Bioplastics WATCHING: More information:

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1 WATCHING: Bioplastics A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETS SUMMER 2016 ISSUE VI More information:

2 2016. All rights reserved K Street, NW Suite 500 Washington, DC

3 Bioplastics A SERIES ON ECONOMIC-DEMOGRAPHIC-CONSUMER & TECHNOLOGY TRENDS IN SPECIFIC PLASTICS END MARKETS CONTENTS Bioplastics in the Marketplace... 2 What are Bioplastics?... 7 New Feedstocks Show Promise for Growth Challenges and Progress Made by Bioplastics Overcoming Hurdles & Bioplastic Success Stories Public Policy Landscape for Bioplastics Conclusion Sources Plastics Market Watch Snapshot PLASTICS MARKET WATCH: BIOPLASTICS iii

4 Special thanks to members of the SPI Bioplastics Division for their guidance and input on this Bioplastics Market Watch Report. Materials compiled, written and edited by William (Bill) Mashek, with editorial assistance from Patrick Krieger and Kendra Martin, SPI. Plastics Market Watch (Report) is provided for general information purposes only. The information in the Report was obtained through voluntary sources believed to be reliable, but the information is in no way guaranteed. The use of any of the information found within is at your own risk. No lawyer-client, advisory, fiduciary or other relationship is created between (SPI) and any person accessing or otherwise using any of the information in this document. SPI (and any of their respective directors, officers, agents, contractors, interns, suppliers and employees) will not be liable for any damages, losses or causes of action of any nature arising from any use of this report iv PLASTICS MARKET WATCH: BIOPLASTICS

5 Bioplastics Introduction PLASTICS MARKET WATCH: BIOPLASTICS 1

6 Bioplastics in the Marketplace Members of SPI s Bioplastics Division came together in 2007 with education and outreach as the primary goals driving their activities. In 2016, these efforts continue, and while progress has been made with key stakeholders in and out of the industry, more work needs to be done. SPI s national poll of 1,107 adults nationwide (with a margin of error of +/- 3.07% at the 95% confidence interval) conducted in May 2016 validates that need with the following findings: n Only 27 percent were somewhat or very familiar with bioplastics 34 percent were not familiar at all with bioplastics. n After learning about bioplastics, 50 percent of those surveyed indicated they would consider purchasing a product if it was a little bit more expensive because it was made with bioplastics. n 86 percent had not seen or were unsure if they had seen the USDA Certified Biobased Product seal. Despite the fact that bioplastics have been around since the 1950s, there is still confusion and misunderstanding about bioplastics. n More than half, 57 percent, indicated they would probably or definitely be more likely to consider purchasing a plastic product with the USDA seal. Despite the fact that bioplastics have been around and widely used since the 1950s, there still is confusion and misunderstandings about bioplastics: from their origins and feedstocks to their end-of-life disposal, biodegradability and product performance. SPI published its Bioplastics Simplified report in February 2016 to specify the attributes and qualities of bioplastics and identify the advancements that have been made in terms of definitions, content, biodegradability, and government guidelines and oversight. These industry advancements have been significant, but challenges remain with all audiences as reflected in a recent Plastics Today article, Bothered and bewildered over bioplastics, and the United Nations Environmental Programme paper, Biodegradable Plastics & Marine Litter: Misconceptions, Concerns, and Impacts. Despite these questions and misunderstandings about bioplastics, there are encouraging signs and support for their continued development and growth. The Ellen MacArthur Foundation s The New Plastics Economy released earlier this year acknowledged the many contributions of plastics to the global economy, but also highlighted bioplastics in calling for better system-wide economic and environmental outcomes. The report issues the challenge of creating 2 PLASTICS MARKET WATCH: BIOPLASTICS

7 In 2012, European Bioplastics reported bioplastics accounted for less than 1 percent of the total global plastics usage; they estimated at the time that the annual global production of bioplastics would increase from 798,070 tons in 2010 to 1.85 million tons by When this prediction was made, SPI also noted that the current high prices for petroleum and natural gas have spurred the industry to examine alternative feedstocks for the production of various bioplastics. Clearly, times and prices have changed. Natural gas and petroleum prices have plunged, making traditional polymers and plastics an easy choice if the top criteria for a brand owner is cost. Still, bioplastic production and research and development has continued in terms of developing new feedstocks and new plastics applications. Today, bioplastics represent 0.7 percent of the total plastics marketplace. Energy prices will change and likely increase in the coming years; but is that how bioplastics will continue to grow? Or will bioplastics growth come from its own increased utilization as material that meets the specifications of brands and businesses? SPI is resin neutral, and believes there is a growing place for all plastics given the unique advantages plastics provide consumers, manufacturers and brand owners. Further, there is no polymer that works best in all situations, and the superior plastic is one that meets the functional needs of a given application or specification. Due to their unique characteristics biobased, sustainable and biodegradable bioplastics an effective after-use plastics economy, drastically reducing the leakage of plastics into natural systems (in particular the ocean) and other negative externalities. Further, in its June 2015 Economic Impact Analysis of U.S. Biobased Products Industry, the U.S. Department of Agriculture (USDA) noted, Demand for the products of the bioplastics manufacturing industry increased from 2009 to Several factors have contributed to heightened demand, i.e., stronger economic conditions, large companies joining the campaign for green packaging. Since the first comprehensive report from the SPI Bioplastics Division in 2012, there have been expansions of the USDA s BioPreferred Program, marketplace growth like The Coca-Cola Company s PlantBottle, and increased utilization among automotive manufacturers and the strong adoption of bioplastic cups and food service items. ECONOMIC IMPACT $126 BILLION The estimated value added from sales of biobased products in 2013 AMERICA S BIOECONOMY GROWS OPPORTUNITIES Thanks to the support of USDA s BioPreferred program and the ingenuity of American manufacturers, the U.S. bioeconomy is thriving supporting millions of jobs, driving economic growth, and expanding opportunities for biobased products from America s farms and forests.* $369 BILLION The amount contributed to the U.S. economy in just one year 4 MILLION JOBS The amount attributed to the biobased industry in ,000,000,000 COMMUNITY BENEFITS 300 MILLION GALLONS The amount of petroleum replaced by biobased products per year 200,000 The biobased industry's greenhouse gas emissions reduction as explained by the number of cars taken off the road in one year USDA s Biopreferred America s Bioeconomy Growth Opportunities. Download full infographic at: PLASTICS MARKET WATCH: BIOPLASTICS 3

8 SPI is resin neutral, and believes there is a growing place for all plastics given the unique advantages plastics provide consumers, manufacturers and brand owners. Further, there is no polymer that works in all situations, and the best plastic is one that meets the functional needs of a given application will play an important role in supporting the growth of the plastics industry and meeting brand needs. The increased usage of bioplastics, in SPI s view, is linked to the better understanding of what plastics and bioplastics are and aren t and how they are developed and can uniquely benefit an array of businesses and applications using plastics. It is in this light that moving the bioplastics needle deserves industry support in terms of research, promotion, and continued communications. This SPI Bioplastics Market Watch is intended to provide readers with an improved understanding of bioplastics and how it offers unique applications that can benefit brands, consumers and the environment. What are some of the hurdles that bioplastics will need to address to continue growing? What needs to change or happen? The SPI Bioplastics Market Watch provides answers to these questions. or specification. 4 PLASTICS MARKET WATCH: BIOPLASTICS

