Future Origins and the Biobased Chemicals Market Wigwag 

News arrived earlier this year that Geno, Unilever, Kao, and L’Oréal have named their joint venture which aims to make alternatives to petroleum and palm for surfactant ingredients used in  laundry detergent and cosmetics. They’ve chosen Future Origins as the moniker.

Yes, there’s a Market

Says here, “USDA forecasting palm oil consumption in 2023-24 to grow by 4.76% on the year to 78.06 million tonnes.” Prices have fluctuated mightily, wigwagging between $480 and $1800 per ton in recent years, says here.

Yes, there’s a Reason

Makers of detergent alcohols have been up against it for some time. Yes, you can make them cheaply and effectively from high-emission petroleum olefins — but Net Zero commitments are in conflict. Yes, you can make them from traditional biobased materials, specifically palm kernel oil — but palm-free supply chains commitments are in conflict. Yes, you can live without detergents, but no one wants to. So, it’s a trilemma.

Yes, there’s a Process

Where are we today? The partners completed several 63,000-liter pilot runs and have produced ‘several tons’ of an otherwise material.on time, and there’s been further processing of a fraction thereof into detergent alcohols at the ‘hundreds of kilos’ scale — the latter have been shipped to commercial partners to seed future production.

Yes, there’s a Timeline

Final investment decision looms in 2025 and completion, if built, is slated for 2028.

Yes, there are reasons to be Skeptical

Yes, salutes are in order. Geno has amazing processes for making amazing products. So does Beano – that amazing enzyme supplement that solves a real-world problem in a biobased way, and never quite found the massive market it deserved. So, you never know.

Also, let’s look beyond the challenges of product adoption and look at the palm oil and petroleum price rollercoaster.

Across the years, we’ve seen two levels of corporate interest in at-scale manufacturing of plant-oil alternatives. There was one kind of chatter in the late 2000s when plant oils soared north of $1000 and there was another kind of chatter when they plummeted below $500 in 2014. 

Suffice to say, I’ve heard the sustainability wigwag from Unilever before. It was during the  Solazyme years, the chatter was about affordable alternative oils. Since Corbion now owns the Solazyme technology and makes products with it, I suspect it was less a technology problem than a price problem.

Yes, “sustainability at any price” is not workable for companies. Everyone knows that. But does everyone know that sustaining sustainability is less about actual price, and more about the spread between alternatives and incumbents.

Let’s reach back for some hard data to illustrate what I mean. 

In 1937, palm kernel oil sold for 7 cents a pound in early 1937. That’s $1.60 per pound in today’s dollars, $3526 per metric ton in today’s dollars. I might add, today’s US median household income is $77,283 and that’s $3558 in 1937 dollars, when the actual median household income back then was $723.

Bottom line, incomes have quintupled, palm prices have halved, palm was viable then as a feedstock, viable now — and sustainability has nothing to do with price, it is a function of spread, the financial kind, not the kind you make with palm oil.

The Spreads

In my mind I have formed the image of an old wigwag. Those were the to-and-fro red waggling signal that used to populate railroad crossings in the days when faster, enclosed automobiles were first appearing and “stop, look and listen” wasn’t practical advice for railroad crossings anymore

The back and forth wigwag signaled danger, apprehension, a shift from breezy confidence that the road ahead was untroubled to the lurking thought that getting smashed by a powerful locomotive was possible, too.

Wigwag, wigwag, back and forth, up and down. Prices rise, where are the damn alternatives? Prices crash, flee for the sustainability exits.

The alternatives are crushed between the virtue of our sustainable aspirations and the iniquity of our retreat from sustaining sustainability every time it begins to cost begins to bite.

Net Zero is the devotee’s code of expressing our aspirations, Net Zero is the skeptic’s code for expressing that Net Zero will not be achieved unless the cost to business as usual is more or less Net Zero. 

So, a name change, perhaps. Well might you say, go Future Origins, but you might also say go, Futures Options, because traders in palm and oil futures may be more likely to have their hands on the steering wheel.

Reaction from the stakeholders

The stakeholders would like to wigwag that they are pleased and delighted, committed to sustainability, committed to responsibility, committed, committed, committed.

Richard Slater, Chief Research and Development Officer at Unilever, said: “We have invested in Future Origins because we believe in using science to help us transition to ingredient sourcing routes that are sustainable for the long term. Biotechnology sits at the intersection of science and sustainability and holds huge potential for future-proofing our business, as well as the planet.”

“Through our partnership with Future Origins, Kao aims to produce more sustainable ingredients for use in our home and personal care products, as well as supply derivatives to its chemical business customers” said Masahiro Katayose Senior Executive Officer, President, Chemical Business at Kao. “By establishing such new supply chains that are traceable and transparent, we will further promote responsible raw material sourcing.”

“We are thrilled to see Future Origins achieve this significant milestone with our joint efforts, propelling us towards our vision of a more sustainable and responsible beauty industry,” said Mohamed Kanji, Chief Open Innovation Officer and Operational Excellence for North America at L’Oréal. “This collaboration reflects our dedication to innovation and sustainability and sets a precedent for the broader industry and consumer options. We are proud to lead in this transformative journey, demonstrating how partnerships can effectively unite beauty with environmental responsibility.”

“We look forward to meeting and working with industry partners interested in gaining early access to these sustainable products and reserving capacity in the commercial scale plant,” said Dr. Priti Pharkya, Senior Vice President of Business Operations at Future Origins.