The future of materials

by

David Yankovitz
Robert Kumpf
Kate Hardin
Ashlee Christian

Two forces shaping the future of materials

Innovation may be once again changing the game in the chemicals industry. Two forces seem to be driving this innovation: a heightened focus on sustainability (from companies, customers, and policymakers) and changing customer preferences. Yet, this potential transformation is taking place amid historic pressure on the industry. First, some companies are pursuing research and development (R&D) and investments against short timelines set by announced sustainability targets from both private and public entities. Second, these capital expenditure decisions, in some cases, must be made even before supply chains for new feedstocks have been secured and project risk can be mitigated by long-term offtake contracts. Furthermore, the current consumer price premium for sustainable products may change as supplies increase.

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Sustainability

The chemicals industry seems to be under increasing pressure to reduce emissions, increase recycled inputs to minimize waste, and develop inherently safer chemicals. Pressure may come from across stakeholder groups: local and federal governments, nongovernmental organizations, investors, industry groups, and downstream consumers. Numerous policies, regulations, and targets have been announced over the last few years, with many investors requiring companies to disclose environmental data.¹ In fact, brands are driving demand for more sustainable materials to meet their sustainability targets and prepare for the low-carbon, reduced-waste future that policies are pushing toward.² Today, more than 1,700 companies and financial institutions, globally, have announced net-zero commitments.³ In addition, according to a Deloitte survey, 59% of respondents reported their companies have started using sustainable materials, such as recycled materials and lower-emitting products.⁴

Over the last two years, several such policies and regulations have been adopted and proposed. The United States passed the Inflation Reduction Act,⁵ which provides incentives and funding to clean energy production and infrastructure, and proposed climate disclosure rules,⁶ which could require listed companies to disclose scope 1, scope 2, and some scope 3 emissions. In September 2022, President Joseph Biden signed an executive order creating a National Biotechnology and Biomanufacturing Initiative to advance American biotechnology and biomanufacturing.⁷ The European Union also proposed the Fit for 55 package⁸ and the European Green Deal,⁹ which could promote several initiatives, including clean energy, energy efficiency, and longer-lasting products that can be repaired, recycled, and reused.

The chemical industry's role in reducing emissions and waste will likely be important as the demand for chemicals and materials grows. For instance, global demand for plastics is expected to triple between 2019 and 2060 from 460 million tons (MT) to 1,231 MT, with increased use in the transportation, construction, and packaging sectors as economic growth drives demand in those sectors.¹⁰ It’s important to note that more than 75% of the chemical industry’s emissions are scope 3 (figure 1).¹¹ This has led to an increased focus on decarbonized upstream inputs, low-carbon end uses, and downstream end-of-life options. And meeting targets will likely become increasingly important to brand value as stakeholders pressure brands to demonstrate progress in meeting corporate sustainability commitments. This pressure on brands could inevitably trickle through to original equipment manufacturers and parts and component manufacturers.

Shifts in demand

Consumer preferences may shift as new products are developed and existing products are improved to solve problems, fulfill needs, and enhance the way we live and work. Shifts could continue to occur due to demographic changes. For instance, one forecast indicates that demand for medical devices could rise by nearly 50% between 2021 and 2029 as the population ages and the prevalence of chronic disease increases.¹² Global demand for electric vehicles (EVs) is forecast to increase eightfold between 2020 and 2030 (from 3 million to 27.5 million),¹³ as policy incentives, better performance, and preferences for sustainable products could drive demand in the sector. Shifts could also occur in response to growing public awareness of an issue. For instance, several regions, countries, and states have banned single-use plastics.¹⁴ And in March 2022, the resolution to end plastic pollution passed the United Nations Environment Assembly, and a binding United Nations treaty could be signed as early as 2024.¹⁵

Each one of these shifts in demand could reverberate through the products’ supply chain. Some shifts may only impact one part or component, but other shifts could impact every part of the supply chain, from feedstocks to end use. This may be especially true when the shift is toward more sustainable goods. Consumers generally want the same (or better) performance and affordability in addition to sustainability. This raises the question of whether it’s more economical for the producer to decarbonize their existing product or start producing a different product that may have slightly different performance metrics but a lower carbon footprint.

This reevaluation of chemical companies’ portfolios is expected to be important as markets continue to evolve because demand for new advanced materials could increase (e.g., lithium-ion batteries for energy storage, graphene for wearable medical devices), while other chemicals and products become outdated (e.g., chlorofluorocarbons [CFCs] after public awareness of their harm to the ozone layer led governments to ban them, and film after the use of digital increased). The difference now is that shifts in demand toward sustainable products could impact all products rather than just a few.

