1. Biodegradable Plastics – Are Costly
Green Products Still Relevant During
an Economic Crisis?
W.F. Kee
Research Analyst
Technical Insights
March 10, 2009

2. Impact of Economic Crisis
Industry Survey on Environmental Issues
Global Biodegradable Plastics Market
Focus Points
Key Drivers for Growth
Existing and Emerging Applications
Strategic Recommendations
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3. Impact of Crisis on the Global Chemicals and
Materials Market
Europe
Europe
Decline in consumer demand resulted in
Decline in consumer demand resulted in
scaling-down of production and redundancies
scaling-down of production and redundancies Russia
across all industries. Russia
across all industries. Russia is affected by the
Construction. automotive and real estate Russia is affected by the
Construction. automotive and real estate economic downturn but its
industries and the finance and banking economic downturn but its
industries and the finance and banking strong position in oil and gas
sectors have already been hit, affecting the strong position in oil and gas
sectors have already been hit, affecting the reserves suggest a quick
chemicals and materials markets reserves suggest a quick
chemicals and materials markets comeback
comeback
USA
USA
Housing market collapse affected a wide range of
Housing market collapse affected a wide range of
chemicals and materials markets Japan
chemicals and materials markets Japan
Significant job losses in the industry and plant Automotive giants are hit hard by
Significant job losses in the industry and plant Automotive giants are hit hard by
closures (Dow, BASF, Rohm & Haas and others) economic recession and
closures (Dow, BASF, Rohm & Haas and others) economic recession and
resulting drop in global demand;
Decline in consumer demand affects end-market resulting drop in global demand;
Decline in consumer demand affects end-market this directly affects all dependent
pricing, which in turn led to volume reduction this directly affects all dependent
pricing, which in turn led to volume reduction chemicals and materials markets
chemicals and materials markets
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4. Global Response: Massive Government Stimulus
USA UK: £250bn bailout Russia
• $787bn American Recovery Germany: $700bn relief package • Support for Russian
and Reinvestment Bill Belgium and Switzerland: Capital infusion ruble
• $700bn bailout rapid interest ECB: Interest rate cuts • $20bn stimulus package
rate cuts France: $50bn stimulus package
• $23bn support for top three
auto companies;
Japan:
• Plan to create 2.5 million China • Interest rate cuts
jobs by 2011 • Interest rate cuts • 447bn yen stimulus
• $586bn stimulus (infrastructure, rural) package
India
• Interest rate cuts South Korea:
• $4bn stimulus package (infrastructure, • Interest rate cuts and
exports, textiles) efforts to keep
Brazil
• Infrastructure development under PDP currency stable
(more than $64bn into country’s financial • $11bn stimulus
system) package
Global Response
• Governments infusing capital into financial institutions
• Globally coordinated interest rate cuts
• IMF (International Monetary Fund) offers bridge loan to meet foreign exchange requirements
• Discussions, coordinated efforts (G20 summit)
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5. What Will Catalyze the Turnaround for
Chemicals and Materials?
In spite of fiscal challenges, credit crunch and contraction of consumer markets, there are still a
number of drivers creating growth opportunities in the global chemicals and materials markets.
Green Chemicals & Materials Logistics and Supply Chain Acquisitions
Renewable Sourcing & Feedstock E-commerce Geographic Regions
• Green Chemicals and Materials – Biodegradable products, sustainably sourced
chemicals, bioenabling chemicals and materials will drive growth in market
segments from solar cell chemicals to bioplastics and from detergents to next
generation biofuels
• Renewable Sourcing and Feedstock – The sourcing and utilization of renewable
chemicals and materials can provide a competitive advantage to companies
that suffer from price fluctuations in traditional feedstock
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6. Perceptions on Environmental Issues
Q: How do you primarily view the current high profile of environmental/green issues?
Perceptions of Environmental/Green Issues
Total Sample (N=593) CEOs (N=248) Other Organization Leaders (N=345)
30%
Moral, ethical obligation 29%
30%
30%
Critical to growth of company 23%
34%
18%
Important to customers 15%
20%
12%
Good public relations 12%
12%
9%
Irrelevant 19%
3%
1%
Don't know/care 2%
1%
0% 10% 20% 30% 40%
Note: The Industry Survey on Environmental Issues was presented during Frost & Sullivan’s Growth, Innovation and Leadership (GIL) event in Sept, 2008
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7. Investment in Green Policies / Strategies
Q: Over the next year, my company’s rate of investment in green policies/strategies will…?
Rate of Green Investment
(N=593)
Increase
67%
Remain Unchanged
33%
Decrease
0%
0% 20% 40% 60% 80%
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8. Drivers for Environmental Investment
Q: There are many drivers which contribute to a company making environmental investments, what are the main reasons driving
your decision to “go green”?
