Ethanol’s Opportunity in the Chemical Market

A Nebraska-focused tech startup and a Latin American chemical supplier highlight two options for using ethanol as the building block for intermediate chemicals. The story appears in the May print edition of Ethanol Producer Magazine.
By Luke Geiver | April 24, 2017

The future of ethanol for intermediate chemical production can be seen next door to a wet mill in Columbus, Nebraska, and thousands of miles south in Sao Paolo, Brazil.

Greenyug LLC, a startup technology development company headquartered in Santa Barbara, California, intends to break ground in Nebraska this summer alongside an Archer Daniels Midland Co. facility. The bolt-on facility—already tested in India—is designed to convert nondenatured ethanol into ethyl acetate, a product used in coatings, paint and cleaning products. Formed in 2008, the company—whose name borrows from English and Sanskrit to spell green era—believes it is entering a massive and economically lucrative market by utilizing ethanol as the main building block for many widely used chemicals.

Braskem, the largest petrochemical company in Latin America, has been converting sugarcane-based ethanol into polyethylene at its facilities in Brazil for several years.

While not the only companies developing green chemicals, Greenyug the startup, and Braskem the global player, show the range of approaches and viable pathways for ethanol to fuel processes other than engine combustion. Each entity—despite company size, global reach or operational locale—offers a glimpse into the possibilities for ethanol-based chemical production opportunities, market needs and the quantifiable value that green chemicals can fetch from buyers.

Upgrading to a Green Era
Greenyug is a small team that formed in 2008 to commercialize its technology platform designed to perform process intensification and liquid phase catalysis to produce hydrogen as a byproduct and ethyl acetate as a revenue generating stream. The system—tested in both California and India from 2011-’13—offers a small footprint compared to others used to create similar chemicals at petrochemical refineries, says Luca Zullo, vice president of commercialization, “Imagine the size of the separation section of a standard ethanol plant.” Prior to his Greenyug efforts, Zullo worked in the petrochemical industry.

The Greenyug process involves feeding a stream of ethanol into a reactive distillation column, dehydrating the ethanol over a catalyst in the liquid phase and then removing the produced ethyl acetate as a bottoms product and hydrogen as a top product.

“Our profitability is based on the spread between ethanol and the products, not unlike the petrochemical industry that focuses on the spread between naphtha and chemicals,” Zullo says. The Greenyug team targets products with selling prices at the $1,000-per-ton starting point. Ethanol is typically in the $500-per-ton range, Zullo says. “This spread provides a very good return, if one has good mass yield conversion and moderate capital costs,” he says, adding that the Greenyug technology approach has performed well in both areas. “Approximately 5 percent of the oil barrel goes into chemicals generating 40 percent of its value. We can do the same for the ethanol industry using a foundation of proven petrochemical technologies,” Zullo says.

The Freedonia Group, a Cleveland-based industry research firm, puts products such as ethyl acetate on a growth path that could create a 2 billion-pound market by 2020. Between now and then, the market for such products should grow by 3.7 percent, the research group said in a recent study on renewable solvents and chemicals. Zullo projects the current global market for his product at roughly $20 billion.

No matter what the market size or demand may be for ethanol-based ethyl acetate, Greenyug has pitched its technology to investors and operational collaborators as one independent of a green premium. “Nowhere in our assumption do we predicate a premium because of a green product,” he says. “Make no mistake, our products are green and often the only 100 percent renewable-based product available. However, from the beginning, we have intended to compete purely on a market basis.” In some cases, the green factor may be the tie breaker in a decision between a Greenyug produced product or an alternative produced using fossil-based naphtha.

This summer will mark the groundbreaking for Greenyug’s first plant next to an ADM wet mill facility. The engineering, procurement and construction contract is being finalized and most of the large equipment needed has been ordered, and product testing on large quantities is already completed. With ADM, Zullo says his team found a great partner that put in considerable effort in due diligence and analysis on the Greenyug process. To finance the plant, Greenyug utilized St. Louis-based Stern Brothers. The company will issue bonds for its project with USDA backing under its business and industry loan guarantee program.

