At the recent International Conference on Bio-Based Materials in Cologne, Germany, Ton Runneboom, Honorary Chairman of the Dutch Biorenewables Business Platform, painted a decidedly positive picture of the opportunities for the development of a sugar-based biochemical industry in Europe – built around the humble sugar beet.
“We looked at how the sugar beet compared to the sugar cane in Brazil and the tapioca in Thailand when used as a feedstock for fermentation-based chemicals. The picture in Northwest Europe was surprisingly positive,” he said. “While sugar production is currently regulated, due to deregulation in 2017, at least another 5 million tons of sugar will come on to the market, which can be used as feedstock for a fermentation-based chemical industry.”
Its belief in the potential of the beet led the Biorenewable Business Platform, together with a number of stakeholders, to commission Deloitte to research the opportunities for a European fermentation-based chemical industry. The result was ‘Opportunities for the fermentation based chemical industry in Northwestern Europe: An analysis of the market potential and cost competitiveness of North West European Sugar Beets”. The report showed that as a highly competitive sugar beet producer, Europe has an indigenous feedstock that is extremely suitable for turning into biobased chemical building blocks and bioplastics. Due to further intensification in the agricultural industry and improvements of crop seeds and yields, the competitiveness is likely to continue to improve for a number of years in the future. Also, the location is advantageous, situated in the proximity of a world class, high-tech chemical cluster.
“Moreover, the price of sugar is low against oil,” Runneboom said. But additional efficiency gains are also possible by starting from beets, instead of sugar. “That eliminates the need for expensive sugar processing,” he added. “You can feed the fermentation industry with glucose, sucrose, starch, whatever.”
The next step is to formulate an industry policy directed towards the build-up of that biobased chemical industry on the basis of indigenous feedstock. In his view, however, backward integration is not the answer. “The chemical industry is not going to back integrate,” he said. “ The answer lies with the farmers.
“Give them the freedom from quotas and they will become more competitive. Forward integration, by the farmers, will improve efficiency and the return on investment on land. The Netherlands has taken the lead in sugar – it has the highest yield of sugar equivalent per hectare, and is much more efficient that the sugar cane in Brazil.”
In short, clear opportunities would appear to exist for investments in the fermentation-based chemical industry in North-West Europe, paving the way for entering a market – that of biobased chemicals and plastics – with a projected CAGR of 6.5% through 2010 and gross margin contribution of €12 billion per annum.