The market
Global carbon markets were valued at €98 billion in 2011, up 4% from 2010. The EU Emissions Trading System (EU ETS), the world's largest carbon market, was worth €76 billion. The total volume of EU Emissions Trading (EUA) reached 6 billion tonnes last year, a 17% increase compared to 2010. EUA prices fell to €6.3 per tonne, half their value a year earlier. Certified Emissions Reductions (CERs) issued by the UN were valued at €17.8 billion last year, down 2% from 12 months prior. The North American carbon market also declined in value, from €367 million to €221 million in 2011. While there is a price for carbon within climate change mitigation programs, there is also a market for purified carbon dioxide (CO2). The market for hospital-use CO2 is projected to reach $292 million by 2017. The largest industrial consumer of CO2 is the soft drink industry. CO2 makes drinks more acidic and flavorful, and the carbon dioxide also acts as a preservative. Because drinks contain more CO2 at low temperatures than at high temperatures, beverage manufacturers suggest that their products be served preferably very cold, thus offering the customer a stronger taste. A company like Pepsi sold one billion cases of fizzy cola last year, consuming approximately 160,000 tons of pure CO2. Worldwide, over one million tons of CO2 are pumped into soft drinks, all of which are released into the environment. The cost of pure CO2 delivered liquefied to the factory can reach €2/kg. Attempts to link the high level of emissions from energy and industry by burning fossil fuels to this industrial demand were initially met with enthusiasm by all parties, until quality control issues forced the industry to withdraw from recycling low-concentration CO2 from energy, industrial, and agricultural processes, such as the production of magnesium from dolomite or the burning of lime for cement. The loss of this opportunity to transport one million tons of CO2 from the environment to industry, on the other hand, has offered new growth opportunities for traditional gas companies like Air Liquide, the sector's largest supplier with nearly €5 billion in revenue.
Innovation
The use of CO2 as a byproduct of industrial and agricultural processes requires a major breakthrough, as the discovery of contaminated carbon dioxide in Coca-Cola beverages in Belgium has led to a reassessment of quality control practices in large companies. Given that many companies are willing to undertake the concentration and purification of food-grade CO2, multinational supply chain managers prefer to extract the gas from the production of hydrogen or ammonia from natural gas or coal, and more recently, from the fermentation of sugarcane into ethanol. Corn ethanol production also releases significant volumes of CO2, which is increasingly being recovered for industrial use. Unfortunately, corn as a fuel and carbon dioxide source competes with food. Therefore, even when raw materials come from a biological source, they cannot be considered sustainable. Geoffrey Coates was born in Evansville, Indiana. He earned a degree in chemistry from Wabash College (Indiana) and a degree in inorganic chemistry from Stanford University (California) in 1994. He undertook a postdoctoral fellowship at the California Institute of Technology. Since 1997, Geoff has been a faculty member at Cornell University. He has built an academic career as a leader in the field of polymer synthesis, with a particular focus on catalytic transformations. He observed that the predominant source of carbon for approximately 30,000 chemical compounds is produced worldwide from a basic set of about 300 chemical intermediates. Ultimately, almost all of these intermediate molecules originate from fossil fuels. Geoff was interested in finding new ways to transform biorenewable resources into polymers. He realized that the key to success is not the availability of raw materials, but rather the identification of catalysts with the necessary reactivity for CO2 polymerization. Carbon dioxide is an ideal raw material because it is abundant, inexpensive, low-toxicity, and non-flammable. Geoff observed that nature uses CO2 to produce over 200 billion tons of glucose through photosynthesis each year, but until recently, chemists had struggled to develop a process that harnesses this attractive raw material. Geoff and his team developed zinc-cobalt-based catalysts that transform CO2 under mild conditions into an intermediate raw material for chemicals. The challenge of recovering these zinc-cobalt catalysts for closed-loop processing, without increasing our already excessive reliance on mining, remains. Geoff has assembled a strong research team at Cornell University. However, the scope and depth of these catalysts, as well as the need to adopt this innovative approach to polymers, from greenhouse gases to commercialization, demanded special attention. He then created Novomer (new polymers) based on an exclusive license of Cornell's catalyst patents and raised $6.6 million in investment, including from DSM, the Dutch chemical group. DSM was an ideal partner in the pursuit of innovation, as management had decided that 50% of all total sales would come from eco-products by 2015. Physics Ventures, Unilever's venture capital arm, matched DSM's investment.
The first cash flow
The Novomer team has successfully scaled up catalyst technology from the lab to demonstration scale and is currently developing large-scale batch and continuous commercial production capabilities. The portfolio of opportunities is so vast that product developers are testing CO2-based polymers in a wide range of applications, including thermoplastics, binders, electronics, coatings, surfactants, and foams. The potential to replace blow-molded bottles has attracted the attention not only of DSM but also of Unilever, one of the world's largest consumers of plastics. Unilever's trials and its expression of interest in this new way of turning pollution into plastic enabled Novomer to secure an $18.4 million grant from the U.S. Department of Energy to pursue this commercialization path. Trial production of extruded thin films has been another component of the overall effort to produce packaging from pollution. Geoff and his team had the necessary financial leeway to ensure that the products and production processes ran smoothly.
The opportunity
Unilever sees a significant advantage in producing cost-competitive packaging without subsidies, carbon taxes, or cap-and-trade systems. Just because the company opposes these policies doesn't mean the future of them is uncertain, nor that businesses can't rely on innovation as a strategic option when its ultimate fate is determined by politics and international agreements. Novomer possesses a platform technology that extends beyond packaging. It could redefine hundreds of products as diverse as diapers or paints. Today, we see the possibilities of combining technology clusters on this innovative platform, driven by this new understanding of the catalysts. Market competition without subsidies, the transformation of waste into a resource, and perhaps even being paid to remove it from the air, are typical features that strengthen the blue economy proposition.
