDiX............................................................................................................................77

CONTENTS:

Project Team . Authors . Resources

PROJECT TEAM

Teresa Spaeth, executive Director, Agricultural utilization research institute (Auri)

Dennis Timmerman, senior Project Development Director, Agricultural utilization research institute (Auri)

STUDY RESEARCHERS

Carol Russell and David Buchholz, lead Authors

Chip Borkenhagen, Art Director

Michael Howie, Traci Holbrook-Hibbitt

Southwest Marketing Advisory Center, southwest Minnesota state university

RESOURCES

Jeff Ackerson, President/ceo, Vinylite Windows, Fergus Falls, Mn

Jim Albrecht, President, comDel innovation, inc., Wahpeton, nD

Clair Angland, President, reprocessed Plastics inc., garfield, Mn

Doug Cameron, Founder and Managing Director, Alberti Advisors, Plymouth, Mn

Debra Darby, Director of Marketing communications, telles (Mirel Bioplastics), cambridge, MA

Steve Davies, Marketing Director, natureWorks llc, Minnetonka, Mn

Alan Doering, senior Associate scientist – co-Products, Agricultural utilization research institute, Marshall, Mn

Jeremy Dworshak, Material engineer, steinwall, inc., coon rapids, Mn

Robert Elde, PhD, Dean, college of Biological sciences, st. Paul, Mn

taryl Enderson, general Manager, Minnesota soybean Processors, Brewster, Mn

Tim Gerlach, executive Director, and Riley Maanum, research & Project Manager, Minnesota corn growers Association, shakopee, Mn

Darin Grinsteinner, engineering Manager, cPi Binani, inc., Winona, Mn

Marc Hillmyer, PhD, Professor of chemistry and Director, center for sustainable Polymers, university of Minnesota, st. Paul, Mn

Don Hurley, Director of sales, shoreMaster inc., Fergus Falls, Mn

Mike Jerke, general Manager, chippewa Valley ethanol company, Benson, Mn

Phil and eresa Johnson, owners, Paydac Plastics inc., elizabeth, Mn

Eric Kaler, PhD, incoming President, university of Minnesota, Minneapolis, Mn

Rob Katzenmeyer, general Manager, shoreMaster inc., Fergus Falls, Mn

Project Team . Authors . Resources

Steve Kelley, senior Fellow, Director of center for science, technology and Public Policy, humphrey institute, Minneapolis, Mn

Patrick Kenney, ceo, green harvest technologies, llc, Mn

Jim Kleinschmit, Director, rural communities, institute for Agriculture and trade Policy, Minneapolis, Mn

Cora Leibig, Vice President of research & Development, segetis, inc., golden Valley, Mn

Jim Lunt, PhD, Managing Director, Jim lunt & Associates, llc, Wayzata, Mn

Gary Noble, ceo, Bio-Plastic solutions, llc, Blooming Prairie, Mn

Jay Olson, global Materials engineering Manager, John Deere, Moline, il

Jim Palmer, executive Director, Minnesota soybean, Mankato, Mn

Michael Riebel, President, Biovation llc, Plymouth, Mn

Jessica Riedl, usDA BioPreferred Program Project Manager, iowa state university, Ames, iA

Mike Rone, owner/Founder/ceo, northern contours, Fergus Falls, Mn

Paul Rothweiler, Vice President of sales and Marketing, Aspen research corporation, st. Paul, Mn

Brian Schmitz, Vice President sales, Mullinix Packages, inc., Fort Wayne, in

Olga Selifonova, ceo and Founder, reluceo, inc., Plymouth, Mn

Andy Shafer, executive Vice President of sales & Marketing, elevance renewable sciences, inc., Bolingbrook, il

Friedrich Srienc, PhD, Professor, Biotechnology institute, university of Minnesota, st. Paul, Mn

Harold Stanislawski, executive Director, Fergus Falls economic improvement commission, Fergus Falls, Mn

Bruce Stockman, Project Development Director, Agricultural utilization research institute, Marshall, Mn

John Souter, Director of operations, Accent signage systems, inc., Minneapolis, Mn

Michael Sparby, senior Director of Project Management, Agricultural utilization research institute, Marshall, Mn

Dennis Timmerman, senior Project Development Director, Agricultural utilization research institute, Marshall, Mn

Brian Tockman, Director of strategic sourcing, segetis, inc., golden Valley, Mn

Chad Ulven, PhD, Assistant Professor, north Dakota state university, Fargo, nD

Jennifer Wagner-Lahr, senior Project Development Director, Agricultural utilization research institute, Marshall, Mn

Ben Wallace, Wood scientist, Marvin Windows and Doors, Warroad, Mn

Tim Welle, Program Manager, BioBusiness Alliance of Minnesota, Minneapolis, Mn

Sam Ziegler, senior Director of Field services, Minnesota soybean, Mankato, Mn

RESOURCES (continued)

W

Executive SummaryThe Process to Successful Adoption of Bioproducts

Without question, progress toward sustain-ability has moved from emerging trend to main-stream commerce. Management in corporateAmerica has embraced sustainability as a richstrategy in an intensely competitive global econ-omy – so much so, that 93 percent of ceos seesuch initiatives as important to their company’sfuture.1 ough markets have tightened in thepast couple of years, even the recession appearsnot to have derailed continued development ofnext-gen green products and the infrastructureneeded to manufacture them.

Minnesota is likewise feeling the impact –and market potential – of such innovativethinking. one dimension of this is in bioplas-tics, a family of products that can vary consider-ably in form and function, yet offer strongpotential for growth.

As a market category, plastics typically playan important role in almost every aspect of ourlives – from the cars we drive to the beveragecontainers, household items and furniture weencounter everyday. While most are found incontainers and packaging, durable and non-durable goods are also ubiquitous. e world-wide market for packaging, alone, is valued at$429 billion, with a growth forecast of $500 bil-lion in sales within the next few years.2

But, despite broad use of plastics, there aresignificant issues in their production and dis-posal. in 2008, alone, the united states gener-ated approximately 13 million tons of plastics inthe municipal solid waste (MsW) stream. con-sumers have taken notice and are applying pres-sure to entities such as food companies to makepackaging more environmentally friendly. in re-sponse, sustainable packaging is projected torepresent 32 percent of the total global packag-ing market by 2014. Plastic-based packaging,which represents 35 percent of all materialsused, will be the fastest-growing sector withinthe sustainable packaging market over the nextfew years.2

A number of factors, such as a desire to re-duce dependence on oil, environmental con-cerns related to pollution and landfills, andhuman health issues are driving market interestabout bioplastics around the world – well be-yond just packaging.

Minnesota manufacturers understand the po-tential in this trend. eighty-one percent say thatit is important, at least to some degree, for theirbusiness to produce environmentally sustainableproducts.3

While interest in bioplastics exists, awarenessis lacking. irty-nine percent of Minnesota

Progress toward sustainabilityhas moved from emergingtrend to mainstream commerce.

Executive Summary

The state has what is needed:the intellectual capital, theinnovative spirit, the environmental mindset, richagricultural resources, a receptive manufacturing community and a proventrack record in fostering biocatalysis.

plastics manufacturers say they feel uninformedabout the uses and opportunities for biobasedmaterial. Yet, two-thirds of Minnesota plasticsmanufacturers anticipate increasing their use ofbiobased material throughout a range of indus-try subsectors – most predominantly, withinbioplastics and biopolymers.

to ultimately be successful, industry expertssay there are issues within bioplastics that mustbe addressed, such as the financial equation.Friedrich srienc, Professor at the Biotechnologyinstitute, university of Minnesota, agrees. “ebottom line is basically economics. People arenot really willing to pay more for things becausethey are biodegradable or sustainable,” he says.4

Also, while manufacturers express a desire touse biobased materials from both an environ-mental and marketing perspective, they haveconcerns about the ability of these materials tomeet the specifications and standards of theircustomers. other issues complicating thegrowth of biobased materials – at least for now– lie in the complex regulatory sector. For amanufacturer distributing internationally, theseconcerns can extend far beyond Minnesota’sborders.

With the projected growth in incorporatingbioplastics into the production and supplychain, there are steps that could be taken to in-crease adoption. education could ease theprocess: 80 percent of Minnesota manufacturersindicate an interest in learning more about uti-lizing biobased material in their operation. But,while increasing the knowledge base is critical tothe innovation process, a lack of informationmay be impeding industry growth.

Also, resolving issues related to the waste

stream could be advantageous. While the initialpush in bioplastics was toward compostability,the fact is that the infrastructure needed to en-sure biodegradable performance under opti-mum conditions simply does not exist. As well,securing funding for biobased material researchis another challenge that needs addressing.

Bioplastics offers the opportunity to not onlyhelp drive employment and the economy, but topositively impact Minnesota’s rural communi-ties. e state appears to be well positioned tobecome a leader in the bioplastics industry, inpart because it already has clusters of renewable-materials companies that are converting agricul-tural products into biofuels, chemicals andbioplastics. in fact, more than 75 Minnesota ac-ademic, private and public organizations arenow involved in biomass catalysis and synthesis;more than 80 Minnesota organizations work inmaterials science; and at least a dozen Min-nesota companies – large and small – producerenewable bioplastics and biopolymers.5 Ac-cording to experts, the state has what is needed:the intellectual capital, the innovative spirit, theenvironmental mindset, rich agricultural re-sources, a receptive manufacturing communityand a proven track record in fostering biocataly-sis.

so, where are the greatest opportunities? eproverbial “low-hanging fruit” is most fre-quently said to be in pressure-sensitive adhe-sives, foam, hardened plastics, packaging andcertain types of non-load-bearing or non-criti-cal-performance molded products. ere is alsoindication that there may be opportunity in ver-tical integration: owning several stages of thevalue stream – from manufacturing to distribu-

Interest in bioplastics exists...but awareness is lacking.

Market Drivers Executive Summary

While increasing the knowledge base is critical tothe innovation process, a lackof information sharing may beimpeding industry growth.

tion – either directly or through partnershipsand agreements.

Perhaps Doug cameron, of Alberti Advisors,said it best: "ere is need for more connectingof the dots. it will take a little bit of capital and alittle bit of risk tolerance before that kind ofthing can come together. But it will never hap-pen if people don't start talking about it."6

RecommendationsWhat needs to take place for bioplastics pro-

duction to grow in Minnesota? e followingsteps are recommended:

Educate• Proactively shape awareness, attitudes and

understanding of the economic, health and envi-ronmental benefits of biobased products amongconsumers, retailers, manufacturers, and the fi-nancial and agricultural communities.

• Support Minnesota educational institutionsin shaping the skills and mindsets necessary forsustainable development.

• Provide education to manufacturers to helpease transition of using biobased material intheir operation.

• Conduct a “connect the dots” conferencewhich brings resin/polyol providers togetherwith university researchers, start-ups, manufac-turers and venture capital to discuss what is hap-pening, who is doing what and to beginnetworking Minnesota ideas, research and busi-nesses that can help each other succeed.

• Evolve group into a community of innovationto help nurture potential of biobased manufac-turing in Minnesota.

• Aggressively raise the media profile of what ishappening in Minnesota related to biobasedplastics, green chemicals and bioproducts.

Collaborate and Support• Nurture an investment environment more

favorable to stimulating innovation and marketdevelopment.

• Create an innovation ecosystem involving ac-ademic institutions, nonprofits and the privatesector that encourages knowledge sharing and

joint ventures.• More robust technology transfer. A guide or

website that incorporates services available toincrease biobased opportunities.

• Encourage a strategic approach toward devel-oping and manufacturing biobased products,supported by comprehensive and coordinatedlegislative actions in such areas as agricultural,environmental and industrial policy.

• Find ways to leverage Minnesota’s strong bio-fuels foundation in the next-generation greenchemicals marketplace.

• Support financing of demonstration projectsand onsite assistance to manufacturers to furtherencourage adoption and up-scaling of biobasedproduction and innovations.

• Investigate the possibility of using ethanolplants as the centerpiece for a biorefinery “campus,”including incubators for start-up green chemicalcompanies, biomaterials research and develop-ment, and manufacturing using biobased mate-rials, including the use of distillers grains asplastics strengtheners and the emerging researchon using waste glycerol from biodiesel produc-tion to produce bioplastics.

• Consider a biobased plastics manufacturingpilot plant facility in which manufacturers, bio-plastics resin/polyols suppliers and product de-velopers could test processes and productsbefore scaling up to full production.

Remove Barriers• Create a clearer and more positive regulatory

environment for sustainability.• Support the development of closed system col-

lection, recycling and composting of biobased plas-tics in large companies, athletic facilities, etc.(e.g., university of Minnesota, cargill, targetField).

• Conduct a pilot educational study of a com-munity-based composting infrastructurewhereby residents could bring compostable ma-terials – including bioplastics – to a singleneighborhood composting location.

Executive Summary

"There is need for more connecting of the dots. It willtake a little bit of capital and alittle bit of risk tolerance before that kind of thing cancome together. But it willnever happen if people don'tstart talking about it."- Doug Cameron, Alberti Advisors

Market Drivers Executive Summary

TThere is little doubt that progress towardsustainability is alive and well. From cleantechto energy efficiency, biodegradable products torecycling, the topic is demanding global atten-tion. “It appears that skepticism over sustain-ability reigns. Problem is–for the skeptics –business leaders didn’t get the memo. Businessisn’t waiting for politicians to act. Sustainabilityhas moved from the tributaries of society intothe mainstream of commerce,” Chris Farrellwrote in the Minneapolis StarTribune earlier thisyear.7

CEOs “have a number of stakeholders thatare pushing them in this direction – customers,investors, employees, even banks and insurancecompanies,” Farrell quotes B. Andrew Brown ofDorsey & Whitney as saying.7

“Management is learning that an embrace ofsustainability is a rich strategy in an intenselycompetitive global economy,” according to Far-rell, who cites that from 2007 through 2009, as-sets in sustainable and socially responsibleinvesting rose by more than 13 percent – upfrom $2.71 trillion to $3.07 trillion. at com-pares with a one-percent gain by the broaderuniverse of professionally managed funds overthe same time period, according to Social In-vestment Forum, an industry trade group. 7

A UN Global Compact-Accenture studypublished last year reported that corporate com-mitment to the principles of sustainability re-mains strong throughout the world. “In the faceof rising global competition, technologicalchange and the most serious economic down-turn in nearly a century … 93 percent of CEOssee sustainability as important to their com-pany’s future success,” the report stated.1

Within the manufacturing sector, next-gengreen products and the infrastructure needed tosupport them continue to emerge relatively un-abated despite the recession, researchers re-ported in the annual State of Green Business2010, therefore expanding opportunities forcompanies seeking to be part of the growinggreen economy.8

Investments in green product developmentcontinue to show growth, especially in large

companies. When asked to identify their topenvironmental initiative, increasing investmentsin green product development (27%) narrowlyovertook energy-efficiency investments (26%)for the first time since the annual State of GreenBusiness study began. When asked about invest-ment in green product development, 86 percentsaid it would be equal to or greater in 2010 thanthe previous year.8

“Demonstrating a visible and authentic com-mitment to sustainability is especially importantto CEOs because it is part of an urgent need toregain and build trust from the public and otherkey stakeholders, such as consumers and govern-ments – trust that was shaken by the recentglobal financial crisis. Strengthening brand,trust and reputation is the strongest motivatorfor taking action on sustainability issues,” thestudy observed, based on research interviewswith nearly 1,000 CEOs, business leaders andacademic experts.1

Consider these findings1:• Eighty-one percent of CEOs – compared to

just 50 percent in 2007 – stated that sustainabil-ity issues are now fully embedded into the strat-egy and operations of their company.

• Fiy-four percent of management surveyedfeel that this tipping point is only a decade away– and 80 percent believe it will occur within 15years – an optimistic view unthinkable in 2007and testament to the sea-change taking place.

Most corporate executives, according to theHarvard Business Review, acknowledge thathow they respond to the challenge of sustain-ability will profoundly affect the competitive-ness of their organizations.

Yet, in “e Sustainability Imperative,” DavidLubin and Daniel Esty wrote, “… most are flail-ing around, launching a hodgepodge of initia-tives without any overarching vision or plan.”9

Lubin and Esty maintain that sustainabilityhas risen to emerging “megatrend” status thatrequires businesses to “adapt and innovate or beswept aside.”

“Getting advantage in a megatrend is not justabout vision – it’s also about execution in fivecritical areas: leadership, methods, strategy,

SustainabilityReshaping Corporate Strategy

1

"Sustainability now has to beon everyone’s agenda, andthat represents a fundamentalchange."- Klaus Kleinfeld, Alcoa

Sustainability

“It appears that skepticismover sustainability reigns.Problem is … business leaders didn't get the memo.”- StarTribune, January 2011

2

“Getting advantage in amegatrend is not just aboutvision – it’s also about execution.”- David A. Lubin and Daniel C. Esty

Market Drivers Sustainability

Consumers–as well as business and governmentcustomers–are increasinglycentral to company sustainability strategies.

Management feels that thetipping point is only a decadeaway–80% believe it will occurr within 15 years.

management and reporting. In each area, com-panies must transition from tactical, ad hoc andsiloed approaches to strategic, systematic and in-tegrated ones.”9

is direction represents a shi, according tothe UN Global Compact-Accenture study –and one that is being driven by three key fac-tors1:

• Consumers – as well as business and gov-ernment customers – are increasingly central tocompany sustainability strategies.

• Innovative, leading-edge technologies areadvancing the sustainability agenda and increas-ing transparency through social media plat-forms.

• Partnerships and collaboration (e.g., withsuppliers, non-governmental organizations, gov-ernment agencies) are now a critical element inaddressing sustainability issues. Seventy-eightpercent of CEOs believe that companies shouldengage in industry collaborations and multi-stakeholder partnerships to accomplish devel-opment goals.

Sustainability

3

Consumers – as well as business and government customers – are increasinglycentral to company sustainability strategies.

Market Drivers

Sustainability

4

OOur Plastic PlanetMinnesota is feeling the im-

pact – and market potential ofsuch innovative thinking. Onedimension of this is in bioplas-tics, a family of products thatcan vary considerably in formand function, yet offers strongpotential for growth.

Plastics play an importantrole in almost every aspect ofour lives, from the cars we driveto the beverage containers,household items and furniturewe encounter every day. elargest category of plastics isfound in containers and packag-ing (e.g., so drink bottles, lids,shampoo bottles), but the mate-rial is also prevalent in durable(e.g., appliances, furniture) andnondurable goods (e.g., diapers,trash bags, cups and utensils,medical devices).

Pike Research estimates thatthe worldwide market for all

The widespread use of plasticsis expected to grow, as aregovernmental and consumerdemands for more ecologicallyfriendly manufacturing andend-of-life processing.

5

The Plastics Landscape

The Plastics LandscapeA Snapshot of the Plastics Industry

types of packaging is currently valued at $429billion, an annual growth rate exceeding thetotal global increase in GDP. “We forecast themarket to surpass $500 billion in sales withinfive years,” 2009 findings indicated.2

e demands on packaging have continuedto increase as the global population grows, chal-lenging industries to react to issues that wererarely considered in the past. e energy re-quired to manufacture packaging, and the pol-lution created during the process, were not highpriorities in years past. Now these factors –along with what to do with bags, containers, etc.once they have fulfilled their function – havegrown in concern.

Whether for packaging or other purposes,the widespread use of plastics is expected togrow, as are governmental and consumer de-mands for more ecologically friendly manufac-turing and end-of-life processing. In particular,disposal of plastic products has been an increas-ing issue. According to 2000 EnvironmentalProtection Agency (EPA) statistics, Americansdiscard more than 3.3 million tons of low- andhigh-density polyethylene bags, sacks and wrapsalone.10

Consider these facts10:• In 2008, the United States generated ap-

proximately 13 million tons of plastics in themunicipal solid waste (MSW) stream as con-tainers and packaging, almost 7 million tons asnondurable goods and nearly 11 million tons asdurable goods.

• Over 380 billion plastic bags, sacks andwraps are consumed in the U.S. each year.

• e total amount of plastics in the MSWstream – about 30 million tons – represented 12

percent of total MSW generation in 2008 – atwelve-fold increase since 1960.

Plastics are recycled for both economic andenvironmental reasons, though overall recoveryof the material for recycling is still relativelysmall – just over two million tons, or 6.8 per-cent of plastics generation in 2008. Recycling ofsome containers such as so drink bottlesreached levels as high as 37 percent, however.10

Consumer ConcernFor years, environmentalists have promoted

degradable plastics along with recycling as theanswer to escalating municipal solid waste dis-posal and litter problems. While recycling hasrisen in popularity, the use of degradable bio-plastics has lagged far behind due to cost, per-formance and other considerations.

Consumers, however, continue to apply pres-sure. In a 2009 study by Ipsos Marketing, 21percent of North American consumers surveyedsaid food companies should concentrate onmaking packaging more environmentallyfriendly, compared to 14 percent who said thefocus should be on improving how food tastes.Support for green packaging from other globalregions was similarly strong: Latin America, 26percent; Europe, 22 percent; and Asia-Pacific,15 percent.11

ough consumer support for more environ-mentally friendly products is significant, thereare critical issues affecting broad market accept-ance of bioplastics. Confusion about materialsand terminology, product labeling, and productend-of-life alternatives are just a few of the ques-tions needing to be addressed.12

6

The Plastics LandscapeThe Plastics Landscape

The Plastics Landscape

7

The Plastics Landscape

8

Biobased plastics have experienced a renaissance.Bioplastics Defined

Biobased polymers have been used in furniture and clothing for thousands of years, with the first arti-ficial thermoplastic polymer (celluloid) invented in the 1860s. Since then, numerous compounds de-rived from renewable resources have been developed, but were overshadowed with the large-scaleindustrial use of crude oil in synthetic polymer production during the 1950s.13

In recent years, however, biobased plastics have experienced a renaissance. Many new polymers fromrenewable feedstocks have been developed. According to the University of Hannover, there are nowmore than 300 types of bioplastics made – at least in part – from such materials as corn, sugar caneand starch.14

Technically, bioplastics are not a single class of polymers, but a family of products that can vary consid-erably. European Bioplastics, among other sources, regards such material as having two differentiatedclasses:

• Plastics based on renewable resources; and• Biodegradable polymers that meet scientifically recognized norms for biodegradability

and compostability of plastics and plastic products.

Bioplastics Value Proposition

While most bioplastics are biodegradable, this is not always the case. Biodegradability is defined bythe chemical structure rather than the origin of the raw materials. As a result, there are synthetic poly-mers that are considered biodegradable. As well, traditional petroleum-based plastics can bebiodegradable.

There are differences between biodegradable and compostable plastics. A claim that a product orpackage is degradable, biodegradable or photodegradable signifies that the entire product or packagewill completely decompose into elements found in nature within a reasonably short period of timeafter customary disposal. A compostable product indicates that the product or package will becomeusable compost (e.g., soil-conditioning material, mulch) in a safe and timely manner through an ap-propriate composting facility or in a home compost pile.15

Sustainable Raw Materials(corn, switchgrass, soy, etc.)

Compostable or other effective end-of-life scenarioBioplastic

Cradle-Biobased Material

Grave-Biodegradeable

Goal - Carbon Neutrality

The Plastics Landscape

Source: Jeff Timm Consulting

BBig Brands Adopt BioplasticsIn an effort to drive sales, attract new cus-

tomers and – companies claim – do what is en-vironmentally responsible, more and morecompanies across the United States are lookingfor ways to package their products using recy-cled or renewable materials.

