ISH Markit releases biodegradable polymers report

Increasing regulations and bans against plastic bags and other single-use plastic items, such as drinking straws, are driving growing demand for biodegradable plastics, according to new analysis from London-based IHS Markit, a leading global source of information and insight. The current market value of biodegradable plastics exceeds $1.1 billion but could reach $1.7 billion by 2023, the report says.

According to IHS Markit, biodegradable or compostable polymers are bio-based or fossil-fuel-based polymers (plastics) that undergo microbial decomposition to carbon dioxide and water in industrial or municipal compost facilities. A few of these polymers decompose in backyard compost bins, soil, freshwater or saltwater.

The food packaging, disposable tableware and bags sector is the largest end-use segment, as well as the major growth driver for biodegradable polymer consumption, the company says. This segment is expected to benefit from local restrictions on plastic shopping bags and could achieve double-digit growth. Compost bags are the second most important end-use for biodegradable polymers. This market segment is expected to experience strong growth thanks to the gradual expansion of composting infrastructure and growing interest in diverting organic waste, including leaves, grass clippings and food waste, from landfills, according to the IHS Markit Chemical Economics Handbook: Biodegradable Polymers Report.

Foam packaging, which includes starch-based loose-fill packaging (packing peanuts), is a significant end-use for biodegradable polymers in Western Europe and North America, and mulch films and other agricultural applications are important end uses in Western Europe and Asia, the company says. Smaller volume markets include paper coatings for cups and cartons, as well as textiles; nonwoven fabrics; resorbable medical devices, such as sutures and implants; downhole tools for oil and gas field operations; and 3-D printing filament.

Current global demand for these polymers is 360,000 metric tons, the company says, but total consumption of biodegradable polymers is expected to increase to almost 550,000 metric tons by 2023, representing an average annual growth rate of 9 percent for the five-year period, which is equivalent to a volume increase of more than 50 percent from 2018 to 2023.

According to IHS Markit, Western Europe, with the world’s strictest and increasingly stringent regulations for single-use plastics, commands 55 percent of the global market value for these specialty biodegradable polymers, followed by Asia and Oceania (Australia and New Zealand) at 25 percent, then North America at 19 percent of consumption, with the rest of the world combined for less than 1 percent of demand.

“Biodegradable plastics, which are largely starch-based compounds or polylactic acid- (PLA-) based materials, have become more cost-competitive with petroleum-based plastics, and the demand is growing significantly, particularly in Western Europe, where environmental regulations are the strictest,” Marifaith Hackett, director of specialty chemicals research at IHS Markit and the report’s lead author, says. “However, the demand for these biodegradable polymers is still a drop in the bucket when you compare it to demand for traditional plastics, such as polyethylene (PE).”

According to IHS Markit, global demand for PE has nearly doubled during the last 20 years. IHS Markit expects 2018 global PE demand to exceed 100 million metric tons. However, significant new market pressures, including a rise in consumer expectations around sustainability, along with tightening environmental regulations in mature markets such as Europe and key growth markets such as China, could threaten future demand growth.

“The properties and processability of biodegradable polymers have improved, allowing the use of these materials in a broader range of applications, but legislation is the single most important demand driver for these plastics,” Hackett says. “Restrictions on the use of nonbiodegradable plastic shopping bags in Italy and France have led to a significant increase in the consumption of biodegradable polymers in those countries, and we expect European countries will continue to lead in legislative restrictions.”

In contrast, she says, biodegradable polymer use has grown more slowly or stagnated in places that lack mandates. “Growing consumer awareness and activism regarding environmental issues could certainly increase the market for biodegradable plastics,” Hackett says. “To truly capture the benefits of these biodegradable polymers, however, you need to have the collection and composting infrastructure to support their use. Very few major cities or municipalities currently have the necessary infrastructure in place.”

She says it is important to understand that many biodegradable polymers are compostable only in special industrial composting facilities, which operate at higher temperatures than home compost piles. “Only a subset of biodegradable polymers is compostable in backyard compost bins; an even smaller subset is compostable in the soil or in marine environments,” Hackett adds.

Despite the positive potential of biodegradable polymers, they are still mostly taking a backseat to other sustainability approaches, such as reducing plastics consumption and recycling, she says. “For various reasons, which may include consumer confusion regarding bio-based plastics versus biodegradable polymers, there is not as much demand for these more sustainable plastics as you might expect, despite heightened public awareness of the plastics waste issue,” Hackett says. “In addition, suitable disposal options for products made from biodegradable polymers are often lacking. The cost of establishing the infrastructure necessary to support their collection and composting remains a barrier to demand growth.”