Ethanol streamed from the ADM facility does not have to be tweaked before it enters Greenyug’s Prairie Catalytic LLC facility—the subsidiary the company formed to operate the Nebraska plant. “From an ethanol plant’s perspective, this is a very simple proposition. When the plant is ready to go, one just diverts some ethanol from the load-out to our plant,” Zullo says. There is no need to retrofit anything on the plant and there is nothing to change with the DDGs. In some cases, the bolt-on process could allow the plant to increase grind rate, Zullo says.

The amount of ethanol needed for the Greenyug process is not enough to change or disrupt ethanol plant fuel market focus, he says, but it is enough to add considerable value to the fraction of ethanol that is used for the chemical production process.

Thanks to an offtake agreement signed in March, Zullo doesn’t have to pitch the market value and demand for ethyl acetate to investors or potential collaborators anymore. HELM AG, a German-based petrochemical producer and supplier that operates globally, signed a marketing agreement with Greenyug for its Nebraska-produced biobased chemicals made from ethanol. Axel Viering, executive director of the derivatives business unit at HELM, says the agreement will strengthen its presence and expand its ethyl acetate distribution network. Currently, the company supplies much of its ethyl acetate products to markets outside of the U.S. “As a major global distributor of chemicals, HELM looks forward to a long-term relationship with Greenyug,” Viering says.

The significance of the offtake agreement with HELM is related to the product procurement model typical of the chemical industry, Zullo says. Distribution channels are varied and complex with some customers taking large delivery of product by rail and others seeking small volumes by other packaging methods. Most chemical buyers do not buy only one product and, instead, prefer to purchase an entire portfolio. A company selling one product may have difficulty gaining acceptance from a client, if that means the client would have to compromise a relationship with the sellers of other products, Zullo explains. “Because of that, we immediately understood that we needed to build a relationship with an existing chemical distributor to save us the need to build an independent sales channel.”

For Greenyug, the significance of the offtake deal is simple. Working with the third largest chemical distributor in the world, Greenyug’s small team can now focus on its future: using ethanol as an intermediate building block to produce a product that sells for $1,300 to $3,000 per ton from its first plant and eventually expanding its operations to other facilities.

Selling the Green Premium
As the largest petrochemical refiner in Latin America, Brazilian-based Braskem is uniquely positioned to produce an ethanol-based chemical. Because of the country’s support and massive volumes of sugarcane-based ethanol, Braskem is shipping a 100 percent green plastic product across the world—and even into space. Its green polyethylene is used in packaging, plastic bags and a 3-D printer designed and used with Braskem’s ethanol-based green polyethylene on the International Space Station.

Research on its trademarked green polyethylene began in 2007. By 2010, production operations started at a 200,000 ton-per-year sugarcane ethanol facility in Triunfo, Brazil, using dehydration and a catalysis-based process to produce the biobased chemical. In 2011, the product was certified as 99 percent renewable and today it is marketed across the globe.

“We have a sustainability platform that is comprised of three pillars,” says Cinthia Vargas, director of communications for Braskem. “One of them is to make our processes as green as we possibly can. Right now, [Green PE] is our one product that offers a different raw material for our clients and that helps us build a larger narrative on sustainability.”

Joe Jankowski, commercial manager in charge of selling the green polyethylene (PE) product, says sales today are robust and growing. “Our clients are looking more at their own footprint and the companies they buy product from,” he says. The product can be used as a drop-in replacement for fossil-based ethylenes. And, as a sign of the market’s size, Jankowski says there is a major need for the product no matter what feedstock is used to produce it. Braskem has a fossil-based polyethylene production facility in Mexico, and another constructed in Texas that is soon to be inaugurated.

Although Jankowski is uncertain if ethanol will be used in greater quantities to produce ethylene in the future, he believes sentiment from his clients will persuade Braskem to utilize more ethanol. The current Green PE is sold at a premium to its fossil-equivalents offered by Braskem, a variable of the product that, unlike Zullo, doesn’t bother Jankowski or the Braskem team.

Braskem’s Green PE story is becoming more powerful among major clients around the world, Jankowski says, evidenced by rising sales and client sentiment. “I do love the fact that [Green PE] is a positive story. It is cutting-edge from our company’s offering,” he says of his ability to sell the product to production facilities and plastic-focused end-users. “And, it is indicative of how we want to be positioned in the future.”

Author: Luke Geiver
BBI International Staff Editor