In 2011, Nestle Purina® PetCare’s PurinaOne® beyOnd™ reportedly will use a cornstarch-based polylactic acid lining in its bags as a re-placement for petroleum-based material. AsPurina explains on its website, “Our commit-ment requires that we produce high-quality, nu-tritious pet foods in a caring and responsibleway. at’s where environ-mental sustainability comesin. We’re working withstakeholders inside and out-side the company, up anddown the supply chain, tofind solutions that are goodfor the environment andgood for our business.”16

“Consumers are reallylooking to associate them-selves with brands that havea cause beyond the productitself,” said Nestle Purina®Brand Manager, HeatherScott, in an article pub-lished on STLToday.com.17

One of the challenges,the article noted, is for companies to find waysto tap consumer demand for greener packagingwithout raising prices. “Our research says cus-tomers won't pay more for it,” James Glenn,President and CEO of Household Essentials, aMissouri company that makes laundry and stor-age products, was quoted as saying.17

ere are other issues along the corporatejourney toward using biobased packaging mate-rials.

Dallas-based Frito-Lay®, which is owned byPepsiCo, introduced a biodegradable PLA bagin 2009 for all six of its SunChips® flavors.Months later, the company reverted most of theline back to its standard packaging because con-

sumers said the starch-based compostable bagswere too noisy.

e initial launch promoted the fact that thebags were compostable because they were madefrom plants versus plastic. But the technologyFrito-Lay® used to make the packaging resultedin a bag that was stiffer than the plastic packag-ing – and louder. Customers complained, evencreating groups on Facebook with names such as“I wanted SunChips but my roommate wassleeping...” and, “Nothing is louder than aSunChips’ bag.” Online videos reported that thebag was “louder than the cockpit of a jet,”backed up by decibel level tests.18

Rather than being seen as insurmountableobstacles, however, such challenges are oenconsidered part of the trial and error process in-volved in innovation. In Frito-Lay®’s case, ratherthan abandoning the new concept, the contro-versial biodegradable bags are still being usedfor packaging the original flavor while the com-pany continues to work on a second-generationcompostable version.

“We here at SunChips® are committed to de-veloping sustainable packaging solutions thatmeet the demands of our snacks and our con-sumers,” Frito-Lay® writes on its website. “Wehave several new compostable package optionsin the works that look promising and look for-

Market Interest

Market InterestMomentum is Building

9

ward to introducing the next generation com-postable bag to consumers in the near future.”19

An industry success story that has been ap-plauded by the Sustainable Biomaterials Collab-orative (SBC), a network that has developedsustainability guidelines for biobased plasticsalong their entire lifecycle, is that of StonyfieldFarm. In October of 2010, Stonyfield, theworld’s leading organic yogurt company, an-nounced the introduction of corn-based plasticfor its multi-pack yogurt containers in conjunc-tion with being the first major buyer of WorkingLandscape Certificates, a purchasable offset pro-gram that promotes sustainable corn produc-tion practices.

"Stonyfield Farm knows that how corn orother biomass used in plant-based plastics isgrown is a major factor in whether or not theplastic is good for the planet," Brenda Platt,SBC, commented in a press announcement.20

Support for sustainability within the retailand manufacturing also isn’t new. Years ago,Henry Ford used up to 60 pounds of soybeansin paints, enamels and molded plastic parts inhis Model T. Plant-based plastic parts includedsteering wheels, dashboards and gearshi knobs.But lower-priced, petroleum-based products dis-placed these early bioplastics and have contin-ued to command the marketplace for decades.21

Today, Ford is using soy-based polyurethanefoams in select models. Toyota plans to replace20 percent of the plastics used in its automobileswith bioplastics by 2015. e 2010 LexusHS250h contains plant-based bioplastics to in-terior components including luggage-trim up-holstery, cowl-side trim, seat cushions, doorscuff plates and tool box areas. Mazda has devel-oped a bioplastic console and seat fabric – andother automakers are adopting the use of bio-plastics and biofoams in their designs at an in-creasing rate.21

According to SBC sustainability guidelines,to be considered green, biobased plastics mustbe derived from sustainably grown and har-vested feedstocks, be manufactured withouthazardous inputs and impacts, and be reused,recycled or composted at the end of their in-

tended use. Working Landscape Certificates(WLCs) are a tool for bioplastic buyers to sup-port complying farming systems.20

Minnesota-based Jim Kleinschmit, who di-rects the Institute for Agriculture and TradePolicy’s (IATP) Rural Communities programand is a member of the Sustainable BiomaterialsCollaborative (SBC), agrees.

“I think [the impetus behind biobased mate-rial adoption] is market demand, which isdriven partly by consumers. Companies want tobe part of change, especially one that’s making apositive difference. But, I think it can also bedriven by regulatory concerns. Some of thesematerials are better from the perspective of theend-of-life, since they can be composted andnot landfilled. I think people are seeing the writ-ing on the wall. If you look at Minnesota andthe new requirements around using com-postable bags for leaves and yard waste, it is onlythe beginning,” says Kleinschmit.22

“Most Minnesotans have a strong interest inbuying and using products that are biodegrad-able and environmentally friendly. e problemhas been their inability to source products withthose qualities for their homes and businesses,”observes Dennis Timmerman, Senior ProjectDevelopment Director at the Agricultural Uti-lization Research Institute (AURI).23

Kleinschmit says this interest could translateinto positive economic impact. “At IATP, we be-lieve bioplastics could be a real opportunity forMinnesota and the country’s farmers, ranchersand foresters, as well as for rural communitieslooking at new manufacturing opportunities.”22

In particular, Kleinschmit believes food serv-ice holds a particular market opportunity. “Weare currently working on creating purchasingguidelines for institutions – such as schools andhospitals – that want to use disposable, single-use, compostable food ware (e.g., cutlery,plates). at type of product is not recyclableright now and, considering it is mixed withfood, it actually has the ability to pull more or-ganic material out of the waste stream if it iscompostable. You can put it all in one spot -food and foodware - which makes everyone’s life

Market Interest

10

Market Interest

“Bioplastics could be a realopportunity for Minnesota … as well as for rural communities looking at newmanufacturing opportunities.”- Jim Kleinschmit, IATP

easier. As an institution and as ‘eaters,’ we don’thave to confusedly try to sort everything out, sopeople are more likely to comply,” hecomments.22

According to Kleinschmit, the specifications,called “BioSpecs for Food Service Ware,” shouldbe available in 2011. He explains they are theproduct of a successful collaboration of leadingresearchers in bioplastics, plus organizationssuch as the Sustainable Biomaterials Collabora-tive and Business-NGO Working Group.22 especifications take into consideration the feed-stock, toxicity and end-of-life requirements forproducts.24

“[“BioSpecs”] is really for companies thatwant a quick scorecard to see who is actuallymeeting the claims that they are making,” Klein-schmit continues. “ey range from the basic,‘Is it compostable and biobased?’ to ‘Is the basematerial more sustainable or not from a feed-stock perspective?’ and ‘Are there other materi-als in the product that impede its ability todegrade or safely compost?’ ese criteria areprimarily for institutions, but could be for any-one who wants an assessment for a specific lineof products.”22

Retailers are also taking forward-thinking po-sitions on the issue of sustainability. Mass mer-chandiser Target Corporation actively promotesits “green” commitment, writing on the com-pany website: “…we are continually ‘rethinking’our merchandise assortment to lessen impactson our communities, our environment and ourbottom line. Many of our categories includeproducts made from recycled materials, non-toxic chemicals or all-natural ingredients … Weare also specifying more environmentallyfriendly packaging applications for our private-label brands. We will continue to evaluate andexpand our eco-friendly products based on mar-ket availability and guest preference.”25

Target is a member of the Sustainable Pack-aging Coalition, in part to gain an understand-ing of how the company’s packaging needs canmeet sustainability requirements.

In 2006, Target dedicated a packaging teamto help make recommendations on more sus-

tainable choices for Target-brand materialand/or reduce packaging where feasible. ecompany indicates that it continues to look foropportunities to source packaging materials thatare recyclable, made with recycled content,biodegradable or biocompostable, made with re-newable resources, manufactured using renew-able energy or using less nonrenewable energy,or sourced from companies practicing responsi-ble harvesting.25

Relative to bioplastics, Target indicated that,“We have introduced six PLA packages in thebakery and deli areas in our SuperTarget storesand will look at expanding the use of PLA … asadditional supply becomes available.”25

Target also introduced a corn-based gi cardin December 2005, using resins made from re-newable resources.25

In October 2010, Canon Inc. and Toray In-dustries, Inc. announced the development of thecomputer printer industry's largest exterior partusing biobased plastic. e newly developedpart is approximately 11 times larger and 6.5times heavier than the previously realized largestbiobased plastic part that achieved the samelevel of flame-retardance – a significant achieve-ment that, until now, had not been possible inparts of this size due to challenges with mold-ability and flow characteristics.26

John Deere introduced bioplastics in selected

Market Interest

11

exterior panels some 10 years ago. Soy-basedfoam cushioning is expected to be in equipmentbeginning in 2011. According to Jay Olson,Global Materials Engineering Manager for JohnDeere, polyethylene for sprayer and seedingtanks will likely be the next component to gobiobased.27

“Sustainability is the new buzzword foreverything that pertains to design for the envi-ronment, recyclability, biodegradability, energy,lifecycle analysis, energy balance. Everythingcomes under the umbrella now of sustainabil-ity,” says Olson.27

"At Deere, sustainability is a new and strate-gic initiative to support our business customersin their products to increase their productivityand their impact on the environment," Olsonsays. "If we can, through our products, providesolutions for our customers to reduce the im-pact on the environment for total sustainability,both environment and energy, that’s where thefuture is in all of our products. One piece of thatis the materials that we use to manufacture in

our vehicles."27

Olson says that the company’s strategic planis aligning with the signature color of its equip-ment – driven in large part by the fact thatDeere serves an agricultural marketplace whoseproducts are used in biobased materials. "It ispart of our strategy to support sustainability, abusiness strategy, so it’s one of the metrics thatwe will be measuring, but it’s a long journey.Even though we’ve been literally a ‘green’ com-pany for a long time, now it is part of our strate-gic business plan...and it will be part of ourdecision analysis for everything that we do –not just material selection, but manufacturingoperations and product design. We'll make deci-sions on how to make the largest impact for ourcustomers on the use of their products."27

According to Olson, there are two primaryreasons that a company might want to considerusing biobased materials. "First, do you want totake a leadership role now at the infancy? Anddo you want to do the right thing for the world,for your customers, or do you just want to ap-

Market Interest

12

John Deere introduced bioplastics in selected exteriorpanels some 10 years ago.Soy-based foam cushioning isexpected to be in equipmentbeginning in 2011.

Photo courtesy of John Deere

Market Interest

proach it as just another material substitu-tion?"27

He says that a manufacturer can explorebiobased materials as a simple materials substi-tution – or as a broader strategy for the com-pany. Olson adds, "You have your design, testand build cycle that you go through to put aproduct into production, so you’ve got two po-sitions to take. Look at it as just another mate-rial that adds value based on cost alone...or doyou want to create a policy that makes sustain-ability part of your overall business strategy?"27

Larger-ticket items also allow for the intro-duction of bioplastics at a scale that does notnecessarily result in a higher price to the endcustomer. “On a $10 item in a $300,000 tractor,you can’t tell the difference. But, in spray foamfor a house, the foam represents a significantportion of the cost. So, it’s not necessarily thefact that there is a soy-based product being used,it’s also related to the application,” says SamZiegler, Senior Director of Field Services for theMinnesota Soybean Board.28

Sustainable Packaging Gets Traction

According to a recent study byPike Research, sustainable packag-ing is projected to grow to 32 per-cent of the total global packagingmarket by 2014, up from just 21percent in 2009. Plastic-basedpackaging, which represents 35percent of all materials used, willbe the fastest-growing sectorwithin the sustainable packagingmarket over the next five years, thereport indicated. Metal-basedpackaging, one of the easiest mate-rials to recycle, will continue to bethe sector with the highest percent-age of sustainability, however, withmore than 63 percent projected tobe environmentally friendly by2014.2

When it comes to the issue ofdeveloping more environmentally-

friendly packaging, some companies focus onweight reduction, believing it provides a reason-able proxy for sustainability through lower rawmaterial inputs, reduced transport, less wasteand lower CO2 emissions. But an emphasis onweight alone can have negative consequences,including greater waste if the packaging be-comes too fragile.29 Simply switching to lighterpackaging is not a silver bullet, according to theSustainable Packaging Coalition (SPC), thaturges manufacturers to think smart about pack-aging rather than simply thinking light.8

Other companies use life cycle analysis tohelp measure sustainability, a strategy that canbe hindered if there are not commonly agreedupon measurements. To support an effective in-dustry response, experts say, there is a need forcommon metrics and definitions on how com-panies measure the sustainability of their pack-aging.29

“… the move toward sustainable packagingrepresents a broad-based effort by manufactur-ers, retailers, industry groups, and governmentsto promote the design of minimal packagingthat can be easily reclaimed. A tremendousamount of innovation is going into reducing en-

Market Interest

13

“Do you want to do the rightthing for the world, for yourcustomers, or do you justwant to approach it as just another material substitution?"- Jay Olson, John Deere

Larger-ticket items also allowfor the introduction of bioplastics at a scale that doesnot necessarily result in ahigher price to the end customer.

ergy requirements to manufacture packagingand also to using more recyclable and com-postable materials, but there is still a long way togo,” said Pike Research President Clint Whee-lock.2

Jim Lunt, Managing Director of Jim Lunt &Associates, LLC, agrees that more and morepeople are indicating a desire for renewable plas-tics. “ey do not want oil-based, depleting,toxic materials. ey don’t completely under-stand what sustainability really means, but theybelieve it means something good – and theywant that.”30

Minnesota plastics manufacturers are clearlygetting that message. In a November 2010 sur-

vey, just over half said consumer interest inenvironmentally friendly packaging andproducts will impact their operation –and that it is consumer demand thatmakes them more receptive to using suchmaterials. Further, 81 percent said that itis important, at least to some degree, fortheir business to produce environmentallysustainable products.3

Growth ForecastsU.S. biobased plastics capacity was

260,000 tons in 2007 with 80 percent of itbiodegradable, reported Deloitte Consult-

ing and the BioBusiness Alliance of Minnesotain “Destination 2025: Focus on the Future ofthe Renewable Materials Industry.” is was ex-pected to grow to 1,460,000 tons in 2011.31

Growth in bioplastics is being driven by anumber of factors: an interest in reducing de-pendence on foreign oil supplies, environmentalconcerns related to pollution and landfills,global warming and human health issues relatedto toxic chemicals emitted by petro-based plas-tics. ese factors are driving legislation aroundthe world, which is creating markets for bioplas-tics through mandates, public policy and wastereduction initiatives.

Market Interest

14

Market Interest

“They don’t completely understand what sustainability really means,but they believe it meanssomething good – and theywant that.”- Jim Lunt, Jim Lunt & Associates

For example, the Japanese government has seta goal that 20 percent of all plastics consumedin that nation will be renewably sourced by2020. e federal farm bill in the United Statesrequires that each federal agency design a planto purchase as many biobased products as prac-tically possible – and that federal procurementwill be based on biobased content, price andperformance.

According to Jim Lunt, global demand forbioplastics is projected to grow more than four-fold to 900,000 metric tons by 2013 – andglobal production will increase six-fold to 1.5million metric tons by 2011 (up from 262,000metric tons in 2007). More importantly, globalproduction capacity is projected to increasefrom 360,000 metric tons in 2007 to about 2.3million metric tons in 2013. In spite of thisgrowth, bioplastics still represent only aboutone percent of the approximate 230 milliontons of plastics in use today.32

Expense and lack of sufficient quantity havelimited sector growth. A study by e Freedo-nia Group, however, has forecast annual in-creases of 11 percent for degradable plasticsthrough 2014. Although representing less thanone-half of one percent of all thermoplasticresin demand in 2009, substantial growth op-portunities appear to be on the horizon.33

According to the Freedonia Group, degrad-able plastic advances will be fostered by their in-creased cost competitiveness withpetroleum-based materials, as well as their sus-tainability and friendlier environmental profile.“Degradable plastics demand is being broad-ened by enhanced performance propertiesbrought about by more sophisticated polymer-ization and blending techniques. Testing andcertification standards have also been estab-lished for many types of biodegradable plastics,with growing pressures to limit packaging wasteand expand the composting infrastructure," thereport summary noted.33

e Freedonia Group indicated “polylacticacid (PLA) will grow at the fastest pace through2014, driven by a more competitive price struc-ture and greater availability. Starch-based plas-tics will have a good outlook as a result ofimproved resin blends and applications in suchareas as compostable yard and kitchen bags, andfood service items such as plates, bowls and cut-lery.”33

Demand for polyhydroxyalkanoates (PHAs)plastics and products are projected to also in-crease, in such areas as films and molded con-tainers.33

According to “Disposable Bioplastics,” a mar-ket opportunity study issued by the United Soy-

Market Interest

15

bean Board (USB), the growth of bioplastics inthe United States is estimated to be 19 percentper year through 2011, reaching a projectedconsumption of over 600 million pounds. isincrease is being driven by several factors, theUSB study observed, including large retailers,such as Walmart and Target, requesting thattheir suppliers adopt bioplastics for packagingproducts they stock; consumer concern over thedepletion of petroleum-based raw materials; de-sire of manufacturers to develop more sustain-able raw material sources; improvement inproperties of bioplastics; governmental supportfor biobased products; and the cost savings bio-plastics represents over petroleum-based prod-uct.34

“Among the bioplastic applications, four useshave standout growth opportunities in the im-mediate future: biodegradable bags/films;biodegradable plastic foam cushioning blocks;bioplastic fibers, degradable and non-degradable; and bioplastic moldedproducts, degradable and non-degradable,” the USB report fore-casted.34

In Minnesota, two-thirds of plas-tics manufacturers surveyed in a re-cent industry study said they believethe use of biobased material will be-come more prevalent in the nextthree years. Forty-one percent saidthat doing such could also make theirprocesses safer for employees and the

community.3

To ultimately be successful, industry expertssay bioplastics will need to meet the cost andperformance requirements of petroleum basedproducts, meaning such potential issues as heatdeflection and brittleness must be addressed.34

While the future looks promising for bioplas-tics, experts agree that there are issues. Bioplas-tics can be inefficient to create, possibly usingalmost as much energy as plastics made withfossil fuels. At the same time, such products canrelease less carbon dioxide into the atmosphere.

Some experts, such as Helmut Kaiser in “Bio-plastics Market Worldwide 2007-2025,” predictbioplastics has the potential to reduce petro-leum consumption for plastic by 15 to 20 per-cent by 2025. “Improved technical propertiesand innovations will open new markets and ap-plications with higher profit potentials in auto-motive, medicine and electronics,” the report

Market Interest

16

Market Interest

To ultimately be successful, in-dustry experts say bioplastics will need to meetthe cost and performance requirements of petroleumbased products.

!"#$"%"&'("&)*"&+,&!$+-.*"/&0.'"1$.#2&

!"#$%&'()#**&++(,&$-&$()&.&/01+&(203&$40+*(!#$5&67(89:9(

)*"&+,&!$+-.*"/&0.'"1$.#2&%"&'("&!"#$" )*"&+,&!$+-.*"/&0.'"1$.#2&)*"&+,&!$+-.*"/&0.'"1$.#2&

Growth of bioplastics in theUnited States is estimated tobe 19 percent per yearthrough 2011.

stated.35

European Bioplastics agrees, going on recordsaying, “e crucial point is the utilization of re-newable resources. Bioplastics’ great advantage– the conservation of fossil resources and reduc-tion in CO2 emissions – makethem one of themost important in-novations for sus-tainabledevelopment. Plas-tics, with their cur-rent globalconsumption of morethan 250 million tonsand annual growth ofapproximately five per-cent, represent the largestfield of application forcrude oil outside the en-ergy and transport sectors.It is becoming increasinglyimportant and pressing … toutilize alternative raw materi-

als.”36

“Petroleum-de-rived plastics havebecome ubiquitousin human society;however, their pro-duction from nonre-newable sources,contribution togreenhouse gas emis-sions and permanentpresence in the envi-ronment aer dis-card demand analternative solutionthat is both environ-mentally friendlyand sustainable,”wrote John Barrettand Friedrich Srienc,both from the De-partment of Chemi-cal Engineering and

Materials Science at the University of Min-nesota.37

“Both PHAs and polylactide show significantpotential for meeting thisdemand. ese materialsare advantageous for theirbiodegradability and pro-duction from renewablefeedstocks, and both arealready available com-mercially. Applicationsof these materials in-clude packaging,fibers for textiles,biomedical materialsand protein-func-tionalizedbiobeads.”37 It isimportant to notethat soy-basedpolyols are alsobeing used toreplace petro-leum-based

17

Market Interest

Meeting demand will requireindustry adoption andcapacity building.

Source: Minneapolis StarTribune

sources in foams, lubricants, inks, paints, con-struction materials and other applications.

Meeting demand, however, will require in-dustry adoption and capacity building. What isclearly lacking now is sufficient industry aware-ness. irty-nine percent of Minnesota plasticsmanufacturers say they feel uninformed aboutthe uses and opportunities for biobased mate-rial. Eight in 10, however, say they are interestedin learning more.3

Market InterestMarket Interest

18

RReplacing PetroleumNumerous factors appear to be driving

growth within bioplastics. e most significant,according to Doug Cameron with Alberti Advi-sors, is the cost of oil. “I think a lot of it is an ex-pectation that petroleum prices will continue torise, and petroleum will be very unstable in priceand will be challenging to economics," he says. "Ithink the biggest driver for the chemical indus-try is the uncertainty in petroleum price and thefeeling that the biomass or sugar prices will sta-bilize and maybe be lower in the long-term."6

Cameron notes that market pull from jugger-naut retailers, such as Target and Walmart, isalso influencing the amount of biobased contentin plastics. On the other hand, he does not be-lieve that biodegradability is a significant mar-ket driver. "I think biodegradability is a nicheopportunity, but I think it's more about theability to lower costs and finding better feed-stock supply situations."6

According to a December 2008 document on

their corporate website, Walmart noted that se-lect produce packaged in corn-based Nature-Works PLA can be found in all Walmart storesand Sam's Club locations, including vegetableand fruit trays and bags. Walmart also hosts anannual Sustainable Packaging Exposition thatbrings together product suppliers and packagingsuppliers to discuss sustainable packaging inno-vations and options.

Market Drivers

Market DriversIt’s About Oil . . . and Much More

19

Numerous factors appear tobe driving growth within bioplastics …the most significant being the cost of oil.

Foam trays from Dyne-a-Pack (Photo courtesy of NatureWorks, LLC.)

"I think the markets drive what happens. Peo-ple look at the price tag of the object they aregoing to buy – and that decision whether or notto buy, feeds its way back up through the valuechain – and that will influence whether it comesfrom a plant source or a petroleum source, basedon the price of that source,” says Paul Roth-weiler, Vice President of Sales and Marketing ofAspen Research.38

Headquartered in St. Paul, Aspen Re-search/Aspen Materials is a hybrid of researchand development, consulting and product de-velopment. Aspen works with companies to de-velop new products and materials, processes andtechnologies – and to improve efficiencies andprofitability.