9 Bioplastics What Are Bioplastics? PLASTICS MARKET WATCH: BIOPLASTICS 5

10 Bioplastics are closely linked to the history and development of plastics some of the industry s earliest pioneers, including Henry Ford, developed plastics using renewable resources. Switchgrass, a feedstock for bioplastic production. 6 PLASTICS MARKET WATCH: BIOPLASTICS

11 What are Bioplastics? Bioplastics are closely linked to the history and development of plastics some of the industry s earliest pioneers, including Henry Ford, developed plastics using renewable resources. Today, bioplastics covers a wide range of materials, but they are all partially or fully biobased and/or biodegradable. First-generation bioplastics come from traditional agricultural and renewable resources such as corn, sugar cane and soybeans. Second-generation sources moved to non-food renewable sources such as switch grass, sawdust, hemp, castor beans, as well as the byproducts of first-generation sources, including husks and peels. Research continues on developing new resources for bioplastics and diversifying feedstock; third generation sources include algae and modified methanobacteria. BI O PLAS TIC /,bīō ˈplastik/ noun plural noun: bioplastics 1. a type of plastic partially or fully biobased and/or biodegradable a. a biobased bioplastic has some or all of its carbon produced from a renewable plant (or sometimes animal) source. a. biodegradable plastics are those that degrade into carbon dioxide (CO 2 ), methane (CH 4 ), water (H 2 0), and biomass through biological action in a defined environment and in a defined timescale. i. These environments include composting, anaerobic digestion, and marine and soil environments. A common misunderstanding about bioplastics is that biobased and biodegradable are linked; they are not, as a bioplastic that is biobased may not necessarily be biodegradable, and a biodegradable bioplastic may not be biobased. This confusion is common, and exists inside and out of the plastics industry, the value chain, among brands and certainly with consumers. Most consumers have a low understanding of plastics forget bioplastics. They do not understand what plastics are, what they do, and how they work. With bioplastics, there is the same misunderstanding, according to BASF s Keith Edwards, head of Sales Management, Specialty Plastics, North America. PLASTICS MARKET WATCH: BIOPLASTICS 7

12 Consumers do, however, accurately attach environmental benefits to bioplastics, including the reduced usage of fossil fuels (natural gas / petroleum), the potential reduction in carbon footprint, and the reduction of global warming potential (GWP). Biodegradability is also appealing to consumers in helping reduce landfill usage and litter. The misunderstandings of bioplastics over the years may have been fueled by early, exaggerated claims of a products biobased content or biodegradability performance. The marketing claims garnered the eye and attention of regulators like the Federal Trade Commission and USDA, as well as industry groups like SPI and standards setting organizations such as ASTM. These groups have worked to develop standards for measuring the percentage of renewable carbon content within the plastic and to Agricultural row mulch film incorporating BYLOX, a biobased additive Photo Courtesy: Genarex Genarex LLC is a product development and manufacturing company that offers sustainable solutions while providing substantial savings. Today, our primary focus is to seek cost effective waste feedstocks that can be obtained and refined into biomaterials that offset costly, non-renewable materials used in the plastics industry today. Genarex produces BYLOX LT and HT, bio-based additives made from corn byproducts that can increase the sustainability of finished products while also improving product functionality such as ductility and processing. The BYLOX suite of products works well in nearly all conversion technologies, including profile and film extrusion, injection molding and thermoforming. The low cost position of our bio-based fillers allows BYLOX LT and HT to be great supplements to reduce the overall cost per pound for resins, making products more cost-competitive compared to those that are not traditionally bio-based. confirm industrial compostability. Efforts to establish standards for other forms of biodegradation anaerobic digestion, home compostability and marine degradability are ongoing. With biodegradation, microorganisms such as bacteria and fungi eat the plastics for food, breaking them down for energy and converting them into carbon dioxide, methane, and water. It is a broad umbrella term for multiple processes that occur in different environmental conditions. Some biodegradable plastics break down under home compostable conditions while others require industrial compostable conditions that provide higher temperatures to help break down a material. There are 21 bioplastic polymers currently used in the marketplace or under development. Recyclability of bioplastics is similar to petroleum-based plastics in that bioplastics from biobased polymers without fillers are the easiest and most likely to be recycled while the bioplastics produced from polymer blends or through biobased fillers in traditional polymers may be difficult to recycle or may contaminate the existing recycling stream. Biodegradability varies from plastic to plastic, some are industrially compostable and home compostable, others are soil biodegradable, marine biodegradable or anaerobically digestible. Industrial Compostable Cold Drink Cup Photo Courtesy: Greenware 8 PLASTICS MARKET WATCH: BIOPLASTICS

13 LEGEND Industrially Compostable Soil Biodegradable O 2 Anaerobically Digestible Home Compostable Marine Biodegradable * Not all grades of each polymer type may meet the biodegradability noted; check with the material supplier for the biodegradability of specific grades. Polymer Abbreviation Polymer Name Biobased Biodegradable PHA Polyhydroxy Alkanoate Yes O 2 PLA Polylactic Acid Yes TPS Thermoplastic Starch Yes O 2 PBS Polybutylene Succinate Yes PBAT Polybutylene Adipate-Co-Terephthalate Partially PBAS Polybutylene Adipate-Co-Succinate In Development PES Polyethylene Succinate Partially And Fully Biobased In Development No PEF Polyethylene Furanoate In Development No PET Polyethylene Terephthalate Partially No PEET Polyetherester Terephthalate Partially No PTT Polytrimethlene Terephthalate Partially No PPA Polyphthalamide Partially No PA 410 Polyamide 410 Partially No PA 610 Polyamide 610 Partially No PA 1010 Polyamide 1010 Yes No PA 10 Polyamide 10 Partially No PA 11 Polyamide 11 Partially No TPC-ET Thermoplastic Copolymer Elastomer Partially No TPU Thermoplastic Polyurethane Partially No PE Polyethylene Yes No PP Polypropylene In Development No PLASTICS MARKET WATCH: BIOPLASTICS 9

14 Plastics and bioplastics are seen as overwhelmingly positive on business and economic activity around the world. Castor Bean, a feedstock for bioplastic production. 10 PLASTICS MARKET WATCH: BIOPLASTICS