Additionally, while in the past, chemicals companies have generally focused mainly on the volume of product sales, as scope 3 emissions gain importance, chemicals companies may start considering how their products are used downstream. For instance, chemicals companies may choose to sell their products (e.g., plastics, resins) to electric vehicle manufacturers (rather than internal combustion engine vehicles manufacturers) to reduce their downstream scope 3 emissions.

Advanced materials: Making the impossible possible

The drivers of shifting demand and sustainability have contributed to today’s innovation in advanced materials, but the current acceleration is likely due in large part to advancements in enabling technologies such as robotics, artificial intelligence (AI) (for more details, see the sidebar “Enabling technologies: Artificial intelligence”), 3D printing, and material informatics (both physics-based machine learning and de novo simulations and eventually quantum computing). Advanced materials research is extensive, incorporating multiple fields, including material science, chemistry, physics, nanotechnology, and biotechnology (for more details, see the sidebar “Enabling technologies: Synthetic biology”), and its development is being accelerated in part by technologies and policies that shorten the time to market. Additionally, initiatives like the Materials Genome Initiative aim to expand the range of advanced materials and accelerate time to market.¹⁶

Enabling technologies: Artificial intelligence

AI technology has expanded broadly over the last few years, with the volume of US AI patent applications rising from 10,000 in 2000 to 80,000 in 2020, driven by uses for planning/control, knowledge processing, and machine learning.¹⁷ The rapidly expanding field of materials informatics is leveraging AI to allow digital-savvy materials manufacturers to increase production efficiency, decrease costs, and spur innovation.¹⁸ AI could significantly improve processes across the value chain, from material discovery to quality control and supply chain management.

For companies moving toward AI, data can be an essential enabler of materials informatics. Generally, the first step toward utilizing AI is assessing the data that is already being collected in a holistic way, as data collected in one area of the business (e.g., material discovery) could be useful in another area of the business (e.g., quality assurance). Combining existing data with publicly available data can open even more possibilities for innovation. From there, a company can build a road map for more efficiently and effectively utilizing the data available to innovate throughout its supply chain (figure 2).

For example, in 2022, one company developed an AI tool that successfully predicted the structure of nearly all proteins known to science, including almost every protein in the human body. The lab offered its database of over 200 million proteins to the public for free. The data has since been used to understand how proteins affect the health of honeybees and to develop an effective malaria vaccine.¹⁹Another important example is how generative AI models could accelerate materials discovery. Some chemical representations have been developed over the years to create a syntax that is both readable to computers and understandable to scientists. But the representation of structure often remains a key issue due to the complexity of material structures.

The simplest depiction is in terms of phase spaces, which merely reflect elemental combinations expected to yield desirable chemistry or physics. This approach shows the power of simplicity by making large phase spaces easily interpretable for researchers and has already led to the experimental discovery of new materials. On the other end of the spectrum is the inclusion of full atomic coordinates, which is the highest level of complexity and yields predictions of the most specific, realistic descriptions of structure.²⁰

There can be a trade-off, though, in adding complexity to structural representations. Phase-space generation can be easily interpretable by experimental researchers, but the recommendations may be incredibly broad. On the other hand, representations that include atomic coordinates are generally best suited for coupling with additional AI or computational chemistry because they yield the most detailed structures. However, as recommendations become more specific, experiments can arguably become more complicated because it may be difficult for synthetic chemists to develop “recipes” for very specific structures. Challenges aside, each approach could exhibit potential for materials discovery.

Materials like self-healing concrete and bioresorbable polymers that allow stitches to absorb into the body represent advancements in materials that can improve how we live and work. Scientists can design new, purpose-driven materials engineered to outperform naturally occurring materials. They can also manipulate and create cells, cell-like structures, DNA, and proteins in organic processes.

The applications of these materials are generally even more wide-ranging than the sciences behind them. Considerable improvements in the fields of medicine, electronics, automotive, construction, energy, and agriculture over the last few years have facilitated new applications of biomaterials, semiconductors, smart materials, nanomaterials, and advanced plastics and resins (figure 3).

Enabling technologies: Synthetic biology

Synthetic biology is at the heart of scientific innovation, fusing biology and engineering to create ground-breaking solutions to some of the world's most pressing issues. It can offer numerous possibilities, ranging from drug development, bioremediation, renewable energy production, and the creation of novel biomaterials. The element that distinguishes synthetic biology from traditional molecular and cellular biology is the focus on the design and construction of core components (parts of enzymes, genetic circuits, metabolic pathways, etc.) that can be modeled, understood, and modified to meet specific performance criteria, and the assembly of these smaller parts and devices into larger integrated systems to solve specific problems.²¹

For instance, synthetic biology has enabled the design and production of spidroins with the goal of biomimicking the structure-property-function relationships of spider silks. This protein is used for various biomedical materials, including drug-delivery systems and scaffold for tissue engineering and wound dressing.²²

Synthetic biology applications can be grouped into four different levels.

