Sustainable Specialties

"The stone age did not end because the world ran out of stones," wrote environmentalist guru Amory Lovins, chief executive officer of the Rocky Mountain Institute, in the Economist magazine in 1999. "And the oil age will not end because the world will run out of oil."

Although no one can say whether a 300% increase in the price of stone precipitated the end of the Stone Age, attendees at a recent conference on renewable resources say a fourfold increase in the price of oil since the mid-1990s may be the impetus for moving the chemical industry into a postpetroleum era. There is disagreement over whether the evolution will be accelerated by supply anxiety or the push for environmentally friendly products, but all agree that the dawning age will be a kind of return to the past, characterized by the chemistry of natural products.

Scott Noesen, director of sustainable development at Dow Chemical, quoted Lovins in his opening address at the conference, which was sponsored in Chicago by the American Oil Chemists' Society (AOCS). According to Noesen, major chemical companies are anticipating fundamental changes in what they make and sell as economic, environmental, and political pressures force industry to rely less on petroleum products. Significant research efforts are under way to replace established raw materials with products like plant oils--such as soybean oil--animal oils, and agricultural waste, he said.

The first wave of renewable or biotech products is already replacing petroleum-based raw materials in large commodity markets such as plastics, fibers, and fuels. These products come in direct contact with consumers and are thus marketed foremost as "green." In fuels, there is also regulatory momentum behind products such as biodiesel.

The second wave--specialty products--consists of materials sold primarily to industry. The main drivers behind their acceptance as replacements for petrochemicals will be price and performance.

That acceptance has been a lot slower than some were anticipating 20 years ago. "Oil prices peaked over $40 per barrel in the 1970s, and people predicted that renewable resources were bound to be more competitive and the wave of the future," said consultant Robert T. Betz, who chaired the AOCS meeting. Betz, a former U.S. head of the oleochemical producer Cognis, said the drop in oil prices in the 1990s slowed development considerably, but the price of a barrel of oil is now at an all-time high, and supply is a concern. "Each decade gets more severe," he said. "We know there is a limit to fossil resources, but we don't know what it is. Our political situation and the balance of payments are such that one wonders, if not now, when? When will it all come together?"

This kind of hand-wringing over the future is not typical in the chemical industry, which tends to focus primarily on the short term. Funds for research into products that may be needed 10 or more years out, for example, are hard to come by at publicly traded firms whose shareholders are demanding fast turnaround of R&D dollars. Consequently, some companies have teamed with government agencies such as the Departments of Energy and Agriculture in order to fund research on renewables.

Size also matters. Large companies with big research infrastructures say they have a distinct competitive advantage. Still, solid advances have been made by midtier companies with backgrounds in natural oils and other products. All agree that renewables are only starting to catch on but will inevitably play a significant role in industry in the future.

Dow, like other pioneers in renewables, focused first on plastics and fibers, markets that are close to retail customers. "Those products are only one step away from Nike and Home Depot," Noesen says. Green products sell. "But in specialties, one looks at the cost of raw materials as a percentage of the total selling price. I don't see as much of a driver right now. Specialty chemicals are further back in the value chain."

He notes, however, that in some basic categories, such as solvents and dispersants for coatings and industrial cleaners, price and performance criteria are being met and renewables are making their way into formulations.

Noesen stresses that the work being done to develop new products is happening within the context of the so-called triple bottom line of economic, environmental, and social concern. "When we say triple bottom line, we mean triple bottom line," he says. "We aren't going to sacrifice economic value for environmental stewardship. But smart companies are looking at the price of natural gas and thinking about diversified feedstock as a competitive advantage."

ACCORDING TO Patricia A. Nugent, program director for Dow Ventures, the company is developing seed-oil-based materials for coatings, in which oils are combined with epoxy resins for various applications. "We are trying it at all different levels: one-to-one and one-to-two blends," she says. "Coatings are complex, especially epoxies. They have to perform under very demanding conditions, so there is a lot of materials testing. Materials are tested for hours and hours against UV light and salt corrosion. It comes down to running tests, changing formulations, looking at results, and rerunning new formulations, maybe with a different curing agent. A lot of things can change: curing agents, resin amounts, additives, and carriers."

Some of the work on oil seeds is being done in a partnership with the Department of Energy that is now in its fourth year. Dow received $10 million in government funding to study plant science, crop processing, materials processing, and application development.