15 Bioplastics New Feedstocks PLASTICS MARKET WATCH: BIOPLASTICS 11

16 New Feedstocks Show Promise for Growth Plastics and bioplastics are seen as overwhelmingly positive for business and economic activity around the world, but there are continuing questions and assertions that highlight the need for further developments in making renewable, environmentally responsible bioplastics. SPI has noted that costs are a major factor in developing biobased bioplastics, particularly when petroleum-based sources are comparatively less expensive. The current pricing model and dynamics affect a wide range of issues, from research and development, to capital investment, to the difference in price in the end products. Economies of scale and a lack of time to amortize capital expenditures also work against the bioplastics industry. Criticisms and misunderstandings of bioplastics are also undermining the development of plastics with respect to feedstock issues, environmental impact assessments, and end-of-life management; the industry s response has been one that acknowledges the need to develop next-generation feedstocks, enhance biodegradability options, and expand the range of polymers that are biobased. The Bioplastic Feedstock Alliance stated, Biobased products represent an opportunity for positive change, but that does not mean that they are free of environmental impacts. Biomass production can also have significant impacts on the environment, which is why producing responsibly is key to realizing its true potential. Criticisms and misunderstandings of bioplastics are also undermining the development of plastics with respect to feedstock issues, environmental impact assessments, and endof-life management. A diversified class of bioplastics will be required to meet the varied needs of brand owners in the coming years; bioplastics must meet the specifications of companies and their desired attributes whether it is a biobased plastic, a biodegradable biobased plastic, or a sustainable plastic made of non-biobased waste products. New feedstocks are linked to the development of new polymers. As an example, Nylon 11, derived from castor beans, displays different physical properties than other polyamide polymers. As a sustainable feedstock, succinic acid is considered by the U.S. Department of Energy as one of the renewable building block chemicals with the greatest technical feasibility and commercial potential. With petroleum feedstocks, succinic acid is more costly to produce and requires expensive, multi-step processes to be developed. Startup Gen3Bio is researching the development of specialty chemicals and polymers that do not use plant sugars as a feed source. We are focusing on micro algae that is grown through CO2 capture or through water treatment not through closedreactors that use sugar as the feedsource, said Kelvin Okamoto, CEO of Gen3Bio. Ski boot using Rilsan, or Nylon 11, a biobased polymer. Photo Courtesy: Arkema 12 PLASTICS MARKET WATCH: BIOPLASTICS

17 Positioned as a Plastic or Bioplastic A diversified class of bioplastics will be required to meet the varied needs of brand owners in the coming years Brand owners will not adopt bioplastics if the product fails to meet (or exceed) their specifications and requirements to keep a product fresh, clean or secure bioplastics have to do the job. In this sense, the priority for bioplastics is their plastic qualities. NatureWorks Davies noted, Our product doesn t sell because it is a bioplastic, it sells because of its functionality and its price like any other plastic. However, there continues to be debate within the industry whether term bioplastics is useful. Given that brand owners are putting an emphasis on sustainability issues and consumers understand to some degree that bioplastics provide an environmental benefit some industry participants want to continue pressing forward with expanded use of bioplastics and making the effort to educate brands and consumers about bioplastics differentiators. Others argue that specifying the plastic is a bioplastic is important, and coveys information to the consumer. If we start labeling them plastic, according to BASF s Edwards, we lose the notion of why we are changing or why we are developing this bioplastic. I think there are education efforts taking place, and consumers are quite savvy at really understanding the benefits versus marketing claims of products and packaging. I also believe that we, as an industry, must do more to educate consumers and brand owners about bioplastics, and recovery options such as recycling or composting, and the benefits. NatureWorks is focusing on the development of methane-to-lactic acid fermentation in its bioplastics feedsource. The company has invested in research and development activities to achieve a commercially viable fermentation process to transform methane into lactic acid that the company uses for its Ingeo biopolymer PLA. The collaborative research initiative has been bolstered by a U.S. Department of Energy grant and involves partnering companies to develop the potentially ground-breaking technology that would diversify the feedstock for bioplastics applications such as food serviceware, packaging and personal care items. Steve Davies, NatureWork s director of Public Affairs & Communications, said the company s next generation feedstock has a five year horizon, but methane simplifies the supply chain, takes agriculture out of the picture, and gives us a lower cost framework. Biodegradable Greenware Portion Cups Photo Courtesy: Greenware PLASTICS MARKET WATCH: BIOPLASTICS 13

18 Consumers are becoming aware of bioplastics, and we are starting to see consumers ask for them. Joe Jankowski, Braskem America Soybeans, a feedstock for bioplastic production. 14 PLASTICS MARKET WATCH: BIOPLASTICS

19 Bioplastics Challenges and Progress PLASTICS MARKET WATCH: BIOPLASTICS 15

20 Challenges and Progress Made by Bioplastics In its 2012 Bioplastics Report, SPI identified the challenges facing the development of bioplastics; some were directly related to the polymers and their feedstocks, others were misconceptions about the technology, and the last were infrastructure and guidelines needed to promote bioplastics development. Four years is not a significant amount of time to overcome all of these challenges, but progress is being made on individual hurdles and across the board. This is not to say that any specific challenge has been put to bed, or that new ones have not been presented to the industry. But identifiable and measurable progress is being made. The hurdles identified in 2012 included: n Confusion with terminology n Lack of industry cohesiveness n Lack of infrastructure for end-of-life disposal options other than landfill n Limited legislation and regulations that provide parity between bioplastics and biofuels n Limited amount of funding available for bioplastics n Limited availability of biobased feedstocks n Limited availability of bioplastics n Lack of testing and certification harmonization internationally n Debate about food versus fuel versus plastics 16 PLASTICS MARKET WATCH: BIOPLASTICS

21 SPI interviewed several bioplastics experts to assess these challenges in Here are some comments and assessments. Confusion with Terminology Within the plastics industry and value chain, there has been broad agreement about specific terms and definitions; in part, these advances are related to industry standards and certifications that have been developed. BASF s Edwards noted, Confusion with bioplastic terminology continues, but it has improved greatly since Standard definitions and terminology are in place. Four years is not a significant amount of time to overcome all of these challenges, but progress is being made on individual hurdles and across the board. Outside the industry, among marketers, supporting infrastructure providers, and particularly the general public, misunderstandings about bioplastics continues. reduce confusion by creating clear, well-understood, and nationally harmonized labeling that enables industry to convey to consumers how to recycle a package. The effort is aligned with the FTC s Green Guides and hopes to increase the availability and quality of recycled materials. Joe Jankowski, commercial manager for Braskem America said How2Recycle s efforts were critical. Consumers are becoming aware of bioplastics, and we are starting to see consumers ask for them, Jankowski said. But consumers need good guidance on how to behave after using a biobased product, What do I do with this thing in my hand when I am done with it? Lack of Industry Cohesiveness Plastics is a competitive and growing industry sector with established companies and incubator-sized entities working to provide bioplastic technologies to customers. To some degree, the lack of cohesiveness or agreement in feedstocks, end-of-life management, and marketing is a positive sign of a vibrant, diversified, and competitive sector. Fundamental issues like industry terminology, regulatory oversight and certifications have solidified and several bioplastic segments like food service items have advanced and are firmly established. Kate Lewis, Analyst for the United States Department of Agriculture BioPreferred Program believes all stakeholders and groups have an incentive to collaborate together given narrow budgets, We will all achieve more by combining resources, particularly on the market research side and consumer awareness. Lack of Infrastructure for End-Of-Life Disposal Options Other Than Landfill Infrastructure for bioplastics is improving, but it is linked to what comes first and the need to build quantity and demand for the material. In certain regions of the world and individual states, progress on end-of-life (EOL) management is being made due to government mandates to curtail landfill disposal. However, industrial compost technologies are not widely accessible in the U.S., according to SPI Assistant Director of Regulatory and Technical Affairs Patrick Krieger. Education efforts, like How2Recycle, sponsored by leading global brands, was noted as a valuable tool not only for consumers, but also for manufacturers and companies. How2Recycle aims to PLASTICS MARKET WATCH: BIOPLASTICS 17