According to Rothweiler, Aspen is not totallyfocused on biobased materials, however. “Wecontinue to modify PLA for a number of clients– some large and some small.”38

In 1997, Aspen was purchased by AndersenWindows, which had done research and devel-opment business with Aspen to create ways tochannel waste streams of plastic and wood fromtheir core operations in value-added products.e resulting material technology, called Fi-brex™, resulted in a superior window product interms of performance that become the Renewalby Andersen™ line of windows. At the time ofthe interview, Aspen was in the process of beingacquired by one of its clients – a company thatmakes PLA-composite biodegradable pots forplants that allow consumers to plant "pot andall" without disturbing the root system. Ander-sen will continue to be a client of Aspen.

e company has drawn on the talent that ex-ists in the metropolitan area with a history of in-novation on a national and global scale. "Mostof the employees here worked 15 to 20 years in aFortune 500 company before they discoveredAspen and came here to work," Rothweilersays.38

"Purchasing agents are going to have an inter-esting role going forward, because it no longer isgoing to be just comparing one petroleum-basedsource to another petroleum-based source. eyare going to have a very large palette of materials

to choose from when determining what theyneed to purchase for making the products con-sumers want to buy," Rothweiler adds.38

Biobased/agricultural sources are not theonly avenue being explored in an effort to re-place petroleum-based plastics. Boston-basedNovomer – a spin-off of Cornell University – isa chemical company using carbon dioxide andcarbon monoxide to make plastics, which arevery competitive to bioplastics in terms of envi-ronmental impact. Novomer claims its propri-etary catalyst technology can be used tomanufacture polypropylene carbonate (PPC),which is used to make plastic packaging andcoatings – and that its process uses 50 percentless energy than traditional plastics manufactur-ing. e company also has shown it can leverageexisting manufacturing infrastructure.39

Biobased plastics, derived from starches andsugars in traditional Minnesota crops, are goingto find tough competition from products de-rived from sugar cane. In May 2009, e Coca-Cola Company unveiled a new plastic bottlemade partially from plants. e PlantBottle™ ismade of 30 percent plant-based material, de-rived from sugar cane and molasses and turnedinto a key component for PET plastic.40

According to a company press release, thebottle can be processed through existing manu-facturing and recycling facilities without con-taminating traditional PET.40

Coca-Cola critics, however, say that addingtoo much bioplastic into plastic recyclingstreams could contaminate recyclables and frus-trate recycling efforts.41

"I doubt Minnesota ethanol producers aregoing to want to get into making ethylene glycolfor the Coke bottle because the price is a lotcheaper in Brazil," says Doug Cameron of Al-berti Advisors.6

Human Health ConcernsStudies have demonstrated that polycarbon-

ate bottles – the hard, clear-plastic type – canleach biphenyl A (BPA), a chemical that turnson estrogen receptors in the body. But, a 2009study by M. Wagner and J. Oehlmann entitled

Market Drivers

20

Biobased plastics, derivedfrom starches and sugars intraditional Minnesota crops,are going to find tough competition from productsderived from sugar cane.

Market Drivers

“If it has the sameperformance, better cost andbetter environmentalfootprint, then it becomes aneasier decision to switch.”- Ben Wallace, Marvin Windows

and Doors

“Endocrine Disruptors in Bottle Mineral Water:Total Estrogenic Burden and Migration fromPlastic Bottles” indicates that bottles made frompolyethylene terephthalate (PTE) may also af-fect estrogen levels with its "hormone-mimick-ing" activity. e implications on reproductivehealth, embryo development and the overallhuman endocrine system are profound.42

John Souter of Accent Signage Systems, Inc.notes that there are anumber of studies onindoor air quality andchildren’s health atschool. "Indoor airquality, as you know, isa function of what par-ticles are in the air, suchas molds and sporesthat come from eitherinternal or externalsources. But, what isnot so oen under-stood is, there are alsoemissions from materialssuch as formaldehydes, etc.,which is a big deal,” Soutersays. “Several case studiespublished recently indicate that controlling in-door air quality has increased children’s abilityto learn, primarily because they have fewer sickdays. I honestly think that is going to be some-thing of a driving factor, especially with the Na-tional Green School movement, as well aspromotions by USGBC." Souter adds.43

Virtually all of the current four billion squarefoot decorative laminate market in the UnitedStates (i.e., high pressure laminates, thermofoils)are derived from hazardous and toxic formalde-hyde or PVC materials. Formaldehyde is aknown cancer-causing agent, and regulations aretightening on any formaldehyde-emitting prod-ucts. ese current products are in wide use inhomes, offices and commercial locations.

Biobased material technologies can be posi-tioned to create higher value by displacing cur-rent “nonrenewable and hazardous”petrochemical products with an authentically

green and renewable solution. Biovation is a Minnesota-based company fo-

cused on new generations of laminates and dec-orative, digital technologies and structuralcomposites to replace high-pressure laminateproducts derived from formaldehyde resins.“We’re talking to one large company that saysformaldehyde is the next asbestos," says MikeRiebel, President of Biovation. "To come up

with a green, zero-formaldehyde solution, theBioSurf ™ technology wehave developed is the bestsolution."44

Manufacturer Acceptance

While interest inbiobased products – andthe technology to producethem – clearly exists, in-dustry purchasing demandhas been cautious withinsome sectors. Marvin Win-dows & Doors, a Min-nesota-based companywith a stated commitment

to improving resource productivity while lower-ing environmental costs, sees both opportunitiesand challenges in using such products.

“We are trying to use more sustainable mate-rials and processes. On the material side, petro-leum-based polymers are not typically going tobe the most sustainable option, but sometimestheir durability makes them the more sustain-able option. ere are some materials that aregoing to be hard to replace because they are veryrobust and have a fairly good environmentalfootprint, even if they are petroleum-based. Butthere are other applications where biobased ma-terials may be the best choice. If it has the sameperformance, better cost and better environ-mental footprint, then it becomes an easier deci-sion to switch,” says Ben Wallace, WoodScientist at Marvin Windows and Doors.45

Wallace adds, “Our primary material is wood,the original biobased material. Wood has been

Market Drivers

21

Completed ADA compliant signage made entirely of NatureWorks Grafica™ materials.(Photo courtesy of Accent Signage)

around forever and oen remains the bestperformance choice. Biobased materialsusing resources such as corn or wheat aretypically meant for interior applications;they do not have good moisture resistance.at is changing; they are getting better. Wewill continue to look at them, but currentlywe are not using anything that has not beenan existing biobase for years.”45

According to Wallace, there are some inMarvin’s industry sector that are using wood-plastic composites, largely still incorporatingpetroleum-based plastics, however. “As far asagriculture-based, there is not much outthere. My guess is that it is going to comeinto adhesives first. As of yet, they really donot have that long-term moisture durability forexterior exposure down,” he says.45

e landscape does, indeed, appear to still bedeveloping. Seven in 10 Minnesota plasticsmanufacturers say they are not aware of anyonein their industry incorporating biobased mate-rial into their operation to a significant degree –hence, why end users may not be seeing a prolif-eration of options at this point.3

Researchers such as Marvin’s Ben Wallacemaintain a deep interest in reviewing new tech-nologies and materials, trying to determine if –and when – to integrate them into production.

“For instance, a sealant injection mold is avery small component of our window. e parthas to work, it has to work well and it has tolast. e second is going to be what it is madeout of and the cost. ose will have to balance.If it is an equal cost, it is pretty easy to choosethe better, more sustainable biobased materialassuming the performances are equal,” Wallacesays.45

Wallace adds, “Typically it is going to be atrade down, however, which is not going towork to have a long-term, durable product.Long-term durability affects our sustainability

Market Drivers

22

Market Drivers

!"#$%&!

!"#$%$&#'(%$)&'*+',-&#*.$%&'/0*'1)2$'3$4-$&#$5'*%'!"4-6%$5'

)7*-#'8%*5-9#&':)5$';6#0'<6*7)&$5':)#$%6)='

'()#*+%&)!$,-%!.*#!&%/(%)#%012./(2&%0!,3*(#!)(4$!

!"#$%&#'()'*&+,*'*(-##+.'/(

!52*0%6&,0,37%!

'*+8*)#,37%!

9:&%%.;!&%87,4%+%.#!<*&!8%#&*7%(+=3,)%0!8&*0(4#)!

0+")1'2(3"**'##(4')/')(3','.-5#'(!-$')%-#*(0")6'78(9:;:(

!!!!!!!!

!"#$%$&#'

9:&%%.;!&%87,4%+%.#!<*&!8%#&*7%(+=3,)%0!8&*0(4#)!

!

,-&#*.$%&'(%$)&'*+'!"#$%$&#'

)7*-#'8%*5-9#&':)5$';6#0'<6*7)&$5':)#$%6)='

9:&%%.;!&%87,4%+%.#!<*&!8%#&*7%(+=3,)%0!8&*0(4#)!

!

$4-$&#$5'*%'!"4-6%$5'/0*'1)2$'3,-&#*.$%&'

)7*-#'8%*5-9#&':)5$';6#0'<6*7)&$5':)#$%6)='

!

$4-$&#$5'*%'!"4-6%$5'

)7*-#'8%*5-9#&':)5$';6#0'<6*7)&$5':)#$%6)='

!!!!

'()#*+%&)!$,-%!.*#!&%/(%)#%01

!"#$%&!

'()#*+%&)!$,-%!.*#!&%/(%)#%01

!52*0%6&,0,37%!

'*+8*)#,37%!

!!!!!!

2./(2&%0!,3*(#!)(4$!

!

'()#*+%&)!$,-%!.*#!&%/(%)#%012./(2&%0!,3*(#!)(4$!

!"#$%&#'()'*&+,*'*(-##+.'/(

!

!"#$%&#'()'*&+,*'*(-##+.'/(

!!!!!!!!!!

Minnesota plastics manufacturers who could potentially supply companiessuch as Marvin have been getting inquiries – typicallyfrom end users that areseeking a “green” replacement forpetroleum-based products.

more than the materials we use. If we are havingto produce that part two or three times in a lifecycle of a window to replace it, that is not goingto be viable.”45

Interestingly, the reverse is also true. Min-nesota plastics manufacturers who could poten-tially supply companies such as Marvin havebeen getting inquiries themselves – typicallyfrom end users that are seeking a “green” re-placement for petroleum-based products.3

e issues facing plastics manufacturers are inmany ways similar to their customers; they wantto be sure performance and economics aresound. While 40 percent of manufacturers saythey have considered using biobased material intheir operation, only 26 percent say they havesuccessfully done so and plan to continue.3

According to Jeremy Dworshak, Material En-gineer at manufacturer Steinwall, Inc., the deci-sion-making about whether to use biobasedmaterials “is not in the processor’s arena. edrivers of that decision are going to be theOEMs. at is why we are trying to get them onboard and get buy-in with it. ere are still un-knowns with exactly how well they will performin all aspects and applications that they could beused in.”46

Looking ahead, however, nearly two-thirds ofMinnesota plastics manufacturers anticipate in-

creasing their use of biobased material through-out a range of industry subsectors – most pre-dominantly, within bioplastics andbiopolymers.3

According to Dennis Timmerman, SeniorProject Development Director with AURI, thatshouldn’t be a surprise. “Minnesota’s manufac-turing and materials sector has always sought toemploy innovative approaches to problem solv-ing and identification of new opportunities,” hecomments.23

“e stars appear to be correctly aligned inrespect to developing a biomaterials industry inMinnesota,” Timmerman continues. “Ourstate’s leading stakeholders are beginning to im-plement strategies to incorporate biobased ma-terials in their product mix. AURI and itspartnering organizations are seeing interestfrom a wide spectrum of the manufacturing sec-tor to build biobased components to address en-vironmental considerations of their customers.To successfully achieve growth in this arena willrequire a willingness to engage a strategy of trialand error within their respective industries.”23

Jim Albrecht, President of ComDel Innova-tion in Wahpeton and Fargo, ND, says that thekey to bringing biobased products to market isto “find an avenue to get there and do so eco-nomically.”47

Market Drivers

23

Nearly two-thirds of Minnesota plastics manufacturers anticipate increasing their use ofbiobased material.

!"#$%&'()#**&++(,&$-&$()&.&/01+&(203&$40+*(!#$5&67(89:9(

!"#!$%&#!'()*+,#-#,!.*+)/!0+(0%*#,!1%2#-+%3!+)!2$#!4%*25!0.2!$%&#!)(2!,()#!*(!

"#!$%&#!)(!+)2#-#*2!+)!.*+)/!0+(0%*#,!1%2#-+%3!

"#!$%&#!.*#,!0+(0%*#,!1%2#-+%3!+)!2$#!4%*25!0.2!$%&#!)(!43%)*!2(!.*#!+2!%/%+)!

!"#$%&"'()*&'*+)"',*-"&./)#0*1/(#2"/3*"'*1/'45/6(42"',*7%#2/("&'*

62$#-!

!"#!$%&#!*.''#**7.338!.*#,!0+(0%*#,!1%2#-+%3!%),!43%)!2(!'()2+).#!,(+)/!*(!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

1%2#-+%3!+)!2$#!4%*25!0.2!$%&#!)(2!,()#!*(!!

!

#!$%&#!'()*+,#-#,!.*+)/!0+(0%*#,!"1%2#-+%3!+)!2$#!4%*25!0.2!$%&#!)(2!,()#!*(!

!"#$%&"'()*&'*

'#**7.338!.*#,!0+(0%*#,!#!$%&#!*.'"

!

!

#!$%&#!'()*+,#-#,!.*+)/!0+(0%*#,!1%2#-+%3!+)!2$#!4%*25!0.2!$%&#!)(2!,()#!*(!

+)"',*-"&./)#0*1/(#2"/3*"'*1/'45/6(42"',*!"#$%&"'()*&'*

'#**7.338!.*#,!0+(0%*#,!

!

!

+)"',*-"&./)#0*1/(#2"/3*"'*1/'45/6(42"',*

!

!

7%#2/("&'*+)"',*-"&./)#0*1/(#2"/3*"'*1/'45/6(42"',*

!

!

7%#2/("&'*

!

!

!

!

#!$%&#!.*#,!0+(0%*#,!1%2#-+%3!+)!2$#!4%*25!"

1%2#-+%3!%),!43%)!2(!'()2+).#!,(+)/!*(!

!

!

#!$%&#!)(!+)2#-#*2!+)!.*+)/!"

#!$%&#!.*#,!0+(0%*#,!1%2#-+%3!+)!2$#!4%*25!0.2!$%&#!)(!43%)*!2(!.*#!+2!%/%+)!

'#**7.338!.*#,!0+(0%*#,!#!$%&#!*.'"1%2#-+%3!%),!43%)!2(!'()2+).#!,(+)/!*(!

!

!

#!$%&#!)(!+)2#-#*2!+)!.*+)/!0+(0%*#,!1%2#-+%3!

#!$%&#!.*#,!0+(0%*#,!1%2#-+%3!+)!2$#!4%*25!0.2!$%&#!)(!43%)*!2(!.*#!+2!%/%+)!

'#**7.338!.*#,!0+(0%*#,!1%2#-+%3!%),!43%)!2(!'()2+).#!,(+)/!*(!

!

!

!

!

!

!

!

!

!

!

!

!

0.2!$%&#!)(!43%)*!2(!.*#!+2!%/%+)!

!

!

0.2!$%&#!)(!43%)*!2(!.*#!+2!%/%+)!

62$#-!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

!

Market Drivers

24

Market Drivers

“In our business, we need to know where nextgeneration technologies are coming from, whichincludes understanding where biomaterials areat and how we can turn these things into prod-uct. It really is just starting. It’s evolutionary,” Al-brecht says.47

Biobased products that are currently beingmanufactured in Minnesota – or are in consid-eration to be – cover a broad spectrum, mostpredominantly within molded products.3

Given the need to appease technical and eco-nomic concerns of purchasers, companies pro-moting use of bioplastics to customers can face

an uphill communication effort. Marketing, re-search and development are typically the pri-mary entry points – each having equally criticalconsideration sets.

“ere will be interest [in bioplastics] as longas the performance is there,” Ben Wallace, Mar-vin Windows, concludes. “If performance is notin place, the manufacturers that build the prod-ucts that go to market are simply not going tosacrifice performance to be biobased.”45

From the plastics manufacturers’ perspective,that viewpoint appears to be well understood.Most (83%) say that their primary concern in

Market Drivers

25

“There will be interest [in bioplastics] as long as the performance is there.”- Ben Wallace, Marvin Windows

and Doors

“In our business, we need toknow where next generationtechnologies are comingfrom.”- Jim Albrecht, ComDel Innovation

producing bioplastics is the ability of material tomeet testing standards and/or customer specifi-cations.3

USDA BioPreferred Programe federal government offers a significant

market for companies offering biobased plasticsand other biobased products. e BioPreferredprogram was created by the Farm Security andRural Investment Act of 2002 (2002 Farm Bill),and expanded by the Food, Conservation andEnergy Act of 2008 (2008 Farm Bill). e pur-pose is to increase the purchase and use ofbiobased products among federal agencies. eUnited States Department of Agriculture(USDA) manages the program.48

Under a cooperative agreement with theUSDA, the Center for Industrial Research andService at Iowa State University manages thedatabase of biobased products for the BioPre-ferred program. According to Iowa State’s Jes-sica Riedl, "We assist companies withsubmitting their product information to theprogram and help them get into the catalog ofbiobased products." at catalog is used by Fed-eral agencies in their procurement process.Under the procurement program, BioPreferreddesignates categories of biobased products thatare required for purchase by Federal agenciesand their contractors. "It’s up to each agency tosome degree how much flexibility they'll give toa biobased product," Riedl adds.49

Riedl continues, "ey are supposed to givepreference to biobased products in 50 desig-nated categories, and they are supposed to givepreference to products with higher biobasedcontent." e online catalog is also available toconsumers or manufacturers who want to iden-tify companies making biobased products and,according to Riedl, has some 1,800 product list-ings and is growing rapidly.49

Listing one’s product in the BioPreferred pro-gram is free – and requires only "self-certifica-tion" that the product meets the biobasedstandards. Federal agencies may ask the manu-facturer for additional information related toASTM testing for biobased content, environ-

mental and health effects analysis, life cyclecosts and product performance against indus-try-recognized standards.

e criteria for certification becomes moredefined for those seeking official USDA certifi-cation that was recently announced. In January2011, the USDA launched a new labeling initia-tive to identify biobased products, which arecommercial or industrial products whose mainingredients are renewable plant or animal mate-rials. Approved products will be able to use theUSDA Certified Biobased Product label, butthey will undergo a certification review in theprocess. Under this voluntary labeling program,biobased product manufacturers and distribu-tors will be able to affix a USDA CertifiedBiobased Product label on qualifying products.e label indicates the product meets or exceeds

Market Drivers

26

Market Drivers

According to the USDA BioPreferred Program,there are more than 2,200 companies in theUnited States that either manufacture or distrib-ute biobased products. e Minnesota map showscompanies that have products already designatedfor preferred Federal procurement via USDA'sBioPreferred Program (green dots). Companieswith products that are expected to be given futuredesignation are indicated with red dots. (Source: USDA)

the amount of biobased content required forproduct certification. is content varies ac-cording to the type of biobased product certi-fied. Food, fuel and feed products areineligible.48 A search of the catalog listed 43Minnesota companies offering biobased prod-ucts.

Labeling applications were accepted begin-ning February 21, 2011. Products must bebiobased to receive product certification.Biobased products already identified within ex-isting product categories under the Federal pro-curement preference portion of theBioPreferred program must meet the minimumbiobased content of the category. Products thatdo not fall within a pre-identified category must

be 25 percent biobased unless the applicant ap-plies for and receives an alternative minimumbiobased content allowance. Mature marketproducts, which are excluded from the Federalprocurement preference program, are also ex-cluded from product certification and label-ing.48

Mike Riebel, of Minnesota-based Biovation,would like to take this idea one step further."We'd like to see certification that something is aMinnesota-grown, Minnesota-manufacturedproduct that is biobased, petrochemical-freeand formaldehyde-free; maybe even a Min-nesota stamp that would better support Min-nesota bioproducts,” he suggests. “Or, perhapscreating new regulations, similar to federal bio-preferred programs developed by the USDA, sothat Minnesota state offices use more of theseproducts."44

Market Drivers

27

Market Drivers

28

Market Drivers

EEconomicse economics of the biobased equation is an

area that needs further exploration. According to Steve Kelley, Humphrey Insti-

tute, “If the catalyst or additive material thatyou are looking at that would give a biobasedplastic a new property costs $6 a pound versus65 cents a pound, that’s an important questionwhen it comes to product design. We clearlyought to try to support more of the scientific re-search on the product development side as wellas how to connect that to the economics. Morewide-spread support from different sectors inMinnesota could help get these additional re-search resources,” he suggests.50

John Barrett and Friedrich Srienc, researchersfrom the Department of Chemical Engineeringand Materials Science at the University of Min-

nesota, agree that economics are an issue. “De-spite their environmental benefits, the most sig-nificant obstacle to the proliferation of PHAsand polylactide is their cost, which is approxi-mately three- to five-times higher than the costof petroleum-derived plastics. Much of thisprice disparity should decrease in the future asthe cost of oil will surely rise with diminishingsupplies. Other factors affecting the price ofthese bioplastics are raw materials cost and en-ergy needed for sterilization of feedstocks.”37

Price is the standard by which many manu-facturers measure the viability of incorporatingbiobased plastics into their operations, espe-cially in a difficult economy. While more andmore consumers – and the companies who mar-ket to them – are demanding environmentallyresponsible products, the fact is that the indus-

Market Challenges

Market ChallengesOvercoming a Century of Petroleum Dominance

Price is the standard by whichmany manufacturers measurethe viability of incorporatingbiobased plastics into theiroperations, especially in a difficult economy.

29

Elevance employee preparesspecialty chemical samples forthe company’s developmentpartners. (Photo courtesy of Elevance Renewable Sciences, Inc.)

try is accustomed to the price of petroleum-based plastics and that is the benchmark used todetermine the value of bioproducts. As oilprices rise, the price gap between biobased prod-ucts and traditional petro-based plastics closes,making the switch to bioproducts easier to jus-tify.

“e science of polymer production fromnatural materials is not new, but the cost of plas-tic produced from cheap oil has been a majorobstacle to its widespread use. Biobased materi-als are going through the same evolution facedby many other industries and as the science andprocesses evolve, the market will be there. It al-ready exists for the right products,” says DennisTimmerman, Senior Project Development Di-rector at the Agricultural Utilization ResearchInstitute (AURI). “We at AURI are convincedthat given the correct balance of resources, thebiofuels and biobased industries offer a tremen-dous opportunity to grow the state’s overalleconomy, create jobs and deliver environmentalbenefits to Minnesota.”23

Darin Grinsteinner, with CPI Binani, sayscustomers are not interested in compromisingcost efficiencies or product performance. "Eitherthe properties have to get better or the price hasto get lower – one of the two," he comments.Yet, he continues to investigate bioplastics be-cause "customers keep asking for it."51

"e economic potential of biorenewablepolymers is based on two criteria they will haveto meet to be competitive," says Marc Hillmyer,Director of the Center for Sustainable Polymersat the University of Minnesota. "First, they needto catch up in terms of their property profile –and they are doing that through copolymers, ad-ditives, processing changes and different poly-merization schemes.”52

"e second is price,” Hillmyer continues.“e efficiencies of the petrochemical industryhave been improved over many decades. ebiorenewable industry is getting more efficientwith fermentation process and other biotech-nology efforts. It’s all relative to petroleum.When oil was more than $120 a barrel, PLAand other biorenewable materials were doing

quite well."52

e University of Minnesota has a long his-tory of excellence in materials and polymer re-search – and that leadership continues today.Polyols are used to make polyurethanes, whichare used in a variety of products including foamsfor seat cushions and furniture. Most polyols arepetroleum-based, but researchers in the Centerfor Sustainable Polymers are exploring new waysto prepare and apply new biorenewable polyols,primarily those derived from soybean oil.

