Bioplastics

Look around your home or office and likely your gaze will fall almost immediately on something made from polyethylene.  It is one of the most widely used plastics in the world because it is both lightweight and sturdy.  Polyethylene is produced in tons by the tens of millions to turn out the tubes, tubs, globes, bags, boxes, films, laminates, and many other little parts for our modern world.  More dense versions the thermoplastic polymer result in a more rigid and crystalline structure that is pipes or containers, while less dense versions can be used for shopping bags or wrap.

Over 300 million tons of plastic materials are produced each year and as much as 8 million tons of it, including polyethylene, end up in oceans each year.  Consequently, polyethylene has become one of the most abundant microplastics in coastal waters around the world.  Such plastics float on the marine surface and are eaten by marine animals who mistake the particles for food. Toxic compounds in microplastics are introduced to the aquatic populations with far reaching implications for the marine environment and ultimately the humans at the end of the food chain.  High density polyethylene (HDPE) has been found to leach estrogenic chemicals that are dangerous to human babies and children. 

In addition to the hazards of plastic waste, polyethylene production results in significant greenhouse gas emissions.  Most polyethylene is made from ethylene gas that is the by-product of natural gas or petroleum processing.  Conventional production of HDPE, as an example, results in about 1.5 pounds of carbon dioxide equivalents for each pounds of plastic.  About 80% of the emissions originate from the petroleum feedstock and about 20% of the emissions result during the production produces.

Most rightly a cry has gone up to prevent plastic from getting to the ocean in the first place and to make more benign plastics.  Some producers have turned to ethylene gas feedstock from renewable fuels such as ethanol.  Ethanol made from corn or sugar cane have been tried as feed stock for ‘bio-HDPE’. 

To be clear, the chemical composition of bio-HDPE is exactly the same as HDPE made from petroleum.  Consequently, bio-HDPE will not decompose in the environment any faster or more completely than conventional HDPE.  Even though plastic containers made from bio-HDPE are recyclable, bio-HDPE is not any less likely to end up as waste on a beach than conventional plastic.  Thus, the environmental value of bio-HDPE could be more or less the savings in carbon emissions that results from using a renewable feedstock.

Calculations vary on just how much advantage bio-HDPE delivers in terms of reduced carbon footprint as measured by cradle-to-plant gate greenhouse gas emissions.  Corn ethanol as a feed stocks appears to offer little advantage since it is highly dependent upon natural gas to power the fermentation processes.  Sugarcane ethanol achieves slightly greater greenhouse gas reductions.

 

In the next posts we look at investment opportunities in the companies that are bringing bio-HDPE to the market.

    

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.