22 France, Italy and other EU nations are more aggressively advancing EOL capabilities, including industrial composting. Currently, the U.S. has less than 200 industrial composting facilities, some of which do not accept some biodegradable plastics. Composting residential and industrial is vital for bioplastic growth and the development of diversified applications like PLA. The increased use of industrially compostable bioplastics will enhance efforts to divert food waste from landfills. However, brand owners will be reluctant to adopt compostable bioplastics unless downstream infrastructure is in place; and not in selected cities or states, but nationwide. Composters will begin to emerge and encourage the adoption of bioplastics as states like California advance their waste reduction initiatives. The USDA s Lewis compares the BioPreferred Program to the U.S. Environmental Protection Agency s Energy Star certification program that recently celebrated its 25 th anniversary. To tip the scale on consumer awareness of a new product or concept, like biobased products, is a protracted process that takes decades and lots of resources, she said. Industrial Compostable Grocery Bags. Photo Courtesy: Novamont Limited Legislation and Regulations in Favor of Bioplastics The promotion of one plastic over another by government agencies is linked to a common concern within the plastics industry and one held by SPI. Industry participants, like NatureWorks Davies believe bioplastics should compete with plastics to meet the specifications and requirements of brands on everything from cost and function to supply and recyclability. And BASF s Edwards believes federal guidelines provide a view of the horizon and gives companies and brand owners a target to strive for in the future. In the U.S., the USDA Biopreferred Program is a strong advocate for bioplastics development and expansion and some states are working to promote the development of biostocks and sources. The Federal Trade Commission is also overseeing and regulating the marketing claims made by brands utilizing bioplastics to ensure language and characterizations are accurate. The Iowa legislature adopted the nation s first Renewable Chemicals Production Tax Credit program this year to further the state s development of biomass as feedstocks for the production of renewable chemicals. Long a leader in the biofuels sector through its corn and soybean production, the new law seeks to expand and diversify its biosciences development. Many of the state s industrial processing facilities produce products that can be further processed into high value chemical compounds that can lead to developing plastics, textiles, paints and pharmaceuticals. 18 PLASTICS MARKET WATCH: BIOPLASTICS

23 Limited Availability of Biobased Feedstocks Feedstocks for biobased plastics are growing and diversifying and next generation sources are showing great promise; however the collection, availability and costs of these feedsources continue to be an industry focus and concern. First-generation feedstock, like corn in the U.S. and sugar cane in other regions, is established in terms of infrastructure necessary to grow, collect and process according to SPI s Krieger. Next-generation feedstocks in certain cases do not have the supply and demand in place to support necessary infrastructure and therefore do not have consistent cost-effectiveness to make an Novamont, headquartered in Italy, is the world leader in the development and production of bioplastics and biochemicals. Novamont promotes a bioeconomy model with the efficient use of renewable resources and repurposed obsolete industrial sites. Thus creating new industries, new products and new jobs. Matrìca biorefinery in Sardinia and a decommissioned industrial site in north-east Italy are two recent examples. The second the world s first dedicated industrial plant to make sustainable bio-butanediol (BDO) through fermentative processes. Novamont s Mater-Bi brand resins are an innovative family of bioplastics. Up to 50% of its feedstocks are obtained from plants and are certified biodegradable and compostable to international standards. Mater-Bi combines performance with low environmental impact. Products made with Mater-Bi are found in large-scale retail, municipal organic waste collection, foodservice, agriculture and packaging markets. International offices are located in Germany, France, and the UK. Novamont North America is located in Shelton, CT. There should be a portfolio of feedstocks available, whatever is locally abundant. In the U.S., for the foreseeable future, the right feedstock that is abundant is cornstarch, which is very low value impact in the marketplace. Consistent supply and quality of the feedstock particularly second and third generation feedsources is another hurdle that will need to be cleared for new feedstocks to take flight. Davies at NatureWorks stated, There should be a portfolio of feedstocks available, whatever is locally abundant. In the U.S., for the foreseeable future, the right feedstock that is abundant is cornstarch, which is very low value and not the cornstock used for animal feeds. In other parts of the world, it is sugar cane. Methane is developed by looking at feedlots and biomethane. Whatever feedstock is being used, it must be sustainable and locally available. Limited Availability of Bioplastics While bioplastics are still a fraction of traditional natural gas or petroleum derived plastics, the marketplace is growing and bioplastics are an option for brands around the world. Bioplastics based on second and third generation feedsources are still in the developmental stage. and not the cornstock used for animal feeds. Steve Davies, NatureWorks LLC PLASTICS MARKET WATCH: BIOPLASTICS 19

24 Lack of Testing and Certification Harmonization Internationally Testing, certification, and harmonization internationally have improved significantly and are not seen as a major factor limiting growth. In fact, with the aggressive positioning taken by some EU nations, the U.S. is benefiting from work and efforts in Italy, France and elsewhere. There has been a lot of harmonization in standards and how we should communicate what our products are and what they do especially on the ASTM-side. There has been a lot of work done to develop robust systems, SPI s Krieger said. Debate About Food Versus Fuel Versus Plastics It s not competition for food; it s competition for land. This debate continues in some markets and with some applications, although the minimal amount of plastics use of agricultural feedstocks is lost in the discussion percent of land is used to make bioplastics according to European Bioplastics. Given the concern among some brand owners and consumers, there continues to be a push for developing new sources of feedstock, based from food waste or alternative sources. Rather than engage on this premise, NatureWorks Davies believes the industry should explain the bigger picture, We are turning greenhouse gas into plastic. It is not competition for food; it is competition for land. You need to look at whatever renewable resource is available and effective with the smallest ecological impact on the land. If that is a first generation sugar that is what you should use, not a non-native species that uses more water or needs a lot more acres to get the same yield. for every 12 ears of corn 1 kernel is used to make bioplastics 0.02% of land used for agriculture in 2014 was used to produce biobased bioplastics. That means for every dozen ears of corn, one kernel is used to produce biobased bioplastics. 20 PLASTICS MARKET WATCH: BIOPLASTICS