A 2009 report developed by Informa Eco-nomics for the Agricultural Utilization Re-search Institute noted that the United SoybeanBoard estimates the annual North Americanproduct demand for polyols represents 3.4 bil-lion pounds, with a conservative estimate of themarket potential for soy-oil-based polyols atabout 600 to 800 million pounds (2006 esti-mates).53

Hillmyer says the Center is currently focusedon three main topics. "e first is inpolyurethane foam and biorenewable polyols,for both rigid and flexible applications. e sec-ond is pressure-sensitive adhesives, like a biore-newable version of sticky notes. And, the thirdis biorenewable durable goods that would becompetitive with high-impact polystyrene, poly-carbonate or ABS, for example.”52

Half of recently surveyed Minnesota plasticsmanufacturers say that they do not expectbiobased material to cost the same as their typi-cal material source. In fact, 43 percent expressedconcern that such material might be prohibi-tively expensive for them to use. When askedhow much they would be willing to pay forbiobased raw material, the average was nine per-cent more than they do now.3

NatureWorks was the first to market and isthe world's largest volume supplier of biobasedplastic. Ingeo resins from NatureWorks are typi-cally within 10 to 20 percent price parity withpetrochemical resins. “Price is, and always willbe, a prime consideration for some companiesand, until recently, that has been a hurdle forsome,” says Steve Davies, Director of Marketingand Public Affairs for NatureWorks.54

Market Challenges

30

Market Challenges

“With recent volatility in oil pricing – and,of course, all the conventional plastics derivedfrom it – that dynamic is changing. Ingeo is ac-tually at, or very close to, pricing parity withsome resins, such as polystyrene. Increasingly,manufacturers are attracted to the relatively sta-ble pricing that Ingeo offers, compared to theroller coaster of oil-based resin pricing,” accord-ing to Davies. “ere are companies positioningthemselves now with Ingeo bioresin, becausethey know prices for petrochemicals will go up.Other companies and their customers place ahigh value on a low carbon footprint and thisvalue overcomes the price differential.”54

NatureWorks’ 140,000-metric-ton produc-

tion facility is located in eastern Nebraska, withanother plant being planned outside the UnitedStates in an as-yet-undisclosed location.

Today, seven of the top eight thermoformersin the United States are using Ingeo®. “Our corebusiness of fresh food packaging and food serv-ice products continues to grow at a healthy clip,”says Davies. “Newer segments such as semi-durables and nonwovens are now picking upsales momentum.”54

Ingeo® is used in a wide range of productsfrom clothing to packaging to disposable din-nerware. When Ingeo® was introduced, manycustomers were primarily interested in the com-postability characteristics it offered. Composta-

Market Challenges

31

bility is still a key feature, especially for dispos-able dinnerware products. Now, however, manycustomers are interested in cradle-to-cradle re-cycling, which Ingeo® enables. NatureWorks isregularly introducing new Ingeo® grades. Ac-cording to Davies, “ese new Ingeo grades are

tailored to specific end uses and manufacturingprocesses including a new injection moldinggrade and a new ‘meltblown’ nonwovensgrade.”54

Mike Rone, with Northern Contours, notes,“We’re hearing from our salespeople and cus-

Market Challenges

32

Market Challenges

Bioserie iPhone covers (Photo courtesy of NatureWorks, LLC.)

(Photos courtesy of Northern Contours)

e GroVia™ BioDiaper™,made of Ingeo™ fibers, isOeko-Tex Standard 100Certified. e lining, coreand waterproof outer are eeof harmful chemicals andmade om sustainable re-sources. Unlike most dispos-able diapers, BioDiapers™ areee of agrance, dyes, plastics and chlorine. (Photo courtesy of NatureWorks,LLC.)

tomers that there is not a lot of pressure forgreen materials at this point in time. Economicconditions in general have put companies insurvival mode – and they are not particularly in-terested in the increased costs involved withpaying for something ‘green.’ Nobody is goingto pay a 20 percent premium for these products.ey may pay three to five percent more, butright now people are looking for ways to savefive to 10 percent, not pay more.” He continues,“Having said that, there is an underlying movetowards greener products and, as the economyrecovers, we anticipate increased demand forthese products.”55

Agreeing that it is critical that the economics“pan out,” Jim Albrecht with ComDel Innova-tion asks, “How do you find a customer willingto pay a premium for such product? Or do wesacrifice part of our profit margin to get it intro-duced?”47

While the price of producing biobased mate-rial can still be more cost intensive, Gary Nobleof Bio-Plastic Solutions tells other manufactur-ers, “If enough of us start buying it, that pricemay come down. Now we can sell it. And themore the volume goes up, the more that is goingto come into alignment.”56

Jeff Ackerson with Vinylite Windows saysthat current conditions in the building contrac-tor marketplace are not conducive to selling aproduct that is even just five percent more ex-pensive, especially in new home construction.“In a replacement market, you might eventuallybe able to get 10 or 15 percent more, especiallyif you had a customer who was interested in eco-friendly products,” he adds. “ere are a numberof marketing messages you'd have to thinkthrough to position the product properly toconvey that value.”57

Harold Stanislawski, with the Fergus FallsEconomic Improvement Commission, suggestsan economic modeling matrix that illustrateswhat the price of biomaterials needs to be inorder to be economically viable compared withpetro-based materials. “A similar matrix existsfor corn and ethanol prices,” he says.58

“If biobased materials become a mandate for

government or military projects to be greener,then all the conversations about price go out thewindow,” says Northern Contours’ Mike Rone.“But when you're talking real people and realmarkets, right now it’s on the back burner.”55

Economics are also a factor within the agri-cultural community. Past opportunities that of-fered market potential and the promise ofincentives haven’t always panned out, accordingto industry experts, leaving a certain amount ofcynicism in their wake.

“I think there can be a high degree of skepti-cism (about new efforts such as bioplastics), butthat does not mean that farmers are not willingto try it. If there were value-added products thatcould help stabilize the market for farmers, theywould have interest,” observes Tim Gerlach,Minnesota Corn Growers Association.59

Reliable SupplyWhen it comes to expense and inefficiency in

a manufacturing plant, stopping and starting theprocess are at the top of the list. Profitability de-pends on keeping the manufacturing lines run-ning at optimum levels – and any interruptionin the supply or quality of raw materials or com-ponents can be a profit-killer. e manufactur-ers interviewed expressed concern about thecurrent state of supply in the bioproducts indus-try.

“e price and availability fluctuations are areal hindrance,” says RPI’s Clair Angland. “I hada potential customer with whom I’d talkedabout price, and by the time we got ready totake the next step, the price had doubled and Icouldn't get the quantity I needed. So, all of asudden, I was having to start over.”60

irty-four percent of Minnesota plasticsmanufacturers say the ability to find a consistentsource/supplier for biobased material is anissue.3

“When it comes to manufacturers utilizingbiobased or sustainable plastics, [manufactur-ers] have a concern about accessing a consistentand ample supply of raw material. While this isa valid issue, the opportunity that a new marketlike this could provide is significant,” says Bruce

Market Challenges

33

“If biobased materials becomea mandate for government ormilitary projects to begreener, then all the conversations about price goout the window.”- Mike Rone, Northern Contours

“How do you find a customerwilling to pay a premium forsuch product? Or do wesacrifice part of our profit margin to get it introduced?”- Jim Albrecht, ComDel Innovation

Stockman, Project Development Director atAURI.61

Nine in 10 Minnesota manufacturers expressa preference to do business with local compa-nies, but that would not be a deciding factor.3

“It would be nice if we had a local supplier,but it’s not necessary,” says Phil Johnson of Pay-dac. “It’s more important that we can access acontinuous, reliablesupply - wherever thesupplier is located.Once we get a mate-rial that works, weneed to be able tokeep getting that ma-terial.”62

“I would definitelylike to see these mate-rials come from do-mestic U.S. sources,because it would de-feat the intended pur-pose if we were replacing dollars spent onforeign oil with dollars spent overseas to accessthese materials,” Johnson adds.62

Vinylite’s Jeff Ackerson agrees. “I’d love tobuy local in Minnesota, but the total cost of theproduct, including delivery, has to be competi-tive,” he says.57

But even traditional materials can be a prob-lem in terms of delivery. Paydac’s Phil Johnsonnotes that one supplier of petro-based materialsrecently changed lead times from two weeks to12 weeks.

“at’s a real issue for us,” Johnson says. “It’salmost impossible for us to predict what orderswill be like 12 weeks from now, so we have to es-timate long so we don’t run out. Because run-ning out is simply not an option. And withlimited storage capacity for materials, that's areal problem.”62

“Within Minnesota itself, there are very fewcompanies who are buying biobased, biodegrad-able, compostable or compounded biomaterialsand converting them into finished products,”Jim Lunt, of Jim Lunt & Associates, says. “Butthere are a lot of people buying those products

who are based in Minnesota and therefore caninfluence the supply chain.”30

Specifications and StandardsPetroleum-based plastics have been used in

manufacturing for decades and have been im-proved, refined and proven over that time in anumber of manufacturing processes and in a

wide variety of industrialand consumer applica-tions. While manufac-turers (and theircustomers) express inter-est in using biobased ma-terials from both anenvironmental and mar-keting perspective, theyalso express concernabout the ability of thesematerials to meet thespecifications and stan-dards of their customers.

For example, Paydac Plastics of Elizabeth,MN, is a contract manufacturer of detailedmolded plastic products – and their business isbased entirely on the demands of one large cus-tomer who orders some 300 different prod-ucts/SKUs. Making a change in materials orspecifications – regardless of magnitude – couldhave serious consequences if they affect per-formance in any way. And that’s a risk that acontract manufacturer such as Paydac is typi-cally not willing to take.

e testing and approval process is anotherconsideration.

“Even if biobased materials were the samecost, many of our customer’s products have gonethrough an expensive approval process,” saysPhil Johnson of Paydac. “Several times we havecome across material that is less expensive, butthe customer has elected not to use it becausethe cost of the approval process would exceedthe savings of the lower-priced material.”62

Paydac has obtained a sample of PLA 2002D,and the company is interested in giving it a tryto “get our feet wet,” according to Johnson.Doing so, however, will require running the ma-

Market Challenges

34

Nine in 10 Minnesota manufacturers express a preference to do business withlocal companies.

Market Challenges

terial using a mold that is owned by their solecustomer. “We haven't gone through the processof getting their permission yet,” he notes.62

John Deere’s Jay Olson, Global Materials En-gineering Manager, notes that regulatory com-pliance and other considerations can affect theamount of time available to explore new materi-als in the manufacturing process. "If we switchfrom one material to another, we still have torun our internal testing of the seeds. Unfortu-nately, that takes time and money. Test time is alimited resource, so to make something that’snot part of the strategic plan, like new productsthat have to hit the market because of emissions,but things that we want to do, like this, it takessecond priority; it’s just that simple," he adds.27

Debra Darby, of Telles, notes that her com-pany recently announced several new customers,and continues to conduct trials with customers.e overall development process can take nine

to 15 months, on average. “We’re working withthe customers’ existing molds and tools – andwe’re finding really good results with injectionmolding, in particular,” she says. “Some of ourearly injection molding trials have indicatedfaster cycle times and reduced energy consump-tion since the process can run at a lower temper-ature.”63

Polyhydroxyalkanoates – or PHAs – natu-rally occur within certain organisms, includingmicrobes. ese microbes use PHA to store en-ergy, consuming it for food when needed – acharacteristic that gives a product called Mirel®its biodegradability. Mirel® is a PHA bioplasticmaterial, a family of bioplastics which arebiobased and biodegradable alternatives tomany petroleum-based plastics. ey are beingcommercialized through Telles, a joint venturebetween Metabolix and Archer Daniels Mid-land Company (ADM). Production began in

Market Challenges

Photo courtesy of Mirel®

35

2010 in Clinton, Iowa. Eight grades of Mirel®bioplastics compounded products are commer-cially available for use in injection molding, filmextrusion, sheet extrusion and thermoforming.

Mirel® has physical properties comparable topetroleum-based resin, yet is biobased andbiodegradable in natural soil and water environ-ments, home composting systems and industrialcomposting facilities where such facilities areavailable. e rate and extent of Mirel’sbiodegradability will depend on the size andshape of the articles made from it, as well as thespecific end-of-life environment. Like nearly allbioplastics and organic matter, however, Mirel®is not designed to biodegrade in conventionallandfills. “Mirel offers a wide range of alterna-tive disposal methods, so we are really able tohelp divert plastic waste from landfills," Darbyadds.63

Mirel® is made from the microbial fermenta-tion of sugar – corn sugar, initially – throughthe joint venture with ADM.

Mirel® is essentially a natural polyester thatperforms like conventional plastic in a widerange of applications. “It also converts on exist-ing equipment and in the regular plastics infra-structure that exists today, even though it isbiobased,” she says.63

One example of the opportunities enabled by

Mirel® is an agricultural mulchfilm used to control weeds infields. Aer harvest, farmerscan simply till the biodegrad-able mulch into the groundwhere it is broken down bythe microbes in the soil anddisappears. Another companyis using Mirel® to replace con-ventional plastic plant potswith a bottomless soil wrapintended to be planted di-rectly into the ground, andwill biodegrade in the soilaer a growing season.

“Currently our commercialproducts are in use for horti-cultural applications, marine

use and compostable bags. But, we are alsoworking on materials for agriculture, and short-term use such as general packaging, single-servefood packaging and, eventually, durable prod-ucts such as business equipment and consumerappliances,” Darby adds.63

ough they continue to have strong interestin using biomaterial, Minnesota plastics manu-facturers cite such issues as potential warrantyimpact, equipment costs and lack of sufficientinternal research and development capability tofully test their systems before making the transi-tion.3

“Any time we make a change of substance inthe structure of the product, such as a stiffeneror a profile, we need to run it through the test-ing process,” says Jeff Ackerson of Vinylite, aFergus Falls-based manufacturer of vinyl win-dows and doors. Vinylite products must meetthe testing standards of the American Architec-tural Manufacturers Association, ASTM andother approving organizations.57

“Before we spend $2,000 on putting theproduct in a test wall, we’d want to model it onthe computer first to see if it has a good chanceof passing the test,” adds Ackerson.57

In the northern tier of states, performanceunder extreme cold conditions is critical – notonly when the product is in use, but also when it

Market Challenges

36

Market Challenges

Photo courtesy of Mirel®

is being shipped, stored or distributed to othermanufacturers or end users. “ere are a lot ofliability, warranty and personal liability issueswith component changes, so to invest in that isreally expensive – and the return is pretty farout because of the investment of time andmoney in testing under various conditions,” saysDon Hurley of ShoreMaster, a manufacturer ofboat docks and other marine equipment.64

RPI (Reprocessed Plastics) of Garfield, MN,processes post-industrial plastic by regrinding itand extruding it into sheets that are either soldas is or cut in-house into products sold by RPI.Occasionally, RPI simply sells the raw regrind ifthe market opportunity presents itself. RPImanufactures products such as baker’s trays, cut-ting boards and stencils for highway departmentpavement painting (e.g., “STOP AHEAD” mes-sages). “e tricky part is knowing whetherthese bioplastics are going to behave like poly-ethylene,” says RPI’s Clair Angland.60

“We have some of the longest warranties inthe industry, so product performance is a bigdeal for us,” says Rob Katzenmeyer of Shore-Master. “Our suppliers submit spec sheets andthey have conducted UV testing, fade testingand so forth. But time is the ultimate test.”65

Debra Darby, of Telles, notes that some stan-dards are becoming outdated as technologychanges, citing the ASTM standard of D6400for compostable plastics in an industrial com-posting environment as an example. “We arealso seeing changes in legislation affecting the

marketplace. California is discussing greenwashing and defining what is compostable andbiodegradable. Minnesota has legislation inplace for use of compostable yard waste bags,"she says. “is harmonization could really bene-fit the bioplastics industry and drive policy thatenables the infrastructure rather than causingroadblocks.”63

Shiing from single-use disposable to durableplastics made from renewable resources helps re-duce the need to build a composting collectionand processing infrastructure. “Because peoplewant durable, they are not as concerned aboutcompostability,” says Jim Lunt, of Jim Lunt &Associates. “But they are concerned about theorigin of the carbon.”30

"We think the real application is in engi-neered durable goods because the end of life ispositive – and because of their ability to replacecurrent hazardous petrochemical products inthese markets," says Mike Riebel of Biovation."e durable goods can be biocomposted justlike bags, and they’re easier to reclaim or recycleif the technology and the processes are correct… It’s a shame to see [biobased plastic] used aslow-end packaging when it has the ability to bein so many other higher-valued products."44

Accent Signage Systems of Minneapolis usesIngeo® for selected products within its Intaglio™Signage System. Fully ADA compliant, this sys-tem features tactile letters, graphics and Braille– and was developed specifically for LEED®green-building applications. ese signage sys-

Market Challenges

37

“This harmonization could really benefit the bioplasticsindustry and drive policy thatenables the infrastructurerather than causing roadblocks.”- Debra Darby, Telles

tems have also earned the GREENGUARD cer-tification for Children and Schools and theGREENGUARD certification for indoor airquality.

ere is a movement toward incorporating acertain percentage of biobased materials in plas-tics – in effect, creating a “blend” of petrochem-ical and renewable plastics. is approach issimilar to that used by the paper industry whenit entered the “recycled source” market; paperstocks were labeled as having a certain percent-age of “post-consumer waste.” e incorpora-tion of biobased plastics in this way can improvethe perceived "greenness" of plastics and builddemand for renewable sources. is is especiallyapplicable in the durable plastics market, inwhich the recyclable/compostable attributes areless critical than with disposable items, such asplastic flatware or packaging.

To a company such as RPI, however, blendspresent a bit of a problem.

“If you blend it, you have a combination ofbiodegradable material and non-biodegradablematerial,” says RPI’s Clair Angland. Once thatgets into the waste stream, there is no easy wayto segregate the sources or types of plastic. “If ithas some PLA in it, that portion may degradeover time, but you cannot call the product‘biodegradable’ because of all the polyethylenethat’s in it.”60

Manufacturing ChallengesManufacturers with significant investments

in equipment, testing, processing and research

may be reluctant to risk changing to anew raw material or a component withdifferent specifications. “ere are manydifferent grades of plastic, with wildlyvarying properties – and different plas-tics are suitable for different applica-tions,” says Steve Davies of NatureWorks.“e same goes for bioplastics.”54

Standards and specifications are oneconcern, and are addressed in anothersection of this report. But the effect onmachines and processes is a practicalconsideration that has some manufactur-

ers asking questions that could mean the differ-ence between keeping their production linesworking – or shutting them down.

Clair Angland of RPI sums it up by saying, “Ithink I can make a sheet out of biobased plas-tics, but I don’t know what it’s going to do to myextrusion line. Is it going to plug things up?Will it purge out? Will I have little bits of PLAin everything from now until the end oftime?”60

At RPI, melt index (flow rate) and end den-sity are key characteristics. “It has to stay flexiblethrough the cooling process to a certain temper-ature or it’s simply going to break as it goesaround the rollers – and then at a certain point,it has to be hard enough to cut with a saw,”Angland says. “It has to follow the rules of whatwe’re used to – either that or we'd really have tochange our process.”60

RPI needs to be able to create sheets that areone-eighth inch to three-quarter inch thick. ecutting process is also a concern for RPI. “Iknow that cutting the stuff is not easy ... itsmears and gets taffy-like when you start cuttingit,” Angland says. “We’re not going to be able toslit it with a razor blade like we currently do, sowe’re probably looking at circular saws – andmaybe fluid to keep it cool during cutting,which means yet another piece of machinery.”60

While RPI is intrigued by bioplastics, theyare not willing to go out on a limb to give thema try. Angland says he would need a potentialcustomer to help pay for the test. “If someonecame in and said they’d pay for the trial and

Market Challenges

38

Market Challenges

Photo courtesy of Accent Signage

Photo above illustrates completed ADA compliant signagemade entirely of NatureWorks Grafica™ materials.

“My advice to other manufacturers is don’t beafraid of the material – try it.”- Gary Noble, Bio-Plastic Solutions,LLC

then become an ongoing customer if it worked,we'd be willing to give it a go,” adds Angland.60

Darin Grinsteinner is Engineering Managerfor CPI Binani, Inc., a thermoplastic directmolding company in Winona, Minnesota. Hehas been experimenting with bioplastic resinswith additives such as distillers grains or fibersin order to increase the performance characteris-tics. He says that customers are asking for cur-rent information on bioplastics. "ey don'twant a data sheet that's over a year old. eywant current stuff," he comments. "So every yearI'm going to do some natural fiber, biocontentplastics work – mainly on my own nickel. How-ever, most of the suppliers that are in the supplychain are good at sharing costs."51

Harold Stanislawski, with the Fergus FallsEconomic Improvement Commission, says,“Ideally, companies could dedicate machines tohandling biobased products, which would elim-inate the need to purge between bio/non-bioruns. ere are reports of a lot of machines forsale in today’s economy, which might offer anopportunity for an aggressive, biofocused vi-sionary manufacturer to pick up the equipmentneeded for a dedicated bioline.”58

Chad Ulven, Assistant Professor in Mechani-cal Engineering at North Dakota State Univer-sity (NDSU), believes that industry will see arapid acceleration of biobased material adoptionwithin the next decade. Ulven’s research atNDSU focuses on integrating natural fibers intosynthetic resins to make “biocomposites,” aswell as looking at resins that are made from veg-etable oil, starches and proteins, and incorporat-ing synthetic fibers with an ultimate goal ofcreating a 100 percent biobased composite.66

“With composite materials, you really designthe material to suit the application, not theother way around. You design the material toput strength and stiffness in the areas you needit. Now that we have enough knowledge base onthese biobased composites, we can start doingthose sorts of things – and we have been,” Ulvencomments.66

But as promising as Ulven says the market is,his work with manufacturers has shown there

are challenges as well. “OEMs that I have en-countered oen are interested in utilizing re-newable materials in their products because theyfeel it is the right thing to do – that it’s responsi-ble for the environment. At the same time, theyare not going to pay more for it. at’s good, inmy opinion, because it drives industry to bemore creative, to step up to the challenge andsay, ‘we can produce some of these biobased ma-terials at an affordable cost to those of the pe-troleum-based,’” he explains.66

Ulven says, “We oen are on the groundhelping the molding process because these mate-rials mold differently than your traditional pe-troleum-based plastic. at is why aneducational component is so important withthese materials. Just making sure people under-stand that their flow behavior is different, theirmelting temperatures are different and how youhandle them is just a different methodologywhen you are working with them.”66

Tim Welle, BioBusiness Alliance of Min-nesota, agrees that it is oen difficult for a plas-tics manufacturer to get to the scale they needto be successful. “You have to build a mold to doit; you need to have the machines tuned up andget up to a certain level. It is difficult – and diffi-cult to get there right away. If I am a manufac-turer producing a line of covers for that and Iam running at 90 percent capacity, I cannot shutdown, try something out and then come back,”Welle says.67

Manufacturers such as Gary Noble of Bio-Plastic Solutions say, for the market to develop,some risks have to be taken. “My advice to othermanufacturers is don’t be afraid of the material– try it. If you have a job that you are finishingup, run it. Learn from it. Take an hour or two,purge your machine, throw it in, get as much in-formation from the supplier of the resin and justrun it in your machine,” he says.56

Part of the issue lies in understanding the ca-pabilities of specific biobased material and em-ploying them correctly, according to OlgaSelifonova of Reluceo. “People try to use thingsfor non-intended purposes,” she observes. “Frommy perspective, they need to look at the proper-

Market Challenges

39

“They are not going to paymore for it. That’s good, in myopinion because it drivesindustry to be more creative.”- Chad Ulven, North Dakota State

University

ties of every new offeringcomprised of biobased mate-rial, and use them precisely forwhat they can and should beused.”68

Selifonova is Chief Execu-tive Officer of Reluceo, a pri-vately held green chemicalcompany located in Min-neapolis. e company is tar-geting novel functionalpolymers for replacing majorconsumer products that carrydetrimental environmentalimpact and biodegradableplastics that can be responsi-bly manufactured with use ofnon-food biomass sources, such as crop andwood residues. Prior to founding Reluceo, Seli-fonova co-founded Segetis, Inc.

