The Economics of transitioning to Bio-based chemicals

Sonichem – is a company which converts low-value forestry by-products into high-value, renewable biochemicals. The company recently secured €1.4 million in Pre-Series A funding, which includes a follow-on investment by ACF Investors. The company has decided to utilize the investment further to build its technology & finalise plans for the biorefinery facility- the 1^st of its kind.

Adrian Black, CEO of Sonichem, said: “At Sonichem, our mission is to make the chemical industry more sustainable. Now we’ve completed the first phase of our Pre-series A round, we’re looking to enter our next stage of commercial development as we look to scale our offerings and build towards finalizing our Pre-series A round and raising our Series A to support the development of our biorefinery plant in the North of the UK. ACF’s investment is a continued vote of confidence in our mission and we’re excited to get going.”

With mounting pressure in order to transition towards sustainable practices amidst the increasing concerns over climate change & environmental degradation, the chemical industry is at a pivotal juncture. Agricultural residues, algae – the renewable biomass sources are used to derive some of the bio-based chemicals, which render a promising alternative to conventional petrochemicals. This transition would lead to decreasing green gas emissions, reliance on fossil resources as well as foster a sustainable economy. However, the integration of bio-based chemicals into the mainstream chemical industry needs careful consideration of numerous economic factors. In this article let us look at the economics of transitioning to bio-based chemicals and exploring the opportunities as well as challenges that are involved in realizing a more sustainable future.

Market dynamics & demand for bio-based chemicals

The demand for bio-based chemicals is influenced by myriad of factors which include regulatory frameworks, shifting consumer preferences, and corporate sustainability initiatives. Rising awareness of environmental issues & surge in consumer consciousness about product sustainability bolster the demand for bio-based alternatives. Furthermore, stringent regulations that are aimed at decreasing carbon emissions as well as promoting renewable resources would further drive the growth of the bio-based chemicals market.

Also, corporate commitments to sustainability play a huge role in shaping the market dynamics and several organizations across diverse industries have started adopting sustainability goals & are seeking bio-based alternatives for meeting these objectives. Furthermore, collaborations among academia, governments and the industry stakeholders help in fostering innovation & creating opportunities for market growth.

Some of the companies that provide bio-based chemical products include Evertree, Bambooder, CH-Bioforce, Sironix Renewables, and Bosk Bioproducts.

Cost considerations & Competitiveness

Manufacturing costs are a significant element which comprise the spending that are associated with feedstock procurement, processing as well as infrastructure, while the economics of bio-based chemicals hinge on cost competitiveness which are relative to conventional petrochemical. Furthermore, technological advancements in fermentation, biotech, as well as catalysis have resulted to enhancements in process efficiency which have helped in bolstering manufacturing costs & improving competitiveness.

One of the major factors that play a vital role in cost optimization is economies of scale. Large-scale manufacturing facilities are benefitted from various factors which include lower per-unit costs owing to efficiencies in resource utilization as well as economies of scale. Furthermore, strategic investments in R&D help the development of cost-effective manufacturing methods, which further improves the competitiveness. One such company that offers high-performance biochemicals is Agrisia Agro.

“Looking for to develop into a global brand, we work together with a worldwide network of strategic partners in order to design and develop wide range of Specialty Products that includes micronutrients, water soluble fertilizers, organic products, and high-performance biochemicals to name a few,” says Sandeep Kumar Singh, Director, Agrisia Agro.

Technological innovation & process optimization

Technological innovation is one of the driving factors that help in bolstering the growth and development of bio-based chemicals. Research efforts mainly focus on building novel conversion processes, improving catalyst efficiency and enhancing fermentation methods. Biotechnology plays a major role in various aspects which include the unlocking of full potential of biomass sources, and leading to enabling the manufacturing of a wide range of bio-based chemicals.

The aim or objective of Process optimization efforts is to reduce waste generation, optimize yield and decrease energy consumption. Furthermore, integration of biorefinery concepts help in the simultaneous manufacturing of several value-added products right from biomass feedstocks. Also, advances in metabolic engineering as well as synthetic biology facilitate the customization of microbial stains for improved product produce as well as substrate utilization efficiency.

“Agriculture is vital to the economy of any country. Chemical fertilizers and insecticides are widely used in modern intensive agriculture methods to boost crop yield and meet the nutritional needs of the world's growing population. says R. L. Narayana Rao, the Founder & Managing Director at Sowbhagya Biotech.

“Rapid urbanization, shrinking agricultural lands, dramatic changes in climatic conditions, and widespread use of agrochemicals in agricultural practices, on the other hand, have been found to cause environmental disturbances and public health hazards, threatening food security and agricultural sustainability,” he adds.

The economics of transitioning to bio-based chemicals have numerous advantages. These include cost considerations, market dynamics, technological innovation, supply chain optimization and others. While huge progress is being made in advancing bio-based technologies numerous challenges still remain which comprise feedstock availability, manufacturing scalability as well as cost competitiveness. Therefore, addressing these challenges need continued investment in R&D as well as collaborative efforts across multiple stakeholders.