In a new report, “Bio-based Intermediate Chemicals 2019 Update,” Lux Research evaluated 24 intermediates to identify those it believes will have the highest adoption based on production technology and market potential, presenting current scenarios beyond oil prices that are likely to provide opportunities for bio-based chemicals.

The high cost of oil originally drove interest in the bio-based intermediate space; however, there are new motivating factors encouraging their growth and adoption. These include petrochemical volatility, negative consumer perception of petroleum-based products, and regional policy in support of the bio-economy.

“While the demand for more environmentally friendly products is driving renewed interest in bio-based and renewable alternatives, high prices and lack of development in production technology are still two major pain points slowing large-scale adoption,” said Kristin Marshall, senior research associate at Lux Research and lead author of the report.

The report distinguishes between drop-in intermediates that are chemically equivalent to intermediate chemicals derived from fossil feedstocks and can, therefore, be “dropped in” to existing processes and markets and non-drop-in intermediates that require significant process and market development before they can be utilized.

Drop-ins are the most limited by current low oil prices and have the most to gain if oil prices rise or if volatility increases in the raw materials market. Non-drop-in intermediates, however, have the potential to be adopted even in low-oil-price markets, where their performance can justify higher costs.

Lux found that, given the higher costs of production for most drop-in intermediates, those being targeted in the short term will benefit from having niche markets where labeling products as “bio-based” is an asset.

Targeting niche markets in the short term allows time for production technologies to be further optimized as more favorable market conditions arise.

The report also finds that, while non-drop-ins could capture sizable market value, they are inherently greater-risk, as they are limited by long timelines of downstream development. Furthermore, developers have largely failed to take advantage of the unique performance attributes that allow them to capture new markets.

The 24 intermediates evaluated were selected based on reports from the U.S. Department of Energy and Lux Research assessments of startups in the bio-intermediates sector.