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Gevo Begins To Ship Missing Link For 100% Renewable Plastic Bottles

Jim Lane
Coca-Cola-1[1].png

From Colorado, news has arrived that Gevo (GEVO) is now selling paraxyleme to Toray (TRYIF), one of the world’s leading producers of fibers, plastics, films, and chemicals. It’s producing PX from isobutanol, one of its three molecules in production (the others are jet fuel and iso-ocrane) at its complex in Silsbee, Texas. Toray expects to produce fibers, yarns, and films from Gevo’s PX.

While any new molecule attached to a major customer relationship is always big news for any producer — this has special significance. Let’s review exactly why.

PX is the missing ingredient in the production of a highly-sought after material — 100% renewable plastic bottling.

What is plastic bottling? It is a material called PET (For you purists: polyethylene terephthalate. Say that three times real fast.) It’s a form of polyester that is see-through, and is an excellent barrier material. Not much gets through these little molecules.

Accordingly, it’s become the third most widely-produced polymer in the world, after polyethylene and polypropylene. PET makes up about 20 percent of the world’s polymer production, and about 30 percent of that PET goes into making plastic bottles. Global PET production is estimated at 20 million metric tons per year by ICIS — and is selling for right around $1500-$1600 per metric ton this year.

So, an $30B+ market. Wow.

In steps Coca-Cola

Seeing high customer demand for more eco-friendly product packaging, Coca-Cola (KO) introduced the first-generation Plant Bottle in 2009, with up to 30 percent renewable content. The company has now distributed more than 10 billion first-generation PlantBottle packages in 20 countries worldwide, and is bullish on reaction from customers.

Why the limit at 30% renewable content? That’s where PX comes in. It’s PET is produced from renewable MEG (ethylene glycol) and PTA (purified terephthalic acid). PTA in turn is produced from paraxylene (PX), which until now has not been available from renewable sources on a commercial basis.

Coca-Cola-2

If it can find or foster sources of renewable PX, Coke aims for 100 percent plant-based packaging, at scale, by mid-decade — and that means billions for the producers, and the key to it all is renewable PX. It’s also worth pointing out that according to ICIS and Nexant, the global PET market is facing huge overcapacity problems in the wake of large amounts of new PTA capacity coming on line in China. So — a good, solid market in renewable PET, safely protected from low operating rates, plant shutdowns, and bad margins — well, it’s not only big business, but great business.

Coca-Cola-3

The Toray relationship

The Toray “buy” is the culmination of a multi-year effort that first surfaced in 2012, when we reported that Toray signed an offtake agreement for renewable bio-paraxylene (bioPX) produced at Gevo’s (then) planned pilot plant. The agreement enabled Toray to carry out pilot-scale production of bioPET, and the company was able to offer samples to its business partners, last year. Using terephthalic acid synthesized from Gevo’s bioPX and commercially available renewable mono ethylene glycol (MEG), Toray had succeeded in lab-level PET polymerization to produce fibers and films samples in 2011.

Later came news that Coca-Cola was stepping forward to invest in pilot plants at Virent, Avantium and Gevo in pursuit of renewable plastic bottling — though Avantium, in its case, would by using its YXY chemical catalytic technology to produce an alternative molecule, PEF, that it believes can provide equal or better product performance to PET.

Why not just use, say, polyethylene?

Good news, Coke does, in Odwalla juice products. Works for juice in the fridge. Does not work for products outside of the fridge, especially carbonated ones.

Back to PX.

The PX was sold under a previously announced offtake agreement with Toray. Toray also provided funding assistance for the construction of Gevo’s PX demo plant at its biorefinery at South Hampton Resources, where Gevo also produces other hydrocarbon products such as renewable jet fuel and renewable iso-octane.

As a result of the shipment, Gevo will recognize revenue associated with both the sale of the PX, as well as the initial funding assistance provided by Toray for the project.

Gevo has also received support from The Coca-Cola Company for the development of its renewable PX technology. Research and development support was provided by The Coca-Cola Company under a previously announced Joint Development Agreement.

“We greatly appreciate the support that Toray and The Coca-Cola Company have provided Gevo in developing bio-PX. This is a groundbreaking achievement that we are very proud to have accomplished. This demonstrates that bio-isobutanol is truly a building block for the renewable chemicals industry,” said Gevo CEO Pat Gruber.

The business case

Here’s the good news, from our report on paraxylene and its opportunities:

“In the case of a Gevo-retrofitted plant, the biorefiner can produce biobutanol plus co-products, or paraxylene and the same co-products – to give one example. Turns out, in renewable fuels as well as elsewhere, it takes two (products) to tango. Pricing moves around in these volatile markets, but as a rule of thumb, paraxylene prices at around a 25 percent premium to ethanol (after taking into account the lower yields of isobutanol, per ton of feedstock). PET sells for roughly a 125 percent premium.”

Having trouble remembering all this?

Here’s a way to keep the supply chain in mind:

After buying some vinegar at the PX, Meg went to the PTA with her pet.

The bottom line

For Gevo, probably the good news couldn’t come too soon. Having gone through dilutive financing events to shore up the balance sheet, mired in an IP battle with Butamax, and having struggled with infections at Luverne that have kept the plant from a 100% shift-over to isobutanol production at or near nameplate capacity— well, the company can use good news, and this market is potentially huge for the comoaby in terms of volume and margins.

For Coca-Cola and Toray, it’s a sign that the strategic entry into renewable PX is showing signs of heading for commercial scale. Although 98% of global PX demand is for plastic bottling — it’s quite possible that Toray and others could open up other markets using bioPX as an ingredient.

But the advance towards 100% renewable Plant Bottle packaging is news of major import — and a sign that Gevo and some combination of partners may well proceed to build a commercial plant, if the product continues to perform as expected and the economics are in line.

Where might this go? Beyond Coca-Cola plastic, there’s already work going on a Sea World, Ford and Heinz to adopt the new technology — Coca-Cola has said on several occasions that it intends to foster broad demand for renewable plastics as part of its overall sustainability mission (and, not coincidentally, to ensure robust and affordable supply of the materials).

coca-cola

Some of that will remain dependent on corn dextrose pricing — since that’s Gevo’s fundamental feedstock. For now, prices have been good, if not historically great. Much will depend for the prices for the reainder of this year — on crucial corn reports due from USDA in July and August on crop conditions.

Jim Lane is editor and publisher  of Biofuels Digest where this article was originally published. Biofuels Digest is the most widely read  Biofuels daily read by 14,000+ organizations. Subscribe here.



was posted on AltEnergyStocks.com.


       

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