Bioplastics William Kelly - June 20, 2016

W. Kelly Background Working in Plastic Development since 1975 (GE Plastics, Amoco) Biopolymer area since 1993 (EcoChem, Chronopol, Hycail BV, Cereplast, Natural Solutions) Over 20 patents and patent applications Commercialized numerous products – generating millions of $ in sales Understand reactive extrusion and blending Technology Currently - still consulting with several companies www.natsolu.com

Topics Bioplastics Trends / Market Bio Materials Opportunities / Applications & Price Considerations

PCL is not a bioplastic – but is biodegradable Bioplastic Defined The term "bioplastic" refers to a biodegradable plastics and/or plastics derived from renewable resources (the definition from European Bioplastics) Interest in bio-materials has increased significantly due to concerns related to global climate change. PCL is not a bioplastic – but is biodegradable

Biodegradable plastics Considering the source/base we distinguish: natural polymers (PHA) modified natural polymers (viscose, methyl cellulose) synthetic polymers (PLA,polyesters)

Bioplastic Source/base: renewable or not renewable Plastics: 265 M tons (2010) – Plastics Europe Bioplastics: 0.724 M tons biodegradable (non renewable resources) 428 000 t plastics from renewable resources 296 000 t Source/base: renewable or not renewable Material: biodegradable or not biodegradable

Biodegradable vs. compostable? Compostable plastic is a subset of biodegradable plastic that will decompose in the conditions and time frames during composting process  Compostable plastic is always biodegradable Biodegradable plastic is not always compostable

What is compostable plastic? Compostable plastic is one that meets all scientifically recognized standards of compostabilty   regardless of the origin of carbon. European norm is EN 13432, and USA norm is ASTM D6400  

ASTM D6400 – Main Factors 1. Mineralization 90 percent conversion to carbon dioxide, water and biomass through the action of microorganisms The same rate of degradation as other organic waste (ie. leaves, grass ...) Time period of 180 days or less 2. Fragmentation Not more than 10% of the original dry weight of test material shall fail to pass through a 2 mm fraction sieve. 3. The impact on the environment No negative impact on flora and fauna

BioPlastic Industry Currenty Account for < 1 % of Total Global Plastic Usage Growth of BioPlastic expected to exceed 2.1 billion pounds soon Biobased Building Blocks showing strong drive forward: BioAmber (succinic acid – used by PTTMCC BioChem in Thailand, sale office in USA), Novomer (polypropylene carbonate), DuPont / Tate & Lyle (1,3-propanediol), Genomatica (1,4-butanediol) BioPlastic growth is an evolution – not a revolution. Growth based on new companies, new materials and new capacities. BioPlastics are complementary to existing fossil-based plastics – offering new options based on societal and consumer trends & demands.

Development of bioplastics through history

Alternative Feedstock Developments Based on Oil Price Instability. Several biopolymer companies are looking into alternative feedstocks NatureWorks is planning to use non-food alternative feedstock from biomass in their new plant located in Thailand BASF is looking into replacing one of their key raw materials it uses in production of its EcoFlex polyester resin (PBAT) with a biobased material. BASF produces Ecovio (Blend w/ INGEO PLA) to claim biocontent.

Bioplastics Growth Expectation Regions supporting Composting and Environmental Concerns – Left Coast (CA, OR, WA). Driven by Green Products, Healthier Lifestyles, and Restoring the Environment. Businesses reacting to Government Agencies, NGOs and Consumer Demand for Eco-Friendly Products Ongoing Shift in Consumer/Corporate Behavior to Environmental Issues Cone/Echo Global Corporate Responsibility Survey, 94 % of consumers would buy a product that has an environmental benefit and 76% have already purchased an environmental product in the past 12 months

World production capacity of bioplastics by material type in 2011

Market share of bioplastics by application use in 2011.

What Is Fueling The Growth of Bioplastics? Petroleum supplies are dwindling while demand for oil-based goods is rising For every 4 barrels of oil used, only 1 new barrel is discovered. Petrochemical-based plastics consume about 2.5 billion barrels of oil annually. Supplies will run short within the next 20 to 100 years. Governments and consumers are demanding action to reduce dependence on oil. Increasing concerns over global warming, environmental pollution, toxic affects of some residual monomers and additives are driving legislation and consumer “backlash” against conventional plastics

Development of bioplastic market - main drivers Technical properties and functionality is selling High consumer acceptance (eco marketing) Organic recycling is a cost-efficient, new recycling option Promotes sustainability Blends with Food & Organic Waste Programs Available in select regions that have a program set up

For renewable resources, the rate of harvest should not exceed the rate of regeneration. [For pollution] The rates of waste generation from projects should not exceed the assimilative capacity of the environment For nonrenewable resources the depletion of the nonrenewable resources should require comparable development of renewable substitutes for that resource. Herman Daly, 1990