25 Bioplastics Overcoming Hurdles PLASTICS MARKET WATCH: BIOPLASTICS 21

26 Overcoming Hurdles & Bioplastic Success Stories Challenges facing the development of bioplastics have evolved over the past four years; while much of the debate and progress has been internally focused within the industry; some focus on bioplastics has occurred with major brands in mainstream media and even pop culture. Bioplastics and specifically biodegradable plastic utensils were prominently featured in the first episode of HBO s political satire Veep when Julia Louis-Dreyfus character works to convince Americans to use biodegradable plastics only to have her spoon melt into her coffee. Granted, the program featured a farce, but brand transitions to bioplastics have been the focus of social media conversations and concerted marketing campaigns. PepsiCo: Innovating through Challenges Is it true there is no such thing as bad publicity? Frito-Lay and its SunChips brand tested that premise in 2009 when hundreds of articles and news reports and thousands more social media postings focused on the noise generated by its new biodegradable plastic bag. SunChips connoisseurs likened the noise of the bags to lawnmowers and even jet engines an exaggeration no doubt, but the reaction got Frito-Lay to switch back to its old packaging while it looked for a solution to muffle the biobased bag. PepsiCo, committed to its environmental program, went back to work on designing and developing the SunChips packaging; after several months the company determined a different kind of bonding agent between exterior and interior layers of the bag could create a sound muffler for the packaging. The new adhesive helped reduce the noise measurably. While the initial design registered between 80 to 85 decibels, the new bag registered just 70 decibels the same level of noise generated by the original packaging and most chip bags on the market. Frito-Lay, and its parent company PepsiCo, initially introduced the environmentally friendly bag that breaks down in compost to generate publicity and awareness of its corporate-wide sustainability initiatives. It got more publicity than anyone in the company could have imagined. Brad Rodgers, PepsiCo s manager of sustainable packaging told the Associated Press, It was interesting we got a lot of extremely positive feedback...but on the same hand we heard one overwhelming complaint. The stiffer biodegradable material, when opened and handled, caused a louder noise than the original bag and one that consumers said made it difficult to enjoy the chips in an office, cafeteria, or when eating with others. A SunChip bag in an industrial composting facility 22 PLASTICS MARKET WATCH: BIOPLASTICS

27 The SunChips packaging was even featured in an MIT Sloan Management Review paper, The Sweet Spot of Sustainability Strategy, outlining PepsiCo s effort to address packaging, litter and sustainability issues. Gregory Unruh, a George Mason University professor and author of the paper concluded there were three lessons from the SunChips story: n Try out big changes on smaller brands first. Launching the compostable bag with SunChips rather than bigger brands such as Fritos or Lay s minimized the risk. n Persist through the initial setbacks and resolve the problem to gain goodwill. Unruh stated, By being the first among its competitors to introduce a compostable snack bag, PepsiCo staked out a first-mover advantage on an issue strategically important to the company. In the end, according to Unruh, PepsiCo s standing with sustainability advocates improved. n Poke fun at yourself to defang your critics. When the company brought the SunChips compostable bag to the Canadian market, its ad campaign acknowledged the noise and offered to send customers a free set of ear plugs. Photo Courtesy: PepsiCo Try big changes on smaller brand first. Persist through initial setbacks. Poke fun at yourself to defang your critics. PLASTICS MARKET WATCH: BIOPLASTICS 23

28 Coca-Cola: Advancing the PlantBottle TM Program Coca-Cola has been producing its partially biobased PlantBottle packaging since 2009, but the company s eye has been on production of a 100 percent biobased bottle. For the company and its brand, the bottle has historically been a key to its identity and marketing efforts. While the contour glass bottle is instantly recognizable and well-loved, the company started to move toward plastic PET bottles in the late 1970s; the plastic bottle significantly lowered distribution costs and met consumer needs for convenient, durable lightweight packaging. The PET in Coca-Cola s PlantBottle package is 30 percent plant-based; the company has reduced its use of fossil fuels without impacting the recyclability of the bottle. PlantBottle packaging can be found in a number of Coca-Cola s brands (Dasani, Minute Maid, Smartwater, Simply Juices, and Gold Peak) and in markets around the world. The company estimates more than 40 billion PlantBottle packages have been sold in more than 40 countries since the bottle was first introduced and its performance and market acceptance by consumers is pushing the company to expand its sustainable packaging efforts, including a carbon neutral, 100 percent renewable and responsibly sourced plastic bottle that is fully recyclable. In June 2015, Coca-Cola and its research partner Virent announced the development of the world s first 100 percent biobased (sugar cane sourced) PlantBottle package at demonstration scale. The company continues to work with technology partners to commercialize a 100 PlantBottle package. Coca-Cola s PlantBottle TM. Photo Courtesy: Coca-Cola 24 PLASTICS MARKET WATCH: BIOPLASTICS

29 Brand Owner Leadership The Bioplastic Feedstock Alliance, with a number of its members (Nike, Coca-Cola, Danone, Ford, Heinz, Nestlé, Procter & Gamble, Unilever, and the World Wildlife Fund) are collaborating to identify a feedstock that can provide the volume necessary for a 100 percent plant-based bottle that will not impact the food supply or produce excessive carbon. The impact of individual brands adopting bioplastics is evident in the Coca-Cola PlantBottle in that one-third of total, global biopet 30 is the PlantBottle. This leadership by global brands working to reduce their carbon footprint enhances their environmental sustainability and aligns with the objectives of the 2015 United Nations Climate Change Conference, COP 21 initiative for member nations to reduce global greenhouse emissions by 55 percent in the coming years. Non-government organizations, like the Ellen MacArthur Foundation, are spurring corporate efforts by promoting the circular economy re-using, repairing, refurbishing and recycling products and materials, turning waste into a resource, and managing all resources through their life cycles. BASF s Edwards believes the growth of bioplastics is linked to corporate initiatives and specific advances in polymers. I think more conversion of large volume applications is needed to bridge the gap a bit snack food packaging, can liners, etc. and brand owners having sustainability drivers must begin to put these in place and make material conversions to help reach their corporate sustainability goals. Many have only put in place real metrics in the past few years, and it will take some time for these to create market pull which should increase the demand for bioplastics, Edwards said. SPI s Krieger indicated a variety of brand owners want to expand their use of bioplastics for their products and packaging, while some are cautious in making the leap because of costs. Brands recognize price considerations, but people use bioplastics for a lot of different reasons. Cost is really specific to application, and applications are a measure of functionality. Krieger said. Why get into bioplastics? It is more than just about cost it could be about functionality, sustainability, or consumer demand. This is why companies are getting into bioplastics. Brands Owners want to be market leaders in adopting sustainable practices. Scale of bioplastics availability may be as much of a hurdle for companies as cost. Brands want to be market leaders in adopting sustainable practices, but are going slow in changing to bioplastics in order to prevent market disruptions or significant front-end costs. Automotive brand owners have been turning to plastics to trim weight on their vehicles and improve their Corporate Average Fuel Economy standards. Sustainability efforts now have automotive manufacturers increasingly turning to biobased products that provide the same product performance as traditional feed stocks, with renewable benefits. Ford Motor Company has been at the forefront of using bioplastics in its vehicles. Last August, Ford expanded its use of soybean oil-based foam blends to another part of the car headrests. Initially used in the 2008 Mustang, the biobased foam is now used in the headrests of a number of vehicles, including the F-150 truck. The company also uses soy foam blends in the headliners of a number of models. According to Braskem s Jankowski, Collaboration is necessary. If there is enough capacity to meet demand, it will require collaboration with the value chain. In some cases, adoption is not as high as it could be due to a lack of awareness or a lack of transparency in the value chain, but there is also a cultural aspect to it in that not every company is ready for bioplastics from a purchasing standpoint. A company must really buy in to bioplastics and sustainability and have the tools to execute on transitioning to biobased plastics. PLASTICS MARKET WATCH: BIOPLASTICS 25

