Regarding sustainable chemistry, have we been changing at the rate we wanted to be changing over the past three years? Have things been getting more investment and scientific attention?
It's clear that the need for sustainable chemistry solutions is higher than ever before. The context is very clear. However, most companies working on this recognize that it is a long-term effort. Avantium has been working on our biobased polymer material PEF for 18 years to bring it to market, showing the need for a long-term perspective, dedication, and perseverance to see it commercialized. That said, the exciting part is that our efforts are now going live this year. Three years ago, we might have discussed the potential, but now we are at the phase where our first commercial plant is becoming operational, and we will see the first PEF products coming to market.
This transition from concept to reality is what makes this moment so significant. Consumers are eager to see and hold products that meet their expectations, and we are finally at the stage where we can deliver. Our technology is not just an idea anymore; it's becoming tangible, with products soon available in various applications, from food packaging to clothing. This commercialization phase is crucial, showing that years of hard work are paying off and that sustainable chemistry solutions are becoming a part of everyday life.
We're talking about the commercialization of YXY technology. Can you explain its significance and the impact it will have?
YXY technology is designed to convert sugars into FDCA, and ultimately into PEF. From a consumer perspective, PEF is the product they will encounter. It's what will package their beverages, make their clothes, and even be used in interior design solutions. This moment is significant because consumers will soon see PEF products on the market. For investors and partners who have supported us, this commercialization validates their support and marks a pivotal point in our history.
PEF offers a unique value proposition as it brings a new type of plastic material to the market. Initially, the cost of goods will be higher due to smaller production scales, but as we scale up, the costs will decrease, similar to how solar panels and electric vehicles became more cost-effective over time. The initial high costs will be offset by the unique benefits PEF offers, such as superior performance in high-end applications like fresh fruit juices and beer packaging. Over time, as we reach economies of scale, PEF will become a cost-effective solution for a broader range of products, making it competitive with conventional packaging materials and petroleum-based plastics.
If you scale up, can the clean sourcing of plant-based materials be a sustainable reality?
The sustainability of sourcing plant-based materials depends on how we organize the supply chains. We use plant-based sugars as feedstock, which differ significantly from petroleum-based sourcing. Instead of extracting petroleum and bringing new carbon into the atmosphere, we will buy raw materials from farmers and forestry owners, depending on the region, using carbon that is already above the ground. This system of sourcing is inherently different and needs to be managed to ensure it remains sustainable and environmentally friendly.
Lifecycle analyses show that using plant-based materials results in a much lower carbon footprint compared to petrochemical products. However, scaling up will require us to ensure that these sugars are produced sustainably. Not all sugar production is environmentally friendly, so it's our responsibility, along with our licensees, to ensure sustainable practices are followed. Starting with a much cleaner alternative to petrochemicals gives us a significant advantage, but we must continue to uphold high standards of sustainability in our sourcing practices.
This is a big year for you with commercialization. How do you envision the future of this technology evolving in the next few years?
When thinking about the future of plastics, it's essential to consider the long-term timeline. Initially, consumers will see PEF products in specific applications like textiles, but it won't immediately become a mainstream product. As larger-scale factories are built around the world, more PEF material will enter the market, expanding its use into packaging, automotive applications, and beyond.
Consumer preference will play a crucial role in this transition. If consumers choose PEF over traditional materials like PET, glass, or aluminum, it will drive brand owners to adopt PEF packaging more rapidly. This transition mirrors how the PET bottle replaced glass and PVC in the beverage industry. Once consumers have PEF products in their hands, their choices will accelerate the market shift, leading to widespread adoption and rapid growth.
Why should potential investors consider investing in your technology over other sustainable initiatives?
While significant investment has gone into the energy transition, such as solar and wind, the next crucial step is the materials transition. Continuing to produce materials from petroleum doesn't address the underlying environmental issues. Our technology offers a fully renewable, fully circular solution that can be endlessly recycled and performs better than conventional materials. PEF provides superior performance, such as making thinner and lighter bottles, extending shelf life, and reducing food waste, which adds additional value beyond sustainability.
For investors, this means not only participating in a crucial environmental transition but also in a technology that offers tangible benefits and market potential. The consumer-driven demand for better and more sustainable materials will drive the growth of this technology, making it an attractive investment opportunity that is less dependent on government policies and more on consumer preferences.
Could you explain one of your other technologies, like Volta Technology, and its potential impact?
Volta Technology is particularly interesting and inspiring. It transforms CO2, the ultimate waste product, into a raw material using electrons of renewables to drive the transformation. This process allows us to turn CO2 into valuable products and chemicals. We can capture CO2 directly from the air or from industrial sources like fertilizer plants and cement factories. This approach offers a transformative way to think about waste, turning it into a resource and supporting a circular economy.
While this technology is still in development and may take another decade to scale up, its potential impact is enormous. It represents a future where waste products like CO2 become essential raw materials for new products. This shift can drastically change how we think about production and waste management, driving sustainability and innovation in the chemical industry.
How has your ideal evolved since starting 18 years ago, and what are you aiming for now?
Our initial goal was to move away from petroleum-based feedstocks, focusing on bio-based solutions due to their abundance. Over time, we also explored using CO2 as a feedstock. Our concept has always been to find alternatives to fossil-based materials and create an economy based on renewable carbon sources.
Initially, the sole focus was on reducing greenhouse gas emissions to combat climate change. Recently, we've added another dimension by addressing plastic pollution and promoting a circular economy.
Plastics have gained a bad reputation due to their environmental impact. We aim to develop plastics that are not only based on renewable sources but also fully recyclable. PEF for instance is 100% plant-based and can be recycled in existing recycling assets. Our CO2 based polyester called PLGA is also marine degradable and compostable. The market has shifted significantly, with consumers and policymakers now pulling for sustainable solutions. This change in market readiness has accelerated our efforts to bring these technologies to market. We are now better positioned than ever to make a significant impact on sustainability, driven by consumer demand and supportive policies.
