Capitalizing on sustainability: major investment opportunities in the bioplastic market

After some years of stagnation, in 2023 the bioplastics market experienced a resurgence. With global plastic production back on the rise, driven by increasing demand and innovative applications, bioplastics are emerging as a crucial component in the transition towards sustainable materials. Despite representing only about 0.5% of the over 400 million tonnes of plastic produced annually, the bioplastics sector is poised for significant growth. Global production capacities are projected to soar from 2.18 million tonnes in 2023 to an impressive 7.43 million tonnes by 2028 (european-bioplastic)​​. This growth is fueled by advancements in polymer technology and a broader acceptance of bioplastics in various industries. This article explores the landscape of the bioplastics market, highlighting the types, market trends, and investment opportunities within this burgeoning sector.

Factors of growth for the bioplastic market

Bioplastics are gaining traction across multiple industries due to their sustainable nature and the growing imperative to reduce environmental impact. The bioplastics market is expected to grow at a compound annual growth rate (CAGR) of 18.8% from 2023 to 2030, reaching an estimated value of USD 11,610.5 million by 2022​​ (www.grandviewresearch.com). This growth is underpinned by several trends:

• Consumer demand: increasing awareness of environmental issues and a preference for eco-friendly products are pushing consumers and businesses towards sustainable choices.
• Regulatory pressures: governments worldwide are implementing policies to reduce plastic waste and promote the use of sustainable materials. The EU’s Single-Use Plastics Directive, for example, mandates reductions in certain plastic products, fostering the adoption of bioplastics.
• Technological and material innovation: Innovations in polymer development, such as the enhancement of PLA and PHA properties, are expanding the applications of bioplastics. These advancements are making bioplastics more competitive with traditional plastics in terms of performance and cost.
• Diversification of applications: bioplastics are now used in a wide range of applications beyond packaging, including electronics, automotive components, and textiles. Packaging remains the largest market segment, accounting for 43% of the bioplastics market in 2023​​.

Regional expansion: the Asia-Pacific region, with its growing population and rising environmental consciousness, is becoming a major market for bioplastics. This region’s expanding middle class and increasing health awareness are driving demand for sustainable materials.

Factors of growth for the bioplastic market

The bioplastics industry offers a plethora of investment opportunities, particularly in the realms of start-ups, R&D, and venture capital funding:

Start-ups and Innovators

The bioplastics sector is seeing a rise in start-ups and innovators who are developing new materials and applications. These companies are focusing on creating scalable and cost-effective bioplastic solutions, drawing interest from investors. Examples include Coffeefrom, which converts spent coffee grounds into bioplastic fibers.

R&D Focus Areas

Investment in research and development is crucial for enhancing bioplastic technologies and broadening their use. Key areas include improving the properties and biodegradability of bioplastics and exploring alternative feedstocks like algae. Efficient production processes are also essential for making bioplastics more viable against traditional plastics. Companies such as NatureWorks and Total Corbion PLA are at the forefront of these efforts, working to advance the capabilities of bioplastics.

Venture Capital and Funding

Venture capital is instrumental in supporting the growth of bioplastic technologies. Investors are funding companies that can scale up and provide sustainable alternatives to conventional plastics.  Examples include Danimer Scientific, which has seen significant investment through its public listing, and Biome Technologies, known for its expansion in the bioplastics field. 

Coffefrom itself is being funded by Terra Next, the acceleration programme for innovative start-ups and SMEs operating in the Bioeconomy sector. Terra Next is part of the National Accelerators Network of CDP Venture Capital, a network that covers the entire Italian territory with the goal of supporting the growth of startups specialized in the most potential markets. It features the participation of Intesa Sanpaolo Innovation Center as a co-creator and promoter, as well as the support of Cariplo Factory, which operationally manages the program.

Key investment sectors in bioplastics

1. Packaging Industry

The packaging industry is the largest market for bioplastics, driven by both consumer demand for eco-friendly packaging and regulatory requirements.

2. Agriculture

In agriculture, bioplastics are revolutionizing how we manage and reduce plastic waste. Products like biodegradable mulching films and plant pots are gaining traction for their ability to decompose naturally, enhancing soil health and supporting sustainable farming practices.

3. Automotive and Electronics

The automotive and electronics industries are increasingly incorporating bioplastics to meet sustainability goals. Bioplastics offer advantages such as reduced weight and lower environmental impact, making them ideal for components like interior trims and electronic housings.

4. Textiles

The textile industry is embracing bioplastics to produce sustainable fibers and fabrics.

Coffefrom bio-based polymers 

In partnership with our research and compounding collaborators, we created three innovative thermoplastic materials that incorporate spent coffee grounds as a key input. These bioplastic pellets, which are particularly suited for injection molding, open up a wide range of applications, from automotive components to tableware, and from promotional items to service products. Coffefrom compounds, designed to meet diverse industrial needs, are distributed exclusively by Nexeo Plastics, ensuring broad accessibility and integration into various manufacturing processes.

Challenges and future potential

Despite its promising growth, the bioplastics industry faces several challenges:

1. Economic viability
   • Bioplastics are often more expensive to produce than conventional plastics. Reducing these costs through technological advancements and achieving economies of scale are essential for making bioplastics competitive.
     
2. Infrastructure development
   • The effective disposal and recycling of certain types of bioplastics require appropriate infrastructure. Investments in composting and recycling facilities are crucial to support the lifecycle of bioplastic products and ensure their environmental benefits are realized.
     
3. Regulatory and consumer education
   • Clear regulations and consumer education are vital to ensure proper use and disposal of bioplastics. Misunderstandings about their biodegradability can lead to improper disposal, diminishing their environmental advantages.

Future outlook

The future of the bioplastics industry is bright, driven by continuous innovation, regulatory support, and growing consumer demand. Key areas for future development include:

• New feedstock exploration: research into alternative feedstocks, such as algae and agricultural residues like spent coffee grounds, will diversify raw materials for bioplastics and reduce dependence on food crops.
• Enhanced material properties: advances in bioplastic formulations are expected to improve their performance and expand their applications, making them more competitive with traditional plastics.
• Global expansion: as regions worldwide adopt supportive policies and infrastructure, the bioplastics market is poised for significant global growth.

Conclusion

The bioplastics industry is at a transformative juncture, offering abundant investment opportunities as the world shifts towards more sustainable materials. From packaging to agriculture, automotive, electronics, and textiles, bioplastics are set to revolutionize various sectors. By investing in bioplastics, stakeholders can drive the transition to a circular economy, foster innovation, and support a more sustainable future. The bioplastics market is not only a strategic move towards environmental sustainability but also presents a financially promising venture in the evolving landscape of materials science.