Better Living Through Chemurgy - Truth About Trade and Technology

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Tuesday, 01 July 2008 04:11

The Economist
Original Publish Date: June 26, 2008

Forty years ago Dustin Hoffman's character in "The Graduate" was givena famous piece of career advice: "Just one word...plastics." It wasappropriate at the time, given that the 1960s were a golden age ofpetrochemical innovation. Oil was cheap and seemed limitless. Sincethen, scientists have kept on coming up with wondrous new products madefrom petroleum that helped to ensure, in the words of one corporateslogan, better living through chemistry. Even so, someone offeringadvice to today's promising graduates might invoke a different, uglierword: chemurgy.

This term, coined in the 1930s, refers to a branch of applied chemistrythat turns agricultural feedstocks into industrial and consumerproducts. It had several successes early in the 20th century. Cellulosewas used to make everything from paint brushes to the film on whichmotion pictures were captured. George Washington Carver, an Americanscientist, developed hundreds of ways to convert peanuts, sweetpotatoes and other crops into glue, soaps, paints, dyes and otherindustrial products. In the 1930s Henry Ford started using parts madefrom agricultural materials, and even built an all-soy car. But theoutbreak of the second world war and the shift to wartime productionhalted his experiment. After the war, low oil prices and breakthroughsin petrochemical technologies ensured the dominance of petroleum-basedplastics and chemicals.

But now chemurgy is back with a vengeance, in the shape of modernindustrial biotechnology. Advances in bioengineering, environmentalworries, high oil prices and new ways to improve the performance ofoil-based products using biotechnology have led to a revival ofinterest in using agricultural feedstocks to make plastics, paints,textile fibres and other industrial products that now come from oil.

This form of biotechnology has not attracted as much attention asbiotech drugs, genetically modified organisms or biofuels, but it hasbeen quietly growing for years. BASF, a German chemical giant,estimates that bio-based products account for some EURO300m ($470m) ofsales in such things as "chiral intermediates" (which give the kick toits pesticides). The sale of industrial enzymes by Novozymes, a Danishfirm, brings in over EURO950m a year, about a third of it from enzymesfor improving laundry detergents. Jens Riese of McKinsey, aconsultancy, reckons industrial biotech's global sales will soar to$100 billion by 2011--by which time sales of biofuels will have reachedonly $72 billion.

Will this boom really prove to be more sustainable than the first,ill-fated blossoming of chemurgy? One potential problem is thatoil-based polymers are very good at what they do. Early bioplasticsmelted too easily, or proved unable to keep soft drinks fizzy when theywere made into bottles. Pat Gruber, a green-chemistry guru who helpedstart NatureWorks (a pioneering biopolymers firm) says customers aresometimes too risk-averse to retrain staff or modify equipment toaccept a new biopolymer--even if it is cheaper or better.

It seems likely that oil-based products will be around for a long timein some applications. But the big advances in oil-based polymershappened decades ago, whereas the number of patents granted forindustrial biotechnology now exceeds 20,000 per year. Such is the paceof innovation, says Tjerk de Ruiter, chief executive of Genencor, aindustrial-biotech firm that is now a division of Denmark's Danisco,that processes that once took five years now take just one. And SteenRiisgaard, the boss of Novozymes, insists that new technologies canindeed push old ones out of the way, provided they are clearly superior(and not just greener). Brewers raced to adopt Novozymes' novelenzymes, for example, in order to cash in on the Atkins Diet craze with"low carb" beers.

A second potential obstacle is that incumbent companies will quash thefledgling new technologies. But concern about oil's reliability as afeedstock means that even oil-dependent incumbents are interested inalternatives. Oil companies such as Royal Dutch Shell and BP see novelbioproducts not as threats but as useful tools for blending into, andpossibly extending, remaining oil reserves. And chemicals giants suchas Dow and DuPont are also big fans of novel industrialbiotechnologies. Chad Holliday, DuPont's boss, is sure that Sorona, hisfirm's new biofibre, will be a multi-billion dollar product and "thenext nylon". DuPont expects its sales of industrial biotechnologyproducts to grow by 16-18% a year, to reach $1 billion by 2012.

Perhaps the biggest worry is that today's industrial-biotech boom is anartefact of the soaring price of oil. If the oil price plunged andstayed low, the boom would surely turn to bust. Short of outrightcollapse, however, even a sharp price drop need not burst the biotechbubble. Mr Riese has scrutinised the economics of sugar and oil--thechief rival feedstocks--and concludes that the "bio-route" will becheaper even at an oil price of $50-60 a barrel. Brent Erickson of BIO,an industry lobby, argues that "this was happening long before theoil-price spike--$100 oil is just gravy." Industry bosses agree, notingthat the flurry of projects now approaching commercial use were deemedviable and initiated a few years ago, when the oil price was closer to$40 a barrel.

For proof that industrial biotech is ready for the big time, look toBrazil. The country already has a large and efficient industryproducing ethanol fuel from sugar cane. Now rival consortia are rushingto build plants to turn sugar cane into bioethylene. This is striking.Unlike many other industrial biotech efforts which target nichemarkets, this is an assault on the $114 billion market for ethylene,the most widely produced organic compound of all.

Erin O'Driscoll of Dow, a chemical giant now investing in Brazilianbioethylene, says the firm is confident the technology is ready forcommercialisation. The chief reason for such optimism is thatindustrial biotechnology is better and cheaper than it was back in theheyday of chemurgy. Dow has even come up with a material made fromsoyabean oil that it plans to sell to carmakers to replace oil-basedfoam. Ford and his friend Carver would be proud.