Gauging market potential is important and,according to Tim Welle of BioBusiness Alliance,requires evaluating the opportunity of biobasedmaterial in new ways. “It is a different way ofthinking. How can this innovation help us growthe top line, not just cut the bottom line? Howcan this be a revenue generator? It probably willnot be a cost cutter. And will this enable you toget into a new market?”67

Bio-Plastic Solutions, a Minnesota firm thathas produced traditional extruded plastic partsfor doors, windows, office furniture and medicaldevices for a decade did just that. ey assessedthe opportunity and are now attempting to cap-italize on the biobased movement. e com-pany, which manufactures durable furnitureparts and building components from corn-basedplastic, is one of the first in the nation to use re-newable polymers in plastic profile extrusion, aprocess for making continuous plastic shapes.“We don’t know of anybody else doing this forprofile extrusion,” Gary Noble, Bio-Plastic Solu-tions founder and CEO, commented in a 2010published interview.69

Last year, the company introduced three newproducts for the building industry made fromBioBest® Bio-Co-Polymer, its patent-pending

renewable plastic material. e furniture edgetrim, drywall corner bead, and interior wallguards are made from a blend of corn-starch-de-rived polylactic acid (PLA) and high-quality,petro-based polymers. e new products con-tain more than 80 percent renewable biobasedcarbon and are recyclable.

Bio-Plastic Solutions is also developing ex-trudable PLA polymers that incorporate cropfibers for use in building interiors.

“I see a tremendous opportunity to add valueto Minnesota agriculture as we focus on grow-ing the biobased industry. Crop fibers, alongwith other specific biomass fibers, could providethe potential for expanding utilization of agri-cultural fibers, as well as job creation in ruralMinnesota through production and processing,”says Alan Doering, Senior Associate Scientist –Co-Products, with the Agricultural UtilizationResearch Institute.70

Research Doering conducts at AURI is sup-porting biobased companies looking at thephysical and chemical composition of agricul-tural fibers along with particle size distributionaer processing. is research will help identifywhich fibers work best in current moldingequipment while adding strength and heat tol-erance to the end product.70

“One of the obstacles processors face is thatevery ag-based fiber has unique characteristics.Lignin, hemi-cellulose, and cellulose content in

Market Challenges

40

Market Challenges

Bioplastic construction pieces, such as sheetrock corners usedduring construction, or corner protectors. (Photo by Rolf Hagberg Photography)

fibers can affect how itperforms in the moldingprocesses or its impact onadding strength or reduc-ing deflection in buildingmaterials. ese are only afew of the characteristicsbeing investigated,” Doer-ing explains.70

e point of developingsuch products, accordingto Gary Noble, is one ofmarket differentiation.“We asked ourselves howcan we give ourselves anopportunity for bettermargins, be less orientedtoward just price and moreoriented toward productvalue,” he says.56

In addition, Noble was seeing growing mar-ket demand for non-hazardous, non-carcinogenbased products to serve as an alternative to pe-troleum or even wood-based options. While ex-terior building materials have some promise, theextensive testing required to mimic factors suchas temperature changesand fading were time andcost intensive. Interiorproducts, however, offeredfewer hurdles but werenot without its necessarygrowing pains.56

“Typical of most devel-opment, you go into iteyes wide shut,” Noblesays. “You think you havethe right direction andyou’ve gathered informa-tion, but what you learn as you are going alongcan be very disruptive to that success.”56

ough the economic downturn has provenchallenging for Bio-Plastic Solutions – andlikely other innovators – Noble believes demandfor durable bioplastics will be robust, as long asprice and performance are on par with petro-leum-based plastics. In particular, the health

care facility and baby furni-ture markets look promising.BioBest® products contain noPVC plastic, no formalde-hyde or hazardous chemicals,and emit no harmful VOCs– thus making them more at-tractive than the alternatives.

Targeting the green build-ing and construction marketmakes sense – both publicand private. John Souter ofAccent Signage notes thatfederal policy and procure-ment is a positive drivingforce. "If you go to theUnited States State Depart-ment website, you’ll see theirgreen initiative – that is tohave all of their federal build-

ings certified at least to a LEED Silver level by2014," he says.43

Souter adds, “Fortunately, the State Depart-ment has taken the time and applied the re-sources to make this happen. I think you aregoing to see this more and more in the private

sector as well. When peoplebecome more cognizant ofgreen technologies, and oncethey find the money trail,things will go prettyquickly."43

Product MisperceptionsAnother factor that must

be dealt with to spurbiobased market growth, saysChad Ulven of NDSU, aremisperceptions on the part of

both buyer and manufacturer.66

“When people think biobased, they thinkcheap. ey think, ‘is is going to fall apart inservice, the degradation rate is very high and itis not going to survive the type of environmen-tal conditions I need.’ But what we have shownis that if you incorporate things properly and ifyou protect those natural-based constituents

Market Challenges

41

Samples of colors that can be used inbioplastic materials. (Photo by Rolf Hagberg Photography)

Bioplastic edging that can be used onfurniture. (Photo by Rolf Hagberg Photography)

within a robust plastic, the degradation andweathering do not change much at all if you doit properly,” says Ulven.66

"People don’t yet fully understand the uniqueproperties of some of these biobased materials,"says Biovation’s Mike Riebel. "Everyone has thispreconceived notion that, if it’s a biomaterial,it’s some biodegradable, disposable low-endpackaging. at preconceived notion is one ofthe biggest barriers. ese are more like engi-neered plastics if you know what you're doingwith them."44

Biobased products can perform differently.As manufacturer Gary Noble with Bio-PlasticSolutions points out, “Buyers want to know ifthe product that you are trying to manufactureis going to work and act in the same way as theproducts they have been receiving to date.” Ifnot, he says, few are willing to take a chance –particularly in the current economic environ-ment.56

Part of the issue lies in understanding the ma-terial itself. “You have to be able to design with alittle more variability in your product. Withsteel, aluminum and materials of that nature,

you know what your standard deviation is onproperties. You know what your tolerances arewhen you are designing a structure out of thosetraditional materials. When designing using nat-ural or biobased materials, you have to be ableto accommodate for a larger variation in physi-cal performance; that comes down to the designengineers being a little bit more savvy,” explainsUlven.66

Critical to this, Ulven believes, is documenta-tion. “What that takes is a larger database ofmaterial properties that one can go spec andlearn from. at is not present right now. Onthe web, you have large databases for physicalproperties of synthetic plastics, metals – youname it, you can find it. With these biobasedmaterials, it is very hard to come across specsheets and mechanical property information toallow designers to play with it. Somebody has totake the initiative to either add to existing data-bases or start creating their own database that iswidely available online.”66

Market Challenges

42

Market Challenges

Photo of bioplastics company in southern Minnesota. (Photo by Rolf Hagberg Photography)

“Once they find the moneytrail, things will go prettyquickly."- John Souter, Accent Signage

Part of the issue lies in understanding the material itself.

Market Challenges

43

For some manufacturers on the forefront ofintroducing biobased materials to the market,one of the most significant issues has been therecent economy. If their own survival is numberone on a buyer’s agenda, they may be less likelyto invest in developing and marketing newproducts. As Gary Noble of Bio-Plastic Solu-tions comments, “For many months, nobodywas willing to do much. ey were extremely fo-cused and intent on building what they had,holding on to their employees and keeping thembusy.”56

But then things started to change. “e latterhalf of 2010, we started getting phone calls.And it wasn’t just small players, it was largerplayers. People were willing to try it. All of asudden, the enthusiasm became no longer justtalk. ere is a willingness to at least approachthe question (of using a biobased material) withtheir customers,” Noble adds.56

Mike Riebel, of Biovation, has a unique per-spective on bioplastics. "I get a lot of heck forthis but, in my opinion, bioplastic is not a plas-tic. You have to think of it, technically, morelike a food product," he says. "If you take a bio-plastic and give it to a normal plastic guy, he'sgoing to treat it like polyethylene, polypropy-lene or whatever. You give it to a food guy whoextrudes spaghetti, he's going to look at it com-pletely different in its ability to be processed,changed and modified – completely differentthan a plastics guy. e best way we've found isto get both of those disciplines to argue to-gether to come up with the correct marketingsolution."44

Perhaps contributing to a lack of manufac-turer adoption is confusion. “What does itmean to be a bioproduct? How does that inter-play with biodegradability? If those definitionsare not firm, I think that might potentially slowthe introduction and overall acceptance ofthem, because there might not be a hard andfast definition of what everybody is working to-ward,” observes Jeremy Dworshak, Material En-gineer at Steinwall, Inc.46

Steinwall, unlike some other Minnesota plas-tics manufacturers, has been actively pursuing

use of biobased resin in production. As processengineers, Steinwall works closely with NorthDakota State University (NDSU) and OEMs torefine the process and applications for ulti-mately producing bioplastic products. Partner-ing with an organization, such as NDSU, is aneffective way to develop industry channels,Dworshak says.46

Regulatory IssuesOther issues complicating the growth of

biobased materials – at least for now – lie in theregulatory sector. As Steve Kelley of theHumphrey Institute explains, these concernscan extend far beyond Minnesota’s borders for amanufacturer. “I think that the changing inter-national context on chemicals of concern isgoing to continue to push manufacturers in thedirection of safer chemicals. One area of uncer-tainty is the U.S. Toxic Chemicals Act, which isup for revision. As long as that remains uncer-tain, it creates an environment where manufac-turers are not sure what is going to happen orhow it will fit into the international market,”says Kelley.50

Kelley adds, “When you think about 3M andthe European Reach Initiative, 3M is not goingto ignore a market the size of Europe. So, one ofthe issues will be the extent to which these dif-ferent markets have different expectations. eU.S. is such a big market, one would hope thatthere would be some consistency; whether thatis politically possible between here and Europeis an interesting question.”50

“I think manufacturers plus government plusthe nonprofits and other observers are going tohave to work together to become more clearabout what we mean by sustainability,” SteveKelley says.50

But, the obvious question is, work togetherhow?

“at is a good and hard question. One over-all issue in chemical regulation: we need to fig-ure out the difference between a risk-basedapproach to harmful chemicals and a hazard-based approach. From the environmental per-spective, if the chemical is hazardous you want

“We started getting phonecalls … All of a sudden theenthusiasm became no longerjust talk.”- Gary Noble, Bio-Plastic Solutions

Market Challenges

44

Market Challenges

to get rid of it. From the manufacturer side, thereal question is not if the chemical is hazardous,but does it pose an actual risk to human healthor is it the environment? I see a divide over thatquestion that hasn’t been bridged and requires acombination of science and politics to bringpeople together and balance these two differentviews,” Kelley adds.50

e Minnesota Environmental Initiative(MEI) has convened a stakeholder group toconsider the question of chemical regulation inMinnesota, where this discussion has been apart of the conversations. According to Kelley,“MEI completed phase one, which was to lookat the feasibility of Minnesotadeveloping its own approach tothis. ey are now trying toraise the money to do phasetwo of this stakeholder processthat includes business, govern-ment and nonprofits. at isone example of a process thatwe could use to try to resolvesome of these differences to getto greater certainty.”50

e Need for Education With the projected growth

in incorporating bioplasticsinto the production and supplychain, some believe educationcould be beneficial to ease theprocess. In a survey conductedwith Minnesota manufacturersin late 2010, 80 percent indi-cated an interest in learningmore about utilizing biobasedmaterial in their operation.3

When asked how they wouldprefer to access information,most opted for doing so online,through a supplier or by read-ing a trade magazine.3

Chad Ulven, NDSU, be-lieves such education could bedelivered via conferences, sym-posiums or online – besides

providing one-to-one guidance on the manufac-turing floor. Such insight, he says, could ease re-ceptivity to trying something new.66

“Just like with any new material a moldergets, they do trials. ey usually get in 500pounds and try to optimize the process beforethey actually produce the final product. You aregoing to do the same thing with this material,however, it makes a huge difference on your per-ception if you start very close to your optimalversus very far away from your optimal,” Ulvencomments.66

According to recent research conducted withMinnesota plastics manufacturers, a third felt

!"#$%$&#'("')$*%"("+',-%$'*.-/#'0(-.*&$1',*#$%(*2'

345'

!"#$%&'()#**&++(,&$-&$()&.&/01+&(203&$40+*(!#$5&67(89:9(

!"#$%$&#'("')$*%"("+',-%$'*.-/#'0(-.*&$1',*#$%(*2'!"#$%$&#'("')$*%"("+',-%$'*.-/#'0(-.*&$1',*#$%(*2'!"#$%$&#'("')$*%"("+',-%$'*.-/#'0(-.*&$1',*#$%(*2'!"#$%$&#'("')$*%"("+',-%$'*.-/#'0(-.*&$1',*#$%(*2'

80% of Minnesota manufacturers have interest inlearning more about utilizingbiobased material in their operation.

45

training is needed inthe use of biobasedmaterial.3

“It is a new para-digm. Training –along with researchand development onhow to get there – isdefinitely a need.Hennepin TechnicalCollege, as an exam-ple, is well set up toprovide that if theycan get some funding.We have the players here for Minnesota to bethe state that really understands how to use withthis [biobased] material and get quality prod-ucts out of it,” says Tim Welle of the BioBusi-ness Alliance.67

For some manufacturers, like Steinwall Inc.,continued learning is already a major initiative.“Education and education sponsorship is a pri-ority here, not only just with the academic insti-tutions, but also internally. We have a verysophisticated training orientation that we devel-oped,” explains Jeremy Dworshak, Material En-gineer. “Another thing that Steinwall does ispublish a bi-monthly newsletter. We write tech-nical articles and articles about injection mold-ing. ese go out not only to our customers, butalso to our competitors, so we can help educatethe industry as a whole – so we can all get bet-ter.”46

Education may be useful within the agricul-tural industry as well, according to Tim Ger-

lach, Minnesota CornGrowers Association. Con-tent, however, would becritical. “If you just have aone-on-one workshop orsomething, you might get afew attendees. But if it isnot based in some sub-stance and real-world prod-uct examples that work, itmay not go anywhere,” Ger-lach comments.59

Confidentiality Versus CollaborationContinued, successful innovation does not

occur spontaneously. To bring innovationthrough to commercialization, according to theAgricultural Utilization Research Institute(AURI), requires planning, strategy develop-ment and a strong network of support. In itsRural Innovation Network Model, AURI advo-cates a systems approach that integrates techni-cal and scientific assistance, marketdevelopment, market research, business plan-ning and targeted network outreach.71

“AURI’s Innovation Launching Pad process isdesigned to explore the value chain and inviteplayers to the table. e purpose is to moveideas to the implementation stage. WithinAURI, we have a motto that innovation equalsideas plus implementation,” observes JenniferWagner-Lahr, Senior Project Development Di-rector at the Agricultural Utilization ResearchInstitute.72

Market Challenges

She adds, “It has been interesting to watchentrepreneurs, operators and service providersproblem solve collaboratively. You would thinkthat there would be motivation to remain closedlipped, but in our experience, we have witnesseda lot of sharing of information and willingnessto make suggestions to others within the indus-try. It is just a matter of bringing people to-gether in an environment that supports trustand communication.”72

A willingness to share information is funda-mental, but something that can be a challengeduring the innovation process. As Joel Makowerreported on www.green-biz.com, “Genuine progressremains elusive as scientists,innovators and companiesoen travel down parallelpaths, each reinventing thesame metaphoric wheel.”73

In an attempt to addressthis challenge on a broadscale basis, a small group ofcompanies – includingNike and Best Buy – part-nered with nonprofit Cre-ative Commons to createGreenXchange, an open in-novation platform that pro-motes the creation and adoption oftechnologies that have the potential to solve im-portant global or industry-wide challenges.Knowledge is shared across many companies, in-dividuals, suppliers, distributors, academia andothers to solve common problems and to assistinternal innovation.

e goal is to encourage patent holders tomake their portfolio available for licensing onreasonable terms, while retaining the defensivebenefits of patents. “Many patent holders havepatented inventions that could have broad ornew applications in areas that they did not an-ticipate, but they may not have a strategy to ac-tively license them or offer them for such uses.By making public license offers on reasonableterms, patent holders can encourage others toseek out novel uses, which can have important

economic or environmental benefits,” develop-ers explained.74

e project, which now boasts 463 “assets,”was initiated at Nike, which has been develop-ing materials and processes to reduce the envi-ronmental impacts of its own products. “Inorder to get to a green economy … we’re goingto have to start collaborating in a much moreopen innovation way," Kelly Lauber, Global Di-rector, Sustainable Ventures at Nike, was quotedin an article on www.greenbiz.com. "Because theissues in front of us … they’re all too big for anyone company."73

Within the biobased material industry, col-laboratives and industry association efforts doexist, but information sharing is not pervasive –particularly among retailers, OEMs and productdevelopers. In preparation of this report, in fact,a number of entities clearly working within thisspace declined to share their progress.

Chad Ulven, NDSU, says such reluctancethreatens to slow the development process.“One thing that really bothers me about tryingto get these materials up and going in the indus-try is that everybody is so paranoid and secretiveabout what they are doing. at, to me, is just ahindrance.”66

“People always ask, ‘What if somebody elsestarts doing what you are doing? How is thatgoing to impact how you move forward?’ I wel-come that. I welcome a couple dozen more peo-

Market Challenges

A willingness to share information is fundamental.

46

Market Challenges

(Photo courtesy of Elevance Renewable Sciences, Inc.)

"We need a bigger ecosystemfor innovation."- Robert Elde, University of

Minnesota

ple trying to do what I am doing. We are such asmall fraction of materials production in thiscountry and materials usage that it is going totake a larger critical mass of people to make abusiness out of this to get it going. It is back-wards to me,” Ulven explains.66

Alan Doering, AURI, has seen first handwhat successful collaboration can accomplish.“One of the biggest impacts on successfully de-veloping biobased products that I have been in-volved with came from networking betweencompanies that complement each other. For ex-ample, one company may have an idea and thematerials to produce their biobased productwhile another company can provide or may al-ready have processing technology to producethe final product,” he says.70

NDSU’s Chad Ulven comments, “Nobody isgoing to throw their hat in the ring and say, ‘Iam going to put a production facility on theground here to produce these materials becauseall of these different people are going to usethem.’ No one is going to do that if no one letsanybody else know that they are trialing themand they are behind the scenes. A lot of peopledon’t want to come out and say, ‘We are trialingsome of these materials; if somebody came outwith a production facility, we would be up fororders in the future,’” he observes.66

From the manufacturing perspective, broadlysharing information can threaten protection ofintellectual property. As one manufacturer ob-serves, “Why would I open my mouth? [Bysharing information] you can accelerate the de-velopment cycle, but you kind of go, ‘Wait aminute. If we do, we are going to have a prob-lem.’ But sometimes when you are small, youhave to look at it and understand that you can’tprotect everything. Sometimes you just have toget it out there.”

Jeremy Dworshak, of Steinwall Inc., agrees.“If you keep it as a black magic, people will beunsure. I think it is important to communicateit.”46

e need for collaboration isn’t relegated tothe private sector. Some believe academiashould further rethink their willingness to work

with the manufacturing community. “Collegesneed to recognize that they should be trainingstudents, not creating IP,” one manufacturersays.

Dean Robert Elde, University of Minnesota,says interest in collaboration does exist from theUniversity’s standpoint, but agrees, "we need abigger ecosystem for innovation."75

As one academic states, “It is always a conflictof interest issue researchers have. How do youjustify a student’s work on a project that couldeventually benefit a company? Universitiescould encourage faculty to take initiatives foreventually commercializing things – for trans-lating research and technologies. ey [acade-mic researchers] should be a part of this becausethey typically know the most about this tech-nology.”

"e fact is, innovation occurs within start-ups. at's where things happen versus the oldmodel which typically started within academia,"Robert Elde says. "We need to collectively sup-port entrepreneurship to create a greater contin-uum of research and innovation."75

Eric Kaler, incoming President of the Univer-sity of Minnesota notes, “I do see and under-stand the value of these collaborations betweenthe University of Minnesota and industry. It isimportant to the University, and to society, forinnovations to be moved into the marketplacein an appropriate way so that they can be fur-ther developed and used. I look forward tohelping the University continue to be a placewhere research results can have a practical im-pact.”76

Food Versus Industrial Use Converting agricultural commodities into in-

dustrial products is a controversial issue. It hasbeen raised in relationship to biofuels produc-tion and is part of the conversation surroundingbiobased plastics as well. Some people are con-cerned that, in the rush to reduce reliance onpetroleum through biobased fuels and products,we are taking food away from a hungry world.

“Many companies who would be early sup-porters of this industry are not excited because

Market Challenges

47

“Sometimes when you aresmall, you have to look at itand understand that you can’tprotect everything. Sometimes you just have toget it out there.”- Manufacturer

"It is important to theUniversity, and to society, for innovations to be moved intothe marketplace.”- Eric Kaler, University of

Minnesota

Market Challenges

48

Market Challenges

(Photo courtesy of Segetis, Inc.)

49

of (real or perceived) concerns about bioplasticscompeting with food, just like in the biofuel sec-tor,” observes Jim Kleinschmit, IATP.22

“What dictates the use of a commodity is itshighest value. If food use is a commodity’s high-est value, it is bid up for that use,” says JimPalmer.77

According to BioPlastics-Investor, the con-cerns about competition between food stocksand bioproducts must be dealt with. “Currentestimates place an ever-increasing demand on

the roughly 10 percent of the plant that is suit-able for crop growth, which could seriously im-pair the world’s ability to feed itself. Moreover,crops are also being harnessed as an alternativefuel source, corn fuel, ethanol biofuel and cellu-lose ethanol for instance, which adds up to themany uses of agricultural products,” the publica-tion asserted.78

“However, new technological advances willallow some bioplastics to be made from agricul-tural waste products, as well as the crops them-

Market Challenges

Market Challenges

50

Market Challenges

selves, which would not only alleviate some ofthe burden for crop space, but assist in creativelydealing with waste from the food production in-dustry.”78

In an effort to balance the production of bio-plastics with concerns about agricultural sus-tainability and the conversion of food productsto industrial products, Green Harvest Tech-nologies works in conjunction with the Institutefor Agricultural Trade Policy (IATP) on theWorking Landscape Certificates (WLC) initia-tive, which is modeled in the energy sector's Re-newable Energy Certificates. It is amarket-based initiative that allows manufactur-ers, retailers and consumers of biobased plasticsto help farmers grow biobased feedstock cropsin a more sustainable manner.