Monomer (e.g., bio-based chemical building blocks): Synthetic biology helped engineer yeast cells to produce a plant-derived compound called artemisinin, an antimalarial drug.²³

Bio-polymer (e.g., DNA synthesis, assembly, and protein engineering): Scientists and engineers at the University of Texas at Austin engineered a new enzyme that can break down PET (polyethylene terephthalate) plastic into monomers. PET is widely used in consumer packaging and is a major contributor to plastic waste.²⁴

Single cell (e.g., metabolic engineering and cell-free systems): Synthetic biology was used to engineer a bacterial strain that can produce a bio-based nylon precursor to replace a fossil fuel-based counterpart.²⁵

System (e.g., synthetic organisms, biosensors, and bioreactors): Some scientists developed a new type of biosensor that can detect the presence of multiple molecules simultaneously in blood and urine. This is useful for health care and environmental monitoring.²⁶

Bioinformatics (the use of computational tools and algorithms to analyze large datasets of biological information, including DNA and protein structures, and gene expression) and bioprocessing (the development of new methods for the large-scale production of biological products, such as enzymes, proteins, and vaccines, using living organisms or their components) help to support the use of synthetic biology in developing new advanced materials.

Advanced materials supporting the energy transition

The chemical industry’s general role in decarbonization is twofold. On the one hand, the industry is working to reduce its scope 1, scope 2, and scope 3 emissions. On the other hand, the industry has also been tasked with supplying the materials needed in the energy transition.²⁷ Examples of materials under development to support the clean energy transition include:

Wind turbines: Advanced materials such as carbon-fiber composites and advanced coatings can improve wind turbine blades' efficiency, durability, and lifespan. The carbon-fiber turbine blades’ energy and carbon-payback period were determined to be 5%–13% lower than those of market incumbents.²⁸
Insulating materials: Advanced insulation materials are used to help reduce the rate of heat transfer between the interior and exterior of a building better than traditional insulating materials. For example, polyurethane rigid foam and spray foam systems containing recycled or bio-based raw materials are used for insulation in the construction industry.²⁹
Solar panels: Perovskite solar cells are being developed to improve efficiency and reduce the cost of solar panels. They have the potential to be more efficient than traditional silicon-based solar cells—their efficiency has increased rapidly from under 3% in 2009 to over 25% (in lab studies) recently.³⁰ They are also generally cheaper and easier to manufacture.
Superconductors: A superconductor is a material that can conduct electricity or transport electrons from one atom to another with no resistance. This means no heat, sound, or any other form of energy would be released from the material when it has reached "critical temperature,” often at very low temperatures.³¹ Previously, a significant amount of energy was used in the cooling process, limiting applications of cooled superconductors to specialty applications in medicine and science. Today, superconductors are being developed to work at room temperature, opening a myriad of new applications—for instance, in the energy industry, they enable more efficient energy generation, transmission, and storage. These superconductors could also enable ultra-high-speed digital interconnects for next-generation computers, low-latency broadband wireless communications, lossless power lines, levitating high-speed trains, and affordable medical imaging devices. Currently, up to 10% of the electricity generated is lost via transmission lines.³²
Advanced batteries: Next-generation batteries are not only being developed based on minerals such as lithium, nickel, cobalt, manganese, and iron but also with more earth-abundant multivalent ions such as magnesium, calcium, zinc, and aluminum. Current lithium-ion batteries are a crucial technology for energy storage in renewable energy systems, electric vehicles, and consumer electronics. Advanced materials such as silicon anodes and solid-state electrolytes are being developed to improve lithium-ion batteries’ energy density, safety, and lifespan.³³Multivalent metal-ion batteries may provide alternatives to lithium-based batteries in the race to ever-increasing energy-density targets.³⁴

Electrolyzer technology and hydrogen fuel cells: Electrolyzer technology enables the production of clean hydrogen, which can be used as a fuel for a wide range of applications, including transportation, industrial processes, and electricity generation. Electrolyzers use electricity to split water into hydrogen and oxygen.³⁵ Hydrogen gas can then be used in various applications, including powering fuel cells. Hydrogen fuel cells may be promising in certain applications for generating electricity from hydrogen and oxygen. Advanced materials such as platinum alloys and graphene are being developed to help improve efficiency and reduce the cost of hydrogen fuel cells. As of February 2023, over 15,000 fuel cell EVs have been sold and leased in the United States, 66 fuel cell buses are in operation, and around 57 hydrogen stations have been set up in California, with more under development.³⁶ It is widely expected that long-distance routes (trucks and ships) will emerge as the leading transportation application of hydrogen.³⁷

Energy-storage materials: Renewable energy projects increasingly tend to include energy storage to enable 24/7 abated electrons. Advanced materials such as metal-organic frameworks (MOFs) and flow batteries are being developed to help improve the energy density, cost, and safety of these energy storage systems. For example, MOFs can store hydrogen³⁸ or carbon dioxide, while flow batteries can store large amounts of electricity for the grid.

