7 Oktober 2008

“Innovation Takes Root” conference: It’s green – but what about cost and performance?

A sustainable message is not enough to succeed with green technology

Sustainability has many packaging firms looking at bio-based and compostable materials as alternatives to traditional plastics. But if companies want to succeed with these materials or any green technology innovations, they need to stress cost and performance advantages and not lead with an environmental message. That’s the advice of Ron Pernick, co-founder and managing director of Clean Edge Inc., a research and publishing firm focused on clean technologies, and others who spoke at the “Innovation Takes Root” conference, Sept 16-18. The Las Vegas event was sponsored by NatureWorks LLC, which makes polylactic acid from corn.

“When it comes to clean tech marketing 101, instead of location, location, location, it is cost, cost, cost,” said Pernick, co-author of The Clean Tech Revolution. “Clean tech is the next engine of economic growth, but it must deliver equal, if not superior performance, compared to what it would replace, and at a competitive price.”

Larry Wendling, staff vice president of corporate research at 3M Corp., St. Paul, Minn., agreed. “We see sustainability as a business opportunity,” he said. “But consumers and retailers are demanding green-based materials with the same or better properties at the same price, so you need to use innovations to achieve a practical outcome, combining customer and market needs.”

Companies developing PLA and other bio-based resins need to find market opportunities that leverage the advantages of those technologies, he said. “You need to treat it as a unique polymer, not a replacement, and match it to new opportunities.”

Opportunities for bio-based materials are emerging not simply because of sustainability initiatives and the green movement, but because of a scarcity of natural resources and a growing world population, said Marc Verbruggen, a longtime Teijin Ltd. executive, who became president and chief executive officer of NatureWorks LLC three months ago. The Japanese chemical firm, based in Osaka, bought a 50 percent interest in NatureWorks of Minnetonka, Minn., a year ago.

“About five or six years ago, I was at an executive meeting in Singapore and an economist was talking about growth in different countries,” said Verbruggen, who never worked in plastics before joining NatureWorks. “I realized then that the whole world can’t keep growing unless we do something about it. We either fight over scarce resources or we innovate our way out of this. This is not about the environment, it is about economics.”

Pernick agreed. “If it was just climate, I don’t think this would be happening. Climate is just one of the many forces. This is the first time the economy and the environment aren’t separated.” Historically, business and the environment have worked against each other, he said.

There are a number of factors favoring bio-based materials, he said. They offer a hedge against rising oil prices, typically create fewer emissions, are supported by government policies in many regions and are gaining traction from “big players such as Wal-Mart, Toyota and Sony.” But there also are a number of challenges to be overcome – especially that “consumers are not necessarily willing to pay premiums for green products,” he said.

In addition, environmental opposition is growing to bio-based materials because of concerns over deforestation and rising food prices due to using corn as a feedstock, said Pernick. “Like oil, corn costs are volatile,” he said. “Corn should be viewed as bridge feedstock [for bio-based materials] not the best feedstock.”

Also, manufacturers have not developed a cohesive message as to the material’s long-term impact, he said. “There is a need for accurate and transparent life-cycle and environmental-impact analysis,” Pernick said. That lack of data is compounded by “the lack of a bioplastics composting infrastructure,” he added.

According to Verbruggen, NatureWorks’ Ingeo PLA resin is cost-competitive with resins like polystyrene, polypropylene and polyethylene, making it a viable alternative even if some questions about the material remain. “Being renewable, sustainable and compostable are just additional benefits,” he said. “What we have to offer are renewable products, good economics and sustainable products, and that is what the economy needs. We are starting on a road. We are clearly not at our destination. We have to take it step by step.”

NatureWorks is doubling the capacity of its PLA plant in Blair, Neb., to 300 million pounds, with that expansion expected to be completed by early next year. Those types of capacity expansions are vital, Pernick said: “In the move from niche to mainstream material, scale will be critical. I expect the economies of scale to drop rapidly to put [bio-based materials] on equal footing.”

He warned firms to “embrace long-term thinking,” in regard to materials and technologies. “Long-term thinking is critical. Either be part of one of the greatest shifts in business and economic history, or become extinct,” he said.

Source: Plastics News, 2008-10-06.

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