Use of lignin as feedstock by 2020 requires funding of public and private R&D projects.
Long considered a waste product of the pulping industry, lignin, a major component of biomass, is currently being used for low and medium-value applications (e.g. binding and dispersing agents), representing a market of $730 million. A recent study by Frost & Sullivan indicates that lignin could be set to address high-value opportunities as early as 2017, such as substituting phenol or as a component in polyurethane formulation. The development of public and private R&D projects in this field could make lignin-based phenolic monomers or carbon fiber a reality by 2020.
The potential of the lignin market globally is addressed in a new Market Insight in which Frost & Sullivan’s experts identify key barriers and analyze different ways to address them. In particular, this new research explores four promising lignin applications: BTX (Benzene/toluene/xylene mixture), phenol, carbon fiber and vanillin.
The industry is just beginning to scratch the surface of lignin’s potential: it could become the main renewable aromatic resource for the chemical industry in the future and, at the same time, it represents a unique chance for petrochemists to secure a future alternative and renewable source of raw material.
“Catching this wave early could allow large industry players to hedge against the volatility of raw material prices while decreasing their environmental impact,” explains Principal Analyst Brian Balmer. “With their support, the lignin industry could unlock opportunities in a shorter time-frame. Being the first mover on this market can assure technology leadership, strategic partnerships and a competitive edge.”
“The petrochemical industry holds by far the highest capacity to accelerate the emergence of lignin-based chemicals,” concludes Dr Balmer. “This is not a game where the petrochemical industry will necessarily lose out to the ‘green’ industry. The most frequent forecast heard in the industry is that biorefiners will become an increasing source of alternative feedstock for petrochemists by means of joint ventures or acquisitions. In the long term, biorefiners and downstream chemists are likely to be integrated.”
This is the view of Frost and Sullivan. Whereas I fully agree upon the opportunity for lignin with a 98% purity to substitute phenol in e.g. phenol-formaldehyde glue for wood panels or as a component in polyurethane formulation, I diverge on the analysis of how the value chain would take shape. My belief is that the petrochemical industry will either remain focused on fossil carbon or will radically change their business model to become pioneers and key players of the plant carbon chemistry as DSM or Dupont already did. I do not see the petrochemical industry succeed by gradually shifting feedstock from oil refiners to bio-refiners. Capacity is not paramount. The paradigm shift required to master different business parameters, the necessary integration of biotechnology competences, an ability to mend long term strategic partnerships, as opposed to opportunistic BU alliances to address profitability shortfalls, makes it all a different game. Money to make acquisitions is not the panacea and forced integrations are bound to fail if done hastily when the wind changes direction. The key players of the plant based chemical industry are already spotable on the global game board and I do not see a lot of old petrochemists or carbochemists on it.