Note: Carbon-payback period is the length of time it takes for the energy savings generated by a wind turbine to offset carbon emissions associated with the production and transportation of the blades.

Emerging sustainable ecosystems

The ability of companies to reexamine existing products and design new products in response to sustainability and consumer preferences may help determine their future success. Companies should evaluate the entire supply chains of each of their products, from feedstock to part to product. Key considerations to examine will include sustainability, cost structure, and performance characteristics at each stage.

Advanced materials improving functional properties

Advanced materials aim to improve performance in various areas, including the creation of materials that are lighter, stronger, more effective, more conductive, more sustainable, and more affordable than traditional materials.

Weight: Lightweight metal alloys such as aluminum alloys and titanium alloys, as well as composite materials such as fiberglass and carbon fiber composites, are being developed to reduce weight while retaining or improving strength.³⁹ In automotive and aerospace applications, this can improve fuel efficiency and payload capacity.

Strength and durability: Materials such as carbon fiber and advanced ceramics are being developed with the goal of outperforming traditional materials in terms of strength and durability.⁴⁰ Carbon fiber tends to be used in aircraft, race cars, and sports equipment, while advanced ceramics are generally used in wear-resistant coatings, medical implants, and cutting tools. Synthetic fibers, such as ultra-high-molecular-weight polyethylene and aramids, are the strongest of any engineered macromolecules.⁴¹ Because of their tensile strength and durability, they tend to be heavily used in many protective gear and vehicles.

Conductivity: Graphene and carbon nanotubes are being developed to improve conductivity for electrical, thermal, and other applications.⁴² Graphene, for example, has excellent electrical conductivity and is being researched for use in electronics and energy storage. New electrical steel grades tend to lower core loss at the high operating frequencies of EV motors.

Stability and efficacy: A material’s stability can allow it to retain its original characteristics and properties throughout its intended use, whereas efficacy is the ability to produce a desired or intended result. For instance, bioabsorbable polymers and encapsulation of COVID-19 vaccines in lipid nanoparticles improve the solubility, stability, bioavailability, and targeted delivery of drugs.⁴³

Self-healing and mimicking ability: Self-healing materials can recover/repair damages automatically and autonomously, that is, without the need for external intervention. For example, self-healing concrete and coatings are being used for construction,⁴⁴ electronic skin mimics the sensory capabilities of human skin,⁴⁵ and perovskite solar cells and capacitors are used for better energy storage.⁴⁶

Processing: Advanced materials such as graphene, nanowires, and quantum dots have improved the performance of electronic devices by increasing speed, reducing power consumption, and improving memory capacity.⁴⁷ These underlying material advances may be especially important to meet the performance demands of the graphic processing units that form the hardware for running emerging AI applications such as large language models.

The industry is exploring taking a circular ecosystem approach to reduce waste and emissions throughout the value chain. Companies can reduce scope 1 and scope 2 emissions through abatement solutions such as electrification, renewable energy usage, clean hydrogen usage, and efficiency improvements. Circular ecosystems can further help to abate upstream and downstream scope 3 emissions through solutions such as bio-based organic building blocks, CCU, advanced chemical recycling, and industrial bio-based operations.

For these circular ecosystems to be successful, a few elements are especially important. First, renewable or low-carbon energy should be used whenever possible. IEA estimates that renewable power generation will need to rise by 12% annually through 2030 to meet net-zero targets, which is twice the average of 2019–2021.⁴⁸ Second, feedstocks that can be reproduced more quickly (e.g., biomass) should be used when possible before more finite resources (like fossil fuels). The full life cycle of these feedstocks should also be taken into consideration. Third, hard-to-abate processes should use carbon capture, utilization, and storage (CCUS) to reduce emissions. Fourth, end-of-life options must be considered (e.g., recyclability, biodegradability, compostability).