Expected Bioplastic Growth by Type Bio-PE (bio-polyethylene) Polylactic Acid (PLA) Polyhydroxyalkanoate (PHA) Bio-PET (bio-polyethylene terephthalate) Bio Starch Blends Biodegradable polyester Bioplastics Industry Overview Guide

Bioplastics Growth Challenges Terminology confusion Conflicting definitions – claims being made for products that fail to degrade under ASTM or European Standards. Lack of infrastructure Composting Limited amount of funding available for bioplastics Limited availability of biobased feedstocks Tight supply of biobased chemicals Cost of Finished Goods versus Existing Plastics (2x to 5x more)

Bioplastic – Niche Applications Bioplastic / Marketing Strategy : Coke-Cola’s PlantBottle (but costs more than PET significantly) Avantium’s PEF (polyethylene furanoate) which is a polyester similar to PET – JV with BASF announced Do these materials Compost? Are they able to be use in Existing Recycle Streams? Costs Relative to PET? Will These Win Customer Acceptance?

Marketplace Opportunities Packaging: Foam containers, Food Service, cosmetic packaging Fibers: Woven and non-woven, Textiles (spun fibers) Construction and housing: Carpets, insulation, wood composites Bottles, Medicine Jars, Personal Care Films: Blown and Cast for Carrier Bags, Horticulture Consumer Products: Toys, Electronics (housings) Price Point for Market Entry - $1.50 to $2.75

Considering Price Points Unmodified PLA sells for ~$0.80 per pound @ volume PBS, PHA, PBAT sells in a range: $1.70 to $2.50 per pound @ volume Price point for CAPA should be < $3.00 “Sell the Steak or Sell the Sizzle” Modified CAPA products addressing Marketplace Opportunity may be priced to sell very competitively.

POLYLACTIC ACID Advantages Limitations Made from a renewable resource Can be formed into containers and packaging for food and consumer goods Can be compostable Limitations Low flexibility Long mold cycle time Low heat distortion temperature

PLA / PCL PLA / PCL studied extensively PCL adds the rubbery phase, with its lower Tg Elongation at break increase at > 60 wt. % PCL Addition of small amount PLA-PCL-PLA tri-block copolymer will enhanced dispersion of PCL in PLA with significantly improved flexibility (~ 4 wt.%) allowing the addition of increased PCL (Note – other ways exist to compatibilize and enhance properties) http://www.sciencedirect.com/science/article/pii/S0032386104010365 Products and Applications of Biopolymers, by C Verbeek, p. 34

CAPA Application – Real Life Issue: PLA brittle behavior and breaks on-line processing at PSI (Plastic Suppliers, Inc.) Solution: adding about 5 wt.% CAPA 6800 to PLA pellets in line, resulting in reduced failures and less brittle behavior still maintaining optical clarity. Circa 2006 – 2007 DaniMer Application

CAPA Application – Real Life Opportunity: International Paper wanted a renewable resourced based biodegradable paper coating for their Cup Stock. Solution: PLA by itself was not working due to flexibility issues and sealing behavior (made too many bad seals causing leaks). Special formulation made using CAPA FB100 plus additives was qualified and implemented at IP with very tight control over moisture. DaniMer Application – circa 2005 - 2007

CAPA Application – Real Life Issue: PLA will form Crystalized Fiber when drawn but will not tack to adhere to any other substrate. Solution: Kimberly-Clark produced tri-lubed fiber with core 100 wt.% PLA and shell made from 95 / 5 : PLA / Capa 6800 – which would allow for tack – thus bonding to substrate. Chronopol Application – circa 1998

CAPA Possibilities Using CAPA (6800, 6500, or FB100) modification is possible Adding PLA, and Minerals plus “Rx extrusion w/ additives” will lower costs Numerous product possibilities – molding, extrusion, foam, fibers, paper coatings Assuming from $0.15 to $0.35 per pound for Compounding and Packaging Selling price based on Market Realities – large volumes may require lower price point Sell Technical Solution versus Selling just Base Resin Example Former GE Plastic (now Sabic) – Noryl : Base resin PPO but > 200+ modified forms sold, sales volume > 250 million pounds. Their Exists Hugh Outside Twin-Screw Compounding Capabilities – that are Idle Trellis Earth, MHG, Spectra Color – many others

CAPA Possibilities CAPA 6800 plus PLA (INGEO 4032D) with small particle mineral plus PDLA polymer (Corbion) – will produce high heat composite materials exceeding 100 0C Opens up more hot serve applications – food service Potential Consumer electronics Automotive possibilities 3-D printing Technical Applications served by Engineering resins Freezer Packaging – due to PCL low temperature Tg ( - 60 oC) Many others not imagined as yet

“[Man] possesses a body shaped by physical, chemical and biological elements, and can only survive and develop if the ecological environment is favorable. Any harm done to the environment, therefore, is harm done to humanity. “ Pope Francis – UN General Assembly in NY, Septemter 25, 2015

William Kelly Natural Solutions www.natsolu.com Thank You William Kelly Natural Solutions www.natsolu.com