Based in the Twin Cities and founded in2007, Green Harvest Technologies has a patentin process to make biobased durable transparentbottles from PLA. "Our process stretches andaligns the polymer chains to increase heat resist-ance and durability. We’ve been able to takePLA's glass transition rate from 105 degreesFahrenheit up to 150 to 155 degrees, whichnow makes it equivalent to PET – and we’redoing that with 100 percent PLA with no addi-tives," Patrick Kenney with Green Harvestsays.79

"We have a priority on doing the green chem-istry and polymer engineering work to establishcertified material formulations we will use inproduct. It's all about proof of concept that ma-terials will perform in productized form," Ken-ney continues. "We are choosing the mostpromising biopolymers from around the worldand taking a ‘science to solutions’ approach. Wewill have a pilot plant for prototype productionusing the advanced materials developed.”79

Kenney says the company is applying the “12Principles of Green Chemistry” in their busi-ness model. e 12 Principles of Green Chem-istry were developed by Paul Anastas, then ofthe U.S. Environmental Protection Agency, andJohn C. Warner to outline what the definitionof “green chemistry” means in practice.10

“Highlighting a subset of the principles, in

gredients in material formulations will be trans-parent, performance characterizations will beclear and tested, and material is designed toavoid toxicity and will have a clear repurposingplan when entering the waste stream," Kenneynotes.79

Green Harvest is gaining interest from thereusable bottle market, including souvenir bot-tles and entertainment markets. “We’ve alsodrawn high interest in applying our technologyin baby bottles and in pharmaceutical bottles,"Kenney adds. Green Harvest intends to manu-facture products and take them to market them-selves. To that end, they are looking to partnerwith and acquire one or more injection moldingcompanies. Once the process and products haveproven themselves in the marketplace and builtbrand recognition, Green Harvest may considerlicensing the technology or becoming a custommanufacturer for other companies.79

An example referenced earlier in this report,Stonyfield Farm is making yogurt cups fromPLA. Green Harvest Technologies sells themWorking Landscape Certificates. “ey pur-chased certificates for acreage that produces theamount of corn it takes to manufacture theamount of PLA they use in their yogurt cups –equivalent to about 500 acres,” says Kenney withGreen Harvest Technologies.79

Corn and PLA (polylactic acid) resins that go into bioplastics. (Photo by Rolf Hagberg Photography)

“If we can start to shift ourchoice of feedstocks for biorefining to help farmersget new markets for otherkinds of crops . . . then thesector becomes so extraordinarily better that itwould be very hard for it notto succeed.”–Jim Kleinschmit, IATP

51

Brian Schmitz of Mullinix Packages adds,"Many customers will not use plastics that takefrom the overall food supply, creating shortageof supply and higher food prices. We need tomake products from biomass other than corn."80

Jim Lunt of Jim Lunt & Associates says thatuses of alternative agricultural feedstocks canalso address this situation to some degree.“Wheat straw, corn stover, corn cellulose andwood pulp – these can all be the source of natu-ral fibers that can be used to reinforce plastics,”he says. “ey give plastics stiffness and strength– and they are already used in automotive inte-rior panels and nonbearing parts.” ese com-posite materials make use of feedstocks that arenot part of the food chain.30

“ere are some plastics that are going to beproduced from corn and some from soybeans,”says Tim Welle of the BioBusiness Alliance.“When you look at the next process of biobasedchemical development, forestry is going to beinvolved. As far as what feedstock group isgoing to benefit most, it is hard to say. A major-ity of plastics produced in high volumes todayare coming from corn. ere is biobased insulat-ing foam and quite a few products emergingfrom soybeans and other types of oils. Biobasedcomposites that use agriculture fibers are an-other interesting opportunity.”67

Chad Ulven, NDSU, has been looking at hy-

bridizing differenttypes of biomasses togain greater stabilityin products. “When Ifill a plastic to replacea talc or calcium car-bonate, I don’t just fillit 100 percent withsunflower, rice hull oroat hull because mythought on it is,‘Okay, if you get thismaterial up and run-ning, what happens ifyou have a bad yearfor that commodity?How are you going to

maintain production?’ So, instead, I have beendigging in and finding what is the cellulose,hemi-cellulose, lignin content and the residualfats and proteins; then I mix or hybridize differ-ent biomasses so I maintain a constant con-stituent breakdown. I mix and match manydifferent biomasses so I have a constant cellu-lose, lignin, fats and protein content so I knowhow that filler is going to behave,” Ulven ex-plains.66

IATP’s Kleinschmit feels that the focus needsto be on the big picture. “It is not just aboutplastics. We aren’t going to solve our energyproblems, or eliminate our petroleum depend-ence, because of biofuels or any other singleform of renewable energy. We have to look ateverything through the refining stream. Bioplas-tics are just one component of an overall biore-fining system that includes energy, lubricantsand more,” he explains.22

He adds, “If we can start to shi our choice offeedstocks for biorefining to help farmers getnew markets for other kinds of crops that weknow are good for the farm and environment(such as perennial grasses), and then are able torecapture many of the nutrients at the end-of-life, then the sector becomes so extraordinarilybetter that it would be very hard for it not tosucceed.”22

Another consideration, according to Tim

Market Challenges

Market Challenges

“We have to figure out the infrastructure for end-of-lifemore quickly for these[biobased] materials. I thinkthat is where the opportunity truly lies.”- Jim Kleinschmit, IATP

52

Market Challenges

Gerlach, Minnesota Corn Growers Association,is the potential impact of biomass recovery.“How much can you remove and still maintainyour soil quality? You can remove biomass. Weknow that you can do that without hurting thesoil. It is just the question of how much. If youare taking corn, there may be more nutrients onthe bottom third of the stock, so you want to re-move the top two-thirds and leave that bottomto keep your soil healthy. Or you may want toremove it and not do it for the next year or two,and then do it again. ose are some of thethings that we have to figure out yet,” says Ger-lach.59

Waste Stream ManagementWhile the initial push in bioplastics was to-

ward compostability, the fact is that the infra-structure needed to ensure biodegradableperformance under optimum conditions simplydoes not exist. Consumers do not know how orwhere to access the composting environment re-quired. is is one reason for increased interestin durables rather than compostables. Jim Luntnotes that the Federal Trade Commission isconsidering a ruling that says, in effect, if theproduct would never actually be separated forcomposting, the product cannot claim to becompostable.

“We have to figure out the infrastructure forend-of-life more quickly for these [biobased]materials. I think that is where the opportunitytruly lies since that is where we’ll see the greatestand immediate advantage of these materials overtheir petroleum-based counterparts. We have toincrease composting, digesting and other appro-priate end-of-life strategies,” comments JimKleinschmit, IATP.22

“A lot of this relates to state-based and fed-eral-based policy,” Kleinschmit continues.“ere has to be some level of product steward-ship put in place for us to truly achieve what isneeded. While this won’t be easy, I do think itcan be achieved if we take some simple steps.”22

NatureWorks, and others in the industry,have created a system whereby post-industrialand post-consumer Ingeo® – including bottles –

are bought back aer use and recycled to cap-ture the lactic acid. “Source recycling works,”says Jim Lunt. “If the system is in a stadium orother closed system where you know you cancollect large quantities, this approach can besuccessful.”30

“I think a big hurdle for all of us to overcomeis aligning the value chain and helping build outthe infrastructure for renewable, disposal op-tions – enabling consumers to have access to in-dustrial composting and other new technologieslike anaerobic digestion,” says Debra Darby ofTelles. “is might mean NatureWorks wantingto recycle products so they can collect the lacticacid – or Mirel becoming part of a compostingstream or anaerobic digestion source for bioen-ergy. ere is added value to this industry thatneeds to be developed further.”63

“Sure you can dispose of them, perhaps recy-cle them and reuse them, but the one advantageof these is that they are biodegradable so thatthey will eventually just disappear,” commentsFriedrich Srienc, Professor at the University ofMinnesota’s BioTechnology Institute.4

Green Harvest Technologies is working onestablishing "closed loop" collection systemswithin captive environments as a way to beginbuilding a recycling structure. e company isfocusing on providing both its plastics productsand the collection/recycling infrastructure tovenues such as education institutions, sports fa-cilities, healthcare facilities and large employers.“e workplace is a big one if we could just pro-vide bioplastics materials just for the lunchhour, all of the plastics that end up going intothe trash,” says Patrick Kenney of Green Har-vest.79

Kenney says his company is working with aBoston-based healthcare system on just such aproject. ey are working to identify generalplastic products used in early life care thatGreen Harvest can provide, as well as the recap-ture and recycling infrastructure around thatproduct. e non-toxic characteristics of bio-plastic products are particularly important dur-ing vulnerable health stages, such as maternity,birthing, neonatal and pediatrics.79

"Green Harvest Technologies has a clear pathinto product markets of U.S. healthcare,” hecontinues. “We are aligned with some majorhealthcare providers that have a passion for sus-tainability. ey are committed to test proto-types and bring bioplastic products into use.ey recognize the many benefits of moving tosustainable plastic products that perform. is isa clear, mission-driven initiative."79

According to Kenney, most of the productsin healthcare need to be either semi-durable ordurable. Most of them are used once with onepatient and then discarded. "Our vision forthese environments is to set up a separate collec-tion stream, differentiating between what hasbeen contaminated with organic matter andwhat hasn’t; setting up a separate collectionstream, and then being able to get enough criti-cal mass to justify shipping to where it can be re-cycled," he says.79

“Going the route of recycling with PLAmeans working with a company like BioCor,”says Kenney, “which is involved in using hydrol-ysis to break down PLA from polylactic acid tolactic acid and then reselling that into the mar-ket as lactic acid. Recycling strategies for otherbioplastics require additional infrastructure.”79

From Jim Kleinschmit’s perspective, of IATP,the need to address these issues is critical. “Youare never going to get the rewards you want – orshould get – for producing a beneficial productif everything is treated the same in the end. Weneed to help encourage manufacturers from thebeginning to produce products that are trulycompostable. Wedon’t want to letthem fall into thetrap of, ‘I will mix alittle bit of this pe-troleum plastic inbecause nobody isreally watching.’Currently, that isn’tseen as a majorproblem, as most ofthese products don’tgo to a composter,

but end up in landfills just like all of the othernon-recyclable plastics. But that can’t be the fu-ture. If the bioplastic industry settles for becom-ing just ‘another plastic,’ then much of the valueof this new industry will be lost,” he says.22

Steve Kelley of the Humphrey Instituteagrees. “As we are trying to develop these com-postable products, we have to keep in mind thatit is not easy to compost them. When we weretalking to consumers at the State Fair, theywould ask, ‘Where can we recycle this or sendthis stuff to be composted?’ ere aren’t thatmany places. And, it is not convenient. I thinkpaying attention to the development of thecomposting side of things as part of our wastestream [is important],” Kelley says.50

Indeed, an advisory group for biobased prod-ucts issued recommendations in a 2009 reportto the European Commission calling for prod-uct-specific legislation that would allowbiobased plastic to enter all waste collection andrecovery systems, including composting, recy-cling and energetic recovery. “Biobased plasticscertified compostable … should gain unhin-dered access to biowaste collection,” the reportsuggested.81

What can Minnesota policymakers do near-term to address end-of-life issues within this sec-tor? According to Kleinschmit from IATP, oneof the answers is to expand composting.

“I think [we need to] open up yard wastecomposting to include food and bioplastics. Wehave to be appropriate and make sure we are notcausing problems with factors such as odor, but

good compostersknow how to handlethat. e greatestand fastest opportu-nity to show thevalue and moveahead in bioplasticsis making our com-posting and organicscollection and sepa-ration more robust,”Kleinschmit notes.22

At the same time,

Market Challenges

53

54

Market Challenges

experts such as Kleinschmit note that it is im-portant to recognize that it will require initialfunding. “It will cost money to do it right. But, Ithink it will save us enough that it is a verysmart investment. It’s not like we have a lot ofother options out there.”22

ere are other dimensions to this issue.When a manufacturer changes the specificationsor characteristics of the raw materials or compo-nents they use, that can also have an effect onthe waste stream from that facility. is couldaffect permitting and environmental compli-ance or reporting – adding cost and risk for themanufacturer.

When asked whether they feel biobased ma-terial could make their operation’s waste streameasier to manage, Minnesota plastics manufac-turers have mixed feelings. irty-six percentsaid such material could be advantageous, while39 percent disagreed and another 15 percentwere unsure.3

“It is remarkable to see the thought that isgoing into the innovation process with those in-volved in the production of biobased materials,”says Jennifer Wagner-Lahr, Senior Project De-velopment Director at AURI. “ere are somany goals beyond performance and economics– and much more altruistic in terms of environ-mental and human benefits – compostability,renewable inputs, as well as zero tolerance fortoxicity. ere is a real opportunity to get itright from the get-go. If the industry can dothis, then the sky is the limit.”72

FundingSecuring funding for biobased material re-

search can be challenging and time-consuming.ough his program has been successful, it canbe difficult, according to Chad Ulven, NDSU.

“is area of research really doesn’t have ahome within any of the federal agencies,” Ulvennotes. “If you look at the USDA, this biomateri-als and bioproducts kind of thing is toward theend of the list. Above it is fuel and then every-thing else that are very valuable things that theUSDA does for farming; don’t get me wrong.So, it really doesn’t have a solid home within the

USDA. It doesn’t really have a solid home in theDepartment of Energy, but it is the fih or sixthitem on their list. NSF the same way and theEPA the same way. So, where do you go forfunding for this if nobody really, on a federallevel, accepts this area as a primary goal forfunding?”66

Likewise, obtaining funding from privatesources can be a challenge. “Venture capitalistsspend 98 percent of their money on phase twoor three companies. People with money are con-servative right now. ey are not sure about thepolitics. ey are not sure about taxation. eyare not sure about the recession really beingover. All of those things will keep the money intheir pocket,” says one manufacturer who sharedhis frustration.

While Olga Selifonova, of Reluceo, acknowl-edges that securing necessary funding can be achallenge, she feels developers must prove theefficacy of their solutions – and work just ashard to find receptive resources to back them.“A big part of any innovation is capital. No goodideas can change things if there are no financialmeans to make them happen,” says Selifonova.“I truly believe that people who have somethingworthwhile can find initial funding. But, ofcourse, development requires a large sum ofmoney. It is really important that you startbuilding relationships with people who are in-terested in what you develop, so that they willinvest.”68

Cora Leibig with Segetis believes that theState of Minnesota should play a significantrole. "If the state really wants this vision to comealive, I think anything the State can do to helpmotivate capital investment would be good. Wealready have the R&D and the technology. Wehave a lot of the downstream businesses and up-stream businesses. ere's an R&D tax creditthat is nice. Anything that motivates capital in-vestment, that's really the missing link."82

Securing funding for biobasedmaterial research can be challenging and time-consuming.

WWhile challenges exist in biobased manufac-turing, industry experts agree that the opportu-nities are significant within both existing – andperhaps non-existing – product categories, ac-cording to Olga Selifonova of Minnesota-basedReluceo.

Selifonova remarks, “Where is the greatestpotential? ere is no single answer. It is abouthow we can apply the knowledge that we haveacquired from petroleum chemistry and the in-dustry it created. We must look at the renewableworld with new eyes and say, ‘Can we try to cre-ate non-toxic substitutes and make them withrenewable feedstocks?’ It is not easy, but it’s pos-sible.” She continues, “But, people have a ten-dency to work onthings that are knownand proven. Few areventuring – like thephrase from Star Trek –‘To boldly go where noone has gone before.’ Ithink we need to stepback and try to inventnew things, because weknow that petroleum isfinite. We need dispos-able, durable and non-toxic goods – all thethings that we enjoytoday, but done usingdifferent chemistry.”68

Promising Product SectorsSteve Kelley, who leads the Center for Sci-

ence, Technology and Public Policy at theHumphrey Institute and is a co-principal inves-tigator with the chemists and chemical engi-neers at the Center for Sustainable Polymers,believes some of the strongest potential existswithin creating safer and compostable materials.From an economic standpoint, Kelley believesthere are three product areas with strong poten-tial – one being pressure-sensitive adhesives.

“Right now, post-it notes and stamp adhe-sives are not necessarily from renewable sources.So how could you develop biobased materials

that have the right characteristics? e Centerfor Sustainable Polymers is doing the researchon that. e second one is foams. What they areresearching is how you can make foams – oenfrom soybean mills – that are less toxic and stillhave the performance characteristics that folkswant. A lot of those foams, in order to get theproperties buyers want, have to have toxic chem-icals added to them,” Kelley says.50

Kelley continues, “e third area is hardenedplastics. ere are some drawbacks with corn-based plastic in terms of heat resistance or othertypes of things. So, how can you include morebiobased materials in them to improve their per-formance and still keep some of the attractive

environmental things likecompostability?”50

Some believe the near-est-term opportunities liein packaging and certaintypes of non-load-bearingor non-critical-perfor-mance molded productsbecause of the lessened li-ability within those sec-tors. A bioplastics handlefor a lawn tractor may bean easier investment “sell”to an OEM versus a steer-ing wheel.

According to TimWelle, BioBusiness Al-liance, bioplastics offers

the opportunity to boost manufacturing withinMinnesota’s smaller communities. “at ishopefully going to be a big part of the bio-process and infrastructure in the state,” Wellesays, adding that there are other sectors thatcould thrive.67

Green Harvest Technologies’ Patrick Kenneysays he sees two courses of action for companies."One is using products that biobased materialfits in today, for instance, the reusable durablebottle is economical. Whereas the bottles forbottled water are economical to do; they’re justnot profitable to do. You’re going to be using upall of your profit to do that."79

Promise and Potential of BioplasticsWhere Opportunity Lies for Minnesota

“Where is the greatest potential? There is no singleanswer.”- Olga Selifonova, Reluceo

55

Nearest-Term Opportunities• Pressure-sensitive adhesives• Foam• Hardened plastics• Packaging• Certain types of non-load-bearing or

non-critical-performance moldedproducts

• Vertical integration: owning several states of the value stream – from manufacturing to distribution – either directly or through partnerships and agreements

Promise and Potential of Bioplastics

Promise and Potential of BioplasticsPromise and Potential of Bioplastics

56

(Photo courtesy of Segetis, Inc).

Kenney sees greater opportunity in verticalintegration: owning several stages of the valuestream – from manufacturing to distribution –either directly or through partnerships andagreements. "If you don’t vertically integrate,you're paying for each of those steps to havetheir own infrastructure and capital, as well astheir own profit margin," he says. “I see real op-portunity in controlling that all of the waythrough. In this way, you can work with onestream of equipment that doesn’t need retuningall of the time – and be able to trim down theexpenses and capture the margins across each ofthose steps."79

"e emerging markets for biorenewablepolyurethane foams are the places where foamcushioning is really important – seating, bed-ding, furniture applications," says MarcHillmyer of the University of Minnesota. "As weget into more and more insulating applications,I think that offers even larger potential thanhousewares and furniture."52

"ere are companies that mix polyurethanefoams on site for use in insulating your home,and that might be an opportunity to utilizesome of this new technology," Hillmyer adds.52

e Minnesota AdvantageWhat is particularly exciting, Humphrey In-

stitute’s Steve Kelley points out, is Minnesota’sunique opportunity to excel. “e area of great-est opportunity isthe intersection ofcorporate need forsafer materials, withresearch on how totake biomaterialsand give them theright characteristics,along with Min-nesota having anavailable natural re-source base. Essen-tially, we stand to capitalize on our currentlystrong corporate base in chemicals with the in-tellectual capacity at the University of Min-nesota and our natural resources. All three areas

lock together,” says Kelley.50

And, as Kelley notes, this triad of opportu-nity is fundamental for the economy. “We cer-tainly want to continue to have the resourcesand intellectual capacity, but it doesn’t have abig economic development impact on Min-nesota unless we are manufacturing here,” he ob-serves.50

Kelley comments, “I don’t know how to de-fine economically what the take-off point is orhow we say, ‘Now this is a big deal.’ But I can seeus ramping up to that point. I don’t think we arestarting at zero; we are starting a couple feet upthe ramp.”50

Robert Elde, Dean of the College of Biologi-cal Sciences at the University of Minnesota, andH. Ted Davis, former Dean of the Institute ofTechnology, agreed in “Biocatalysis and its Syn-ergy with Healthy Ecosystems” that the State ofMinnesota is particularly well-suited to host andsupport an industry wherein plant matter can betransformed into many products that now usepetro-chemicals.

“In terms of technological capacity, Min-nesota has the academic resources, the innova-tive spirit, a large agricultural base that could beutilized for source materials, and a proven trackrecord in fostering life sciences companies ingeneral and biocatalysis specifically. In addition,Minnesota already has the critical piece of an in-vestment community that is predisposed to in-

vesting in high-risk lifescience endeavors (i.e.,medical devices),” Eldeand Davis observed.83

“Furthermore, im-portant intangiblesmake Minnesota theright place to developthe biocatalysis indus-try: academic leaders atthe University of Min-nesota are willing to

champion initiatives designed to support bio-catalysis and Minnesotans are generally inclinedtoward environmentally friendly activities.”83

From the private sector, Olga Selifonova of

Promise and Potential of Bioplastics

57

“We certainly want tocontinue to have theresources and intellectual capacity, but it doesn’t have abig economic developmentimpact on Minnesota unlesswe are manufacturing here.”- Steve Kelley, Humphrey Institute

The Minnesota Advantage• Intellectual capital• Innovative spirit• Environmental mindset• Rich agricultural resources• Receptive manufacturing community• Proven track record in fostering biocatalysis

Reluceo, agrees. “I truly believe that Minnesotais very well-positioned to become a leader in thebiobased economy. I think we have the raw ma-terials. I think we have the people. I think wehave great cities to really be a leader in thiscountry,” she says.68

e state already has clusters of renewable-materials companies that are converting agricul-tural products into biofuels, chemicals andbioplastics. According to the BioBusiness Al-liance, more than 75 Min-nesota academic, private andpublic organizations are nowinvolved in biomass catalysisand synthesis; more than 80Minnesota organizations workin materials science; and atleast a dozen Minnesota com-panies, large and small, pro-duce renewable bioplastics andbiopolymers.5

“It is clear that Minnesotahas the feedstocks, infrastruc-ture and knowledge in the agprocessing industry to developthe biorefinery concept,” observes MichaelSparby, Senior Director of Project Managementat AURI. “is will allow farmers and proces-sors to start moving their products from com-modities into higher-value biomaterials.”84

“e positive part about Minnesota is that wehave the soybeans and the crushing facilities,"says Jim Palmer of the Minnesota SoybeanBoard. "To complete the circle, we need thecompanies and the technology to be able to uti-lize and build the biobased products here."77

Taryl Enderson, General Manager for Min-nesota Soybean Processors in Brewster, MN,says added value for Minnesota farmers is para-mount. "We would like to move our farmer-pro-ducers to a more vertically integrated marketposition, and retain more value from soybeansfor our producers. Bioplastics represents thatkind of opportunity.”85

In spite of Minnesota’s strength and potentialfor building the biobased industry, however,there have been opportunities missed. Elevance

Renewable Sciences, Inc. actually had its start inMinnesota. "Elevance is in Illinois because Illi-nois provided a more attractive home for Ele-vance than Minnesota did," says Andy Shafer,Executive Vice President of Sales and Marketingat Elevance. "ere was some interaction withthe State, but it wasn't very aggressive … ereare a lot of resources that Minnesota has, butthey haven't been coordinated to really pull thethings together to drive a lot of growth."86

Leveraging Minnesota's Strength in BiofuelsDoug Cameron of Alberti Advisors sees op-

portunity to leverage Minnesota's biofuels in-dustry into the green chemicals category, whichoperates at the molecular level in discoveringways to replace petroleum-based products, suchas resins, with biobased sources. For example,Cameron points to Segetis, a Twin Cities-basedcompany that is making biobased plasticizers toreplace petro-based products that are of concernin terms of human toxicity. One of the basicbuilding blocks of the Segetis technology is lev-ulinic acid, which they currently source fromChina due to lack of availability in the UnitedStates.6

"e real critical issue is getting the supply oflevulinic acid, and all of the other pieces arepretty easy," Cameron says. "If some corn plantwanted to dedicate some effort to making lev-

Promise and Potential of Bioplastics

58

There is potentialopportunity to leverage Minnesota's biofuels industryinto the green chemicals category, which operates atthe molecular level in discovering ways to replacepetroleum based productssuch as resins with biobasedsources.

Promise and Potential of Bioplastics

Elevance employees prepare specialty chemicalsamples for the company’s development partners.(Photo courtesy of Elevance Renewable Sciences, Inc.)