But value could be created for companies along the supply chain if circular ecosystems are developed. Today’s linear ecosystem results in most products losing economic value entirely at the end of the product’s life as they end up in a landfill (figure 4). A circular system would preserve economic value as products are reused, refurbished, repaired, or recycled. Additional economic value could be created in several ways. For instance, producers could reach new customer segments with reused, refurbished, repaired, or recycled products, as well as through increased efficiencies, such as a company using its own waste as a low-cost feedstock. Lastly, companies could reduce regulatory, investment, and reputational risks by moving toward sustainable business practices.

To help fully realize this value creation, companies should track and report their sustainability efforts in a way that is wholly transparent. Life-cycle assessments can provide a more comprehensive understanding of the environmental impact of a particular product throughout its entire life cycle, from raw material extraction to disposal. Additionally, accurately and transparently reporting the results to investors and customers is important. Customers that view a company as transparent are 1.5 times more likely to pay more for a product even when a cheaper option is available.⁴⁹

Eastman: Developing an industry-leading business in the circular economy

Introduction: Eastman was founded in 1920 in Kingsport, Tennessee, by Eastman Kodak and spun off by Kodak as a new entity in 1994. Today, it is a global specialty materials company that produces a broad range of products for everyday life, such as innovative films for electric vehicles and resins for high-performance medical devices.⁵⁰

The company’s vision is to continue innovating to make materials that enhance the quality of life while also being a thought and action leader to define the path for circularity globally. To that end, Eastman works closely with others to address the triple challenge: climate change, the global water crisis, and caring for the global population.⁵¹

Problem: Kodak operated a methanolysis plant from the mid-1980s to the mid-2000s to chemically recycle used polyesters and manufacture the recycled content into new products. However, customer demand for a sustainable solution was not there, and the economics of that plant declined, eventually leading to its closure.⁵²

Eastman began considering sustainability in its strategy again in the early 2000s.⁵³ At that time, Eastman started to explore once again whether it could innovate around its existing assets to develop more sustainable business practices and how it could work with partners toward common goals to reduce waste and emissions.

Solution: In 2019, Eastman announced that it would start two chemical-recycling projects. The first would leverage an existing coal-gasification facility in Kingsport that had initially been completed in 1983 to produce chemicals from syngas rather than from petroleum. This plant would use Carbon Renewal Technology (CRT) to recycle most complex waste plastics (with the exception of PVC (polyvinyl chloride)) into syngas.⁵⁴ Eastman would then use that syngas to produce acetic acid and other acetyls, building blocks for advanced materials, additives, and fibers.⁵⁵

The second project would leverage the methanolysis technology originally developed by Kodak in the 1980s to break down PET into MEG and DMT, which Eastman would further manufacture into specialty copolyesters.⁵⁶ This Polyester Renewal Technology (PRT), a form of depolymerization known as molecular recycling, allows Eastman to recycle polyester waste repeatedly without degradation over time and reduces greenhouse gas (GHG) emissions by 20%–30% compared to processes using fossil fuels.⁵⁷

One of the biggest challenges facing Eastman within its commercial-scale recycling plants is collecting enough quality feedstock to feed the plant. To help ensure adequate feedstock, Eastman partnered with feedstock providers, invested in its ability to sort plastics (to avoid contamination), identified several different feedstock prototypes based on what’s available in the market, and used process chemistry to optimize those feedstocks. Eastman focused on a low feedstock cost and a premium for recycled products to make the economics work this time.⁵⁸

Second, Eastman uses a mass-balance approach to track recycled content to receive revenue from its product and associated recycled content. The mass-balance approach traces, measures, and reports the amount of recycled materials used to create a product.⁵⁹ This method is certified by International Sustainability and Carbon Certification (ISCC) and allows brands to report the percentage of recycled content allocated to their manufactured products. This way, brands can demonstrate that they have met their recycled content targets.

Benefits: Chemical recycling has already helped reduce waste and emissions for Eastman and its partners. Eastman reports that it recycled more than 12 million pounds (about 5,500 metric tons) of plastic waste in 2021.⁶⁰ And Eastman’s customers can benefit by acquiring recycled content to meet their emissions and waste targets. Eastman’s CRT process is also estimated to reduce GHG emissions by 20%–50% compared to processes using fossil fuels,⁶¹ and its PRT process is expected to reduce emissions by 20%–30%.⁶²

The future: Eastman is expected to begin operations at its PRT plant in Kingsport later this year and has already announced two new PRT projects—one in France and another in the United States. The plant in France is expected to come online in 2026,⁶³ with more than 80% of feedstock under definitive agreements and most rPET-packaging offtake under definitive agreements.⁶⁴ Eastman has committed to recycling more than 250 million pounds (about 114,000 metric tons) of plastic by 2025 and more than 500 million pounds (about 227,000 metric tons) by 2030.⁶⁵ The company also plans to innovate new ways to optimize its supply chain through waste takeback strategies, including pre- and postconsumer waste or forming a closed-loop system through brand partnerships.

