Green Chemicals Will Save Industry $65.5 Billion by 2020

November 1, 2011

In the last decade there has been a great deal of activity in the development of renewable feedstocks for a variety of chemical processes.  Compared to conventional petroleum-derived feedstocks, these new materials offer lower greenhouse gas emissions and reduced toxicity.  More importantly to the companies that use chemicals in their industrial processes, they offer significantly lower costs.  In contrast to the consumer market, where choosing green products usually entails paying a premium, greener is cheaper in industry.  Most renewable feedstocks are produced through biological processes or thermal and chemical processes applied to cellulosic materials, such as wood, agricultural waste, or non-food plants like switchgrass – all of which are less costly than the purchase of petroleum products. 

According to a recent report from Pike Research, the use of green chemistry in a range of industrial activities will grow rapidly in the coming decade, offering significant direct cost savings as well as indirect savings in the form of avoiding liability for environmental and social impacts.  The total amount saved, the cleantech market intelligence firm forecasts, will reach $65.5 billion by 2020.

“The worldwide chemical industry is valued at around $4 trillion, so even small improvements in efficiency can have very large impacts,” says senior analyst Mackinnon Lawrence.  “Just by bringing laggard companies up to the baseline standard of the industry as a whole, it’s possible to capture more than $40 billion in cost savings and avoided liabilities.”

Originally developed in the 1990s, partly as a result of the passage in the United States of the Pollution Prevention Act of 1990, green chemistry is less a description of a distinct industrial segment than a way of carrying out industrial activities from design to manufacturing.  The primary pathways for green chemistry, in Pike Research’s view, include waste minimization in the chemical production process, replacement of existing products with less toxic alternatives, and the shift to renewable, non-petroleum-based feedstocks.  The evolution of these practices is being driven by a combination of technical, regulatory, consumer preference, and economic factors. Most notably, rapid advances in biotechnology have created powerful new toolkits for the manipulation of organisms (bacteria, yeasts, and algae) to produce industrially useful compounds with great efficiency and minimal waste. At the same time, the rising price of petroleum – critical both as a source of process energy and as a feedstock for many chemical processes – has fueled interest and investment in finding alternative, renewable feedstocks.

Overall, green chemistry represents a market opportunity that will grow from $2.8 billion in 2011 to $98.5 billion by 2020.

Pike Research’s report, “Green Chemistry”, examines the three major segments of the green chemical market:  waste minimization in conventional synthetic chemical processes, green replacements for conventional chemical products, and the use of renewable feedstocks to produce chemicals and materials with smaller environmental footprints than those produced by current processes.  Representative companies from each segment are profiled and global forecasts, segmented by world region, extend through 2020.  An Executive Summary of the report is available for free download on the firm’s website.

Pike Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets.  The company’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Smart Energy, Smart Grid, Smart Transportation, Smart Industry, and Smart Buildings sectors.  For more information, visit www.navigantresearch.com or call +1.303.997.7609.

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