30 At BASF, we create chemistry for a sustainable future. Industrially Compostable coffee capsules and packaging using BASF plastic ecovio(r). Photo Courtesy: BASF As a leading provider of high-quality and high-performing plastics, BASF has been developing biodegradable and bio-based polymers for more than a quarter century. With ecovio, BASF offers a certified compostable polymer which features a variable biobased content. It consists of the compostable BASF polymer ecoflex and polylactic acid, which is derived from the renewable resource corn. Products made with ecovio exhibit the same high performance and strength in use as conventional plastics. For example, an ecovio bag can carry the same load as its polyethylene counterpart. The product properties are designed such that the products only fully biodegrade in compost after use. The main applications for ecovio include plastic films such as organic waste bags, dual-use bags (first for shopping, then for organic waste) or agricultural films; and, compostable packaging solutions such as paper coating, shrink films, foam packaging and injection molding products. ecovio is a finished product that can be used by the customer as a drop-in solution with standard plastic production procedures. For more information on ecovio, At BASF, we create chemistry for a sustainable future. We combine economic success with environmental protection and social responsibility. Through science and innovation, we enable our customers in nearly every industry to meet the current and future needs of society. BASF Corporation is the largest affiliate of BASF SE and the second largest producer and marketer of chemicals and related products in North America. For more information on BASF, 26 PLASTICS MARKET WATCH: BIOPLASTICS

31 Bioplastics Public Policy Landscape PLASTICS MARKET WATCH: BIOPLASTICS 27

32 Public Policy Landscape for Bioplastics Bioplastics growth in the U.S. and around the world is being guided and encouraged by federal and state programs. Some encourage the use of biobased products while others ensure products are accurately portrayed in terms of their performance and environmental impact. For example, Iowa has adopted legislation to promote its soy and corn production and facilities. USDA BioPreferred/Biobased Seal The United States Department of Agriculture BioPreferred program was created as part of the 2002 Farm Bill to spur the development and new markets for biobased products. By 2016, after the program was expanded in the 2014 Farm Bill, more than 2,500 products in 100 different categories were certified through the program. The dual purposed program reduces the country s reliance on petroleum while increasing the use and development of renewable agricultural crops and materials, including row crops, marine, and forestry materials. The program balances its promotion by mandating the purchasing of biobased products for Federal agencies and contractors while providing voluntary product certification and labeling in the private sector. The biobased economy contributes a total of $369 billion to the U.S. economy each year while supporting four million jobs. Kate Lewis, Analyst for BioPreferred, USDA said the program incentivizes the development, purchase and use of biobased products, If you look at the manufacturing supply chain, we view the product certification and labeling program as an end-market tool that is designed to increase a buyer s awareness of what a biobased product is and the value proposition of biobased products. Biobased products include a diverse range of offerings such as construction, janitorial, and grounds-keeping products as well as personal care and packaging products used by consumers every day. To earn the USDA certification, a product must meet a minimum biobased content threshold and pass third party testing. The USDA, in promoting the success of the biobased program, points to an independent report it commissioned that stated the biobased economy contributes a total $369 billion to the U.S. economy each year while supporting four million jobs, directly and indirectly. Further, USDA estimates biobased products displace around 300 million gallons of petroleum per year in the U.S., the equivalent of taking 200,000 cars off the road. In the USDA s independent Economic Impact of the Biobased Product Industry report authored by Dr. Jay Golden, director of Duke University s Center for Sustainability & Commerce, and Dr. Robert Handfield, professor of Supply Chain Management at North Carolina State University s Poole College of Management identified seven major overarching sectors that represent the U.S. biobased products industry s contribution to the U.S. economy: agriculture and forestry, biorefining, biobased chemicals, enzymes, bioplastic bottles and packaging, forest products, and textiles. 28 PLASTICS MARKET WATCH: BIOPLASTICS

33 Looking toward the future, Lewis said the USDA is working to merge the two side of the program and provide a one-stop shop on the supply and demand side for tools and information on biobased products and resources. construction janitorial Braskem s I m green TM Polyethylene combines technology, innovation, and sustainability. Produced from ethanol made from sugarcane a renewable source green polyethylene is a dropin biopolymer substitute to conventional, fossil-based polyethylene. It exhibits the same characteristics as the petrochemical polyethylene, in application, performance, and especially recycling. As the largest petrochemical company in the Americas and the world s leading biopolymer producer, Braskem is committed to improving people s lives by creating more environmental-friendly solutions for the chemicals and plastics. By using I m green TM Polyethlyene, Braskem s partners can offer unique products that help lower greenhouse gas emissions throughout the value chain. I m green TM Polyethlyene is currently used in food packaging, personal care, home care, cosmetics, toys and bags. For more information, visit grounds-keeping BIOBASED PRODUCTS personal care packaging Graphic Courtesy: Braskem America PLASTICS MARKET WATCH: BIOPLASTICS 29

34 FTC Green Guides Another federal program that is helping to guide the development of bioplastics and other environmentally-aware products is the Federal Trade Commission s Green Guides. Established in 1992, and updated over the years, Green Guides offer help to consumers in making green product choices and companies in how they market their products. The Green Guides have evolved to help consumers understand different environmental claims and benefits as well as the logos and emblems used to distinguish products in the marketplace. The updated FTC Green Guides address specific claims companies may make, including recent additions that address third-party certification seals and claims about carbon offsets and renewable materials and energy sources. Given the emphasis a growing number of consumers are placing on environmental issues, the Green Guides will likely grow and continue to delineate environmental claims helping consumers and companies alike. False or misleading environmental claims undermine consumer confidence in products and corporate claims regarding environmental protections. The FTC has been particularly active in regulating biodegradable products and claims as well as certifications marketers have used to designate them. For example, in 2015, the FTC found that a company acted deceptively by making false and unsubstantiated environmental claims about its product, a chemical additive that supposedly would make treated plastics biodegrade in a landfill within nine months to five years or within a reasonably short period of time. The FTC s action was based on their rejection of substantiation for biodegradability claims, even though the tests conducted on the product were based on established, international test methods. The FTC found that because testing had not simulated the physical conditions found in most U.S. landfills, it was not competent and reliable scientific evidence. FTC Green Guides Biodegradable Marketers often claim their product is degradable or biodegradable, but if a product is headed for a landfill (where most trash ends up), a company shouldn t make this claim without explaining how long the product will take to degrade and how much it will break down over time. Something that s biodegradable, like food or leaves, breaks down and decomposes into elements found in nature when it s exposed to light, air, moisture, certain bacteria, or other organisms. But most trash ends up in landfills which are designed to shut out sunlight, air and moisture. That keeps pollutants out of the air and drinking water, but also slows decomposition. Things like food that usually decompose quickly, could take decades (or longer) to decompose in a landfill. If a company says its product is degradable, and the product is typically thrown out in the trash, the company should have proof that the product will completely break down and return to nature in a landfill in the time or at the rate the ad states. ASTM ASTM, an international standards setting body, maintains several standards with respect to bioplastics for reporting how much biobased carbon content can be found in a material, as well as topics related to industrial composting. In addition, the ASTM Subcommittee D20.96 is developing several additional standards on home composting, and marine degradation. Manufacturers are hesitant to make claims related to product performance without these types of standards in place, so their creation may facilitate additional development for biodegradable bioplastics within these specific scenarios. 30 PLASTICS MARKET WATCH: BIOPLASTICS