Eastman has noted two helpful market trends as it expands its recycling capabilities. First, companies are beginning to design products with recyclability in mind. This has led to simplifying the plastics used in a product so that sorting and recycling are easier. Second, companies are beginning to use preconsumer and postconsumer waste, expanding access to noncontaminated plastics feedstock.⁶⁶

Bio-based materials

Bio-based materials seem to be gaining traction as a potentially viable solution for developing more sustainable goods and potentially solving some specific aspects of waste by moving toward biodegradability and compostability as options. Bio-based materials are made from natural feedstocks or inputs extracted from plants or other organic sources, such as starch, cellulose, and proteins, and can further be processed through various biological and chemical reactions. These materials are then transformed into fibers, films, and resins via processes such as extrusion, casting, and molding. They can be classified into categories such as bioplastics, bio-composites, and bio-based chemicals, each with unique properties and applications.⁶⁷

Four generations of feedstocks are used for manufacturing bio-based materials:

First-generation feedstocks (e.g., corn, sugarcane, and soybeans): These are commonly used to produce biofuels and bioplastics. For instance, some companies make bio-based polymers from corn for use in textiles, carpets, and other applications.⁶⁸

Second-generation feedstocks (e.g., switchgrass, algae, and agricultural waste): A few bioplastics companies use agricultural waste such as potato peels and other food scraps to make compostable packaging.

Third-generation feedstocks (e.g., microorganisms like bacteria, yeast, and fungi): For instance, algae can be used to produce oils that can be used in food, cosmetics, and biofuels.⁶⁹ Another example is a biotech company, which uses bacteria to produce self-healing concrete that seals cracks, making special coatings or waterproof membranes unnecessary.⁷⁰

Fourth-generation feedstocks (e.g., synthetic biology-based feedstocks to design and engineer organisms that produce specific materials or chemicals): One genetic engineering company uses synthetic biology to engineer microbes to produce high-value chemicals such as fragrances, flavors, and medicines.⁷¹

Consumer demand for bio-based materials is currently growing and is expected to continue to grow in the future as businesses move toward more sustainable materials. Global bioplastics only account for 1% of total plastics production, but production capacities could potentially increase from around 2.2 MT in 2022 to approximately 6.3 MT in 2027, a 23% CAGR.⁷²

But, as with other advanced materials, challenges exist.

Scalability: There can be additional complexity in scaling up the production of materials using bio-based feedstocks rather than traditional chemicals. To help ensure high performance and durability, scaling may need to be done in stages with particular attention to efficient processing and manufacturing and quality control. AI and other technologies could help to streamline the manufacturing of bio-based materials by detecting and removing intermediate, redundant, or wasteful procedures, such as finding the most promising feedstocks or optimizing processing conditions. This can lead to more efficient and cost-effective production processes that help minimize waste and lower the time and cost required to scale up production.

Redesign of products and processes: Nascent infrastructure in the bio-based materials market and supply chain can pose significant challenges for life-cycle analysis and sustainability efforts. For instance, drop-in bio-based materials, which are designed to replace existing materials without significant changes to the manufacturing process, may reduce emissions relative to traditional materials. However, the environmental benefits may be limited if the production of bio-based material relies on fossil fuels elsewhere in the supply chain. On the other hand, “smart drop-in” and carbon-neutral materials can offer significant environmental benefits but may require a redesign of the entire manufacturing process. This can involve significant investments in R&D, as well as changes to existing manufacturing infrastructure, which can be difficult to finance.

End-of-life issues: Not all bio-based materials are biodegradable or compostable, and those that are, may require specific conditions to break down properly. For example, some bio-based plastics made from polylactic acid (PLA) require high temperatures and humidity levels to compost, which may not be available in all composting facilities. To address this challenge, some companies are developing bio-based plastics that are specifically designed to be compostable in a wide range of environments (e.g., home-compostable, industrial-compostable, marine biodegradable).⁷³

Innovating toward a sustainable, circular future

As the chemicals industry focuses on reducing carbon emissions, different companies are adopting different solutions depending on their suppliers and customers. Some companies are innovating toward more sustainable, circular solutions to address supply-chain carbon emissions as well as scope 3 emissions from their products. Others are reducing their scope 2 emissions by exploring bio-based materials, industrial engineering, and carbon capture and utilization. Across the value chain, companies are innovating as the value of emissions avoidance generally increases over time, both in terms of meeting stated (internal and external) targets and enhanced customer loyalty.