Mandatory composting programs can contribute to demand growth for biodegradable polymers, the IHS Markit report says. These programs divert organic waste from landfills, thus reducing greenhouse gas emissions from landfill sites. The expansion of composting programs can spur demand for compostable trash bags and food service ware, both important end uses for biodegradable polymers, the company says. The shortage of composting facilities that are capable of processing biodegradable polymers limits the positive impact of mandatory composting programs on biodegradable polymer demand.

“More legislation is likely coming in Europe or at the EU level, and if that occurs, we could see major changes in this industry and pushback from producers of traditional plastic products,” Hackett says. “The last time we at IHS Markit assessed the global demand for biodegradable polymers, we noted the U.S. was the largest driver of demand growth for this segment, but due to legislation Europe is by far the leading demand center. Europe is the place to watch, as Europeans are particularly motivated to reduce marine litter.”

The issue of plastics and sustainability will be a key topic of discussion at the upcoming 6th Annual Global Plastics Summit (GPS) 2018, which takes place Oct. 30 to Nov. 1 in Chicago. Experts from IHS Markit and the Plastics Industry Association, Washington, will discuss the latest market outlooks from key industry sectors,. The eventwill feature senior business leaders sharing their companies’ strategies for success and innovators presenting the latest in plastics technologies.

The biodegradable polymers industry is affected by several major drivers in the environmental area, IHS Markit says: solid-waste disposal patterns, existing and potential legislation and consumer attitudes and behavior. The evolution of these factors and their effect on the biodegradable polymers industry differ in each region of the world.

In the U.S., landfilling is the most common method of municipal solid waste (MSW) disposal. According to the U.S. Environmental Protection Agency, landfill accounted for 53 percent of total MSW in 2014, which is the most recent year for which data is available. Materials recycling accounted for 26 percent, and combustion with energy recovery at 13 percent were next in order of importance. Composting accounted for 9 percent of MSW disposal.

Composting has the potential to become a more important means of MSW disposal, especially for food waste and yard trimmings, IHS Markit says. According to its report, these two categories of waste accounted for 28 percent of U.S. MSW generation in 2014. In the case of yard trimmings, 31 percent of the waste generated was landfilled, while 61 percent was composted, and the remaining 8 percent was combusted with energy recovery.

“Biodegradable or compostable polymers can play a role in diverting waste from landfills,” Hackett says “For example, biodegradable pods for single-serve coffee makers simplify disposal of used capsules; compostable trash bags can control odors, minimize mess, discourage pests and otherwise reduce the ‘yuck’ factor associated with residential composting programs. Diverting organic waste from landfill reduces emissions of methane, which is a potent greenhouse gas. We at IHS Markit expect biodegradable or compostable plastics will increasingly be an important part of the sustainability solution, but much of their advancement and adoption will depend on legislation as well as consumer attitudes and behavior.”

Concerns about plastic waste in the environment are contributing to demand for biodegradable polymers worldwide, IHS Markit says. In 2015, China’s Jilin Province issued a ban on nonbiodegradable plastic bags and food service items, boosting bioplastics manufacturing in China. In addition to local policies, policies for biodegradable polymers also are at the national level.

In India, the biodegradable polymer market is still at a preliminary stage, with few players in the segment. However, IHS Markit says, India seems to be taking the lead in Asia as it relates to plastic bag bans. In 2012, the Delhi government issued an order imposing a ban on the use, storage, sale and manufacture of single-use plastic shopping bags in the city. In other parts of the country, use of these bags is a finable offense, but despite this, change is not highly visible on the ground.

The major manufacturers of biodegradable polymers include NatureWorks, a joint venture of Cargill and PTT Global Chemical; Novamont; BASF; and PTT MCC Biochem Co., Ltd., a joint venture of PTT Public Company Ltd. and Mitsubishi Chemical Corp..

In addition, IHS Markit says, TOTAL Corbion PLA, a joint venture of energy producer TOTAL and lactic-acid producer Corbion, plans to start up a world-scale polylactic acid facility in Thailand by the end of 2018. The U.S. accounts for the bulk of production for these polymers, but Thailand, with its proximity to growing markets in Southeast Asia, its expanding bio-economy, favorable investment climate, stable government and access to cost-effective sugarcane feedstocks for fermentation, is becoming an increasingly important contributor to the biodegradable polymers market, the IHS Markit report says.

IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers information, analytics and solutions to customers in business, finance and government, helping to improve their operational efficiency and providing insights that lead to well-informed decisions.