Looking at the impact of Covid-19 on investment across the sector, by Liz Gyekye
Many businesses across the world have faced big challenges during the last 18 months due to the coronavirus pandemic. Business decisions have stalled in many parts of the world, including major investments. Yet, some bio-based companies have weathered the Covid storm and continued to invest in their own people, products and research. Here, Liz Gyekye unpicks this issue.
The Covid-19 pandemic has not stopped major companies from pledging to launch bio-based products in order to meet their sustainability targets. For example, last year, fast-moving consumer goods company Unilever announced plans to make all 70,000 of its products biodegradable over the next decade. Last year, US green footwear brand Allbirds announced its expansion into Korea and this year, BMW Group made pledges to use renewable materials in its products.
Bio-based companies know their supply chain partners such as Allbirds and Unilever are demanding bio-material materials, so they are investing more in developing their own products – even during this challenging Covid period.
Brazil-based biopolymer specialist Braskem is one company that has benefited from this renewed sustainability interest and it has recently announced that it will be beefing up investment in its bio-based products derived from sugarcane – I’m green PE (polyethylene) and EVA (ethylene vinyl acetate copolymer).
Earlier this year, Braskem also announced plans to invest USD$61 million for expanding the production of biopolymers at its plant in Rio Grande do Sul, Brazil. The plant’s capacity will be increased from the current 200 kton/year to 260 kton/year. This expansion should be completed during the last quarter of 2022.
Braskem’s drive to create solutions from sugarcane is directly connected to its sustainability strategy of increasingly investing in products developed from raw materials derived from renewable resources. Currently, the portfolio of renewable resins is exported to more than 30 countries and is already used in the products of more than 250 major brands, such as Allbirds, Tetra Pak, Johnson & Johnson, and Shiseido.
Marco Jansen, global biopolymers leader at Braskem, tells Bio Market Insights: “Braskem has continued investing in our capabilities around circular economy and sustainability in our teams, products and technologies during the pandemic period.
“This period has been challenging in many ways but at the same time it looks like the importance of sustainability to the consumer has only increased. This resonates with our commitments to the carbon-neutral circular economy.”
Jansen adds that the main challenge Braskem faced during Covid was adapting to working remotely, “especially for new team members who have joined the company, but our teams have done a fantastic job in staying motivated, keeping focused and delivering great results”.
Finland-based renewable diesel producer Neste has also delivered great results during the Covid period and continued to invest in its products, people and research.
A corporate communications statement from the company states that Neste continued “carefully considered investments during the pandemic”. For example, last year, its cash-out investments were €995m (including M&A) and €418m in the first quarter of 2021. In order to boost its renewable fuel capacity, it acquired a refinery in the Netherlands owned by oilseed processor Bunge earlier this year. Neste also expanded its Singapore refinery capacity and invested in a maintenance project related to its Finland-based refinery in Porvoo.
In April, the company announced that it was investing around €190m in its Rotterdam refinery to produce sustainable aviation fuel. Neste also aims at creating readiness for a final investment decision by its Board of Directors for a possible new world-scale renewable products refinery project in Rotterdam towards the end of 2021 or early 2022.
Elsewhere, Neste has invested the majority of its annual R&D in research and testing future raw materials and technologies enabling their use. In its corporate communications statement, it stated: “In 2020, Neste’s innovation expenditure grew to €61 million from €54 million in the previous year. The growth was largely driven by boosting efforts in developing new innovation business platforms and by higher R&D investments into strategic areas of current renewables businesses. The R&D laboratories were in full operation during the whole year taking necessary precautions due to the pandemic situation.”
Neste has not only invested more in its R&D during the coronavirus pandemic, it hired around 800 new employees last year as well.
Scaling up
US-based bio-based companies have also seen a positive impact on investment during the pandemic. California-based synthetic biology (the repurposing of biological systems for novel objectives and applications) and renewable chemical company Amyris has delivered great results during this uncertain period and seen strong demand for its products. California is known for leading the way in renewable energy, but it is also leading the way in synthetic biology.
John Melo, CEO of Amyris, says that Covid-19 has impacted investment in two areas that have reinforced the speed and scale of the company’s ‘Lab-to-Market’ (synthetic biology platform) model.
