All eyes are turning to renewable resources to produce the building blocks of chemical production—also known as platform chemicals—because of the scarcity of fossil-based feedstock and rising awareness about sustainability.
This increased focus on renewables has spurred growth in the Global Bio-Based Platform Chemicals Market, which is expected to grow at a CAGR of 13.82 percent from 2014-2019, making these chemicals one of the fastest growing segments of the Global Green Chemicals Market.
Technavio analysts have taken a look at some of the key drivers and challenges that are set to impact market growth through the projected period.
Rising Cost of Crude Oil
Rising Cost of Crude OilRising crude oil prices have forced manufacturers to shift to the production of bio-based chemicals, which has increased demand for platform chemicals that use renewable raw materials such as vegetable oils, animal fat, sugar, and industrial starch.
Availability of Raw Materials
Availability of Raw MaterialsBio-based feedstocks are not always readily available. On top of that, a huge amount of investment is required to procure land to produce bio-based feedstock using bio itaconic acid and bio 1,4 diacids. This lack of availability will be a major roadblock to market growth in this segment.
Support and Funding from Government
The rising cost of crude oil is decreasing the profit margins of manufacturers. To keep industry afloat, global governments are putting their support behind bio-based chemical production by injecting the market with incentives meant to tempt companies towards renewables. For instance, the Biorefinery Assistance Program in the US, states that companies willing to produce high-performance renewable chemicals and bio-based products will be eligible for loan guarantees to build the requisite manufacturing plants.
Moreover, the EU and industry leaders have launched a new European Joint Undertaking on Bio-based Industries, which will contribute US$6 billion into the European market for the production of bio-based products.
Lack of Commercialization
There is a problem with lack of commercialization in the Bio-Based Platform Chemical Market. Many chemical producers—especially those in developing countries—aren’t even aware of renewable feedstocks as an option. Establishing bio-based chemical plants is also way more expensive than conventional plants, and this rampant lack of awareness only serves to compound the issue.
Reduced Carbon Footprint
Bio-based platform chemicals emit less carbon dioxide than chemicals produced with traditional feedstock. As consumers become more aware of renewable, green and bio-based products, vendors are going to be forced to shift to bio-based platform chemicals.
Intense Competition from Fossil Fuel Products
Crude oil-based chemicals still have a leg up on bio-based chemicals in a lot of ways. They are cheaper and less restrictive than they renewable counterparts, and still hold a market majority. Despite the strong growth expected in the Bio-Based Platform Chemicals Market, it will still take some time and a few technological advances for renewable chemicals to catch up with the convenience of crude oil-based materials.