Drivers of Going Green
(N=400)
Potential competitive advantage 69%
Growth opportunity for company 67%
Corporate social responsibility 62%
Meeting customer expectations/requirements 61%
New technology opportunities 59%
Ability to enter new markets 54%
Greener Image 50%
Product development 46%
Potential cost savings 38%
61%
Leverage existing markets 33%
0% 20% 40% 60% 80%
Note: Multiple mention question. Only top ten responses shown.
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9. Poll 1
Q1: In this economic downturn, do you think we should
continue to invest in green technologies even if the
technology is more expensive?
A. Yes
B. No
Please respond A or B on the textbox of your screen.
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10. Key Drivers for the Biodegradable Plastics Industry
Driver 1-3 years 4-7 years 8-12 years
Climate change High High High
Trend of going “green” High High High
Regulations – EU, Japan High High High
Green procurement policies High High High
Drive for less dependence on oil High High High
Improvements in R&D – impact of
Medium High High
biotechnology
Increased demand from educated
Medium High High
consumers
Eco-labeling Low Medium Medium
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11. Global Volume Forecast by Polymer Type
Global Volume Forecast by Polymer Type (2003 - 2013)
450
Others
400
PHA
350 Starch-based
PLA
300
Volume (kt)
250
200
150
100
50
0
2003 2007 2010 2013
Year
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12. Volume Share by Polymer Type
2003 2007
PLA Starch PHA Other PLA Starch PHA Other
8.0% 7.4%
0.8% 1.4%
27.3%
51.8%
39.4%
63.9%
2010 2013
PLA Starch PHA Other PLA Starch PHA Other
5.7% 4.7%
11.2% 18.6%
38.6%
43.3%
39.8%
38.2%
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13. Existing and Emerging Application Sectors
Catering Products Healthcare
Film and Rigid
Packaging
Automotive
Existing and
Compostable Waste / Emerging
Carrier Bags Applications
Electronics
Agriculture -
mulching film Toys
Existing Application Sectors Emerging Application Sectors
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14. Key Players
Polymer
Player Existing Markets Emerging Markets
Type
Packaging film, agricultural Injection molding, foams,
Novamont Starch applications, waste and shopping thermoforming, extrusion, tire
bags, catering additive
Plastic replacement, automotive,
Rodenburg Starch Flower pots, agricultural films
electronic packaging
Rigid packaging, injection Water flushable applications –
Plantic Starch molding, flexible films, barrier water dispersible labels, health &
resins hygiene
Injection molding, thermoforming, Hybrid resins for automotive,
Starch / PLA
Cereplast extrusion coating and blow consumer electronics, toys,
blend
molding applications cosmetic packaging
Fiber and nonwovens, films, Apparel, furnishings, carpets,
Natureworks PLA
water bottles, catering products plastic cards
Consumer goods - cosmetic
Disposable cutlery, agricultural packaging, razors, brushes,
Metabolix PHA
film applicators, cell phones, pens and
office supplies
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15. Application Roadmap
Medical Applications
Automotive components
Application
Electronic Applications
Toys
Rigid and flexible plastic replacement
TIMELINE
Present 2015 2020 2025
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16. Poll 2
Q2: What application sectors would you like to have the option of
using biodegradable plastics? (may choose more than one)
A. Food packaging
B. Carrier / waste bags
C. Disposable cutlery
D. Textiles
E. Toys
F. Electronic casings
G. Others
Please respond A/B/C/D/E/F or G on the textbox of your screen.
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17. Strategic Recommendations
Challenges Recommendations Implementation
Seek cheaper feedstock
Improve upon processing economics
Integrated process
Cost Develop more efficient technologies
Process optimization
Competitiveness Monitor new technological developments,
Genetically modified bacterial
especially biotechnology
strains
Develop new and better technologies Structural modification of polymers
Improvement of Improve blending prospects Cross linkage
Properties Reinforcement using natural fibers Development of biocomposites or
Consider incorporating nanotechnology nanocomposites
Indecision Develop products that can act as “drop-in”
Regarding replacements Sustainability as a branding tool
Positioning of Introduce innovative products that open new Investigate emerging markets
markets
Products
Environmental, Carbon footprint assessment Closed loop process
Proper disposal guidelines Life cycle analysis, or similar
Health and Cradle to cradle concept Low energy
Safety Issues Ensure proper ESH testing Efficient green processes
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18. Your Feedback is Important to Us
• What would you like to see from Frost & Sullivan?
• Growth Forecasts?
• Competitive Structure?
• Emerging Trends?
• Strategic Recommendations?
• Other?
Please inform us by taking our survey.
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19. For Additional Information
Steve Lee
Strategic Account Manager
Chemicals, Materials and Food, Asia Pacific
(65) 6890 0914
steve.lee@frost.com
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