35 California Landfill Initiative Individual states, particularly California, are pushing the envelope on the utilization of bioplastics through landfill and waste reduction efforts. California s 75 Percent Initiative is the state s ambitious goal of 75 percent recycling, composting or source reduction of solid waste by Given the state s size and population, the 75 Percent Initiative is a monumental task requiring a number of strategies to curb waste from being landfilled. The California s 75 Percent Initiative is the state s ambitious goal of 75 percent recycling, composting or source reduction of solid waste by California Department of Resources Recycling and Recovery (CalRecycle) developed a state-wide catalog of options for implementing the 75 Percent Initiative, including a mix of statutory and regulatory changes, infrastructure expansion, fiscal policies and incentives, as well as monitoring and enforcement. According to a progress report published by CalRecycle to the State Legislature, the 75 Percent Initiative builds on some earlier efforts the 1986 Beverage Container Recycling and Litter Reduction Act and the 1989 Integrated Waste Management Act that were adopted when California had single-digit recycling rates, limited infrastructure, and few end markets for recyclables. California has a diversion rate equivalent of 65 percent, a statewide recycling rate of 50 percent, and a beverage container recycling rate of 80 percent. For comparison, according to the Environmental Protection Agency, only 34.3 percent of waste in the U.S. was recycled, composted or sent to energy facilities in But California s waste generation is significant; by 2020, an estimated 80 million tons of solid waste will be generated and currently California has enough landfill permitted until 2057, according to a CalRecycle March 2015 report. To meet the 75 Percent Initiative, 60 million tons of waste will need to be source reduced, composted, or recycled. The state believes 37 million tons more than half will be achieved through source reduction, composting, and recycling programs. EU Circular Economy/ EU 2020 Mandate for Composting European countries have been at the forefront of advancing policies to address recycling, composting and landfill utilization; bioplastics have been a centerpiece of many initiatives in France, Italy and elsewhere in the region. In February 2016, France issued it new mandate on single-use plastic bags. The French Ministry of Ecology, Sustainable Development and Energy issued new language that delineated requirements to reduce single-use plastic bags for more biobased, biodegradable and home compostable bags. France had introduced a ban on single-use plastic bags in the prior year, but the revised ruling provides further support for the French standard for 2017 that calls for home composting of plastic bags with at least 30 percent biobased content. (The biobased content will increase in later years: 40 percent in 2018, 50 percent in 2020, and 60 percent in 2025.) PLASTICS MARKET WATCH: BIOPLASTICS 31

36 The growth and expansion of plastics in recent years is linked to the advantages the material provides all participants in the value chain. Sugarcane and baggase (a sugarcane byproduct) are common feedstocks for biobased bioplastics 32 PLASTICS MARKET WATCH: BIOPLASTICS

37 Bioplastics Conclusion PLASTICS MARKET WATCH: BIOPLASTICS 33

38 Conclusion The growth and expansion of plastics in recent years is linked to the advantages the material provides all participants in the value chain; its role in packaging, manufacturing, consumer goods, bottling or construction is growing due to the unique and unmistakable benefits it provides. Bioplastics is part of plastics growth story that is helping brand owners and manufacturers find new applications and solutions for products. For plastics to continue to grow, expansion the sector needs bioplastics to continue maturing and diversifying. Bioplastics should be seen as another arrow in plastics quiver that can solve problems for customers and contribute to plastics overall marketplace success. Bioplastics offer brand owners and end-consumers the unique advantages of being biobased, sustainable and biodegradable; a brand owner looking to differentiate itself and its product can use bioplastics for its consumer preferences, end-of-life options, as well as potential carbon footprint reductions and a diversification of feedstocks (i.e. reduced reliance on fossil fuel with their variable costs). Bioplastics is part of plastics growth story that is helping brand owners and manufacturers find new applications and solutions for products. PACKAGING As noted, the 19 members of SPI s Bioplastics Division have been working inside and outside of the plastics sector to promote awareness of bioplastics and MANUFACTURING their offerings such as performance, feed stocks and EOL disposal. Their efforts have been bolstered by government guidelines on product claims and support for biobased developments. CONSTRUCTION The growth and expansion of plastics in recent years is linked to the advantages the material provides all participants in the value chain CONSUMER GOODS Currently, there are 21 bioplastic polymers being used in the marketplace or under development. Research and advancements are being made in diversifying the feed stocks for plastics as well as their applications and EOL capabilities including recycling and/ or biodegradeability whether in soil, water or other home/industrial BOTTLING composting environment. 34 PLASTICS MARKET WATCH: BIOPLASTICS

39 Plastics and bioplastics are trending in the right direction, showing clear growth around the world as new applications and technologies are developed. While demand for bioplastics has grown in recent years, the price of petroleum and natural gas has had an impact on the research, adoption and usage of bioplastics. But rather than decline, bioplastics has continued to diversify and show growth. A number of issues are pushing bioplastics usage, most notably large brand owners moving to advance sustainability and green packaging initiatives. Leadership from brand owners will continue to be a major indicator for the future growth of bioplastics look no further than Coca-Cola s PlantBottle to see how the actions of one company can profoundly change the landscape for the material. An additional factor that will continue to spur development of bioplastics will be EOL management and increased infrastructure capabilities for handling bioplastics recycling and biodegradability. Governments need to continue collaborating with brand owners and institutions that use bioplastics to ensure EOL management of bioplastics is fulfilled and expanded. Further, the federal and state government support of biobased developments and research and tax credits will benefit bioplastics and all biobased products and chemicals. Plastics and bioplastics are trending in the right direction, showing clear growth around the world as new applications and technologies are developed. There is a place and need for all plastics in the industry and no perfect polymer will fit everyone s needs in all situations. While bioplastics currently represent 0.7 percent of the total plastics marketplace, it can continue to grow if a number of factors align in and out of the industry to spur the materials diversification, usage and EOL management. To SPI, bioplastics growth is critical to the entire sector and in meeting the needs of all customers and consumers. Bioplastics represent an evolution and not a revolution within the plastics marketplace. PLASTICS MARKET WATCH: BIOPLASTICS 35

