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Greening the polyurethane industry through versatile and low cost eco-polyols

Periodic Reporting for period 1 - ECO-POL (Greening the polyurethane industry through versatile and low cost eco-polyols)

Reporting period: 2019-11-01 to 2020-04-30

PolyLabs’ mission is to manufacture and commercialise greener Polyurethane (PU), by introducing a novel production process using renewable raw material and low-grade unrecyclable plastic instead of petrol-derived monomers.
In fact, while for other plastics (like PET) greener alternatives are gradually entering the market, more than 23 million tons of PU are produced every year from two raw materials coming from oil refining: polyols and isocyanates. This is posing relevant concerns to PU manufacturers, as their customers are “going green”, avoiding the use of oil-derived product as much as possible.
Eco-polyols have long been seen as a solution to these issues, driving a steep growth of the green polyols industry. However, eco and bio polyols are only adequate for few specific applications and their price (>2€/kg) make them suitable only for high-end solutions.
PolyLabs has developed a proprietary autocatalytic process to produce an extremely versatile polyol which can replace oil-based ones in practically all applications. And at an expected competitive market price (1.4 – 1.5 €/kg).
Through this SME Instrument innovation project, we plan to scale up our process from lab to industrial scale to meet the needs of our existing customer base including medium and large size global PU producers, which are asking for a viable alternative to classic polyols.
The commercialisation plan foresees a first industrial plant of 15,000 tonnes/year to be commissioned in the Netherlands, which will be replicated in several countries as long as the local market demand grows.
In this way, we can continue our growth moving from the current 300 tons/year of first generation eco-polyols to reach 14,000 tonnes of Eco-Pol sold by 2023, for a turnover exceeding 20 M€.
The company has already secured a seed funding to develop the market entry product, and through this innovation project we aim to strengthen our links with customers as Huntsman, Covestro, Audi, Basf, Dow, Dupont.
The main objective of the Phase 1 project was to analyze the process economics in order to have a detailed view on the CAPEX and OPEX for a pilot scaled-up plant of 10,000 tonnes/year.
This analysis encompasses the feedstock price, the polyol production cost as well as the expected price customers are willing to pay, including considerations on possible premium price strategy for such “eco” alternative.
In particular, the main activities carried out relate to:
Technical Feasibility
Plan of the scale up production and analysis of the process economics, including analysis of CAPEX (collected by suppliers) and OPEX (calculated based on projections from the current pilot plant).
Streamline of the production operations, analysing the in-bound and out-bound logistics, the selection of the suppliers of raw materials (including rPET), and the analysis of the sensibility of the process economics with respect to the price of raw materials.
Business Feasibility
Size the reachable customers and a reliable market share: verification of EU/global market size, evaluating the number of customers to be reached each year after market launch in order to estimate robust financial projections; update competitor analysis.
Establish a sound Go-to-market Strategy: revenue model, pricing and promotion strategies will be reviewed; a commercialisation plan will be drafted; strategic partnerships facilitating sales and clients outreach will be searched and identified. According to the company’s growth strategy and plan, alternative business models will be explored to propose different sale scenarios. Revenues and profit can increase thanks to license offerings.
5-years financial projections: profit&loss account, cash flow, break-even analysis, ROI calculation. An investment plan will be prepared with a cost breakdown of all activities necessary to conduct a successful product development and market launch.
Risk assessment & Contingency Plan: The main potential risks for the product implementation and commercialisation (management, finance, technical challenges or setbacks, change of partners in the supply chain, changes in market trends) will be identified, described and mitigation actions planned.
To achieve such goals, we have performed the following tasks:
1. Analysis of the process economics
2. Extensive polyurethane market analysis.
3. Technology Assessment and Contingency Plan.
4. Definition and refinement of the business model.
5. Improvement of the existing business plan.
The outcomes of this Phase 1 allowed us to:
• Confirm the viability of the technology at industrial scale
• Have an understanding on how to design and commission the first demo plant
• Engage stakeholders and suppliers to be involved in the design and construction of the plant
• Engage with potential customers interested to test the polyols produced by the demo plant
Moreover, according to the results obtained during the Phase 1 feasibility study, we have evaluated and defined the technological and economical needs for the development of the Phase 2 project aimed at producing a ready-to-market solution.
With respect to the current competing processes, Eco-Pol’s key competitive advantages are:
Higher reactivity in PU formulations, 3 times faster than current products. The distribution of primary and secondary hydroxyl groups directly affects the reactivity of a polyol with isocyanates. Reactivity is a measure of the rate at which a polyol undergoes the reaction to make a polyurethane polymer. In general, polyol reactivity increases as primary hydroxyl content increases. In Eco-Pol, the hydroxyl groups used in the process are up to 100% primary. This increases the reactivity of our polyol (3 times faster) with isocyanates to create PU, thus it allows to reduce the required polyol-isocyanate catalyst used in PU processing.
Use of up to 40% waste materials, that is low-grade PET. Current bio-polyols are produced with up to 85% natural oils, such as soy, rapeseed, and the like, which require the use of agriculture lands to be produced and has an environmental impact for plant growing. Eco-Pol significantly reduces such impact by embedding recycled PET which would otherwise be disposed into landfills or incinerated.
Cost-competitiveness: one of the main hindering factors to the adoption of bio-polyols is the highest production costs and related prices with respect to petrol-based monomers. No currently available bio-polyol has a price lower than 2 €/kg (green premium), while Eco-Pol projected prices come very close to the petroleum-based polyols for production volumes exceeding 100 tonnes/year.

The next steps for the commercialization of the Eco-Pol product are:
• 2020 (Q1): Demonstration and validation of the Eco-Pol technology and formulations in industrial pilot trials with three prospective customers. Engage with manufacturers and test scale-up blending.
• 2021 (Q1): Secure international IP protection of the formulations, Trade Mark registration in EU. Obtain the REACH certification for the compliance of chemical products to EU regulations.
• 2021 (Q2): Logistics and supply chain in place for supporting the international commercialisation of the products. Disseminate results to enlarge the PU producers’ customer base.
• 2021 (Q4): Set up of the first industrial scale manufacturing plant