Nugent says Dow is not primarily looking to stamp the word green on coatings labels. Rather, the goal is to develop an all-around superior product. "It is a whole new feedstock for us that gives us the opportunity to bring wholly new materials into the marketplace," she says. She sees the opportunity to gain a competitive edge with materials that are completely different from the olefin-based standards.

For Robert R. Matheson Jr., technical manager for strategic technology with DuPont's performance coatings unit, research on renewables is essentially advance work. "Our goal is to look out in advance and bring forward the technologies that will benefit the marketplace at a time when the marketplace doesn't even know about it," he says. "We are the long-range guys."

THE PRIMARY IMPETUS for exploration is economic, Matheson says. "It is clear, if you look out far enough, that you have to worry about where your raw materials are coming from, in terms of price and performance. We have been scouting ideas--not pushing anything for commercialization, but making sure we have a plan and options for when raw material prices or availability or any other factor comes along and forces us to change from our traditional raw materials."?

Matheson acknowledges that few renewable-resource-based specialty chemicals have been commercialized, primarily because of cost and durability concerns. Durability, in fact, is what pushed coatings--such as the linseed oil paint used on the original Ford Model-T--toward synthetic materials.

"Natural products tend to be deficient in external properties compared with what people expect," Matheson says. "There is yellowing of linseed oils or cracking of Japanese lacquers. In the push for more durability, people have moved to synthetics. Society's expectations are fixed there; you are not going to go backward in terms of durability."

On the front line at DuPont is a crossover from fibers: 1,3-propanediol, a corn-derived intermediate that is being studied for specialty applications. DuPont is also studying uses for tulipalin A---methylenebutyrolactone--a natural material found in tulips. Consisting of a five-membered ring with an oxygen and a carbonyl group, the molecule polymerizes in a manner similar to the polymerization of methyl methacrylate, Matheson says.

"It's a nice monomer with good durability and a good refractive index," he says. "It is one of those things waiting on the fence. We've done all our homework. If it suddenly becomes a raw material for some other purpose at a reasonable price, we would begin to displace our current oil-based methacrylate monomers with an appropriate percentage of tulipalin."

Another product of interest to DuPont is limonene, a citrus-derived material sometimes used for its odor properties. The material is harvested and used industrially, but it is "priced all over the place," Matheson says, "depending on things like frosts in Brazil." Its chemistry, he says, is analogous to that of 4-vinyl-1-cyclohexene. "We've looked at it closely. It has two double bonds, and we use it as a place to introduce alkoxysilanes for exterior coatings."

Matheson says the need for new materials in coatings will gradually ramp up as traditional materials become scarce. Product development must be forward-looking without pushing products onto the market. "The future that we see is not that you wake up Thursday morning and find there is no oil in the world anymore," he says. "We really do think that our incremental strategy is the smart one. You want options, a second source of supply, which is something that any prudent industrialist would think of. You never want to be sole-sourced."

Executives with DuPont and Dow argue that large, world-class research organizations will give them a competitive advantage in developing renewable options for specialty materials. "You need to do a lot of up-front and exploratory work," Matheson says. "It is not something you can do on a small scale over a short period of time." But several mid-sized and smaller firms note that they also have sizable programs under way.

Robert Gleim, director of technology for adhesives and sealants at Rohm and Haas, points out that renewables have been under investigation for a decade. "It's clear that if you don't start down the path now, you'll never get the organization moving in that direction," he says. "You have to start down the path, otherwise you are always waiting for the ideal climate--the right combination of raw materials, market forces, and regulatory forces--to occur, which never happens. We decided to take the first step and drive it into our business."

Like DuPont and Dow, Rohm and Haas is developing renewable alternatives for coatings. One of the ways the company is dealing with competition from the larger firms is the pursuit of partnerships. "In coatings, we are working closely with biobased materials companies looking for ways to take any technology they have to bring it into coatings formulations," says Ken Smith, research manager for architectural coatings. "We are looking to reduce the amount of petroleum-based binders in a can of paint and still deliver performance."

Rohm and Haas's coatings group formed a key partnership with Archer Daniels Midland in 2003, Smith says. Rohm and Haas has been working on combinations of its vinyl acrylic and styrene-acrylic binders with biobased materials developed by ADM, mostly coalescents, dispersants, and rheology modifiers based on fatty acids.