Over the last five years, several large oil, gas, and chemical companies have announced plans to build commercial-scale advanced recycling facilities.⁷⁴ Eastman has three advanced recycling facilities that have been planned or are under construction in the United States and France.⁷⁵ LyondellBasell currently has one pilot plant operational and is planning to build a commercial-scale plant to begin operation in 2025.⁷⁶ The company is also partnering with other players to build a first-of-its-kind circularity center in Houston, which will process and sort plastics to feed both mechanical and advanced recycling facilities.⁷⁷ The plant is expected online in 2024. Additionally, some companies, such as Avient, are not only incorporating more recycled materials into their products but also designing products with improved recyclability.⁷⁸

Other companies are beginning to displace fossil fuels as feedstock, developing alternative feedstocks from bio-based sources such as plants and cooking oils. For instance, Genomatica is using microorganisms and industrial processes to ferment plant sugars into materials and ingredients for everyday products such as clothing, cosmetics, and cleaning products.⁷⁹ Ingevity is developing alternative bio-based feedstocks such as crude tall oil (CTO) from its pine-based product lines, which can be used in products in the industrial specialties, oilfield lubricant technologies, and pavement technologies businesses.⁸⁰

Meanwhile, other companies are focusing on carbon capture and utilization. Companies such as Air Liquide and Air Products are developing carbon capture technologies. Air Products is leveraging its existing knowledge and assets to grow its hydrogen and carbon capture technologies.⁸¹Air Liquide has several different carbon capture technologies for different hard-to-abate sectors.⁸² It is currently working on one project to capture CO2 from a hydrogen plant for reuse in agri-food and industrial applications.⁸³ 3M has also announced plans to scale the production of carbon removal materials for direct air capture (DAC), leveraging its expertise in filtration technology.⁸⁴ LanzaTech is one of several companies finding ways to utilize industrial carbon off-gases. The company is using bacteria to convert carbon oxides into fuels and chemicals.⁸⁵

As these companies commercialize these technologies, they tend to pioneer a level of transparency around these efforts to reduce waste, increase water and energy efficiency, and decrease carbon emissions. For example, companies may be enlisting third-party certifiers to verify characteristics such as recycled content and mass balance protocols. The accurate measurement of recycled content and carbon reductions, as well as the transparency with which it is reported, is likely to be key to garnering customer and employee trust as well as reducing long-term regulatory risk.

Circular materials

Circular solutions could reduce waste and emissions, while preserving more fully the economic value of products. Residential recycling rates in the United States have risen from 10% in 1980 to just over 30% in 2019.⁸⁶ However, those percentages vary greatly by product, with plastics recycling only rising from less than 1% in 1980 to 9% today.⁸⁷ This is despite the fact that, on a per-metric-ton basis, chemicals are more valuable than steel, glass, and concrete—materials that are recycled at significantly higher rates (figure 5).⁸⁸ While the complexities of recycling chemicals can make it more costly, some companies seem to be finding ways to develop efficiencies and strengthen supply chains to drive down costs. By finding cost-effective ways to use circular solutions, more value can be preserved from chemical products at the end of their life. This is especially important for waste plastic, given that plastic production is expected to triple globally by 2060.⁸⁹

Mechanical recycling: This process mechanically crushes the plastic and remelts it into granulate (preserving the molecular structure) for use in the production of new plastics. While mechanical recycling generally benefits from having the lowest carbon footprint of all recycling technologies currently in existence,⁹⁰ it may also be limited by several factors. First, the plastics that can be recycled are limited by type and level of contaminants. Second, the process of mechanical recycling results in lower quality or downcycling of the plastic. As a result, less than 10% of plastic is mechanically recycled more than once.⁹¹

Due to these limits, new processes are being developed and scaled to process more plastic waste for reuse (figure 6).

Chemical recycling: All forms of chemical recycling (sometimes called advanced recycling or molecular recycling) produce “virgin resin” that can be used in pharma and FDA-grade applications (in contrast to mechanically recycled content) and can (at least theoretically) be recycled an infinite number of times without compromising quality.⁹² These new processes fit into three distinct categories: purification, depolymerization, and conversion.⁹³

Purification: It is a physical process where solvents are used to produce virgin-like polymers from single-polymer feedstocks or mixed plastics.⁹⁴

Depolymerization: These technologies break down the polymer chains of a single-resin feedstock to produce a specific set of products, usually monomers. These virgin-quality monomers can then be used to create polymers and plastic resin.⁹⁵

Conversion: These technologies break the polymer chains to produce hydrocarbon products such as naphtha or syngas. This particular set of technologies distinguishes itself by allowing for mixed plastics with higher levels of contamination. While pyrolysis (one type of conversion process) requires high temperatures, some companies are working to reduce temperatures and pressure to focus on one type of plastic.⁹⁶

Like bio-based materials, there are challenges to scaling up chemical-recycling processes.

