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Chemistry, Materials & Packaging
Lignin Poised to Become Renewable Alternative to Petrochemical Feedstocks

Lignin, a by-product of the wood-pulping industry, is an organic substance binding the cells, fibers and vessels in wood. Between 40 and 50 million tons are produced worldwide per year; while some is being used for low- and medium-value applications (e.g. binding and dispersing agents in materials such as cement and bio-based leather substitutes — representing a market of roughly $730 million), most is currently treated as a non-commercialized waste product.

However, according to growth strategy firm Frost & Sullivan, the industry is just beginning to scratch the surface of lignin's potential: It could become the main renewable, aromatic resource for the chemical industry and could also allow petrochemists to secure an alternative, renewable source of raw material.

The biochemical industry continues to grow and replace existing oil-based products. According to the World Economic Forum (2010), bio-based chemicals are expected to grow significantly and increase their share to an estimated 9 percent of all chemical production in 2020.

"Catching this wave early could allow large industry players to hedge against the volatility of raw material prices while decreasing their environmental impact," explains principal analyst Brian Balmer. "With their support, the lignin industry could unlock opportunities in a shorter time frame. Being the first mover on this market can assure technology leadership, strategic partnerships and a competitive edge."

"The petrochemical industry holds by far the highest capacity to accelerate the emergence of lignin-based chemicals," Balmer added. "This is not a game where the petrochemical industry will necessarily lose out to the 'green' industry. The most frequent forecast heard in the industry is that biorefiners will become an increasing source of alternative feedstock for petrochemists by means of joint ventures or acquisitions. In the long term, biorefiners and downstream chemists are likely to be integrated."

Lignin is the world's second most abundant renewable carbon source, after cellulose. Frost & Sullivan says the nascent lignin-based chemicals industry would do well to create value through focused collaboration.

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