40 Sources AB 341 Report to the Legislature, California Department of Resources Recycling and Recovery, August 2015 Are Green Labels Legitimate or Just Greenwashing?, Scientific American, April 18, 2016 Banks, Ian; De Smet, Michiel; Linder, Mats, Towards a new plastics economy, Chemistry World, May 3, 2016 Bioplastic Feedstock Alliance, Responsible Bioplastics, Sustainable Sourcing and the Circular Economy, November 1, 2015 Brokaw, Leslie, Pepsi s biodegradable backlash: The snack bag that was too noisy, Greenbiz, March 18, 2014 California Department of Resources Recycling and Recovery, State of Disposal in California, March 2015 Clare Goldsberry, Bothered and bewildered over bioplastics, Plastics Today, November 20, 2015 Davies, Steve, Director Public Affairs & Communications, NatureWorks, Interview, April 2016 Donovan, Emily, California falling short of 75 percent recycling goals, Desert Sun, August 6, 2015 Edwards, Keith, Head of Sales Management, Specialty Plastics North America, BASF, Interview, May 2016 European Bioplastics, Institute for bioplastics and Biocomposites, Bioplastics Market Data, 2015 French law introduces measures to strengthen bioplastics market Biobased, biodegradable fruit and vegetable bags mandatory as of January 2017, European Bioplastics Press Release April 16, 2016 Fussell, Nicky, Busting the myths of biodegradable plastics, Packaging News, November 18, 2015 Global bioplastics production capacities continue to grow despite low oil price European Bioplastics, Press Release, November 5, 2015 Golden, J.S., Handfield, R.B., Daystar, J. and, T.E. McConnell (2015). An Economic Impact Analysis of the U.S. Biobased Products Industry: A Report to the Congress of the United States of America. A Joint Publication of the Duke Center for Sustainability & Commerce and the Supply Chain Resource Cooperative at North Carolina State University Hardcastle, Jessica Lyons, 6 Sustainable Packaging Trends to Watch in 2016, Environmental Leader, January 22, 2016 Henry, Karen, Bioplastics Association Criticizes EU s New Circular Economy Package, Environmental Leader, December 2, 2015 How2Recycle.org, Il Bioeconomist, France goes green: Paris adopted the law on energy transition and green growth, July 23, 2015 Jankowski, Joe, Commercial Manager, Braskem America, Inc. Interview, June 2016 Karidis, Arlene, Good things come in plant packages: How bioplastics could become mainstream, WasteDive, March 31, 2016 Krieger, Patrick, Assistant Director, Regulatory and Technical Affairs, SPI, Interview, April 2016 Lewis, Kate, Analyst for the United States Department of Agriculture, BioPreferred Program, Interview, June 2016 Manolis Sherman, Lilli, Cow Gas to Plastics, Plastics Technology, March 16, 2016 Mechele R. Dillard, Frito-Lay hopes new quieter SunChips bag excites customers, Huliq, February 24, 2011 Miel, Rhoda, Danone converting some yogurt packaging to PLA, Plastic News, February 19, 2014 Okamoto, Kelvin, CEO, 3GenBio, Interview, May 2016 Royte, Elizabeth, Smithsonian Magazine Corn Plastic to the Rescue, August 2006 Sapp, Meghan, Iowa governor signs renewable chemical tax credit into law, Biofuels Digest, April 7, 2016 Schelmetic, Tracey, Auto Plastics Future Is in Biomaterials and Nanotechnology, Thomasnet, September 16, 2014 Sheppard, Kate, Why We re Doomed, Mother Jones, October 5, 2010 Sherman, Lilli Manolis, France Supporting Biobased & Home- Compostable Bags, Plastics Technology, February 12, 2016 Skidmores, Sarah, Biodegradable Bag Made Quieter For Critics, Associated Press, May 25, 2011 Smith, Kevin, Report: L.A. County must expedite recycling to meet landfill reduction goals, San Gabriel Valley Tribune, July 13, 2015 Succinic acid, Wikipedia, Szaky, Tom, Bioplastics and the Truth about Biodegradable Plastic, Huffington Post, January 11, 2016 The New Plastics Economy Rethinking the Future of Plastics, Ellen MacCarthur Foundation, January 19, 2016 Thryft, Anne R., 6 Promising New Ways to Make Bio-based & Renewable Plastics Design News, January 22, 2016 United States Department of Agriculture, Fact Sheet: Overview of USDA s BioPreferred Program, February 18, 2016 United States Department of Agriculture, News Release: New Report Shows U.S. Biobased Products Industry Contributes $369 Billion, 4 Million Jobs to American Economy, June 17, 2015 United States Energy Information Administration, Short-term Energy and Summer Fuels Outlook, April 12, 2016 United States Enivironmental Protection Agency, Advancing Sustainable Materials Management: Facts and Figures. advancing-sustainable-materials-management-facts-and-figures Unruh, Gregory, The Sweet Spot of Sustainability Strategy, MIT Sloan Management Review, Fall 2013 Verbruggen, Marc, NatureWorks: The Next Decade Opportunities, Obstacles, and Opportunities, Presentation, April PLASTICS MARKET WATCH: BIOPLASTICS

41 Plastics Market Watch Snapshot Confidence Level Extremely Low Low Moderately Pessimistic Neutral Moderately Optimistic High Extremely High Increasingly optimistic outlook continues for all sectors of manufacturing. Plastics use continues to grow and expand, including bioplastics. Plastics provide wide functionality, flexibility, strength and low costs across packaging, manufacturing, consumer goods, bottling, construction, etc. Current ample supply and low price of petroleum and natural gas have had an impact on the research, adoption and usage of bioplastics. US ECONOMY Bioplastics support overall plastics industry's need for continued growth and diversification. Bioplastics offer brand owners and end-consumers the unique advantages of being biobased, sustainable, and biodegradable. Bioplastics contain manufacturing advantages and end-of-life capabilities as well as carbon footprint reductions and diversification of feed stocks. Misunderstanding of "biobased" and "biodegradable" causes confusion with general public as well as within industry. There is a lack of infrastructure for end-of-life disposal options other than landfill. UTILITY OF BIOPLASTICS Research advances in diversifying the feed stocks for plastics as well as their applications and end-of-life capabilities including biodegradability. End-of-Life management and increased infrastructure capabilities for handling bioplastics recycling and biodegradability exist. TECHNOLOGY TRENDS Government guidelines on product claims continue, as does support for biobased developments. More than half of adults polled in a national survey indicated they would probably or definitely be more likely to consider purchasing a plastic product with the USDA Certified Biobased Product seal. 86% of adults polled in a national survey said they'd not seen or were unsure if they'd seen the USDA Certified Biobased Product seal. There's limited legislation and regulation in favor of bioplastics, plus a lack of testing standards for end-of-life options. Debate about food vs. fuel vs. plastics persists. PUBLIC POLICY Large brand owners move to advance sustainability and green packaging initiatives. After learning about bioplastics, 50 percent of adults polled in a national survey indicate they would consider purchasing a product if it was a little bit more expensive because it was made with bioplastics. Bioplastics is still in its infancy but represents an evolution not a revolution within the plastics marketplace. Only 27% of adults polled in a national survey were somewhat or very familiar with bioplastics 34% were not familiar at all with bioplastics. Despite having been around since the 1950 s, there's still confusion and misunderstandings of bioplastics: from origins/feedstocks to end-of-life disposal, biodegradability and product performance. BIG PICTURE PLASTICS MARKET WATCH: BIOPLASTICS 37

42 We create chemistry that makes compost love plastic. Most plastics don t biodegrade, but ecovio plastics from BASF biodegrade completely when composted in a controlled environment*. Using compostable bags for collection of organic waste makes disposal more hygienic and convenient. Rather than ending up in landfi ll, the ecovio bagged organic waste can be turned into valuable compost where programs exist. When the plastic bag you use today can mean a cleaner future for the environment, it s because at BASF, we create chemistry. = REGISTERED TRADEMARK OF BASF GROUP * ECOVIO 38 POLYMERS ARE CERTIFIED GLOBALLY BY THE BPI ACCORDING TO ASTM D6400, PLASTICS MARKET WATCH: BIOPLASTICS DIN CERTCO ACCORDING TO EN 13432, THE JBPA ACCORDING TO GREENPLA AND THE ABAM ACCORDING TO AS SPECIFICATIONS.

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