He explains: “First, the pandemic accelerated consumer interest in clean beauty across the globe. We’re the first synthetic biology company to successfully launch a family of clean consumer brands, and our revenue increased by 197% in 2020. We expect to double that business in 2021 as we scale our portfolio, ingredients, and manufacturing operations. In the past year, we manufactured and sold more bio-based sustainable products from fermentation than all the companies in our sector.
“Equally important, Covid-19 accelerated the need for sustainably produced squalene as adjuvants for vaccines. We recently closed the first licensing deal for our novel RNA vaccine platform in treating Covid-19 following positive preliminary results in a pre-clinical study, in partnership with the Infectious Disease Research Institute (IDRI). We’re scaling all these investments further in 2021, and as our success scales, so too do the positive effects for people, the planet and business.”
Amyris is not the only US business to see its company fare well during the pandemic. San Francisco Bay-headquartered renewable bioproducts company Mango Materials has also prospered. The company produces biomaterial replacements for plastic and polyester. CEO Molly Morse says that during lockdowns, people spent a significant amount of time in their homes while watching their individual rubbish bins pile up.
“Where did all of this come from? What happens to it when it is no longer needed? Due to this and related issues, we have seen a drastic increase in interest for bio-based and biodegradable materials. This has coincided with an uptick in interest from investors in new biomanufacturing technologies such as Mango Materials,” Morse says.
From the West Coast to the East Coast, New York-based Ecovative, a biotech company which specialises in producing mycelium (mushroom)-based packaging, also echoed Morse’s views. Ecovative CEO Eben Bayer says that Covid-19 lockdowns made people revaluate their lifestyles and think more critically about sustainability. It also led to a simultaneous e-commerce boon and calls for greater corporate accountability, he adds.
“Ecovative, as a long-time producer of sustainable, high-performing products, saw growing demand for our services, and also saw growing interest from investors. In April, Ecovative announced a $60m Series D round led by Viking Global Investors, which is now being used to support a massive infrastructure and team expansion as we look to expand our AirMycelium farming technologies globally, increase mycelium research and development for new markets at our Mycelium Foundry and support our existing partnerships in packaging, leather and food.”
Ecovative is continuing to receive strong interest in its products from partners, investors and consumers, during this ‘return to normal’ period.
Although a lot of these bio-based companies have found silver linings during this pandemic, helped by strong consumer and brand demand for sustainable materials, not all have found this period plain sailing.
Covid delays
Avantium, a Dutch biochemicals company that develops plant-based, recyclable plastics (polyethylene furanoate – PEF), has not found the Covid period plain sailing.
The company does a lot of application trials in joint development with partners abroad.
CEO Tom van Aken says: “It is always valuable to do those trials together on the potential customer’s site location. But travelling to Asia and the US, and also to Southern Europe where we also have collaborations, was difficult or impossible. This hampered certain projects.
“The inability to meet in person or travel has meant that we’ve had to take our negotiations to a virtual setting, which has led to delays in our commercialisation timelines. Avantium Renewable Polymers has been fully focused on reaching a positive financial investment decision (FID) concerning the construction of a 5-kilotonnes FDCA (furandicarboxylic acid) flagship plant. To be in the position to make this final decision to construct the commercial plant, a number of conditions must be met. One of the conditions is that Avantium has secured offtake commitments for over 50% of FDCA production capacity from the flagship plant. This has been achieved, but a few months later than we had hoped, due to the obstacles mentioned earlier.”
Ultimately, Avantium hopes to make plastics from plant sugars rather than fossil fuels and already has partnerships with brands such as Coca-Cola, Danone and Carlsberg.
“The world around us faced acute and unforeseen challenges due to the Covid-19 pandemic,” Van Aken explains. “The pandemic has resulted in a volatile business environment. As a result, investors have been more cautious. Nevertheless, there is also a clear trend towards investments in ESG driven companies such as Avantium. Long-term environmental problems, consumer consciousness and industry pressures continued to grow. At Avantium, we believe that innovative and sustainable products, like our plant-based PEF, are still a solution for many of these issues. We are well positioned to offer technologies and products to meet the needs of consumers and industries, which will in turn provide substantial benefits for our environment.”
All in all, climate change is one of the most pressing issues of our generation. In 2020, the upheaval caused by the pandemic prompted much reflection on environmental practices, among individuals and businesses alike, and bio-based companies are providing and investing in solutions to help tackle this pressing issue. It looks like the ‘invisible menace’ has not been able to stop this green wave.
