Value Chains 1 Presentation to CRIBE Lignin Workshop Toronto - PowerPoint PPT Presentation

Requirements of Global Value Chains 1 Presentation to CRIBE Lignin Workshop Toronto – December 5, 2018 Anne Waddell and A.J. (Sandy) Marshall

Points to be Covered 2 1. Why large firms are looking at this business?  Price and performance and finally…. the climate change imperative 2. Integrating into the hybrid chemistry value chain 3. Key factors to access global value chains, e.g. resin for IKEA  Production at scale  The business case – knowledge of the market and the customer  Timelines and standards for adoption  Ongoing monitoring 4. Bio-plastics supply chain example  Identifying and addressing gaps along the value chains

Why Large Firms are Looking at this 3 Business?  Potential for more sustainable biobased materials. Demand for plastics and textiles will increase, and existing raw material sources – fossil-based oil for plastics and water-intensive cotton for textiles – are unsustainable.  Forest and agricultural based biomass can be utilized in a variety of consumer product sectors where their value-added is considerably higher than in the traditional products, such as pulp, paper and bioenergy  Policies addressing climate change will enable growing opportunities for clean solutions  MNEs are supporting clean tech solutions with published targets and membership in NFP organizations addressing climate change – l’Oreal , Dupont, IKEA, Unilever, Proctor & Gamble ( See Appendix for IKEA’s targets )  Disconnect remains between business lines and corporate sustainability targets

Integrating into the Hybrid Chemistry Value Chain is an Opportunity to Commercialize 4 Bio-Jet fuel Fuels & Fossil-based Energy Consumer Primary Feedstock Chemicals Advanced Polymers & Manufacturing Finished Ethanol Chemicals Products Butanol Biodiesel Succinic acid Bio-based iso-Butanol Lignin Feedstock Levulinic acid NCC Lignin Natural fibres Processed Biomass Biomass Recovered Resources Oils / Fats Low Value Added High Value Added

Key Factors to Access Global Value 5 Chains – production at scale  Having production at scale is critical; preparatory commercial work, e.g. relationships with customers is key, but consider the following challenges:  Feedstock agnostic assumption is often incorrect; each feedstock requires a process variation  Recirculation loops in demo plants are necessary to address process bugs  First commercial is not a bigger demo plant – progress from technology company to industrial company is necessary on all fronts  An in-house engineering study is not sufficient; an independent study is required  Debt and equity do not like first-of-kind  Strategic partners are necessary to secure financing and streamline industrial growth

The Example – Engineered Stone 6

Key Factors to Access Global Value 7 Chains – the proved business case  Bio-succinic acid is cost competitive with IPA; IPA is facing issues of availability and volatile pricing  Bio-succinic acid can replace IPA (isophthalic acid) and/or PA (phathalic acid) in the formulation of unsaturated polyester resins (UPR) for engineered stone. UPR producer testing show the following advantages:  Better resistance to UV  Better workability (lower viscosity)  Same or even lower water pick-up  Higher Tg (glass transition temperature)  Good mechanical properties  Partial renew  Need to interact throughout the value chain, from direct customer (UPR Producer) to Resin Customer (Marble Producer) to Marble Customer (End Customer, IKEA) to generate market pull and find the "champion" even though there is a strong Value Proposition

Timelines and Standards for Adoption* 8 Timelines Presentations to business line leaders - NDA signed in 2014  Identification and prioritization of target applications  One project in advanced development stage  Plant visit in 2016  Compliance Independent Life Cycle Analysis written report – critical  ISO certifications - ISO 9001, ISO 14001, OHSAS 18001 and FSSC 22000 – critical – regular  audits and updating  Standards testify to an integrated management system  Safety Data Sheet, e.g. Dow Lignin  Continual improvement and conformity to customer, statutory and regulatory requirements  Customer certifications require customer audits Each product application requires certification, e.g. Food grade FDA approval; Pharma  grade USP/NF – see appendix *See Appendix for IKEA targets Reference “Standards and Labels related to Biobased Products 2016 to 2018”, IEA Bioenergy Task #42, October 2018

Bio-Plastics Value Chain Creating strong market pull to fill gaps 9 Consumer Primary Chemicals Advanced Polymers & Manufacturing Finished Chemicals Products Bio-based Feedstock Development Focus Areas: Processed Biomass Meet Customer Requirements – define product quality specifications – define and establish relationship with customers – partner with customers to meet quality specs through Customer Needs: application development – moisture and oxygen barrier properties Strengthen the Value Chain – polymer strength (tensile, modulus) – identify and engage partners to fill the gaps – light weight components – conduct demonstration trials at necessary scale to – lower carbon intensity products reduce development risk along the value chain through – healthy environments the progressive transformations

Thank You - Questions 10

Appendix – IKEA’s Sustainability Goals 11

USP/NF 12 BAS USP/NF GRADE is: • GMP manufactured SA which conforms to USP/NF monograph • We have food grade product registered with FDA, with GFSI certification • All our IMS systems documentation in place corresponds to the CFR & FDA. We are FDA registered facility • SA purity is higher than 99%, using USP methods United States Pharmacopeia and Natural Formulary (USP/NF) there are only five tests required for succinic acid monograph chemical analysis: • Purity – no less than 99.0% and no more than 105%, tested for every bush on COA • Melting point – between 185C and 190C – based on historical data MSDS • Residue on ignition – not more than 0.025%, based on historical data on the COA for pharma • Heavy metals – not more than 0.002% (2ppm), Control quality on COA • Residual solvents – meets the requirements, based on historical data . Information as above is typically contained in a safety sheet that accompanies the product