10 companies that are revolutionising plastic
Small caps are tackling the thorny problem of plastic. Here’s our take on the most promising solutions.
By Bertrand Beauté and Stanislas Cavalier
The story of Gert-Jan Gruter is worthy of a Hollywood film. For years, the Dutch chemist worked in the plastics processing industry, improving traditional plastics made from hydrocarbons. But as he became aware of the environmental effects of plastic, he decided to develop an alternative material that was better for the planet. In 2000, he founded Avantium – a spin-off from oil giant Shell – where he created a plant-based bioplastic called "PEF" (polyethylene furanoate), a bio-based substitute for PET that requires no oil-based components, is completely recyclable and is able to reduce CO₂ emissions caused by bottle production by 50% to 70% compared to PET.
"PEF is very promising, because it has better properties than PET, which means it can replace multi layer plastics." says Pieter Busscher of Robeco. According to its advocates, this plant-based material is also more rigid than its oil-based equivalent. As a result, bottles require less plastic, which reduces production costs. It is also more airtight. PEF blocks 10 times more oxygen and six to ten times more CO₂ than PET. In February 2023, Avantium entered into a partnership with US company Origin Materials in order to accelerate the mass production of PET. Most analysts recommend buying shares.
In November 2022, Biome Technologies signed a partnership with UK chemical manufacturer Thomas Swan & Co. to bring new bioplastics to market. This collaboration is expected to boost the company’s sales, which have slipped over the past two years for this small British company and developer of natural plastics. Its bioplastics division generated £4.4 million in revenue in 2022, compared with £4.8 million in 2021 and £4.9 million in 2020. However, European Bioplastics predicts that demand for these materials, which offer an alternative for oil-based polymers, will triple over the next five years. This could help to lift Biome Technologies, despite intensifying competition within the industry. Another company division, Stanelco RF Technologies, develops fibre optics solutions, among others. Stanelco’s revenues doubled from £0.9 million in 2021 to £1.8 million in 2022. No analysts are currently tracking the stock.
Is a French start-up in the process of resolving one of the flaws of traditional recycling? Carbios has generated buzz around the world after partnering with large-scale users of plastic such as L’Oréal, Nestlé Waters, PepsiCo, Patagonia, On Running and Puma. These giants, that all use significant amounts of recycled PET, hope that Carbios is the solution to the inherent problem in traditional recycling. "Mechanical recycling – a technique used in 99% of reprocessing facilities – damages polymers, which lose their mechanical properties over time. This is why PET can only be recycled a limited number of times," says Paul de Froment, vice president of Equity Research Cleantech & Energy at Bryan, Garnier & Co. "Carbios’ technology promises to produce 100% recycled and 100% recyclable PET with no loss in quality."
Essentially, Carbios uses enzymes (proteins present in cells) to split polymers into individual monomers, while the colours and additives end up as residue. In its demonstrator project, the company has reached a 90% PET depolymerisation rate and hopes to achieve 95% soon. The next step is to take the technology from the laboratory to the industrial scale. This year, Carbios will begin work on a plant in Meurthe-et-Moselle at facilities owned by Indorama, the largest global producer of PET resin, which will use the recycled material produced at the plant. The site is expected to be up and running in 2025 with a processing capacity of 50,000 tonnes of waste per year. In addition to PET bottles, Carbios technology is expected to be capable of recycling clothing that was not previously recyclable. Of the 70 million tonnes of PET produced annually worldwide, two-thirds are used to produce textile fibres (polyester fibres) and the remaining third is used for packaging. This is a potentially massive market. The two analysts that follow the company recommend purchasing shares, which have increased 350% over the last five years.
Corbion in partnership with Total Currently representing 1.5% of global plastics production, bioplastic manufacture is expected to triple in volume in the next five years, reaching 6.3 million tonnes per year in 2027, compared to 2.2 million tonnes in 2022, according to European Bioplastics. This growth is primarily driven by the success of one bioplastic in particular: PLA (polylactic acid). Made from renewable raw materials (such as sugar and starch), PLA is both recyclable and compostable. Furthermore, its properties make it a real alternative to plastics made from fossil fuels in many applications (floor and wall coverings, plastic bin bags, smartphone and computer cases, dashboards, etc.).