“The positive part about Minnesota is that we have thesoybeans and the crushingfacilities. To complete the circle, we need the companiesand the technology to be ableto utilize and build thebiobased products here.”-Jim Palmer, Minnesota SoybeanBoard

ulinic acid, I’m sure that Segetis would be reallyinterested in talking to them. So that’s anotherMinnesota connection."6

Cora Leibig of Segetis, Inc. underscores thatneed. When asked if Segetis was sourcing thecellulose and starch needed for levulinic acid inMinnesota, she responds, "I wish we were. Whatit takes is a biorefinery … for breaking downcorncobs or cellulose to form the levulinic acidwe need as a source. Right now, that is done inChina."82

Both Leibig, and her Segetis, Inc. colleague,Brian Tockman, believe that there is potential inusing Minnesota's leadership in biofuels as afoundation for the next state of green chemicals,many of which can be used in plastics. "Insteadof collecting corn kernels, you'd be collectingcorn cobs," Leibig says. "e assets that are usedfor making ethanol are quite different from theassets that would make levulinic acid, so youneed to invest in the capital infrastructure to dothat production."82

"Anytime there is the ability to invest addi-tional capital on an existing site, you’re able toleverage all the previous infrastructure invest-ment. So, we think there are several locations inMinnesota and the Upper Midwest where youcan have an effective biorefinery campus," Tock-man adds. "You have common wastewater, com-mon utilities, common feedstock and producthandling and transport … It's not that you canuse the same fermentation vessels, because it'sdifferent technology, but you could have thembe adjacent and share all of those other re-sources.”87

"In this business, it is all about diversifica-tion,” says Mike Jerke, General Manager ofChippewa Valley Ethanol Company in Benson,MN. "e biorefinery concept provides newproducts and markets to expand opportunitiesfor the industry."88

Andy Shafer, with Illinois-based Elevance,says the industry will likely develop in the samemanner as petrochemicals. "I believe models de-velop in terms of what is most efficient and at-tractive. e petrochemical industry tends tohave the monomers for chemicals and the build-

ing blocks for fuel at refineries on an integratedsite. I don't think the renewable industry willlikely develop in a different manner," he says. "Ithink you'll see both fuels and key building-block chemicals coming off the same refinery as-sets. Ultimately, the most competitive sites willbe ones that are integrated."86

According to Shafer, Elevance is building oneof the world's largest biorefineries in Indonesia– and is in the advanced stages of looking atsites in North America to acquire and retrofit itstechnology. "We can add our technology to thatinfrastructure for a slight and incremental capi-tal cost, diversify the product mix and upgradeits value substantially to the point where it be-comes a viable integrated asset."86

Cameron also notes a New York-based com-pany called Novomer – a chemistry companyusing carbon dioxide to make plastic intermedi-ates – which, to some degree, is a competitor tobiobased plastics. "Ethanol plants provide a veryconcentrated, very pure carbon dioxide stream.It’s a lot easier to get carbon dioxide from anethanol plant than it is from like a coal plant. Sosome of these companies that can use carbondioxide as a feed stock should be thinking aboutcombining with an ethanol plant," he adds."Everybody is going to be happy if you can usecarbon dioxide. Most of the fermentationprocesses will be based on corn or corn starch,but every one of them is looking at ways to usebiomass."6

University of Minnesota experts FriedrichSrienc and John Barrett see it this way: “Typicalfermentations to produce these plastics requirethe use of refined – that is, expensive – feed-stocks, such as glucose.” ey continued, “Toaddress this issue, researchers are investigatingthe use of less refined feed sources, for example,biomass and waste streams from other processes.Ideally, PHAs could be produced as part of alarger biorefining operation. For example, pro-ducing PHAs using glycerol waste frombiodiesel production or CO2 from ethanol pro-duction, thereby offsetting the overhead costs ofutilities and infrastructure … Also, for bioplas-tics to retain their image as environmentally

59

Promise and Potential of Bioplastics

Promise and Potential of BioplasticsPromise and Potential of Bioplastics

60

friendly alternatives that are truly superior topetroleum-derived plastics, processes should bedesigned in such a way that the need for toxicsolvents in product recovery and purification iseliminated.”37

In addition to the potential for producingPHAs from glycerol waste, a 2009 Informa Eco-nomics report developed for the AgricultureUtilization Research Institute noted that addi-tional products that may be produced from asoy-based biorefinery may include soy-basedfoamed plastics, polyols, methyl soyate, fattyacids, waxes, alkyd resins, adhesives, epoxyresins, soy-based resin reinforced composites,soy-based nanocomposites and lubricants. 53

Fillers, such as clay, talc, glass and paper, arecommonly used in plastics to increase strength.ese fillers also serve to reduce costs related tothe actual plastic resin used. Using biobasedfillers, such as corn stover, soybean hulls andeven chicken feathers, is being explored – as isthe use of a co-product of ethanol production.89

Distillers dried grains (DDG) and distillersdried grains with solubles (DDGS) appear to bestrong candidates as reinforcement for plastics.e high fiber content, coupled with a molecu-lar structure that is suitable for binding, are at-tributes that make DDG and DDGSparticularly attractive in this application. Pre-liminary research indicates that concentrationsbetween 25 and 50 percent worked best as fillersin plastics. While DDG/DDGS is not as strongas glass fiber, it may be suitable for applicationswhere strength is not so much as issue, such asceiling panels or door liners. Research on theuse of distillers’ grains in plastics is being con-ducted at Northern Illinois University and atIowa State University.89

Can the University of Minnesota play a rolein capitalizing on this opportunity? Paul Roth-weiler, of Aspen Research, says, "Absolutely! Itfits the skill sets at the University. ey have awonderful chemistry program there, and somevery brilliant professors. If they could find alter-native, more efficient reaction schemes for con-verting ethanol and other small moleculesproduced by microbes, they can start to make

larger molecules – and those larger moleculeswill be used in application that petroleum is cur-rently used and ethanol is not."38

Rothweiler adds, "e other problem withethanol is they need to work on the total energycosts with forming ethanol from sugars and cel-lulose; there’s still work to be done there."38

e Potential of Public-Private PartnershipsMany of the experts interviewed as part of

this report saw an opportunity for collaborationand public-private partnership focused on abiobased plastics initiative for Minnesota. Anexample: the Ontario BioAuto Council has amission to position the province first in the raceto meet the growing demand for affordable, sus-tainable biobased products. e council bringstogether Ontario’s distinct advantages in thegrowing biobased economy, and helps ensureparticipants have every opportunity to suc-ceed.90

Ontario has clear advantages for biobased ini-tiatives. It houses the largest North Americanauto parts and assembly industries, some ofwhich are already using and producing partsfrom plant-derived feedstocks. Ontario is also acontinental stronghold for research and produc-tion in agriculture and forestry, providing newplant varieties and expertise in plant oils,starches and fibers. And the provincial chemicaland plastics sectors are thriving, worth an esti-mated $20 billion each. Industry leaders, in-vestors and innovators from these areas allconnect through the Ontario BioAutoCouncil.90

e Council’s focus is biomaterials, such asflexible biobased foams for car seats and wood-fiber composites for automotive and construc-tion applications. With a $5 million investmentfund from the Government of Ontario, thecouncil is providing support for biomaterialsventures and commercialization. With sustain-ability as its cornerstone, the Ontario BioAutoCouncil connects the ends of the value chain,and meets economic and environmental chal-lenges head-on. Ontario has the natural re-sources needed for a strong biobased economy,

Promise and Potential of Bioplastics

61

“PHAs could be produced aspart of a larger biorefining operation ... using glycerolwaste from biodiesel production or CO2 fromethanol production.”- John S.F. Barrett and Friedrich Srienc, University of Minnesota

and the industrial capacity to advance new ini-tiatives. e Ontario BioAuto Council is theconduit for those strengths.90

"We believe that building on the foundationof polymer science excellence at the Universityof Minnesota, we’re going to be one of theworld’s leading centers in this area," says MarcHillmyer of the Center for Sustainable Polymersat the University of Minnesota. It is this type ofleadership and innovation that many feel canserve as a solid foundation for developing Min-nesota's biobased plastics industry.52

Paul Rothweiler, of Aspen Research, says,"What I would like to see is more support forthe University in helping to get fundamental re-search going on some of these newer materialsand the related recycling processes. In a capital-istic environment, you should say, 'ose whoare going to make money should invest money.'But, when you start looking at the unknowns

and uncertainty in this area of application, thereis a hesitancy to fund them – and the ultimateresult is that the work doesn’t happen. So, soci-ety, as the benefactors from this work, needs toplace more emphasis in getting some of the re-search done. As that work resolves those risksand unknowns, the investors will follow – andwe will all win.”38

"Now, at the same time, there needs to be avery robust transfer of technology from acade-mia to industry because, without that transfer,we will end up with technology sitting on theshelf that won't contribute to society,” Roth-weiler adds.38

He continues, "So, there needs to be thosetwo: we need to help the universities performthe initial research, and ensure entrepreneurswill be able to translate that into commerciallyviable materials. With that, bio will then havethe potential to become the new market we all

Promise and Potential of Bioplastics

62

Promise and Potential of Bioplastics

Photo courtesy of the Center for Sustainable Polymers, University of Minnesota

“We’re going to be one of theworld’s leading centers in this area."- Marc Hillmyer, Center for Sustainable Polymers, University ofMinnesota

want it to be. ey need a kick-start.”38

"Assuming these technologies are developed,and there is a robust tech-transfer bridge be-tween the university system and industry, weshould then consider providing entrepreneurs aslight incentive for commercializing it,” Roth-weiler adds. “at could be in the form of a taxbreak, or selling the material for a specified pe-riod of time. I realize that proposal could beperceived as reducing the tax income of govern-ment and subsequently taking money away fromother government programs, but when I sit backand take a look at the benefits of commercializ-ing those materials will bring, I think there isgood justification for that proposal."38

Andy Shafer, of Elevance, says that interfac-ing with higher education can be a challenge."Intellectual property is the key to driving all ofthis. If that can't be managed, distributed andshared, then you can't attract the investmentnecessary to grow young companies," he says."All of that has to be managed so that it flowseasily."86

At the same time, Minnesota must get proac-tive in capitalizing on opportunities that presentthemselves. Doug Cameron of Alberti Advisorswas part of the group that started Elevance, aChicago-based company that is developingchemistry from vegetable oils. "at’s a big sadstory for Minnesota. It was started at Cargill,and then one of the lead investors in the spinoutdecided that, as part of their investment, theywanted to move it to Chicago," he says. "Min-nesota didn’t put up much of a fight, and so thiswhole, big vegetable oil company that’s doingextremely well and raising lots of money leMinnesota to go to Chicago. It’s just too bad."6

John Souter, of Accent Signage, believes thatraising the profile of what is already happeningin Minnesota could be a key to spurring addi-tional interest, technology and development.“Shoppers in Lakewinds, near where I live, don’tknow that the technology that creates thebiodegradable bags they use to carry out theirgroceries – Ingeo® PLA – was developed by Na-tureWorks. And, they have no clue that thiscompany is only a mile or so down the road

from the store.”43

Souter says that Minnesota media needs to bemore informed – and engage. "One of thethings that upset me over the years as a scientistwith 3M, is the apparent apathy of our media tothe scientific development within our commu-nity," he says. "For example, we’ve had some in-credible inventions at 3M that generatedbillions of dollars, but were never really coveredin any detail – perhaps the exception being Post-it® notes. Unless the media starts to understandwhat local companies are doing here with greentechnologies, and actually start to cover these ona regular basis, you will have a few more greatcompanies like NatureWorks that very few peo-ple know about."43

Promise and Potential of Bioplastics

63

Raising the profile of what isalready happening in Minnesota could be a key tospurring additional interest,technology and development.

Promise and Potential of BioplasticsPromise and Potential of Bioplastics

64

Huhtamaki, headquartered in Espoo,Finland, estimated that285,000 BioWare® cupsand 12,000 deli containers made of Ingeo™and used by climatechange delegates effectively eliminated theamount of greenhouse gasgenerated by driving anaverage European automobile 12,305 miles.(Photo courtesy of NatureWorks)

B Building on the Petroleum ExperienceWe have had a century to figure out how to

use petroleum-based sources in plastics. eadoption curve for biobased materials in manu-facturing is following a similar path, though cer-tainly at an accelerated rate – driven bytechnology, innovation, environmental con-cerns, unstable oil supply and fluctuating prices.

Paul Rothweiler, of Aspen Research, says thatadoption of biobased materials is going to bebased on what manufacturers know about pe-troleum-based plastics. "Many of the things wedid with petroleum-based materials, we’re goingto do with biobased materials. Essentially, it’sthe same molecule and, in some cases, it’s exactlythe same molecule as the petroleum-based mate-rials," he says. "Much of what we do today willremain the same. What that fundamentallymeans is our learning curve for adopting thesebiobased materials will be short, because we canleverage 100 years of petroleum-based chem-istry, processes and applications."3

Olga Selifonova, of Reluceo, agrees thatadoption of sustainable, biobased products is in-evitable, but believes innovation won’t necessar-ily be rapid. “It will take time. It is still very earlyin the development, but expectations are veryhigh. Now that buyers are asking, it is a chancefor innovators to try to look for new solutionsthat can compete in terms of performance andprice.”68

According to American Recycler, biobasedplastics are expanding into two different ends ofthe performance scale – biobased commodityplastics for packaging and similar use; and tech-nical biobased plastics for automotive, elec-tronic and consumer goods applications. Whileshort-term challenges exist related to the eco-nomic slump with project expansions, the arti-cle noted that, “… in the long-term, thechallenges are more structural, such as enhanc-ing the recycling infrastructure as well as techni-cal properties for bioplastics."91

Quoting Brian Balmer of Frost & Sullivanfrom the article, "Bioplastic suppliers shouldfocus on improving product performance andthe depth of their product range if they are to

succeed in the rapidly evolving markets forbiobased plastics. End users need to be madeaware of the various alternatives available inbiobased plastics, with a clear definition of theperformance and end-of-life characteristics ofeach of these biobased plastics."91

According to Jim Palmer with the MinnesotaSoybean Board, one of the best models for soy-based products moving into petroleum-basedterritory is in the area of printers’ inks. "Whilesoybean ink was slightly higher in initial cost,the industry discovered that the quality, the en-vironmental and worker safety, and the ease ofclean-up far surpassed petroleum ink," he says."Now, soy inks dominate the market in manyprinting applications. I think the same couldhappen with bioplastics. Manufacturers mightpay a little more if they can offset that price in-crease through meeting environmental stan-dards."77

“e processes have to be further developed,”says Friedrich Srienc, Professor at the BioTech-nology Institute, University of Minnesota. “epetro-chemical industry really evolved overmany decades. [Bioplastics] are not really fullymatured yet; they can be improved. e manu-facturing processes and the research and devel-opment are all a part of that. We need to findout how to better modify the properties theseplastics have so that they can be used for what-ever application you can dream of. e potentialreally ranges from whatever plastics are cur-rently being used to very high-specialty prod-ucts.”4

Supplier-Manufacturer CollaborationRaw materials providers (e.g., resins, polyols)

must convince manufacturers to consider theuse of biobased materials – and many timesmust work in partnership with them in a virtualresearch and development role to discover theuse, opportunities and challenges involved.

Manufacturers need to figure out how to usethese biobased materials in their processes with-out compromising efficiency, equipment andprofitability – while assuring their customers ofconsistent performance, reliability and competi-

Making It WorkThe Process to Successful Adoption of Biomaterials in Plastics Manufacturing

Adoption of biobased materials is going to be basedon what manufacturers knowabout petroleum-based plastics.

65

“The potential really rangesfrom whatever plastics arecurrently being used to veryhigh-specialty products.”- Friedrich Srienc, BioTechnology Institute, University of Minnesota

Making It Work

66

Making It WorkMaking It Work

(Photo courtesy of Northern Contours)

tive cost. Manufacturers who purchase biobasedcomponents from others must know, without adoubt, that these products will meet safety andtesting standards and will not jeopardize theircustomer experience with their brand or prod-uct.

In other words, there are a number of hurdlesto adopting biobased plastics – but just as manyopportunities. One of the most significant hur-dles is the reluctance of manufacturers to investtime and money in pilot testing bioplastics as analternative to what they have always done.

Patrick Kenney says his company, Green Har-

vest Technologies, is trying to address the issue."One of our primary objectives is to take the ini-tiative that companies are very reluctant to do –the development work and the manufacturing –to establish that biobased materials can work inproducts and in the marketplace," he says. "Ourfocus is on developing product that uses bioplas-tics, making the right bioplastics formulations,leveraging the capabilities that manufacturingtechnology and processes can bring to makethose materials perform in a product.”79

"e product owners aren’t convinced thematerial can perform. If a product owner asked

Making It Work

67

a plastic molder to make a product from PLA,they would mold it," says Kenney.79

Managing Costs for CompetitivenessBut there is considerable cost and risk for

manufacturers trying to meet a request for theuse of bioplastics. "ere is the cost of reposi-tioning the equipment and re-characterizing theequipment, and the product owners would berelying on the manufacturer to get the materialto perform in their product. Most manufactur-ers aren't qualified to do that developmentwork," Kenney adds.79

Mullinix Packages, Inc. of Fort Wayne, IN,uses PLA from NatureWorks to make high-heatfoodservice lids for a major cup supplier. Ac-cording to Brian Schmitz, Vice President ofSales, the demand for biobased materialsstemmed from limited market demand in spe-cific geographic regions of the country. "Weadopted PLA as a request from a customer," hesays. "Many people talk about bio, but once theyrecognize the premiums attached, which are tra-ditionally 20 to 30 percent over petroleum-based products, they reconsider. Less than twopercent of our business is biobased."80

Anticipating where the market isheaded has proven successful for Ac-cent Signage, an architectural interi-ors and ADA signage company inthe Twin Cities. John Souter of Ac-cent Signage says, "If you do not havea business model that is based onsupplying the end consumer withwhat they would like, as opposed towhat you’d like to sell them, you’dbetter reinvestigate what you’redoing."43

A 20-year veteran of 3M, Souteruses a multi-attribute analysis(MAA) to determine market trendsfor his company. "It’s a mathematicalmodel that enables you to get apretty good prediction of what’sgoing to happen, assuming thatyou’re fairly accurate with your inputdata," he says. "As a wholesale com-pany, we define the difference be-tween a customer and a consumer. Inother words, if we just followed thenormal market approach of only lis-tening to the voice of our customerand not considering the end user – aswell as technology trends – wewould have missed the boat on greentechnology. Many companies areusing green-washing to look as ifthey are at the forefront of thismovement."43

e MAA analysis led Accent Sig-

Making It Work

68

Making It Work

"The product owners aren’tconvinced the material canperform.”- Patrick Kenney, Green HarvestTechnologies

nage to develop its Materia™ line of interiorADA signage systems, some of which use Na-tureWorks PLA. Most importantly, Accent Sig-nage has been able to offer this line of productsat the same price as non-biobased signage. "atwas a conscious attribute in the multi-attributemodel. We asked if the product was likely to flyat a 20 percent price premium. We thought, no,it would not, and I think we’ve been provenright," Souter adds. "One ofthe things that you findwith the end consumer isthat everyone wants to dothe right thing, but few arewilling to pay a premiumfor it."43

Mike Riebel with Biova-tion also believes that costcompetitiveness of biobasedplastics is achievable now."Green is good, as long asyou’re within 10 percent ofthe competitive products. To get more than thatis difficult," he says. "ese biomaterials can becompetitive, as long as they are engineered anddeveloped with that in mind. Also, we're look-ing at higher-value applications. One of thethings we've learned is that biomaterials aren'tjust a simple replacement. ey can be engi-neered to replace something of much highervalue with the right technology."44

Patrick Kenney notes that biobased materialsare heavier and denser than the high-tech plas-tics currently used. For example, the bottledwater available at Walmart is packaged in alightweight PET bottle that is virtually paper-thin. When it’s empty it can crush easily, so themachines that make these bottles have beentuned to handling very lightweight material,using high pressure and high heat.79

"If you were to make that same bottle with aPLA, it would probably have twice as much ma-terial, and it would be a slower process. Youcouldn’t use as high heat; you’d have to uselower pressure. You’d have to reset all of the dialson the machine, in a sense, because you have adifferent recipe, so then you’re producing a

lower volume as well. at lower volume drivesup the price," Kenney says.79

In the case of resins or polyols, the actual ex-periences of manufacturers – and consumers –with biobased products are dependent to a greatdegree on what happens to these biobased in-gredients once they get into the manufacturingprocess. Purchasers of raw biobased productsmay use them in their own formulations, which

may or may not produce optimum results. Inorder to mitigate these concerns, it is importantfor biobased "raw material" suppliers to work as"research partners" with their customers.

RENUVA™ and BIOH™ are two examples ofcommercially available products derived fromvegetable oils, such as soybean oil.

e Dow Chemical Company producesRENUVA™. According to company literature,RENUVA™ utilizes a proprietary process tobreak down the oil, functionalize it – and thenreconstruct the molecules for greater qualityand consistency.92

According to Dow, the RENUVA™ processalso eliminates odors typically associated withother biobased polyols. Additionally, this chem-istry provides the opportunity to design polyolswith a variety of specifications and attributes foroptimum performance in specific applications.92

RENUVA™ is being used for seating foams,carpet backing, steering wheels, vehicle armrests and head rests, bedding and furniture, andnoise and vibration mitigation in vehicles. It isalso being used in adhesives, protective coatings,and even footwear. e Green Footwear Project

Making It Work

69

Photo courtesy of Segetis, Inc.

led by Dow Italia is showcasing high-quality,stylish shoes using RENUVA™ polyurethane as away to reduce the carbon "footprint" offootwear – and demonstrate that renewable re-sources can be an attractive and beneficial alter-native for manufacturers.92

BIOH™ is a series of soy-based polyol prod-ucts developed by Cargill and introduced in2005. Based on promising soy-oil polymeriza-tion technology first developed at PittsburgState University in Kansas, BIOH™ is being po-sitioned at this point as a renewable, biobasedalternative in the polyurethane foam industryfor furniture, bedding, and vehicle seating andcushioning. Serta mattresses are using BIOH™extensively in their inner spring mattresses.BIOH™ is used to replace a portion of the non-renewable petroleum-based chemicals tradition-ally used to manufacture foams. Commercialfoams are typically made with 5 to 20 percentrenewable content from BIOH™ polyols.93

One factor in the consistency and perform-ance of biobased materials is the consistencyand quality of the source of the biomass beingused (e.g., corn, soybeans). With its relationshipto Cargill, BIOH™ (although it is made fromsoybeans) is similar to Mirel®, in that its parentcompany has a long history in agricultural com-modities and can, to some degree, bring agreater sense of quality control to the commodi-ties used in its innovative biobased products andtechnology.

Paul Rothweiler, of Aspen Research, believesthat biobased products are being consideredwhile companies battle the unpredictability inthe oil markets. "Corporations have a lot in-vested in being economically sound, and watchprice fluctuations very closely," he says. "Compa-nies must make sure they can produce productsthat are going to withstand oil price fluctua-tions. Biosourced materials are one of thosethings you look at and say, 'I need this in myportfolio to ensure stability.’”38

Partnership rough the Value ChainAddressing costs is a real issue – but one that

can sometimes be best addressed through closeworking relationships.

"Our internal policy is to use renewable or re-cyclable materials wherever you have cost parity.If a renewable or biobased material or recyclablematerial is the same cost, that’s the right thing todo," Jay Olson of John Deere says.27

Olson adds that their manufacturing partnerfor the biobased seat cushion deserves a lot ofcredit for their commitment to finding ways toattain cost parity. "We brought this to them,they evaluated it, and they grabbed it and cham-pioned it because they also believed it was theright thing to do. And it was a cost improve-ment for them. ey’ll be able to produce abiobased seat cushion at the same cost as petro-leum-based. at will put them in a leadershipposition because, over time, it will become less

Making It Work

70

Making It Work

Addressing costs is a real issue– but one that can sometimesbe best addressed throughclose working relationships.