Feedstock availability: There is currently a feedstock shortage due to several issues, including:

Lack of access to curbside pickup or other collection sites in some parts of the country
Consumer behavior and lack of understanding of what and how to recycle, which can lead to issues with feedstock contamination
Adoption of more advanced sorting technologies and processing efficiencies, including digitalization and robotics at materials recovery facilities (MRFs)⁹⁷

To address these feedstock challenges, some companies are partnering with municipalities to increase public awareness⁹⁸and some regions are adopting Extended Producer Responsibility (EPR) programs that stand up a Producer Responsibility Organization, funded by plastic producers, which organizes collections, transport, and sorting of plastics.⁹⁹

Regulatory uncertainty: Twenty-two states have passed laws that recognize advanced recycling as “recycling,” even if they convert the plastics to fuels instead.¹⁰⁰ This legislation provides certainty to companies that want to invest in advanced recycling facilities. But other regulations and policies could also potentially impact the economics of projects.

Economics: While some consumers have shown a willingness to pay higher premiums for sustainable goods, consumers tend to be price sensitive, especially in times of economic downturn.¹⁰¹ Consequently, some investors may view investment in a large recycling facility to be relatively risky from a market perspective. However, this risk could be somewhat mitigated through long-term supply agreements with brands.

Incineration with CCUS: Today, about 19% of all global plastic waste is incinerated.¹⁰² Some companies are working to capture the CO2 from the incineration of plastics and use the CO2 in combination with hydrogen to produce syngas for plastics production.

Three strategic levers for chemicals companies

The push toward sustainability could challenge the industry to innovate across processes and products. As companies navigate through these new demands—more sustainable, safer, reliable, and better-performing products—three considerations should help guide them.

Realizing value from existing assets and data

For some companies, the first step in developing more sustainable business practices is not just tracking emissions; it’s taking a holistic look at current assets, data, and partnerships. An up-front assessment of current data can help identify opportunities and track progress. Taking a holistic view of all data is important since some data will be useful in multiple parts of the business. This data can be used for the discovery, development, and scaling of new materials, optimizing operations, and minimizing emissions.

Additionally, for some companies and some products, there could be natural areas for the integration of bio-based materials, recycled content, or other sustainable advanced materials. These drop-ins could help companies increase their portfolio of sustainable products with relatively low up-front costs. However, other applications may require companies to redesign the entire supply chain, which may involve a higher upfront cost. Understanding the options and cost implications of each strategy can help companies determine how to develop their product portfolios.

Making the economics work

Forecasting is difficult in the most stable of markets, and the movement toward higher quality, sustainable products can make forecasting even more difficult. Consequently, to make the economics work, companies may need to sign long-term contracts, utilize government funding or incentives, and make efforts to garner customer loyalty.

Maintaining brand trust, increasing enterprise value

Customers that highly trust a brand will purchase from that brand again 88% of the time.¹⁰³ Consequently, highly trusted companies outperform low-trust companies with up to four times the amplification of market value. Brand trust is generally built upon four factors: humanity, transparency, reliability, and capability.¹⁰⁴ For oil, gas, and chemicals companies, the biggest gap between the best-performing and worst-performing companies is in the intent factors (transparency and humanity).¹⁰⁵ As chemical companies move toward more sustainable products, it is important that companies be transparent about their successes and failures to help reduce reputational risk and maintain brand trust.

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The authors would like to thank Zubair Azad, Dan Ferrante, Maria Kipreos, Eddie Newland, Jake Riley, Annabel Hernandez Romero, and Emily Werner from Deloitte Consulting LLP, Olivier Jan from Deloitte Conseil, and Aijaz Hussain (former employee) for their subject matter inputs and contributions toward the development of this study.

The authors would also like to thank Ankhi Biswas from Deloitte SVCS India Pvt. Ltd. for her extensive research and analysis support, Scott Van Tilburg from Deloitte Consulting LLP for his inputs, Rithu Thomas from the Deloitte Insights team for providing support for the report’s editing and publication processes, and Katrina Hudson, Dario Failla, Alyssa Weir, Clayton Wilkerson, and Jennifer McHugh from Deloitte Services LP for their operational and marketing support.

Finally, the authors would also like to thank Jeff Carbeck from Eastman for his valuable inputs on the Eastman case study.

Cover image by: Peter Crowther

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