Aware of the potential of PLA, Dutch group Corbion has partnered with French oil giant TotalEnergies to form a joint venture named TotalEnergies Corbion, with the goal of becoming "one of the leaders in the bioplastics market". With a plant in Rayong, Thailand, TotalEnergies Corbion produces 75,000 tonnes of PLA per year, while global production sits at 240,000 tonnes per year. In 2024, the company will open a second facility in Grandpuits in France to produce 175,000 tonnes of PLA annually. With this strong development, the joint venture expects to hold a 10% share in the biopolymer market by 2030.
But PLA does have its critics. In order to be recycled or composted, it needs to be collected in specific recycling systems. And since those systems are uncommon, PLA waste often ends up in incinerators. Further more, the "100% compostable" claim that PLA proudly advertises is misleading for consumers. In fact, PLA can only be composted under industrial conditions: it must be heated to 60° Celsius for several weeks to break down into usable compost. In reality, this is often too expensive for companies and they end up burning it. Half of the analysts who cover Corbion recommend holding shares, and the other half recommend buying.
"The future of plastics is here." The slogan that appears in large print on the website of the US company Danimer Scientific immediately sets the tone. Founded in 2004, the company develops and sells plastics derived from plants and billed as 100% biodegradable. The company’s flagship product is PHA (polyhydroxyalkanoate), a polyester synthesised by microbes from soy or rapeseed oil. PHA is approved by the US Food and Drug Administration (FDA) for food packaging and boasts a wide range of applications, including packaging, bottles, kitchen utensils, rubbish bags, toys and nappy linings.
The sector research firm Markets and Markets predicts that the global PHA market will grow at a compound annual growth rate of 15.3% from $81 million in 2022 to $167 million by 2027. With more than 430 patents, Danimer is one of the key players in the sector. However, the company has stiff competition to contend with. A plethora of companies, such as Bio-on (Italy), Mango Materials (US), Genecis Bioindustries (Canada), Shenzen Ecoman (China) and Tianjin GreenBio Materials (China), are also active in the PHA market. This does not discourage analysts, who all recommend buying Danimer shares.
"We are globally focused on sustainable materials and the circular economy," Eastman CEO Mark Costa told L’Usine Nouvelle magazine in an interview in 2022, speaking of the new direction the company is taking. Around for more than a century, the US firm has in the past few years been launching all sorts of projects in the plastics sector. For one, in September 2021, Eastman won the Innovation in Bioplastics Award from the Plastics Industry Association for its cellulose-based compostable plastic, Aventa. The company sells other bioplastics and is working to become a leader in the sector.
Meanwhile, Eastman is also pouring money into chemical recycling. In March 2022, the company announced that it was building the world’s largest molecular recycling plant in Port-Jérôme-sur-Seine, France – an investment worth $1 billion. Once it comes on stream in 2026, the 40-hectare facility will have a capacity of 160,000 tonnes per year and treat hard-to-recycle plastic waste, such as soiled, opaque or multi- layer PET or polyester textiles. The aim is to reuse these materials infinitely, as this waste cannot currently be recycled using traditional mechanical processes.
And that makes three! In Febru-ary 2023, the Canadian compa-ny Loop Industries announced that it was investing €450 mil-lion to build a PET chemical plastics recycling plant in Saint-Avold (France), in part-nership with the French giant Suez and the South Korean firm SK Geo Centric. Offering a ca-pacity of 70,000 tonnes once it comes on stream in 2027, the site is Loop Industries’ third project. At the same time, Loop is building a plant in Canada, scheduled to open in 2024, and a plant in South Korea, planned for 2025 and also developed with SK Geo Centric. The aim is to supply Loop’s customers, such as the French cosmetics brand L’Occitane, with a locally sourced recycled PET resin. To produce this recycled plas-tic, Loop does not use the traditional mechanical recycling process, which damages the plastic, but a chemical process: methanolysis. Com-pared to other chemical recycling processes (glycolysis, pyrolysis), methanolysis has the advantage of not altering the PET materi-als because it works at a lower temperature, around 80°C. Ac-cording to company claims, this could pave the way to full recy-cling of PET. This process would also make it possible to treat PET that could not previously be re-cycled, such as polyester fibres in clothing.