(Photo courtesy of NatureWorks)

cost than the petro-based," Olson says.27

Successful adoption of biobased materials canbenefit significantly from full buy-in at everystep. "Every link of the chain has a commitmentto it, otherwise it doesn’t get pulled through. Ittakes a champion in each line to each supplier,both externally and then the internal valuechain as well, with all of the different functionswithin a company – product engineering, sup-ply management, manufacturing and marketing.It’s definitely a team focus, because if there’s onepart of the link that doesn’t support it or doesn’tmeet their needs, then that’s a barrier," Olsoncomments.27

Andy Shafer, of Elevance, says, “You have tolook at the value chain. e monomer companyis going to have to work with someone to getthe polymer made. e polymer company isgoing to have to work with someone to get itconverted into the fabricated article. en, thatfabricated article is going to have to get to anend user to actually use that injection-moldedpart, thermoformed package or whatever it maybe."86

"At each step in the supply chain – the valuechain – you're going to have different sets of is-sues and requirements to overcome: the abilityto process, the right physical properties, the eco-nomics and the equipment required to manu-facture the next step in the chain," Shafer adds."Whatever it may be, all those factors have to beaddressed."86

Doug Cameron, of Alberti Advisors, says thatadopting biobased materials into a manufactur-ing environment is no small commitment. "Evenif it’s a very similar molecule, the fiber size isgoing to be slightly different and the processingspeed is going to be different, so it's not a situa-tion where you’re going to flip back and forth,"he says. "You would probably need to have dedi-cated line. You'll probably have to work with theengineers and do some testing and tweaking."6

Brian Schmitz of Mullunix Packages says,“We have to take great care in manufacturing,including extensive clean up between runningbiobased and petroleum based products. Addi-tionally, biobased materials have limited condi-

tions of use due to low heat deflection tempera-tures and brittleness."80

"e people who figure it out are going tohave an opportunity. I have consulted with anumber of companies that are setting up serv-ices or building expertise in how to formulateand make product based on these new poly-mers," says Doug Cameron of Alberti Advisors."e people are going to have to put a little bitof work into reformulating and looking at theirproducts, and it’s not going to be trivial."6

Cameron sees opportunity for collaboration."People who are strictly manufacturers couldteam up with some of these development groupswho can work out the formulations – and helpthem get into the business."6

"We’re very open to partnerships,” says CoraLeibig with Segetis, Inc. “We believe that it’s im-portant for us to grow our business so that weattract the partnerships we need. We need sup-ply chain partnerships; partnerships with bio-mass owners who can help us get a more localsupply of levulinic acid; and we welcome part-nerships downstream for formulating materials,as well as manufacturing partnerships for ourown particular materials."82

"Minnesota has been a great place," Leibigadds. "ere are a number of consumers of ourproducts and formulators of our products righthere in the Twin Cities and throughout Min-nesota."82

Paul Rothweiler of Aspen Research agreesthat education is key. "ere is an educationlevel associated in working with biobased plas-tics – especially with entrepreneurs, some ofwhom have come to us and want a biobasedplastic for a specific application," he says. "Forexample, if you tell me that your product isgoing to have UV exposure, you cannot substi-tute PLA directly for acrylates because PLA hasesters that break under UV exposure."38

Making It Work

71

"People who are strictly manufacturers could team upwith some of these development groups who canwork out the formulations –and help them get into thebusiness."- Doug Cameron, Alberti Advisors

72

Making It Work

TTo address the challenges and maximize opportu-nities, the following action steps are recommended:

EducateProactively shape awareness, attitudes and

understanding of the economic, health and envi-ronmental benefits of biobased products amongconsumers, retailers, manufacturers, and the finan-cial and agricultural communities. Education andinformation exchange could stimulate demand andensure closer alignment of product and buyerneeds, as could sharing success stories of biobaseddevelopment initiatives.

Support Minnesota educational institutionsin shaping the skills and mindsets necessary forsustainable development. Globally, business andindustry are recognizing the need to engendergreen thinking within their management teamsand corporate strategic plans. By teaching futureleaders the environmental and long-term eco-nomic benefits of sustainability, academia can pro-vide future leaders with the tools necessary forsuch decision-making.

Provide education to manufacturers to helpease transition of using biobased material in theiroperation.

Conduct a “connect the dots” conferencewhich brings resin/polyol providers together withuniversity researchers, start-ups, manufacturersand venture capital to discuss what is happening,who is doing what and to begin networking Min-nesota ideas, research and businesses that can helpeach other succeed.

Evolve group into a community of innova-tion to help nurture potential of biobased manu-facturing in Minnesota.

Aggressively raise the media profile, throughthe efforts of AURI, industry partners and leadersof the agricultural community, about what is hap-pening in Minnesota related to biobased plastics,green chemicals and bioproducts.

Collaborate and SupportNurture an investment environment more fa-

vorable to stimulating innovation and market de-

velopment. Measures should be explored that in-crease access to capital, particularly for developingsustainable products for new or existing markets.

More robust technology transfer. A guide orwebsite that incorporates services available to in-crease biobased opportunities.

Create an innovation ecosystem involving aca-demic institutions, nonprofits and the private sec-tor that encourages knowledge sharing and jointventures. A more open and collaborative environ-ment made possible through stakeholder dialoguecould accelerate innovation and product develop-ment.

• Industry and academic partnerships to supporta strong research and development environment

• Forums for sharing of best practices Encourage a strategic approach toward devel-

oping and manufacturing biobased products, sup-ported by comprehensive and coordinatedlegislative actions in such areas as agricultural, en-vironmental and industrial policy. Input to ongo-ing strategies and decisions should address the fullproduct value chain from renewable raw materialto final end product. Doing so could ensure sus-tainable market growth and support eventual jobcreation.

Find ways to leverage Minnesota’s strong bio-fuels foundation and leverage it in the next gener-ation green chemicals marketplace.

Support financing of demonstration projectsand onsite assistance to manufacturers to furtherencourage adoption and up scaling of biobasedproduction and innovations. As part of enhancingmanufacturing receptivity and trial, further com-municate the long term economic and brand dif-ferentiation benefits of biobased products to helpfacilitate dynamic market development.

Investigate the possibility of using ethanoland biodiesel plants as the centerpiece for abiorefinery “campus,” including incubators forstart-up green chemical companies, biomaterialsresearch and development, and manufacturingusing biobased materials, including the use of dis-tillers grains as plastics strengtheners and theemerging research on using waste glycerol frombiodiesel production to produce bioplastics.

RecommendationsWhat Should Happen Next

73

Recommendations

Consider a biobased plastics manufacturingpilot plant facility in which manufacturers, bio-plastics resin/polyols suppliers and product devel-opers could test processes and products beforescaling up to full production.

Remove BarriersCreate a clearer and more positive regulatory

environment for sustainability. More proactiveand collaborative engagement between govern-ment, academia and industry could be beneficial.

Support the development of closed system col-lection, recycling and composting of biobasedplastics in large companies, athletic facilities, etc.(e.g., University of Minnesota, Cargill, Twins Sta-dium).

Conduct a pilot study of a community-basedcomposting infrastructure whereby residentscould bring compostable materials – includingbioplastics – to a single neighborhood compostinglocation. Turn it into an education project.

RecommendationsRecommendations

74

Addendum

75

Thought Leader Forum

ought Leader ForumFollowing the completion of the Biobased

Products: Focus on Bioplastics Report, AURIbrought together a small group of industrythought leaders. ese thought leaders have sig-nificant experience in biobased materials, innova-tion and industry development in the upperMidwest region and assisted in vetting the find-ings in this report.

e intention of the gathering was to 1) gaugeresponses to the report; 2) understand thoughtleader priorities as they relate to the report; 3)determine next steps; and 4) explore additionalconsiderations before moving forward.

AttendeesParticipants included start-up entrepreneurs,

established mid-sized biobased materials compa-nies, former executives from Fortune 500 compa-nies, commodity group representatives,researchers and higher education administrators.Each brought a unique perspective and set of re-sources that will be called upon to establish a vi-brant biobased materials industry in Minnesota.

e meeting was facilitated by Dick Gross, aprofessional facilitator with over fieen years ofexperience garnering insights and building con-sensus in the public and private sector.

Responses to the ReportParticipants found the report thought-provok-

ing. Issues of time to market, access to capital, in-tellectual property protection, and talentdevelopment were discussed. e group sharedseveral success stories within the biobased mate-rials industry that we can learn from. ey alsonoted that the bioplastics industry is in its in-fancy and changing rapidly. Participants felt thatthis report captures the current state of the in-dustry in Minnesota in the midst of a very globalmarket. e group also expressed concerns thatthe growing pains of the industry will be ampli-fied in the highly connected and social network-ing environment – successes and failures will beimmense.

Priorities and Recommendation of oughtLeader

Each of the recommendations contained inthis report were discussed by the group. e fa-cilitator asked participants to amend, remove oradd to the recommendations in the report. Par-ticipants were then asked to prioritize the revisedlist of recommendations. e ten highest rank-ing recommendations were:

1. Nurture an investment environment includ-ing the provision of an infrastructure/clearing-house mechanism.

2. Encourage a strategic approach.3. Leverage Minnesota’s strong biofuels foun-

dation and investigate ethanol plants as potentialcenterpieces for a biorefinery campus, potentiallystructured as co-ops (two recommendationscombined).

4. Proactively shape awareness, attitudes andunderstanding of the biobased materials industry,including what it is today, addressing the foodversus biobased industry, and sustainability issues.

5. Create an innovation ecosystem that in-cludes the entire biobased materials system, fromproduction to consumers, and focuses on sustain-ability.

6. Educate manufacturers about biobased ma-terials and their appropriate use (this is pre-con-sumer education).

7. Hold a “Connect the Dots” conference.8. Evolve this group and others into an innova-

tion community.9. Take a more regional approach.10. Support Minnesota educational institutions.

Next StepsFollowing the official release of the report, a

“Connect the Dots” conference will be held toengage a broader audience. At this conference,participants will not only connect with others in-volved in this industry, but will begin working onthe priorities identified in the report and poten-tially other priorities brought forward by partici-pants of the conference. Hopefully, thisconference will lay the groundwork for the estab-lishment of an innovation community centeredon biobased materials.

Recommendations

76

Additional Resources Neededought leaders identified additional research

that could provide important information for thebiobased materials industry, especially as it re-lates to a concerted effort to move the industryforward:

• An analysis/assessment of the technical, eco-nomic and environmental vitality and potentialof biobased materials industry.

• Quantify the amount and type of fundingresources needed to jumpstart the industry inMinnesota and regionally.

• Since this report looked specifically at bio-plastics, there is an opportunity to focus on otherapplications of biobased materials, such as lubri-cants, films, biobased polymers, polyurethanes,fabrics, packaging, etc.

Lastly, thought leaders were asked to identifyadditional individuals and organizations thatshould be a part of future activities of a commu-nity centered on the biobased materials industry.

• State agencies – Department of Employ-ment and Economic Development, MinnesotaDepartment of Agriculture, Minnesota PollutionControl Agency, others

• e cellulosic sector (e.g., forest industry,more ag industry)

• Manufacturing industry representatives• Investors• End-users• Other sectors of the biomaterials industry

beyond plastics

Definitions

Biobased: Products that are made from bio-logical renewable raw materials such as plantsand trees. e term excludes food, traditionalpaper and wood products, but also biomass asan energy source. Biobased products are oenconsidered a substitute for fossil-based products,and are felt to leave a smaller ecological foot-print (i.e., generate less waste, use less energyand water).

PLA: Stands for polylactide – a versatilepolymer that is made from lactic acid. Lacticacid is made from dextrose by fermentation.Dextrose is made from cornstarch, which is de-rived from carbon dioxide and water.

Biodegradable: Describes products that canbe decomposed – but not necessarily 100 per-cent degraded – in a microbial environmentaer disposal.

Compostable: Products that are 100 percentbiodegradable.

Recyclable: Products that are not biodegrad-able or compostable, but still have useful physi-cal or chemical properties aer serving theiroriginal purpose and can, therefore, be reused orremanufactured.

Sustainable: Encompasses issues of environ-ment, health, social and economic justice, aswell as material resource sustainability through-out the entire life cycle of bioplastics from feed-stock production to management of thebioplastic product aer its intended use.

Biobased Content: e amount of biobasedcarbon in the material or product as fraction orpercent weight of the total organic carbon inthe material or product.

Bioplastics: Plastics in which 100 percent ofthe carbon is derived from renewable agricul-tural and forestry resources such as corn starch,soybean protein, and cellulose. ey are not asingle class of polymers but rather a family ofproducts that can vary significantly from oneanother.

Organic: Material(s) containing carbonbased compound(s) in which the carbon is at-tached to other carbon atom(s), hydrogen, oxy-gen, or other elements in a chain, ring orthree-dimensional structure.

Biomaterial: Any material made from annu-ally renewable plant matter (as opposed to non-renewable prehistoric plant material, fossilfuels), including agricultural crops and residues,and trees. Sustainable biomaterials are those thatare sourced from sustainably grown and har-vested cropland or forests; manufactured with-out hazardous inputs and impacts; healthy andsafe for the environment during use; and de-signed to be reutilized at the end of their in-tended use such as via recycling or composting.

Appendix

Appendix

77

Appendix

78

Appendix

Appendix

79

Companies in Minnesota

City Company City Company

Albert Lea • Agra Resources Coop. Mankato • Environ Biocomposites Manufacturing, LLC• Daisy Blue Naturals • Ridley Block Operations• KleenTec Minneapolis • AVEDA Corporation

Atwater • Bushmills Ethanol, LLC • BioForce Enviro-Tech Inc.Baxter • LINDAR Corporation • Cargill Industrial Oils and LubricantsBecker • Biocorp North America • Chemstar Products Company

• Simply Neutral • Eniva CorporationBenson • Chippewa Valley Ethanol Company, LLP • Entropy Solutions

• Future Products Inc. • Herban CowboyBlooming Prairie • DiaServe Inc. • Majestic Tree Care Inc.Bloomington • Ardore Candles • Mrs. Meyer’s Clean DayBurnsville • Dianne’s Custom Candles, LLC • Natural Built HomeCampbell • SoyCandleWorks • Restore ProductsCannon Falls • Clark Valley Soy Company • SoyMade Scents

• Sustane Natural Fertilizers Inc. • TargetCircle Pines • Northern Technologies International Corporation • e ymesClaremont • Al-Corn • Warner Tool ProductsCold Spring • Mississippi Topsoils Inc. • CaldreaCook • HillWood Products Morris • Denco, LLCCurrie • Environmental Dust Control Inc. Nevis • Minnesota Emu Inc.Detroit Lakes • Pet Care Systems Inc. New Prague • All Paper Recycling Inc.Eagan • Cool Clean Technologies Newfolden • Made By MelanieFairmont • Rosen’s Inc. Osseo • Crescent ProductsFaribault • Faribault Mills Plymouth • Ultra Green, LLCEdina • SoySo Inc. Princeton • BioMatrix InternationalFloodwood • Mat Inc. • Crystal Cabinet Works Inc.Golden Valley • Liberty Carton Company Prior Lake • Basket Ease

• McLaughlin Gormley King Co. Rochester • Bubbles by Brooks• StarchTech Inc. Roseville • UV Color Inc.

Granite Falls • Grante Falls Energy, LLC Saint Francis • Soy RadiantHam Lake • Quality Blending Inc. Saint Joseph • USA Solutions

• White Oaks Candles, LLC Saint Paul • 3MHeron Lake • Heron Lake BioEnergy, LLC • CHS Inc. / CenexHollandale • North American Mat Co. • Cortec CorporationHopkins • High Five, LLC Shakopee • Conklin Company Inc.Inver Grove Heights • Cenex Shoreview • Multi-CleanLakeville • Copper Creek Candles Inc. • RecyclaholicsLino Lakes • React-NTI • Safe and CleanLittle Falls • Central Minnesota Ethanol Coop. Slayton • Soy Scents by Joan Inc.Long Lake • Baltix Furniture Inc. Spring Park • Petzlife Products Inc.

• Bugg Products, LLC Wayzata • VetbasisLuverne • Agri-Energy, LLC Winnebago • Corn Plus, LLCMabel • Steuart Laboratories Winthrop • Heartland Corn Products

80

References

1 Lacy, Peter; Cooper, Tim; Hayward, Rob;and Neuberger, Lisa. “A New Era of Sustainability,” UN Global Compact-AccentureCEO Study 2010.

2 “Sustainable Packaging: EnvironmentallyResponsible Packaging for Consumer and Industrial Markets: Market Analysis and Forecasts,” Pike Research, 2009.

3 Russell Herder Renewable Materials Survey, 2010.

4 Srienc, Friedrich. Interview with Carol Russell, February 2011.

5 Morrison, Liz. “Just one word: (bio)plastics,”Ag Innovation News, Agricultural UtilizationResearch Institute, July-September 2010.

6 Cameron, Doug. Interview with DavidBuchholz, January 2011.

7 Farrell, Chris. “From Wal-Mart to DowChemical to Silicon Valley and Beyond, Companies are Embracing a New, Core Strategy,” StarTribune, 15 January 2011.

8 Makower, Joel and editors of GreenBiz.com.“State of Green Business 2010”, Greener WorldMedia, Inc., February 2010.

9 Lubin, David A. and Esty, Daniel C. “e Sustainability Imperative,” Harvard Business Review, May 2010.

10 Environmental Protection Agency (EPA).

11 Ipsos Marketing, Consumer Goods, 2009.

12 Jeff Timm Consulting, Bioplastic & Biocomposite Supply Chain Conference, La Crosse, WI, October 2009.

13 Shen, Li; Haufe, Juliane; and Patel, MartinK, Copernicus Institute for Sustainable Development and Innovation, Utrecht University. “Product Overview and Market Projection of Emerging Bio-Based Plastics,”PRO-BIP 2009.

14 Packaging Recovery Organisation Europe,March 2009.

15 Wilcox-Barsalou, Miriam. “Federal Regulations for Bioplastics,” Plastics and thePlanet, 18 August 2010.

16 http://www.purina.com/Sustainability/sustainability.aspx.

17 Brown, Lisa. “Companies Turn to Renewable Packaging,” stltoday.com, November 2010.

18 Gura, David. “Noise From ConsumersPrompts SunChips to Return to Traditional,Quieter Bags,” National Public Radio, 6 October 2010.

19 http://www.sunchips.com.

20 “Sustainable Biomaterials CollaborativeApplauds Stonyfield Farm’s Adoption of Working Landscape Certificates,” SBC Press, 13 October 2010.

21 Crawford, Craig. “Automotive Bioplastics:Back to the Future,” Entrepreneur, June 2009.

22 Kleinschmit, Jim. Interview with CarolRussell, January 2011.

23 Timmerman, Dennis. Interview with CarolRussell, March 2011.

24 “Environmentally Preferable PurchasingSpecifications for Compostable Biobased FoodService Ware”, Sustainable Biomaterials Collaborative, 2011.

Appendix

Appendix

81

25 http://www.target.com.

26 “Canon, Toray Develop Industry’s Largest Bio-Based Plastic Exterior Part for Usein Multifunctional Office Systems,” Canon U.S.A., Inc., 14 October 2010.

27 Olson, Jay. Interview with David Buchholz, January 2011.

28 Ziegler, Sam. Interview with David Buchholz, March 2011.

29 Global Packaging Project Report. “A Global Language for Packaging and Sustainability: A Framework and a Measurement System for Our Industry,” e Consumer Goods Forum, June 2010.

30 Lunt, Jim. Interview with David Buchholz,October 2010.

31 “Destination 2025: Focus on the Future ofthe Renewable Materials Industry,” Deloitte Consulting LLP and e BioBusinessAlliance of Minnesota, 2009.

32 Lunt, Jim. “World of Bioplastics,” 2010.

33 “Degradable Plastics to 2014,” FreedoniaGroup, August 2010.

34 Sarnacke, Phil and Wildes, Stephen. “Disposable Bioplastics Consumer DisposablesAgricultural Films: A Market OpportunityStudy,” United Soybean Board, April 2008.

35 Kaiser, Helmut. “Bioplastics MarketWorldwide 2007-2025”.

36 “Bioplastics at a Glance,” European Bioplastics.

37 Barrett, John S. F. and Srienc, Friedrich.“Green Chemistry for the Production ofBiodegradable, Biorenewable, BiocompatiblePolymers,” Biocatalysis for Green Chemistryand Chemical Process Development.

38 Rothweiler, Paul. Interview with DavidBuchholz, January 2011.

39 Ritch, Emma. “Novomer, Kodak partneron bioplastics manufacturing,” CleantechGroup, LLC, 14 December 2009.

40 “Introducing PlantBottle™,” e Coca-Cola Company, May 2009.

41 Bardelline, Jonathan. “10 InnovationsChanging the Way Products are Packaged andShipped,” GreenBiz.com, 17 June 2010.

42 Wagner, M. and Oehlmann, J. “EndocrineDisruptors in Bottle Mineral Water: Total Estrogenic Burden and Migration from PlasticBottles,” Environmental Science and PollutionResearch 16, DOI 10.1007/s11356, 2009.

43 Souter, John. Interview with David Buchholz, January 2011.

44 Riebel, Mike. Interview with David Buchholz, February 2011.

45 Wallace, Ben. Interview with Carol Russell, October 2010.

46 Dworshak, Jeremy. Interview with CarolRussell, February 2011.

47 Albrecht, Jim. Interview with Carol Russell, 2010.

48 http://www.biopreferred.gov.

49 Riedl, Jessica. Interview with David Buchholz, December 2010.

50 Kelley, Steve. Interview with Carol Russell,January 2011.

51 Grinsteinner, Darin. Interview with DavidBuchholz, February 2011.

52 Hillmyer, Marc. Interview with DavidBuchholz, December 2010.

53 “A Study Assessing the Opportunities andPotential of Corn Based Products and Technologies,” Informa Economics, August 2009.

82

54 Davies, Steve. Interview with David Buchholz, October 2010.

55 Rone, Mike. Interview with Mike Howie,September 2010.

56 Noble, Gary. Interview with Carol Russell,January 2011.

57 Ackerson, Jeff. Interview with Mike Howie,December 2010.

58 Stanislawski, Harold. Interview with MikeHowie, December 2010.

59 Gerlach, Tim. Interview with Carol Russell, October 2010.

60 Angland, Clair. Interview with MikeHowie, September 2010.

61 Stockman, Bruce. Interview with CarolRussell, March 2011.

62 Johnson, Phil. Interview with Mike Howie,September 2010.

63 Darby, Debra. Interview with Mike Howie,September 2010.

64 Hurley, Don. Interview with Mike Howie,September 2010.

65 Katzenmeyer, Rob. Interview with MikeHowie, September 2010.

66 Ulven, Chad. Interview with Carol Russell,January 2011.

67 Welle, Tim. Interview with Carol Russelland David Buchholz, December 2010.

68 Selifonova, Olga. Interview with CarolRussell, April 2011.

69 Morrison, Liz. “Bio-Built,” Ag InnovationNews, Agricultural Utilization ResearchInstitute, July-September 2010.

70 Doering, Alan. Interview with Carol Russell, March 2011.

71 “Rural Innovation Network: Bringing theBest Ideas to Market, ” Agricultural UtilizationResearch Institute.

72 Wagner-Lahr, Jennifer. Interview withCarol Russell, March 2011.

73 Makower, Joel. “GreenXchange: Sustainable Innovation Meets the CreativeCommons,” GreenBiz.com, 13 July 2009.

74 “Patent Strategies for Promoting Open Innovation,” Science Commons.

75 Elde, Robert. Interview with Carol Russelland David Buchholz, December 2010.

76 Kaler, Eric. Interview with Carol Russell,March 2011.

77 Palmer, Jim. Interview with David Buchholz, March 2011.

78 Bioplastics-Investor.

79 Kenney, Patrick. Interview with DavidBuchholz, December 2010.

80 Schmitz, Brian. Interview with DavidBuchholz, January 2011.

81 “Taking Bio-Based from Promise to Market,” European Commission Enterprise andIndustry, November 2009.

82 Leibig, Cora. Interview with David Buchholz, February 2011.

83 Elde, Robert, College of Biological Sciences and Davis, H. Ted of the Institute ofTechnology. “A Forum on a New Science andNew Industry in Minnesota: Biocatalysis and itsSynergy with Healthy Ecosystems.”

84 Sparby, Michael. Interview with Carol Russell, March 2011.

85 Enderson, Taryl. Interview with DennisTimmerman, March 2011.

(References continued...)

Appendix

86 Shafer, Andy. Interview with David Buchholz, February 2011.

87 Tockman, Brian. Interview with DavidBuchholz, February 2011.

88 Jerke, Mike. Interview with DennisTimmerman, March 2011.

89 “Ethanol Coproducts Eyed as Fillers inPlastics,” ScienceDaily, 2 July 2008.

90 http://www.bioautocouncil.com.

91 “Innovation drives new bio-based plasticsapplications,” American Recycler, June 2010.

92 http://www.dow.com/renuva.

93 http://www.bioh.com.

Appendix

83

www.auri.org