Thomas Kauffman, Rohm and Haas project group leader for adhesives and sealants, says the company has used some renewable materials, such as castor oil, for years, but there is recently a more intense focus on new applications. "We are trying to remain cognizant of what is happening in raw-material pricing and petrochemical feedstocks," Kauffman says. "We want to be positioned to tap into lower cost feed streams where available. Moreover, we are looking into performance enhancement. We know there are some unique situations where biobased materials can actually be value-added building blocks."

Catherine Hunt, director of technology partnerships for Rohm and Haas, says funding research on renewables is now done in a more systematic fashion than in the past. The firm has entered two agreements with DOE this year, with government funding totaling $2.75 million. Hunt says the agreements are key to proceeding on renewables.

"We like doing long-range research, but there is more pressure from stockholders to see projects that deliver in the short term," she says. "So, in order to do long-range research, we have started to partner with the government." In coatings, the company is targeting sustainable materials that will be favored under strict environmental and safety regulations. "By going to biomass coalescents," she says, "we not only decrease our dependence on foreign oil, but we also lower the volatility of the formula."

Other specialty chemical firms have a long history of working in renewables--many have businesses based on oil chemistry and other natural products. One of the biggest is Uniqema, where there is a push to wean customers from petrochemicals to renewable resources, according to Daniel Howe, vice president of marketing. Price and performance have reached parity with petrochemicals in some areas, Howe says, including dimerized fatty acids, which can serve as replacements for polyamides. In coatings, Uniqema is creating a range of green products such as water-based alkyd resins.

Johnson Polymer, a wholly owned subsidiary of privately held JohnsonDiversey, has been working with renewable water-based polymers for years. Richard Chylla, the firm's director of strategic business development, contends that specialties companies across the sector are turning up the heat under renewable materials. The incentive is mostly economic, he says.

"I think customers are almost always looking for price and performance, except in certain applications where there is a perceived large benefit to being green, such as for paint for a child's bedroom or a coating that is going to go on a plastic toy." But with the rising price of petrochemicals, Chylla sees a "change in the balance" of raw materials that will increasingly favor renewables.

NATURAL POLYMERS have always been a ripe area for specialty product development, according to Chylla. "Some of the most plentiful materials in nature--things like collagen, casein, whey protein, and carotene--are good coatings materials," he says. "They can be formulated into very tough films and have been shown to have both barrier and resistance properties." Over the past decade, he adds, biotechnology and genetic engineering provided tools for custom production of optimum molecules from natural products.

Recent work at Johnson, Chylla says, includes research on the use of vernonia oil, from the Vernonia galamensis plant, native to Ethiopia, as a cross-linkable material for coatings.

International Specialty Products upped its activity in renewables with the 1999 purchase of Kelco, a producer of alginates from kelp. According to Larry Grenner, senior vice president of R&D, sodium alginate and propylene glycol alginate are finding applications outside their traditional use as food emulsifiers and stabilizers. Having made an easy transition into pharmaceutical formulations, Grenner says, alginates are now gaining traction in paper coatings, personal care, and adhesives.

Since buying Kelco, ISP has been aggressive in scouting new uses for kelp-derived products, Grenner says. "In all of our businesses, we look to see if there is a role for the alginates or their various salts. It is more cost-effective than synthetic products." According to Grenner, kelp is harvested by boats off the coast of California and can be cut four times a year.

There is some debate as to whether size matters in developing the renewable-resource-based products of the future, but there is general agreement that products will evolve away from petrochemicals over time and that manufacturing infrastructure will similarly have to change. Smaller, specialty-oriented firms may be well positioned.

"It requires some investment," Chylla says. "You have to bring about the infrastructure and create economies of scale. But because we are a specialty manufacturer, our infrastructure has always been flexible and very well suited to making small- to medium-sized volumes of lots of different kinds of products."

Noeson says Dow is studying its future needs in order to size plants properly. He says Dow is reevaluating the "intergalactic-scale, low-cost production-of-stuff" approach to building plants that are likely to remain in place for 30 to 40 years.

Just as Dow redesigned its manufacturing when it evolved from processing brine and salt to processing petroleum in the mid-20th century, the firm will need to redesign manufacturing again around renewable resources and biotech materials. "We will have to reinvent some things," he says, to establish a more modular infrastructure characterized by several small plants in place of one very large one.

When deciding on plant design, Noeson says, companies need to ask the question they are currently asking in new product research: "What is the world going to look like 30 years from now?"