For the time being, PET is only recycled mechanically. But chemical recycling is begin-ning to shift into industriali-sation mode, as shown by the projects of Loop Industries, the US chemicals company Eastman, which announced a $1 billion investment to build a PET chemical recycling unit in France in 2022, and the Dutch firm Ioniqa, which is building a plant in the Netherlands. Tight-ening European regulations – certain packaging will have to be made of 30% recycled mate-rials by 2030 – explain this race to develop chemical recycling, which produces recycled plas-tic of better quality than that obtained through mechanical processes. The only drawback is that chemical recycling re-mains more expensive than its mechanical counterpart. Most analysts recommend buying Loop shares, which lost 60% in value between April 2022 and April 2023.
In February 2023, US company Origin Materials completed construction of its first Origin 1 production facility in Ontario, Canada. The purpose of the site will be to produce chloromethyl furfural from wood residues. This chemical is a precursor that can then be used to manufacture a range of materials, including PET bioplastic. "PET produced using Origin technology is functionally identical to petroleum-based PET, but with a lower carbon footprint since it is made from sustainable wood residues which capture carbon," the company said in a statement. Origin Materials boasts partners and customers including major plastics consumers such as Nestlé Waters, Danone, PepsiCo and LVMH Beauty.
In addition to developing its plant-based PET, Origin Materials entered into a strategic partnership in February 2023 with the Dutch company Avantium to accelerate the production of two other bioplastics, PEF and FDCA. Most analysts recommend buying shares.
Plastics recycling plants seem to be cropping up everywhere. In January 2023, the US company PureCycle Technologies announced that it would be investing $250 million to build a recycling facility in the port of Antwerp in Belgium. PureCycle’s most advanced plant to date is located in Ironton, Ohio. Operations at the new plant planned to launch in the first quarter of 2023. Another facility is under construction in Augusta, Georgia, and another is planned for Asia in 2025.
Unlike many recycling companies, which focus primarily on PET, PureCycle has developed expertise in transforming polypropylene (PP). This thermo plastic is used in the automotive industry (bumpers, interiors, glove boxes), in food packaging and to make tableware suitable for microwave ovens. If dumped, polypropylene takes several hundred years to decompose, which is why it is so important to collect and recycle it. This would be a big win for the environment in more than one way, as one tonne of recycled PP saves the equivalent of 830 litres of oil. The sole downside is that the current techniques only enable polypropylene to be recycled a few times, as the process alters the plastic. After a handful of cycles, the PP becomes too damaged and eventually has to be incinerated.
PureCycle Technologies claims that its patented pyrolysis and purification technology can produce "recycled polypropylene with properties equal to virgin polymer". The next step is to move from the laboratory to industrial production. The opening of PureCycle’s first plant in the first quarter of 2023 will give an indication of the economic potential of this technology. Most analysts recommend buying shares.
How can we increase the rate of plastics recycling? One key way is to encourage consumers to sort their waste and bring it to dedicated collection points, rather than throwing everything away with household rubbish, or worse, littering. In Switzerland, good consumer habits have resulted in a PET recycling rate of more than 80%, but a small incentive could be needed to encourage consumers around the world. And to do just that, Norwegian company Tomra Systems has developed bottle collection machines. Often installed in supermarkets, these machines offer consumers a reward (cinema tickets, discounts in shops, etc.) for returning bottles via the machine. Equipped with sensors, the machines automatically sort glass bottles separately from PET bottles. In 2022, Tomra managed 82,000 collection systems, primarily installed in European countries, that collected 45 billion cans and bottles.
In addition to its supermarket recycling machines, Tomra Systems also offers industrial recycling machines that are used in food manufacturing (PepsiCo, Nestlé). Most analysts recommend holding shares, which have risen 65% in the past five years.